driving the day
1. Passing the test
This morning, the National Health Commission (NHC) released the latest nationwide COVID-19 numbers.
On Monday, China reported eight new COVID-19 cases (NHC).
- All were imported from abroad.
The good news: Beijing’s Xinfadi outbreak looks to be effectively under control.
- Yesterday was the first time that Beijing reported no new daily confirmed COVID-19 cases since the start of the Xinfadi outbreak on June 11.
Not so fast…
- Yesterday, Beijing reported one new asymptomatic case.
- There are still 31 asymptomatic cases under isolated medical observation in Beijing.
Today is also the first day of the gaokao – the all-powerful life-defining national university entrance examination.
Some context: This year’s examination was delayed by one month due to the pandemic.
Not only that, but the testing itself is subject to some extra fun measures:
- Test takers’ health status and temperature had to be monitored 14 days in advance of sitting the exam.
- In medium and high-risk regions, students have to wear masks during the test.
- Separate exam rooms have been prepared for students who fail to pass the first test of the exam day – the temperature check.
Get smart: Everything is disrupted by COVID-19.
Fun fact: One of the essay topics in today’s exam is “distance and connection during the epidemic.”
2. Last batch of annul SPBs quota is out
Word is out, the Ministry of Finance (MoF) just approved another RMB 1.26 trillion in local government special purpose bonds (SPBs) and has already distributed them to provincial governments.
This means that the entire RMB 3.75 trillion SPB quota for2020 has now been allocated.
Some context:RMB 2.29 trillion of the quota had already been allocated by the end of May.
More context: MoF is still holding on to RMB 200 billion of the total quota, which was decided last week will be used for recapitalizing some of the country’s small banks.
According to a city level financial official, this round of SPBs will finance projects in:
- Transport infrastructure
- Environmental protection
- Cold chain logistics infrastructure
- Public utilities
- Industrial parks
- Healthcare facilities
- Urban renovation
However, local governments will not be able to raise the money by issuing the SPBs just yet.
- Instead, MoF has decided that July will be usedprimarily for issuing RMB 1 trillion of Special Treasury Bonds.
- Issuance of SPBs is expected to pick up again in August.
Solve this puzzle: There’s still six months left of 2020, yet most of the fiscal stimulus package has already been deployed…
21st Century Biz:
3. Cracking down on financial crimes
On Friday, China’s legislature (NPC) dropped the draft of the amended Criminal Law.
Why it matters: The amendment further clamps down on financial crimes.
Most notably, punishments are getting harsher:
- The max prison sentence for committing serious financial fraud in stock and bond issuance is now 15 years, up from five years.
- The max prison sentence for violating rules for information disclosure which cause major losses for investors is now 10 years, up from three years.
Still, some are not happy.
Vice chairman of the NPC Standing Committee Wang Dongming thinks the new punishments are not enough (Caixin):
- “China’s capital markets have long been plagued by fraudulent issuance of securities.”
- “The minimum punishment for serious crimes in this area should be ten years in prison.”
Get smart: The crackdown on financial fraud is far from over.
Get smarter: As China moves towards a registration-based IPO system, it’s important to build in trust in the system. Having rules in place to hold market participants accountable for the interests of investors is part of that equation.
4. Li goes to Guizhou
Yesterday, Premier Li Keqiang flew down to Guizhou.
Top of Li’s agenda: Poverty alleviation and flood control.
Some context: Since the beginning of June, floods have affected more than 19 million people and claimed 121 livesin 26 provinces.
- The direct economic cost is calculated to exceed RMB 41 billion.
Li used the occasion to put officials on notice (Gov.cn 1):
- “He urged all departments concerned to fully carry out President Xi’s instruction with people’s life security prioritized on top of their agendas.”
Li emphasized that officials are still responsible for fulfilling their poverty alleviation targets:
- “This year is crucial in winning the battle against poverty, and eradicating poverty is the Party’s solemn commitment to the people.”
- “He asked the Guizhou authorities to complete their poverty-relief tasks and strengthen flood control and disaster relief to prevent the return to poverty after the disaster.”
During a stop at a mobile intelligent terminals producer, Li emphasized the employment issue in lifting people out of poverty (Gov.cn 3):
- “He encouraged the company to employ more local rural migrant workers, adding that it can yield a win-win result of offering jobs to rural migrant workers and lowering production costs.”
Get smart: None of the items on Li’s agenda has an easy fix.
Premier Li visits flood victims in mountainous area of Guizhou
Premier urges improving employment for rural migrant workers
5. The NPCSC’s security patch
Last Thursday, the National People’s Congress Standing Committee (NPCSC) released the draft of China’s long-awaited Data Security Law for public comment.
- The law looks to provide a legal basis for the enforcement of data security – especially as it pertains to national security.
But doesn’t China already have a data security law, you ask?
- Sort of. The Cybersecurity Lawwent into effect in 2017 and is aimed at network operators and those running critical information infrastructure.
- The new Data Security Law is more concerned with protecting individual privacy and national security.
The new law calls for (NPC):
- Promoting data security by establishing new standards and promoting the development of data security testing and certification
- Establishing a national data security management system including a data classification system, risk assessment and monitoring system, and emergency response mechanism
- Defining the data security responsibilities of individuals and organizations
And, oh yeah, it applies globally:
- The draft stipulates that entities outside of China who conduct data activities that harm China’s national security or interests may also be subject to the law.
Get smart: China’s internet sector has exploded in recent years, and data security practices have not kept pace. The government isplaying catch-up.