CCP Factional Tensions Rising as Trade War Escalates

I originally wrote a post about tensions within the CCP on July 15, but did not post it because the rumors were, and still are, unverified. However, I am posting it today because Reuters has confirmed that there's some smoke behind that smoke. The rumors of a "soft coup" (not about the Xi posters, but the "soft coup") were based off what now appears to be real tension within the CCP.

Reuters: Handling of U.S. trade dispute causes rift in Chinese leadership: sources
A growing trade war with the United States is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, according to four sources close to the government.

...A backlash is being felt at the highest levels of the government, possibly hitting a close aide to Xi, his ideology chief and strategist Wang Huning, according to two sources familiar with discussions in leadership circles.

...Wang, who was the architect of the “China Dream”, Xi’s vision for China to become a strong and prosperous nation, has been taken to task by the Chinese leader for crafting an excessively nationalistic image for the country, which has only provoked the United States, the sources said.

“He’s in trouble for mishandling the propaganda and hyping up China too much,” said one of the sources, who has ties to China’s leadership and propaganda system.

...“Many economists and intellectuals are upset about China’s trade war policies,” an academic at a Chinese policy think tank told Reuters, speaking on condition of anonymity due to the sensitivity of the issue. “The overarching view is that China’s current stance has been too hard-line and the leadership has clearly misjudged the situation.”
I've previously covered some of China's behind the scenes political maneuvering in posts such as Socionomics Watch—The battle for China

This post has a link to many of these political articles: Pettis Says China Has 2 Years to Adjust; Xi Must Consolidate Power

My hypothesis (narrative) for Chinese politics leans on economics. We can observe which political faction is ascendant or in power based on reform efforts. Zhu Rongji was pushing to open China in the late 1990s and he was removed. There were still plans to open the stock market in the early 2000s and these stopped in the mid-2000s. The book Red Capitalism by Frasier Howie and Carl Walter provides good coverage of shifting reform and the battle between the Ministry of Finance and People's Bank of China.

Where I went wrong was in thinking reforms would be restarted under Xi Jinping and Li Keqiang. Coming into power, Li was talking about reforms that were nixed a decade earlier. The People's Bank of China started winning turf wars (and did again last month on the topic of fiscal stimulus). The ouster of Bo Xilai and subsequent anti-corruption drive seemed as if it was clearing the decks for reform. However, reform stopped again when the economy slowed in 2014. I wondered if a slowdown wouldn't be used to uncover more corruption, but instead the government launched a belated stimulus. We're back to square one with the economy slowing. There's some small signs of a pick-up in reform, but it may be trade war related (such as opening the financial sector). Li Keqiang is still banging the drum about SME financing, a problem that has only grown worse over the past 6 years.

In the rumors below, the ascendant politicians are reformers such as Wang Yang. It's possible someone supportive of the reform camp cooked up that story. The reformers are less anti-Western and want a more open domestic economy, thus they would be opponents of Xi Jinping (at least on policy) if he's given up on reform. The other camp that may be opposing Xi are the conservatives (Jiang Zemin) who are still operating under Deng's maxim of "to get rich is glorious." They may align with the reform camp on some issues, but they mainly don't want to kill the golden goose with a confrontational trade war and don't want to challenge U.S. power this early. Triggering the Logic of Strategy was a strategic blunder because America was sleepwalking its way into relative decline and retreat.

We see through a glass darkly and when it comes to Chinese politics, the glass is layered with 20 years of dust and smog. As I note below, the rumors aren't to be directly believed, but at best are second or third-order derivative of what is actually going on, plus a sign of overall mood. The trade war and implementation of the "Logic of Strategy" has alarmed China because for the first time since Deng opened the country 40 years ago, the United States has begun implementing a serious policy aimed at containing China and, if necessary, knocking it down a peg to ensure American dominance in the Pacific. China's plan was to grow its economy and once it became a global powerhouse, to then begin confronting the U.S. on geopolitical and military issues. That strategy was working well until the expansion into the South China Sea. Now it is the U.S. that has chosen to accelerate the start of confrontation with rising China. The CCP's timetable has shifted and policy must shift as a result. As Steve Bannon put it, for the first time in decades, China doesn't know what to do. Or rather, if we take the rumors at face value, the CCP is debating internally what to do now that the game have changed.

