driving the day
1. Beijing’s quick reflexes
This morning, the National Health Commission (NHC) released the latest nationwide COVID-19 numbers.
On Wednesday, China reported nine new COVID-19 cases (NHC):
- All were imported from abroad.
- That’s a slight increase from the seven imported cases reported on Tuesday.
This is reassuring:
- Beijing reported no new confirmed cases for the third day in a row.
- Not a single domestically-infected case has been found across the country in the past three days.
Some pesky strays still linger (Beijing NHC):
- On Wednesday, Beijing reported one new asymptomatic case.
At the city’s daily press conference, officials provided more evidence that local authorities acted fast to contain the new outbreak.
- The Xinfadi market was located as the source of infection through contract tracing and testing within 22 hours after the first case was confirmed on June 11.
- Of the 335 total confirmed cases found in Beijing since, only 127 were infected through clustered community spread.
- The rest were all individual cases, located and isolated early enough that they did not infect more people around them.
Get smart:Beijing’s effective response to its recent outbreak provides a blueprint for how to deal with new waves of the virus.
2. Data dump – inflation
The National Bureau of Statistics (NBS) droppedJune inflation data today.
Here’s the deets (NBS):
- The consumer price index (CPI) rose 2.5% y/y in June, up from 2.4% in May.
- The producer price index (PPI) fell 3.0% y/y in June, up from a 3.7% contraction in May.
Some context: This is the first uptick in producer prices we’ve seen since the beginning of the pandemic.
Don’t get too excited.
- The uptick in PPI is mostly due to the rebound of international oil prices after they fell off a cliff back in April.
- And PPI is still in deflationary territory.
The rise in CPI can be mainly attributed to increasing food prices due to temporary factors:
- Pork prices increased as imports slumped after authorities banned some pork imports due to fears that they might carry coronavirus.
- A combination of flooding in southern China and the COVID-19 outbreak at a major wholesale market in Beijing drove up vegetable prices.
Get smart: The PBoC will be happy to see that consumer prices are holding steady. Given weak consumer demand, deflationary pressures arethe central bank’s top concern.
Get smarter: Nonetheless, downward pressure on prices in the coming months looks likely.
3. You’ve got a friend in Xi
Sometimes, you gotta talk to someone who just gets you.
On Wednesday, Xi Jinping called Russian President Vladimir Putin to congratulate him on the 75th anniversary of the USSR’s victory in World War II.
But that wasn’t the only thing they talked about (Xinhua 1):
- “Russia smoothly carried out a referendum and passed a set of constitutional amendments with a large majority vote, Xi said, [which] reflected the Russian people’s support for the Russian government and approval of its governance philosophy.”
Some context: The referendum in question empowered Putin to run for two more six-year presidential terms…a move referred to in legal circles as “pulling a Xi” (see March 12, 2018 Tip Sheet).
Xi also touted Sino-Russian cooperation on key political issues:
- “The Chinese side is willing to continue working with the Russian side in…rejecting external sabotage and intervention, [and] well preserving their respective sovereignty, security and development rights.”
Get smart: Like Putin, Xi wants to promote national sovereignty as the guiding principle of global governance.
Get smarter: The global erosion of democratic norms gives Xi and other autocrats more latitude to operate as they please.
4. Wang Yang tells Tibetan Buddhists to be Chinese
From Monday to Wednesday this week, Politburo Standing Committee member Wang Yang went trekking around Tibet.
Some context: Wang oversees the religious and ethnic affairs portfolio. This is his fourth trip to Tibet in the last two years.
What Wang got up to (Xinhua):
- “During the three-day tour that started Monday, he visited villages relocated for poverty relief, pasturing areas, industrial parks and religious venues in Xigaze [Shigatse] and Lhasa, and presided over a symposium where he listened to suggestions from the attendees.”
Wang brought a familiar message:
- “He called for raising the social awareness of religious believers that they are, above all, citizens of the country, as well as the promotion of patriotism to further adapt Tibetan Buddhism to the socialist society.”
And for those who insist on being Buddhist, Wang said they should do it China-style (CPC People):
- “[We] must raise the Sinicization level of Tibetan Buddhism.”
Get smart: The Party’s hardline stance towards religion under Xi Jinping has not made it any friends in Tibet.
Get smarter: As long as there is no unrest, the Party doesn’t care how Tibetans view its policies.
5. Xi looks to bring law enforcement to heel
China’s law enforcement system looks in for a shakeup.
On Wednesday, Secretary-general of the Party’s Political and Legal Affairs Commission (PLAC) Chen Yixin held a meeting to kick off a nationwide “education and rectification” campaign.
Some context: The PLAC oversees China’s judiciary and law enforcement bodies.
The whole thing sounds pretty scary.
Here is how Chen described the campaign (PLAC):
- “We must scrape the bone to removethe poison.”
- “We must drain away the filth and bring in fresh water.”
What that means: Heads are going to roll.
But…they might not roll too fast.
- Initially the campaign will only bein five cities and four counties.
- Then in early 2021, the campaign goesnationwide.
- Only in early 2022 will the campaign be completed.
Get smart: The law enforcement system is the one pillar of the Party-state where Xi Jinping has never fully consolidated control. Looks like he is set to change that.
6. The constructive side of Wang Yi
This morning, State Councilor and Foreign Minister Wang Yiaddressed a forum on China-US relations. In the audience were participants from think tanks of both countries.
According to Wang, bilateral ties have hit a historical low-point (MoFA):
- “Relations between China and the United States are facing the most serious challenges since the establishment of diplomatic relations [in 1979].”
Wang said that China just wants the relationship back on track and is willing to sit down and talk to make that happen.
Wang proposed creating three lists to frame a relationship-mending discussion:
- The first outlines bilateral and global issues the two countries could work on together.
- The second lists issues on which they have disputes, but which can be resolved through dialogue.
- The third one is for issues that are unlikely to be resolved.
But one thing is absolutely off limits:
- The US must not seek to change China’s political system.
Get smart: This is a sensible framework for healthier relations.
Get smarter: Unfortunately, Wang making this proposal publicly is likely because traditional private diplomatic channels are not working.
7. State Council reveals 2020 legislative plan
On Wednesday, the General Office of the State Council released its legislative work plan for 2020.
Looks like it’s gonna be a busy year.
- Central government agencies are tasked with drafting 16 laws.
Some context: The plan’s release comes two months behind the normal schedule due to – as with everything else this year – disruptions from the COVID-19 pandemic. However, many of the planned laws are already in various phases of completion.
There’s much to look forward to!
There are two new revisions with some business implications:
- Revision of the Agricultural Product Quality Safety Law
- Revision of the Administrative Reconsideration Law
In the meantime, the State Council has already drafted revisions to four key laws for the financial sector, which will soon be presented to the legislature for deliberation:
- ThePeople’s Bank of China Law
- The Commercial BankLaw
- The Anti-Money Laundering Law
- The Insurance Law
Ministries will also be formulating or revising 26 administrative regulations.
- This includes some controversial and long delayed ones, like the Regulations on Protection of Critical Information Infrastructure Security.
Get smart: Companies that will be affected by these laws and regulations should be figuring out how to influence them – or, at a minimum, track their progress.