Observations by Qin Peng: The Third Plenary Session of the 19th CPC Central Committee to Open in July, Xi Jinping Prepares for “Jia Sheng Fan”

Audience friends, hello everyone, welcome to watch “Qin Peng Observation”. Today is April 30th in Eastern Time and May 1st in Beijing, Hong Kong, and Taipei time.

Today’s focus: The Third Plenary Session of the Chinese Communist Party (CCP) will be held in July, but the key issue of Xi Jinping has not been resolved yet, preparing a pot of half-cooked rice to serve.

Real estate stocks hit the limit up, policies for home purchases have been relaxed in multiple areas, but Beijing played a joke.

Why do M7 car owners of XPeng need to apologize? What is the biggest issue? CEO Yu Chengdong of “far ahead” has stepped down.

First of all, please pay attention to my new YouTube channel and Clean World channel in the comment section, thank you!

Before the May Day holiday, the Chinese Communist authorities rushed to release a batch of favorable news to stimulate holiday consumption intentions.

The most significant news was on April 30th when the CCP Central Political Bureau held a meeting deciding to convene the 20th Central Committee’s Third Plenary Session in July this year, focusing on further comprehensive deepening of reforms and promoting issues related to China’s modernization. The meeting will analyze the current economic situation and work, review the “Opinions on Continuously Promoting the High-Quality Development of Integrated Development in the Yangtze River Delta”.

Many have been eagerly awaiting an important decision, and finally, it came to light.

The timing of this decision, slightly later than previously rumored, but not significantly. In early April, after attending the “China Development High-level Forum” personally presided over by Xi Jinping, Douglas H. Paal, former director of the American Institute in Taiwan (AIT), revealed unofficial information that the CCP planned to convene the Third Plenum in June.

However, convening the Third Plenum in July set a new record: it is the first time in 35 years that the CCP has held the Central Committee Meeting in the summer. In June 1989, just after the CCP had just suppressed the student movement, a major seismic event occurred within the CCP leadership. The CCP held the Fourth Plenary Session of the Thirteenth Central Committee on June 23-24, and Xi Jinping is still not resolved:

Firstly, personnel issues are unsettled with the defense minister and minister of foreign affairs, accounting for two-fifths of the state councilors. Changes may also occur in the vice-chairmen and members of the Central Military Commission, requiring a reassignment of power and interests.

Secondly, there is no certainty on the major economic policies. Since the Eleventh Plenum, the CCP has used the Third Plenum as an important meeting to determine major economic policies, however, Xi Jinping has been consistently denying Deng Xiaoping’s reform and opening-up policy. Xi Jinping has attempted to focus on strengthening state-owned enterprises, promoting “common prosperity,” as well as boosting chip manufacturing and new energy vehicles. However, this approach has faced obstacles domestically and internationally, leading to the US-China trade war, opposition to the Belt and Road Initiative, and preparations by Western countries to counter China’s excess production capacity.

Now, with the Third Plenum approaching, based on recent reports from Xinhua News Agency and previous actions by Xi Jinping, under internal and external pressures, Xi Jinping has made a significant compromise, reverting to focusing on economic development.

Xinhua’s report indicates that Xi Jinping is striving to readjust and show the public that he has not deviated from his original intentions: “The meeting believes that since the beginning of this year, under the strong leadership of the Party Central Committee with Xi Jinping at its core, local regions and departments have exerted great efforts to promote the economy, consolidate and enhance the positive trend of economic recovery, with more positive factors in economic operation, increasing momentum, improving social expectations, solidly promoting high-quality development, showing characteristics of faster growth, optimized structure, and improved quality and efficiency, achieving a good start in the economy.”

However, there are few significant new developments in the economic aspects. Many policies seem to be following the previous path, without substantial innovations. Xi Jinping’s attempt to create new terminology to give the impression that he is active, such as “developing new qualitative productivity according to local conditions, strengthening the layout of the national strategic science and technology forces, nurturing and strengthening emerging industries, pre-positioning future industries, leveraging advanced technology for traditional industry transformation and upgrading, actively developing risk investment, and strengthening patient capital.”

