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Indonesian President Prabowo Subianto dismissed outspoken Finance Minister Purbaya Yudhi Sadewa on September 14, exactly one year after appointing him to take over from globally respected finance chief Sri Mulyani Indrawati.

He was replaced by Deputy Finance Minister Suahasil Nazara, a widely respected former aide to Sri Mulyani.

The move came as tensions were growing over state revenues and the government’s relationship with Danantara, Indonesia’s powerful sovereign investment authority.

Prabowo’s government is facing mounting criticism over fiscal stability and costly flagship programs, including the corruption- and quality-plagued free lunch initiative and the establishment of tens of thousands of village cooperatives.

Investors have grown cautious, the rupiah has been hit hard this year and the stock market has suffered losses over the integrity and transparency of the bourse.

Several polls have pointed to a sharp decline in public satisfaction with the government. A Tempo Data Science survey conducted from July 31 to Aug. 11 found that 62 percent of respondents were dissatisfied with government performance. The speed of the decline is striking: in the same survey, satisfaction stood at 75 percent in December 2025.

A separate poll by the respected Saiful Mujani Research and Consulting (SMRC) showed Prabowo with an approval rating of 51.1 percent in July, down from 81.2 percent a year earlier. Indonesia traditionally gives its leaders very high approval ratings, which makes this decline sobering.

The government’s declining support is beginning to test a more consequential asset: its performance-based legitimacy.

A fight over Rp120 trillion

Purbaya’s dismissal is widely believed to be linked to internal tensions and growing dissatisfaction within the presidential palace over the management of state revenues and the Finance Ministry’s relationship with Danantara, the powerful asset fund that Prabowo put in charge of all state-owned companies in 2025.

Danantara was launched with the promise that it would manage and invest the assets of all 1000 or so SOEs and thereby propel the country to higher growth. Purbaya turned that on its head last week, when he said about Rp120 trillion ($7.1 billion) from Danantara’s SOE revenues would go to the state budget. The money was intended to be recorded as non-tax state revenue and used as a fiscal buffer.

Purbaya said the payment had effectively been agreed upon and that the amount reflected a commitment made by Danantara’s leadership to Prabowo. But days before his removal, he publicly acknowledged resistance from Danantara, saying the agency had questioned the proposed payment.

The episode fueled speculation that Prabowo was unhappy with the communication and coordination between the Finance Ministry and Danantara over the effort to secure the funds. Purbaya had also been embroiled in a dispute with Bank Indonesia, the central bank, which culminated in the resignation of its governor, Perry Warjiyo.

Danantara’s head and concurrent Investment Minister Rosan Roeslani, who is very close to Prabowo, is said to have been surprised by the announcement.

The government’s apparent decision to draw $7.1 billion from Danantara’s profits so soon after its creation has raised questions about whether the authority is being treated as an investment institution or a source of budget financing. The issue is clouded by the fact that Danantara itself has yet to issue a financial statement for 2025, a fact that contributes to investor skepticism.

Where is the money?

The government is under pressure to find additional fiscal room as non-tax revenue is expected to weaken in 2027, partly because of lower assumptions for commodity prices. At the same time, spending demands remain high. That makes Danantara’s profits an attractive source of cash — but one that may come at the expense of its ability to invest.

Bhima Yudhistira, an economist and executive director of the Center of Economic and Law Studies (Celios), said internal coordination problems may have contributed to the dismissal. Bhima pointed to tensions between the Directorate General of Customs and Excise and the Directorate General of Taxes, including disputes over the replacement of senior officials and the policy of withholding tax refunds from companies.

He said a policy to withhold tax refunds was initially intended to allow the government to scrutinize companies in the natural resources sector. But the policy was later expanded to other industries, triggering dissatisfaction among businesses. The broader application of the policy, Bhima said, contributed to differences between Purbaya and Bimo Wijayanto, the director general of taxes.

The tensions went beyond taxation to the promised $7.1 billion dividend payment from Danantara to the Finance Ministry.

Taken together, Bhima said, the disputes pointed to poor internal coordination under Purbaya. He said the minister’s increasingly overconfident leadership style and public communications had aggravated the problems. In short, Purbaya is boastful and relishes attracting controversy.

“Purbaya’s way of coordinating internally, including his communication style, became increasingly problematic and overconfident,” Bhima said. “That is what ultimately led to his reshuffle.”

Purbaya was sworn in on September 8, 2025, replacing Sri Mulyani, who had served under three presidents and is a former Managing Director of the World Bank. During his year at the Finance Ministry, he replaced Sri Mulyani’s caution with a more interventionist approach to fiscal policy, including the controversial placement of Rp200 trillion in government reserve funds at five state-owned commercial banks in September 2025 to spur lending.

See related story:

Economic growth also accelerated during his tenure, although it remained below the government’s 6 percent target. GDP grew 5.39 percent in the fourth quarter of 2025 and 5.61 percent in the first quarter of 2026, before slowing to 5.29 percent in the second quarter. Some economists have questioned the quality of that growth, arguing that government spending, rather than stronger household and private-sector activity, is driving the economy.

