driving the day
1. The other development belt
On Saturday, Xi Jinping concluded his tour of Jiangsu province by hosting a symposium on developing the Yangtze River Economic Belt (YREB).
Some context: The YREB encompasses 11 provinces and municipalities from source to sea along the Yangtze River.
- The corridor spans an economically diverse swath of territory, ranging from poorer inland provinces to China’s highly developed coastal regions.
Xi described the region as the “main artery” for dual circulation (Xinhua):
- “We must…promote the coordinated development of the upper, middle, and lower reaches [of the Yangtze].”
- “[We should] guide the orderly transfer of capital, technology, and labor-intensive industries from downstream regions to the middle and upper reaches.”
- “Provinces and cities along the Yangtze should…actively open their markets to the world.”
More context: The dual circulation strategy (DCS) is Beijing’s game plan to reorient China’s economy around domestic demand (see November 4 Tip Sheet).
Get smart: Developing China’s western regions has been a long-standing policy priority. Xi wants to harness some of the eastern seaboard’s economic mojo to make that happen.
The bigger picture: DCS is less about creating a new spate of policy priorities and more about upping the urgency to push long-idled development and reform goals to fruition.
2. Things are looking up
China’s stats bureau published monthly econ data for October on Monday morning.
- Retail sales rose by 4.3% y/y, up from 3.3% growth in September.
- Fixed asset investment increased by 12.2% y/y, up from 8.7% growth in September.
- Value-added output at industrial firms rose 6.9% y/y, the same as in September.
That first bullet point has got us particularly excited.
- Up till now, Chinese consumers have been MIA this year, leading to a lopsided economic recovery driven by industry and investment.
Get smart: October’s data is a positive development, but one swallow does not a summer make.
- We’ll need to see a couple more months of data to know whether the recovery in consumer spending has legs.
Go deeper: For more in-depth analysis of the numbers, check out today’s (and every day’s!) China Markets Dispatch.
3. Xi stresses ecological protection and entrepreneurship in Jiangsu
Prior to hosting the symposium on the Yangtze River Economic Belt (YREB) in Jiangsu (see entry #1), Xi Jinping spent Thursday and Friday visiting the cities of Nantong and Yangzhou.
Xi made stops at:
- A riverside district in Nantong
- The Nantong Museum
- The Yangzhou section of an ancient canal
- The Jiangdu water conservancy project
Throughout the trip, Xi repeatedly stressed the importance of environmental protection, calling for:
- Industrial activity in urban areas to take ecological protection into account
- The protection of waterways to ensure they benefit the people
- The transfer of water from the south to northern regions for balanced and sustainable development
Xi encouraged investment in environmental protection, saying (CPC People):
- “Investment in ecology and the environment is neither meaningless nor ineffective, but rather fundamental and strategic.”
Xi also encouraged private entrepreneurs to be more socially conscious during a visit to the Nantong Museum.
Some context: The museum was established by the industrialist and philanthropist Zhang Jiang in 1905.
- At the museum, Xi praised Zhang as the “sage and model of Chinese private entrepreneurs.”
Get smart: Environmental protection has become one of the defining issues of Xi’s term in office and a major quality-of-life issue for ordinary Chinese citizens.
4. CMC issues new guidelines for joint operations
On Friday, the Central Military Commission (CMC) announced new guidelines for joint operations for the armed forces (PLA).
This is a big deal (Taylor Fravel’s Twitter):
- “This marks only the fifth time that the PLA has changed its operational doctrine since 1949.”
The full text of the guidelines has not been made public. But here is a short summary from state media (China Daily):
- “[The guidelines] establish basic concepts and rules for the PLA’s joint combat operations, clarify responsibilities of units at different levels, expound on questions such as how to fight future wars and also stress the importance of combat preparedness.”
Why the guidelines were published:
- “A researcher with the PLA Academy of Military Science, who spoke on the condition of anonymity, said such guidelines are badly needed by the armed forces because they will help combat units to better plan, organize and coordinate their joint operations.”
- “’Our forces are giving unprecedented importance to honing their joint combat skills but have found many problems and questions that they have been unable to solve,’ he explained.”
Get smart: Improving joint operations is a long-term and ongoing process. These guidelines move the ball forward, but there is still a long way to go.
5. RCEP gets inked
After eight years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) was signed on Sunday.
Some context: RCEP is now the world’s largest free trade agreement. For more on the deal’s scope, see the November 13 Tip Sheet.
RCEP could reshape the way the region does business.
- It’s the first free trade agreement linking China, Japan, and South Korea.
- It lays the foundation for a coherent regional trading zone.
- It adjusts country of origin requirements, allowing components and finished products to move more freely between member countries.
Plus, it’s worth a ton of money (FT):
- “Economists said the deal…could add almost $200bn annually to the global economy by 2030.”
Premier Li Keqiang hailed the agreement as (Gov.cn):
- “A landmark achievement for East Asian regional cooperation and a victory for multilateralism and free trade.”
Get smart: Don’t get too excited. It will take time to get the deal ratified, and longer still before tariff reductions kick in.
Get smarter: RCEP’s signing means that China will increasingly be setting trade norms in Asia, a region where the US has largely abdicated responsibility under the Trump administration.