China’s Premier Steps Up to Issue Economic Warning

Welcome to Foreign Policy’s China Brief.

The highlights this week: Chinese Premier Li Keqiang hosts a high-profile video meeting on the economy, a new cache of police files from Xinjiang adds to a growing body of evidence of state atrocities, and Airbnb gives up its Chinese business.

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Chinese Premier Li Keqiang hosted an unexpected video call for government officials at all levels on Wednesday afternoon, which focused on the economy. More than 100,000 viewers were on the call, according to Chinese social media. The meeting came two days after the State Council rolled out a 33-point program to stabilize the Chinese economy, which is buckling under the weight of repeated COVID-19 lockdowns.

A seemingly legitimate transcript of the meeting circulating on social media suggests that Li had mostly bad news to share: China’s economic indices are at record lows, national and local government budgets have shrunk, and a hoped-for recovery in May has barely materialized. Li said the situation appears worse in some ways than when China locked down in 2020.

By contrast, the front page of Wednesday’s People’s Daily tried to put a positive spin on the economy, highlighting “brighter” prospects and Chinese President Xi Jinping’s leadership. But it’s unclear if this language will reassure investors, business leaders, or the public. It’s possible that Li’s realistic acceptance of challenges—a tone he also struck with foreign business leaders in a meeting last week—is a better sell.

The appearances are likely to fuel recent speculation that Li’s political star is ascendant and that he may even keep his position alongside Xi during leadership changes due later this year. There is also talk of a split between the two leaders and even a power struggle. Some analysts suggest that Xi is driving China’s continued and costly commitment to zero-COVID, while Li and other officials oppose it.

However, the contrast in messaging is not necessarily evidence of a serious divide or even of greater power for Li. There are plenty of other explanations: Li may be taking the hit for Xi in delivering bad news, or he may have been given token prominence as a concession during his last year in office. Although Xi plays the most critical role in setting China’s zero-COVID policy, abandoning it is a decision with genuine health and institutional costs, not an exercise in dictatorial will.

Furthermore, there is little sign of Xi faltering. State media outlets are producing new rounds of fulsome hagiography, and party media may grant him a leadership title previously reserved only for Mao Zedong. In a routine appearance on Wednesday, Xi took applause as usual while Li trailed behind. Meanwhile, some claims that Li has gained renewed prominence are based on routine coverage of official duties that has just gained more attention than usual.

Speculation like this grows largely because the rest of the world—and most people in China—have no window into the decision-making processes or power struggles among Chinese Communist Party (CCP) leadership. The code of silence around the leadership is tight, and reporters’ sources are often at least two degrees removed from core political power; they tend to be Western-leaning academics or technocratic officials.

Long-running questions about the political leadership—such as why Xi disappeared from public events for two weeks during a critical leadership transition in 2012—still lack clear answers. Instead there is a just a flurry of poorly sourced rumors and speculation. The absence of information leads some anti-CCP diaspora media to churn out unattributed claims, sometimes irresponsibly repeated by mainstream media. (Take the recent false story that Xi suffered a brain aneurysm and was rushed to the hospital, which ended up in the Daily Mail and Sky News.)

Ultimately, the general public won’t find out about power struggles until they have visible consequences—be they dramatic, as in the Bo Xilai case, or relatively boring, such as the leadership changes expected at the party conference later this year. But the economic problems Li mentioned this week are playing out in plain sight, for all in China to see.

Xinjiang files. A new cache of documents and images hacked from two local police stations in Xinjiang was released on Tuesday. As FP’s Christina Lu writes, the files add to the already considerable evidence of China’s atrocities against the Uyghurs, including that police were given explicit shoot-to-kill orders. It’s striking how much information came from two local stations, which detailed more than 6,000 arrests, mostly for participation in the cultural or religious rituals of Uyghur life.

Meanwhile, United Nations human rights chief Michelle Bachelet is on a visit to Xinjiang that the U.S. government and human rights groups have criticized as more likely to be used by the Chinese government as an endorsement of its policies than to discover new information about the treatment of the Uyghurs. Though Bachelet has said she will have meetings that are not arranged by the Chinese government, that is meaningless in an atmosphere of fear and intimidation in which Bachelet’s every move will be surveilled.

For a sense of the lengths people have to go to if they want to speak freely in Xinjiang, see this piece in ChinaFile by anthropologist Jo Smith Finley, which describes an old friend driving her into the countryside to feel safe having an honest conversation.

U.S. school shooting horrifies Chinese public. The horrific school shooting in Uvalde, Texas, on Tuesday has drawn considerable coverage in Chinese media, which often focuses on U.S. gun violence and police killings. The technique is reminiscent of the Soviet focus on race issues in the United States. Like the Soviet accusations, coverage of violence in the United States is both rooted in fact and exploited to distract from China’s own human rights abuses.

However, the coverage also reflects a genuine fear among the Chinese public: Chinese parents have given gun violence as a reason for increasingly choosing Australia, Canada, or the United Kingdom over the United States for their children’s education. Mass shootings are rare in China, which has strict gun control. An ongoing rash of knife attacks in schools began in the 2010s, but the attackers are generally middle-aged, rather than teenagers themselves.

Airbnb exits China. Airbnb is giving up its Chinese business, which never really took off despite grand hopes for the mainland market. The short-term home rental company suffered in part because all visitors are supposed to register with the local police anytime they stay anywhere in China—even just with friends. Hotels carry out these ID checks routinely; Airbnb attempted to put the burden on visitors but opened itself up to complaints by police about its operations.

Racism against minorities, especially Uyghurs, is also common in Chinese hotels. Uyghurs and others without proper ID were long forced to resort to so-called no-show motels that didn’t require police registration but were generally low quality. The crackdown against the Uyghur minority led to closures and created problems for Airbnb when Chinese hosts openly discriminated against guests.

Henan bank crisis. Four banks in Henan province have frozen withdrawals, seemingly because of their entanglement in an online Ponzi scheme. The moves have prompted protests by hundreds of people—often an effective tactic to pressure Chinese authorities to respond quickly to financial scandals and make at least partial restitution. (It does cut both ways: In 2017, protests after a pyramid scheme collapsed led police to arrest many suspects but also dozens of protesters.)

Online scams exploded in China in the 2010s, often through peer-to-peer lending and other dubious investments; they were one of the prompts for the government’s crackdown on Alibaba, a leader in financial technology innovation that often created space for scamming. As in Henan, conventional banks have sought such schemes to compensate for their own growing debts.