The danger from within

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With triumphant music playing in the Great Hall of the People, a smiling Xi Jinping awarded medals to more than two dozen men and women who devoted most of their lives to China's Communist Party. "The New Era needs heroes — it is also an era where heroes will surely emerge," the president said at today's ceremony in Beijing, part of the events this week to mark the party's 100th anniversary. Xi has many reasons to celebrate. China's economy has expanded by almost 50 times from the size it was in 1976, and is now the world's second-biggest. Extreme poverty has been eliminated. China has more millionaires than any country apart from the U.S. That economic success in part comes down to pragmatism. The party's embrace of foreign capital helped spur an economic miracle that has enriched the globe. But one thing it won't tolerate is dissent. The tanks used against Tiananmen Square protesters have given way to an all-encompassing surveillance state. The dismantling of Hong Kong's democratic institutions to Xinjiang's alleged re-education camps to the crackdown on Big Tech shows that fealty must be paid to the party to thrive in China. Xi's moves have prompted more Western countries to view China's authoritarianism as a threat to free nations everywhere. Yet the bigger problem over the next 100 years will come if China's 1.4 billion people see the costs of one-party rule outweighing the gains. As one Shanghai-based social worker put it: "The party worries more about challenges from within." — Daniel Ten Kate A display in Shanghai marking the centenary.  Photographer: Qilai Shen/Bloomberg Check out all our biggest stories on the Bloomberg Politics web page here and tell us how we're doing or what we're missing at balancepower@bloomberg.net.

Global Headlines

Jail time | Former President Jacob Zuma was sentenced to 15 months in jail for defying a court order to testify at a corruption inquiry, after repeatedly being implicated in the plunder of state funds during the nine years he led South Africa. The ruling boosts President Cyril Ramaphosa's anti-graft campaign but could widen divisions in the ruling party and cost it support in the 79-year-old former leader's home province. Planting seeds | President Joe Biden travels to Wisconsin today to promote a bipartisan deal on infrastructure that would have benefits for agriculture and rural America, a stronghold for predecessor Donald Trump. But Biden and the Democratic Party face major political challenges in farming regions that will play an outsize role in the 2022 contest for control of the Senate. The House passed two competitiveness bills yesterday that are expected to form the core of legislation to boost research and development in response to China's clout. No respite | The heat wave that shattered temperature records across the U.S. Pacific Northwest yesterday and threatens to smother the area for days to come has begun to trigger rolling blackouts. The scorching conditions gripping a region usually defined by cool weather and rain — the result of a "heat dome" — is a powerful example of how climate change is driving temperatures to new highs around the world. Commodities are back and, from pension funds to physical commodity traders, everyone is making money. The question is whether it's a temporary snapback from the pandemic or a longer-term shift in the global economy: For the first time since before the 2008 crisis, central banks are fretting about inflation. The rally will have a political impact, too. Missing out | HSBC has lost about a third of its debt capital markets team covering Chinese state-owned enterprises, a sign it's struggling to win favor in Beijing three years after getting caught up in geopolitical spats. The bank began missing out on dollar bond deals after it became entangled in a U.S. probe of Huawei's finance chief and in tensions between China and the U.K. over political freedoms in Hong Kong. Standing up | The European Union is working on potential legal action against Poland for its crackdown on LGBTQ rights, Alberto Nardelli and Stephanie Bodoni report. The move could come as soon as next month over Poland's so-called "LGBTQ-free zones," which seek to ban pride parades and other gay-friendly events and have fueled fear and discrimination. We're now producing a daily snapshot of news on Iran, including the status of talks on the 2015 nuclear deal and the latest on energy markets. You can read today's edition here. What to Watch More than 12 million Australians — close to half the population — are in lockdown as the government struggles to contain the delta coronavirus variant. Ethiopia's government began implementing a cease-fire in war-ravaged Tigray after rebel fighters entered the state capital and celebrated retaking the city. The Pentagon official overseeing its cybersecurity initiative for U.S. defense contractors has been placed on leave in connection with a suspected unauthorized disclosure of classified information from a military intelligence agency. And finally ... Mexico's Supreme Court removed prohibitions on marijuana consumption, eliminating all legal obstacles for the Health Ministry to authorize planting, harvesting, possession and transportation of pot for personal use by adults. It's the latest step in Mexico's path to becoming one of the largest nations to fully regulate the industry, more than two years after the court ordered Congress to change the cannabis ban. A soldier at an illegal plantation in Cosala, Mexico in October 2019. Photographer: Rashide Frias/AFP/Getty Images

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