driving the day
1. China’s tech to-do list
Avid Tip Sheet readers know that in recent years, the US has takengleeful delight in cutting off Chinese tech companies from key technologies and components.
- Just askHuawei.
But Washington’s containment efforts have had an unintended consequence:
- They’ve given Beijing a clear blueprint for where to focusefforts to reduce dependence on American tech.
At a press conference on Wednesday, Bai Chunli, president of the Chinese Academy of Sciences (CAS) said (The Paper):
- “We must transform the American containment list into our research priorities.”
Some context: Bai’s comments come just days after Xi Jinping convened a symposium of scientists, politicians, and industry leaders to discuss how to achieve breakthroughs in key tech (see Monday’s Tip Sheet).
CAS has been focused on boosting technological independence for some time (SCMP):
- “In 2018, [CAS] initiated so-called Category C projects, defined as collaboration with enterprises to circumvent technology containment efforts.”
- “Five such projects started last year, focusing on computer chips and software, electromagnetic technology, high-end bearing steel, and multilingual audio research.”
Get smart:Xi, Bai, and others are out to ensure that the Chinese tech industry is never again at Washington’s mercy.
2. Xi goes to Changsha
Yesterday, Xi continued gallivanting around Hunan (see yesterday’s Tip Sheet).
He made a stop in Changsha, where he visited:
- An advanced manufacturing company producing intelligent equipment
- A cultural industry park
- A university
Get smart: These visits weren’t chosen at random. Each one signals a policy priority.
We’re most interested in his first stop.
At Sunward, the advanced equipment manufacturer (Xinhua 2):
- “[Xi] stressed the importance of innovation as the country has entered a crucial and challenging stage of development.”
- “’Key and core technologies must be firmly held in our hands,’ Xi said.”
Some context: The advanced manufacturing sector has been a top priority for some time now (see January 6 Tip Sheet). Growing it has taken on added urgency as tensions with the US threatenChina’s supply chains (see previous entry).
The end game: Xi wants China to move up the value chain. He doesn’t just want the country tobe the world’s factory – he also wants it to be the world’sdesign studio.
3. Bureaucracy is such a drag
Top leaders are sick of bureaucracy dragging on the national economy.
Thursday’s State Council executive meeting told provinces to get out of the way of people and businesses that operate across province lines – quickly.
By end 2020, 58 administrative processes should be manageable from anywhere in China, including:
- Registering a business
- Authenticating diplomas and professional certifications
- Transferring social security funds
By end 2021, an additional 74 administrative processes should be covered, including:
- Processing product and manufacturing licenses
- Managing medical bills and records
- Moving residence (hukou) registration
Even better: All of this stuff will be doable online.
The State Council’s orders take aim at a massive economic problem.
According to Renmin University law professor Liu Junhai (Xinhua):
- “Current regional and sectoral barriers in the market directly restrict the optimal allocation and rational flow of various factors and hinder the establishment of a unified national market.”
Some context: Just last Friday, premier Li Keqiang told local governments to stop making things harder for people and companies that cross province lines (see September 14 Tip Sheet).
The bottom line:Everyone who lives and works in China will heave a collective sigh of relief if this actually gets done. Butefforts to tackle local protectionism have a long history of failure – so a little skepticism is in order here.
4. Powering SMEs
At Thursday’s State Councilmeeting, Premier Li Keqiangurged more efforts to power small and micro-sized businesses. Literally.
- Li wants to make it easier for small businesses to get electricity.
Some context: “Getting electricity” is one of the metrics in the World Bank’s “Doing Business” project. It evaluates (World Bank):
- “The procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse.”
More context: Despite already ranking #12 globally for ease of getting electricity, China still wants to improve. This spring, the National Energy Administration (NEA):
- Released draft opinions aimed at helping businesses get power faster with fewer procedures
- Launched a national inspection to see how localities were doing on powering businesses
So what’s new? The State Council just pledged to further streamline administrative procedures to ensure small businesses can get connected without trips to government agencies, administrative approvals, or additional costs.
- The goal is for small businesses seeking normal grid connection to get powered within 25 working days by the end of 2020, and within 15 working days by 2022.
Get smart: The State Council is leaving no stone unturned in its effortsto improve the business environment for smallbusiness.
5. State Council tells SOEs to mind their own business
Also on the State Council’s agenda Thursday: State-owned enterprise (SOE) reform.
The government promised that:
- “The task of relieving SOEs of their obligation in undertaking social programs will be essentially complete this year.”
- “SOEs’ non-essential business will be spun off at a faster pace, to enable them to better focus on growing their main business.”
- Some SOEs still provide all sorts of social services, like running schools and hospitals – a legacy of the planned economy era.
- Many SOEs have expanded far beyond their original remit, investing in real estate, finance, and other industries where they sought to make a quick buck.
The meeting also promised to open up more space for private firms:
- “Market access will continue to be broadened.”
- “Power grid operators will continue to spin off competitive operations like equipment manufacturing.”
- “Oil and gas infrastructure will be made equally accessible to all businesses regardless of ownership type.”
- “Private companies will be supported to participate in the construction of major railway projects.”
What to watch: The debate on SOE reform is heating up again as a new three-year SOE reform plan isbeing drafted. The plan is scheduledto be unveiled in October (see June 15 Tip Sheet).
6. State Council releases Xinjiang labor rights white paper
On Wednesday, the State Council published a white paper on employment and labor rights in Xinjiang.
Some context: Global condemnationof Beijing’s Xinjiang policy is increasing – including with respect to forced labor.
Nothing to see here: According to the white paper, things in Xinjiang have never been better.
The document highlights areas of improvement in the region’s employment outlook, including:
- Increased vocational training
- More support for entrepreneurs
- Job-seeking assistance for the unemployed
- Higher family incomes and standards of living
The white paper also insists that the government fully respects workers’ human rights, including:
- Freedom of religion
- Freedom to use their own language
- Freedom from forced labor
- Right to remuneration
- Right to leisure and occupational safety
The document concludes with harsh words for critics of China’s actions in Xinjiang:
- “Certain international forces, guilty of ideological bias…have been applying double standards in Xinjiang, criticizing ‘breaches of human rights’ while ignoring the tremendous efforts Xinjiang has made to protect human rights.”
Get smart: The white paper’s claims will convince exactly nobody.
Get smarter: Beijing haslost the global PR battle over its Xinjiang policy.