Xi's Article on Self-Revolution - 2022 Tax Breaks @4.2 trillion RMB - Zhong Sheng on Need for China & US to Work Together - IMF Raises China's GDP Forecast to 5.2%
Here are the stories and pieces that I found noteworthy from the Wednesday, February 1, 2023, edition of the People’s Daily.
Page 1: At the top of the page is a report (English report) on Xi Jinping’s letter to students of the Hungarian-Chinese bilingual school.
The main report on the page, however, is around Xi’s article on comprehensive and strict Party governance being published in Qiushi. The article talks about “self-revolution” being the second answer for the Party to break out of the historical cycle of dynastic rise and fall. The first answer, if you recall, was “democracy” and letting the people have oversight over the government. None of this narrative is new. For instance, here’s my coverage of the paper from July 2022, which talked about the answer to the “cave-dwelling question.”
But here’s what the PD report says:
The article says that since the 18th Party Congress, the CPC Central Committee has put comprehensive and strict Party governance within the context of the ‘four comprehensive’ strategic layout, promoted the building of a clean and honest work style and the anti-corruption struggle with unprecedented courage and determination, checked some unhealthy tendencies that had not been addressed for many years, solved many persistent diseases that had not been resolved for a long time, serious hidden dangers existing across the Party, the state, and the army have been eliminated, and the situation of loose and lax governance of the Party has been fundamentally reversed. The comprehensive and strict governance of the Party has made historic and groundbreaking achievements, and has had an all-round and deep-seated impact, which must be sustained and continuously advanced for a long time.” 文章强调，党的十八大以来，党中央把全面从严治党纳入“四个全面”战略布局，以前所未有的勇气和定力推进党风廉政建设和反腐败斗争，刹住了一些多年未刹住的歪风邪气，解决了许多长期没有解决的顽瘴痼疾，清除了党、国家、军队内部存在的严重隐患，管党治党宽松软状况得到根本扭转。全面从严治党取得了历史性、开创性成就，产生了全方位、深层次影响，必须长期坚持、不断前进.
Then we get to self-revolution.
The article says that self-revolution is to “supplement calcium and strengthen bones, detoxify and sterilise, strong men break wrists, remove putrefaction and regenerate muscles, constantly remove viruses that erode the healthy body of the Party, constantly improve self-immunity, and prevent death. Being brave in self-revolution and accepting people's supervision are inherently consistent, and both stem from the Party’s original mission. Over the past 100 years, the Party has maintained its enduring prosperity and continued growth by promoting people's democracy and accepting oversight from the people, by comprehensively and strictly governing the Party, promoting self-revolution, being brave in upholding the truth and correcting mistakes, and being brave in turning the blade inward and scraping bones to cure poison.” 自我革命就是补钙壮骨、排毒杀菌、壮士断腕、去腐生肌，不断清除侵蚀党的健康肌体的病毒，不断提高自身免疫力，防止人亡政息。勇于自我革命和接受人民监督是内在一致的，都源于党的初心使命。一百年来，党外靠发展人民民主、接受人民监督，内靠全面从严治党、推进自我革命，勇于坚持真理、修正错误，勇于刀刃向内、刮骨疗毒，保证了党长盛不衰、不断发展壮大.
After this, we get the six key aspects of self-revolution:
adhere to the leadership of the party's political construction and adhere to the fundamental political direction of self-revolution
insist on taking ideological construction as the basic construction of the party
resolutely implement the spirit of the eight-point central regulations, rectify work style with strict discipline
insist on fighting corruption and punishing evil with thunderous momentum, and fight the tough and protracted battle of self-revolution
persist in strengthening the political function and organisational cohesion of party organisations, and forge a contingent of cadres who dare to be good at struggle and self-revolution
build a system of self-purification, self-perfection, self-innovation and self-improvement to provide institutional guarantee for promoting the great self-revolution
Third, there’s a report informing that China's tax refunds, as well as tax and fee cuts and deferrals, exceeded 4.2 trillion yuan (about 621.27 billion U.S. dollars) in 2022. This comprised:
approximately 2.46 trillion yuan worth of value-added tax credits that have been refunded to taxpayers’ accounts
over 1 trillion yuan of tax and fee cuts
750 billion yuan of deferred tax and fee payments.
The report also says that around 1.5 trillion yuan of tax and fee payments were rebated, deducted or deferred for enterprises in the manufacturing sector last year. Catering, retail, cultural tourism, transportation and other service industries saw tax cuts, fee reductions, tax rebates and tax deferrals and fee deferrals of more than 870 billion yuan. Small and micro enterprises, as well as individual businesses, saw more than 1.7 trillion yuan in tax rebates, tax and fee reductions and deferrals last year.
