China’s leader Hu Jintao’s visit to the U.S. comes at a time when the Chinese Communist Party (CCP) is facing challenges both domestically and internationally.
During his five-day stop in the United States, Hu has attended the U.N. summit on climate change and the G20 summit in Pittsburgh, focused on the global financial crisis.
At the same time, unresolved Chinese domestic and international issues are still bubbling away. Calm has not yet been restored to Xinjiang since the riots in July, the announcement of Hu Jintao’s heir during last Tuesday’s Fourth Plenary Session was postponed, and the recent Sino-America trade dispute over increased U.S. tariffs on Chinese-made tires is unresolved.
Regime leaders generally use overseas trips to boost their political credentials. An examination of the challenges that Hu is facing, however, would indicate that his recent visit comes at an inconvenient time.
Heir apparent fails to win in party plenum
The failure of Hu Jintao’s heir apparent, Xi Jinping, to gain promotion in last Tuesday’s Party strategy meeting has brought widespread speculation.
Current second-in-command Xi Jinping was widely anticipated to be promoted to the position of deputy chairman of the Central Military Commission during the meeting, and the move would have assured his smooth ascension to the future Party leadership.
That Xi was ultimately not promoted raised questions among commentators about power succession in China. Some China observers in Hong Kong commented that the incident reflects intense internal political struggles.
A truly ‘Forbidden City’ ahead of national day
Meanwhile, the regime will hold a robust military parade on Oct. 1 to celebrate the 60th anniversary of the its rule. The last military parade for a National Day celebration took place 10 years ago. This time, in an undertaking of expense and magnitude that rivals last year’s Beijing Olympics preparations, the regime is even more determined to showcase itself.
Since early September, over 7,000 armed police have patrolled Beijing through the night, and passengers who enter the city via train or bus have been made to show identity cards. The regime has also mobilized a vast network of over one million “volunteers” to participate in security work.
Red armbands, reminiscent of the Cultural Revolution, are also being distributed to restaurateurs, barbers, and shopkeepers, according to official propaganda. “The sea of red armbands will frighten the potential attackers,” an official Beijing Web site quoted an official as saying, without identifying who the attackers might be.
The heightened security reflects the vast pressure the regime is experiencing from China’s current climate of social unrest. The ruling CCP regards failure to suppress dissent as equivalent to its own demise.
As a sign of the extremes in security measures, carrier pigeons and kites are prohibited from the capital. Dissidents and appellants are banned from Beijing, too.
Fruit and cooking knives were also temporarily banned from sale after two stabbing incidents in the city.
Beijing has been turned into a truly forbidden city, at a time when a communist totalitarian regime has gained its enormous wealth by practicing capitalism.
Trade war?
The Sino-America trade dispute over increased duties on imported Chinese-made tires began right after the chairman of China’s National People’s Congress, Wu Bangguo, finished his goodwill visit to the U.S. on Sept. 10. He had signed contracts worth US$12.4 billion.
According to a White House statement on Sept. 11, “The President decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case.” Punitive duties were imposed on imports of passenger vehicles and light truck tires for three years to correct market disruptions caused by a surge in imported tires, set to take effect on Sept. 26.
Beijing responded immediately by announcing an investigation into alleged dumping and subsidizing of U.S. poultry and automotive exports.
The possibility of a trade war between the two nations loomed just before Hu’s U.S. trip. A Chinese Ministry of Commerce official told China’s National Business Daily that the U.S. government had “adopted an inappropriate measure for an inappropriate product at an inappropriate time.”
The Treasury International Capital September Report shows that in July China again started to increase its holdings of U.S. treasury bills by US$24.1 billion. Its total holdings again exceeded US$800 billion.
However, just one month ago, Chinese media had widely praised the regime’s decision to reduce its holdings of U.S. treasury bills by US$25.1 billion (from US$801.5 billion in May to US$776.4 in June).
The state-run Beijing Youth Daily published an article on Aug. 19 titled “A Wise Move for China to Reduce Its Holdings of U.S. Treasury Bills,” which says: “China must make a choice—to continue fooling ourselves as well as others by purchasing U.S. treasury bills in large volumes and watching its depreciation, or to look for breakthroughs by actively adjusting the foreign reserve investment structure.”
A 2000–2009 report from the Chinese Academy of Social Sciences states that China’s ability to purchase foreign reserves has shrunk 50 percent. “It is especially important to look for ways to increase the value or maintain the value of the foreign reserves,” according to the Beijing Youth Daily report.
Besides, Beijing’s economic stimulus package has only opened the gate for speculation in the Chinese stock market and housing market, deepening the worry over fueling a bubble economy. Where the Chinese economy is heading has become one of the regime’s biggest preoccupations.
Beijing’s ability to threaten the U.S. by reducing U.S. treasury bill holdings is questionable. What’s next is to see how Hu Jintao will avoid the mire of trade protectionism in negotiations with Obama.
Read the original Chinese article.
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