Welcome to Foreign Policy’s China Brief.
The highlights this week: The Chinese Communist Party (CCP) opens the Third Plenum, floods devastate eastern China amid the annual rainy season, and authorities crack down on organized duty-free import operations.
Xi Seeks to Cultivate Reformist Image at Plenum
China’s Third Plenum, an important political event held every five years that often sets economic policy, began on Monday. It will conclude with new policy announcements on Thursday.
Most of the time, the Chinese political calendar has the verve of a long corporate Zoom meeting. CCP events are effectively presentations of already agreed-on politics—especially under President Xi Jinping, who is a far more powerful autocrat than his predecessors. It’s rare that the personal rivalries and mafiosi intrigues of the party spill out into the open, as they did with former Commerce Minister Bo Xilai’s downfall at the so-called Two Sessions in 2012. But the delay of the Third Plenum, which was originally slated to be held in 2023, indicates that the political maneuverings around the event may have been particularly intense.
In the run-up to the plenum, authorities have once again revved up Xi’s personality cult. The propaganda push emphasizes that Xi is the heir to the “reform and opening up” of former Chinese leader Deng Xiaoping. A heavily promoted documentary produced by state media titled Leading a New Journey begins with a reference to Xi’s supposed visit to investigate the “household contract responsibility system” in Anhui province in 1978.
Xi has previously claimed that he went as a student to Anhui to study the village that introduced the aforementioned system, a set of reforms later adopted across China that moved the country away from collectivization. But as political scientist Joshua Eisenman has shown, the story about the local system in Anhui is largely a propaganda fabrication that Deng used to implement his policy changes; Xi’s trip is also probably made up. Now, the documentary says, Xi has “taken up the baton of history” in order to advance further reforms.
The drum is being beaten so loudly because there are fears within the party and wider public that Xi has effectively abandoned Deng’s projects of reform and opening up, returning to the top-down mentality and Maoist ideals of the pre-reform era. Deng’s efforts made life better in China, and the idea that his approach might be reversed is frightening for most people.
Deng’s own achievements have been downplayed since Xi took over in 2013, and assessments vary on why Xi isn’t taking the steps needed to fix China’s economy. Deng valued improved relations with the West, which have deteriorated sharply under Xi. But Deng is still a highly popular figure, especially among influential older party members, and Xi wants to recast his own ideas as being part of Deng’s legacy.
State media is thus trying to reassure the public that Xi is committed to reform. The economic buzzword this year is “new quality productive forces,” or using technology to produce decisive breakthroughs that will give China critical geopolitical advantages over other powers. Coupled with Xi’s traditionally Marxist focus on manufacturing—and a shift away from previous attempts to move the Chinese economy toward consumption rather than production—the Third Plenum announcements are likely to focus on technologically focused growth.
But the Chinese economy continues to be in bad shape, especially compared with the more than 30 years of powerful growth initiated by Deng. Xi’s focus on policies that lend China geopolitical advantages—even if they end up producing results—doesn’t do much to help ordinary Chinese people, who are struggling with collapsing housing prices, rising costs of living, and unemployment. (Overall unemployment officially stands at 5 percent but is in reality likely much higher; youth unemployment, even after the stats were juked, is officially 14.9 percent.)
Economic uncertainty is reverberating through the country. And it’s not just the long hangover of the COVID-19 pandemic. A recent paper showed that, since 2014, the Chinese public has increasingly believed that the economy is rigged against normal people. The Third Plenum’s announcements are unlikely to change that.
What We’re Following
Cooking oil scandal, cont’d. Outrage over the use of tankers to transport both fuel oil and cooking oil—a controversy first exposed in the state-run Beijing News that we reported on last week—has only grown. It’s rare for Chinese censors to allow a scandal to be covered so intensely by the media. Food safety is not only a widespread concern in China—it is also potentially politically sensitive: High-ranking CCP members have their own exclusive, heavily regulated food supply chain, the tegong.
