Another project ends in failure: Bureaucrat challenges party leader and wins.

Hello viewers, welcome to “Qin Peng Observation.”

Today’s focus: Leaders of the China Social Sciences Institute’s Economic Research Institute have collectively been punished, with the charge of “wildly discussing the central government.” However, the truth is not so simple. What did they say to anger the authorities in Zhongnanhai?

Xi Jinping’s another major project has failed. The bureaucratic elite challenged Xi Jinping and emerged victorious.

Renowned Wall Street investor Li Lu shared some insights, signaling the end of the era of Wall Street colluding with the Chinese Communist Party economically.

First, please follow my new YouTube channel and Clean World channel in the comments section to watch more exciting content. Thank you!

Recently, China’s mainland economy has been declining, and the political environment has been shrouded in mystery, with a series of strange incidents occurring. Today, let’s discuss three of the latest major events.

One of them is the “political earthquake” at the Chinese Academy of Social Sciences, where the leadership of the Economic Research Institute was ousted. According to reports from the Hong Kong media, Ming Pao Daily, the incident was triggered by the Deputy Director Zhu Hengpeng “wildly discussing the central government” and has faced severe punishment. At the same time, the institute’s director and party secretary were removed, with plans to clean up the remnants.

Based on the official website of the Chinese Academy of Sciences’ transfer information on August 22nd, the former party secretary Wang Limin was reassigned while the original director Huang Qunhui was completely removed from office. It appears she made leadership mistakes, or perhaps they collectively failed in some way. However, Deputy Director Zhu Hengpeng has been completely removed from the Chinese Academy of Social Sciences and related websites. Even a Baidu AI search yielded no results, indicating a potentially dire outcome for him.

So, what did Zhu Hengpeng say that was considered so disrespectful to Xi Jinping?

From public information, Zhu Hengpeng is the director of the Center for Public Policy Research at the Chinese Academy of Social Sciences, focusing on public hospital reforms and health insurance systems in recent years. Several of his articles have caused some buzz, such as an interview in 2018 where he candidly mentioned the high cost of cancer drugs being linked to doctors receiving higher kickbacks for prescribing expensive medications. He also highlighted the profitmaking practices of hospitals by delaying payments to enterprises. Although sharp, his remarks did not directly target systemic issues within the CCP.

In May of this year, Zhu Hengpeng suggested that young people should contribute fees to support their parents’ retirement in their hometown, sparking backlash. However, within the context of the CCP system, this proposal could be seen as burden-sharing for the Party and may not have raised significant issues.

The only statement of Zhu Hengpeng that could have touched on CCP interests was an article in the 11th issue of “Economic Dynamics” in 2022, titled “Social security expenditures should be limited but supplements for low-income groups.” The article urged for adjustments in fiscal expenditure structuring to allocate resources to enhance social security for low-income groups, promoting social equality while boosting domestic demand to achieve a win-win economic and social benefit scenario.

This article highlighted the unequal distribution of resources within the CCP, with officials taking a large share of the pie. Although it did not cause a significant stir at the time, it resurfaced in May this year, sparking discussions online. Many netizens called for reforms, which seemingly threatened the privileges of CCP officials.

However, considering the CCP’s system, these issues were previously tolerable. Should Zhu Hengpeng be severely disciplined and branded as “wildly discussing the central government” because of an article written two years ago? It seems somewhat unreasonable.

Therefore, I believe a more reasonable explanation for Zhu Hengpeng’s punishment is likely not solely based on his previous public articles but rather what he may have privately expressed within the Economic Research Institute. Criticizing the CCP’s greed and lack of direction candidly in private exchanges within the institute could have led to his punishment, as speaking differently internally and externally was common within the CCP system.

We are aware that recently the National People’s Congress introduced a decision to delay retirement, sparking controversy. According to the legislative procedure, experts were likely gathered for internal discussions and consultations beforehand. As a specialist in medical insurance and social security, Zhu Hengpeng may have participated in these discussions and expressed untimely opinions publicly or privately, leading to the charge of “wildly discussing the central government.” Since this decision was made by the CCP Central Committee led by Xi Jinping, seeking expert opinions may have been a superficial gesture to seek endorsement rather than actual consultation. Hence, any dissenting opinions would be seen as opposing the central leadership.

Zhu Hengpeng appears to be acutely aware of the deep-rooted problems within the CCP system. In a prior article, he cited startling data, revealing that indirect taxes in China accounted for over 50% of revenue, significantly higher than European countries, and public social security spending in China accounted for only 11.8% of GDP in 2019, whereas Western nations averaged 30% to 40%.

Zhu Hengpeng cautioned that widening income disparities over an extended period could lead to severe social conflicts based on historical and international experiences. He pointed out the vast discrepancies in retirement benefits among various groups and highlighted the inadequacies in the current social security system for different segments of the population.