The report adds that the tax burden of enterprises overall fell by 2.7% in 2022, with the burden in the transportation sector and the accommodation and catering industry dropping by 15.4% and 14.2%. As per VAT invoice data, the sales revenue of manufacturing enterprises increased by 4.1% year-on-year. The sales revenue of high-tech industries in China increased by 9.9% year-on-year. The sales revenue of high-tech industrial enterprises that enjoyed the tax relief increased by 11.5% year-on-year, which was 2.1 percentage points higher than that of high-tech industrial enterprises that did not enjoy the tax breaks. A total of 13.15 million market entities were established in 2022 and began engaging in tax-related activities. The total number of such enterprises today is 84.07 million. In 2022, tax authorities collected 31.7 trillion yuan in taxes and fees.
Next, there’s a report on Li Keqiang’s visit to the People’s Bank of China and the State Administration of Foreign Exchange.
First, at SAFE, Li said: “opening up to the outside world is a basic national policy. China's economy is deeply integrated into the world. Foreign exchange reserves reflect international confidence in economic and trade cooperation with China. The stability of the exchange rate is related to the stability of the overall economic and financial situation. Being faced with multiple external shocks in recent years, China has kept foreign exchange reserves above 3 trillion U.S. dollars, and the exchange rate of yuan has remained basically stable, providing strong support for foreign trade, the financial sector and the economy.”在中央外汇业务中心，李克强与工作人员交流，对外汇储备实现好的经营收益表示肯定。他说，对外开放是基本国策，中国经济深度融入世界，外汇储备体现国际上与我国开展经贸合作的信心，汇率稳事关经济金融大局稳。这些年面对多轮外部冲击，我国外汇储备保持在3万亿美元以上，人民币汇率基本稳定、在国际主要币种中相对稳健，为稳定外贸、金融、经济等提供了有力支撑。
Li then patted himself on the back during what seems to be a period to bid farewell to his role of managing the economy. “He said that finance is the core of a modern economy, and financial reform and development have strongly supported economic development in recent years. Over the past 10 years, the economy has grown at an average annual rate of 6.2%, expanding from 53 trillion yuan to 121 trillion yuan, and the total assets of financial institutions have increased to more than 400 trillion yuan. At present, the stock market and bond market rank second in the world. Only when the economy is sound can the financial sector be sound, and only when the financial sector is stable can the economy be sound.” 从过去十年周期看，经济年均增长6.2%、从53万亿元大幅增加到121万亿元，金融机构总资产大幅增加到400多万亿元，目前股市债市规模位居全球第二。经济好金融才会好，金融稳定经济才能稳健.
At the PBOC, he said that in recent years, the Party Central Committee with Xi as the core has “made concerted efforts to maintain sustained economic growth.” “We innovated and strengthened macro-control, adhered to a prudent monetary policy, used aggregate and structural tools according to the situation, maintained a reasonable and sufficient liquidity, and increased support for key areas and weak links, which has played an important role in maintaining macroeconomic stability and serving the development of the real economy. At present, there are more than 160 million enterprises and individual industrial and commercial households, which is three times that of 10 years ago…”
Anyway, Xinhua English summarises this entire chunk well:
“Improvement and innovations in macro regulation, as well as sticking to the prudent monetary policy, have played a crucial role in ensuring economic stability and serving the real economy, Li said at the symposium, citing loan rate reductions for enterprises and the mild increases in consumer prices. China has also prevented risks from unusual fluctuations in the financial markets, addressed risks in small and medium financial institutions and property developers, among others, and ensured that no systemic risks arise, he said, cautioning that ensuring financial stability and preventing risks is still an arduous, long-term task.”
Finally, Li called for “enhancing financial support to strengthen consumption, investment and economic structure, improving the financial environment for the private sector, especially the small firms, fending off financial risks, and keeping the yuan's exchange rate at a reasonable and balanced level.”
Page 2: There’s a brief report on a national teleconference on SOE reform. Liu He and Wang Yong were part of this meeting. The report says that as per the meeting, the three-year tasks for SOE reforms have been completed. Xinhua reports:
“In the past three years, work has been done to integrate the leadership of the Communist Party of China with corporate governance in SOEs, highlight their role as market entities, and advance system reform…The SOEs have become leaner and healthier, their system to encourage technological innovation has been improved, and supervision over state assets has become more professional, systematic and law-based … The conference pledged to plan and push for further reform in the SOEs to improve their core competitiveness and core functions.”
