Driving the Day
1. Xi offers to share governing advice with Ugandan president
On Tuesday, Xi Jinping held talks with Ugandan President Yoweri Museveni.
Some context: Museveni is in town for a meeting to coordinate follow-up actions from September’sForum on China-Africa Cooperation (FOCAC) summit (see September 4 Tip Sheet).
The bilateral relationship, according to Xi, could not be better (Xinhua):
- “At present, China-Uganda ties are at their best in history.”
The two countries upgraded their relationship:
- “[Xi and Museveni] agreed to lift their countries’ relationship to a comprehensive cooperative partnership.”
This is worth watching:
- “[Xi] said China is willing to strengthen exchanges with Uganda on the experience of governance.”
That sounds good to Museveni:
- “Museveni…[expressed his] willingness to learn from the Communist Party of China’s experience in state governance.”
Xi may have already learned a thing or two about governance from Museveni.
- Museveni had his country’sConstitution amended to get rid of presidential term limits in 2005.
- Xi did the same thing last year (see March 12, 2018 Tip Sheet).
Get smart: Xi is increasingly promoting a “China solution” that seeks to popularize aspects of China’s governance model in other countries.
Xinhua: China, Uganda lift ties to comprehensive cooperative partnership
2.US court holds Chinese banks in contempt
The pressure points between China and the US are proliferating by the day.
The latest: A US court is holding three Chinese banks in contemptfor refusing to comply with subpoenas in a case related to sanctions on North Korea.
The subpoenas ask the following banks to provide client details:
- China Merchants Bank
- Shanghai Pudong Development Bank
- Bank of Communications
Some context: The court is using “long-arm jurisdiction” – which essentially allows the US to force foreign companies to adhere to US law anywhere in the world, as long as that company has a “contact point” with the US.
Chief counsel of the Chinese Banking Association Bu Xiangrui says the US approach is wrong (Caixin):
- “The Justice Department should have requested information from the Chinese banks under a legal assistance pact between the two countries instead of exercising the court’s long-arm jurisdiction.”
Bu is no fan of long-arm jurisdiction (21st Cent Biz):
- “[It] not only infringes on the judicial sovereignty of other countries, but also does not conform to the spirit of international law.”
Get smart: This is yet another example of how the Chinese and American systems increasingly clash with each other.
Caixin:Stocks of 3 Chinese Banks Plunge on U.S. Contempt Finding
3. The Politburo does some soul-searching
On Monday afternoon, the Politburo held a “Stay true to the Party’s founding mission” study session.
Some context: The “Stay true to the Party’sfounding mission” Study Campaign is all the rage right now (see yesterday’sTip Sheet).
Xi said that remembering the Party’soriginal purpose is increasingly important:
- “The longer [we] govern the country, the more we cannot forget the founding mission.”
That mission, as all well-read cadres know, is:
- “seeking wellbeing for the Chinese people and rejuvenation for the Chinese nation.”
However, Xi sees problems on the path ahead:
- “We must not lose our revolutionary spirit and fighting spirit…and [let ourselves] gradually become complacent, lose initiative, and fall into a state of hedonism.”
What this means: Inactivity and bureaucratism are still serious problems within the Party ranks.
To deal with these issues, the study campaign has identified eight problems the Party needs to address – most of which concern policy implementation.
Get smart: Making sure the system self-corrects is hugely important as there are no external checks on the Party.
Our question: Is this study campaign enough to correct what is ailing the Party?
4.Premier Li urgesadministrative reform
Since taking over the premiership in March 2013, Li Keqiang has put administrative reform at the center of his agenda.
He was at it again on Tuesday, when he chaired the National Teleconference on Deepening Administrative Reform and Optimizing the Business Environment.
(Pro tip: real insiders call it the NTDAROBE)
One of the goalsis to combat the economic slowdown (Gov.cn):
- “Administrative reform and business environment improvement should be taken as important measures to stimulate vitality of market entities, enhance competitiveness, release market potential and withstand downward pressure.”
Li is trying to bring China’s business environment in line with those in developed economies:
- “He emphasized that a market and law-based principle with respect to international practice should be followed in further reform on administration streamlining and optimization of [the] business environment.”
The conference laid out a few concrete measures to be taken:
- “shortening the negative list for market entry”
- “separating business licenses and operating permits”
- “cutting the time required for starting a business to within five days”
- “reforming the construction project approval mechanism”
Get smart: This is all laudable stuff that should pay off over the coming years. But none of it will alleviate the current cyclical drags on economic growth.
5.Xi still rooting out corruption in the military
Minnie Chan from the SCMP scoops that the anti-corruption campaign in the military is alive and well:
- “More than 70 serving and retired senior officers with the People’s Liberation Army have been demoted for their involvement in a corruption scandal that has rocked the PLA leadership, military sources said.”
It all goes back to purged general Fang Fenghui (see October 18 Tip Sheet):
- “The officers – who included at least one general and two lieutenant generals – were punished for their connections to Fang Fenghui, the former chief of joint staff.”
- “Their demotions were based on confessions given by Fang, who was sentenced to life imprisonment in February for taking bribes, according to three separate military sources, who requested anonymity.”
The penalties have been relatively light:
- “The latest penalties were lenient. None of them were sentenced to jail because they were seen as underlings of Fang,”…[a] retired naval officer said.
- “The case [Fang’s]is seen as a scandal in the family,” he said. “The lenient punishment suggests Xi doesn’twant to taint the PLA’simage any further or damage morale.”
Get smart: Xi has expended considerable energy to root out corruption in the PLA – and make it loyal to him.