Manolo Quezon is #TheExplainer Newsletter — Health Lessens Wealth
This week’s column tried to take a holistic look at different stories competing for our attention. But the overall story it seems to me, is the government acknowledging health is a drag on the economy, and that the economy could stand a boost from dropping health precautions: this would also perhaps make it more acceptable for people to take on the Health portfolio in the cabinet, which remains unfilled.
The government needs to start bringing in income as a Supreme Court ruling giving local governments a bigger chunk of national taxes, kicks in. For all the efforts of the past administration to ensure this doesn’t turn out to be the bonanza LGUs expected — by devolving many national government services, which means LGUs will now find themselves saddled with even greater expenses and obligations — the government one way or another, will still have to fill in the gap for LGUs anyway.
And, some interesting readings on the historic third term for China’s current paramount leader.
This week’s The Long View
Philippine Daily Inquirer / 04:30 AM October 26, 2022
There is, apparently, a phenomenon already being called Duterte nostalgia. A kind of acknowledgment of this was the offhand comment of President Marcos Jr.’s new P1-a-year communications consultant, Paul Soriano, that the President, sadly, isn’t seen enough. Now, the President is being seen a lot, together with comments that he’s perhaps going overboard since he looks tired and even bloated. When, in the same first 100-day period, the President’s own vice president expresses exhaustion on social media, you know that the back you have to watch is well and truly your own. If the veep can subtly throw shade on the prexy, then a former prexy can do the same thing just as well: and so from the corner of former prexy Gloria Macapagal Arroyo came the revelation that the President, in his concurrent capacity as aggie secretary, has only been to his department’s office twice.
PNP chief turned Bureau of Corrections big boss turned Sen. Ronald “Bato” dela Rosa has also taken to accentuating the (past) positive (for the faithful) by responding to the woes of Justice Secretary Jesus Crispin Remulla by suggesting the revival of “tokhang.” The lone senator of Arroyo’s party, Lakas-CMD, Ramon “Bong” Revilla Jr., helpfully filed a resolution calling for Dela Rosa’s committee to investigate the utterly shocking because utterly confused and uncoordinated goings-on in the national penitentiary, what with the liquidation of Percival “Percy Lapid” Mabasa allegedly having been a hit ordered from within New Bilibid Prison: a case that began to turn cold the moment the supposed middleman, Crisanto Villamor, dropped dead just after being exposed.
Back in the good old days not so long ago, so the framing seems to be going, people were afraid of the government instead of running circles around it. While the President has already twice refused to engage in the battle over history in the Department of Education (there are many online, after all, who have been fighting and winning that war for him for years), this was belied by news of the review of curricula proposing to substitute the gentler (and formerly official) term of New Society where textbooks now say martial law. The veep was moved enough to issue a statement saying no historical whitewashing would take place since she is, after all, the granddaughter of someone who’d launched and led yellow confetti protests in Davao.
In the meantime, the President has continued helpfully providing employment to retirees from the Duterte era: most recently, a former PNP chief turned health undersecretary. Not just as an expression of PNP solidarity but just as possibly as part of his Protect the Faithful duties, Dela Rosa weighed in on criticisms of the appointment by saying his fellow ex-PNP chief is some sort of management whiz and can therefore best backstop the doctors. In the meantime, the President is left justifying the continuing absence of a permanent secretary of health by saying the time to name one will be when the pandemic ends. This was five days ago: lo and behold, yesterday, the secretary of tourism announced a forthcoming executive order making mask-wearing optional in enclosed places. For the economy. For the country. And, one might suggest, for the possibility of finally convincing someone, anyone, to take on what remains one of the most thankless jobs in the country.
Not least because besides the pandemic, there remains the unfolding impact of part of the Duterte legacy, which is the increasing likelihood he has bequeathed his successor and all incumbent local leaders with a poisoned pill of his making to accompany the Mandanas ruling. The President has alluded to this in terms of schools: while the Supreme Court’s Mandanas ruling historically decided LGUs will get a share of all national taxes, Duterte then issued an executive order stating the devolution of formerly national services to LGUs: meaning even before they got their expected windfall, they (the LGUs) were mandated expenditures for programs and projects the national government used to provide. It’s a rather clever switcheroo, not least because it’s likely to leave local governments even more dependent on the national government for funds.
In the not-so-long-ago days already being discussed with nostalgia, local governments and members of the House of Representatives alike were kept happy by means of emergency pandemic-related spending, and what some critics suggest was the most promiscuous public works spending in living memory. The Restoration Era’s equivalent seems to be a combination of large allocations for intelligence funds and contingency funds to backstop the expected shortfalls in LGU budgets since the share for LGUs will apparently still be calculated on the basis of the leanest of the lean years, 2020, as far as national income is concerned. But however tallied, there’s nothing to disburse until collections can actually better meet demand: which is where the fiscal meets the political, in the vacuum that is the empty administrative and policy spaces where a secretary of health is usually found. At least the pandemic can be essentially declared ended with a stroke of a pen, without the discomfort of having to seek medical advice, and the economy can rev up in time for next year’s expected harsher doses of reality to come.