Next, there’s a report on China’s forex situation. This is basically a two weeks old report with data from SAFE. It says that China’s foreign exchange settlement and sales by banks was $2.57 trillion (17.38 trillion yuan) and $2.46 trillion last year, respectively. It adds that In December, overseas holdings in onshore bonds increased by a net $7.3 billion while those in onshore stocks rose by $8.4 billion.
Page 3: First, the lead article on the page is a feature report on Chinese peacekeepers in Lebanon. It informs that the first time that China dispatched peacekeepers to Lebanon was in 2006. The article talks about mine-clearing work done by Chinese soldiers, and praises their contributions in this regard. It says:
“Since 2006, China has dispatched more than 7,000 peacekeeping officers and soldiers to Lebanon, who have cleared more than 15,000 landmines and various types of unexploded ordnance, and provided medical assistance to the local area for more than 87,000 person times, effectively promoting the realisation of United Nations Interim Force in Lebanon’ (UNIFIL) peacekeeping goals.” 2006年以来，中国已累计向黎巴嫩派出维和官兵7000余人次，排除地雷及各类未爆物1.5万余枚，为当地提供医疗援助8.7万余人次，有力促进联黎部队维和目标的实现.
Next, there’s a Zhong Sheng commentary on China-US ties. This is essentially a prelude to US Secretary of State Antony Blinken’s upcoming visit to China. It’s been an interesting few weeks in the US-China relationship. While there has been more official-level dialogue, there has also been friction. For instance, there’s a new US House of Representatives select committee focussed on China. Mike Gallagher is chairing this committee, and the focus is on Tiktok, Taiwan, economic dependence, influence and so on.
Here’s an excerpt from Politico’s China Watcher newsletter’s chat with Gallagher.
“What will be the Select Committee’s top priorities?
We're going to be looking big picture. What are the immediate things we need to do in order to prevent World War III from breaking out over Taiwan? And then what are the long-term investments we need to make to win this new Cold War with Communist China.
How is this a new Cold War?
I believe China and Russia have been waging a new Cold War against us for the better part of a decade. And now we're waking up to the fact that that's happening. I recognize that this is not perfectly analogous to the old Cold War, but I find that comparison useful … [because] it’s a whole of society effort. The health of our educational system is tied to our success, as is the number of harpoon missiles that we have on Taiwan. It’s a long-term competition, not just a short-term sprint. Ultimately, it's an ideological competition between two competing systems of government and the values inherent in them. And it reminds us that our goal should be that it remains cold and not turn hot because that would be devastating.”
Anyway, back to Zhong Sheng; the article strikes a hopeful note, talking about the increased contacts between the two sides since the Biden-Xi meeting in Bali in November. It says that “the international community generally hoping that China and the United States will work together to find a correct way for the two major powers to get along, promote stability amid what is a turbulent and intertwined world, and play the role of major powers in promoting global economic recovery after the pandemic, coping with climate change, and resolving regional hot-spot issues.” 国际社会普遍希望中美双方共同努力，找到两个大国正确相处之道，为变乱交织的世界增添稳定性，为促进全球经济疫后复苏、应对气候变化、解决地区热点问题等发挥大国作用.
Then the blame for tensions is placed on the US.
“In recent years, the US has been unable to let go of the obsession of regarding China as a so-called ‘strategic competitor’. This has led to the bilateral relationship becoming deadlocked and brought instability to global peace and development. The article then quotes Stephen Roach from Yale as having said that if the US and China remain at odds, their ability to resolve major global issues will be severely limited. What the US should understand is that there is competition in the world at any time, but competition should be about learning from each other, catching up with each other and making common progress, rather than being about “I win you lose” and “you die, I live” approaches; being blindly anti-China is not feasible. 近年来，美国对华政策始终放不下将中国视为所谓“战略竞争对手”的执念，导致中美关系始终走不出困局，也给世界和平发展带来了不稳定因素。美国耶鲁大学高级研究员罗奇不久前发出警示，如果美中仍然争端不断，那么双方解决重大全球问题的能力将严重受限。美方应该明白的是，任何时候世界都有竞争，但竞争应该是相互借鉴、你追我赶，共同进步，而不是你输我赢、你死我活，搞盲目反华是行不通的.