The terms “new qualitative productivity” and “patient capital” were newly created expressions that sparked discussions and mocking on the internet. The term “patient capital” particularly drew attention and ridicule from netizens: “Patient capitalists? In other words, obedient, loyal, and closely attached!” “Don’t run away, have patience,” and “Patient capital means capital that is not driven by short-term profit. For example, investing in long-term capital that plans to profit in 70-80 years, commonly known as ‘foolish capital.'”

The online mockery alarmed the CCP internet censorship office, leading to a frenzy of content removal:

Looking at the contents of the Political Bureau meeting, the CCP is attempting to reintroduce some old ideas combined with Xi Jinping’s new approach. For instance, in 2018, Xi Jinping proposed “integration of the Yangtze River Delta,” among other initiatives. Future plans may incorporate these into the central economic decision-making. However, in reality, the CCP has been discussing the economic development in the Yangtze River Delta for over 20 years without substantial progress.

Over the past three decades, China’s rapid economic development and its position as the “world’s factory” were not solely due to the visionary leadership of any CCP leader but rather the relaxation of internal regulations and opening up to foreign investments. Meanwhile, genuine concerns have been raised, such as Professor Xu Xiaonian’s observation: “What I see is that the government has destroyed these industries.” For example, in Xi Jinping’s era, the education and training industry, platform companies, and more faced challenges.

Nevertheless, Xi Jinping is attempting to introduce some new concepts, such as the new national security view. However, these endeavors may counteract the efforts in the economic aspects.

On April 29th, Xi Jinping’s trusted official, Secretary of the Central Political and Legal Affairs Commission and Minister of the CCP State Security Department, Chen Yixin, published an important article titled “Comprehensively Studying and Implementing the Overall National Security Concept to Firmly Defend National Security” on the front page of “Learning Times”. This outlined new initiatives including the “five anti-struggle”: “win the fight against subversion and defense, fight against hegemony, fight against secession, fight against counter-terrorism and counter-spying”.

Balancing economic development while engaging in anti-hegemony activities and counter-spying reflects a fragmented approach.

Speaking of Xi Jinping’s new initiatives, we cannot ignore the latest incident involving Huawei’s &XPeng M7 collision. The incident exposed several long-standing and deep-rooted issues.

Issue one, Huawei displayed significant PR and control capabilities online, such as deleting videos and images of victims seeking justice and automatically changing the names of WeChat groups if they mention “Huawei.” Chinese financial media were also forced to compromise. On April 29th, 21st Century Business Herald announced the withdrawal of an article titled “Reflecting on the XPeng M7 incident: ‘Exaggerated promotion’ backfires, the cost of ‘far ahead’ should not be lives.”

Issue two, after the accident, those who had previously opposed the CCP and Huawei rallied to fight against who? It was against Huawei and staunch Huawei supporters. The victims of the incident were also Huawei fans, with one of them claiming before the accident, “Which car brand hasn’t had fatalities? I would rather die for Huawei, die for the motherland.” After the incident, Huawei fans used patriotism to force the victim to apologize to Huawei. Eventually, the victim had to release a statement, tearfully thanking everyone and requesting the deletion of untrue reports online to avoid further disturbances for themselves and their family.

This once again proves that Huawei is not an ordinary commercial company, being part of CCP’s national security and military apparatus. Its backing is from the top leadership and CCP, not just the government.

Issue three, last year, the mainland’s automotive industry app “Car Master” conducted tests revealing that the XPeng M7 doors couldn’t open. However, at that time, a group of Huawei fans and official spokespersons dismissed the issue by claiming that “Car Master” was being paid to discredit Huawei.

Such incidents where nationalism manipulates public opinion also reveal the hidden agendas behind China’s new energy vehicles, raising concerns about the true safety standards of these Chinese-made vehicles!

