An economy reforged: Jude Blanchette and Lizzi Lee on China’s new era

Below is a complete transcript of the Sinica Podcast episode with Lizzi Lee and Jude Blanchette.

Kaiser Kuo: Welcome to the Sinica Podcast, a weekly discussion of current affairs in China produced in partnership with The China Project. Subscribe to The China Project’s daily Access newsletter to keep on top of all the latest news from China, from hundreds of different news sources, or check out all the original writing on the site at TheChinaProject.com, including reported stories, editorials, and regular columns, as well as a growing library of videos, and, of course, podcasts. We cover everything from China’s fraught foreign relations to its ingenious entrepreneurs, from the ongoing repression of Uyghurs and other Muslim people in China’s Xinjiang region to the tectonic shifts underway as China rolls out what we call the Red New Deal. It’s a feast of business, political, and cultural news about a nation that is reshaping the world. We cover China with neither fear nor favor. I am Kaiser Kuo, coming to you from Chapel Hill, North Carolina.

Today on Sinica, we’ve got a conversation with Lizzi C. Lee and Jude Blanchette from our NEXTChina conference taped on November 10th. It’s a fascinating discussion with two of the smartest folks in the China-watching space. Please enjoy.

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Kaiser: I’m really psyched about this next one, because we will be joined by two fabulous guests for what is in fact Part 2 of a Sinica Podcast that we put out just a couple of months ago, not even quite two months ago. I promised during the taping of that show that we would reconvene during the NEXTChina conference and that we would revisit some of the same questions we looked at back then. Now that “some time” has passed. So let me welcome back on Jude and Lizzi. Please join me on the virtual stage and let’s rock and roll. Let’s introduce our guests. Shall we Jeremy?

Jeremy Goldkorn: Let’s do that.

Kaiser: Lizzi Lee is an economist-turned-China-analyst and presenter at the excellent Wall Street TV, which is my favorite YouTube channel. Certainly my favorite Chinese-language YouTube channel. It is the best Chinese-language news to be found in the U.S. No Guo Wengui nastiness, no Falun Gong idiocy. It’s just great. She has been a contributor to The China Project, and is an amazingly keen observer of the Chinese political scene. Lizzi, welcome back.

Lizzi: Hello, Kaiser. Happy to be here.

Jeremy: And Jude Blanchette is the Freeman Chair in China Studies at the Center for Strategic and International Studies (CSIS), and he is a frequent guest on our show. He hosts CSIS’s excellent Pekingology podcast and is the author of China’s New Red Guards: The Return of Radicalism and the Rebirth of Mao Zedong. Jude, thank you so much for joining us again.

Jude: Thank you. It’s a pleasure to be here.

Kaiser: We should point out that that book is not actually about what we’re calling the Red New Deal.

Jeremy: A different red period.

Kaiser: First of all, Lizzi, when we spoke back in September, you still weren’t quite convinced that we are seeing something that is part of a broader overarching program. You almost had me completely convinced that… Jeremy, I don’t know if you felt the same way, but you did complicate my thinking on this, which was always welcome. So you and Jude were really tag-teaming, working together…to remind the people who hadn’t listened to the show, they talked about the political calendar and the sort of logic of that political calendar in the run-up to the 20th Party Congress next fall, and talked about pent-up regulatory demand, that because of the COVID-19 pandemic, a lot of things that would’ve been on the docket just got pushed back. I was a little discombobulated, to use Jeremy’s phrase, but where are you on this now? Are you seeing this differently now?

Lizzi: Right. So first just let me clarify a little bit. I think last time I mainly wanted to caution against the use of overarching umbrella terms to subsume all China-related issues to things like “Party control,” Xi Jinping’s strongman tendency. And now I still think it’s quite important to understand the individual pieces when we talk about anti-monopoly driving China. I think it’s important to understand the agencies like SAMR, CAC, MIIT, what they are, what they actually do, instead of jumping to the conclusions, “This is just an insult on private sector,” that kind of argument altogether. But I will say, I feel that I wasn’t completely able to see the forest for the trees, especially on the social issues. I remember last time when I was talking about the crackdown on fandom culture, the crackdown on online gaming, I mostly thought it was a Xi Jinping thing, it’s his standard for morality or whatever. But I may think on that front, it changed a little bit.

