1. Hong Kong rolls out economic support measures
China is finally stimulating the economy! At least for a very small portion of the country.
In order to combat the economic fallout from weeks of protests and chaos, the Hong Kong government has announced an economic aid package (Caixin):
- “Hong Kong’s government slashed its 2019 growth forecast on Thursday and announced a HK$19.1 billion ($2.44 billion) package of measures to support the economy as the special administrative region (SAR) faces threats from the impact of a global slowdown, the U.S.-China trade war and mass protests.”
Financial Secretary Paul Chan Mo-po’s announcement is in the running for understatement of the year:
- “Domestically, the recent social incidents have hit the retail trade, restaurants and tourism, adding a further blow to an already-weak economy.”
- “Based on the latest developments and assessments on the outlook, the Hong Kong economy will continue to face an austere environment for the rest of the year.”
Get smart: These measures will have virtually no impact on the mainland economy.
Caixin: Hong Kong Cuts GDP Growth Forecast Amid Unrest
2.Still no actual stimulus on the mainland
Beyond the Hong Kong stimulus measures (see previous entry), markets were buoyant on Friday as traders interpreted a press conference by the NDRC as flagging actual stimulus measures (CNN):
- “China earlier said it would step up its efforts to boost disposable income and stabilize employment.”
- “The National Development and Reform Commission announced those plans during a press briefing.”
Regular Tip Sheet readers won’t be surprised at our take: This ain’t stimulus.
Get smart: At this point in the economic downcycle, if we finally do get real stimulus, then everyone will know it. It won’t be rolled out in drips and drabs via NDRC pressers.
CNN: Asian markets move higher as China announces plans to help economy
3. A surprising turn in nationalist fervor
We are all living in a computer simulation that has the sole goal of testing humanity’s ability to cope with increasing cognitive dissonance and the death of irony.
How else to explain this headline from Bloomberg?
- “Chinese Champion Huawei Under Fire for Calling Taiwan a Country.”
Sigh. The details:
- “People on [China’s] Weibo messaging service have expressed outrage that some Huawei and Honor smartphones listed ‘Taipei (Taiwan)’ for users who select as their language of choice traditional Chinese, which is used on the island.
- “Customers who select simplified Chinese — used on the mainland — would see ‘Taipei (China).’”
We have to hand it to the nationalist netizens on this one, at least they are being consistent in their outrage:
- “The Weibo topic has been viewed more than 350,000 times, with some calling for a boycott of a telecommunications giant considered one of the country’s crown jewels.”
Get smart: Or don’t. At this point it doesn’t matter.
Bloomberg: Chinese Champion Huawei Under Fire for Calling Taiwan a Country
4.China to retaliate on tariffs, again
Late Thursday, Chinese officials finally acknowledged that they will indeed retaliate against the latest round of US tariffs on Chinese exports.
The announcement seemed more resigned than combative (Xinhua):
- “China has to take necessary countermeasures in response to the U.S. announcement of imposing additional 10 percent tariffs on 300 billion U.S. dollars of Chinese imports, an official with the Customs Tariff Commission of the State Council said Thursday.”
Officials also seem increasingly exasperated:
- “The U.S. move seriously violated the consensus reached between the two heads of state in Argentina and Osaka, Japan, and deviated from the right track of settling differences through consultations, the official said.”
Our take: At this stage, we don’t see a deal in 2019 as possible.
What to watch: Then it’s election season in the US, and calculations on both sides will change again, probably not for the better.
5.State Council wants to make sure migrants get paid
On Thursday, the State Council announced that it is establishing a new leading small group to protect migrant workers.
Specifically, the group will be focused on making sure that the legal rights of migrant workers are protected – and that their wages are paid on time.
Some context: Migrant workers have long been subject to exploitation by their employers.
The new group will be led by Vice Premier Hu Chunhua. It will include members from 25 other central institutions.
The day-to-day work of the group will be handled by the Ministry of Human Resources and Social Security.
Our thought: Interesting timing! Migrant workers are usually the first to get fired when a business finds itself in trouble. Looks to us like central leaders are worried about potential unrest as the economy slows.
6.Next NPC bi-monthly session scheduled
It’s happening folks!
On Thursday morning, Li Zhanshu gathered his legislator colleagues for a meeting, where they decided to hold their next bi-monthly legislative session from August 22-26.
Seven laws will be up for discussion:
- Draft revision to the Drug Administration Law
- Draft amendments to the Land Administration Law and the Urban Real Estate Administration Law
- Draft Resource Tax Law
- Draft Basic Healthcare and Health Promotion Law
- Draft Civil Code on Personality Rights
- Draft Civil Code on Tort Liability Law
And a final but interesting one:
- Law on Governmental Sanctions on Public Employees
What won’t be discussed: The Patent Law was expected to return for review, but doesn’t seem to have made the cut for this meeting.
But that’s not all. The session will also listen to reports from the State Council and the NPC on various topics.
- Implementation of the National Economic and Social Development Plan
- Budget implementation
Our thinking: This could be an important session for the healthcare sector. The Drug Administration Law and the Basic Healthcare and Health Promotion Law are close to being approved. Both will have big effects on the sector.
CPC People: 栗战书主持召开十三届全国人大常委会第三十六次委员长会议
Xinhua: China’s top legislature schedules bi-monthly session
7.New Party organization and staffing rules
Yesterday, theCentral Committee published regulationsgoverning the setup and staffing of both Party and state institutions —which was discussed at the June 24 Politburo meeting (see June 25 Tip Sheet).
Some context: Since 1991, the power to reorganize and staff the Party and the state has been in the hands of the Central Institutional Organization Commission – now there’s finally an actual Party regulation to govern the process.
The new regs say that only the Politburo holds the power to rejigger the Party and state apparatus – including the setup of local government institutions (Gov.cn):
- “Without the authorization of the Party center, no department shall interfere with local institutional organization in any form.”
And the Party center doesn’t want any creative tweaking of its organizational plan:
- “Once the instructional organization has been determined, it must be strictly implemented.”
In addition, the regulations laid out five factors to consider in any big organizational decision, including the (we assume rhetorical) question:
- “Is it conducive to uphold and strengthening the overall leadership of the Party?”
Get smart: This is not the first effort by Xi to secure the Party’s control over the state – and it won’t be the last.