Original post written on July 15, 2018:

Xi Jinping images are being taken down in China.
There may be many reasons why this could be happening, but there are also rumors of a power shift. Rumor has it a Xi ally was removed from the Politburo and replaced with a possible Xi successor at the next leadership changeover, as there's also a claim that term limits are back in the constitution. This is one of three soft coup rumors circulating.

I can make zero assessment of the veracity of this story at this time. The only thing I am sure of is Xi images are coming down, as verified by the tweet above and the last story posted below. I'm posting this rumor, as I have in the past with other rumors, in the context of social mood theory and the current political environment. Additionally, China's secretive politics makes it more prone to rumors since we don't have reliable independent sources on the daily inner workings of the party. As for social mood, even the most extreme false version, this is foreign propaganda aimed at China, it tells us something that it is coming out now. The source of the claims below are a Twitter post.
This could be an astroturf concoction (similar to Russia collusions) where a fake story is passed off as a source for a news article, creating the image of real news. The only credible source in the story is an Apple Daily article discussing the upcoming Beidaihe meetings and the images coming down.

Apple Daily: 【習權風暴】北戴河會議下月召開 解決中央主要領導問題

This story will quickly be verified or proven false by its claims.

The first rumor:

Wang Huning is the first victim of Sino-U.S. trade tensions, removed from the Politburo.

Moving into Wang's position is Hu Chunhua, whose wings were clipped by Xi last October.

Term limits for the President will be put back into the constitution.

The second rumor and third rumors both have Xi removed from power:
The second version: Wang Huning was forced to step down, Wang Yang replaced Xi Jinping, but the program has not yet passed

The third version: Liu He is out of the game, Wang Yang is in charge of the economy, Hu Chunhua becomes the successor of the general secretary, retaining the position of Xi Jinping
Coup rumors aren't unkown in China. There was one in October 2017.

SCMP: Coup plotters foiled: Xi Jinping fended off threat to ‘save Communist Party’
Among those named was the former party boss of megacity Chongqing, Sun Zhengcai, once a front runner for a place in the inner circle – the Politburo Standing Committee.

“[Xi] addressed the cases of Bo Xilai, Zhou Yongkang, Ling Jihua, Xu Caihou, Guo Boxiong and Sun Zhengcai. They had high positions and great power in the party, but they were hugely corrupt and plotted to usurp the party’s leadership and seize state power,” Liu said, becoming the first senior official to accuse Sun of trying to take over the party.

Xinhua said late last month that Sun had been expelled from the party and handed over to judicial authorities for further investigation. The announcement came two months after his downfall but no details of the investigation were released.
What's interesting about this story is Hu Chunhua was tied to Sun Zhengcai. He publicly condemned Sun and called for loyalty to Xi.

Background information on Wang and Hu:

The Diplomat: Wang Huning: China’s Antidote to Strongman Politics
Infogalactic: Wang Huning
NYTimes: Behind the Scenes, Communist Strategist Presses China’s Rise
As Mr. Trump pits his advisers against one another and sows doubt about America’s future in Asia, Mr. Wang has emerged as one of Mr. Xi’s most influential confidants, one who has brought a steadiness of vision and purpose to China’s rivalry with the United States.
A college professor turned party theoretician, Mr. Wang, 63, has long argued that China needs a strong, authoritarian state to restore it to national greatness after a century of humiliation by foreign powers. He has helped cast Mr. Xi as leading China into a “new era” of global ascendance by keeping society under the party’s tight control.

His efforts were recognized last month when he was elevated into the all-powerful seven-man Politburo Standing Committee despite never having governed a province or run a state ministry. He is now the party’s top ideologue and the chief interpreter of Mr. Xi’s new style of authoritarian rule.

...Just as Mao made China independent and Deng Xiaoping made it prosperous, Mr. Xi has vowed to make China strong again. With Mr. Wang’s help, he has centralized power, tightened control of society and emphasized the need to keep a firm grip on the party itself using a sweeping anticorruption campaign.
SCMP: Can China’s ideology tsar, Wang Huning, be the steadying hand in Sino-US relations?
So how does surging, ambitious China and surging, ambitious Xi keep the chorus of communist comity singing the same happy tune? One key is Wang Huning, the top-gun librettist on the new Standing Committee. Now something like the chief party theoretician, as well as the go-to speech-writer, Wang has the talent to weave together different policy textures into one fine fabric of collective thought.
WaPo: Meet the mastermind behind Xi Jinping’s power
Wang’s writing over the years is so strikingly parallel to the policies Xi has adopted that he is regarded by many as the brain behind the throne, the mandarin behind the emperor. What Wang has written offers huge clues to understanding where China is headed.