If you remember in August, there was this piece published in Qiushi [a leading theoretical journal of the Chinese Communist Party], I think we will get to it a little bit later, but basically Xi Jinping made an explicit mention of this idea of lying flat, right? This popular life philosophy among many Chinese young people who want to escape the rat race without explicitly contributing productively to society. And I think Xi Jinping said something like, “Oh, well, happy life is burned through hard work, common prosperity is created through diligence.” Right? And he talked about common prosperity as an environment where everyone can participate in the development of the society, avoiding involution, avoiding lying flat. So that speech sort of helped me tie in the social piece more closely with the economics piece. And on the pent-up demand versus political calendar, I think I tend to appreciate Jude’s wisdom a little more than I did last time, but I’ll just leave it to Jude to elaborate more.

Jeremy: And perhaps I can ask Jude, our last conversation took place before Qiushi had published Xi’s speech in August, and as Lizzi mentioned, before the introduction of subsequent regulatory actions that we’re often being couched in terms that explicitly tied them to a broader agenda. What developments have nudged you more toward seeing all of these things as a holistic package, seeing the shape of the forest now, as Lizzi had put it.

Jude: I think first is, there are some of the actions which I wouldn’t put in this holistic view of either your Red New Deal or this overarching common prosperity framework. So I think there are still some things that we were talking about over the summer, which don’t slide in. And I think of the DiDi IPO, I don’t think that fits broadly in a New Red Deal. And that really, for me, was the issue we were looking at front and center and set off this real cascade of action. But I agree. I think one of the beauties of working on China is you never have to admit you’re wrong. So I’ll just evolve my analysis as if I never was saying all that. But I do, I think a couple things happened.

Number one is, first of all, Xi Jinping came out and packaged it all together. And Lizzi just mentioned this common prosperity push. And I think also now, getting some of the narratives that are surrounding the plenum, we haven’t seen the history resolution yet, but it’s clear now what they’re saying is, “We’re in a new era.” Now Xi Jinping has been saying, “Hey guys, it’s my era” since the 19th Party Congress, but I now think actions and rhetoric are coming together in a way that’s been, I think, demonstrative that something different is happening here. And then even when you look at issues, like, I know we’ll talk about real estate later, but again, this idea of rhetoric matching actions, the degree to which Beijing is trying to effectively draw a line on real estate, and say, “We’re going to do our best to break the back of moral hazard.” To signal that this time is different. I think that’s what’s been really surprising for me.

For so long Beijing would come up to the precipice and then return back to the old tools, kick the can, and the problem would snowball down the hill. And I think over the past year, COVID-19, for certain, we didn’t see this massive stimulus package, which many of us were expecting. They sort of just, they ground their way through. And now I think on a range of regulatory measures, but especially the property sector, it’s clear now that they’re putting political will behind this. So I think it’s those features coming together. Xi Jinping tying this in a bow, the propaganda threading the narrative for us, and then seeing the regulatory actions really match the rhetoric. It’s clear something different is happening now.

Kaiser: Yeah. You say “we” in the China studies field, we don’t have to admit that we’re wrong, but that doesn’t mean that we still can’t brag when we were right. Right?

The time since the last podcast, I’ve advanced the hypothesis about why this is all happening. And it really draws to quite an extent on our earlier conversations. I mean, in a nutshell, and I’ve talked about this before, my sense is that China had undergone these involuntary stress tests just across the last three years. And this has been brought up before. I mean, earlier today during this conference. My sense is that in these were, of course, the trade war, the tech cold war, some people have called it. Of course the COVID crisis, especially the COVID crisis, Yasheng pointed out it looks particularly good in comparison to the United States. There was the international opprobrium over Xinjiang and over Hong Kong and a lot of other things, and China feels like it has emerged from this with, as I’ve said before, more regime support, more political capital, more confidence in its state capacity and, rightly / wrongly, the lesson that it draws is that it can endure short-term pain and reap long-term gain, right? It’s time to break the eggs and make the omelet, or time to whatever, pull the bandaid off.

This is not to suggest that they’re going to prevail. And I think there’s a lot of worry about overreach out of an abundance of hubris, right? So Lizzi, do you think I have this right? I mean, do you think that there are other factors maybe that have convinced Xi and the Party leadership that this is the right time to act?