For my column, I referred to these reports:
Two very interesting readings, one in the Asia Sentinel, the other by Zachary Abuza, on the unprecedented third term accorded Xi Jinping.
The list of China’s new Politburo Standing Committee was changed at the last minute to remove former Chinese President Hu Jintao allies without his knowledge, leading to Hu’s removal from the closing ceremony of the 20th Communist Party Congress, according to two sources.
The public ejection on television of the 79-year-old former president from the head table, apparently against his will, caused shock waves in international circles as a demonstration of Chinese leader Xi Jinping’s raw power. While foreign media were allowed to broadcast the incident, the video footage of Hu’s removal was censored in Chinese media and social media.
Although officials attempted to downplay Hu’s abrupt departure as due to health issues, unofficial video made public here made it clear it was against Hu’s wishes.
The earlier standing committee list of the handful of the most powerful Chinese leaders governing the country included at least one person allied with Hu, but the final list of the seven members of the committee dropped any Hu protégé, said these sources.
The new Politburo Standing Committee, unveiled on October 23, consisted of Xi and six other men who were all Xi’s loyalists, Asia Sentinel reported on October 23. The week-long congress ended with Xi getting an unprecedented third term as Chinese president, while his predecessors Hu and Jiang Zemin had served only two, according to the two-term limit laid down by the late Chinese leader Deng Xiaoping.
“It seems pretty clear that the final list was not the list of names Hu had been led to expect, which suggests he thought he had a deal that there would be one or two Youth League names in the standing committee,” said one of the sources. The Communist Youth League is Hu’s faction.
Xi substituted his own list of the Politburo Standing Committee at the last minute, denying Hu any chance to oppose it in the closing ceremony of the congress, the source added. “Hence Hu’s removal from the open session, in case he said anything.”
Hu was escorted out of the closing ceremony of the congress on October 22, Asia Sentinel reported on October 23. The video of the moment just before Hu was taken away showed Li Zhanshu, seated next to Hu, taking away a red document from Hu while talking to him. Li was a member of the previous Politburo Standing Committee but not the latest committee.
Then Xi, who was seated on the other side next to Hu, gave instructions to what appeared to be an aide.
The man, holding a red document, and another person then escorted Hu out. Hu was seen in the video trying to get hold of the document in the man’s hands and having a prolonged discussion with the two men, indicating his reluctance to leave. It is unclear whether the red document held by the aide was the same document which Hu initially possessed.
Peter Humphrey, a British analyst, commented on the video on Linkedin on October 25: “It is very clear in these photos that Xi was personally calling the shots during this ugly incident when Xi personally called in his goons to purge Mr. Hu from the conference room in classic Stalinist style and (Li) on his left was trying to prevent Hu from using a document folder on the table in front of the elderly cadre. Hu was clearly about to do something that Xi jumped in to prevent.”
Humphrey previously ran a risk consultancy in Shanghai, was jailed in China and now lives in the UK.
“I think one of the key reasons for Xi’s predecessor Hu Jintao to be removed from the conference was that he withheld applause for Xi in order to express disapproval of Xi’s power grab throughout the ‘congress’, while everybody else obsequiously and fearfully clapped,” said Humphrey on Linkedin on October 24.
“And Hu was seated right next to Xi, so his protest was very obvious, and Xi would inevitably take offense.”
In the video, Hu looked tired and dazed, giving credence to the explanation in Chinese state media that the 79-year-old was unwell and taken to an adjacent room to recover. However, evidence in another video suggests ill health could not be the only reason that the former president was taken away from the congress. According to this other video, everybody else at the congress, except for Li, ignored Hu while he was escorted out.
Normally, if an important person suddenly suffered ill health in a meeting, many people would react in surprise and try to help him. For example, when Singapore Prime Minister Lee Hsien Loong fainted during a speech on August 21, 2016, several people rushed to Lee’s assistance.
Moreover, if an attendee at a meeting suffered from ill health, doctors and nurses would normally attend to him. Instead, one of the two men who took Hu away was Kong Shaoxun, deputy director of the general office of the Central Committee of the Chinese Communist Party, a holder of a political office, tweeted Dake Kang, an AP journalist, on October 22…
The Chinese Communist Party’s 20th Congress saw the thorough consolidation of power by Xi Jinping, elected to a third term, with a leadership that is personally loyal to him. No leader since Mao consolidated this amount of political power. China’s importance as a trade partner and regional power means that this will be felt across Southeast Asia economically, politically, as well as in the diplomatic and security realm.
What may be good for Xi politically is not good for China economically. Xi stacked the Politburo and its Standing Committee with ideologues and loyalists; there are no pro-economic reform advocates left and corporate China is not represented.
Even before the 20th Congress, the Chinese economy had slowed as a result of the draconian zero-COVID-19 policy and Xi’s assault on the dynamic privately owned tech sector. But the markets reacted sharply to Xi’s consolidation of power.
