driving the day
1. Xi’s ten commandments for Shenzhen
On Wednesday morning, Xi Jinping delivered a speech at a ceremony marking the 40th anniversary of the Shenzhen Special Economic Zone.
Some context: Shenzhen began piloting economic reform policies in 1980. The pilots brought rapid economic growth and built a robust manufacturing and tech sector.
Xi described Shenzhen’s past 40 years as a “miracle” and promised that it will only get better.
- But he didn’t announce any new policies.
Instead, he drew ten lessons from Shenzhen’s past and admonished the city to follow them in the future. They are (Xinhua):
- Adhere to Party leadership
- Refine the socialist system through reforms
- Test new approaches
- Open up further
- Innovate and win the upper hand in the global technological revolution
- Share development dividends equitably with the people
- Build a rules-based environment
- Insist on environmental protection and sustainable development
- Follow “one country, two systems,” and create synergy between the mainland, Hong Kong, and Macau
- Contribute to the broader national economy
Get smart:Xi believes the world is watching to see how the Chinese development model stacks up against the West.
- He views Shenzhen as a showcase, demonstrating thatChina’s approach can deliver not just development, but also innovation and prosperity.
2. Repurposing SPBs
In recent weeks, local governments have been furiously reallocating funds raised from special purpose bonds (SPBs) toward shovel-ready projects.
Some context:When Beijing started handing out SPB quotas to local governments earlier this year, a lot of local authorities jumped the gun, raising funds for projects that were a long way from getting started and that still needed preparatory work.
- As a result, a big chunk of the funds Beijing intended as stimulus have just been lying around not doing anything.
But now, local governments are putting the funds to work.
Here’s the latest:
- Local governments reallocated SPB funds in response to a July notice from the Ministry of Finance (MoF) that gave provincial authorities discretion to change how funds raised from SPBs could be used.
- Changes were required to be made, and registered with MoF, before the end of September.
- Now the reallocation is happening in earnest.
Get smart:Local governments have to issue all SPBs allocated for 2020 by the end of October. And since they are also in the process of reallocating idle funds toward more productive uses, we expect SPBs will make a solid contribution to economic growth in Q4.
Get smarter:This fiscal impulse will help economic growth to further accelerate this quarter. But fiscal spending is still not packing the punch that Beijing intended.
Go deeper:Read our August 21 note on the subject –Why China’s Fiscal Bazooka is Firing Blanks.
3. Semper Xi
Prior to stopping off in Shenzhen (see entry #1), on Tuesday, Xi Jinping continued his tour of Guangdong province, paying a visit to a military base in Chaozhou where he addressed members of China’s Marine Corps.
Xi told the troops to be ready for combat(CGTN):
- “He told the troops that they should fully focus on combat readiness and always remain on high alert, adding that the Marine Corps should be built through real combat training.”
- “A military is built to fight. Our military must regard combat capability as the criterion to meet in all its work.”
Some context:Xi’s comments come amid dramatically heightened tensions between Beijing and Taipei as well as between China and the United States.
While he stopped short of saying the T-word, Xi did mention the Marines had an important role to play in safeguarding China’s sovereignty and territorial integrity.
He also wanted to make sure the troops know who’s boss(Xinhua):
- “Xi also stressed upholding the absolute Party leadership over the armed forces, ensuring that the military must be loyal, pure and reliable.”
Get smart:Military modernization has been one of Xi’s most cherished policy projects. If the worst should happen, he wants to make sure that China’s armed forces are ready.
4. The kids aren’t alright
On October 13, the CCP Central Committee and the State Council released a reform plan to adjust evaluation criteria in the education system.
The stated goal:
- To ensure schools produce the “talents” that the country needs
Here’s the profile of ideal talents (Gov.cn):
- Be loyal to the Party and determined to serve the country
- Stay fit and healthy
- Be well-rounded with extracurricular hobbies
- Be industrious and respect hard work
To that end, the plan seeks to adjust incentives for governments, schools, teachers, students, and employers. Most significantly, it states that:
- Test scores should not be the only criterion for entrance exams to high schools and colleges.
- Governments and state-owned enterprises should lead in adopting a competency-based talent scouting system.
Get smart:Political loyalty is what the Party valuesmost in the next generation.
The bigger picture: Various efforts to reform the educational system and to evaluate students by more diverse metrics beyond test scores have been made for over 20 years. But old habits die hard, and so far they have not seen much success.
5. Going going green
On Tuesday, Executive Vice Premier Han Zheng paid a visit to the Ministry of Ecology and Environment (MEE) where he led a symposium on environmental protection.
- Environmental protection will be an even higher priority in the coming years
Han went on to describe an ambitious environmental policy agenda for the 14th Five-Year Plan.
It includes (The Paper):
- Developing an action plan to achieve new goals on peaking emissions and carbon neutrality
- Building a national carbon market
- Actively participating in global climate governance
- Improving environmental monitoring and enforcement capacity
- Prioritizing water resource protection, particularly in key regions
Some context: Xi Jinping announced bold new climate targets in his address to the UN General Assembly on September 23, including plans for China to reach its carbon emissions peak in 2030 and to achieve carbon neutrality by 2060.
Get smart:Any speculation that Xi’s UN climate pledge was all for show can be put to rest. The implementation plans are underway.
6. NPCSC does its thing
Yesterday, the National People’s Congress Standing Committee (NPCSC) – aka the leaders of China’s legislature – kicked off a routine bi-monthly gathering.
It’s happening a bit earlier than usual, so as not to overlap with the Party’s Fifth Plenum, scheduled for October 26-29 (seeSeptember 29 Tip Sheet).
This time around, at least 15 draft bills will be up for review (NPC Observer):
- An amendment to the Patent Law
- A revision to the Minors Protection Law
- The Biosecurity Law
- The Export Control Law
- An amendment to the National Flag Law
- An amendment to the National Emblem Law
- The Yangtze River Protection Law
- The Veterans Support Law
- A Criminal Law Amendment (XI)
- A revision to the Administrative Penalties Law
- The Personal Information Protection Law
- An amendment to the Election Law for the National People’s Congress and Local People’s Congresses at All Levels
- A revision to the Wild Animals Protection Law
- A revision to the National Defense Law
- A Coast Guard Law
Get smart:The upcoming session will likely see passage of a few laws with broad business implications, including changes to the Patent Law and the Export Control Law. A draft of the much-needed Personal Information Protection Law will also make a debut.