Welcome to Foreign Policy’s China Brief. The highlights this week: The Chinese leadership convenes at a Beijing plenum, a cluster of COVID-19 cases in Xinjiang prompts testing and lockdown, and why Ant Financial could be the world’s biggest IPO when it goes public next week.
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China’s New Confidence on Display
The Chinese leadership is currently meeting in Beijing to set economic and political goals for the next five years—a plenum at which, as usual, the outcomes are already agreed. On the agenda: a “Vision 2035” program that will likely cement a new focus on domestic consumption and technology, as well as an increased role for Chinese Communist Party leadership in the private economy. It may also cement Xi’s place as a president-for-life.
More conventionally, the plenum will also set the official five-year plan, a feature of communist governments since the days of the Soviet Union. The strongest influence of the five-year plan comes in the first and the last year of its implementation. In the first year, leaders try to show that they’re following the new line, by the second year things slip back to existing structures, and in the final year officials scramble to meet targets at the last minute. (The Soviets had a term for this: shturmovshchina, or “storming.”)
Growing ego. In the run-up to the plenum, speeches by President Xi Jinping and others have demonstrated a bold confidence that this is China’s moment. As economic policymaker Liu He put it, “Bad things are turning into good ones.”
Despite the damage to China’s global reputation this year, its leaders seem to believe that Western economic weakness and mishandling of the coronavirus have created opportunities. That may be true, but it may also encourage dangerous overconfidence, as happened in 2009, when the Chinese leadership was convinced the economic crisis had significantly weakened Washington.
What will China do? That overconfidence is most frightening when it comes to Taiwan, where recent saber-rattling has again raised the specter of an invasion. Distinguishing signal from noise on Taiwan is difficult, but the traditional restraints on Chinese military action—fear of U.S. intervention, reputational damage, and corruption inside the People’s Liberation Army—have weakened.
The odds of Chinese action in Taiwan increase if the U.S. election doesn’t produce a clear result, or if a lame duck President Donald Trump embarks on a scorched-earth program on his way out—since Beijing may be convinced that a distracted Washington has no will to block it.
Xinjiang outbreak. A new cluster of COVID-19 cases prompted mass testing and the lockdown of 4.5 million people in Kashgar, Xinjiang. The circumstances appear to be connected to the coerced labor that has caused Western firms to break ties with Xinjiang suppliers. Rumors about deadly outbreaks in camps and prisons are circulating in the Uighur diaspora, and it’s possible that prisons—a site of outbreaks worldwide—may be a reservoir for the disease in China.
U.S. media retaliation. Following last week’s measures by the United States against another cluster of Chinese media outlets, Beijing has targeted six more U.S. bureaus in China: the Los Angeles Times, ABC, Minnesota Public Radio, the Bureau of National Affairs (now owned by Bloomberg and known as Bloomberg Industry Group), Newsweek, and Feature Story News. The move goes after smaller bureaus, in part because China has already targeted the larger ones.
Minnesota Public Radio’s Marketplace program has excellent Shanghai correspondence, while the Los Angeles Times has thrived in China since the New York Times and the Washington Post lost their U.S. staff there.
Disinformation effort. The disinformation campaign against U.S. Democratic presidential candidate Joe Biden, based on the false claim that that he profited from his son Hunter Biden’s overseas connections, has some ties to China. A recent sex tape purporting to show Hunter was hosted on GNews, a website owned by the exiled business magnate and Steve Bannon ally Guo Wengui.
Meanwhile, researcher Elise Thomas at the Australian Strategic Policy Institute found that a dossier making spurious allegations against Biden that has circulated in Trump-supporting Chinese circles appears to have originated with a man who doesn’t exist: a fake analyst named Martin Aspen, using a computer-generated face, fake social media accounts, and a false address.
Biggest IPO ever. Ant Group, the financial arm of Alibaba, is potentially set to have the biggest initial public offering ever—around $34 billion—when it opens on the Hong Kong and Shanghai markets next week. Ant’s Alipay is one of two e-payment systems, along with WeChat Pay, that dominates payments in China. China is clearly a global leader in electronic payments, ahead of Europe and well ahead of the United States. Large parts of the country have transitioned straight from cash payments to mobile payments.
Violence in Kyrgyzstan. Amid the chaotic overthrow of the government in Kyrgyzstan, mobs have reportedly targeted Chinese businesses and workers for intimidation and extortion. That reflects a long-term problem for Chinese enterprises in Central Asia: Close ties to political elites can backfire when those elites fall, and Chinese firms are seen as complicit in local corruption. The promotion of the Belt and Road Initiative hasn’t helped. In Kazakhstan, for example, many locals see the initiative as a way for their own corrupt officials to launder money.
Slow economic rebound. China’s economic recovery appears more substantial than even other countries that have controlled COVID-19, owing to the size of its domestic market and a successful program of government support for businesses. Growth this year is set to come in at 2.1 percent, according to a Reuters survey of leading economists. That project is still a 44-year low in a developing economy, but it’s less of a blow than once feared.
A U.S. indictment that reads like a thriller
The United States has just indicted seven individuals for a program of coercion and intimidation directed against an unnamed Chinese exile in an attempt to force him to return home for punishment. The detailed indictment describes how the target—from context, likely to be Xu Jin, the former head of the Wuhan Development and Reform Commission who fled in 2011—was threatened, stalked, and had his family used as leverage.
China’s program of intimidation of former high-level officials who fled overseas, known as the Fox Hunt, has made considerable use of shady methods, as well as more conventional channels such as Interpol’s Red Notices.
That’s it for this week.
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