A familiar face

The appointment of Suahasil could be reassuring. Suahasil said the president had instructed him to maintain the health and credibility of the country’s finances and to improve public communication about fiscal policy.

“The state budget must be healthy. It must also be credible and trusted,” Suahasil said after his inauguration as quoted by local media.

He played down the prospect of any major change in economic policy, describing his appointment as a continuation rather than a break with the ministry’s existing direction.

“The market has its own logic,” he said. “But in my view, this is not a change. It is a continuation.”

Suahasil served as head of the Fiscal Policy Agency from 2016 to 2017 and has been deputy finance minister since 2019, working alongside Sri Mulyani in formulating and implementing national fiscal policy.

He has a master’s degree from Cornell University and a doctorate in economics from the University of Illinois. Before joining the ministry, he held several public-policy positions, including work on fiscal decentralization and poverty-reduction programs.

His appointment may provide continuity, but the central fiscal dilemma facing the government remains unchanged: how to finance an ambitious spending agenda without weakening the institutions and investment capacity that are supposed to generate Indonesia’s future growth.

Ainur Rohmah is a freelance journalist and regular contributor to Asia Sentinel.

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Indonesia’s experiment with decentralization is facing a tough test under President Prabowo Subianto. As Jakarta pulls billions of dollars in regional funding back to the center to finance his signature programs, local governments are left with less money to pay workers, maintain infrastructure and provide basic services.

The consequences are increasingly visible not only in local budgets but also on the streets.

In Banda Aceh on Aug. 15, demonstrators attempting to raise the Bulan Bintang, or Crescent Star, flag at the Baiturrahman Grand Mosque clashed with security forces. The protest came as Aceh marked the 21st anniversary of the peace agreement that ended an armed insurgency against Jakarta. Protesters criticized the government’s response to devastating floods in late 2025 and what they described as the incomplete implementation of the 2005 Helsinki peace accord that ended the fighting.

The same day, in Timika, Central Papua, demonstrators raised security and humanitarian concerns and called for a referendum. Some carried the Morning Star, a symbol associated with the Papuan independence movement. In West Kalimantan, the Borneo Raya flag was raised in Sanggau. Its supporters said it represented cultural identity rather than separatism, while demanding a fairer share of natural-resource revenues and greater control over local wealth.

The three protests have different histories and political demands, but they share a familiar grievance: resources are extracted from the regions, decisions are made in Jakarta and communities feel they receive too little in return.

Shrinking fiscal space

The government’s sweeping budget-efficiency drive has become a major source of frustration. Regional transfers were cut to Rp 693 trillion in the 2026 budget, down Rp 226.9 trillion, or 24.7 percent, from the previous year. The proposed 2027 allocation rises to Rp 735 trillion but remains below the 2025 level.

The savings are needed to finance Prabowo’s populism, including the Free Nutritious Meals program, Red-and-White Village Cooperatives, People’s Schools, Garuda Schools and food-security projects.

For local governments, however, the cuts are not merely an accounting exercise. Syafruddin Karimi, an economist at Andalas University, estimates that about 490 local governments need additional funding to meet payroll and minimum operating costs after the reduction in transfers. The pressure is compounded by about Rp 70 trillion in revenue-sharing funds that remain unpaid to hundreds of regions.

Local governments are consequently forced to choose between competing necessities. Salaries and essential services must be protected, while infrastructure, maintenance and payments to contractors can be delayed or cut. Some governments have turned to higher local taxes and fees to compensate, potentially increasing costs for residents and businesses.

The problem is particularly acute for regions with weak tax bases. Of Indonesia’s 546 autonomous regions, fewer than 10 percent have strong locally generated revenue. Most are heavily dependent on transfers from Jakarta.

That dependence was not accidental. Regional transfers were created as part of Indonesia’s post-Suharto decentralization after 1998 to give local governments the resources to perform responsibilities transferred from the central government and set their own development priorities.

Now, critics say, the system is moving in the opposite direction.

“The regions remain the location of development but lose control over the budget, project design, timing and contractors,” Syafruddin said. “They are left with responsibility for public services without commensurate fiscal authority.”

The distinction matters. The government argues that money has not disappeared from the regions because central government ministries continue to finance regional projects. But spending money in a region is not the same as giving the region control over it. A project designed in Jakarta leaves local governments with little say over what should be built, where it should go, who benefits or when it should be implemented. In effect, local governments become administrators of decisions made elsewhere.

Voices of protest

The move back to centralization, which was the norm under Suharto, has drawn objections from local officials and civil-society groups. Governors have previously confronted the Finance Ministry over the cuts. Two organizations, the Committee for Monitoring the Implementation of Regional Autonomy and the Indonesian Forum for Budget Transparency, have challenged the 2022 law governing fiscal relations between Jakarta and the regions before the Constitutional Court, which has yet to rule on the case.