Lizzi: Right. So first I will agree that China does think it emerged triumphant from what’s perceived as a hostile external environment. And I would add that it’s not just a grand facade to display strength to mask Xi Jinping’s insecurity. I think it’s more complicated than that. I think it’s a genuine sense of confidence. And I also like, and agree, with the short term versus long term trade-off kind of framework to think about this issue. But in addition to the political capital piece, which you just mentioned, I would just add that the short term, long term thinking is also deeply tied into sort of the economic logic here. This audience would know that for quite some time, China’s success is basically defined by GDP scorecard. And there’s, say, perhaps an overly simplistic argument that CCP’s legitimacy also stems from his ability to deliver growth.

But along that way, sacrifices like raising inequality, raising living cost, rent and property prices, deteriorating environment, poor social safety nets, they’re treated as second-order issues. And I think now analysts would agree that common prosperity fundamentally is a shift of priority from efficiency to equity or in Xi Jinping’s own word, previously it was about making the cake larger, now it’s about dividing the cake more evenly. So that’s sort of a great way to frame this, but I would also argue that there’s also a fundamental logic, common prosperity is also fundamentally an economic growth concept in a sense that we are basically trading off short-term pain in terms of GDP growth in exchange for long-term, more sustainable, healthier growth pattern, reorienting to consumption, less wasteful investment in society or wasteful investment, and also reining in rampant debt.

So, that’s sort of the trade off that we are thinking about. So if I’m the decision maker in Beijing, and if I wanted to think about optimal timing, when I’m going to push it through, well, ideally I would want to do it when short-term cost is the lowest and long-term gain is the highest. So when is short-term cost the lowest? And my argument is that it’s really the year post-pandemic in a sense that, well, first there’s a base effect, last year was crappy. So if you’re just doing moderately well this year, your GDP growth still looks stellar. That’s just the artifact of the number. And then there’s also a post pandemic demand search, what we call the reopening effect, right? So when basically all the sectors are opening, it’s easy to get that GDP boost.

And depending on what kind of analysis you look at, that post-pandemic tide, actually gives you an extra two to three percentage point of GDP growth, which, it’s a pretty comfortable room for you to maneuver and to sort of push through short-term growth dampening initiatives that could potentially be hard in other times. So I do think this year of post-pandemic is a year when short-term cost is the lowest. And if you wanted to push through these initiatives without making a dent in your GDP scorecard, this is the right time to do it.

In terms of long term gain, I would argue that it’s optimal to do this when the deadlines for deliverables are far in the future. You know, you can do this at the beginning of a Five-Year Plan. You can do it at a beginning of your term. And Xi Jinping can still harvest the full benefit of the long term growth benefit, the long term sustainability benefit that’s further down in the future.

So, combining those two factors, I would argue that this is indeed the optimal timing for China to push through this common prosperity initiative in terms of lowest short-term cost in highest long-term gain. And also you mentioned political capital. I think with the Sixth Plenum, with the historical resolution, this ideology conference inside of the Party, Xi Jinping is really taking advantage of inner Party utility and inter-Party unity, and also his moment of maximal political capital.

Jeremy: So we’ve got great timing and for China, great name, common prosperity. Jude, how do you feel about the name we’ve been giving it at The China Project, Red New Deal? Is it illuminating or is it confusing? Does it sound too benign or too terrifyingly Communist?

Jude: I guess to show how far I’ve moved since our last conversation, I actually think it underestimates what’s going on here. And I have come to the conclusion, I think now that we’re pulling a lot of these threads together — I think Lizzi’s analysis was very much the analysis of an economist, but it was great, but I think really what she was saying is — for Xi Jinping the time to push and pay a price is now. But I think more fundamentally what’s happening is we’re entering an entirely new era of China’s development model. And I think this will be seen as profound a shift in the trajectory of Chinese growth as 1992. I wouldn’t say ’78, ’79, but I would certainly say 1992. And I think it’s the correlation of an external environment, which is drastically different from what China has experienced from 1990 to 2016.

