“Hu Bian Shut Down the Entire Internet, What Nerve Did It Touch in the Chinese Communist Party?”

Hello, viewers, welcome to “Qin Peng Observation”.

Today’s focus: Former Chief Editor of “Global Times” Hu Xijin has been banned from the entire internet, what nerve did he touch in Zhongnanhai? “People’s Daily” specifically wrote a criticism against Hu. Anbang Think Tank came up with a strange idea, suggesting that private economy should also be surnamed Zhao.

Renowned economist Chen Zhiwu suggested closing the A-share market, but his comments were deleted. Why can’t the stock market be closed decisively? Is the CCP’s Politburo really anxious this time? Speaking out in support of consumption.

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Hu Xijin being banned is a major event that just happened. Is it because the authorities are tightening speech, to the point even a provocateur like Hu couldn’t tolerate it? Or is it because one of his comments, such as crying about the stock market falling every day, losing 100,000 yuan, has angered the authorities, and they are now furious? This has sparked speculation among the public.

All of Hu’s internet content updates have stopped on July 27th, when he commented on the wealth-flaunting interns at CITIC Securities. About this young master, I asked some friends in the Chinese financial circle, and confirmed he is Wang Chao, former director of the inspection bureau of the China Securities Regulatory Commission, who has dual roles in government and business.

Many speculate that Hu was banned because he made unfounded remarks about the central government, commenting on the Third Plenary Session of the Twentieth Central Committee. In response to this, on July 30th, he exclusively told Singapore’s major overseas publication “Lianhe Zaobao,” “I don’t want to say anything personally, you can just look online, please understand.” Few words, but at least it proves that he is currently safe, dispelling previous rumors of him being disciplined.

Why do I also not think Hu was disciplined? I am not saying he is clean; Hu once reported two subordinates to the Central Commission for Discipline Inspection of the CCP for having mistresses and fathering two illegitimate children. However, Hu ultimately landed safely, indicating that the party-state still likes people like him: while most people can only turn black into white, Hu can turn black into gray, then into flowers, and even make some readers like that color, a trait not easily matched by an ordinary CCP writer. Especially now when Zhongnanhai is surrounded, with noises both domestically and internationally, it indeed needs people like Hu to occasionally stir the waters. Therefore, Hu has been persistently retreating without giving up.

However, dealing with someone like Hu has also posed challenges to Zhongnanhai. In the age of the internet, some things they don’t want people to know inevitably get leaked out, necessitating someone to put out fires or create rumors to divert attention. Meanwhile, there are things the Party Central Committee clearly wants to remain unchanged. However, Hu always makes it sound so complex, even suggesting a change in the status quo, which the authorities find unacceptable.

Hu Xijin is one of those who thrives on controversy. Therefore, officials or left-wing internet personalities occasionally criticize him for being inconsistent in his stance, even becoming a public intellectual, keeping Hu on edge.

This time, Hu made such a mistake, and he provoked Zhongnanhai, which displeased Xi Jinping or his confidants. Otherwise, they could have simply deleted Hu’s articles, but this time they went as far as banning him directly, a first.

Hu’s mistake lay in comparing the texts of the decisions of the Third Plenary Session of the Twentieth Central Committee and the Eighteenth Central Committee ten years ago, believing that deleting the phrase “the dominant public ownership” represented a historic change. However, to Xi Jinping, this falls into the category of “should not be changed, cannot be changed, and must not be changed.”

Thus, when Hu’s article was published, it triggered strong criticisms from Maoists, accusing him of challenging the authority of the CCP’s constitution and party regulations, blatantly violating the party’s political discipline. The article was deleted shortly after being published.

On July 30th, the core Party media published a commentary by Zhongyin, pinpointing the mistakes made by Hu Xijin, nailing him or at least putting a foot on him. Besides emphasizing the development of state-owned and private economies as “two immovable principles,” it also stressed the need to adhere to “the dominant public ownership while allowing multiple forms of ownership to jointly develop.”

Those familiar with China’s political scene should know that “Zhongyin” in “People’s Daily” is the mastermind behind a series of articles that speculate on the party’s intentions, stepping out to stand for the Party Central Committee and the Party Mama. For example, at the end of 2022, China’s economy was heading toward a dead end after three years of lockdown, with both officials and the public urging Zhongnanhai to ease restrictions. In December 2022, Zhongyin wrote articles for three consecutive days, discussing the achievements of the three-year lockdown, the need to vaccinate as the peak loomed, and addressing public concerns about medicine when seeking medical treatment, elevating the party’s position while cleanly deflecting responsibility.

In fact, from the moment Hu Xijin’s article was published, I told my friends in China that no matter how the CCP changed its rhetoric, it could never give up state-owned economy as the foundation of its governance. Because several generations of party leaders have emphasized that the state-owned economy is the basis of the Communist Party’s rule. Therefore, developing, growing, and enhancing the state-owned economy is something the CCP must adhere to.

Therefore, no matter how the CCP deceives private entrepreneurs with the idea that they are “one of their own,” in the Party’s eyes, private enterprises have always been objects to utilize but most importantly, to guard against. The CCP is fearful that once private enterprises prosper, they may seek political power or attempt to influence the Party Central Committee’s policies.

The CCP’s highest priority has always been its own rule and interests. Once economic prosperity clashes with the Party’s rule, it will undoubtedly forsake the economy and choose politics.

However, some individuals who care about the hardship of the people or wish to share the Party’s concerns hope to have the best of both worlds. For instance, the mainland’s Anbang Think Tank recently wrote an article attempting to argue that “private economy is state-owned economy.”