They argue that changes to the transfer system, including adjustments made to finance central priorities such as the Free Nutritious Meals program, are narrowing the fiscal autonomy guaranteed to local governments by the Constitution.

Constitutional Court Justice Saldi Isra acknowledged the complaints during a hearing this month, saying regions were “crying out” over changes to the transfer system. He warned that annual political calculations in the state budget should not override the fiscal framework established by law.

“If political logic is allowed to defeat systems that have been firmly established,” he said, “the system itself loses its function.”

Prabowo has argued that money is better managed centrally than “left to be corrupted.” The argument reflects a legitimate problem: corruption in regional governments is real and has been pervasive. But centralization is not the same as fighting corruption. Much regional corruption involves bribery and extortion rather than the direct theft of budget funds. A more effective response would be stronger oversight, transparent procurement and targeted sanctions against inefficient or corrupt governments rather than reducing the fiscal autonomy of all regions.

The Institute for Development of Economics and Finance (INDEF) has warned that shrinking regional transfers and the restoration of central authority could weaken decentralization and deepen local governments’ dependence on Jakarta.

The Center of Economic and Law Studies (CELIOS), has raised another concern: shifting regional funds into large central programs could concentrate corruption risks on a much larger scale while making oversight more difficult. This has already occurred with a headline-grabbing corruption case centered on procurement for the free lunch program. CELIOS also estimated that food waste from the free meals program alone could reach Rp 1.2 trillion.

The government, meanwhile, says regional transfers remain essential to maintaining public services and has provided additional revenue-sharing funds to some regions, including disaster-hit Aceh. Finance Minister Purbaya Yudhi Sadewa confirmed that around Rp 20 trillion in additional funding has been disbursed to 490 local governments to help them meet payroll obligations for contractual civil servants. The move came after mounting protests from regional governments over the cuts.

The shrinking of decentralization

Economists argue that decentralization was designed to prevent excessive concentration of political and economic power in Jakarta by giving local governments both the resources and authority to set priorities in education, health care, infrastructure and other public services.

From that perspective, the growing role of the central government in determining how money is spent is difficult to reconcile with meaningful regional autonomy. For example, Prabowo initially put the free lunch program under the education budget, a move that was struck down by the Constitutional Court, which said meals are not legitimate education activities. As Jakarta controls more funding, selects more projects and determines their implementation, local governments risk being responsible for delivering services without having comparable control over resources.

Economists acknowledge that local governments need to strengthen their own revenue collection efforts. But they caution that fiscal independence cannot be built overnight. Regions with weak economies require years of investment, stronger human capital, better institutions and sustained economic development before they can reduce their dependence on central transfers.

They also point to Article 18A of Indonesia’s Constitution, which requires financial relations between Jakarta and the regions, as well as public services and natural-resource management, to be conducted “fairly and harmoniously.” For some experts, the current shift in fiscal authority risks upsetting that balance.

The government may succeed in directing more money toward Prabowo’s national priorities, economists say. But if that comes at the expense of local fiscal space and decision-making power, the consequences could extend beyond delayed projects and unpaid bills. They could erode something harder to restore: public trust.

The appearance of regional identity flags in Aceh, Papua and Kalimantan, they argue, should be understood as a symptom of political frustration when communities feel decisions about their lives are increasingly being made in Jakarta.

The unexpected announcement on August 12 that Natarajan Chandrasekaran will not seek a third five-year term as executive chairman of Tata Sons, India’s biggest conglomerate, marks the climax of bitter family differences and ego clashes that have colored events at the top of the $280 billion group for decades.

Noel Tata, chairman of the Tata Trusts that control the group, has come out the winner, having triggered Chandrasekaran’s decision to leave when his current five-year term ends next February.

With Chandrasekaran going, Noel is gaining the group leadership that he was denied when his elder half-brother, Ratan Tata, retired as Tata Sons chairman in 2012. At the time, he was seen by many in Mumbai and elsewhere as the natural successor.

Noel’s managerial advancement was also restricted by Ratan during the 21 years that he was chairman, allegedly because he doubted Noel’s ability, but basically, observers say, because of their family history.

Ratan Tata’s parents had a difficult divorce. His father later married Simone Dunoyer from Switzerland, and Noel was born. The two boys grew up separately and it seems that Ratan never accepted his stepmother or half-brother. Noel then complicated the family base by marrying Aloo Mistry, the daughter of Pallonji Mistry whose Shapoorji Pallonji group is Tata’s largest minority shareholder with an 18 percent stake (which it now wants to sell).

Helped initially by his mother, Simone, who was regarded as a trailblazer in cosmetics and fashion retailing, Noel proved his ability by turning Tata’s Trent retail business into a success against strong competition, hitting $2 billion in revenues last year. He also developed Tata’s international trading company and had boardroom roles in various companies.

But Ratan is quoted in a recent biography saying, somewhat dismissively, “perhaps, if Noel had had the experience of handling difficult assignments, he could have established his credentials more forcefully… For Noel to compete successfully for the top post he should have greater exposure than he has had… Partly, his not having it has been his own choice.”

