DRIVING THE DAY
1. Xi talks to Trump, says little
Xi Jinping spoke with US President Trump yesterday.
As per usual, North Korea dominated the conversation.
The official readouts don’t give much away. That’s because there wasn’t a lot of progress to report on. The US side says:
- “The two leaders condemned North Korea’s latest provocative and destabilizing action and noted North Korea’s current path is dangerous to the world.”
- “[The two presidents] committed to strengthen coordination and take further action with the goal of achieving the denuclearization of the Korean Peninsula.”
For its part, China is still pushing a diplomatic solution:
- “China has always upheld the idea of . . . resolving the issue through dialogue and consultations.”
- “Efforts should focus on diplomacy . . . to move toward a peaceful settlement and resolution regarding the peninsula nuclear issue”
The tough reality: The stated aim of both countries is denuclearization. That’s not going to happen. And there is no agreed-upon alternative.
Deep Dive: The New York Times has a great article on the history of China-DPRK relations. It’s worth a read (link below).
- White House Press Office: Readout of President Donald J. Trump’s Call with President Xi Jinping of China
- CPC: 习近平应约同美国总统特朗普通电话
- China Daily: Xi, Trump talk about peninsula
- NY Times: North Korea’s Nuclear Arsenal Threatens China’s Path to Power
FINANCE & ECONOMICS
2. Controlling capital
China’s outbound investment is clearly seeing more government restriction – the State Council has made that explicit.
But remember, while plenty of deals are getting shut down, lots are also being actively encouraged.
Deals that will help move China up the manufacturing value chain are particularly welcomed (Caixin):
- “’We’ve received support from the State Administration of Foreign Exchange . . . after we emphasized the importance of the technology transfer brought about by this deal,’ said Zhang Lin, vice director of a Chinese subsidiary that was set up to acquire Canadian automated production system manufacturer Valiant TMS Group.”
In fact, we just did an extended interview on all of these dynamics with the fine folks at The Diplomat:
- “The fundamental implication . . . is that China regulators want to have a greater say over where and how China’s financial resources are deployed.”
- “The policy is not simply to curb outbound investment overall, but to funnel it into preferred sectors.”
Want more? Read our full take via The Diplomat here and below.
- Caixin: In Overseas Deals, China Goes Easy Only on Tech, Manufacturing
- The Diplomat: China’s State Council Announces Curbs on Overseas Investment
POLITICS & POLICY
3. Li Keqiang cuts red tape (again)
The State Council convened its weekly meeting yesterday.
The agenda: Making it easier to do business. The meeting eliminated 74 administrative approvals that were previously required to operate.
Some context: Li has made cutting red tape his signature initiative, and it’s paying off (gov.cn):
- “[T]he government has cut administrative approval[s] by 697 items since . . . 2013.”
- “[T]he country had 2.91 million newly registered businesses in the first half of 2017, up by 11.1 percent year-on-year.”
Get smart: Less government doesn’t necessarily mean more market. While Li shrinks the role of the government, Xi is expanding the role of the Party.
- Gov.cn: 李克强主持召开国务院常务会议部署在更大范围推进“证照分离”改革试点等
- Gov.cn: China goes further to cut red tape to aid business
POLITICS & POLICY
4. China is setting standards
File this under boring but important: The State Council also discussed the improvement of product quality standards yesterday.
The key sectors: manufacturing, aerospace, rail, auto and ICT.
Get smart: China wants to build its own standards ecosystem – it doesn’t want to simply sign up to global best practices.
Get smarter: Foreign businesses need to be aware this is happening and get involved. State Council Document No. 5 encourages foreign companies to help China develop standards. Smart companies will take the government up on its offer.
POLITICS & POLICY
5. Did Xi Jinping dis Yao Yilin?
Li Keqiang chaired a ceremony to honor Yao Yilin on the 100th anniversary of Yao’s birth. Yao was a Politburo Standing Committee member (1987 – 1992) and vice premier (1983-1993).
In his remarks, Li stressed that Yao:
- was a loyal communist
- was practical and results-oriented
- was a reformer
- served the people
- was not corrupt
Get smart: That’s an incomplete portrait. Yao’s most famous for being an arch-conservative that opposed Deng’s reforms and lobbied hard for sending the troops into Tiananmen in 1989.
Get smarter: How former leaders like Yao are presented sends a message to Party members. The message yesterday was: be loyal, be clean, keep reforming.
What everyone is really talking about: These days Yao is most famous for being the father-in-law of Wang Qishan. Yesterday’s ceremony was less high-profile than similar ceremonies for former leaders have been in the past. Most notably, Xi Jinping did not attend.
That’s got Beijing buzzing (again) about a Xi-Wang split. Xi’s absence was definitely purposeful, but it could be more about not honoring Yao than dissing Wang. The truth is that nobody knows.
- People’s Daily: 纪念姚依林同志诞辰100周年座谈会举行
- People’s Daily: 在纪念姚依林同志诞辰100周年座谈会上的讲话
- People’s Daily: 在纪念姚依林同志诞辰100周年座谈会上的发言
POLITICS & POLICY
6. Two generals bite the dust
The careers of two top generals appear over after they were excluded from a military delegation set to attend the 19th Party Congress next month (SCMP).
- “The move comes after media reports suggested that one of the officers, Fang Fenghui, had been questioned on suspicion of corruption.”
- “Another surprise omission from the list of delegates . . . is the director of the political work department, General Zhang Yang. He also sits on the military commission.”
Get smart: Fang had previously been tapped for big things. But Xi Jinping is remaking the army in his image, and Fang looks like collateral damage.
- CPC: 解放军和武警部队选举产生出席中国共产党第十九次全国代表大会代表
- SCMP: Chinese general reported to be facing corruption probe off military delegation to party congress
POLITICS & POLICY
7. Know your cadre: Chen Yiqin is up
Guizhou’s got a new governor. Her name is Chen Yiqin.
Chen’s new position should guarantee her a seat on the Party’s next Central Committee (CC), to be selected at the 19th Party Congress. That will make her one of the 200 most powerful politicians in the country.
Some context: Chen has already served as a CC alternate for the past ten years, so she was due a promotion.
We don’t know much about Chen. She is from Guizhou and has spent her entire career there.
Get smart: Li Zhanshu and Chen Min’er have both served as Guizhou Party Secretary in recent years. They are both contenders to be on the next Politburo Standing Committee and are two of Xi Jinping’s closest allies. Chen Yiqin would have worked closely with both of them.
We don’t know if that means anything, but it’s worth noting.
- People’s Daily: 谌贻琴任贵州省副省长、代省长（图/简历）