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China Reform Monitor - No. 1235

Xi and Li split on economic reforms;
China arming multiple factions in Sudan conflict

Edited by Joshua Eisenman
August 17, 2016

July 22:

Rumors abound in Beijing that Premier Li Keqiang “will be replaced in next year’s reshuffling of key party posts,” 
the Wall Street Journal reports. Discord between Li and President Xi Jinping has spilled into the open as of late. The first instance was in May, when the official People’s Daily published an articlecriticizing the reliance on credit to drive growth. Xi’s economic advisers drafted the article because he was upset with Li’s decision to unleash $697 billion in bank credit in the first-quarter, jeopardizing Xi’s plan to pare debt and industrial overcapacity. Li’s subtle response was four words added to another People’s Dailyabout a May 9 conference call led by the premier. The words, which weren’t part of the call, were xiang ren wei guo, an idiom that means “the premier endures for the nation.” Then, on July 4, Xi and Li delivered contradictory instructions on how to reform China’s state-owned sector, Xinhua reports. Xi told the State Council to ensure “stronger, better, bigger” state firms, under strong party management, while Li ordered state companies to “slim down” and “follow market rules.” This month Xi held a meeting with two dozen top economic analysts, and Li wasn’t invited, Xinhua reports. Two days later, Li held a meeting with a separate group of experts, Xinhua reports. “There is a lack of clear direction from the top. Everybody is waiting to see what others might do,” said an official at the State-owned Assets Supervision and Administration Commission.
July 24:

Namibian President Hage Geingob has inaugurated the new terminal of Walvis Bay International Airport, built by the Chinese construction company New Era Investments. At a cost of about $8 million the terminal will handle 200 passengers per hour and 1 million passengers per year, 
the official People’s Dailyreports.

July 26:

According to China’s Ministry of Commerce, non-financial outbound investment to Africa jumped 10 percent in the first half of 2016 to more than $1.3 billion. In December 2015, at the Forum on China-Africa Cooperation Summit in Johannesburg, China announced $60 billion in new financing, including $10 billion for an industrial capacity cooperation fund to invest in manufacturing, hi-tech, agriculture, energy, and infrastructure, $5 billion dollars for aid and interest-free loans, $35 billion for preferential loans and export credits, and $5 billion for the China-Africa Development Fund and African small and medium-sized enterprises. Since 2012, China has provided African countries with over $20 billion dollars in loans,
 the official PLA Daily reports. Since 2000, China has helped Africa build more than 120 educational facilities, nearly 40 agricultural irrigation projects, and over 70 medical facilities. 

July 27:

Chinese weapons sold to Sudan have been funneled to rebels in South Sudan, where two Chinese peacekeepers were recently killed. In May, the South Sudan government’s military, the Sudan People’s Liberation Army, captured 1,300 boxes of Chinese ammunition from a rebel faction known as the SPLA in Opposition, or SPLA-IO. The ammunition was discovered in Unity State, which borders (north) Sudan, and the boxes were painted to obscure that they had originated in China. They were originally part of a 2014 consignment to Sudan's National Intelligence and Security Service that was diverted to the SPLA-IO in Unity State, IRIN reports. Last June, Chinese arms were airdropped to SPLA-IO forces in Jonglei State. In 2014, China sold arms to both Sudans, and was South Sudan’s largest supplier. "China appears unwilling to unwilling or unable to rein in Chinese arms dealers, such as Norinco,” said Luke Patey at the Danish Institute for International Studies.

[Editor’s Note: South Sudan declared independence from Sudan in 2011 after fighting a decades-long civil war during which China sold weapons to the government and China National Petroleum Corp invested heavily in oil production. In December 2013, South Sudan's ruling party split into two factions, roughly along ethnic lines. President Salva Kiir, from the Dinka ethnic group, remains head of the government, while Riek Machar, who is Nuer and served as vice president, leads the breakaway SPLA-IO.]

August 1: 

People’s Liberation Army personnel are getting buyouts to retire early. Packages include severance payments worth tens of thousands of dollars and promises to keep paying up to 80 percent of pre-retirement wages for those that served at least 18 years, Bloomberg reports. Under the plan, a senior colonel is eligible for a 1 million yuan buyout, and 80 percent of his salary. Self-employed ex-soldiers will be exempt from taxes. The buyouts are meant to speed President Xi’s push to shed 300,000 troops and reveal the hurdles the overhaul faces. In November, Xi instructed authorities to “provide special measures and favored policies to pro-actively help ex-soldiers settle down.” Buyouts also reduce the risk that demobilized troops end up disgruntled. “Soldiers have a deterrent and destructive power once they unite to do something together, and they could cause some social stability issues,” said Yue Gang, a retired PLA colonel.

Related Categories: China; China and East Asia Program

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