A different kind of average

finance economics

1. Settling for average

On Wednesday, we told you all about the Party’s recommendations to the 14th Five-Year Plan (FYP) and its 15-year vision which emerged out of the fifth plenum (see November 4 Tip Sheet).

One thing we neglected to mention: The document broke with tradition by not setting a concrete GDP growth target.

We might have guessed the target would be omitted.

Back in May, at the annual Two Sessions meeting, the government decided to scrap its 2020 GDP growth target amid the economic fallout of COVID-19.

But the beloved benchmark may make a comeback, albeit in a slightly modified form.

On Thursday, Reuters scooped that policymakers were planning on setting an average annual GDP growth target of 5% over the next five years, citing government sources:

“‘[Economic] objectives should be expressed in numbers. We still need a key indicator for economic development during the 14th five-year plan period,’ said a policy source.”
“We will have a GDP target and it could be around 5%.”

Get smart: An average annual growth rate would be something of a compromise between “new era” economic reformers and the old guard state planners who came of age in the socialist tradition.

Get smarter: It also allows Beijing to respond more flexibly to economic challenges.

Bloomberg: China Considering 5-Year Growth Target of About 5%, Reuters Says

politics policy

2. Xi calls Italian president

Xi Jinping hopped on the phone with Italian president Sergio Mattarella Thursday.

The reason: To mark the 50th anniversary of diplomatic relations.

Xi’s message (China Daily):

“China welcomes all countries, including Italy, to actively participate in its development and realize mutually beneficial cooperation, President Xi Jinping said on Wednesday.”
“Xi said that the two countries have led by example in how nations with different social systems and cultural backgrounds can develop bilateral relations.”

Sino-Italian relations have been on a rollercoaster of late:

The two countries looked like besties when Italy signed up to the Belt and Road in March 2019 (see March 22, 2019 Tip Sheet).
But relations have deteriorated significantly over the past year, as exemplified by the Italian government’s recent decision to bar Huawei from supplying 5G equipment to Italian telecom company Fastweb (Reuters).

Get smart: Xi’s call to Mattarella will not move the needle on bilateral relations.

The bigger picture: After a year of Wolf Warrior diplomacy, China faces an uphill battle in restoring its reputation in Europe.

Reuters: Italy vetoes 5G deal between Fastweb and China’s Huawei

3. Wang Yang tours anti-poverty work in Hebei

On Tuesday and Wednesday, vice premier Wang Yang travelled to Fuping county in Hebei province.

The destination wasn’t chosen at random (CPC People):

“Fuping has a glorious revolutionary history. It was the first poor county visited by…Party General Secretary Xi Jinping.”

During the visit, Wang called for a continuation of poverty alleviation and rural revitalization efforts.

Some context: The Party has promised to eradicate extreme poverty by the end of the year.

According to Wang, things have gone well so far – all thanks to the Party (Xinhua):

“Poverty reduction has fully demonstrated…the political advantages of [Party] leadership and the strength of the system of socialism with Chinese characteristics.”

But there’s lots more to do:

“Shaking off poverty is not the end of our efforts, but the start of a new journey toward realizing common prosperity and fully building a modern socialist country.”

Get smart: The Party was always going to reach its poverty alleviation goal – at least on paper.

But as the year-end deadline approaches, we’re already seeing official language switch to focus on the next big goal: building a modern socialist country.

Xinhua: Top political advisor stresses promoting rural vitalization

4. Binge buying soybeans

US ag exports to China hit a record high of USD 3.13 billion in September, according to data from the US Census Bureau published Wednesday.

Most of the credit goes to soybeans:

Soy accounted for 62% of the total ag export value in September.
7.5 million tons of soybeans were shipped to China in August and September, 70% more than the previous record for the same period.

Some context: China is binge buying to fulfill ag purchase commitments under the US-China trade deal.

Last month, the US Trade Representative’s office said it’s making good progress (see October 26 Tip Sheet).

Purchases of other key ag commodities are also breaking records (Reuters):

“September’s U.S. corn tonnage to China was the second largest on record for any month.”
“Annual U.S. beef exports to China…were up 160% on the year to record levels.”

Get smart: Some agricultural products already counting toward the purchase targets won’t actually ship out until 2021. But we don’t think anyone will be looking at the fine print.

Get smarter: Australia’s ag trade with China has been plagued by trade disruptions this year. Farmers down under are starting to blame the China-US trade deal.

5. Airlock secure, decontamination commencing

China has once again shut borders to foreign nationals departing from some countries with high COVID-19 rates, regardless of whether they hold valid visas or residence permits.

As of writing, the UK, Belgium, France, India, Russia, Italy, Ukraine, Ethiopia, Bangladesh and the Philippines are covered by the ban.

Just last week, China brought in extremely strict testing requirements for all travelers departing from a longer list of high risk countries:

Travelers must provide results from two COVID tests – a nucleic acid test and a blood test – taken within 48 hours of their flight to China.

The US, Australia, Canada, Germany, Singapore, and others are covered by this requirement, which applies to both Chinese and foreign nationals.

Here’s the kicker: Since meeting the testing requirements in time is nearly impossible, for many countries it is effectively a travel ban.

Some context: China just reopened its borders on September 28th to many foreign nationals who hold residence permits but got stuck outside the borders in March as a result of a blanket entry ban (see September 24 Tip Sheet).

Get smart: China has used targeted lockdowns to good effect in controlling small outbreaks in Kashgar, Qingdao, and Beijing. It looks like it wants to bring a similar strategy to international border controls.

SCMP: Coronavirus: China closes door to British, Belgian and Philippine visitors

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