I think a political evolution under Xi Jinping — or devolution, I should say — is probably more likely, considering that he’s now going to take a third term. But I think more fundamentally, and Lizzi I think is spot on, one of the reasons you were going broke for growth in 2005, for example, is you had 15 to 20 new workforce entrance. Now you’re losing one to two million a year. And the new workforce entrance you have coming out of Chinese university systems don’t want to work in low-skill manufacturing jobs. They demand higher value-add jobs. So when Xi Jinping said in 2017, which I didn’t fully appreciate the profundity of this, that the principle contradiction had changed from boosting aggregate productive capacity to qualitative growth, there was a time lag, I think, of three or four years, but it’s finally clear that he’s now got the political credibility and I think the sort of the domestic support and the international environment is operating in a way that sort of, I think boosts his message, that folks, it’s time to gird our loins, batten down, and really push through these painful reforms.

What’s interesting to me is I remember being in Beijing in 2012, 2013, where there was a view that Xi Jinping might be a reformer. You had the Third Plenum. Then we went back and said, “No, no, no, he’s actually breaking hard to the left, but maybe that’s because he’s going to break to the right and push for more marketizing reforms.” And again, what I’m realizing now is actually he was going left to go left. He was essentially consolidating authority and power because he was going to reform, but it was a different type of restructuring and reform than I think many were, at banks and financial service firms, were hoping. But I think now the job for us is to understand what Xi’s conception of a modern socialist nation entails because that’s the roadmap between now and 2035, is building out that system. And it’s tackling a lot of the issues that Lizzi mentioned. It’s reforging an economy, which is resilient to supply chain shocks and volatility. I think this is just a fundamentally new period we’re entering into.

Kaiser: It’s exciting time to be in our business. Yeah. You know, and Adam Tooze has actually written that question and said, “Is this what it sounds like when an economy shifts gears completely?” And it was remarkable when he said it. And we’ve talked a little bit, earlier in this conference, about the deflation of the property. But, well, again, it was Adam who talked about sort of the daring of pricking the pin and taking the moral hazard out, I think as Yasheng said. This planned demolition, right. We’ve all been aware of this, but it all depends on the ability to prevent contagion. The property market is just so integral to the rest of the economy, both upstream and downstream. It seems like a load-bearing wall that you just can’t knock down as part of the remodeling. What are the risks involved in here, Lizzi?

Lizzi: Great. So I definitely agree with that assessment. I actually think China’s property market is probably, well, sort of correcting China’s property market is probably the key pillar in this common prosperity drive. And I would go so far as to say that I think it’s the ultimate test of Beijing’s political drive. This is really the hardest piece we’ve seen so far. This audience would know that China’s property market has been a driver for China’s growth in China’s wealth accumulation over the past two decades or even more, but it’s also a cost for inequality, depending on which number you look at. Well, growth related to the property market is probably 25% percent of China’s total GDP growth. And if you look at household wealth, roughly 70 to 80% of household wealth is locked into house value. So that’s quite significant.

So here’s the fundamental contradiction. If you correct the value of the property market, then the drop in property value could potentially make homeowners feel poorer through the wealth effect, and that could potentially have an effect on their consumption. So, the contradiction is, well, you want to reduce housing prices, but by reducing housing prices, you also reduce house wealth. And by reducing house wealth, you also reduce their tendency, well, their propensity to spend or propensity to consume. Basically you’re hurting the group of people you’re trying to help to start with. So that’s kind of a hard problem to solve. And by sort of overly reducing property value in China, I would argue it’s like shooting oneself in the foot. So it’s a hard problem.

And second, as Kaiser mentioned, there’s also this problem of risk contagion; as you know, property market is not isolated, there are lots of upstream suppliers in construction, in property management, in sales — downstream buyers, household, they’re all very much interconnected. If you look at what the officials are saying from PBOC [People’s Bank of China], their assurance is very much along the lines of, oh, we’ll be able to ring fence the risks that property giants like Evergrande’s collapse posed to the entire financial system. The so-called controlled implosion without risk of contagion.

But the thing is when it comes to Evergrande or those property giants, it’s definitely much more complicated. I mean, I think from the number I saw, around two-thirds of liabilities owned by Evergrande is tied to this vast network of enterprises, suppliers, contractors, subcontractors, and their form of financing is not as clean as we would imagine. Much of it is not even on paper. So how do you solve that complicated supply chain finance problem without accidentally firing up a risk that leads to systematic insolvency? I think that’s a problem that requires careful thinking and actually Angela Zhang and co-author had a great piece on this, on sort of the supply chain finance vulnerabilities associated with Evergrande, which I highly recommend, but the point—

Jeremy: Isn’t there another key risk of cutting off a vital revenue source for local governments, because that is traditionally how they finance themselves? How can China possibly deal with that challenge of essentially making local governments find a whole new way to pay their bills?