The cooking oil scandal has prompted a high-level state investigation. It is likely to affect the operations of state-run companies, especially Sinograin, which stands accused of employing its tanker trucks for dual use. The scandal is hitting waterborne tankers as well. Beijing currently recommends against dual use, but there are no laws or regulations prohibiting it. That may soon change.
Flood season. China’s summer rainy season has arrived—and, with it, the flooding that has repeatedly devastated the country. The small town of Dafengying, in Henan, was hit by a year’s worth of rainfall in a single day on Tuesday. Elsewhere, the much-touted “sponge cities,” which were supposed to help absorb rainfall, have largely failed at doing so.
China’s historical heartlands in the east are full of rivers and lakes, and enormous hydrological engineering projects there, such as the 1,100-mile-long Grand Canal, have always been a government priority. The uncertainties of climate change have created intense worries around the resilience of dams and dikes; the massive Three Gorges Dam in particular is pushing its limits.
In 1975, the collapse of the Banqiao Dam may have killed more than 200,000 people, both in the initial flooding and in ensuant starvation among an already malnourished population cut off from food supplies. Today, food supply fears still accompany flooding, since China’s arable land is concentrated in the flood-prone east.
Tech and Business
Auto competition. A vice minister at China’s Ministry of Industry and Information Technology (MIIT) criticized the “disorderly competition” in the Chinese auto industry while attending the China Auto Forum in Shanghai on Friday. Xin Guobin, the MIIT official, blamed weakening domestic demand for the cutthroat atmosphere in the industry, which has caused auto company profits to fall. Tariffs on Chinese electric vehicles imposed by multiple countries, including the United States and India, also mean that it’s less likely that Chinese auto firms can tap into prosperous foreign markets.
Domestically, Chinese EV producers have been engaged in a vicious price war over the last year and a half. Prices were slashed to unprofitable levels, falling 8.4 percent in 2023. Chinese EVs are undoubtedly impressive, but the exceptionally low prices are in some part an unsustainable byproduct of competition. The struggle is good for the planet, however, speeding up the rapid adoption of EVs by Chinese consumers.
Duty-free crackdown. China’s daigou trade, where professional couriers take advantage of duty-free quotas in certain areas to purchase goods for people on the Chinese mainland, has come under intense scrutiny from authorities. The trade, worth at least $15 billion a year, is a result of the heavy tariffs China imposes on luxury goods; over 20 percent of some brands’ consumption in China is purchased through these semilegal channels.
When those goods reach consumers in China, the line between legitimate duty-free purchases and tariff evasion becomes unclear. In areas such as the tourist island of Hainan—where travelers can access generous duty-free quotas—the ongoing crackdown risks hitting economically important trade as well. It has already trimmed the profits of major European luxury brands such as L’Oréal.
FP’s Most Read this Week
- The Return of the Military Draft by Raphael S. Cohen
- Russians Expect Nothing From Putin’s War by Kristaps Andrejsons
- How China Trapped Itself in America’s Fentanyl Crisis by Zongyuan Zoe Liu
A Bit of Culture
Anonymous verses telling the government to shove it are common throughout Chinese history; in 20th-century China, they were known as shunkouliu, or “slippery rhymes,” catchy doggerel excoriating local officials or government policies. This far older example dates back to the last years of the Mongol-run Yuan dynasty (1271 to 1368), as revolts spread across the country.—Brendan O’Kane, translator
To the tune “Drunk in Peacetime”
(Anonymous, after 1351)
All praises to our mighty Yuan,
Where power rests with the worst of men,
Where cruel forced labor stirs up disaffection;
Where the pay is worthless paper
And the masses rise in insurrection;
Where it’s lax for them and harsh for us,
And everybody knows the deal is raw;
Where money makes money and dog eats dog,
Where officials turn bandit and crooks run the law;
Where it’s smartest to be dumb—
The sorriest sight you ever saw.