Tata is generally revered as India’s most respectable large business, devoted to charitable enterprises and patriotic principles that guide corporate decisions over its 1.1 million employees and 30 operating companies, ranging from salt to software and Jaguar cars, and hotels to aviation and defense,

The image, however, began to unravel after Ratan retired as chairman of Tata Sons in 2012. He remained head of the trusts that have a controlling 66 percent share in the group and, in 2016, at age 78, he staged a boardroom coup that ousted his chosen successor as chairman, 50-year-old Cyrus Mistry (brother of Noel’s wife). Ratan replaced him with Chandrasekaran, who ran the highly profitable Tata Consultancy Services software business, again sidelining Noel. (Cyrus died later in a car crash).

The coup was widely criticized. “The halo that once surrounded the Tata name has gone. The group looks like just one more conglomerate that has lost its way,” wrote Swaminathan S Anklesaria Aiyar, a respected veteran economic affairs columnist, in The Economic Times.

Mistry had not been removed for bad management, though there were criticisms of his style and some of his decisions. He went primarily because he did not show sufficient respect and deference to Ratan. Some of his more brash aides also upset the serenity of Tata’s Bombay House headquarters.

Unlike Mistry, Chandrasekaran managed his relationship with Ratan expertly, but he does not seem to have felt the need to do the same with Noel Tata, probably because, like others, he underestimated Noel’s ability to be tough and exert authority.

Chandrasekaran has had some failures, notably trouble-prone Air India, and there have also been losses on new digital and other ventures with major expansion into AI. But growth has been good with revenues of $185 billion, and many of the problems left by Ratan, such as the Tata Motors’ declining Indian car business, have been turned into successes. That is reflected in a bullish annual report for 2025-26.

Air India’s losses more than doubled to nearly $3 billion in 2025-26 and accounted for some 80 percent of the group companies’ total losses. The airline’s reputation has been hit by a fatal crash last year and by a pilot losing control of an aircraft for four seconds earlier this month. There have been a series of other problems, not least rising fuel costs and restrictions on international flight routes. The airline has just appointed a new chief executive – Tewolde Gebremariam who earlier ran Ethiopian Airlines.

Tata bought Air India from the government in 2022. Ratan, who died in 2024, was still running the trusts and will have had some influence on the decision. Commercially it was a disaster, but it helped the government because there was no other viable buyer, and it was a homecoming for the group that founded the airline in 1932 and lost it to nationalization in 1953.

There were splits among trustees throughout last year about appointments and governance issues. This escalated to the point where Chandrasekaran and Noel went to Delhi last October for a meeting with Amit Shah, the home minister and the prime minister’s troubleshooter, and Nirmala Sitharaman, the finance minister. Chandrasekaran had good links with the government because he had hired S. Jaishankar as a global affairs adviser for a few months in 2018-19 after Jaishankar retired as foreign secretary and before he was appointed foreign minister. But it seems he over-estimated the support that access could yield.

Despite the problems – and tensions over whether Tata Sons should follow a Reserve Bank of India instruction to be floated on the Bombay Stock Exchange – the two main trusts proposed Chandrasekaran for a third term. This however was questioned at a Tata Sons board meeting in February by Noel who was critical about losses. Not a risk-taker, Noel has also raised concern about Chandrasekaran’s $120 billion five-year expansion plan for the group.

The proposal for a third term “was not carried through because one of the Board Members did not support it,” Chandrasekaran said in his resignation statement, referring to Noel without naming him. In the absence of unanimous support, Chandrasekaran said he had, as chairman, deferred the decision. Noel apparently did nothing after that to solve the impasse, so Chandrasekaran made his statement on August 12, avoiding the risk of an embarrassing situation at Tata Sons’ annual general meeting planned for August 18 which was postponed because of separate issues involving one of the trusts.

Noel lacks Ratan’s commanding (though shy) presence, but now has the opportunity to prove that he can preside over the group as head of the trusts. He cannot also be chairman of Tata Sons because Ratan, after he retired from that position, changed the rules so that one person cannot hold both posts.

Ratan having not married, Noel is securing his own family’s role in Tata’s future. He has appointed his 32-year-old son Neville, who has managerial roles in the retail businesses, to the two top trusts. Noel’s two daughters, Leah and Maya, are employed in the group’s hotels and in retail.

First, however, Noel needs to lead the choice of a strong candidate to succeed Chandrasekaran, and then allow the winner freedom to run the group and be its public face.

John Elliot is a veteran observer of India. This is reprinted with permission from his blog, Riding the Elephant.

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Aug. 5 marked the seventh anniversary of the demotion of Jammu and Kashmir from a state to two federally governed Union Territories (UTs). Seven years on, India’s decision to unilaterally withdraw special state status remains politically fraught as regional parties, except the ruling Bharatiya Janata Party (BJP), still oppose the decision as something that politically dispossessed the region.

