1. China’s uneven recovery: the official take
Folks in China are expecting the strongest economic data print since the pandemic started when the stats bureau drops the Q3 GDP results on Monday.
But like us, Yang Weimin, a former top economic policy advisor, is concerned about the uneven recovery.
Some context: Yang was Liu He’s deputy at the Party’s top economic policy making body, the Central Financial and Economic Affairs Commission, for five years before retiring in 2018.
On Thursday, Yang gave a pithy summary of the uneven nature of the recovery so far (Yicai):
- The supply side has recovered quicker than the demand side.
- On the demand side, investment has recovered quicker than consumption.
- Within the service sector, the more digitized sub-sectors like finance and information services are growing faster than other sectors.
Our take: Yang nailed it. We’ve been concerned about this supply-demand mismatch for months. It’s the key reason we don’t think the current recovery is sustainable.
Go deeper: For much more on our (and Yang’s) concerns about the economy,check out today’s (and everyday’s!) China Markets Dispatch.
2. Ready, set, innovate
On Thursday, Premier Li Keqiang channeled his inner startup-bro by officially launching the 2020 National Mass Innovation and Entrepreneurship Week.
In his opening speech, Li said that despite a challenging external environment (Gov.cn 1):
- “China has continued to further reform and [open up], implement the innovation-driven development strategy, and carry out mass entrepreneurship and innovation.”
He also said entrepreneurship has been key in helping China recover from COVID-19:
- “Entrepreneurshipand innovation has helped create a large number of market entities and job positions.”
- “[These entities] have played a…supportive role in stabilizing the fundamentals of the Chinese economy and helping it resume and rebound quickly.”
Li then called for efforts to:
- “Build a market-oriented, rule-based and international business environment, continuously improve the level of opening-up, treat domestic and foreign enterprises equally and make China a fertile soil for global entrepreneurship and innovation.”
Get smart: Boosting entrepreneurship has been one of Li’s longstanding pet projects. He and other policymakers hope courting innovation will help move China’s economy up the value chain.
Get smarter: Beijing’s top-down style of economic management is good at allocating resources to key priorities but doesn’t necessarily lend itself well to an organic culture of entrepreneurship.
3. Examining education reform
On October 15, the general offices of the CCP Central Committee and the State Council issued new guidelines to strengthen sports and arts education in schools.
Some context: The guidelines are set to implement the just-issued reform plan, which aims to adjust evaluation criteria in the larger education system (see October 14 Tip Sheet).
And whaddayaknow, the key to education reform turns out to be…more exams.
- A grueling (we assume) sports test will be included in the entrance exams to high schools.
- In pilot areas, an art exam will also be included in the admission criteria to high schools.
The idea: With the percentage of students passing the sports and arts tests in decline, the added “opportunities” are meant to incentivize students to work harder in these subjects and simultaneously give gifted students another way into higher education.
As per usual, local governments are responsible for implementation.
- Local governments, education administration departments, and school leaders will be held accountable if the passing rates of students in sports and arts continue to drop.
Get smart: Students won’t be thrilled with this.
Get smarter: Neither will local government officials.
4. MoST wants input on sci-tech innovation Five-Year Plan
The Ministry of Science and Technology (MoST) is hard at work drafting a National Science and Technology Innovation Five-Year Plan (FYP).
Some context: After the upcoming 14th FYP is published, many agencies will issue detailed plans for their own work during the same period.
Now MoST is asking for research contributions from universities, think tanks, companies and industry associations on a laundry list of “major issues” to inform the sci-tech innovation plan.
What major innovation issues does MoST want input on?
The catalogue includes requests for policy research on how to:
- Address the international trends sci-tech innovation will face until 2025
- Support domestic innovation through policy, and by better linking the technology, education, industrial, and financial sectors
- Boost investment into basic research
- Address the broader development and security aspects of sci-tech
- Build an internationalized research environment and an international cooperation strategy
What we like to see: “Security” gets a mention, but internationalization and cooperation remain top priorities.
Get smart: Sci-tech innovation is in the national spotlight as policymakers grapple with US export restrictions and other aspects of technical decoupling. The sci-tech innovation FYP will elucidate a short-term strategy to address this issue.
5. Discipline inspectors head to the provinces
On Wednesday, the Central Commission for Discipline Inspection (CCDI) announced that the latest round of discipline inspections have been launched.
Some context: This will be the sixth round of inspections since the 19th Party Congress in October 2017.
The scope: Inspections this time will focus on 32 central and provincial Party and state institutions.
This time the provinces got some special attention, with inspection teams sent to 17 provinces and municipalities:
- Inner Mongolia
But that’s not all. Other prominent institutions to be inspected include the Ministry of Public Security, Ministry of Finance, and Ministry of Agriculture and Rural Affairs.
Get smart: The discipline commission is Xi’s enforcer, and the most important body in ensuring implementation of the Party line.
Get smarter: With just about two years to the next Party congress, making sure the provinces – and the public security apparatus – are all in order is key to a peaceful power transf…continuation.