Driving the Day
1. Phase one trade deal wrapping up
It’s really happennnnnning!
The phase one US-China trade deal is getting wrapped up and ready to be signed in early January.
- That’s according to comments from US Treasury Secretary Steve Mnuchin on Thursday in the US.
The Chinese side is being less specific on timing, but Commerce Ministry Spokesman Gao Feng confirmed that the two sides are in “close communication” on finalizing the agreement.
That said – mum is still the word on the particulars of the deal (Reuters):
- “’After the official signing of the deal, the content of the agreement will be made public,’ Gao said.”
Get smart: Given that the May deal fell apart at the last minute, both sides are being cautious about making anything public until this thing is official.
Get smarter: There’s growing speculation that China may have made more concessions than previously thought – and Beijing doesn’t want to let that be known until it’s over and done with.
Our take: Holding the details close to the vest makes sense – as each country felt burned by how things went down in May. We wouldn’t read much more into the official silence beyond that.
2.Property developers are going bust
Tight property policy in China is increasingly rippling through the industry.
Policymakers’ goal is to rein in the high price of housing – in order to address ever-increasing affordability issues.
The upshot is that property developers are taking it on the chin (Caixin):
- “As of Nov. 27, 459 real estate companies had filed for bankruptcy this year, slightly more than the 458 bankruptcy filings seen in the whole of 2018.”
The increased bankruptcies are creating new problems:
- “The rise in bankruptcy filings may lead to an increase in unfinished developments, with homebuyers who pre-purchased apartments ‘off-the-plan’ losing out.”
So local governments are stepping in to help:
- “Some local governments have begun to tighten regulations governing the funds property developers take from sales of off-plan homes.”
Xi’an in northwest China has been particularly aggressive to ensure that buyers aren’t left holding the bag. But the city isn’t alone:
- “Northeast China’s Heilongjiang province has asked developers not to sell any properties until construction of the whole building is at least two-thirds of the way done.”
Get smart: The slowing property market is a key driver of the current economic slowdown, but we don’t expect regulators to loosen property policy any time soon.
3. A criança de ouro
On Friday, Xi Jinping was still in Macau for the celebration of the city’s return to Chinese rule and the swearing in ofnew chief executive, Ho Iat Seng.
Some context: During his visit, Xi Jinping has been laying it on thick, praising Macau’s model implementation of one country, two systemsin a very thinly veiled rebuke to Hong Kong (see yesterday’s Tip Sheet).
Here’s how Xi sees Macau’s success (SCMP):
- “Macau’s success tells us that as long as we are confident in the one country, two systems principle, its vibrancy and superiority can be manifested.”
- “It also tells us that the implementation of the principle can be long-lasting only when we can make sure it is not being distorted.”
Get smart: Xi is implying that Hong Kong has “distorted” one country two systems by not putting enough emphasis on the “one country” part of the equation.
What it means: If you want to know where Beijing wants to take Hong Kong, just look at Macau. That likely means more concerted efforts to push through national security legislation and introduce patriotic education in schools.
SCMP:Chinese President Xi Jinping heaps praise on Macau, citing progress and patriotism
Xinhua:Patriotism most important reason for Macao’s success in “one country, two systems” practice: Xi
4.Li Keqiang tells office heads to prepare for a tough year
On Thursday, Li Keqiang met with secretaries-general and general office directors from different levels of government around the country.
Some context: These officials are incredibly important. They run the day-to-day affairs of their respective governments.
Li thanked everybody for their service.
But then he got real (Gov.cn 1):
- “Next year, our country’s economy could face greater downward pressure.”
- “[We] will face a more complex situation, and governments at every level will have more difficult tasks, and greater responsibilities.”
Li’s main piece of advice – keep the people happy.
- “The government is the people’s government.”
- “General office [officials]… must always remember that their overall goal and guiding philosophy is to serve the people.”
Get smart: All signs point to a difficult year in 2020.
Gov.cn:Premier stresses people-oriented administrative services
5.Beijing stands up for data privacy
On Thursday, Chinese tech companies got called out for their shady data collection practices by…the Chinese government?
You read that right.
This week, the Ministry of Industry and Information Technology (MIIT) put several Chinese tech firms on blast for serious violations of user privacy.
Some context: In November, the MIIT launched a crackdown on data collection, warning app developersto get their houses in order or be “dealt with” according to law. Since then, more than 8,000 apps have fallen into line.
The named and shamed companies include some of the big boys of the tech industry:
- Sina Sports
- Sohu News
The offending behaviors included:
- Demanding unnecessary authorizations/permissions
- Illegally collecting and using personal data
- Illicitly selling user information to third parties
- Impeding account cancellation
Get smart: There’s a prevailing narrative in some corners that Chinese internet users aren’t concerned about privacy. That’s simply not true, and the government is out to address those concerns.
Get smarter: At the same time, the government is ramping up its own ability to collect data on its people.
The bottom line: The CCP doesn’t want random companies infringing on the data privacy of Chinese citizens…that’s their job!
Caixin:Government Blasts Tencent, Xiaomi Apps for Data Privacy Abuses