1. State Council moves to cut red tape in FTZs
The State Council did its thing on Wednesday, holding aweekly executive meeting.
Top of the agenda: Making it easier to do business in China’s free trade zones (FTZs).
Specifically, the meeting decided thatfrom December 1, China will decouple business licenses from operational permits for all 523 items that require central government approval.
Some context: In China, companies often need a slew of permits to operate – in addition to a business license.
Premier Li Keqiang admitted that the situation is not good (Gov.cn):
- “Our market entry threshold is still quite high.”
- “Companies with business licenses yet without required permits cannot actually operate.”
- “These are the reasons that firms may be up yet not actually running.”
Details of the reforms:
- “The review requirement of 13 items… will be abolished.”
- “The review requirement of eight items… will be replaced by record-filing.”
- “The review requirement of 60 items… will be replaced by pre-commitment of compliance.”
- “For the remaining 442 items, services will be improved by cutting documentation requirements, providing faster, online processing, extending or scrapping the validity period and abolishing on-site verifications.”
Stop us if you’e heard this one before: The worsening economic picture is creating impetus to improve the business environment.
2.State Council wants to boost pork production
Wednesday’s State Council meeting also discussed boosting pork production.
Some context: African Swine Fever has decimated China’s hog population. That’s sent pork prices skyrocketing – they were up 27% y/y in July. And general food pricesare also on the rise, having increased by 9.1% y/y in July.
More context: On his recent trip to Heilongjiang, Premier Li Keqiang expressed concern over rising food prices.
Here’s what the government will do to boost production (Gov.cn):
- “Subsidies to farms with culled pigs will be dispensed more timely.”
- “Major hog producers and farm owners will receive more support in expanding their herds.”
That’s not all:
- “Local authorities should promptly scrap bans and limits on hog raising except those stipulated in laws and regulations, and large-scale farming should be promoted.”
Get smart: Food prices, especially meat prices, are a quality of life issue for China’s laobaixing. The state is going to do whatever itcan to keep costs low.
We’ll say it again:It’s one more reason that we don’t see large-scale monetary stimulus on the cards.
Gov.cn: State Council stresses stabilizing hog production, ensuring pork supply
3. NPC starts holding regular press conference
The National Peoples’ Congress (NPC) began its bimonthly legislative session this morning.
But the big news was thatyesterday, the NPC Legislative Commission held its first ever press conference.
- Moving forward, the NPC will hold a press conference in advance of every legislative session.
Some context: The Legislation Law, amended in 2015, stipulated that the NPC should keep the public updated on the progress of its solicitation of public comments on various laws.
That’s part of what the regular press conference aims to do.
NPC spokesman Zang Tiewei got the ball rolling by issuing an update on how public input has informed policy decisions.
- On the Patent Law, rules on patent extensions for innovative drugs are being rewritten to be more specific.
- On the Drug Administration Law, the definitions of “fake drugs” and “defective drugs” are being clarified.
Zang confirmed that the latter law would be approved at this month’s legislative session.
However, the Basic Healthcare and Health Promotion Law, which will also get a reading at the session, will not likely be put to a vote (See August 16 Tip Sheet).
Get smart: The NPC is gradually improving its dialogue with the public on issues of legislation.
4.MEE looks to targetedindustrial production cuts
On July 26, the Ministry of Ecology and Environment (MEE) reportedly issued a document to guide local environmental departments in formulating winter curtailment plans for industrial production in seven northeastern provinces:
Some context: Air pollution tends to get worse in winter because of heat generated from coal-fired sources. To try and offsetsome of the pollution, the government has curtailedindustrial production every winter since 2013.
But the MEE document makes clear there will be no “one-size-fits-all” approachthis winter.
- Instead, local governments are encouraged to take a factory-by-factory approach, evaluating individual factories ontheadvancement of their technology, levelof their emissions, and other factors.
Get smart: With the economy deteriorating, the government wants to avoid unnecessary disruptions caused by overly blunt curtailment plans.
What to watch: The MEE has not yet designated the effective period for winter curtailments. Last winter, the period was extended to six months (Octoberto March), compared to four months for the previous winter(mid-Novemberto mid-March).
5.MNCs and the Hong Kong protests
Last night, scattered scenes of chaos unfolded once again in Hong Kong (see links below).
So in case you were wondering if the relative calm from the past few days would persist – you have your answer.
Get smart: No matter where you stand on the ethics of the protests, one thing is increasingly clear. As the intensity of the protests ebbs and flows, they are becoming more and more of an issue for the business community.
Put simply, chaos and unpredictability aren’t great for the business environment.
But we don’t want to overstate the case here.
- With the recent resignation of the Cathay Pacific CEO and pressure from mainland authorities on the Big Four accounting firms inHong Kong, a media narrative seems to be taking hold that Beijing is looking to strong-arm all foreign companies into toeing its line on the protests.
That notion goes a bit too far.
Our take: Beijing is certainly signaling to the Hong Kong business elite that they need to be part of a solution. But authorities are not looking to drag the entire foreign business community into this fight.
Still, all is not well. From Hong Kong, to Taiwan, to the trade war, todomestic ideological tightening– political developments are increasingly impacting the operating environment forforeign company’sin China…for the worse.
AFR: China’s warning to global CEOs
SCMP: Chaos at Hong Kong’s Yuen Long MTR station as protesters confront police while marking one month since mob attack
SCMP: Man collapses as angry Hong Kong residents demand answers from MTR Corp over police use of tear gas in stations