Driving the Day
1. Carrie Lam withdraws extradition bill
On Wednesday, Hong Kong Chief Executive Carrie Lam finally acceded to the demands of Hong Kong’s protesters by agreeing to withdrawthe city’s proposed extradition bill.
For those who forgot: The draft bill would allow extradition to mainland China. It was the introduction of the bill that sparked the current wave of protests.
The move has not appeased protesters:
- “Barely three hours after she appeared on a televised message, a group calling themselves representatives of protesters dismissed her withdrawal of the bill as applying a ‘band-aid to rotting flesh.'”
- “All ‘five demands, not one less’ had to be met before they would cease their actions, a protester representative said at a news conference outside the Legislative Council.”
Some context: The protesters’ five demands are:
- Withdrawal of the extradition bill
- A new commission to investigate police conduct during the protests
- Amnesty for protesters who have been arrested
- A cessation of characterizing the protests as riots
- Resumption of political reforms
Lam did not accede to the other four demands. Instead she promised to consult community leaders to address problems ranging from income inequality to social justice.
Get smart: While Lam’s move was not enough for most, it is a step in the right direction, and could be the beginning of finding a way forward tobring the protests to an end.
2.State Council looks to stabilize economy
The State Council held its weekly executive meeting on Wednesday.
Top of the agenda: Stabilizing an increasingly shaky economy.
Premier Li Keqiang said that things are not looking good:
- “The current external environment is increasingly complex and grim.”
- “Downward pressure on the domestic economy has increased.”
Li said that officials need to take the situation seriously:
- “Every region and every ministry must…increase its sense of urgency.”
Li’s top concern is employment:
- “More measures should be taken to stabilize employment.”
- “[We should] use the balance of the RMB 100 billion unemployment insurance fund to carry out large-scale vocational skills training.”
We are also going to see some targeted monetary easing:
- “Policy tools such as overall and targeted cuts of required reserve ratios will be taken in a prompt manner to encourage financial institutions to channel more capital into inclusive financing, enhancing support for the real economy, small and micro firms in particular.”
And local governments will up their infrastructure spending (see next entry).
Get smart: These measures are not totally new, but rather an intensification of already-existing efforts to address the economic slowdown.
Get smarter: While Beijing is still holding the line on“no massive stimulus” for now,leaders are clearly growingincreasingly worried about the economy.
Gov.cn: 李克强主持召开国务院常务会议 部署精准施策加大力度做好“六稳”工作等
Gov.cn: China to take targeted measures for steady economic growth
3. State Council tells local governments to get spending
Wednesday’s State Council meeting promised to increase local government spending.
First, central officialswantlocal governments to get money allocated for special projects in 2019 out the door.
- The entire 2019 quota forlocal government special project bonds must be issued by the end of September.
- All money raised from the bonds must be disbursed to projects by the end of October.
Get smart: That’s actually not that big of a deal. Over 93% of the 2019 quota has already been issued.
But this is more important:
- “It was decided at the meeting that in order to meet the local needs for construction of key projects, part of next year’s special bonds quota will be allocated in advance to ensure that the funds are available for use at the beginning of next year.”
- “The scope for use of these bonds will be expanded, with a focus on transportation infrastructure, … energy projects… and ecological projects.”
- “Life services in education, medical care, elderly care and child care, as well as urban utilities, will also be prioritized.”
Our take: This may help to stabilize investment – but it won’t reverse the economic slowdown.
And remember,the meat of this won’t kick in until 2020– so it increasingly looks like the economy won’t bottom out until some point next year.
4.The Party has an accountability problem
On Wednesday, the Central Committee released newly revised regulations on Party accountability.
Some context: The original rules were approved in June 2016 and came into effect the following month.
The revised rules aim to make leading officials more accountable (Xinhua):
- “Leading Party officials and organizations should be held accountable for poor leadership of the Party; insufficient promotion of political, theoretical, organizational and disciplinary work within the Party; insufficient combating of corruption; as well as improper conduct in the most pressing issues that concern the people, including education, medical services and ecological protection.”
There will be consequences for not doing a good job:
- “Leading officials will face punishment according to the severity of their wrongdoings, such as being named and shamed within certain ranks, receiving oral or written warnings, being suspended from their posts, transferred, or forced to resign, demotion, or dismissal.”
One key problem the revision wants to address is actually the overuse of accountability mechanisms to punish officials for minor wrongdoings.
Get smart: The fact that these regulations were revised within three years of being issued implies that they have not been effective.
Get smarter: China’s lack of an independent judiciary means that accountability will remain a perennial problem.
Xinhua: CPC issues revised regulation on Party accountability
5.US and China agree to talks…again
We’re as bored of writing it as you are of reading it, but…
Earlier today, Chinese Vice Premier Liu He and his US counterparts shared a phone call and agreed to restart trade talks in early October.
The two sides have also committed to deputy-level meetings in mid-September to lay the groundwork for the October talks.
Some context: The last round of talks was held on July 30-31 in Shanghai, but went nowhere. The following day, US President Donald Trump announced a new raft of tariffs on Chinese goods.
Despite previous failures, the two sides are still looking to talkit out.
And you’ll never guess what these mad lads committed to!
According to a Ministry of Commerce statement:
- “Both sides agreed that they should work together and take practical actions to create good conditions for consultation.”
Far out, dude!
Get smart: While we suppose it’s a good thing that the two sides are still on speaking terms, we don’t hold out much hope that this next round of talks will make any substantial progress.
Get smarter: As we’ve said before, don’t expect a trade war resolution in 2019.
Trade war: Chinese and US negotiators agree to meet in early October
China, U.S. agree to jointly create favorable conditions for trade talks in October
6.State Council appoints new Macau leader
On Wednesday, the State Council appointed Ho Iat Seng as chief executive of Macau.
Some context: Ho was “elected” chief executive by a 400-member committee on August 25. He was the only candidate.
Ho is the fifth chief executive since Portugal handed over Macau to the PRC in 1999.
Top of Ho’s agenda: Pushing forward with the Greater Bay Area (GBA) initiative to better integrate Hong Kong, Macau, and Guangdong.
Why Ho is interesting: Ho has been a member of the mainland’s legislature (NPC Standing Committee) since 2011. This makes him well placed to try and figure out how the Macanese and mainland legal systems can work together.
Get smart: As protests rage in Hong Kong, officials in Beijing and Hong Kong are increasingly looking to learn from the comparatively stable Macau.
What to watch: Xi Jinping is expected to attend Ho’s swearing in ceremony on December 20. It would be the perfect time for him to weigh in with his views on what is happening in Hong Kong.
State Council appoints Ho Iat Seng as Macao chief executive