By Eric Mertz of the General Crisis Watch Substack,
A journey into the hall of mirrors which is modern Chinese politics
I want to preface this article by stating everything I say here could be wrong.
Modern Chinese politics is a hall of mirrors, and the true allegiance of every player in the game is known only to themselves. As such, we on the outside are left with no choice but to try and interpret what we see and understand it using logic and critical thinking - and all the while knowing it’s entirely plausible our own biases are warping what we’re seeing.
So take all of this with a grain of salt and do your own research.
Until then, let’s break out the thumbtacks and string.
Chinese Communist Party
Before we can talk about the factions within the Party, we need to clear up a common myth.
The Chinese Communist Party (CCP, officially the Communist Party of China in English translations) is not actually communist. It hasn’t been since Deng Xiaoping lifted the boot of the state off the collective throats of the Chinese people in December of 1978 enough for the Chinese people to breathe.
This lessening of pressure on the Chinese people was just enough for China to transition from Communism to Fascism.
Such an allegation is going to be a tough sell, so let me point you to the Foundation for Economic Education’s definition and after you’ve finished reading it, come on back for a discussion of the arguments in favor of Deng turning China into a fascist state.
The one core aspect of fascism you will find anywhere is the tendency to corporatism. As the FEE points out, this usually manifests in the existence of a single organization that represents all interests within a given constituency, which is very true of the Chinese economy and what passes for a civil society. These organizations have an appointed leader chosen by the Party, and they subordinate the interests of the group to that of the State and by extension the Party.
These groups maintain sufficient autonomy to pursue the directives handed down by the State in the most efficient manner they’re allowed so they can solve the issues the State tried - and failed - to solve under Mao. To that extent, 1,400 such organizations exist throughout China - with 19,600 provincial branches and 160,000 county-level branches for these organizations.
Protectionism and Autarky
Fascism is the marriage of socialism to nationalism, and in economics this manifests in the form of protectionism and autarky. China has shown its willingness to engage in this through its deliberate manipulation of the Yuan to manipulate the balance of trade and the extensive subsidies granted to domestic firms as a means of choking out foreign firms when it comes to competition both at home and abroad.
Suppression of Labor Unions
In China, every trade union is legally required to be a member of the All-China Federation of Trade Unions, with their interests subordinated to the state via a ban on the collective bargaining tactics protected in law in Western nations and the appointment of labor union leaders by external powers rather than through an election by members of the association.
Overview of the Faction System
The factional system discussed below originated out of the concerns for the legitimacy of the party moving forward after the death of the leadership who fought the Chinese Civil War and defeated the Kuomintang and the National Resistance Army after the CCP hid in the mountains and sold opium during the war against the Japanese.
To that end, the new party leadership claimed legitimacy on the basis of two pillars - the growth of the economy and the improvement of the standard of living, and the creation of patronage systems that would guarantee jobs for educated young men and women. This patronage would bind ambitious young party apparatchiks into a chain of command where they would act as clients within the Party and State of their patrons - and by extension see a 30% higher chance of being promoted once a spot opened up.
When Deng Xiaoping took power and announced he was going to share power to prevent the disaster which was the Mao era from reoccurring, two factions emerged - the Shanghai Clique and the Communist Youth League Clique. The Shanghai Clique had undisputed hegemony over the Party from 1989 and the ascension of Jiang Zemin until Hu Jintao was able to secure his first term as President in 2002.
Hu Jintao and his ally, Li Keqiang, struck a deal with Jiang Zemin wherein the two factions would share power and trade positions in turn. Certain positions within the cabinet of the executive branch would be set aside for each clique in the opposition’s government - each seat associated with the political base which the clique represented - to ensure both groups worked together and neither felt threatened.
Within this structure, the Communist Youth League Faction was a populist organization that represented the rural provinces and the internal illegal migrants who were flocking to the cities looking for work despite the fact they lacked the hùkǒu (household registration permit which allows an individual to live in a given location) or dān wèi (work unit which created a de facto caste system within the Chinese economy and controlled what job one was legally allowed to work and where). In contrast, the Shanghai Clique represented the coastal regions and the State-Owned Enterprises and large cartels on the coasts who were the primary source of hard currency by which China imported food and coal.
