The 5G debate

driving the day

1. Xi touts opening (again)

On Wednesday night, Xi Jinping spoke (via video) at the China International Import Expo.

He used the opportunity to reassure foreign business executivesonce again that they will not be shut out of China’s market under his new economic strategy of dual circulation (Xinhua):

“We have set out to foster a new development paradigm with…domestic and international circulation reinforcing each other.”
“What we envision is not a development loop behind closed doors, but more open domestic and international circulation.”

Then, Xi listed a few near-term priorities for opening:

Making the “digital economy” and internet industry more open
Shortening the catalog of technologies prohibited or restricted for import
Better protecting the rights and interests of foreign investors
Speeding up negotiation of a China-EU investment treaty and the China-Japan-ROK free trade agreement

Xi also wowed foreign companies with a “big number”:

“China’s vast market is the most promising in the world. Total imports into China are estimated to top USD 22 trillion in the coming decade.”

Get smart: That big number – USD 22 trillion in imports – ain’t actually so big.

China has been averaging over USD 2 trillion in imports annually since 2018.

Our question: Does Xi not expect China’s import market to grow further?

Xinhua: 习近平在第三届中国国际进口博览会开幕式上的主旨演讲（全文）

politics policy

2. Li Keqiang’s magical policy tour

Premier Li Keqiang was on the road on Tuesday and Wednesday, conducting a wide-ranging tour of Henan province.

Some context: On Tuesday, Xinhua published the Party’s recommendations to the 14th Five-Year Plan (FYP) and 15-year vision which emerged from the fifth plenum (see yesterday’s Tip Sheet).

Most of Li’s whistle-stops mapped on to key policy priorities outlined in the plenum doc.

First, Li visited with people living in government subsidized housing (Gov.cn 2):

“The construction of government-subsidized housing is an important task in promoting a new type of urbanization, he said.”
“After inquiring about the difficulties and suggestions of the residents, he urged local authorities to make every attempt to help people resolve their problems.”

Li then moved on to the provincial capital of Zhengzhou where he inspected a robotics company and Zhengzhou University’s engineering research center, where he called for:

“Efforts [to] be stepped up to enhance innovation development and [a] new type of industrialization.”
“He also urged Henan to cultivate more talent to play a bigger role in the rise of the central region.”

Next up, Li paid a visit to Sanquan Foods which has helped create some 25,000 jobs:

“Premier Li inquired about [the company’s] production and operation and stressed that safety and quality should be put first in the food production chain.”
“He also asked several heads of small and micro-sized enterprises in charge of supporting facilities whether they have seen any preferential policies on tax and fee cuts.”

Li also said that the government would shun “indiscriminate strong stimulus.”

Get smart: The 14th FYP doesn’t officially drop until March, but between the plenum doc and Li’s Henan photo-ops, we can basically guess the plan’s major contours, which look to include:

Fixing the housing market
A huge focus on tech and innovation
A double down on regional development
Food safety and other quality-of-life issues
Supporting SMEs

Get smarter: These policy priorities should sound familiar.

China’s senior leadership feels confident in its chosen policy and development paths.
They aren’t looking to change course, but rather to accelerate the push on key priorities.

read more

Gov.cn: 李克强在河南考察

Gov.cn: Premier stresses livelihood, urbanization, modern agriculture in Henan

3. Security ascendant

Here at Trivium, we’re still noodling on the fifth plenum readout that dropped on Tuesday.

One big thing that has caught our eye: Expansion of the national security regime got a dedicated section in the Party’s recommendations for the 14th Five-Year Plan (FYP).

Why that matters: No previous proposal to the FYP has featured such a section.

The section highlights how the worsening external environment has the Party leadership concerned – and how security is now viewed as paramount to future development:

“We’ve become increasingly aware that security is the premise of development and development is the guarantee of security.”

The proposal suggested to look at every prospect of governance through a security lens.

“We will improve the centralized, unified, efficient and authoritative national security leadership system…improve national security legislation…and strengthen national security law enforcement.”

