The company initially tried to refute this as “irresponsible” reporting, but investors opted to believe China’s leading investigative journalism outlet, and the company’s bonds dropped by 33% in a day.
But the party-state authorities’ ban on reporting about Chairman Ye and his empire of enterprise (documented here in 2017) remains in place, so Caixin‘s scoop was expunged from the PRC internet within hours.
The news was officially confirmed more than two weeks later, on March 19, when the Czech Republic sent a delegation to find out what was going on with its major source of foreign investment. The delegation was told that Chairman Ye, an advisor to Czech President Milos Zeman, was indeed “being investigated for a suspicion of breaking the law.”
CEFC was ranked 222nd in the Fortune 500 in 2017, and last year stunned the international energy industry by securing agreement to buy a $9 billion, 15% stake in Rosneft, Russia’s state oil giant.
Now the company’s future is as murky as its past.
Caixin reporter Ji Tianqin 季天琴 spent the most of 2017 interviewing CEFC executives, tracking down former associates of Ye, and tracing CEFC’s constellation of satellite companies through the financial records. And the crowning glory: she interviewed Ye himself twice, finding all manner of holes in the stories he told her.
Ji Tianqin is famous in Chinese journalism circles for her award-winning deep-dives addressing, among other things, Wang Lijun’s reign of terror in Chongqing. Considering the difficulty of being an investigative reporter in China today, she really ought to be famous outside China too.
This epic investigation into CEFC reveals how, through party and military connections, turnover figures massively inflated by fake trading, and relentless pursuit of international photo-ops and status symbols, Ye Jianming was able to sell domestic and foreign audiences a mostly vacuous narrative about his rising global energy and finance colossus.
Suffice to say, these revelations extend my record of getting some things right about CEFC, but not very many. I’ll leave that discussion for another post, as my purpose here is to urge China-watchers to invest the time in dipping into the 16,000-word translation below — and to please share thoughts on what it all means. I’d also welcome any translation corrections from people more familiar with financial and business terminology.
This is a spectacular work of Chinese investigative journalism that may contain some profound implications for understanding the PRC’s economy, politics and international relations.
Ye Jianming under investigation, what fate will befall CEFC?
By Ji Tianqin
The first weekend after the July 12 Philippines vs China arbitration ruling — the “7.12 Incident” — has passed without reports of major anti-foreign protests.
There were, however, scattered cases of nationalist mobilization. There was at least one case of picketing outside a KFC in Hebei province (video), some smashing of iPhones (footage of which was often shared via iPhones), and a bunch of online dried mango retailers claiming to have switched their suppliers away from the Philippines.
Together with the various patriotic outpourings online, this was probably the largest set of collective actions by Chinese citizens on the South China Sea issue yet seen in China — bigger than Scarborough Shoal in 2012, or the peak of tensions in 2011, though still probably smaller and less intense than the demonstrations that would likely have occurred during the 2001 Sino-American EP-3 incident, had authorities had not prevented them.
While the Global Times hailed the “new wave of patriotism,” it was clear that, like in 2001, the party-state did not want real-world demonstrations. Municipal and university authorities were reportedly instructed to stay vigilantly on guard against potential mass gatherings. Nor, it seems, was online warmongering particularly desirable from the party’s perspective, with jingoistic Weibos encountering censorship.
An article published on the Communist Youth League’s Weibo illuminates some of the reasoning behind this desire to keep the patriotic outbursts relatively mild. It argues that much of the extreme nationalist outbursts are in fact “next-level smearing” (高级黑, referred to below as gaojihei) of China’s good patriots by anti-party elements posing as extreme nationalists.
Just how much of China’s ultra-nationalist output this actually accounts for is a wide open question. But the article offers evidence that it does explain at least some of the most visible and intense cases of what the outside world commonly understands as Chinese nationalism. In this way, it’s another illustration of how much more lurks behind shows of apparently anti-foreign mobilization besides simple “nationalist” ideology.
The examples cited suggest at least 4 distinct kinds of anti-regime motivation for extreme nationalist speech and actions:
- Critiquing the party’s ideological policies through parody;
- Giving patriotism negative associations;
- Fomenting domestic chaos that would destabilize party rule;
- Pushing for a war that would likely be disastrous for the party.
The article is written by one of the Communist Youth League’s most energetic proponents of pro-party “positive energy” in both China and Australia. Besides being on the committee of the All-China Youth Federation, Lei Xiying is a PhD student at Australian National University, whose previous projects include the “take a selfie with the flag,” setting up an Association for PhD Students and Outstanding Youth Scholars, and heavy promotion of last year’s military parade. He’s a prolific political commentator in the PRC state media, as well as in the Chinese-language media in Australia.
The author is, in short, a very worthy recipient of his Positive Energy Youth award bestowed on him by the Cyberspace Administration of China for being an “outstanding youth representative of online ideological construction.” As such, the article is illustrative of some of the issues facing the state’s leadership of popular nationalism on contentious foreign policy issues in the internet era, which i’ll return to briefly at the end.