After Hu served his two terms, it was decided the CCP needed to prevent either clique from establishing full hegemony over the State or the Party, so the choice was made to place Xi Jinping as the next President of the People’s Republic of China.
This proved to be a mistake.
Based out of Beijing, the Tsinghua Clique has as its core a cadre of students and teachers from Tsinghua University. Tsinghua is a member of the C9 League (the Chinese equivalent to the Ivy League) and a Double First-Class University (a designation of the university’s priority in terms of funding to ensure it is able to compete academically on the world stage).
As with the Shanghai Clique, the Tsinghua Clique is a complex network of interpersonal relationships between patron and client, with Xi Jinping and President of the Central Party School and Vice-Minister for Education Chen Xi at their center.
The Tsinghua Clique has effectively shut down the Communist Youth League Clique as a faction within Chinese politics, with large numbers of loyal party members from rural provinces such as Fujian and Shaanxi and sidelining the Premier of the People’s Republic of China (the de facto Head of Government) who had been placed as Xi’s second in command by the CCP as part of the initial plan to share power between the Shanghai and CYL Cliques.
However, the rapid expansion of the Tsinghua Clique has come with very real concern regarding competency. Xi has reportedly personally played a role in promoting men known for their loyalty rather than their competency, with very real concerns of a looming disaster should they hit a disaster they are not ready to face.
Such as the outbreak of a global pandemic.
Part of this rapid consolidation of power has been the placing of key personnel in the Military, Domestic Security Services, Party, and Economy, and, perhaps most importantly, in the Party Organization Department. In the case of the economy, this has gone as far as completely cutting the Premier out of his normal role as manager for the Chinese economy - a de facto role which dates back to Deng Xiaoping’s “liberalization” of the economy; while in his role as Head of the Organization Department of the Chinese Communist Party Chen has been placed in charge of staffing every Party Organ and State Agency.
Combined with the strict hierarchy within the party, this has meant serious problems for the rival factions within the party. Chen has moved rapidly to use his position to staff any opening with either an ally of his and Xi’s, or with clients thereof, often rapidly promoting individuals up the chain as new positions come open. The two have also worked together to wield greater control over the workings of their subordinates both within the Party and in the State, in direct contrast to Hu Jintao’s more hands-off approach.
Meanwhile, Xi and Chen were instrumental in moving their allies into the Ministry of Foreign Affairs to support Minister of Foreign Affairs and State Counselor Wang Yi, and helped set a radical change of direction in terms of foreign policy.
Under Deng Xiaoping, China chose a more conciliatory foreign policy to ensure a peaceful rise to prominence without presenting a threat to the world, using the language of cooperation to court foreign investment that the CCP could use to gain strength and attain some level of prosperity. Instead, China under Deng and Jiang would seek to work behind the scenes, influencing other nations covertly through the use of bilateral relations and occasionally trade deals.
The Tsinghua Clique began to radically change this course in 2017, when they began to take a more belligerent tone with the rest of the world. Billed as a response to growing hostility towards the CCP abroad, Xi claimed it was time for China to step out of the shadows and take a more assertive place on the world stage.
This new diplomatic stance would be dubbed “Wolf Warrior Diplomacy” after the 2017 film “Wolf Warrior 2”.
The most powerful man in China, Xi Jinping is the son of the former top Propaganda Minister and Mao’s former number two before he was purged at Mao’s order for supporting the publishing of a biography of a party martyr which Mao’s internal security chief claimed was a front to rehabilitate Gao Gang. When all education above that of the primary level was abolished and students were ordered to bring their teachers forward for struggle sessions, Xi was in Middle School. His home was ransacked, his sister Xi Heping committed suicide due to the militant nature of the student radicals and Xi’s mother was dragged before the people and forced to denounce her husband as an enemy of the people and of the revolution.
Xi would be sent to a village in rural Shaanxi and forced to live in a cave house as part of the Down to the Countryside Movement. There, he worked as a Secretary for the village party where he was required to assist in the activities of the Cultural Revolution before he ran away to Beijing. He was eventually caught, placed in one of the detention facilities run by the Red Guards, and returned to the village he’d “deserted” to dig ditches before he was “allowed” to return to white-collar work with the party for seven years before he was able to bribe his way into party membership.