In any case, this political earthquake exposes the extreme fragility and sensitivity of the CCP, aware that the accumulated problems are difficult to rectify, leading to decisions that are unpopular. By indiscriminately blaming individuals for “wildly discussing the central government,” they instill fear among officials to align with the central directives. Recent reports suggest that the CCP has instructed financial institutions that analysts and economists are prohibited from researching Japan’s history in the 1990s or making comparative studies.

This is an inevitable phenomenon in the last stages of a regime: praising is allowed, dissent is not tolerated. Silence is considered a form of guilt.

We are aware that Xi Jinping’s decisions often end in failure, earning him the nickname “Emperor of Unfinished Projects.” However, a recent failure differed from previous ones, signaling a shift in direction.

Recently, reports from within the CCP system indicate that the “Study Xi Strong China” app, a mandatory learning platform for over 80 million Communist Party members, public officials, state-owned enterprise employees, and public schoolteachers, is no longer being evaluated for logins as of now. This app was initially launched on January 1, 2019, with a ceremony chaired by Wang Huning, a member of the CCP Central Politburo. The CCP’s emphasis on this app is evident.

Simultaneously, the CCP used this app to exert strict control over its members, making it a requirement for weekly/monthly group learning sessions, and group inspections and records were conducted through the app. In the absence of “Study Xi Strong China” records during bi-annual or annual reviews, members were considered absent from organizational activities. This compelled CCP members to access the app daily, leading some members to have others log in or play content overnight. Thus, the app faced severe backlash within the CCP’s political circles.

As early anticipated, the CCP’s highest echelons are most suspicious not of the general populace but of its own officials, seeking to monitor over 80 million party members through the app. Subsequently, reports surfaced questioning the app’s security, suspecting monitoring of over a billion smartphones. It was found to have access to photos, videos, contact lists, locations, call logs, and even activating the phone’s audio recording feature.

Such high-pressure governance naturally stirred dissatisfaction and backlash within the CCP system. In February of this year, the CCP Central Learning Group reported three instances of typical political formalism, including the “Study Xi Strong China” app.

As a dynasty nears its end, social conflicts intensify, compelling rulers to appease internal relations. Therefore, the app’s failure is not surprising. While officials perceive surveillance of subordinates as beneficial, they are also aware of being monitored by superiors. Who would be willing or pleased under such circumstances?

Therefore, I say this app’s failure is not ordinary; it reflects the CCP officials’ resistance, leading to the centralization under Xi Jinping. It also indicates that while the CCP’s facade remains strong, the internal structure is trembling significantly. If the system collapses one day, it should not come as a shock.

The third major event we will discuss today revolves around a segment of text from renowned investor Li Lu that has been circulating online.

He mentioned Warren Buffett’s partner, Charlie Munger’s observation that common sense is the most scarce form of understanding, and that going against common sense will come at a cost.

Li Lu pointed out 11 common-sense points, summarizing that modernization stems from a combination of market economy and modern technology. He highlighted that all contemporary advanced technologies are created by private enterprises, with government-led initiatives having no successful cases. Li Lu stressed that institutional design must align with human nature to be successful and emphasized that large government powers inherently lead to a zero-sum game, causing hardship for the people.

Market economy essence depends on the delegation of economic power from the government. He highlighted that economic vitality is often determined by the magnitude of governmental power allocation. Li Lu discussed the relationship between market economy and expectations, stating that negative sentiments among the majority would lead to economic downturns, reinforcing negative expectations and hastening recession. He underlined that demand drives the market economy, not supply, warning that boosting supply to address declining real demands would create further issues.

What are your thoughts on these points? Comparing these insights with Chinese society reveals how China’s current issues contradict common sense. Each point challenges the CCP’s confidence in the path of socialism with Chinese characteristics.

Li Lu’s unique background as a renowned investor and former student leader wanted by the CCP, turned successful businessman, investing in companies like Maotai and BYD, implies his heightened political sensitivity. The question arises, given the CCP’s hypersensitivity, isn’t he concerned about sharing such harsh common-sense views?

Li Lu is likely aware of the risks involved but to some extent, may no longer be concerned. International capital has been withdrawing from China, no longer viewing it as a primary investment destination.

In the past three years, Buffett’s fund has been steadily selling off shares in BYD, with holdings dipping below 5% by the end of July this year. Subsequent reductions will no longer require disclosure.

An internet user interpreted Li Lu’s words as more insightful than rhetoric about democracy, freedom, wealth, and civilization. After being labeled a “traitor” for so many years, Li Lu seems to be revealing his true feelings. While we can’t say for sure if this is a revelation, logically, as international allies^ grow wary of China, the CCP once idolized by global leaders, now facing international isolation, the party may no longer prioritize its sensitivities.

Would you agree with this assessment?

That’s all for my sharing today. If you enjoy my program, please subscribe to my new channel in the comment section. Let’s continue to delve deep into understanding the truth behind Chinese and world politics and economics!