driving the day
1. Xi signals control over security services
On Wednesday, Xi Jinping presented a new police flag to China’s men in blue (Xinhua 2):
- “At the ceremony held in the Great Hall of the People in Beijing, Xi presented Minister of Public Security Zhao Kezhi and Minister of State Security Chen Wenqing with the flag.”
This is a big deal.
Previously, Xi has only presented flags to the armed services.
What it means: Xi is signaling his direct control over the police and security services.
Xi had a message for the Zhao, Chen, and the rest of the security services:
- Be loyal to the Party
- Serve the people
- Be impartial in law enforcement
Pay attention: That order is not arbitrary. First and foremost, the security services are there to ensure the Party’s rule – not enforce the law.
Get smart: Xi is currently carrying out a “rectification campaign” throughout the security services (see July 9 Tip Sheet). The aim is to ensure that those officers disloyal to Xi are purged.
2.Li pushes for red tape cut (again)
On Wednesday, Premier Li Keqiang chaired the State Council’s weekly executive meeting.
Li was talking (once again) about his favorite topic: cutting red tape for businesses (see March 18 Tip Sheet).
As the economy lags, Li said that reducing bureaucracy was more important than ever before (Gov.cn):
- “Deepening the reform of [improving the business environment], in parallel with the fiscal and financial relief policies, are important measures to stimulate market vitality and enhance the endogenous driving force of developing [the economy].”
Li told the central and local governments exactly what they had to do:
- Achieve online registration for businesses by the end of the year
- Cancel repetitive licensing approvals in areas of facilitating business operation and agricultural development
- Delegate certain approval processes to provincial departments
- Submit requests to the National People’s Congress on laws that need to be amended
Get smart: Cutting red tape has been one of Li’s pet projects for seven years now. It may sound trivial, but it’s a big deal for the companies affected by overly onerous approval processes.
What to watch: A list of approvals to be cancelled should be released in the next few days.
3.Après le déluge, l’argent
Red tape wasn’t the only topic under discussion at Wednesday’s State Council executive meeting (see previous entry)
- After a season of catastrophic floods, Premier Li Keqiang still wants to make it rain.
Specifically, Li wants to help people in flood-stricken regions resume production and get back to work.
Some context: Following on the heels of COVID-19, southern China has seen devastating flooding–creating a crushing economic double whammy.
Li had a few ideas about how to help people get their lives back (People.cn):
- “A total of 100 billion yuan (about 14.48 billion U.S. dollars) will be allocated from central and local fiscal [resources] for post-disaster recovery and reconstruction, while a mechanism will be established to ensure the funds go straight to the disaster-stricken areas.”
- “Specific measures will be introduced to guide state-owned financial institutions and rural credit cooperatives to increase their support for post-disaster recovery of protected agriculture.”
And this’ll definitely help:
- “Funds raised through special government bonds and local government bonds are allowed to be used for post-disaster recovery and reconstruction, the meeting said.”
Get smart: One of the Party’s signature promises is to eradicate poverty by the end of 2020. Li and co. are determined to make sure that flooding doesn’t derail that goal.
4.Shots fired (into the ocean)
On Wednesday, China fired two “aircraft-carrier killer” missiles into the South China Sea (SCS).
Why the waste of military hardware you ask?
- The move was meant as a warning in the face of perceived American provocation.
Some context: On Tuesday, a US U-2 spy plane made a pass over a Chinese naval live-fire drill, prompting stern representations from Beijing.
Chinese military spokesman Wu Qian was not psyched about the incident (Xinhua):
- “The trespass severely affected China’s normal exercises and training activities, and violated the rules of behavior for air and maritime safety between China and the United States.”
- “The U.S. action could easily have resulted in misjudgments and even accidents.”
Wu also wanted the US and China to avoid unfortunate misunderstandings (The Paper):
- “The two sides should…strengthen crisis communication, effectively prevent risks, and promote and maintain the overall stability of the relations between the two armies.”
But unfortunately, Washington still had some SCS-related needling left to do.
On Wednesday (NYT):
- “The Trump administration…added 24 Chinese companies to a government list that bans them from buying American products, citing their role in helping the Chinese military construct artificial islands in the disputed South China Sea.”
Get smart: Pick a flashpoint, any flashpoint!
Related: US-China financial decoupling was also in the headlines today. Check out the latest in today’s China Markets Dispatch.
5. One world, two systems?
With the US and China studiously cultivating their own tech ecosystems, observers have been left to wonder if the world is truly headed for technological decoupling.
Yesterday, at the World Semiconductor Conference in Nanjing, Wei Shaojun, vice chairman of the China Semiconductor Industry Association said he doesn’t think so (21st Century Biz):
- “Although some countries are artificially splitting this system, it is impossible for a ‘one world, two systems’ style decoupling [to exist]. The cost of it is unaffordable for any country.”
Wei also believes that striving for total technological self-sufficiency is self-defeating:
- “If you try to do everything by yourself, you will consciously or unconsciously shut yourself up and become backward.”
- “There are some technologies that you cannot do by yourself.”
Despite the disruption to the Chinese semiconductor industry, Wei estimated China will continue to import loads of chips:
- “If nothing out of the ordinary happens this year, China will again import more than USD 300 billion worth of semiconductors.”
Get smart: A bifurcated tech ecosystem willbe bad news for the global tech industry, but the process is already underway.
- We wish we could share Wei’s optimism on this one.
6. Xinjiang postpones school opening
This morning, the National Health Commission dropped the latest COVID-19 numbers (NHC):
On Wednesday, China saw (NHC):
- No domestically transmitted cases – for the 11th consecutive day.
- No domestically transmitted asymptomatic cases – for the fifth consecutive day.
- Eight imported cases – down from 15 on Tuesday.
- 19 imported asymptomatic cases – up from 14 on Tuesday.
Things are looking good across the board – Xinjiang included:
- Xinjiang hasn’t reported any confirmed cases since August 15.
- The number of people held under quarantine in Xinjiang came down from 10,450 on August 15 to just 2,506 on August 26.
Despite the rosy picture, Xinjiang authorities have done little to ease the restrictive measures imposed during the outbreak (see yesterday’s Tip Sheet).
And on Wednesday:
- The Xinjiang Department of Education released a notice to postpone the fall school semesteracross the province.
- Urumqi quietly started another round of testing in key communities.
Some context: Xinjiang’s decision to postpone school opening was made after the Ministry of Education ordered all schools in the country to proceed with “comprehensive” reopening last Thursday (see August 21 Tip Sheet).
Get smart: Nobody ever accused the Xinjiang authorities of being pushovers.