On the issue of sovereignty, the proposal was abundantly clear:

China won’t back down against foreign interference into its internal affairs re: Hong Kong and Macau
And it won’t tolerate any talk about “‘Taiwan independence” or other “separatist activities”

On the economic side, the security proposal called for a competitiveness study into key sectors and to minimize external shocks.

Our take: The hard stance on national security paints China into a corner – giving leaders less wiggle room to finesse the increasingly complex external environment when needed.

The bottom line: This security focus increases the risk of confrontation with the US.

4. How the sausage is made – fifth plenum edition

The fifth plenum is now out of the way, and we’ve got the Party’s recommendations for the 14th Five Year Plan in hand (see yesterday’s Tip Sheet).

Wondering how it all went down? Xinhua’s got the tick tock for you:

On April 13, Xi Jinping got the process started, naming the Party’s drafting team and listing 38 issues he thought required further research.
On June 17, Xi checked in with his drafting team and reviewed the structure of the recommendations document. He also told the team to link the proposed five-year targets with the 2035 vision.
Between August and October, the Politburo Standing Committee and the full Politburo met five times to review drafts.

There was no shortage of expert input:

The drafting group reviewed over 200 papers from research institutions and 109 proposals from government agencies.
Between July and September, Xi held seven symposiums seeking expert input (we covered most of them here in the Tip Sheet).
On August 16, the Party called for public comment online, and gathered over a million submissions.

Retired senior cadres also had a say:

They submitted 58 proposals in August.

Get smart: The drafting of top Party documents is a closely held process, but these policies are informed by input from a large number of channels.

Get smarter: There was a bit more visibility this time than during the last FYP drafting process.

5. NPCSC schedules extra session

On Tuesday, China’s legislature (NPCSC) announced it will hold its next session next week, on November 10-11.

That’s sooner than expected: The NPCSC last met in mid-October (see October 14 Tip Sheet), and wasn’t originally scheduled to meet again for another month and a half.

Some context: It’s rare that the NPCSC adds an extra session – but not unheard of.

It usually occurs when something requires urgent legislative attention.

This time around, at least two draft bills will be up for review (Xinhua):

An amendment to the Copyright Law
The Veterans Support Law

What’s the rush?

The draft Veterans Support Law drew unprecedented interest when first released for public comment – receiving a whopping 820,000 comments.

We still don’t think this merits a schedule change.

The real reason is probably just a time management issue (NPC Observer):

“[The NPCSC’s] year-end session in late December is typically quite ‘action-packed,’ so it may have chosen to avoid a longer-than-usual December session by passing a few bills earlier.”

Get smart: We’ll find out more next week.

NPC Observer: NPCSC Special Session Watch: Copyright Law Amendment Veterans Support Law

tech

6. The brewing 5G debate

There’s a brewing debate around the efficacy of China’s 5G rollout, and it’s worth paying attention to.

That’s why we found this scathing critique of China’s 5G ecosystem, published in the South China Morning Post on Thursday, worth noting. The title:

“China’s 5G push is outpacing reality.”

A quick look at the state of the 5G buildout:

The Ministry of Industry and Information Technology (MIIT) says China has built roughly 690,000 5G base stations as of September (MIIT).
But 10 million 5G base stations are required to achieve nationwide coverage (SCMP).

That works out to just 7% coverage so far.

Regardless, local governments are pushing 5Ghard (SCMP):

“More than 400 incentive policies for 5G adoption have been rolled out by central and local governments, [said an official from MIIT].”

But insiders have some reservations:

“Former Chinese finance minister Lou Jiwei…warned that 5G technology was immature and suffered from high maintenance costs and lack of applications.”

Still, when asked whether 5G buildout is getting ahead of itself, the MIIT’s spokesman had a clear answer (Gov.cn):

“Building out early is a typical approach to public infrastructure.”

Get smart: 5G networks fall within the “new infrastructure” category, which senior officials have prioritized throughout the year to receive pandemic-related stimulus funds.

But despite the priority funding this year, there is still a long way to go.

Get smarter: Even in the absence of a defined roadmap, or clear-cut use cases, regulators are determined to push out 5G.

But determination doesn’t guarantee success.

SCIO: 国新办举行前三季度工业通信业发展情况新闻发布会图文实录

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