Lizzi: Yeah, that’s actually sort of the point of my last point I was about to get into, but those structural challenges in the text and revenue model of local versus central government, I think it’s deeply ingrained. It’s really hard to change. In fact, if you look at the debate on property tax reform, it was actually one of the top three physical reform priorities outlined by the ministry of finance, I think in 2013, following the Third Plenum. Tt was mostly, well, roughly a decade ago, and at that time the finance minister was Lou Jiwei. He promised to have this gradual transition away from the original model to this property tax model, basically recurring tax on property values as a way to reduce China’s rampant housing price. But ironically, local governments, basically, strongly lobbied against that transition, because exactly as Jeremy just said, their finance relied heavily on land sales and adoption of property tax would just impair their infrastructure investment.

So how do you actually fix the system? It failed once. Is Xi Jinping going to be successful this time? I honestly don’t know. But that’s the extent of how hard this is. The Party made a promise and didn’t realize that.

Kaiser: That’s such a difficult needle to thread. I mean, it just seems so amazingly challenging. What do you think are the keys? If there’s a key to success in doing this and addressing these really intractable, deep-rooted problems, what are some of the things that they need to get right? What do we need to look for to see them actually have a chance at even succeeding in this?

Lizzi: Right. So, that’s a great question. And here, I would just propose a bunch of ideas, maybe none of them work.

But first, as a former economist, I would say take a more path dependent approach, in a sense that, there are multiple problems. There’s solving the tax revenue model problem. There’s a reducing property value or reducing housing price value. There’s the debt problem. There’s other related issues related to supply chain vulnerabilities. So I would say, figure out which piece to attack first and do it slow and small, right? If you wanted to roll out a property tax, probably not a nationwide rollout, first pick a few areas to try it and try different magnitudes and try different orders and see how the feedback is revenue sufficient and have that experimental approach instead of a command and control approach, which is what we’ve been seeing so far. I think that would be beneficial.

And second, I would just mention that I think signaling or messaging is incredibly important, and I think the Party has not done a good enough job in messaging market expectation. I think the most obvious case is on the messaging surrounding common prosperity. Remember when Xi Jinping first made the speech on common prosperity, he mentioned this idea of tertiary redistribution, and that just shocked the market. People were like, what are we going to do with this Robin Hood-style approach to wealth inequality, right? And all the tycoons sort of… are they going to contribute all their wealth, what’s going on there? And Xinhua came out with a piece later on, basically elaborating on the idea of common prosperity in telling us, well, it’s not egalitarianism, it’s not robbing the rich to help the poor, as misinterpreted by some hostile Western media.

But the point is, if you don’t want Western media to input it that way, why can’t you get the message right the first time around? And I do think as you mentioned, there is this tendency to sort of overshoot, then pull back. And that’s really not the ideal way to do things. If you can get the message sort of more gradual, slowly put that in, it would be a more optimal way to deliver that message. That would be my message to Xi Jinping.

Kaiser: Absolutely, I think that messaging is important, not only for foreign investors, but also for the people who are hoping to be made whole by this whole thing. Lizzi, there are a couple requests that I’ve seen in the chat and in the Q-and-A, that you repeat the name of the author and the title of the piece on Evergrande and supply chain finance risks.

Lizzi: Right. So I believe it’s Angela Zhang in Hong Kong and another coauthor, I can’t really remember [Alex Yang]. I believe the piece is published in Bloomberg Opinion, I believe.

Kaiser: Fantastic. Thanks. Thanks so much.

Lizzi: No worries.

Kaiser: Do you think that — Jude, I think both of you can take a crack at this — is Beijing now all-in on this, or do you think that they’ve left themselves room to…I mean as Jude suggested, run up to the cliff and then back off, or are there maybe a better metaphor? Are there off-ramps to this right now? Are there ways, or are those things where they can… when you’re going downhill and trucks have those sort of off ramp things that they can slow their roll. What do you think Jude, do you think Beijing’s all-in on this now?