While the BJP celebrated the day for completing the “constitutional integration” of Jammu and Kashmir with India (the region is also claimed by Pakistan and a small portion of it by China), major regional parties like the National Conference (NC) and People’s Democratic Party (PDP), continue to mourn the loss of special status, which they say snatched away decades of constitutional rights and diluted the special identity of the region.

Omar Abdullah, the Chief Minister of the Union Territory of Jammu and Kashmir and president of the National Conference party, said the “wounds have not yet healed” seven years after Aug. 5, 2019. He said the central government’s promise to restore full statehood remains unfulfilled and his party is committed to reversing a decision that “took away our rights and threatens our identity.”

NC leaders and MPs joined protests in Delhi and Srinagar on Aug. 5, demanding immediate restoration of full statehood. They said that central government assurances after delimitation and elections remain unmet.

The president of the regional PDP, Mehbooba Mufti, called Aug. 5 a “black day.” She said the central government “looted the special status of Jammu and Kashmir” and demanded the restoration of the rescinded Articles 370 and 35A, release of political prisoners and an end to curbs on democratic expression. PDP activists staged candlelight protests on the occasion in Srinagar and other towns.

“Neither Pakistan nor China granted Article 370 and 35A to Jammu and Kashmir but it was the Indian Constitution. However, the BJP used the brute majority to snatch Article 370 from Jammu and Kashmir. We are an alive nation and will keep fighting for it,” Mufti said on Aug.4 while participating in a protest in Srinagar on the eve of the anniversary.

A recent report released by the Forum for Human Rights in Jammu and Kashmir, an informal group of concerned Indian citizens including former judges, senior bureaucrats, military officers, academics, lawyers, and activists, paints a grim picture of the political condition of the region since special status was revoked. The group calls for full statehood to be restored.

The report, Jammu and Kashmir: Seven Years Under Union Rule, was released this month and describes 2025-26 as a year of “contradictory trends” with fewer militant incidents (about 20 vs 35 the previous year) but no corresponding improvement in democratic normalcy or civil liberties.

Deepening accountability gap

The report notes that the current administration has “deepened a governance and accountability gap” as elected representatives, including the ruling NC government, have limited power over key domains. The report highlights the continued use of anti-terror laws, frequent detentions and restrictions on peaceful protest and free expression.

On the overall security situation in Jammu and Kashmir, the report notes that it appears to have improved between August 2025 and July 2026, with reported fatalities in armed conflict falling to 32 in 20 incidents with no civilian deaths, 23 alleged terrorist fatalities and 9 soldiers killed. However, the report points out, “Kashmir-related militancy continues and may once again be targeting significant structures in the rest of India.”

The report concludes that fully restoring statehood is a human rights issue and that linking statehood to the security situation is “dangerous” and can be used indefinitely to justify the suspension of democratic rights.

The report notes that governance remains “stalemated between the concentration of powers in the hands of the Lieutenant-Governor, who is not accountable to the people, and the administration, which is accountable to the people but has little to no powers of governance.”

“The grant of emergency powers over telecommunications to Manoj Sinha [the Lieutenant Governor of the Union Territory of Jammu and Kashmir] further compounds the helplessness of the elected administration,” the report states.

The report is also critical of the region’s economic trajectory. The report found that the regional economy has suffered from “ill-considered interventions” by the Union government that follow a “start‐stop pattern” that disrupts long-term planning in key sectors. The report highlights rising unemployment in the Union Territory, which is about twice the national average. It links economic underperformance to concentrated power in the hands of the Lieutenant Governor and criticizes the absence of stable, accountable institutions that can design and implement coherent economic policy over time.

The Forum has recommended restoring the pre‐2019 federal arrangements, and reviving independent oversight institutions (including a human‐rights commission) that were disbanded or weakened post-2019.

Grievances remain despite elections

In a recently published research paper authored by two Kashmir-based academics, Waseem Ahmad Bhat and Javaid Ahmad Bhat, the authors analyzed the 2024 assembly elections in the context of the post-2019 changes, arguing that while the local polls provided formal procedural representation, they operated firmly within boundaries engineered by the central government.

“Durable political stability and substantive democratic agency in Jammu and Kashmir will remain elusive without genuine restoration of representative autonomy, clear institutional accountability and a federal recognition of regional diversity,” the authors write in the conclusion of the paper, published in the journal Asian Affairs.

A Kashmir-based political analyst and academic told Asia Sentinel that the abrogation of Article 370 fundamentally changed the political and constitutional position of Jammu and Kashmir.

“It reduced the region’s political autonomy and increased the role of the central government through Union institutions and the Lieutenant Governor. The restrictions, detentions, communication shutdowns, and limits on political activity after 2019 created a sense of uncertainty and political alienation among many people,” the analyst said, wishing to remain anonymous.

Overall, he said the 2024 elections were a key sign of renewed political participation, “but not necessarily evidence of full democratic reconciliation or restoration of the political autonomy that existed before 2019.” He said voting does not necessarily mean that political grievances have been resolved.

Burhan Majid, a Kashmiri academic who teaches law at Jamia Hamdard University in New Delhi, told Asia Sentinel that demands for the restoration of statehood, and the continued opposition of regional political parties, show that the 2019 changes have not resolved the deeper political contest over Jammu and Kashmir.