This lack of formal education is noticeable in his speech, where Xi speaks with a middle-school level of fluency in Mandarin and often finds himself struggling to discuss more technical issues. Despite this, Xi was able to make sufficient connections to get himself a position at Tsinghua University, where he studied political science and Marxist theory - graduating with a doctorate in the field.
It was here that Xi would meet the allies who would help propel him to become the most powerful man in China since Jiang Zemin.
Xi’s Titles include:
President* of the People’s Republic of China
Chairman of the Central Military Commission
General Secretary of the Communist Party of China
*Although the position has been translated as “President” since 1982, the Chinese title for the Head of Government “Guójiā Zhǔxí” is the same as that used for the Chairman of the Central Military Commission “Zhōngyāng Jūnwěi Zhǔxí”. The change in 1982 was a result of China’s shift away from the Soviet Union in favor of closer ties to the US. However, the translation of “Chairman” is a more accurate translation than that of “President”, which is best translated into Chinese as “Zǒngtǒng”.
The other major player, though far weaker these days, is the Shanghai Clique established by Jiang Zemin during his rise to power following the Tiananmen Square Massacre.
With a power base in China’s Special Economic Zones along the coast, the Shanghai Clique has a reputation within China as a party of corrupt elitists who’re primarily interested in using foreign trade as a means to enrich themselves. From the Shanghai Clique’s perspective, this foreign trade is the lifeblood of China, and the wealth gained from exports is the only thing keeping China moving and fed. This is an accurate perspective, as China is heavily dependent on imports to provide food, coal, and oil.
Traditionally, members of the Clique sought positions in Shanghai as it was the training and testing grounds where they could attain higher positions in the nation as a whole. Positions within Shanghai were thus highly sought after, and Jiang and his allies would use their patronage network to find the best candidates from across the country to cycle them through the city. This had the double effect of creating a patronage network that would, in theory, live beyond Jiang’s retirement - or even his death.
An unlikely leader of China, Jiang Zemin was the compromise candidate to fill Zhao Ziyang’s position as General Secretary of the CCP after Zhao was forcibly vacated from the seat for having supported the Tiananmen Square protests.
Before this, Jiang had been one of the most powerful CCP officials in the south, and was Deng’s point man for the liberalization of the Chinese economy from Communism to Fascism.
As a child, Jiang was raised by his uncle and aunt - Jiang Shangqing and Wang Zhelan - due to the infertility of their marriage. Until, that is, Shangqing was killed fighting the Japanese during the Second Sino-Japanese War. Jiang would grow up in Nanjing under the governance of the Imperial Japanese Army, managing to gain an education despite the horrors imposed by the IJA in the city.
After college, he joined the CCP and was named Economic Minister of the Central Committee of the CCP in 1983 before being sent to Shanghai to serve as mayor. It was here Jiang would truly step up as the point-man of Deng’s economic reforms and establish his power base.
His elevation to the Party Secretary for Shanghai in 1987 brought with it an automatic seat in the Politburo, just in time for the Tiananmen Square protests and massacre. Widely regarded as little more than a potted flower*, the various factions who sought to fill Zhao’s vacated seat eventually agreed to him as a compromise as they stepped back to reconsolidate their powerbases and forge alliances.
This proved to be a tactical mistake.
Jiang used Tiananmen Square as an example of Deng’s failure to properly pursue ideological training of the youth, with a heavy focus on staffing the propaganda ministry with loyalists. Supporters of the political liberalization movement in general - and of democracy in particular - were thoroughly purged from positions within the Party propaganda organs.
When Deng died, Jiang took the country in a new direction. Viewing the widening gap between provinces in terms of GDP as a threat to the legitimacy of the party, especially with the sheer level of corruption (estimated to be consuming an average of 10% of the economy) which had accompanied it along the coast. Unemployment in some areas rose to 40% at this point, State-Owned Enterprises were shuttering due to an inability to compete, the Iron Rice Bowl** was broken, organized crime began to spread rapidly, and rural peasants were streaming into the cities.
Jiang began to crack down on the economy of the coastal regions during this era, and began to move clients within the party who were patronized by his allies into higher positions whenever a new position opened. This placed him in the perfect position to claim the title of Paramount Leader when a new “threat emerged”.
In 1992, the practice of traditional stretching and breathing exercises known as Qigong began to take China by storm. Initially, this had considerable support from the CCP as it was perceived to promote the health of the people - something which would translate into greater productivity. However, within 3 years the various qigong groups - of which Falun Gong had become the largest - were viewed as having too much power within the Party and by extension the government after the leadership within the State mandated Qigong Associated rejected being co-opted by the party.
