US Trade War Pressure Ignites Intense Party Strife Within Beijing

U.S. President Donald Trump (R) and Chinese leader Xi Jinping (L) prepare to shake hands during dinner at the Mar-a-Lago estate in West Palm Beach, Florida, on April 6, 2017.

By Steven Chew | Epoch Times Staff

When times are good, the leader is the poster boy of success. But when times are bad, some scapegoat whose head will roll must be identified. An intense replay of this principle is currently at work in Beijing.

Since taking office in 2012, Chinese leader Xi Jinping has been heralded as China’s new leviathan for his widely propagandised deeds: his massive anti-corruption campaign, his advocacy of the China Dream, his huge economic Belt and Road Initiative, and his newly found legitimacy as “President-for-Life” (as of March 2018 )

Then came the economic backlash: US slapping tariffs on China to retaliate against its huge trade deficits with China over the years (US$335 billion in 2017 ). Initially, it was US$34 billion that came into effect in July 6, which China retaliated with dollar-for-dollar tariffs on US imports.

Then President Trump slapped 10% tariffs on an additional US$200 billion worth of Chinese imports, which could start from end August. Beijing responded: “China is shocked.”

US slapping tariffs on China to retaliate against its huge trade
deficits with China over the years (US$335  billion in 2017).

China’s initial bet on a tit-for-tat strategy for the trade war salvaged national pride and provided counter narratives to the US and the world, but soon it exposed China’s true economic weakness when the tariffs exceeded total imports from the US. President Trump has threatened an additional US$500 billion if China were to retaliate again: “I am willing to slap tariffs on every Chinese good imported to the US should the need arise.”

All of these developments are unsettling for Xi Jinping, who has been entrusted by the Chinese people to drive the Chinese economy forward, albeit it is an economy that is heavily reliant on US technology and agriculture imports. Stock market performance since April 2018 reveals which side is winning the war – the US. This is a setback more so to China than the US.

Generally when things go wrong, especially in a one-party, authoritarian regime, the leaders always enjoy immunity from incrimination. The communist regime just needs to find someone else to lay the finger on.




All fingers point to Wang Huning (王沪宁),62 years old, current member of the party’s Politburo Standing Committee (China’s top decision-making body) and secretary of the party’s Secretariat. He has been singled out in July 2018 as the nemesis for the US-China trade war tension.

So what did he do? He has “distorted” Xi’s narratives to project China (through party and state media) as the new global hegemon, which got the US so apprehensive of China’s ambitions that Trump nipped China in the bud by imposing huge trade tariffs, putting China in its current downswing state. Wang Huning has disappeared from public view since July 4. Many speculate that he has been “arrested” for his “crimes”. His disappearance is the result of internal strife among party officials.

China’s Rise and US Apprehension

All leaders need to find new things to champion when their tenure starts. For Xi Jinping, he reiterated the China Dream when he took office in 2012.

The China Dream is about Chinese prosperity, collective effort, socialism, and national glory. Xi did not originate this; he simply rejuvenated and propagandised it through state media.

While the Dream conjures up nationalistic support for his new administration, he consolidated his real power in the party, military, and government through his anti-corruption campaign in November 2012, shortly after the 18th National Congress of the Communist Party of China.

Although the campaign is to clean up malfeasance within party ranks, it also helped Xi remove opponents from Jiang Zemin’s faction in the Politburo Standing Committee (Zhou Yongkang), the Central Political and Legal Affairs Commission (Li Dongsheng), the Central Military Commission (General Xu Caihou, Guo Boxiong), and the Chinese People’s Political Consultative Conference (Ling Jihua, Su Rong).

Many of these political figures have also played a major role in the persecution of Falun Gong in China since 1999, especially Zhou Yongkang, who directed a clandestine programme to forcefully harvest organs from living Falun Gong practitioners to feed China’s organ transplantation trade. China has abundant supply – 100 million Falun Gong practitioners to tap on. Jiang’s vilification of this peaceful practice since 1999 has dehumanised these prisoners of conscience in the Chinese media, lubricating this mass murder.

