driving the day
1. I don’t know but I been told, the Party line we must uphold
On Friday, Xi Jinping met with top military figures during a conference on ideological and political education work in the military.
Some context: As far as we know, this is the first time this conference has taken place.
Surprise! Xi wants political education to become the norm in the Chinese military.
The top brass hopped to work in making Xi’s vision a reality (Xinhua 1):
- “[Central Military Commission] Vice Chairman Zhang Youxia called for efforts to implement Xi’s instructions, focus on the Party’s ideological and political buildup in the military, and maintain its political orientation while building an education system for the new era so as to significantly improve related work.”
What it means: Expect to see new education campaigns kick off in the military to inculcate the values of loyalty to Xi and to the Party.
More context: The meeting follows a review of the rules surrounding “political work” in the armed forces at a State Council meeting last week (see December 1 Tip Sheet).
Get smart: There has been a distinct increase in the amount of attention Xi has paid to the military since the Fifth Plenum in October.
Get smarter: The military has been a major bastion of support for Xi since the beginning of his tenure.
- The big man wants to further solidify the loyalty of this key institution.
economics and finance
2. Data dump – trade
China’s customs bureau dropped monthly trade data for November on Monday morning.
The headline: The total value of exports hit a record high last month, and export growth surged to the highest point in almost three years.
- Exports grew 21.1% y/y – beating expectations of 12% and up from growth of 11.4% in October.
- That’s the highest growth rate since November 2018.
- Imports grew 4.5% y/y – missing expectations of 6.1% and down from growth of 4.7% in October.
- Despite the expectations miss, this was the third consecutive month of positive growth for imports.
Quick take 1 (CNBC):
- “China’s exports were supported by strong overseas demand for personal protective equipment (PPE) and electronics products for working from home, as well as seasonal Christmas demand.”
Quick take 2:
- While not as eye-popping as the export number, the headline import number was still solid – showing domestic demand is on solid footing.
Get smart: A fast-appreciating exchange rate doesn’t seem to be hurting Chinese exporters.
Get smarter: Pandemic-related worries about China’s export sector were always misguided.
What to watch: That said, it’s hard to see this pace of export growth continuing in 2021.
3. Setting sights on signing the CAI
On Friday, Vice Premier Liu He held a video call with Valdis Dombrovskis, the Executive Vice President of the European Commission for An Economy that Works for People.
Quick tip: To save time, Brussels insiders abbreviate Dombrovskis’ title to EVPotECfAEtWfP.
On the agenda: Trying to get the China-EU Comprehensive Agreement on Investment (CAI) over the line before the end of 2020.
Some context: Back in September, Xi Jinping and German Chancellor Angela Merkel agreed to conclude the CAI before the end of 2020 (see September 15 Tip Sheet).
Press reports on the call didn’t offer much to go on (China Daily):
- “Liu…conducted constructive communication with Dombrovskis…over ways to push forward the negotiations of the China-EU investment agreement.”
Our take: Sounds to us like nothing much got decided on the call.
Get smart: Concluding CAI by the end of 2020 seemed unlikely when Xi and Merkel agreed to it in September.
- Now it seems well-nigh impossible.
Get smarter: With US president-elect Joe Biden moving into the White House in January and with Merkel – a vocal CAI supporter – set to step down next year, European interest in getting the deal done may drop off sharply.
- Beijing needs to act fast if it genuinely wants to complete the CAI, whether in 2020 or shortly thereafter.
4. Hong Kong gets a lecture in constitutional law
On Friday, Director of the Hong Kong Liaison Office Luo Huining gave a speech at an online symposium commemorating China’s Constitution Day.
Some context: This is the first Constitution Day since the sweeping Hong Kong national security law went into effect in July (see July 6 Tip Sheet).
Luo made it clear that Hong Kong is subject to China’s national constitution (The Paper):
- “Hong Kong’s constitutional foundation consists of both the [national] constitution and the Hong Kong Basic Law.”
- “Hong Kong society must fully recognize and respect the constitution.”
To Luo, obeying the constitution means two things in Hong Kong:
- “The constitution bears the important function of maintaining national security.”
- “The constitution stipulates that patriotism is Chinese citizens’ sacred responsibility.”
Luo said the national security law fulfilled a key part of that mission:
- “In recent months, the national security law has shown its initial authority, moving Hong Kong from chaos to governance.”
But more work is needed:
- “There are still many stipulations in the national security law that need to be turned into better rules and mechanisms to serve as a benchmark for the citizenry’s code of conduct.”
Get smart: Luo’s emphasis on the national constitution leaves no doubt as to where ultimate authority rests – and relegates the Hong Kong Basic Law to subordinate status.
5. Central Committee General Office gets a new number two
Late last week, state media reported that Meng Xiangfeng had been promoted to deputy head of the General Office of the Party’s Central Committee and is now in charge of overseeing its daily operations.
Meng’s job is an important one: The General Office is referred to as the Party’s “nerve center.” It organizes the day-to-day affairs of the top leadership.
So who is this Meng?
- He spent the first two decades of his career working for the Party’s discipline commission (CCDI).
- In 2007, he was sent out of Beijing for the first time when he served for a year on the Hangzhou Party Standing Committee.
- Meng then spent five years (2008-2013) in Liaoning, where he served as deputy head of the provincial discipline commission.
- Meng then did a four-year stint (2013-2017) in the General Office, where he served under Xi besty and current head of the legislature Li Zhanshu.
- For the past three years (2017-2020), Meng has had a leadership role in the agency that oversees Party affairs throughout all central Party and government institutions.
Get smart: Meng now has the inside track to take over as director of the General Office at the 2022 Party Congress.
- That would effectively make him Xi Jinping’s chief of staff and likely guarantee him a seat on the Politburo.
Get smarter: Meng will be one of the most powerful officials in China over the next decade.
Go deeper: Want to know who else will likely be on the Politburo in 2022? We’ve mapped out the career prospects for the 100 most likely candidates. If you would like to see our projections, send an email to email@example.com for details and pricing.
6. Backing the pack
Speaking on Saturday at the China Think Tank International Influence Forum, Vice Foreign Minister Le Yucheng offered a message about messaging.
His top-line takeaway:
- China’s increasingly bellicose rhetoric on the international stage is proper and necessary.
Le dismissed criticisms of Beijing’s aggressive “wolf warrior” diplomats (MoFA):
- “[Discussion of] ‘wolf warrior’ diplomacy is just another manifestation of the ‘China threat’ theory.”
- “Its purpose is to prevent us from fighting back…and [make us] give up the fight.”
Le also waved off suggestions that China’s deeply defensive posture is hurting its image:
- “It is said that China has made enemies on all sides of the world. This is not true.”
- “China’s ‘circle of friends’ is not getting smaller, but growing.”
He then urged the conference attendees to do a better job of telling China’s story to the outside world:
- “China…is constantly changing. The success of the road of socialism with Chinese characteristics provides us with rich materials for telling Chinese stories.”
Get smart: It’s hard to overstate how popular hardline rhetoric is with China’s domestic audience. Politicians call for restraint at their own peril.
Get smarter: Despite what Le says, there’s no question that the wolf warrior approach has done significant harm to China’s international image.