The debate that racked China’s Communist Party founders 100 years ago still reverberates today

This is a week of pomp, pageantry, and propaganda in China as the Chinese Communist Party, which has ruled the nation since 1949, celebrates the 100th anniversary of its founding congress in July 1921.

The festivities kicked off Monday with President Xi Jinping joining a crowd of 20,000 at the National Stadium (a.k.a. The Bird’s Nest) to watch The Great Journey, an extravaganza of song, dance, and fireworks that lauded the party for guiding China’s rise as a great power over the past century. On Tuesday, Xi, who is also the party chief, appeared at the Great Hall of the People to hand out commemorative medals of honor to 29 “ordinary heroes” for their contributions to the party.

Xi has promised “grand celebrations” across China, and is scheduled to deliver an “important” speech on Thursday, July 1, the official centenary. Apparently there will be no military parades. But as Hong Kong’s South China Morning Post observes, even days ahead of the anniversary, “much of what is expected to be the biggest political celebration in China’s modern history remains shrouded in secrecy.”

Perhaps that’s apt. The event that’s the object of all this veneration was also shrouded in secrecy. The “first assembly,” as the party calls it, convened 100 years ago in Shanghai in a brick-walled shikumen villa in the city’s French concession. The gathering included ten Chinese delegates—among them a young activist from Hunan named Mao Zedong—and two foreign agents sent from Comintern, the Soviet-controlled international association of Communist parties. Discussions had gone on several days when a stranger barged into the building, then excused himself claiming he had the wrong address. Fearing they had been discovered by a French spy, the group fled, most of them reconvening later on tourist boat on South Lake in nearby Zhejiang province.

One of the oddities of the July 1 anniversary is that the actual date of the group’s first meeting was July 23, 1921. As Didi Kirsten Tatlow reported for the New York Times on the meeting’s 90th anniversary, the party didn’t think to commemorate the occasion until its 20th anniversary, by which time Mao had emerged as leader and was hiding with Communist fighters in caves of Yan’an. No one could remember the opening date of the congress, so Mao arbitrarily picked July 1. An autobiographical account by one of the founding delegates and news reports of a murder in a Shanghai hotel later helped to establish the true date. Tatlow quotes a party historian as acknowledging that the party kept July 1 as the official date because it was chosen by Mao.

The house where the first congress took place has been carefully restored. It is one of Chinese communism’s most revered shrines and is a popular “red tourism” destination. And yet it sits at the center of one of the world’s glitziest commercial districts. I lived a few blocks away in the early 2000s when I was Shanghai correspondent for the Washington Post. In the months ahead of then-President Jiang Zemin’s visit to the site to commemorate the founding congress’s 80th anniversary, I watched the Shanghai government evict 3,800 mostly poor families crowded into the neighborhood’s remaining shikumen houses to make room for the first phase of Xintiandi, a 130-acre, $3.2 billion real estate development led by a Hong Kong property developer.

As I noted in one dispatch: “The block surrounding the site, where party founders once vowed to rid China of greedy capitalists and foreign oppressors, has recently been colonized by nearly a dozen upscale clubs and eateries. There is a French cabaret, an American ‘bistro bar,’ an English pub and Japanese jazz club. A McDonalds and a German beer hall are on the way. At the newly opened Starbucks outlet, sepia photographs behind hissing espresso machines celebrate Shanghai in its glory days as a Western treaty port.” (For a glimpse of what Xintiandi is like today, check out this video from the SCMP‘s Thomas Yau.)

The little historians know about the discussion at that founding session suggests that one of the key debates was whether China’s fledgling communist movement should remain aloof from “bourgeois democrats” or seek a tactical alliance with merchants and landlords to free China from foreign colonizers.

Harvard’s Anthony Saich sheds light on the argument in a recently published profile of Henricus Sneevliet, (alias Maring), the Dutch Comintern agent. He notes that the Chinese delegates rejected the recommendation of the two Comintern advisers that they forge a “united front” with capitalists and even consider joining the emerging nationalist movement led by Sun Yat-sen to the south. Instead, the delegates insisted on a pure “proletarian” platform that called for surrender of land and machines to the working masses.

As the party begins its second century, that old debate still reverberates.

There will be no Eastworld newsletter on Thursday; we plan to enjoy the holiday! But mark your calendars for July 6, when I’ll be moderating virtual conversation about the startup scene in Southeast Asia. That discussion is entitled “Fostering the Next Generations of Unicorns,” and is sponsored by Huawei Technologies. Register to participate here.

More Eastworld news below.

Clay Chandler
– clay.chandler@fortune.com

This edition of Eastworld was curated and produced by Yvonne Lau. Reach her at yvonne.lau@fortune.com.

