1. AMCs are back in vogue
China’s Asset Management Companies (AMCs) have a new mission – taking over the off-balance-sheet debt of China’s local governments.
Some context: The four national AMCs were created in the late ‘90s and early 2000s to dispose of bad bank loans – as part of a systemic bank restructuring at that time.
More context: In 2014, officials began to allow provinces to set up local AMCs – since then 50 local AMCs have been established.
So what’s new now?
The 21st Century Business Herald scoops that since Q3 this year, financial officials have allowed AMCs to help dispose of or restructure the debt of local government financing vehicles (LGFVs).
- So far Cinda Asset Management Company – one of the original four big boys – has poured RMB 7 billion into such activity.
Why it matters: AMCs had previously not been allowed to do business with LGFVs, which are the vehicles that carry the bulk of local governments’ so-called implicit debt.
Get smart: Regulators have spent the past two years trying to figure out the true size and scope of local government debt burdens. They are now trying out different ways to actually deal with those debt burdens.
2.NDRC seeks to remove hurdles to investment
On Thursday, China’s keymacro-economic planner (NDRC) announced that it has launched a nationwide campaign to identify and get rid of hurdles to investment.
Local NDRC offices throughout the country will be in charge of finding out what is going on in their specific jurisdictions.
The timeline: The campaign will run from November 2019 to May 2020.
Some of the problems that the NDRC is looking to rectify include:
- Illegal government policies, rules, and normative documents that hinder investment
- Extra-legal administrative approval processes for private investment
- Inconsistent or unnecessary requirements for administrative approvals
- Inefficient administrative review processes
- Incomplete implementation of central-level investment policies
- Unclear industrial planning
- Inaccurate and biased investment data
This is interesting: The government will also look to facilitate more public-private partnerships (PPPs).
Get smart:Moves to boost investment spending have come up short. The government is keen to find out why and improve the situation.
3. Meet Gansu’s newestLSG
On December 5, top officials inGansu provincedecided to establish an exciting new body – the Gansu Special Bond Management Leading Small Group.
The group will be headed by Governor Tang Renjian and is aimed at:
- Strengthening coordination inprovincial management of special bond issuance
- Furthering the role of special bonds in stabilizing investment, expanding domestic demand, and addressing economic weak spots
Some context: Local governments have struggled to find investment-worthy projects recently (see the October 11 Tip Sheet).
The new group will have dedicated task forces for seven priority areas:
- Forestry and water conservation
- Ecological and environmental protection
- Social undertakings
- Logistics infrastructure
- Municipal and industrial park infrastructure
Get smart: Governments at all levels are trying to figure out how to boost investment more efficiently and more effectively (see entry #2 above).
4.Science and technology plan picks up steam
On Thursday, local media reported that the Ministry of Science and Technology (MoST) is ramping up its work on the National Medium- to Long-Term Science and Technology Development Plan (2021-2035).
Get. Ex. Cited.
In case the title wasn’t enough of a hint, the plan specifies China’s scientific and technological development priorities until 2035.
So what’s on the docket? A genetically engineered dolphin-man? A Roomba capable of feeling love?
Probably nothing quite so exciting.
- The government has reportedly identified more than 50 “strategic research directions,” which will be given top priority.
- These are mainly related to “core technologies” that will bolster social and economic development.
Development will likely be focused on the 16 key areas that were highlighted during the 6th National Technology Forecast meeting back in March, including:
- Information technology
What to watch: We’ll know exactly what’s on the agendaonce the plan is officially releasedin 2020.
Get smart: This is how scientific and technological development works in China. The government identifies key research directions and dumps massive amounts of resources into those areas.
5.Policy advisors research eco-compensation
On Thursday, the Chinese People’s Political Consultative Conference (CPPCC) held its latest biweekly policy symposium.
Some context: The CPPCC is an integral part of China’s policymaking apparatus. It solicits advice from non-Party groups and then makes policy recommendations to top leaders.
Top of Thursday’s agenda: Eco-compensation.
What is eco-compensation, you ask? Development Asia explains:
- “The term is specific to the PRC and broadly refers to a range of potential policy directions and approaches to environmental management with the goal of improving outcomes by taking into account the costs and benefits of environmental goods and services in economic activities.”
Suggestions on Thursday were broad and lacked specificity:
- “Political advisors proposed advancing legislation concerning eco-compensation mechanisms to better define the principles, areas, scope, subjects, standards and funding sources of the compensation and the rights and responsibilities of stakeholders.”
- “They also proposed setting up more market-oriented and diversified eco-compensation mechanisms and strengthening trans-departmental information sharing and trans-regional coordination.”
Get smart: China’s eco-compensation mechanisms are still in the early stages. But make no mistake, activities that harm – or even disturb – the natural environment will increasingly be subject to taxes and fees.
CPC People:全国政协召开双周协商座谈会 汪洋主持
Xinhua:Political advisors discuss developing eco-compensation mechanisms
Development Asia:Eco-Compensation and What It Means for the World