Jude: Yes and no. I mean, no, they’re off-ramps. I mean, we’re already seeing this with the rollout of the property tax plan. They’re doing it in trial zones. With Evergrande right now, of course, they’re trying to wring out sort of the froth of the market. They’re already starting to loosen up some of the three red lines because they don’t want to grind the whole thing to a halt. So I think to some extent, the tried and true method of trial and error is — and local level experimentation with this — is likely to be how they’re going to move forward. The difference, though, is Xi Jinping is saying the runway on this is long and consistent. Don’t expect us to turn the corner. We’re going to have to essentially push and pull back as things work and don’t work.

And the other thing too, I think on all of this, just so I don’t sound like I’ve drank the Xi Kool-Aid when I say he’s shifting the growth model, reality gets a vote in all of this, and this is an extraordinarily daunting set of objectives he’s set for himself. And I should also say, the way that he’s going about this with the Eye of Sauron approach from the center, I think China’s recent experience shows some of the governance pathologies that can come out of this approach of more top-down central planning. So I think this story has yet to be written. We’re at the first inning here, and I think there’s as many pitfalls as there are promises here.

And if I’m Xi Jinping I’m probably feeling pretty good right now. But as I look out, over the next two, three, five years, and to Lizzi’s point, all of these things are a massive accumulation of small and big governance challenges. And the sequencing and the timing and navigating vested interests, and making sure you’re prioritizing who gets the haircut and who doesn’t, there’s no clear blueprint for any of this. So I think all of us watching this externally, even as we think Xi Jinping’s got the plan, need to expect that I think volatility, unpredictability is going to be the norm, and with Xi Jinping essentially driving the boat in the same way that we were all surprised by the velocity and pace, and to some extent, the confusion and chaos around the swirl this summer, I don’t think that goes away. I think we’re going to see this move in fits and surges as it evolves.

Jeremy: What is related to all of this, the Eye of Sauron is, of course, what’s going on in Beijing this week with the Sixth Plenum of the 19th Party Congress. And so by the end of the week, sometime probably in the next 24 hours, we’ll know more about a historical resolution, only the third such resolution ever to be issued by the Chinese Communist Party.

How does this third historical resolution play into the common prosperity agenda, do you think? Maybe Jude, you can take a crack at that.

Kaiser: And then I’d love to hear Lizzi’s opinion on this as well.

Jude: Just very quickly, I think the function of the history resolution is more going to be mapping out and clarifying that we’re in the Xi era. And I think this is as much going to be demarcating — as the People’s Daily said, by the way, Tuesday morning — the era of revolution, national construction, and reform is over. This is a new era. And I think this is going to underline it, circle it, put the highlighter over it. And actually, I would say for folks who can’t wait a day or so to get the resolution, Xi Jinping’s speech in January about the new development concept contains about three or four paragraphs that sums up the history that feels to me like probably a precis for what the language is going to be in the resolution, in terms of what the overall message is.

But I think Jeremy, just very narrowly to your point, I think common prosperity is arguably going to be in here to clarify that this is going to be one of the dominant themes of policymaking and messaging to Chinese people: I hear you. We’ve moved from one phase where we had to build up aggregate resources, now I hear all your concerns, I understand that the sort of neoliberal logic has created a lot of negative externalities, it hasn’t met the rising needs of the Chinese people, so don’t worry, this is now going to be our focus moving forward. We’ve always been listening to the people. The people have always had different demands, but we hear you.

Jeremy: But if you are not on board with that agenda, we will ruthlessly crush you and grind up your bones.

Jude: That part is the quiet part they don’t say in the resolution, Jeremy.

Kaiser: To Lizzi’s earlier point, that doesn’t sound like terrible messaging to me. I mean, that sounds, and the way that I’ve seen it fall on the ears of many of my Chinese friends who are very critical of Xi, there seems to be a lot of buy-in. I mean, anecdotally, but—

Jude: Can I just make one point — I think that the part not said, though, is the deep anxiety I feel and hear is not about the policy agenda. It’s about Xi Jinping and sort of the idea now that he is going to be in power for an indeterminate length of time. I don’t think it means everyone is lockstep torches marching down Chang’an Avenue to unseat the guy. But I do think there is an unspoken quiet surrounding his taking this third term, even if you support the policy agenda.

