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Brief #1: 2020 economic policy, China-Russia, Xinjiang, Hong Kong protests, Wang Liqiang

Brief #1: 2020 economic policy, China-Russia, Xinjiang, Hong Kong protests, Wang Liqiang

Dear all,

Welcome to Neican Brief 内参简报, a weekly analysis of China-related current affairs.

Many of us are drowning in China news and analyses. There is just so much of it out there. Trying to make sense of it all is time-consuming, difficult and exhausting work.

Our goal is to keep you updated on China through concise and accessible weekly briefings.

We will select, summarise, contextualise, analyse key China developments. And we will condense it all into a short 10-minute read delivered to you at the end of each week.

We would appreciate your patience and feedback as we crossing this river by feeling the stones.

- Adam and Yun

1. China’s economic policy in 2020: stability is supreme

The Politburo meeting on Friday (December 6) discussed next year’s economic work plan and emphasised that:

  • China’s economy is stable and its positive long-term prospects remain unchanged.
  • China needs to maintain economic stability in 2020.
  • Economic growth will be kept in a “reasonable range” next year.
  • Macroeconomic policy, including the counter-cyclical tools, needs to be “forward-looking, targeted, and effective.”
  • China must “be good at turning external pressure [including from the trade war with the United States] into deepening reform”.
  • The goal of building a “moderately prosperous society” needs to be achieved by the end of 2020.
  • Preventing major financial risks, poverty and pollution, and ensuring the “six stabilities” (employment, financial system, foreign trade, foreign investment, domestic investment, and economic expectations) needs to be prioritised.

Politburo’s main concern is economic stability, meaning maintaining growth and preventing major economic shocks in the face of mounting risks and challenges from both at home and abroad.

The Politburo outcomes above will guide economic plan and policy for 2020, the details of which will be worked out later this month at the annual Central Economic Work Conference 中央经济工作会议.

Politburo also discussed party discipline inspection, political supervision, and anti-corruption work. It did so using the standard formulas.

2. China-Russia relations: towards “new heights in strategic collaboration”?

China and Russia are forging deeper cooperation, amid strains with the West. This week, China hosted the Secretary of the Russian National Security Council Nikolai Patrushev on law enforcement and security cooperation in addition to hosting the China-Russia Friendship Committee for Peace and Development.

Xi, during his meeting with Patrushev on Monday (December 2), said that “China and Russia stand closer together”  and “give each other firm and strong strategic support amid the complex and volatile international situation.”

Xi stressed that “western countries have increased their interference in the internal affairs of China and Russia since the start of the year, posing threats to the two countries’ sovereignty and security and hindering the economic and social development of the two countries. ”

Also on Monday, Xi and Putin launched the Power of Siberia natural gas pipeline. This is another sign of the increasing multifaceted cooperation between the two countries.

Despite the converging strategic interests, their interests are not aligned in many respects. For example, both countries are competing for influence in Central Asia.

Nevertheless, the increased coordination between the two authoritarian states has numerous potential implication for geopolitics, regional security and technology. We see this cooperation as based on strategic calculation rather than deeper, more permanent affinity.

3. Xinjiang’s continuing human catastrophe

Last week, the International Consortium of Investigative Journalists released the leaked classified Chinese Government documents, which provided extensive details on the internment and “re-education” of Uyghurs. This came in after the leak of 400 pages of internal Chinese documents detailing the ongoing crackdown.

This week, science researchers raised concerns about studies that used DNA from Uyghurs to predict facial shape, which may contribute to the mass surveillance of Uyghurs.

US House of Representatives passed the Uyghur Act, which among other things, called for sanctions against Chinese Government officials responsible for human rights abuses in Xinjiang. The US Senate is expected to pass the bill shortly.

Under the bill, President Trump may be required to impose Global Magnitsky Act sanctions against Xinjiang Communist Party Secretary Chen Quanguo 陈全国. This would be the first time ever that such sanctions are imposed on a Politburo member.

The Chinese Government responded that the US is distorting the truth and interfering in China’s internal affairs.

Xinjiang and HK are adding to bilateral difficulties. The CCP is unlikely to change course on its repressive policies in Xinjiang even if international pressure continues to mount.

4. Hong Kong: the momentum of the protest is in question

The Hong Kong Human Rights and Democracy Act was enacted last week. The law imposes sanctions against Chinese Government officials responsible for human rights abuses in Hong Kong. It also mandates an annual review on Hong Kong’s special status with the US.

Pro-democracy activists in Hong Kong have publicly supported this US legislation. Similar to the Uyghur Act, the Chinese Government’s reaction is to call for the US to stop interfering in China’s domestic affairs. This is another setback for Beijing following Hong Kong district council election two weeks ago.

Despite this, we are pessimistic about the prospect of democracy in Hong Kong in the long run. While Beijing lacks a short term solution to the continuing protests beyond using force through the HK Police, it is putting in place a multifaceted long-term strategy.

Mass protest through violent means will be hard to maintain in the long run because more and more protesters are being arrested. This number has now reached 6,000 people. The protest this afternoon will give us more indications on the momentum of the protest movement, but the situation remains unpredictable and fluid.

5. Wang Liqiang saga: small fish, big splash

For the (very) few of you that have not been following this dramatic saga. Here is a short summary:

  • Australian media broke the story of the defection of an alleged PRC intelligence operative, Mr Wang Liqiang 王立强, on Saturday, 23 November.
  • Wang asserts that he was involved in the Causeway kidnappings in late-2015, the infiltration of HK student organisations, and information operations in both HK and Taiwan to advance the CCP’s interests.
  • Both media and intelligence agencies are still looking at Wang’s case with increasing questions about the veracity of Wang’s claims.

When the story first broke, we argued based on publicly available information that, on balance, Wang’s story was unconvincing, and “we are sceptical of Mr Wang’s claims and credibility.” Almost two weeks on, we now know more. We think that Wang most likely played a minor role in activities that could be considered to be interference or information operations. He appears to have embellished his story, and 60 Minutes Australia made it even more dramatic.

Nick Eftimiades, former Defense Intelligence Agency analyst and author of Chinese Intelligence Operations, after examining Wang’s 17-page statement submitted to the Australian authorities, concluded:

It seems unlikely [Wang] made up a story including dozens of names and organizations with dates, individual names, their corporate positions, and locations of events.

If some of the information provided by Wang is verified — which appears to be the case — then he is nothing more than a low level company employee who acted as a co-optee of China’s intelligence establishment.  

It is common practice for defectors to inflate their access or knowledge to make themselves appear more valuable to a country.  If Wang asserted himself as a higher level operative it is probably because of his lack of knowledge of intelligence operations…Such inflated beliefs of importance are common among recruited agents and co-optees who, due to nothing other than circumstances and position, find themselves engaged in the great game between nations.

This week one of us moved house while the other loitered in HK. Adam is in DC from next Monday (December 9) until Friday (December 13) for those of you wanting to catch him.