... He maintains that political reform should not be pursued at the expense of stability and that strong, unified central leadership is crucial to further reforms, which should be led by inner-party democratization rather than initiated from the outside.

...There is no doubt that Xi Jinping is his own man, who has accumulated more power to pursue his goals than any leader since Mao Zedong. But, Wang’s writings that hew so closely to Xi’s policies offer the best insight we are likely to gain into how those within the hierarchy of China’s opaque leadership think.

Infogalactic: Hu Chunhua
SCMP: Why China’s Xi Jinping is unlikely to anoint a successor
The man once tipped to become President Xi Jinping’s successor, Guangdong party boss Hu Chunhua, is likely to become a vice-premier in March but his prospects of inclusion in the Communist Party’s top echelon of power, the Politburo Standing Committee, are fading, sources have told the South China Morning Post.
The Straits Times: Xi protege Li Xi named Guangdong party boss, replaces Hu Chunhua
Mr Hu, while having professed loyalty to Mr Xi, is linked to the Communist Youth League faction of former president Hu Jintao and his accession to the PSC had become doubtful after Mr Sun’s fall.

“His career has peaked,” said Hong Kong-based analyst Willy Lam of Mr Hu Chunhua.

He could be made one of the vice-premiers next March or be given a party job that is respectable but does not carry much power, Dr Lam added.

The speed with which Mr Hu was removed from the Guangdong post showed “Xi’s aggressiveness”, Dr Lam said. “He doesn’t waste time.”
The rumor:

Vision Times: 十九大不算数传北京政变王沪宁出局习近平最后机会?
[Look at China, July 15th, 2018] (Look at the Chinese reporter Chen Jinyuan's comprehensive report) The Sino-US trade war is escalating and overweight, and just before the Beidaihe meeting will be held, from major social media sites such as Twitter, WeChat and Various channels of SMS have been reported to escalate in Zhongnanhai, and a coup may occur . The news is divided into several different versions. The commonality is that the dynasty of the Red dynasty was not in the middle of the dynasty. Wang Huning, the head of the Three Kingdoms National Division, was forced to step down and was responsible for the loss of Sino-US trade war. Hu Chunhua was in the upper position. The news shows that the suspected status of Xi Jinping is related to the recent emergence of a series of visions in Zhongnanhai. The inside story attracts attention.

Hong Kong's "Apple Daily" quoted Beijing's political circle yesterday (July 14): The Beidaihe meeting will be held at the beginning of next month. In addition to the former Chinese Premier Li Peng, the former Standing Committee of the Communist Party of China requested that the Politburo enlarged meeting be held recently. In addition to affirming the work of the central government since the 19th National Congress of the Communist Party of China, it is also pointed out that at the same time, it is also guilty of "bigger mistakes". The meeting will resolve the main leadership issues of the CPC Central Committee.

The news did not say what the "bigger mistakes" specifically meant, nor did it mention the "main central leadership issues" that should be resolved.

However, the report of the "Apple Daily" said that the above-mentioned news, if confirmed, will be the latest signal showing that the CCP’s high-level division is intensifying, and it will be the biggest challenge for the CCP’s new and senior executives to Xi Jinping after the 19th National Congress of the Communist Party of China.

The mainland rumors that Jiang Zemin, Zhu Rongji, Wen Jiabao and other veterans, jointly signed a political bureau, pointed out that after the 19th National Congress of the Communist Party of China, there was a left-leaning and personal worship, and asked for an enlarged meeting of the Politburo.

On July 12th, Twitter account Ali Niu Niu published a tweet, claiming several resolutions of the CCP's top management, the full text is:

Beidaihe News: 1, Wang Huning was forced to step down and was responsible for the loss of Sino-US trade war; 2, Hu Chunhua entered the general, became the successor of the general secretary; 3, the second revision of the constitution, rejoined the presidency of the state.

...The source has not yet been confirmed by the Beijing authorities. However, the push friends and the majority of netizens have been talking about it, and the response has been enthusiastic. Most people are skeptical because the source is unknown.