Life’s-a-game memes and the hijacking of youth patriotism by “crazy uncles”
Communist Youth League Weibo, July 16, 2016
This afternoon a post-1995 netizen sent me a “patriotic” photograph that he found confusing.
At a glance, with the slogan “violators of my China, however distant, must be punished” it’s a hot-blooded emotional “patriot.” But look a bit closer . . . Excuse me? [The calligraphic banner] is “a gift for US President Putin” . . . look again, a bald, bespectacled, half-naked, very inelegant “crazy uncle” with bad posture hits your eye . . .
“Bro, his patriotic expression is weird, how could he say the American President is Putin…”
I replied to this post-95’s doubts in three decisive words: next! level! smear! (高！级！黑！)
Is this surprising? Actually no, it’s commonplace. Whenever big things happen in China, whenever the whole population’s patriotic sentiments rise, these kinds of gaojihei are sprayed out everywhere.
For example, the author says, during the Diaoyu crisis, a person who had once burned the 5-star red flag suddenly became a patriotic Diaoyu defender, inciting the masses to take to the streets. Other suspect “patriots” had bragged about using the occasion to help themselves to a free meal or Rolex watch. “As for those among the peaceful patriotic marchers who urged violence and looting, their shouting of patriotic slogans was the loudest, but what was their objective?”
In one common gaojihei, Lei notes, netizens purported to blame actress Zhao Wei, who has again been the target of nationalist criticism of late, for masterminding the South China Sea arbitration decision, the Turkish coup attempt, and the Nice terror attack in order to divert attention from her sins.
Lei makes an important distinction between those who initiate extreme nationalist actions and those who join in later:
The initiators of this type of information are generally troublemakers, while those who forward it on are overwhelmingly ordinary netizens with naive patriotic sentiments — their heart is good, but due to their unfamiliarity with the internet’s complex public opinion environment, they are used by people with a purpose.
Besides these, some groups who are normally very dissatisfied with the state, the current system and the present state of affairs, suddenly become interested in patriotism, and urge everyone to take to the streets, and take to the battlefield.
The author then provides several examples of such suspects.
Another concern is the attempts to link party-sactioned patriotism with the sickening violence seen in the anti-Japan demonstrations over the Diaoyu Islands in 2012.
Some people take the opportunity to smear and exaggerate the behaviour of “extremist elements,” and use this to “represent” and “denounce” the rational behaviour of the overwhelming majority of patriotic youth, enacting maximum distortion on patriotism.
Have we taken to the streets and smashed things? Committed violence? We are just playing with memes (表情包), OK?
The author then takes the opportunity to address some other criticisms of South China Sea patriotism. A comment observing two main types of nationalists, “very smart swindlers” and “very emotional idiots,” comes remarkably close to Lei’s own analysis of the initiators and followers noted above. Not surprisingly, his rebuttal does not acknowledge any such parallel:
Please do not force these meaningless labels on us, OK? If you must label us, we are the ‘party of memes’ (表情包党), OK?
In response to a middle-aged Weibo user’s observation that outbursts of patriotism tend to involve the denouncing of race-traitors:
We love the country but we do not arrest traitors, that was your generation’s hobby, our hobby is memes, OK?
In the words of noted scholar Liu Yang 刘仰: “If you trace the patriotic demonstrations over the past few years, you find that every time patriotic enthusiasm is ignited, a succession of acts of sabotage follow. Strong voices immediately appear afterwards, saying patriots are ‘angry youth,’ patriots are criminals, patriots are extremist terrorists, patriots are ignorant brain-dead! . . . Time after time patriotic enthusiasm has ended in farce. This may be the behind-the-scenes manipulators’ objective: [keep this pattern repeating] until one day when China really needs the power of patriotism no one will appear, like the villagers in the Boy Who Cried Wolf or King You’s generals after he played with the fire beacons (‘烽火戏诸侯’故事里的勤王之师).”
Thankfully, according to the author, the plot was thwarted thanks to the Communist Youth League sending out articles such as his own, discouraging any boycotts of any country’s products, and designating memes as the “patriotic form” of choice for today’s youth.
In conclusion Lei notes that critics of patriotism had different motivations corresponding to their generations. In contrast to the post-1970 and post-1980 generations (who presumably act on the basis of their westernised values), post-1950 and post-1960 critics of contemporary youth patriotism are often driven by their disillusionment with “the current system, road, and theory.” The article finishes with a rousing affirmation of the current generation:
Our understanding of history, of China, and of the world is inevitably more complete, more objective, more rational than that ‘historically burdened’ generation
. . .
this is why, after the 7.12 arbitration incident, we did not take to streets, scream protests, or even smash things up as some people had hoped . . . on the contrary we initiated a form of ‘mocking and scolding’ (嬉笑怒骂) unique to this generation.