Kaiser: Sure.

Lizzi: Right. Right. I completely agree. I’ll just add a couple points here. So if you look at the difference between this historical resolution versus the previous two versions, I think one key difference, the focus is on achievement rather than self-reflection. The previous two resolutions talk about problems, mistakes in the past. But as we can tell from the title of the third historical resolution, it’s going to be about the Party’s achievement in the past hundred years, and then a forward-looking piece sort of projecting into the future, which no one knows when it’s going to end. So I think that kind of, I don’t want to use the word hubris, but that kind of confidence, I think there’s elements of truth, there’s elements of grounding into it, but it’s also kind of scary.

So from my talking with people in China, I get this mixed sense of, yes, we are stronger, you guys in America did a terrible job during COVID. But there’s also this sense of insecurity. When is the end of it, how is he going to solve this succession problem? So I think it’s a mixed feeling there.

And onto Kaiser’s question on messaging: Here, I actually agree that the direction of common prosperity is quite clear. I don’t think there’s any room for change on that. But I did see, what I would call encouraging science on the willingness to course correct. Actually, before this, I read in Wall Street Journal that Chinese regulators in charge of sort of defusing the Evergrande bomb actually become wary of the financial risks of other property giants, that they are willing to consider to relax the three red lines a little bit so that those struggling developers can solve their assets to, say, state firms to avoid defaults and avoid hits to broader economy. So that willingness to be a little flexible on the margin, I think, is an encouraging sign. As far as I can tell.

Kaiser: You know Jude, you mentioned right now that they might not be marching down Chang’an Jie with torches, but can we see cracks? I mean, people have talked about them with respect to the rollout of the property tax, that is apparently not an entirely popular move. But is there a cohesion within at least the upper echelon of the Party leadership right now? Is there any evidence of any meaningful disunity or even dissent? Is that even possible right now?

Jude: I mean, I think we need a taxonomy of dissent just so we can make clear or put this on a spectrum, because within the next 24 hours, Xi Jinping is going to come out of the Sixth Plenum, have a history resolution, and he’s increasingly called “the people’s leader” on the front of the People’s Daily. So if there is arguably and clearly rising tension, frustration, some grumbling within certain pockets, which I think is inarguable, A) that’s been a feature of Xi Jinping’s reign for 10 years. He has smashed some iron rice bowls, purged, imprisoned…of course, a lot of this is not going to be popular. But I think the functional thing that we should be looking at if our threshold is, is there unpopularity? There’s unpopularity with Joe Biden. I think the thing we’re thinking about and watching for, is it rising to the level where A) his position in power is potential at risk, or B) the resentment frustration will be such that it could fundamentally undermine his policy agenda?

And I think the second one is more realistic to me where we’ll see pockets of buzuowei and all the classic pathologies of governance, which get in the way when the center wants to move the localities. But the first one, as I say now, and I’ve been saying for five years, it’s not the droid you’re looking for. It’s a waste of time to be thinking that, “Oh, he’s done it now.” Because every day, every August this happens around Beidaihe, and every August, he comes out large and in charge.

Kaiser: Yeah. You know, thank you guys so much. We’re right at time. What a fantastic conversation, it was everything that I was looking for. I think you can see, anyone who’s listening can understand why I have just so much admiration for these two and why they make such a fantastic duo on the set. So, you know what, we’re going to make this a regular feature. The Jude and Lizzi hour is going to ride again soon. Because this is going to be… I’m going to change the damn name of the show. This is going to be the Red New Deal podcast. That’s all we’re going to-

Jeremy: Or maybe we can call it exciting new developments on Xi Jinping’s new development concept.

Kaiser: Chronicling the new era. Thank you so much both of you. And I’m going to hand over to Jeremy and make myself scarce right now.

Kaiser: The Sinica Podcast is powered by The China Project and is a proud part of the Sinica Network. Our show is produced and edited by me, Kaiser Kuo. We would be delighted if you drop us an email at sinica@thechinaproject.com, or just as good, give us a rating and a review on Apple Podcasts, as this really does help people discover the show. Meanwhile, follow us on Twitter or on Facebook @supchinanews, and make sure to check out all the shows in the Sinica Network. Thanks for listening, and we’ll see you next week. Take care.