DRIVING THE DAY
1. Xi blasts protectionism
The trade war is heating up. On Wednesday, Donald Trump tweeted:
- “China is…being vicious.”
- “We were being nice – until now!”
But Xi Jinping wants the world to know that…it’s not China’s fault!
Here’s what Xi said on Wednesday (AFP):
- “’A trade war should be rejected because there will be no winner,’ Xi said at the opening of a BRICS summit of emerging economies in Johannesburg.”
- “’Unilateralism and protectionism are mounting, dealing a severe blow to multilateralism and the multilateral trading regime,’ he said, without mentioning the United States by name.”
- “We are facing a choice between cooperation and confrontation, between opening up and closed-door policy and between mutual benefit and a beggar-thy-neighbour approach.”
- “The international community has again reached a new crossroads.”
Get smart: The Chinese DO NOT want this trade war. But Trump’s inflammatory rhetoric makes it more politically difficult for Xi and other officials to come back to the negotiating table.
AFP: China’s Xi says ‘no winner’ in any trade war
FINANCE and ECONOMICS
2. Facebook gets denied again
Well, that was fast. Facebook’s latest venture in China (see yesterday’s Tip Sheet) has apparently been shut down (US News):
- “China has withdrawn its approval for Facebook Inc’s plan to open a new venture in the eastern province of Zhejiang, the New York Times reported on Wednesday, citing a person familiar with the matter.”
- “A Chinese government database showed that Facebook had gained approval to open a subsidiary, but the registration has since disappeared, according to checks made by Reuters.”
Consider us shocked (#sarcasm).
As we said yesterday, Facebook is a Chinese official’s nightmare –a vast social media platform that by its very nature facilitates the mobilization of social forces.
Get smart: Facebook is uniquely unappealing to Chinese officials. But its also true that all foreign tech companies face increasing scrutiny as China seeks to foster tecnological independence.
Our take: If it’s not clear by now, let us say it again: The competition in the technology arena will make the US-China trade war look quaint. Buckle up.
China Pulls Approval for Facebook’s Planned Venture: NYT
FINANCE and ECONOMICS
3. RIP NPX deal
The Qualcomm-NPX deal is officially dead.
We wrote yesterday that we expected this to happen, but now it’s official (FT):
- “Qualcomm has admitted defeat in its $44bn bid for Dutch chipmaker NXP, after apparently failing to win approval from Chinese regulators for what would have been the semiconductor industry’s largest ever takeover.”
- “Steve Mollenkopf, Qualcomm’s chief executive, conceded defeat on Wednesday after a two-year effort to close the NXP tie-up. Instead, he announced a $30bn share buyback programme.”
Although the writing on the wall has been clear in recent weeks, it is still a remarkable development for China to shut down the deal – especially after the US relented on its ZTE sanctions.
Our take: China feels vulnerable on the tech front, and is miffed about the trade war (to put it mildly). So policymakers will play whatever cards they have to slow down the advancement of US tech companies.
As we wrote in the previous entry – the technology war is just getting started, buckle up.
The Financial Times: Qualcomm to ditch NXP deal in favour of buybacks
POLITICS and POLICY
4. Meet the new SCCGPTGFAR
What’s the best way to streamline government administration?
That’s an age-old question. And the State Council’s answer is: Create a new small group!
Yesterday,the State Council announced the creation of the State Council Coordination Group for Promoting Transformation of Government Functions and Administrative Reform – SCCGPTGFAR, for short.
(Okay, we made up that acronym…but we are sticking by it.)
To be fair, the new group is the successor organization to a previous group that was responsible for administrative reform. So the total number of government entities has not changed.
Who’s in charge:
- Vice premier Han Zheng heads the group.
- State Councilor Wang Yong is deputy head.
- State Councilor Xiao Jie is also deputy head and director of the group’s office.
Officials from at least 26 other government agencies are members of the new entity.
What it means: We don’t expect this to lead to any radical acceleration of administrative reform. But it is a sign that the government remains focused on administrative reforms, and is looking to improve implementation of them.
Gov.cn: New duties given to group on govt function transformation
POLITICS and POLICY
5. Baby steps for public medical insurance reform
China’s public medical insurance schemes for rural and urban residents will be unified as of next year, according to the newly-established State Medical Insurance Administration (SMIA).
- “Rural residents in China used to have a medical insurance scheme far inferior to their urban counterparts.”
- “The government started to standardize rural and urban schemes in 2017.”
Some more context: The government has wanted to consolidate the two schemes for a while. But turf battles between agencies have slowed the process. That was the biggest driver behind the creation of the SMIA in March.
Get smart: This announcement shows that the SMIA is already being effective.
What to watch: There is a third public medical insurance scheme – the one for employees. But officials are undecided on whether or not they want to merge it with the residential schemes.
Gov.cn: China to complete standardizing urban, rural medical insurance by 2019