Zheng Zhongyuan, an overseas commentator, said that the news moved out of Jiang Zemin. Jiang’s last 19 strong support, the meeting almost collapsed, saying that Jiang and Wen Jiabao could not be jointly signed. Jiang Zemin and Wen Jiabao are political opponents. He believes that in the case of Xi Jinping's mastery of military and political power, the possibility of a coup is very small.

However, Zheng Zhongyuan believes that in order to concentrate power, the 19th National Congress of the Communist Party of China Xi Jinping had rumors that Xi Jinping and Jiang Zemin had reached a compromise. However, when the Beidaihe meeting was near recently, these news suddenly broke out. In addition, the official media published the old text of Hua Guofeng’s confession, and the CCTV news broadcast appeared in black, and the authorities demanded the removal of the portraits. It shows that Zhongnanhai’s power struggle has not stopped, and a new round of killing has come.

Zheng Zhongyuan pointed out that the news of these suspected spoilers is likely to be the remnant of the Jiang faction, the Sino-US trade war, the near-peace pressure on the mountain, and the opportunity to set fire at the rear. In response to the two nursery rhymes predicted by Mr. Xin Ziling two years ago: "There is no shortage of water, the core is not guaranteed"; "The father is not dead, the land has not been." If Xi Jinping does not act decisively, the CCP that has captured Jiang Zemin and Zeng Qinghong and has merged with the corrupt forces has become a huge danger. In the end, it may not be a success. This may also be the last chance for Xi Jinping to decide whether to be responsible to the people or only to protect the red mountains.

In an exclusive interview published on November 6, 2016, Xin Ziling said that the Sixth Plenary Session established Xi Jinping's core position in the party. The process is actually full of thrilling struggles between the two headquarters. Although Xi Jinping has achieved an overwhelming advantage. The game is still going on and the struggle is not over.

He said that it is particularly noteworthy that the Jiang faction has changed its face to support the "center of learning", but the bottom line of their retreat and the end of their slogan is to keep Jiang Zemin and Zeng Qinghong politically. "If Jiang Zemin and Zeng Qinghong don't fall, they have the hope of a turnaround. If they have the conditions, they will take action. This is the complexity of the new situation."

Xin Ziling mentioned that there are two virginity rumors circulating in the mainland. The first one is that "the water industry does not fall, the core does not protect." Hydraulics means that the river does not fall, "the core of learning" is in danger; another one is "the father is not dead, the land has not been."

"Ginger father is not dead, Lu is not already" is an idiom. In the Spring and Autumn Period, Lu Guoguojun’s younger brother, Qing’s father, launched two coups within two years and killed the two succeeding monarchs of Lu’s country. The situation is in serious confusion. The idiom metaphor does not clear the culprit in the creation of civil strife, and the state cannot be peaceful.

The virginity circulating in the mainland changed "Lu" to "Land": "Gyeongfu is not dead, and the land is not yet." "Gyeongfu" refers to Zeng Qinghong, the second character of Jiangpai, who is known as the "King of the Prince."

Xin Ziling believes that this kind of virginity is particularly worthy of attention. "Jiang Zeng's problem is not solved, and their power cannot be fundamentally down." "The decisive victory is that Jiang Zeng has fallen. This group of people has completely dispersed. There is no hope. It is an absolute victory."
This next story may or may not corroborate that something high level is going on in China.

Taiwan News: Chinese government hides pictures of Xi, fearing defacement
After a string of images of Xi splashed with ink, China's government issues instructions to hide representations of President Xi, reported Radio Free Asia.

The Communist Party of China (CPC) fears more defacing of political advertisements, as the public demonstrates their discontent.

Shanghai resident Dong Yaoqiong (董瑶琼) posted a live video of herself splashing an image of Xi with black ink on July 4, in protest of Xi's "authoritarian tyranny" and the CPC's "mind control persecution." Dong was soon arrested and her social media presence taken down, but the incident led to similar ink protests throughout China.

...On July 6, the Dongguan Municipal Government in southern China issued a notice calling for all outdoor political advertisements to not use images of the CPC or party leaders.

On July 12, the Beijing Baoying Property Management Limited (北京寶盈物業管理有限公司) issued a "special notice" saying that police had given the company instructions to remove all political advertisements and images of Xi within 48 hours.

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