“Even the Supreme Court, in upholding the abrogation in 2023, ordered the government to hold elections and restore statehood, a tacit admission that legality and legitimacy are not the same thing,” he said.

Majid Maqbool is an independent journalist and writer based in Kashmir.

Chinese President Xi Jinping, who faces enemies on many fronts, needs all the friends he can get as he seeks a fourth term. This is why Xi is handing out exceptional honors to two late Chinese leaders, President Jiang Zemin and Prime Minister Zhu Rongji, analysts told Asia Sentinel.

“The fact that Xi has been forced to adopt high-profile functions to honor Zhu and Jiang shows the limits of Xi’s powers,” Willy Lam, a veteran Hong Kong journalist and senior fellow at the Jamestown Foundation, told Asia Sentinel. “It is possible that Xi might merely be giving lip service to Zhu and Jiang to placate still-powerful CCP (Chinese Communist Party) members loyal to Zhu and Jiang.”

Zhu, hailed in state media as “an outstanding leader,” was cremated in Beijing on Aug. 18. The Chinese flag in Tiananmen Square in Beijing was flown at half-mast while tight security sealed off the area.

The tight security likely reflects the Chinese government’s fear that the death of Zhu, who is liked by many Chinese for his economic reforms, might spark demonstrations. The death of another Chinese leader, Hu Yaobang, in April 1989 led to the protests in Tiananmen Square that ended in carnage on June 4, 1989.

The official hagiography of Jiang in particular now approaches idolatry.

A silver coin bearing Jiang’s face will be issued, the People’s Bank of China announced on Aug.14. China’s postal service issued stamps on Aug. 17 commemorating Jiang. With the support of the Chinese government, a book of articles on foreign diplomacy by Jiang has been distributed throughout the nation, state media reported on Aug. 17.

“Xi has to honor both of them to mitigate conflict. Xi probably seeks a fourth term as general secretary and president and he must build public and party support,” an ex-banker told Asia Sentinel.

Getting ready for term 4

Xi will chair a meeting in Beijing in October at which analysts believe he will seek endorsement for a fourth term. Xi already broke a rule laid down by the late leader Deng Xiaoping that Chinese presidents should not serve more than two five-year terms. His power may be creating unease.

“He has amassed too much power, so everybody is against such an upstart. He broke the 10-year tenure rule and went after other princelings for corruption, so he alienated himself from the princelings. Not only did he not protect their interests, but actually moved their cheese away from them,” a Malaysian analyst told Asia Sentinel.

“Xi has enemies aplenty and everywhere. So he needs some sort of allies,” said the analyst, who declined to be named. “Apparently, Xi needs to bolster himself with the help of the Jiang faction nowadays, hence all the olive branches to the Jiang faction.”

In a ceremony marking the 100th anniversary of Jiang’s birth at the Great Hall of the People in Beijing on Aug. 17, Xi spoke glowingly of Jiang, who died in 2022 at the age of 96. Xi praised Jiang for having lived a glorious life and making contributions that can never be forgotten. Xi commended Jiang for having made the Chinese people more prosperous and deepening economic reforms. Xi declared of Jiang, “We must learn from his strategic foresight.”

Cai Qi, the fifth most powerful Chinese leader, is hosting a discussion on the thought of Jiang in Beijing Aug. 17-19, Chinese state media reported. The forum will discuss “the Three Represents,” the signature philosophy of Jiang, which reconciled capitalism with Chinese Communist doctrine.

Jiang’s good old days

Under the current political and economic climate in China, Xi needs to respect Jiang’s accomplishments. Many Chinese remember that under Jiang the economy boomed and wages rose. Xi needs to create a narrative that builds on Jiang, rather than denouncing or criticizing him, because many Chinese question the course that Xi has chosen for China,” explained the ex-banker, who declined to be named.

Xi’s effusive praise for Jiang is an apparent reversal of the two men’s rivalry when Jiang was alive. In 2020, Xi cancelled the initial public offering (IPO) of Ant Group in Hong Kong and Shanghai, for example. The $37 billion dual listing would have been the world’s biggest IPO at that time. Alvin Jiang Zhicheng, a grandson of Jiang Zemin, was a minority shareholder of the Chinese online payment company.

Alvin and his father, Jiang Mianheng, attended the 100th anniversary event for Jiang. At the ceremony, Xi shook hands with Jiang Mianheng, the eldest son of Jiang Zemin, and posed for photographs with members of the Jiang family.

Former Chinese leaders like Wen Jiabao, Wang Qishan and Zhang Gaoli also attended the ceremony.

The meaning of the elders

Conspicuously absent was Hu Jintao, Xi’s predecessor. The former Chinese President was escorted out of a Communist Party Congress session in Xi’s presence in Oct. 2022 and is rarely seen in public any longer. Hu was seen as close to Jiang.