Jiang ordered the practice suppressed, banning books and publications in the process. State-owned media began to refer to Falun Gong as “peasant superstition” and proclaimed the religious aspects were at odds with China’s status as an officially atheist state.
On April 22, 1999, a group of Falun Gong practitioners staged a sit-in protest in Tianjian against the government’s policies of repression. They were beaten and arrested, with onlookers told the orders came from the Ministry of Propaganda in Beijing.
Three days later, 10,000 practitioners descended on Beijing to peacefully assemble to demand the release of those who had been arrested.
It was the largest mass protest action since Tiananmen Square and the first one to ever occur at the government compound.
Jiang responded by constructing an entirely new extrajudicial organ of repression, the 610 Office, to persecute Falun Gong practitioners at home and abroad.
*Potted flower is an insult in Chinese which indicates one is ornamental but ultimately useless.
**The Iron Rice Bowl was a series of guaranteed jobs in State-Owned Enterprises, the military, and the civil service. The individual holding the rice bowl may be shuffled around within the organization, but couldn’t be fired.
Communist Youth League Clique
The former rival faction to the Shanghai Clique, the Communist Youth League Clique was formed from the adult leadership of the CYL at the time of Deng Xiaoping’s decision to transfer to a system of collective leadership.
Originally founded with the idea of training new cadres who could take over running the country as the revolutionary cadre retired, the refusal of the old revolutionaries to retire frustrated their ambitions. The CYL Cadre likely would have remained in the political wilderness if Hu Jintao and Li Keqiang hadn’t taken advantage of Deng’s move to open the governance of the country.
The cornerstone of the CYL Clique was a populist opposition towards the coastal bias at the expense of the hinterlands. With growing inequality between the rural hinterlands and the industrial and commercial coastal regions, the rural region had grown increasingly dissatisfied with the status quo.
Politicians associated with the CYL Clique have focused on steering investment in the economy towards the rural areas, and were the only politicians in the CCP who expressed interest in dealing with the environmental issues which have been plaguing the country (see Part 2 for more on this). They also placed a strong emphasis on shared power and responsibility, refusing to consolidate their power when they had the chance.
However, the CYL Clique’s hands-off attitude towards management and redirection of funds from the coastal areas to the hinterlands caused severe corruption issues and drove dissatisfaction with their leadership. Dissatisfaction which was compounded by the failures in how Hu and his associates failed to respond appropriately to the SARS outbreak.
Failures which the CCP would repeat when SARS reared its ugly head again in 2019.
Less a faction than a strata within Chinese society, the Red Aristocracy is the highly unofficial but very real collection of the children and grandchildren of high-ranking officials from the early years of the CCP. Lacking formal leadership or any kind of unity, the Red Aristocracy is less a faction than a loose collection of vaguely aligned interests centered in the military with little representation in politics.
This lack of unity or formal leadership means they lack the patronage systems which help the members of more formally defined cliques. It has allowed the ascendant Tsinghua Clique to cut their power - cutting their seats on the Politburo and the Central Committee by half. When Xi, himself a Princeling, came to power, he did so with the backing of the Red Aristocracy within the military’s various State-Owned Enterprises.
The increasingly technocratic nature of the CCP has further sidelined the PLA from the factional games, largely due to the lack of any cross-training between the military and the civil administration.
-Xi Jinping - Tsinghua Clique
-Li Keqiang - CYL Clique
-Li Zhanshu - Tsinghua Clique
-Wang Yang - CYL Clique
-Zhao Leji - Tsinghua Clique
-Han Zheng - Shanghai Clique
-Wang Huning - Shanghai Clique
One of the most important things Xi has done was the merger of the Central Commission for Discipline Inspection with several other independent organizations into the National Supervisory Commission at the cabinet level in 2018. Corruption has been rampant in the era when Hu Jintao was running the country, and the investigations into corrupt officials are likely valid. However, lacking an independent judiciary, any convictions handed down by a Chinese court are not.
This is not helped by the fact we know several high-ranking members of the Shanghai Clique have been purged - only to have their positions replaced by loyal members of the Tsinghua Clique. This has occurred in every institution over which Xi has authority over; the Party, the State, the People’s Liberation Army, the State-Owned Enterprise cartels, and the various Internal Security apparatuses.
