On the eve of the G-20 summit, Chinese leader Xi Jinping spoke about challenges within the Chinese Communist Party (CCP) during a meeting with senior cadres in the Politburo. Meanwhile, the state-run, Beijing-friendly Tsinghua University released a report concluding that the U.S.–China trade dispute would have minimal impact on the Chinese economy.
Both moves suggest that Xi would not make major concessions when he meets with U.S. President Donald Trump at the upcoming summit in Japan, China observers said.
Trump and Xi are expected to meet on June 29, on the second day of the summit. It will be their first face-to-face meeting after U.S.–China trade talks broke down in early May. U.S. officials alleged that Beijing had backtracked on agreements that both parties made during previous talks.
Meanwhile, Reuters quoted a senior U.S. official on June 25 as saying that Trump will treat the meeting with Xi as a chance to see Beijing’s opinion, and is “comfortable with any outcome.”
Trump has said he would make a final decision on whether to impose new tariffs on $300 billion worth of Chinese goods after meeting with Xi.
The Party’s Politburo, a 25-member body, organized a group study session on June 24, where Xi gave remarks.
He called on all Party members to fully trust the senior officials, do whatever the Party asks, and to report anybody who doesn’t follow the rules.
“Factors that may weaken the Party exist at every minute … the risks that can shake the foundation of the Party are everywhere,” Xi said.
Xi didn’t make any allusions to external threats such as the current trade dispute; he continually emphasized that problems exist from within.
In a June 25 report, Taiwan’s official news agency Central News Agency interpreted Xi’s words as meaning “the risks that can shake the CCP’s foundation are everywhere inside the party.”
“My understanding is that the infighting between different factions right now is very intense,” U.S.-based China commentator Tang Jingyuan told the Epoch Times.
Tang’s observation is that the Party has two groups of senior cadres who are against making any compromises in the U.S.–China trade dispute.
One group believes that the CCP doesn’t need to cooperate with the United States. Another group, comprised of those associated with officials who have been sacked amid Xi’s anti-corruption campaign, are opposed to Xi’s leadership. This faction believes that fruitful cooperation between the United States and China would benefit Xi, and hence, don’t support a resolution to the trade war.
In this context, Xi’s remarks indicate that he needs to satisfy these groups in order to maintain his leadership position, Tang said.
As the Party’s annual secretive conclave for senior officials at Beidaihe is approaching, Xi is also keen on preventing internal attacks on his leadership as they prepare to discuss key policy decisions, Tang said.
“To make sure that he won’t be criticized too much by the other CCP factions and keep his position as CCP leader, Xi won’t make big compromise during the G-20 summit,” Tang predicted.
Tsinghua Think Tank Report
Meanwhile, the Academic Center for China’s Economic Practice and Thinking (ACCEPT), a think tank founded by Tsinghua University’s School of Economics and Management, released “China’s Macroeconomic Analysis and Forecast Report” on June 23.
In the report, ACCEPT argues that China’s economy has been performing well, and projects that the middle-class population will double in size from the current 400 million within 15 years, according to the South China Morning Post.
David Li Daokui, the think tank’s chairman, also told a seminar in Beijing on June 23 that China’s gross domestic product (GDP) will grow 6.3 percent this year. “The direct impact of the trade war is very limited and controllable.”
On June 5, the International Monetary Fund (IMF) cut its 2019 GDP growth forecast for China from 6.3 percent to 6.2 percent, due to heightened uncertainty around trade frictions.
Tang Hao, a U.S.-based China affairs commentator, also pointed out that as foreign manufacturers move their production out of China to prevent U.S. tariffs, the Chinese economy will face more challenges.
Economic Indicators Point to a Struggling Economy
Prices of consumer products are rising. According to China’s National Bureau of Statistics, the country’s consumer price index (CPI) annual growth rate reached 2.7 percent in May, which is the highest since February 2018.
Meanwhile, China’s purchasing managers’ index (PMI) was 49.4 percent in May, which is 0.7 percent lower than April.
Li Muyang, the host of a news analysis show on the U.S.-based broadcaster NTD, commented that the Tsinghua report was meant to paint a rosy picture of the economy to fool Xi, “making him unable to see the real situation.”
“Not only this report, but most of the CCP’s reports have said that China’s economy is doing well. Xi may believe it and thus, won’t give in when he talks to Trump,” Li told The Epoch Times on June 25.