It then adds that “During the meeting in Bali, the two heads of state agreed on the importance of establishing the guiding principles for Sino-US relations, and conducted constructive discussions on this. The Chinese side emphasises that China and the United States should adhere to mutual respect, peaceful coexistence, and win-win cooperation, thereby ensuring that the right direction for the development of Sino-US relations and ensuring that Sino-US relations move forward on the right course, without drifting off, stalling, or collision.” 巴厘岛会晤期间，两国元首一致认同确立中美关系指导原则的重要性，就此进行了建设性探讨。中方强调中美应坚持相互尊重、和平共处、合作共赢，就是要给中美关系发展指明方向，确保中美关系沿着正确航向前行，不偏航、不失速，更不能相撞.
The next bit is even more conciliatory, given all the pieces in Chinese media over the years about the inevitable decline of the US. But there’s a sting in the tail, as you will read in the last line.
“China respects the social system of the United States and never bets against it. It hopes that the United States will continue to be open and confident and maintain its development and progress. Similarly, the United States should also respect China's development path. The Communist Party of China’s leadership and China's socialist system have won the support of more than 1.4 billion people, which is the fundamental guarantee for China's development and stability. It is very important for China and the United States to recognize and respect this difference, instead of insisting on uniformity and trying to change or even subvert each other’s systems. The United States must accurately grasp this point, avoid letting ideological prejudice engulf its China policy, and earnestly embody its commitments such as ‘respecting China's system and not seeking to change China's system’ in concrete actions, instead of saying one thing and doing another.” 中国尊重美国的社会制度，从不赌美国输，希望美国继续开放自信，保持发展进步。同样，美国也应当尊重中国的发展道路。中国共产党领导和中国社会主义制度得到14亿多人民拥护和支持，是中国发展和稳定的根本保障。中美相处很重要一条就是承认这种不同，尊重这种不同，而不是强求一律，试图去改变甚至颠覆对方的制度。美方必须准确把握这一点，避免任由意识形态偏见裹挟对华政策，切实将“尊重中国的体制，不寻求改变中国体制”等承诺体现在具体行动上，而不是说一套做一套。
Quick thought: “On this issue of China not wanting to change or subvert the American system of governance, I think Beijing is correct. It isn’t acting in missionary mode. However, the problem for them is that in American domestic politics, there increasingly seems to be a narrative linkage between authoritarianism abroad and authoritarian tendencies at home. This makes the success of a near-peer authoritarian system abroad an existential challenge for the American system. So even if China demonstrates that it isn’t actively trying to influence systemic change in the US, is it really going to impact American viewpoints? For instance, here’s an excerpt from Joe Biden’s speech on the anniversary of the January 6 attack on the Capitol.
“Both at home and abroad, we’re engaged anew in a struggle between democracy and autocracy, between the aspirations of the many and the greed of the few, between the people’s right of self-determination and self- — the self-seeking autocrat. From China to Russia and beyond, they’re betting that democracy’s days are numbered. They’ve actually told me democracy is too slow, too bogged down by division to succeed in today’s rapidly changing, complicated world. And they’re betting — they’re betting America will become more like them and less like us. They’re betting that America is a place for the autocrat, the dictator, the strongman. I do not believe that. That is not who we are. That is not who we have ever been. And that is not who we should ever, ever be.”
Anyway, back to Zhong Sheng. The next bit of the article urges the US to do away with Cold War mentality and regarding China as a “imaginary enemy.” This, it says, is a “major obstacle to peaceful coexistence between China and the United States.”
Any conflict or confrontation between China and the United States, be it a cold war or a hot war, a trade war or a technological war, will ultimately harm the interests of both countries and the rest of the world. The Taiwan question is the core of China's core interests, the basis of the political foundation of China-US relations, and the insurmountable red line in China-US relations. The US should let go of its obsession of containing China and take practical actions to implement the commitments that it ‘does not seek a 'new Cold War', does not seek to oppose China through strengthening its alliance, does not support 'Taiwan independence' or 'two China' or 'one China, one Taiwan', and has no intention of conflict with China’.” 中美一旦冲突对抗，无论是冷战、热战，还是贸易战、科技战，最终将损害中美两国和世界各国利益。台湾问题是中国核心利益中的核心，是中美关系政治基础中的基础，是中美关系第一条不可逾越的红线。美方应放下围堵遏制中国的执念，以实际行动落实“不寻求‘新冷战’，不寻求通过强化盟友关系反对中国，不支持‘台湾独立’，也不支持‘两个中国’‘一中一台’，无意同中国发生冲突”.