The stock market index collapsed as soon as the markets opened on Monday. There was a major selloff on all indexes and some $2.47 billion of foreign funds immediately withdrew from the China market.
There’s a real concern that the informal tax on the wealthy, known as the “Common Prosperity” donations, will become larger and more compulsory.
Capital flight is skyrocketing as high-net-worth individuals seek to move their funds to the safety of foreign jurisdictions. Money is flowing out of China as fast as possible. The Financial Times reported that the number of private Chinese family investments in Singapore nearly doubled from 400 to 700 since late 2020.
No one will speak truth to power in China anymore. Surrounded by sycophants, Xi is more likely to pursue policies that cannot be reversed.
This has an immediate impact on Southeast Asia as every country’s largest trading partner is China, particularly those that are still largely dependent on the export of raw materials.
China, which has been a major source of foreign investment in the region is seeing its GDP growth continue to slow, now below 5 percent for the year.
While capital flight may help some sectors in Southeast Asia, the gains will be narrow and not compensate for the loss of China as the driver of economic growth in the region…
While the Belt and Road Initiative (BRI) is still state policy, Xi’s signature program of infrastructure lending for projects to boost China’s trade with Asia and Africa is a diminished initiative. In 2018 and 2019, even before the pandemic, BRI lending dropped precipitously.
The two state-owned development banks that were responsible for 75 percent of BRI funding, saw lending collapse. Overall lending in 2020 was 58 percent from its 2018 peak.
Very clearly, many BRI projects are underwater and debt servicing had slowed. In 2018–19, China quietly renegotiated the repayment terms of $16 billion in loans. The pandemic caused a further slowdown in lending.
Though BRI projects recommenced in 2020, they are considerably smaller in scale and amount.
Xi will not abandon the BRI. It’s his vanity project and too associated with him to dismantle. Indeed, it was mentioned five times in the Oct. 16 Political Report to the congress, compared to just twice in 2017.
The BRI will likely move away from physical infrastructure and focus on fiber optic cables, 5G and 6G, and the export of artificial intelligence/smart cities. Emphasizing the Digital Silk Road serves many of China’s interests. It deepens their control over the internet and protocols, routes more traffic through Chinese servers and gets other countries to adopt Chinese software and norms. The export of their digital authoritarian model will be a key priority.
Analysts are still divided on what the Congress means for Taiwan, a major factor in region-wide stability. On the one hand, Xi’s report was fairly pragmatic and made clear that there would be no quick move to invade the island, though he refused to renounce the use of force. Taiwan was mentioned only nine times in the report, compared to 12 in 2017, and the report offered no change in the existing policy.
…A limited conflict in the South China Sea against a much weaker adversary, where they can control the escalatory cycle, far away from the prying eyes of their ultranationalist public, is a very good opportunity for the PLA to gain some joint warfighting experience.
As such, there will be a harder line and a more aggressive stance in the South China Sea.
But we’re in new territory here. Xi has absolute and unrestricted power; there are no institutional checks on him, which makes security in Southeast Asia far less predictable.
Foreign Minister Wang Yi, who successfully executed Xi Jinping’s “wolf warrior” diplomacy featuring combative, jingoistic envoys who hectored their host countries on social media, was elevated to the 24-man Politburo. He will replace Yang Jiechi as the director of the general office of the Central Foreign Affairs Commission.
On the Politburo Standing Committee is Wang Huning, the top ideology czar who ensured that “Xi Jinping Thought” was enshrined in the constitution. Wang is also a fervent nationalist and really the driving force behind the assertive nationalism and the BRI that were the hallmarks of Xi’s first decade in office.
Xi’s army of wolf warrior diplomats will continue their hawkish rhetoric, despite the fact that public opinion toward China across Southeast Asia is starting to harden.
It’s important that both the Minister of State Security and the Minister of Public Security, for the first time sit on the Politburo.
This underscores the regime’s obsession with security, but it also matters in Southeast Asia, where the long arm of China’s law has been felt, with demands for the repatriation of dissidents and Uyghurs.
The governments of Southeast Asia are clearly afraid of being pulled into great power competition between the United States and China. No state wants to be forced to choose sides, as both countries are critically important economic partners.
Your subscribing to this newsletter helps keep up my productivity and for those of you giving of yourselves to help through Patreon, it also makes a big difference to writing morale. As it’s been evolving this newsletter helps me flesh out my ideas, which then get distilled into my column, which then provides at launching pad for expanding those ideas, and so on.
Thank you to those who are contributing to Patreon and thus helping provide the resources required to keep producing this newsletter and podcast.
Proconsul: Martin Bautista
Consul: Abigail Salta, Noel Herrera-Lim
Praetors: Carlos v. Jugo, Ramon Rufino, Arbet Bernardo, Raoul
Aediles: Steven Rood, Willi, Cleve Arguelles, Sean Paul Laguna, Giancarlo Angulo
Quaestors: Joseph Planta, , Annie Inojo, Loreta Perea, Sam Chittick
Become a patron of Manolo Quezon is #TheExplainer today: Get access to exclusive content and experiences on the world’s largest membership platform for artists and creators.