This has even resulted in the execution of officials such as former Director of Public Security for Inner Mongolia, Zhao Liping, and Secretary of the Party Committee and Chairman of a State-Owned Enterprise named China Huarong Asset Management Co., Ltd., Lai Xiaomin. Over 170 high-ranking party officials have been expelled from the CCP, with a significant number of them having been given significant prison sentences - including 35 high-ranking members of the Central Committee, former head of China’s domestic surveillance apparatus, Zhou Yongkang, and even former Politburo member, Sun Zhengcai.
If you recall from the section on the Communist Youth League Clique, their rise to power was largely fueled by populist discontent over the imbalance in economic investment. While the coast is full of shining cities which glisten in the sun, the Chinese hinterlands are deeply impoverished. Peasant families rely on coal-fire stoves built into the base of their beds to stay warm, dilapidated houses are common, and poverty is widespread.
Recognizing the potential threat this poses to the Tsinghua Clique’s hold on power, Xi decided to steal Hu Jintao’s playbook and ran with it. In 2012 alone, Xi ensured the rural hinterlands received twice the amount of money that these regions received in all of Hu Jintao’s second five-year term. Combined with attacks on the Communist Youth League Clique in media as elitists who’re only using the rural communities for power, and cut financial support for the organization which gave the Clique its name by half.
Meanwhile, Xi has cut the membership of the rival organizations in both the Central Committee and the Politburo by half. These dismissed individuals have been replaced with members of the Tsinghua Clique, or in some cases simply not-at-all. Acceptance into the party has been cut by half, with the CCP shrinking as a percentage of the population for the first time since the end of the Chinese Civil War.
Meanwhile, the Tsinghua Clique has managed to use expulsions and reshuffling of positions within the Party and the State to place their people in control of the cities of Tianjian, Beijing, Shenzhen, Shanghai, Chongqing, and Guangzhou. This has created an anocratic nightmare, where the Shanghai Clique or the Communist Youth League Clique are competing with the Tsinghua Clique within the governing structure of the State.
It is widely speculated among China Watchers that this is playing a role in the disaster which the world is watching unfold in Shanghai right now.
However, these party games are nothing compared to the blood which has been shed.
Primarily carried out by Communist Youth League Clique partymen, these assassination attempts include an instance where Xi’s car was deliberately struck by another vehicle twice on the same day in September of 2014 and what appears to have been a coup attempt in March 2012 which was only quashed by the PLA. The Shanghai Clique, meanwhile, reportedly attempted to use police officials to kill Xi using police officers in a city in the south. In both instances, Xi has responded with extensive purges, often targeting security personnel and replacing them with members of his Clique.
There have even been accusations of terrorism having been carried out by rival groups.
On August 12, 2015, two explosions ripped through the Port of Tianjian. 800 metric tons of ammonium nitrate which had been sitting at the port awaiting export exploded late in the evening, killing 173 people and injuring hundreds more. Toxic substances such as sodium cyanide were released in the explosion, and toxic gases were present at dangerous levels for weeks after. When it rained six days later, the streets of the Beijing suburb were covered in white foam, and residents who were out and about complained of rashes and burns from caustic chemicals in the rain.
Officially, the cause of the explosion was listed as auto-ignition of nitrocellulose which had been stored close to the ammonium nitrate. The hot weather had reportedly caused the wetting agent in the nitrocellulose to evaporate away, resulting in an explosion.
However, reports indicate Xi has decided this wasn’t an accident.
Unverified reports indicate PLA munitions were found at the site, with serial numbers tracing back to armories under the control of PLA officers loyal to Jiang Zemin.
The PLA has not been spared. Xi has reportedly purged 165 General or Flag Officers from the PLA for corruption connected to State-Owned Enterprises in the PLA orbit - either directly owned by the PLA, by the Central Military Commission, or which are suppliers to the PLA.
Despite this, the growing professionalism of the PLA and the growing bifurcation between the Administrative and Military branches of the CCP has resulted in both becoming more technocratic and reducing the cross-training which was more common in the era of Mao and Deng.