I personally find this article quite ridiculous; it’s akin to trying to prove that even a person like Ah-Q can also have the surname Zhao. The key point to remember is that in Zhao Lao Taiye’s eyes, Ah-Q is not worthy of bearing the surname Zhao. Let’s revisit a classic film scene to gain a clear understanding of the real situation in mainland China.

Speaking of unwarranted criticisms of the central government leading to banned speech, there is another example. Renowned economist Chen Zhiwu, at the 2024 China Global Economic Forum, suggested shutting down the A-share market! Let’s examine that.

Chen Zhiwu also emphasized: In the 1950s, when the CCP nationalized private property and land, they made this promise to the people: hand over your land and property to the country, and in return, the country will take care of your future work, living, healthcare, retirement, and education. However, over the past 30 years of reform, the country has shifted the responsibilities of people’s jobs, housing, healthcare, and education back to the individuals, neglecting them. But on the other hand, the country hasn’t returned the private property and land that was nationalized back to the people. Fifty years later, individuals are still responsible for their own lives.

I strongly agree with the latter part. However, concerning Professor Chen’s earlier argument that since planned economy has been restored, there’s no need for a capital market, this only proves that he doesn’t fully understand the CCP.

Why is that? Because the CCP instituted the stock market not to make stockholders rich, quite the contrary, it was to rescue the almost lifeless state-owned economy and the stagnant state-owned banks by raising funds through the stock market.

This true history can be seen in a retrospective published by “First Financial” in 2012, featuring the major economist Xie Baisan who was involved in China’s stock market reform, and the “Global People” special feature under “People’s Daily,” “Zhu Rongji and the Chinese Stock Market.”

It is due to such original intentions, along with the principle of party supremacy, and the interests of CCP officials being above those of the people, that the Chinese stock market has ultimately become a tool for state capital and privileged CCP members to raise funds, evolving into a bizarre entity until today.

Chinese economist Wu Jingliang once said that the Chinese stock market is worse than a gambling den, as at least in a casino, one doesn’t have to show their hand beforehand. Yet, in the Chinese stock market, who is manipulating from behind the scenes, determining everyone’s hands?

Therefore, given the ease with which money can be raised from the common people, and even from foreign funds, the CCP would never bear to shut it down. It was predictable for Chen Zhiwu’s speech to be deleted.

Of course, such continued chaos will inevitably lead to the ongoing decline of the Chinese economy, with more and more unemployed individuals, young people refusing to be mere tools and turning into “Generation Ten Not,” and the increasing apprehension about the future leading Chinese people to tighten their purse strings and refrain from spending.

This scenario has pushed Zhongnanhai into a clash with Chinese consumers. The Party Central Committee wants citizens to consume bravely, resorting to means beyond giving money, while Chinese consumers are supporting the Party Central Committee in all matters apart from spending money.

Initially, the CCP primarily issued documents, including the 20 measures to “restore and expand consumption” released by the state’s National Development and Reform Commission in 2023. But what did they achieve? Ineffective results; there was brief tourism boom in 2023, but the tourism market plummeted this year.

Subsequently, the CCP changed tactics and began to trumpet the bright future of the Chinese economy to encourage consumption. However, still no significant positive effect.

Then we witnessed the CCP’s Third Plenary Session in July, followed by two unexpected interest rate cuts by the central bank after the meeting, but with minimal reaction from the market.

Hence, the Party Central Committee finally became anxious. On July 30th, the CCP Politburo convened to acknowledge that “domestic effective demand is insufficient, and economic operations are becoming divided,” proposing to “boost consumption, prevent vicious competition within industries.” It emphasized that the focus should be on expanding domestic demand, shifting more focus of economic policy toward benefiting the people, stimulating consumption, increasing residents’ incomes through diversified channels, enhancing the consumption ability and willingness of low- and middle-income groups, using service consumption as a crucial lever to expand and upgrade consumption, supporting cultural tourism, elderly care, child-rearing, and household services consumption.

How will this turn out? After some analysis, I have come to three conclusions:

Firstly, it’s useful because acknowledging the problem publicly will inevitably lead to some measures.

Secondly, the strength is limited due to the lack of powerful fiscal stimuli and the failure to fundamentally change public confidence. I did not see specific measures to help raise the income of low- and middle-income groups, suggesting that issuing documents remains the primary action.

Thirdly, the overarching trend of a U-turn from Zhongnanhai is irreversible. A financial expert on the mainland stated that the next steps in policy arrangement will focus on “further comprehensive deepening of reforms + increased macro-control intensity,” implementing “timely release of a batch of mature and feasible reform measures,” but I doubt it. Now, “reform” has become a sensitive term; can one still hope for reform?

Even more critical is that faced with deteriorating external circumstances, the CCP has no intention to change fundamentally. While Xi Jinping had personally met with the Italian Prime Minister the day before, and CCP State Council Vice Premier He Lifeng recently stated in “People’s Daily” that they should “adhere to openness and innovation, and not build a car in isolation.” On July 30th, the chairman of the National Development and Reform Commission, Zheng Shanjie, stated that they should create a top-notch business environment, not only allowing foreign investors to “come in,” but also ensuring their “good development.” Nevertheless, the CCP’s pressure on Taiwan remains unchanged, its support for the Russo-Ukrainian war remains unchanged, and its confrontations with the United States and other Western countries remain unchanged.

Therefore, regarding the future of the Chinese economy, all I can say is to buckle up and prepare for the ongoing decline of the economy.

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