The final bit in the article talks about the importance of bilateral trade and the need to work together rather than decouple.
Finally, there’s a report on the IMF’s global economic forecast for the year. As part of this, the Fund raised China’s GDP growth projection to 5.2%, 0.8 percentage points higher than its October 2022 forecast. The IMF said global growth would still fall to 2.9% in 2023 from 3.4 percent last year, but that marked an improvement over its earlier prediction of 2.7% growth in 2023.
And that’s about it for the paper today. There isn’t much else that I found interesting. But let me share some other news reports that are worth reading:
US and India launch ambitious tech and defence initiatives - Apart from the development itself, there’s this interesting chunk from the report:
“Sullivan said the initiative was part of Biden’s strategy to enhance ties with allies and partners across the Indo-Pacific, citing the Aukus submarine pact with Australia and the UK, and the resurrection of the “Quad” — a security grouping of the US, Japan, Australia and India. “This is another big foundational piece of an overall strategy to put the entire democratic world in the Indo-Pacific in a position of strength.” One US official said the technology initiative, coupled with other actions, meant that 2023 would “probably be the most consequential year in US-India diplomacy”, adding that India was “the key” to US ambitions in the region. He said that India was aligning more with the US because of its tense relations with China, particularly after deadly border clashes in the Galwan Valley in 2020. “The Indians don’t advertise this . . . but it had a kind of 9/11, Pearl Harbor-style impact on the strategic thinking of their elites.” Sullivan said the initiative did not suggest a fundamental shift in India’s geopolitical orientation, but stressed that it underscored the impact that negative Chinese behaviour was having on countries around the world.”
Neil Thomas’ fantastic piece for China File: Where Does Xi Jinping Go from Here? An excerpt below:
“The new era of ‘maximum Xi’ heightens political risk across multiple dimensions. Other leaders are less likely to push back against Xi’s views, as they now know definitively that their careers depend on supporting Xi’s agenda. They and the Chinese public will increasingly see major policy decisions as expressions of Xi’s personal leadership, creating a sticky political dynamic wherein correcting errors becomes more difficult as criticism of policy becomes tantamount to criticism of Xi. When Xi does decide on a new direction, his power renders policymaking susceptible to volatile shifts, as demonstrated by the sudden about-face on zero-COVID, a reversal that is hard to imagine could have happened unless Xi personally decided to change course and could then bring the whole system with him. Xi’s loyalists also have less experience in national or even provincial leadership roles than their predecessors, especially his top economic team of Li Qiang, Ding Xuexiang, and He Lifeng. To be sure, Xi’s stronger control could lead to better policy implementation. The value of improved implementation, however, depends on the quality of his policies, and Xi unfortunately appears committed to his long-standing political agenda. Recent pragmatic steps, such as the minor detente in U.S.-China diplomacy and the prioritization of economic recovery in 2023, are likely to prove less indicative of Xi’s long-term decisionmaking than the political undercurrents that necessitated these adjustments in the first place. Beijing’s constructive efforts appear to be a tactical shift to reduce pressures on the economy at an especially difficult time for China, as the country moves from frequent COVID lockdowns to the virus ripping its way through the population. Next year, if the growth rate recovers to near pre-COVID levels, and if Washington offers little incentive to adopt less confrontational tactics, then a more confident Xi will likely return to a more interventionist regulatory policy and a more assertive foreign policy. Indeed, in closed-door remarks at the First Plenum, which were only published on December 31, Xi informed the new Party leadership of his belief that “history has repeatedly proven that using struggle to seek security leads to the survival of security, while using compromise to seek security leads to the death of security; and that using struggle to seek development leads to the flourishing of development, while using compromise to seek development leads to the decline of development.”
Xi Jinping expected to visit Moscow to further China-Russia ties, defying impression of split over Ukraine war - The Russian side is saying this, but there’s no confirmation yet from Beijing.
Russia Boosts China Trade to Counter Western Sanctions - WSJ report on data from the Free Russia Foundation
“China has become a supplier of some key technologies that can have a military purpose despite the Western sanctions. China sold $3.3 million worth of unmanned aerial vehicles, or drones, to Russia last year, according to the data. The report noted that drone deliveries to Russia continued in November and December from the United Arab Emirates, Hong Kong, China and Singapore. Russia last year increased its imports of semiconductors and microchips by around 34%, with China emerging as the major source. That has helped Russia increase its overall import of chips to $2.45 billion in 2022 from $1.82 billion in 2021, despite Western sanctions targeting that trade.”