driving the day
1. Fifth Plenum is under way
The Fifth Plenum of the Party Central Committee kicked off in Beijing this morning.
Why it matters: The Fifth Plenum will see thedebut ofrecommendations for China’s 14th five-year plan (14 FYP).
Xi Jinping got things started by (Xinhua):
- Delivering a report on the Politburo’s work over the past year
- Explaining the rationale behind the Party’s recommendations of the 14 FYP and longer range policy goals through 2035
There hasn’t been much other reporting, and there won’t be until Thursday when the meeting ends.
But according to Li Junru, former vice president of Central Party School, this plenum is particularly important (The Paper):
- “This (Plenum) is a major turning point, and China will start a new journey of modernization on the basis of building a moderately prosperous society.”
- “Whether this five-year plan is well formulated and executed, and whether it can be completed on schedule [will shape] modernization in the next 25 years.”
Get smart: The recommendations for the 14 FYP will define China’s economic, social, ideological, and environmental goals for the next five years.
Get smarter: The 14 FYP will be a window into how the Party understands the most important challenges and opportunities facing China.
2. Taking care of (private) business
As Tip Sheet readers know, China’s private sector has been feeling somewhat unloved, amid a new flourishing of state capitalism.
That’s why on Friday, China’s macro planner (NDRC) along with four government ministries and the central bank released a set of opinions on supporting and upgrading private enterprises.
The document made for familiar reading, calling for (NDRC):
- Tax and fee reductions
- Energy price reductions
- Standardizing logistics costs
- Liberalizing market access for private enterprises in key sectors
The opinions also:
- Call for equal treatment of private enterprises and state-owned enterprises in obtaining government land use rights
- Ban additional barriers for private enterprises that have met market entry requirements in certain industries
- Call for the free movement of enterprises between regions
Finally, the document calls for targeted support to resolve the problems commonly faced by private enterprises through the application of transparent rules and procedures.
Get smart: Conceptually, there’s not much new here – but the document does provide some important details on how specifically Beijing wants to make life easier for private companies.
Get smarter: Policymakers want the private sector to be a major engine of the economy. For that to happen, the business environment needs to be up to snuff.
3. Survey says…fix the business environment
On Friday, the China Small and Medium-sized Enterprises (SMEs) Promotion and Development Center released a report detailing the burdens borne by Chinese companies.
- The State Council commissioned the report to better understand the challengescompaniesare currently facing.
- The report surveyed some 8,600 enterprises nationwide over the first three quarters of 2020.
- 76% were private enterprises and 56% were SMEs.
The report contains lots of interesting tidbits, but here’s a snapshot of what companies have said would make their lives easier (Sina):
- Extend the time limits on the preferential policies issued this year to combat COVID-19
- Reduce financing costs and expand financing channels
- Reduce energy, land, and logistics costs
- Cancel unnecessary approval processes and reduce institutional transaction costs
Whaddaya know, a lot of these asks line up perfectly with the NDRC’s newly issued policy doc (see previous entry).
The report also made some policy recommendations, including:
- Speeding up the construction of a high-quality public service system
- Setting up a mechanism to review enterprise fees
- Settling government arrears to enterprises
Get smart: A consensus is forming around what the government needs to do to improve the business environment – but identifying problems and fixing them are two different things, entirely.
4. US pleased with China ag purchases
A kind word for China? From Washington?!?
- Believe it or not, it happened.
On Saturday, the US Trade Representative and the Department of Agriculture hailed China’s progress in implementing agriculture-related aspects of the phase one trade deal.
Some context: The deal, signed January 15, was negotiated in simpler times (see theJanuary 16 Tip Sheet).
Despite everything, China is keeping its side of the bargain.
- “China ha[s] bought over $23 billion in U.S. agricultural goods to date, or about 71% of the target.” (Reuters 1)
- “China has already purchased record amounts of American corn and sales of soybeans are running at their highest in data going back to 1991.” (Bloomberg)
- “American sorghum sales…for this season are currently at their highest in at least six years.” (Bloomberg)
Still, there’s a ways to go and just two months left in 2020.
- That’s why we aren’t surprised by reports that China may boost corn import quotas again this year (Reuters 2).
Get smart: Once the key boneof contention in the US-China relationship, the trade deal is now the only glimmer of positivity.
5. New COVID-19 outbreak in Xinjiang
Over the weekend, COVID-19 reared its ugly head in the western city of Kashgar in Xinjiang (Xinjiang NHC).
- On Saturday, local authorities discovered an asymptomatic COVID-19 carrier through routine testing.
- On Sunday, another 137 asymptomatic cases were identified viacontact tracing.
Some context: The last time Xinjiang reported COVID-19 transmission was on August 15, in its capital city of Urumqi.
Why this is disturbing: The source of the infection has yet to be identified.
The central government immediately got to work (Xinhua):
- On Sunday, the National Health Commission sent a working group to Kashgar.
Local authorities also:
- Activated the highest level of emergency response
- Designated four townships as high-risk areas
- Closed kindergartens, primary, and secondary schools until October 30
- Gathered 600 medical staff from other parts of Xinjiang to complete city-wide testing by Tuesday
However, Kashgar officials chose not to:
- Suspend air, rail, and road traffic
- Close grocery stores
- Ban or quarantine incoming travelers
- Bar travelers from leaving Kashgar
Get smart: With 138 people already infected, Kashgar is institutingrelatively mild lockdown measures.
Get smarter: Government officials have learned to deal with these local outbreaks whilecausingthe least economic disruption.