“A key point of observation for these commemorative events is whether Hu Jintao will make another public appearance. If he attends, it could at least be leveraged on the level of political messaging to demonstrate that unity persists between the current leadership and the retired elders; if he continues to be absent, it will inevitably reignite external speculation about his health and high-level relationships,” China watcher David Tsai tweeted on Aug. 15.

“By comparison, whether Wen Jiabao and Wang Qishan appear is equally noteworthy. There have been numerous unverified rumors surrounding their political circumstances in recent years, so if the two attend as normal, it would undoubtedly address some of those external speculations to a certain extent; conversely, if several heavyweight retired leaders are absent simultaneously, the political symbolism would only be further amplified,” Tsai said.

At the ceremony, Xi praised Jiang for being “decisive, confronting risky challenges, resolutely overcoming danger and difficulties.”

Deng had chosen Jiang to be his successor, largely because Jiang put down the protests in Shanghai without bloodshed in 1989, in contrast to the bloody crackdown in Beijing that year.

“We must learn from his resolve and unusual courage…to better combine development and security,” Xi said at the ceremony.

Another of the old titans, former premier Zhu Rongji, died at the age of 97 on Aug. 12. The next day, Chinese state media praised him in a lengthy obituary, saying that after Zhu stepped down as prime minister in March 2003, he “firmly supported” Hu as China’s leader and subsequently Xi as China’s leader.

In many circles, it is believed Zhu was at odds with Xi over his economic policy, but after retirement, Zhu remained quiet on policy matters, which allowed speculation to continue.

In the words of government economists these days, South Korea hasn’t had it so good in years.

Riding on the back of strong semiconductor exports, the economy this year is expected to post 3 percent growth for the first time in five years, boosting per capita annual income from $40,000 to $50,000, nearly on par with Japan.

Undoubtedly stir…

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In a much-anticipated press conference by ousted Bangladesh premier Sheikh Hasina in New Delhi that drove relations between the two countries to a new low, Hasina reiterated that she intends to return to Bangladesh in December but did not disclose a specific date or travel plan, avoiding spelling out a roadmap. Her son, Sajeeb Wazed Joy, joined the briefing from the United States and acknowledged India’s continued support for his mother since she left Dhaka two years earlier, following the student-led uprising that ended the Awami League government.

Dhaka expressed dismay over Hasina’s appearance, charging that New Delhi had allowed a convicted individual to address journalists. Bangladesh’s foreign ministry objected to what it described as an opportunity for Hasina and her allies to attack the state and people of Bangladesh. The ministry said the event was an affront to Bangladesh’s sovereignty and an insult to those killed during the July Revolution, while adding that Bangladesh still sought a constructive and forward-looking relationship with India based on sovereign equality, mutual respect, non-interference and national dignity.

Reactions from Bangladesh over the Hasina event were sharp and strong, with the country’s home minister, Salahuddin Ahmed, criticizing New Delhi for allowing Hasina to repeatedly address the media, including some global news agencies, from Indian soil. Reiterating Dhaka’s wish for friendly ties with New Delhi, the minister argued that Hasina’s presence in India has emerged as a source of discomfort in bilateral ties between the two countries. Earlier, a statement from the Bangladeshi foreign ministry said that Dhaka was outraged over an absconder’s open press briefing in New Delhi. It asserted that “convicted mass murderer Hasina and her mafia enterprise will never have a place in the polity of Bangladesh.”

It also raised questions about the timing, as on that particular date the people of Bangladesh observed the second anniversary of the Monsoon Revolution that deposed Hasina’s autocratic government. Dhaka said New Delhi had been informed in advance about the potential negative consequences of the Hasina event on bilateral relations, but its concerns were not taken into consideration, which it interpreted as an insult to the July-August martyrs. Insisting on a constructive, mutually beneficial and forward-looking relationship with India based on non-interference in each other’s internal affairs and respect for national dignity, the statement described the Delhi program as detrimental to bilateral ties. It also called for Hasina’s extradition to Bangladesh under the 2013 extradition treaty without delay. When Dhaka repeated its demand for Hasina’s repatriation, New Delhi responded that the matter remained under legal scrutiny.

New Delhi responded that the event had been organized by an independent press club made up of journalists from Indian and international media organizations, and that the Indian government neither organized the briefing nor endorsed the views expressed. A foreign ministry spokesperson said India had no role in the program and added that, even if Hasina had been granted shelter, she was not permitted to conduct political activity from Indian soil against another sovereign state. New Delhi is not expected to press Hasina to leave India unless it receives assurances from Dhaka that she would be treated in accordance with due legal process after her return.

New Delhi clarified that Hasina’s event was organized by an independent press club comprising journalist-members from national and international media organizations and that the Indian authorities do not endorse any views expressed during the press briefing. The Indian authorities had no role in the program, a foreign ministry spokesperson said, adding that even though Hasina has been granted asylum, she is not allowed to pursue political activities targeting another sovereign nation from Indian soil. It is understood that New Delhi would not insist that Hasina leave India unless it receives assurances from Dhaka that she would be treated in accordance with legal provisions upon her arrival in Bangladesh. However, New Delhi reiterated that it does not endorse the comments made by either Hasina or Joy, both of whom were highly critical of the current BNP government in Dhaka.

