driving the day
1. Xi takes victory lap in COVID fight
On Tuesday, Xi Jinping and other top leaders gathered in the Great Hall of the People to honor citizens who have contributed to tackling the COVID-19 pandemic.
The details (Xinhua 4):
- “Renowned respiratory disease expert Zhong Nanshan received the Medal of the Republic, the highest state honor.”
Three others were conferred the honorary title of “People’s Hero”:
- Zhang Boli, a traditional Chinese medicine expert
- Zhang Dingyu, head of Wuhan’s designated coronavirus-treating Jinyintan Hospital
- Chen Wei, a military medical scientist
The ceremony served as a victory lap for Xi and the Party. Xi said (Xinhua 1):
- “The struggle against the novel coronavirus epidemic was a great strategic achievement, which fully demonstrates the clear superiority of the Chinese Communist Party’s leadership and our country’s socialist system.”
Meanwhile, state media has gone into overdrive touting Xi’s personal leadership in the crisis.
- Yesterday’s top story on state media was a video titled “Xi Jinping leads China’s fight against the virus.”
Get smart: The successful effort to contain the virus has bolstered popular support for the Party.
Get smarter: The impact on Xi’s standing is more complicated. Although now portrayed as the nation’s savior, many still remember that Xi was noticeably aloof at the beginning of the crisis.
2. Data dump – trade
On Monday, China’s General Administration of Customs dropped trade stats for August.
The headline numbers:
- China’s exports rose by 9.5% y/y – up from a 7.2% y/y increase in July and beating expectations of a 7.1% rise.
- China’s imports fell by 2.1% y/y – down from a 1.4% decline in July and disappointing expectations of a 0.1% rise.
- The trade surplus came in at a whopping USD 58.93 billion – down slightly from July’s USD 62.33 billion, but up 69% y/y.
Quick take 1: These big trade surpluses in July and August will provide a nice boost to Q3 growth.
Quick take 2: We don’t expect these surpluses to last.
Want to know more? We break these numbers down further in our premium China Markets Dispatch newsletter. Click here to find out more.
3. Beijing to expand service sector
On Monday, the State Council approved a plan, formulated by the Beijing government and the Ministry of Commerce, to further open up the service sector in the capital.
Some context: This is not anew idea. Beijing initiatedreforms in a similar vein in 2015.
Now Beijing is signalling it doesn’t want to take its foot off the gas.
- The new plan touched on a variety of sectors, including high-tech RD, information technology, and financial services.
For the information technology sector, Beijing will:
- Allow foreign investment in domestic VPN services (capped at a 50% stake in individual companies)
- Scrap the foreign ownership cap on app store businesses
The plan also included some good old financial opening moves, including to:
- Encourage foriegn banks to obtain fund custody licenses
- Allow qualified foriegn banks to trade gold and silver futures
- Allow foriegn banks to act as lead underwriters in the interbank bond markets
Get smart:The top leadership is increasingly worried about being cut off from foreign technology and capital. These openings are an attempt to stop that from happening.
4. Staking out a path
Yesterday, Le Yucheng, vice minister of foreign affairs, published an op-ed on Sino-US relations in People’s Daily –the essential daily readfor officials.
Le called for improving relations(People.cn):
- “We must…unswervingly promote the healthy and stable development of Sino-US relations.”
Le said the two sides should talk.
- “[China and US should] restore and restart dialogue mechanisms at all levels and across all areas to bring our problems to the negotiating table.”
Le proposed a laundry list of areas for potential cooperation, including:
- The economy and trade
- Law enforcement
- Industries like new energy, robots, artificial intelligence, online education, and telemedicine
- Global governance issues such as climate change, counter-terrorism, humanitarian relief, global public health, and nuclear nonproliferation
But Le also drew a line in the sand.
- “Taiwan, Hong Kong, Tibet, and Xinjiang issues are…China’s core interests and concerns on which China has no room for compromise.”
Get smart: Chinese officials are trying to come up with specific areas for cooperation to stabilize the quickly deteriorating relationship with the US.
Get smarter: China does not have a willing partner in DC.
5. Suzhou government backs down on “civilization scores”
On Thursday, the Suzhou Public Security Bureau announceda “civilization code” feature on a government-run mobile app.
In a nutshell: The code measures Suzhou residents’ level of “civilized behaviors” based on traffic and social service records.
- Residents with high scores will enjoy “priority and convenience in work, life, employment, studies, and recreation.”
Suzhou residents weren’t thrilled, judging from comments online (Huxiu):
- “Who has the power to define the standards and scores for civilization?”
- “How would you fairly, accurately, and comprehensively judge a person’s moral character through a score?”
On Sunday, Suzhou authorities did some damage control (Sina):
- “The code is still in a trial phase and is not mandatory.”
- “It does not affect people’s access to public goods and services.”
- “We should have collected more public opinions before the trial.”
The code feature has since been quietly pulled from the app.
Get smart:The future of digital governance in China is still very much up in the air.