EASTWORLD NEWS

Another lockdown Down Under

Experts had hailed Australia for its early pandemic response, but on Tuesday, over 10 million Australians in four cities—Perth, Brisbane, Sydney, and Darwin—are under COVID-19 lockdown. The government is battling to control fresh outbreaks of the highly infectious Delta variant. Only 5% of Australians are fully vaccinated. Prime Minister Scott Morrison acknowledged that the Delta strain is "presenting very different challenges from those we have faced in the past." As of Monday, Australia has 271 active COVID-19 cases. CNN

Paving the CBDC path

China is setting the pace on central bank digital currencies, Toshihide Endo, a former Japanese financial regulator, told Reuters on Tuesday. When China's CBDC is fully rolled out, “it would be a move hard to ignore for other nations," Endo said. "Japan and other advanced nations will face the tough question of how quickly they should follow." In April, the People’s Bank of China became the first major central bank to launch a retail CBDC, a digital currency that individuals and institutions can use as virtual cash. Reuters

India’s crypto craze

Indians have poured tens of billions into cryptocurrencies in the last twelve months. Crypto investments in India have skyrocketed to almost $40 billion, up from $200 million in the prior 12-month period, says Chainalysis data. The country now has 15 million crypto traders, which surpasses the U.K.’s 2.3 million and is catching up to the U.S.’s 23 million. India's crypto boom has occurred even as authorities have remained wary of the digital asset. The Reserve Bank of India has "major concerns" about cryptocurrencies, it said in early June. Bloomberg

Tesla 'recall'

Electric vehicle maker Tesla is set to "recall" 285,000 Model 3 and Model Y cars in China, after a regulatory investigation found that drivers could accidentally enable the cars' autopilot. But Tesla customers won't be returning their cars. The company can fix the software glitches by remote or in-person upgrades. Yet, the SAMR "framing the safety update as a recall continues the run of bad press and government scrutiny Tesla has suffered in China this year, despite the brand's enduring consumer appeal," writes Fortune's Eamon Barrett. Fortune

A slimmed down Kim

North Korean leader Kim Jong Un has lost weight, as shown by recently-released images from North Korea’s Central News Agency. The slimmed-down Kim has caused "concern" among citizens, according to tightly-controlled broadcasts from Central TV, the country’s main network. One unnamed citizen said: “Seeing [him] emaciated like that… everyone just started to cry.” Such imagery has potential political undertones, analysts say; it shows that the leader is "suffering" alongside his people who are facing food shortages and economic pressures. Wall Street Journal

MARKETS AND MOVERS

Kakao Bank –  Kakao Bank, one of South Korea’s two virtual banks, is looking to raise $2.3 billion in its Korea Exchange IPO in August. If shares sell at the top end of the indicated price range, Kakao Bank's valuation could reach $16.4 billion, making it worth more than the country’s top two financial institutions, KB Financial and Shinhan Financial. Founded in 2016, the virtual bank is a subsidiary of South Korean Internet giant Kakao Corporation.

BeiGene – Chinese biopharmaceutical firm BeiGene has scored approval for a $31 billion IPO on the Shanghai STAR Market. The listing will make the cancer drugmaker China’s first biopharma company to maintain triple listings in China, Hong Kong, and the U.S. BeiGene listed on the Nasdaq in 2016 in a $182 million IPO and subsequently raised $902 million on the HKEX in 2018.

SoftBank – Masayoshi Son’s SoftBank Group has curtailed its ambitions to become a top robotics maker. SoftBank Robotics, the group’s global robotics business, is cutting jobs and has halted production of its flagship ‘Pepper’ robot, says a Monday Reuters report. The company envisioned Pepper as a human-like machine to help with labor shortages, but global sales failed to take off.

HKEX – Blockbuster listings of Chinese technology firms buoyed the Hong Kong Exchanges and Clearing (HKEX), Hong Kong’s main bourse, to a record-breaking first half in terms of IPO proceeds, according to new data from KPMG. The HKEX raised $26 billion in the first six months of the year, with five Chinese tech companies contributing two-thirds of the sum.

Slowing growth – Rating agency S&P Global has reduced its growth forecasts for India, Malaysia and the Philippines due to fresh COVID-19 outbreaks and a lagging vaccine rollout. The agency slashed India's growth to 9.5% from 11%, given its recent surge in infections. S&P curbed the Philippines' growth forecast to 6% from 7.9%, while reducing Malaysia's to 4.1% from 6.2%. The slower-than-anticipated vaccine rollout is the top risk faced by Asian emerging economies, says S&P.

FINAL FIGURE

50,000

India has moved an additional 50,000 troops to its border with China, a historic step toward an offensive military stance against its neighbor. In recent years, Sino-Indian border tensions have ramped up due to decades-long and unresolved boundary disputes. Last June, 20 Indian soldiers were killed when Indian troops clashed with their Chinese counterparts in the Galwan Valley. India now has around 200,000 troops stationed along its border with China, an increase of 40% from last year. Bloomberg