This has prevented much of the head-counting and factional games which were present in previous eras and have served to sideline the Princelings from the power games of the administrative portions of the CCP. Before the outbreak of the COVID-19 Pandemic, it was largely assumed this meant a succession crisis was unlikely, as the PLA was unlikely to take a hand in choosing Xi’s successor unless China suffered a serious crisis that harmed the internal harmony of the State or weakened China’s economic growth.
Xi’s Zero COVID policies have done both, and have brought the PLA into the heart of every major city in China. There, they have become enforcers of lockdowns and the sole means to distribute food to the people as private avenues for the distribution of food has been shut down.
Xi has recently cracked down on Big Tech firms connected to Jiang Zemin and the Shanghai Clique, with Jack Ma’s Ant Group being the standout example. One of the key board members of Ant Group is Jiang Guofei, the grandson of Jiang Zemin, and a member of the Shanghai Clique’s private sector branch. It is widely speculated the recent move to prevent Ant Group is connected to this link, along with the perception Jack Ma was a supporter of the Shanghai Clique’s more radical economic wing.
The latter is an easy charge to make given the fact Alibaba had created a shadow banking, investment, and payment system within China which was only nominally answerable to the control of the People’s Bank of China*.
However, while the use of the State to rein in Ant Group and force Jack Ma out in favor of a more pliant and reliable CEO has received the most attention from the press, Xi has been busy elsewhere.
As of 2015, 115 Sate-Owned Enterprises had been purged of members of the Shanghai and Communist Youth League Clique leadership. Chen Xi, and before him Zheo Leji, has used his role as the Head of the Organization Department of the Chinese Communist Party to fill new vacancies with employees who were private sector clients of high ranking members of the Tsinghua Clique.
When the oligarchs connected to the Party realized they were in danger, Xi cracked down on their ability to move money overseas. This has created a thriving black market where wealthy and corrupt businessmen in China will purchase a luxury travel package to a casino and resort in Macau where they will play a sufficient number of hands of high-stakes baccarat - sacrificing their losings to pay off the owner - and then convert the chips into a foreign currency. Xi has cracked down on this method of capital outflow as well, even going so far as to have the man who helped facilitate these outflows arrested.
This has moved the money laundering operations overseas, where Triads in Vancouver - to name a rather interesting example - have set up a racket where oligarchs and corrupt politicians have been able to avoid the long arm of the Chinese law. Using casinos that are owned by the government of British Columbia, dirty money obtained from bribes, no-show jobs, patronage deals, and other corrupt means are then laundered from Yuan into Canadian Dollars and used to buy assets in Canada.
*People’s Bank of China is China’s central bank. Unlike the Federal Reserve, the PBoC is under the direct control of the central government and has limited freedom to act on its own initiative to pursue monetary policy.
Jiang Zemin’s use of the propaganda offices to shape thought was vital in cementing the Shanghai Clique as the dominant force in China’s factional contests. As a former member of the Shanghai Clique Xi knew how important this was. Which is why he has so heavily focused on it in the run-up to the March 2023 election to determine whether he will serve a third term.
To this extent, Xi has radically overhauled the education system.
For all that China claims to be a new entity, the Confucian emphasis on education and literacy as a path into the bureaucracy and thus to wealth and power still holds - including the use of an entrance exam to determine whether a given student will even be able to attend a higher level of education. Students are only guaranteed education for their compulsory period up through the age of twelve, after which the family must pay for the schooling themselves. This has created a system of private tutoring akin to the cram schools found in Japan for the purpose of passing their high school entrance exam program.
Or rather, it had.
With the educational reform program, Beijing has placed these private systems under such strict control as to have effectively banned the program.
Meanwhile, the CCP is planning to remove English from the core curriculum to make room for the mandatory classes in Xi Jinping Thought. It’s worth noting that this is only the second time in the history of the CCP since a leader’s ideology has been granted the title of Thought - the highest rank recognized under the party constitution - and only the third time propaganda of this time has been mandated as part of the curriculum.
Combined with a ban on foreign textbooks and a de facto ban on learning foreign languages in favor of Xi’s ideology, this creates a closed ideological loop that makes it far more difficult to question the official ideology of the ruling clique and will help cement their control. This situation is even worse in the Red Army schools which are run by the Red Aristocracy to ensure students will be unquestionably loyal to the Party. A development that Xi has strongly supported as they will help cement his control over the Party - and by extension the State.