China initiated the Belt and Road Initiative in 2013 to economically connect China with the rest of Asia, Europe, and Africa through land and maritime routes, covering more than 68 countries, 65% of the world’s population and 40% of global GDP as of 2017.

The outlay is not just economic, where China invests in massive infrastructure projects, but also military, where China sets up bases in strategic ports along the coast from the South China Sea all the way to Africa. All of these have been achieved under the watchful eyes of US political and military thinkers.

China has spared no efforts in drumming up publicity for the benefits of creating this huge unified market between China and the rest of the world, where capital, talents, and technology will flow and cross-ignite.

China never falls short of publicity narratives for the world’s appetite. In 2015, it unveiled another strategic plan – the “Made in China 2025” move to upgrade Chinese manufacturing capability, essentially to move from low-value production to high-value production.

Then, in 2018, China is talking about being the world leader in Artificial Intelligence technology. According to CB Insights, based on keyword searches of abstracts and titles in 2017, China has far outpaced America in AI-related patent publications: for “deep learning”, 652 compared with 101; for “artificial intelligence”, 641 to 130; for “machine learning”, 882 to about 770.

The latest potent dosage for Trump came in March 2018 when Xi Jinping revised the Chinese constitution to potentially remain as Chinese President until such time as he desires to abdicate his throne. Xi is now President of the People’s Republic of China, General Secretary of the Communist Party of China, and Chairman of the Central Military Commission – literally the chairman of everything in China.

On top of all these developments is China’s major military build-up in the South China Sea, which strained relationships and sparked concerns in the US and its allies.

Having been the world’s preponderant hegemon for 73 years, the US will not be a bystander in the formative moments of a new global order—a power shift so to speak—that is currently being reconfigured by China.

Wang Huning (王沪宁) has been singled out in July 2018 as the nemesis for the US-China trade war tension.

Wang Huning – China’s ‘Pen Barrel’ (笔杆子)

On July 12, China’s party media published an article entitled ‘The Heat of Xi Jinping Cools. Who Should Be Held Accountable for Current China-US Tension?’(‘习近平热”降温 中美紧张谁之过?’)

Xi’s heat wave is cooling; is this an aberration? What happened is that someone stopped fanning, so the heat dissipated. What it also means is that there should not have been any heat wave at all in the first place, but it was there because someone fanned the flames.

On July 9, Xi Jinping’s name, pictures, posters, and paraphernalia suddenly disappeared from the front pages of state and party media online sites, including People’s Daily, the government’s mouthpiece. Even the website of the Chinese Academy of Sciences stopped discussing Xi Jinping’s doctrines. This is unprecedented.

But do not read this as a pending political upheaval against Xi Jinping. It is more akin to resetting Xi’s exposure and publicity levels back to normal, due to over-exposure earlier by Wang Huning and his cronies.

Who is Wang Huning (王沪宁)? He is currently a member of the party’s Politburo Standing Committee, the party’s highest decision-making body. He is one of China’s seven most powerful persons. He was Professor of Law by age 30 at Shanghai’s Fudan University in 1985, author of at least a dozen books, and has published more than 50 academic articles.

In the post-Mao Zedong era, Wang Huning’s writings in the 1980s on “neo-authoritarianism” were in sync with the tune sung by party officials. The doctrine held that political stability provided the structure for economic development, and that considerations such as democracy and individual liberty were to come later, when the conditions were appropriate. As it turns out, political stability can only come from the communist party’s monopoly on power.

Neo-authoritarianism caught on, first with Jiang Zemin, then Hu Jintao, and now Xi Jinping. Wang literally wrote Jiang Zemin’s ‘Theory of the Three Represents’, Hu Jintao’s ‘Scientific Theory of Development’, Xi’s ‘China Dream’, and last year for Xi Jinping, his ‘Thought on Socialism with Chinese Characteristics for a New Era’ (abbreviated ‘Thought’). All doctrines have been written into the Chinese constitution.

Wang’s orientations are extremely leftist and show up in many ways.

