1. Xi wants to give people bigger say in lawmaking
Xi Jinping spent the weekend in Shanghai.
Some context: Xi is town to deliver a speech at the opening of the Shanghai International Import Expo on Tuesday.
Over the weekend, Xi met with top officials and toured various parts of the city.
Many of his activities focused on improving governance.
In particular, Xi stressed that the government needs to make sure it gets input from citizens (Shine):
- “At a civic center in a community where residents come from over 50 countries and regions, Xi was briefed on the community’s platform that solicits residents’ opinions, and talked with representatives of them attending a consultation meeting on a draft law.”
- “Xi called for efforts to make it easier for residents to express their views through established channels and continue to explore diverse forms of democracy.”
Get smart: Much commentary and analysis of Xi’s governance reforms focus on his efforts to centralize decision making. But he has also promoted opening more channels for the public to input in to policymaking.
2.Li pushes for anti-terror cooperation in Tashkent
It was a busy weekend for Premier Li Keqiang.
On Saturday, Li was in Tashkent, Uzbekistan to meet with otherheads of governments of Shanghai Cooperation Organization (SCO) member states.
Some context: The SCO is a regional grouping consisting of China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Pakistan, and India.
Top of the agenda – preventing terrorism (Gov.cn):
- “We should strengthen efforts to prevent the emergence and spread of extremist ideas in the areas of education, propaganda, poverty alleviation, and amongst the young and root out the breeding ground for terrorism.”
Important subtext:China wants to make sure that SCO member states support its policies in Xinjiang.
Li also called for increased economic cooperation (Xinhua):
- “Member states need to forge ahead the building of [a] connectivity network, expand trade exchanges and increase the trade volume.”
Get smart: Trade tensions with the US and EU have madediversifying trading partnersa top priority for the Chinese leadership.
Chinese premier calls for intensified SCO cooperation
3. RCEP negotiations make “major breakthrough”
After quality time with China’s Central Asian neighbours, Premier Li Keqiang headed to Bangkok, Thailand for the annual ASEAN-China Summit in Bangkok.
Top of the agenda: Li came to town hoping to make progresson the Regional Comprehensive Economic Partnership (RCEP), a free-trade deal between China, ASEAN, Japan, South Korea, Australia, India, and New Zealand.
In a speech to the summit Sunday, Li said (Gov.cn 1):
- “[We must] accelerate the upgrading of trade cooperation.”
- “China is willing…to move forward with improving trade liberalization and facilitation.”
Li’s message found a (mostly) receptive audience (Gov.cn 2):
- “Negotiations on the Regional Comprehensive Economic Partnership (RCEP) have made a major breakthrough, according to leaders attending the 22nd ASEAN-China, Japan and the Republic of Korea (ROK) (10+3) leaders’ meeting on Nov 4.”
- “Addressing the meeting, Premier Li Keqiang noted that 15 member states of the RCEP have concluded all text negotiations and essentially all market access negotiations.”
Get smart: RCEP includes 16 countries, so if only 15 have agreed, that means one country is still not on board. It is almost certainly India, which has long had reservations about the agreement.
If RCEP is really done, it could open bandwidth to focus on other agreements:
- “‘On this basis, we are willing to accelerate negotiations on the China-Japan-ROK free trade area and move toward the goal of building an East Asian economic community,’said Premier Li.”
What to watch: Details of the RCEP negotiations are still not public. We should get more information in the coming hours.
Gov.cn:RCEP negotiations make major breakthrough
Gov.cn:Premier Li urges China, ASEAN to uphold multilateralism, free trade
Straits Times:Asean Summit: China committed to supporting Asean centrality, says Li Keqiang
4.Phase one deal agreed “in principle”
China and the US continue to hammer out the details of a proposed phase onetrade deal.
On Friday, Vice Premier Liu He spoke by phone with US Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin.
The big news: The two sideshave reached “consensus in principle.”
What that means (Bloomberg):
- “The deal would see China increase purchases of U.S. agriculture products, keep its currency stable and open financial services markets to American firms.”
- “In return, Beijing wants the U.S. to do away with new import taxes due to take effect Dec. 15 on goods including smart-phones.”
Get smart: Everything we are hearing and seeing says that a phase one deal will be inked in the coming weeks.
Get smarter: Phase one is easy. But getting to a comprehensive, long-lasting deal will be tough.
5.Top official hints at land use reform
We are still waiting for the release of the decisions approved at the Fourth Plenum last week (see Friday’s Tip Sheet). Only then will we truly know the impact of the meeting.
In the meantime, the Propaganda Department was kind enough to hold a press conference on the plenum on Friday.
Han Wenxiu, deputy director of the office of the Central Finance and Economic Affairs Commission, explained the implications for economic policy.
Han promised that opening to foreign investment will accelerate.
- The government will move to open completely the manufacturing, services, and agricultural sectors.
- They will also accelerate openings in finance, telecoms, education, healthcare, and culture.
Pay attention: This is the first time officials have discussed completely opening the agriculture sector.
Han also made sure to reiterate promises to improve the business environment and ensure fair competition.
This is what really caught our eye:
- “[We will] improve the mechanism by which production factors such as labor, capital, land, knowledge, technology, management, and data participate in distribution according to their contributions.”
Got that? Yeah we didn’t think so.
In plain English: Officials want to make sure that all of these things are properly valued.
Why that is interesting: The government has not previously discussed “land” or “data” in these contexts.
What it means: The government will facilitate the trading of land and data.
6.Legislature studies big data
Last week, the legislature (NPC) went back to school – holding a study session on big data.
Chinese Academy of Sciences member Mei Hong briefed legislators on approaches to data protection legislation in other countries.
Mei focused on two approaches:
- The EU’s General Data Protection Regulation (GDPR)
- The California Consumer Privacy Act (CCPA)
Mei then stressed the need for China to develop its own data protection legislation.
Mei thinks that data protection legislation should clearly specifywho owns the data. This, in turn, will help to improve data sharing, flows, and transactions.
Mei also had a few criticisms for current government initiatives.
- Government and public institutions have failed to share data with the public as promised.
- Governments havefailed to explain to businesses the benefits of sharing data with the government.
Get smart: In the West, data regulation focuses on privacy concerns. In China, it is all about how to better use data.
7.The hits keepon coming for P2P lending
On Sunday, the 21st Century Business Herald scooped that top officials recently held a meeting to discuss risks associated with peer-to-peer (P2P) lending.
The meeting agreed that a further crackdown on the industry is needed:
- Regulators will hold P2P platforms and their stakeholders accountable, and gradually stop all new lending by bad actors.
- Businesses that are not monitored in real time by the national internet emergency center will need to exit the market.
- Viable P2P lenders will be encouraged to apply for licenses as small loan or consumer finance companies.
The tough stance hardly comes as news.
- Last week, Shanghai ordered 40 P2P lending companies to shut down (see November 1 Tip Sheet).
- On October 18, Shandong issued a new warning against P2P lending that effectively outlaws the practice.
The upshot: Total outstanding P2P loans are down by 49% since the end of 2018.
Get smart: The crackdown on P2P lending shows no signs of easing.