Not sure if the summary above hangs together at all — the article itself is similarly disjointed — but it does raise a couple of issues facing the state’s leadership of popular nationalism on contentious foreign policy issues in the internet era.
First, as the Liu Yang quote suggests, the CCP state’s ability to tap into the power of popular nationalist mobilizations is significantly compromised by the moderate backlash their extreme elements generate. This point, borne out in Chris Cairns and Allen Carlson’s recent study of the 2012 wave of nationalism, has been recognized by other smart minds within the propaganda system. In a research interview in 2013, a state media employee familiar with audience costs theory observed that any international leverage China may gain from allowing domestic protests is greatly diminished when violence ensues. Not only does protest violence require suppression, thereby foregrounding the state’s ability to control nationalist outrage. It also brings forth strong anti-nationalist voices from across society, suggesting popular support for defiance of nationalist demands for escalatory foreign policy choices.
Second, perhaps reflecting the need to protect trade ties in a time of economic uncertainty, the CYL was clearly keen to specifically discourage boycotts among the youth, and substitute them with online “memes” (表情包). For the party-state to adopt these particular forms of internet-era youth expression as a vehicle for its propaganda makes perfect sense. But as a substitute for real political action it’s so openly inconsequential (and, due to the need for political correctness, humourless) that i wonder how this could possibly satisfy any genuine nationalist anger about the South China Sea issue — let alone the kind of general dissatisfaction with life that underpins at least part of it. This might be why some of the approved “memes” contained nods in the direction of slightly more violent Cultural Revolution-esque imagery (e.g. the one below).
What else is going on here? What am i missing about this “meme” strategy? As always, thoughts, suggestions, corrections etc. most welcome.
Below is a piece published at The Diplomat, running through what the “status quo” is in the South China Sea, and the difficulties encountered in trying to define it. Aside from identifying some key metrics of the current situation in the disputed area, the aim was generate some debate, or at least second thoughts, about the usefulness of the “status quo” as a normative standard. The concept has proved useful in diplomacy over Taiwan, Korea and elsewhere, and (arguably) in international relations theory. But given the complex, watery nature of the South China Sea dispute, i argue it’s not likely to help in establishing the kind of clear-cut, universally recognized standards the region needs to forestall escalation there.
The term’s broad-brush vagueness – it simply means “the existing situation” – may make it appealing for practitioners of diplomacy, but the lack of clarity limits its usefulness as an analytic tool. More troublingly, being such an all-encompassing term, its use as a normative standard is inevitably selective, resulting in inconsistencies that risk breeding misunderstanding and mistrust. Unless used with care and nuance, it is a term that is more likely to undermine than underpin a “rules-based order” in maritime Asia.
The U.S. position on the East and South China Sea disputes, as Defense Secretary Ash Carter and other officials have frequently reiterated in recent months, is that it opposes changes to the status quo made through force or coercion. Senior U.S. military and civilian officials have used this standard formulation frequently since mid-2013, most prominently in relation to the PRC’s East China Sea Air Defense Identification Zone (ADIZ), and its well-publicized island-construction project in the South China Sea.
Claimants in the disputed seas have also embraced the idea of defending the status quo from Chinese advances. The leaders of Japan and the Philippines on June 4 affirmed their opposition to “unilateral attempts to changes the status quo.” Vietnam maintains a slightly subtler position that stops short of outright opposition, as typified by Prime Minister Nguyen Tan Dung’s call for countries to refrain from “actions that would complicate the situation and change the status quo of rocks and shoals.”
The spectacular photographs of China’s progress in creating artificial islands in the South China Sea have deservedly generated a flurry of attention in the media and punditry in the past week or so.
The pictures show the amazing transformation, over the past year or so, of submerged atolls into sizeable islands with harbours, roads, container depots, workers’ dormitories and even cement plants. The reclamation activities have been documented periodically since early 2014 by Vietnamese bloggers, the Philippines foreign ministry, defense publisher IHS Janes, and, most recently, the Washington-based CSIS’s Asia Maritime Transparency Initiative.
These images seem to have a special ability to catch people’s eyes and draw attention to the issue. On my own humble Twitter feed, where most posts are lucky to be noticed by anyone, when i’ve attached images of China’s artificial Spratlys, the stats suddenly light up with dozens of retweets, many from strangers.
With this viral quality, and visual impact, they could well become iconic images that define the South China Sea issue as a whole. So amidst the surge of interest, it’s worthwhile reflecting on what’s not in the pictures. Here’s my stocktake, together with a collection of less widely-circulated photos:
- The scoreboard: China is still well behind
- The company: reclamation is part of most claimants’ Spratly strategies
- The history: it’s not new, and that does matter for policy responses
- The regional context: easing tensions
- The environment: an unfolding tragedy
Additions, omissions and arguments most welcome!