In May 2018, he publicly remarked at a symposium commemorating the 200th birthday of Karl Marx in Beijing that Xi’s ‘Thought’ is the Marxism of modern China and a new development of Marxism in the 21st century. It is the latest theoretical outcome of the party in upholding and developing Marxism in the new era with innovative and strategic perspectives.

Chinese President Xi Jinping (with Wang Huning, picture left) speaks with Italian Prime Minister Paolo Gentiloni (not pictured) during a bilateral meeting at Diaoyutai State Guesthouse on May 16, 2017 in Beijing, China.

The Left-Wing, Not the US, Is the Communist Party’s Real Enemy

On July 6, a number of Chinese officials used Hong Kong media HK01 (香港01) to anonymously voice their concerns not against the US, but against left-wing factions within the communist party.

They condemned these factions for “distorting President Xi’s strategic thoughts”, for publicising that China is challenging the US’s position [as a superpower], that they are “enemies of the Party”, and that they should be held accountable [for what they have done].

From the content of these interviews, these officials appear to come from foreign affairs, economics, and various government departments in China.

In 2012, Xi conveyed the message that the Pacific Ocean is large enough to accommodate the interests of the US and China. This and the Belt and Road Initiative have been distorted by the left-wing factions to mean that China now wants to stand on equal footing with the US, that China is rising to become an economic hegemon.

Stock market performance since April 2018 reveals which side is winning the war – the US. This is a setback more so to China than the US.

According to the anonymous officials, the left-wing factions used nationalistic and populist sentiments to mislead Chinese people and party officials. In the process, they have brought serious damage to China’s international image. They should be held accountable for triggering the US to launch the trade war against China.

The anonymous officials also mentioned the left-wing factions are the real enemies of the communist regime. The current state of the US-China trade war is not created by Trump, but by these party officials who propagated misinformation, distorted Xi’s message, and misled the populace through state media.

Internal Strife Within the Communist Party

China is fully capable of absorbing all the tariffs President Trump has and will impose. The numbers are not big, in relative terms: 25% of US$34 billion is an extra US$8.5 billion that China has to pay. Even the 10% tariff on US$200 billion only amounts to an additional US$20 billion.

Seriously, the tariff impact is symbolic. China’s exports are likely to top US$2.4 trillion in 2018. An extra charge of US$28.5 billion for China is not earth-shaking.

Geographic scope China’s Belt and Road Initiative.

However, the trade war has made space for Xi’s enemies to brew havoc. Xi has been carefully treading a middle line between the hardliners and pragmatists within the party. Certainly, Xi’s anti-corruption campaign has created enemies that are ever ready to pound on him at any given opportunity.

China sent clear instructions to tone down public nationalism after China’s delegation led by Vice-Premier Liu He failed to negotiate a trade truce with Washington in May 2018.

However, anti-Xi factions within the party want to see Xi stand up to fight the US and to use the trade war to weaken China’s economy so as to launch a full-scale attack on Xi.

China is struggling with external pressure arising from the US trade war, but also internal issues. China’s rapid economic growth has produced high inequality, rapid urbanisation, environmental unsustainability, and external imbalances.

Party pragmatists such as Wang Qishan, Liu He, Wang Yang, and Hu Jintao are fully aware of China’s chances of winning the pyrrhic trade war and are seeking alternative solutions for it.

Conversely, the hardliners are instigating China to respond “tit for tat” and to “fight till the end” “at all costs”. They are the far-left of the communist party, many of whom are Jiang Zemin’s residual cronies.

They know that China would face an economic fallout should it fight the US head-on, which would result in economic and financial crisis, and social instability. Losing the trade war will create a perfect opportunity for them to regain their foothold in China politics, much of which has been wiped out by Xi’s anti-corruption campaign.

The current trade war is not only a tug of war between the US and China, but also an internal tussle within the communist party, between the far-left hardliners and the pragmatists. Beijing is now taking steps to curb the hardliners; if not, it risks losing not only its economy, but also the China Dream.

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