Hasina, 78, has lived in New Delhi in self-imposed exile since August 2024. In what was billed as her first public media interaction in two years, she repeated comments already reported, saying that “whatever fate awaits” her, she would return home. Recalling the struggles of her father, Bangabandhu Sheikh Mujibur Rahman, during the 1971 liberation war and the sacrifices of the Muktijoddhas, or freedom fighters, Hasina said fear for her life would not determine whether she returned. She said December was an appropriate month because Bangladesh marks Victory Day on 16 December, commemorating the 1971 surrender of Pakistani forces.

Referring to the July-August 2024 unrest, Hasina alleged that organized groups had infiltrated the job-quota reform movement and transformed it into a campaign demanding her resignation. She said what began as a peaceful protest turned violent, with demonstrators attacking public infrastructure and law-enforcement personnel. Hasina argued that the escalation forced her to leave Bangladesh but did not sever her connection with the people. She also claimed that the February national election was stage-managed because the Awami League was barred from participating, leaving citizens, in her words, under fear, repression and economic hardship.

The government led by Professor Muhammad Yunus took charge in August 2024, after Hasina fled shortly before a mob entered the prime minister’s residence. Eighteen months later, the caretaker administration sponsored a general election in which Khaleda Zia’s Bangladesh Nationalist Party emerged victorious and BNP chief Tarique Rahman became prime minister. Since then, Hasina has faced numerous penalties in absentia, including a death sentence from Bangladesh’s International Crimes Tribunal over alleged crimes against humanity during the July-August uprising. The Awami League has also been restricted from political activity and from contesting elections.

The interim administration demanded Hasina’s repatriation from India to face trial in Dhaka, and the BNP government has repeatedly asked New Delhi to extradite her under the bilateral treaty between the two countries. Indian Prime Minister Narendra Modi was among the first foreign leaders to congratulate Tarique Rahman before he took office, but New Delhi has remained non-committal on Hasina’s extradition. That cautious posture appeared to be reflected in Rahman’s recent first overseas visit, which included Malaysia and China but not India. He has been invited to New Delhi for the BRICS summit on 12-13 September, though Dhaka has reportedly not confirmed his attendance.

Dhaka is yet to confirm Prime Minister Tarique Rahman’s visit to India, with Bangladesh Deputy Foreign Minister Shama Obaed stating that the proposed trip to New Delhi was “yet to be finalized.” It is speculated that the Bangladeshi government has insisted on Hasina’s extradition before the prime minister accepts the multiple invitations from New Delhi to visit the country. Tarique Rahman received the first invitation months ago for a bilateral trip to India and was later invited to attend the BRICS Summit outreach session in New Delhi on September 12-13 in his capacity as the current BIMSTEC chair. It is believed that the prime minister conveyed his position to the Indian government during a meeting with Indian envoy Trivedi in Dhaka on August 10. Trivedi later returned to New Delhi to brief the Indian prime minister on their discussions.

Meanwhile, Bangladesh is set to hold a presidential election on August 20, with BNP stalwart Mirza Fakhrul Islam Alamgir poised to become the country’s next head of state. As the BNP holds a majority in the Jatiya Sansad, the party nominee, who currently serves as a minister in Tarique Rahman’s cabinet, is widely expected to win the election and move into Bangabhaban in the coming days. A trusted ally of former premier Khaleda Zia during periods of severe crisis, including her illnesses, he effectively led the BNP while Tarique Rahman remained in exile for years. A grassroots BNP worker, Mirza Fakhrul endured repeated humiliations at the hands of the ruling Awami League leadership. The August 20 election became necessary after President Mohammed Shahabuddin, regarded as a Hasina loyalist, resigned prematurely on July 24.

In Dhaka the same day, Prime Minister Tarique Rahman inaugurated the July Uprising Memorial Museum, converted from the vandalized Ganabhaban complex at Sher-e-Bangla Nagar, in the presence of Nobel Peace Prize laureate Professor Yunus. Yunus said the museum would honor the courage and sacrifice of those killed in the 2024 revolution, now widely described by its supporters as a struggle for democracy in Bangladesh. He urged citizens to visit the museum and reflect on the vision of a new nation that rejects authoritarianism.

Bangladeshi author Taslima Nasreen also backed Hasina’s stated intention to return, saying after the audio address that the former prime minister should be guaranteed an impartial and internationally credible judicial process. Nasreen said she understood the pain of exile, having lived outside Bangladesh for more than three decades, and wished Hasina success in the next phase of her political life. She criticized the government’s restrictions on media coverage of Hasina’s New Delhi event as undemocratic and called for the ban on the Awami League to be lifted. At the same time, she reminded Hasina that, during her 15 years in power, she had not allowed Nasreen to return home because of opposition from radical Islamist groups—a position Nasreen said had later turned against Hasina herself.

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