1.CSRC issues rules for new tech board
On Wednesday, China’s securities regulator (CSRC) issued draft rules that will govern trading on the Shanghai Stock Exchange’s much-ballyhooed new innovation board.
The idea is to set clear rules for companies to IPO– and a higher bar than normal for investors to participate.
Key details (Asia Times):
- “There are five different sets of market capitalization requirements for [an] initial public offering.”
- “Companies with an estimated market value of no less than three billion yuan…are eligible for applying for an IPO.”
- “There will be no price limit for the first five trading days after the IPO.”
- “Following that, the price of a stock is not allowed to rise or fall by more than 20% in one trading day.”
- “This compares to the 5% limit in other trading boards in the A-share market.”
- “[For] individual investors [to participate they] must have no less than 500,000 yuan in daily average assets.”
Get smart: The current state of China’s stock exchanges is so badthat in many ways it makes sense to just start from scratch. But regulators will have to stringently enforce the new rules before foreign investors have faith in the new board.
Asia Times: Securities regulator unveils plan for new ST trading board
2.PMIs signal nothing
You know it’s a slow news day when we coverPMI releases.
The details, from Bloomberg:
- “The first official gauge of China’s economy in 2019 showed a slowdown in the manufacturing sector eased off a little in January, though uncertainty over the future of trade with the U.S. remains a headwind.”
- “The official manufacturing purchasing managers index came in at 49.5 in January from 49.4 in December, remaining below the 50 mark that signifies contraction.”
- “A gauge of new export orders also improved slightly, while a measure of activity in services and construction showed robust expansion, improving for a second month.”
To us, the headline hereis that the manufacturing sector remained in contractionary territory for two consecutive months. The fact that the index was slightly less negative in the month doesn’t say a whole lot.
Get smart: The first two months of the year are a data black hole, as most monthly economic numbers aren’t reported. That means markets will be searching for signs in indicators that don’t really say much about the actual state of things.
Bloomberg: China Manufacturing Shows Resilience Amid Trade War, Slowdown
3.Party insider takes #2 spot at MoFA
The Ministry of Foreign Affairs (MoFA) has a new Party Secretary.
Official media announced yesterday that 56-year-old Qi Yu will be taking over the post.
Get smart: At MoFA, the Party secretary is not more powerful than the minister. Instead, Qi, like his predecessors before him, will be a vice minister, and second in command to minister (and state councilor) Wang Yi.
Why Qi’s appointment is so surprising: Qi has no diplomatic experience. That’s unheard of for a MoFA Party secretary, who is usually a seasoned diplomat.
- Qi is a Party man through and through, having spent most of his career working for various local Organization Departments.
- He has spent the last four years as deputy head of the Central Organization Department.
- Prior to that he headed the Jilin Organization Department (2013-2015) and the Qinghai Organization Department (2007-2013).
- For over 15 years, his job focused on Party-building.
Our question: How will Qi’s appointment be regarded within the ministry? He just took a job that several senior diplomats thought they were in the running for.
Why it matters: Qi’s appointment will serve to make sure that the ministry is in line with the decisions of the Party center.
4.State Council lays groundwork for property tax
At its weekly meeting on Wednesday, the State Council promised to make it easier to register property.
Here’s the plan (Gov.cn):
- “An interagency information pooling and sharing mechanism will be established so that information related to immovable property registration, including household registration, business license, tax payments and transactions, can be shared by the end of this year.”
- “The registration processes will be consolidated [and] single-window interagency services will be made available.”
- “The time required for general registration and mortgage registration will be cut to no more than 10 and five working days, respectively, by the end of this year. And both will be reduced to no more than five working days before the end of 2020.”
Why this matters: A better property registration system would lay the foundations for a property tax.
The bigger picture: A clearer picture of “who owns what” will create a better functioning real estate market.
5.Discipline commission not happy with poverty alleviation work
It’s not going to be a happy Spring Festival for many a government official.
On the eve of the holiday, the Party’s disciplineauthority (CCDI) announced the results of its recent inspections of poverty alleviation work by 11 central government agencies, 13 provincial governments and two banks (see October 10 Tip Sheet).
The CCDI’s feedback: You are not doing enough!
The commission called out the failures of specific institutions, including the Ministry of Finance, National Development and Reform Commission, and the Agricultural Bank of China (see links below).
There will be consequences. The inspection teams have singled out officials in nearly every agency and referred them to the Organization Department and/or CCDIfor further investigation.
Get smart: Eradicating poverty by 2020 is one of Xi’s signature policy initiatives. And the clock is ticking. As we get closer to the deadline, the pressure on officials to show results will only increase.
What to watch: We will see more inspections in the near future.
The bigger picture: The CCDI’s remit has broadened beyond just policing corruption. It is not increasingly focused on ensuring policy implementation.