driving the day
1. Xi promises more opening in services
On Friday, the annual China International Fair for Trade in Services (CIFTIS) kicked off in Beijing.
Some context: The annual fair was established in2012. It was supposed to be held in May, but was postponed due to COVID.
The fair is something of a milestone. It is the first major international exhibition to be held since the pandemic.
A lot of people are attending (Xinhua 1 and 2):
- “A total of 18,000 enterprises and institutions from 148 countries and regions…have registered for the fair.”
- 95,000 people entered the fair on Saturday.
Xi Jinping gave the fair some love, sending a video greeting.
Xi made a pitch for globalization (Xinhua 3):
- “A review of human history shows that the world economy thrives in openness and withers in seclusion.”
Xi said China would further open its service industry:
- “China will remain steadfast in opening up wider to the world.”
- “We will continue to work on a negative list system for managing cross-border services trade.”
What to watch: China has promised to release its services negative list by the end of the year.
2. Heavy bondage
For months, we’ve been telling you about the role that local bond issuance has played in China’s economic recovery.
According to Yicai, in the first eight months of 2020, local governments issued RMB 3.75 trillion worth of new bonds– nearly 80% of this year’s RMB 4.73 trillion quota.
- The remaining RMB 1 trillion will be issued in September and October.
This begs the question–what did local governments do with the dough?
Yicai broke down spending through the first seven months:
- RMB 881.56 billion went towards municipal and industrial park infrastructure.
- RMB 687.87 billion went into transportation infrastructure.
- RMB 619.1 billion was used to stabilize investment in education, science, culture, health, and social security.
- RMB 280.7 billion went towards poverty alleviation.
- RMB 203.3 billion went towards environmental protection.
- RMB 200 billion was used to replenish capital at small and medium-sized banks.
- RMB 74.79 billion went towards affordable housing and the transformation of shantytowns and old urban communities
Get smart:Expect to see increased spending on disaster recovery and reconstruction efforts in the August breakdown following Premier Li Keqiang’s statements on the subject (seeAugust 27 China Tip Sheet).
3. Where in the world is Yang Jiechi?
China’s away team has been busy.
On Thursday, we told you Foreign Minister Wang Yi was in Europe with a message of win-win cooperation–only to be met with a lukewarm reception (see theSeptember 3 Tip Sheet).
Last week, top diplomat Yang Jiechi also took his show on the road, visiting Greece, Spain, and Myanmar.
According to a written interview that Yang gave to Xinhua on Sunday, the visits went swimmingly, with representatives of the three countries expressing their agreement with China’s outlook on a wide range of issues (The Paper):
- “The international community should adhere to multilateralism, work together to maintain a peaceful and peaceful development environment…and work together to meet global challenges.”
Yang was also pushing the win-win cooperation angle:
- “China’s cooperation with the three countries will be stronger and more powerful, which will greatly promote the pragmatic cooperation between China, ASEAN and the EU, and promote the realization of a…win-win situation and deeper integration of interests.”
And Yang couldn’t resist taking a veiled swipe at the US, noting that some countries were:
- “Instigating conflicts and confrontations with a Cold War mentality [and] poisoning international relations.”
Get smart:As relations with Washington sour, Beijing is keen to mend fences abroad.
4. Zhejiang gots a new governor
It’s been a busy few days on the Zhejiang personnel front.
- On Friday, Zheng Shanjie was appointed governor of the province.
Zheng is taking over the job after former governor Yuan Jiajun was appointed Zhejiang Party boss earlier last week (seeSeptember 2 Tip Sheet).
A little about Zheng:
- Zheng has spent most of his career in his native Fujian, becoming vice governor of the province in February 2015.
- Starting in August 2015, Zheng served for two years as first deputy director of the National Energy Administration (until April 2017) and then as deputy director of the Taiwan Affairs Office.
- In December 2017, Zheng was moved to Zhejiang where he was appointed Party secretary of Ningbo; since May 2018, he has also been serving as Zhejiang deputy Party secretary.
Zheng has friends in high places.
- In Fujian, Zheng worked closely withXi Jinping’s good friendHe Lifeng, who now heads the National Development and Reform Commission.
Get smart: At 58, Zheng still has seven years before reaching retirement age. He will likely be promotedto a provincial Party secretary role in a few years. Should that happen, he would then be a candidate for the Politburo in 2027.
5. It’s the (market) economy, stupid
Last week, we told you that some policymakers are trying to use Beijing’s shiny new dual circulation strategy (DCS) to push through market-oriented reforms (seeSeptember 2 Tip Sheet).
Over the weekend, Wang Yiming, former vice president of the State Council’s DevelopmentResearch Center added his voice to the chorus.
He argued that some commentators were getting hung up on the difference between domestic circulation and international circulation while ignoring the key word (Sina):
- “My understanding is that the focus should be on ‘circulation’. Market-oriented reform is the key.”
According to Wang, those reforms should include:
- Stronger property rights to incentivize scientists and researchers to do original research
- A fair business environment to stabilize the supply chain and improve economic competitiveness
- Additional reforms to the financial market to make it better support the real economy
- Facilitating urbanization and providing migrant workers with better access to social security and public services.
- Speeding up income redistributionto double the size of China’s middle-income group to 800 million in the next 15 years
Wang also argued that foreign companies are key to the success of DCS:
- “As long as foreign companies expand [in China], the US cannot break the dual circulation system.”
Get smart:The space for economic debate has expanded as officials attempt to define what DCS really is.Wang and others are trying to use this peroid
6. Business secret protection gets a long-awaited upgrade
On Friday, China’s market regulator released a draft version of the Specifications for Business Secret Protectionfor public comment.
This is big:
- The foreign business community has been haranguing the Chinese government for better protections for business secrets, proprietary information, and intellectual property rights since time immemorial.
It’s long overdue:
- The draft specifications were overhauled from their 1998 version.
- The update process started last year, after the release of the revised Anti-Unfair Competition Law (AUCL) in June 2019 (see April 24, 2019 Tip Sheet).
The changes are huge:
- The new version has 39 articles compared to the 1998 version’s 12.
The draft specifications aim to make the updated AUCL more enforceable by clearly defining:
- What constitutes business secrets, technological information, operational information, and commercial information
- What constitutes infringement of business secrets
Get smart:Although long overdue, the new specifications show the Chinese government is receptive to the concerns of foreign companies.
Get involved:The public commenting period closes on October 18.
7. Industrial internet development on MIIT’s agenda
On Saturday, Xiao Yaqing, the Minister of Industry and Information Technology (MIIT), spoke at the Digital Trade Trends and Frontiers forum at the China International Fair for Trade in Services (see entry #1).
Xiao was there to deliver Xi’s message:
- “[Xi] attaches great importance to the development of the digital economy and asks to promote the integration of the digital economy and the real economy.”
Noting that China’s 14th five-year plan was just around the corner, Xiao laid out the MIIT’s medium-term priorities:
- Draftingfive-year plans related to big data, software, and information communications
- Developing industrial internet and upgrading manufacturing
- Promoting data governance standards
- Deepening international cooperation with the G20, BRICS countries, Russia, and Europe
Get smart: Policymakers are thinking big when it comes to the digitalization of China’s industrial sectors.
Worth noting:The US is conspicuously absent from the list of potential partners for international cooperation.