What are the recent Chinese policy changes really about?

Sep 13, 2021
beijing china
(Image: Unsplash)

Something extraordinary seems to be happening in China recently, so extraordinary that many are scratching heads asking what this is all about? 

One thing that Xi Jinping is very clear about is that “Houses are built for living, not for speculation”. Maybe that is something we could learn.

In this short essay, I will first outline what it is that has been happening. Then I will follow up with some articulated global reaction before I get to what I think it is about.

What is it?

Li Guangman, an unknown social media commentator, a retired former editor of an obscure science and engineering journal, posted a short essay on some social media. This would have meant nothing, as there are literally millions of social media posts every day, but for the fact that this piece by Li has been reprinted in almost all of the Chinese heavy weight official media outlets.

The fact that these important mouthpieces of the Chinese government reprinted Li is extraordinary enough. But what is utterly and totally unexpected is that, Hu Xijin, the editor of the Global Times, the English edition of which is often cited as the mouthpiece of the CCP by the Western media, came out with a critique of Li. Hu Xijin accuses Li of misinterpreting  Chinese recent policies, and declares that this kind of misinterpretation is dangerous.

Li Guangman’s blog post is titled “Everyone Can Feel a Critical Change is Taking Place” in which Li claims that there is a profound transformation in every sphere in the Chinese society, from the economy to finance, from culture to politics, a transformation that can be as significant as a revolution. This revolution “crushes dry weeds and smashes rotten wood” and is like “chopping off the poisoned bone to save the body”, the latter phrase famously used by Xi Jinping in reference to his determination to combat corruption within the CCP.

Li’s polemics is set within the political context of the Chinese authorities’ imposition of regulations on several industries including:

  • Regulation on real estate speculation – reflected in Xi Jinping’s well-known utterance that “Houses are built for living, not for speculation”
  • Regulation on an increasingly expanding education industry of private tuition. Education is so competitive that parents deploy all their financial resources not only try to get their kids into the best schools but also give their kids extramural lessons on various subjects, from piano lessons to English, from swimming lessons to math studies. By some estimate, the labour force engaged in private tuition is twice as large as that employed in all the normal schools!
  • Regulation on the increasingly expensive health care industry, including curbing over prescription, increasing investment on expensive modern medical equipment catering for the wealth of the elderly at the expense of prevention of disease and the poor
  • Regulation on the entertainment industry for tax evasion of celebrities’ obscene high income, on some celebrities’ anti-Chinese identity politics while making huge amount of money from the Chinese market
  • Regulation of the too big to fail companies such as Alibaba and the gaming industry by decreeing that children under 18 can only play online games for no more than three hours a week
  • Propagating the narrative of “common prosperity” to which the rich are encouraged to set up charities to make contribution to the society with the idea of the so-called tertiary distribution of wealth

Li argues that the average Chinese can no longer cope with the life pressure of “three mountains” of expensive health care, competitive education and unaffordable housing. The three mountains are so heavily suffocating that the young Chinese simply do not want to have children, even though the Chinese authorities have reversed one child per family policy by encouraging families to have more children.

Hu Xijin, in his critique of Li, notably not disputing the factual problems pointed out by Li, challenges Li’s interpretation. Hu argues that recent actions by the Chinese government and CCP are policies designed to regulate the market, to stop capital from barbaric growth, and to restore social justice and equality. To Hu, this is a continuation of China’s reform and therefore it is not seismic revolution. Hu insinuates that Li is instigating revolution that will interrupt China’s orderly process of reform and development.

What Is the global response?

One predictable response by some both in and outside China is that this could be the initiation of Xi Jinping’s Cultural Revolution. Li’s blog is compared with the hand-written poster on a newspaper wall put up by some university lecturers in Peking University in 1966, which heralded the start of Mao’s Cultural Revolution. In post-Mao China a very effective way of shutting anybody up is to say “You are talking the Cultural Revolution language”. The Western respected Professor Zhang Weiying at Peking University also joined in by saying that there is a danger that the government’s regulations will kill the golden goose of the market economy in China.

Another global reaction is also predictable: the clichés of “thought control” and “personal power struggle”, as reported by the Australian Financial Review on September 4 with a typical title of “WHY CHINA IS CRACKING DOWN ON EVERYTHING”. But to be fair to Western commentators, the Chinese society is not a liberal one and there is a lack of transparency. So here is a conundrum: Whom to believe? The editor of Global Times Hu Xijin or the obscure person Li Guamgman? Who is behind whom?

There are also other mixed messages. For instance, on September 2, Xi Jinping announced the intended establishment of a stock exchange in Beijing to serve the Chinese small and media private enterprises (there are three existing stock exchanges in China, in Hong Kong, Shanghai and Shenzhen). In fact, Xi Jinping repeatedly reassures the outside world that China is going to be more open. As an indication, one of the largest American investment management companies Blackrock announced its sole owned investment enterprise in China, against the outcry of George Soros.

What is it about?

My first interpretation is that the Li versus Hu incident, followed up in fierce debates in the social media, indicates the Chinese society is dynamic and diverse and there are internal debates and discussions about political, economic and social issues. The Chinese are not just passive victims of elite power struggle but agents of their own life. Even within the CCP, there are not only members representing diverse interest groups but also members of diverse ideological strands. For instance, in a new book Red Roulette: An Insider’s Story of Wealth, Power, Corruption, and Vengeance in Today’s China by former high flying capitalist Desmond Shum, the now-retired premier Wen Jiabao, who seems to represent a more liberal tradition within the party, is shown to be out of touch and naïve. He did not seem to be aware that when he was in power his wife and mother enriched themselves to be billionaires via inside dealings.

My second interpretation is that the CCP under the leadership of Xi Jinping has been searching for a narrative for China’s further development. On the one hand, it recognises the dynamics of the market and individual entrepreneurship. On the other hand, it also recognise the increasing gap between the rich, the too rich and the too poor. Anti-corruption is only an ex post facto correction. Elimination of absolute poverty is also just an ex post facto correction. The “let some get rich first” narrative is no long viable. What is a sustainable model of development that can bring “common prosperity” to this vast number of people amidst increasingly serious domestic challenges of socio-economic issues as well as the increasingly hostile external geopolitical environment?

I do not think Xi has a well-defined narrative, yet, just as we do not have one in the West either. “Common prosperity” as a “China dream” is fine, but how to get there?

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