According to the latest Huawei XPeng M7 report for the first quarter, with a net profit of 220 million yuan and a gross profit margin of 21.5%, selling over 5000 units priced at over 500 thousand yuan each month, how much of this success is based on the imposed red brand premium? And how much remains concealed? This is a GDP tainted with blood.

According to a exclusive report by mainland technology media 36Kr, Yu Chengdong will step down as Huawei’s Terminal Business Group CEO while retaining the position of Terminal BG Chairman. Since November 2020, Yu Chengdong has been in charge of promoting Huawei’s smart selection car and related businesses. Over the past three years, Huawei has collaborated extensively with car companies like XPeng and introduced the four major Hongmeng Smart Mobility brands. Among them, the most recognizable brand is XPeng. Since the launch of the new M7 in September 2023, Xpeng has experienced peak moments.

Currently, it remains uncertain about Yu Chengdong’s future role. However, it is believed that Huawei will not change, and the various problems associated with Huawei will likely be buried in an information black hole as usual.

Several Chinese cities have relaxed their property purchase policies ahead of the May Day holiday, garnering significant attention online, especially in Chengdu, Tianjin, and Beijing.

The price cuts are influenced by two main factors. Firstly, concerns about property prices and issues with delivering the homes have deterred prospective buyers, shattering hopes of a rebound in the Chinese property market. On the evening of April 30th, market institution “Kerui” released data indicating that the sales of the top 100 real estate developers totaled 312.17 billion yuan for the month, a 12.9% decrease compared to the previous month and a sharp 44.9% drop from the same period last year, nearly halving.

Currently, the sales figures for the top 100 developers are only a third of what they were three years ago. The sales for the month of April in the years 2021, 2022, and 2023 were 1035.97 billion, 430.63 billion, and 566.54 billion yuan, respectively.

Secondly, the Political Bureau meeting of the CCP sent signals about addressing the excess inventory of housing. On April 30th, the Political Bureau convened, deciding to hold the Third Plenum in July this year, emphasizing that fiscal policy requires faster issuance of debt and focusing on real estate and local debt risk resolutions, stating that they must “coordinate research on policy measures to digest existing housing stocks and optimize policies for new housing.” It emphasized ensuring that high-risk provinces and cities effectively reduce debt while maintaining stable development.

Discussion of debt issues signals that the CCP authorities are struggling with high local debts. Thus, despite the relaxation of policies by the three cities, there might not be a substantial impact. Even Chengdu, which performs the best in sales, is attempting to capitalize on the property market, Tianjin aims to compete in the Beijing and Hebei markets, while Beijing is caught in a dilemma.

The move by Beijing to allow such policy changes appears farcical: households in Beijing with two houses can purchase a new house outside the fifth ring road. The discrimination against non-Beijing residents persists, turning out to be futile despite the changes.

In response, author “Zhenaidajicheng” commented: “This policy is a bit quirky. Even if housing prices have dropped significantly, the current situation is that loosening all restrictions will not stimulate housing consumption.”

Song Zhongqing, Chief Lawyer at Beijing Zhongrencheng Law Firm, remarked: “A Beijing household with two houses can have three… This is essentially unable to cut off essential needs and is reaching out to high-net-worth individuals.” “I’m very puzzled: Tongzhou housing prices have been declining for seven years, why are they not opening up synchronously like other districts?”

However, it is not surprising as some major cities in China, due to certain unique urban welfare benefits, are reluctant to open up to the low-end population unless it is inevitable.

First Financial conducted a survey on Weibo, asking “Will you consider buying a house after restrictions are lifted?” At present, out of 7915 votes, only 857 people said “yes,” while others selected options like “no,” “this is not something I can consider right now,” or “wait and see.”

So, what can we expect for the future of China’s property market?

All in all, today’s sharing ends here. For those who enjoy my program, please subscribe to my new channels in the comment section. In 2024, let us together observe more historical turning points!