driving the day
1. Xi touts DCS at APEC summit
On Thursday, Xi Jinping delivered a keynote address at the Asia-Pacific Economic Cooperation (APEC) CEO Dialogue.
His message: Unity is strength (Xinhua).
- “Meeting challenges through cooperation is the only way forward for…the international community.”
Xi then artfully segued into explaining why the dual circulation strategy (DCS) will be a boon to APEC nations.
He said DCS will:
- “[E]xpand domestic demand…and ensure smooth flow of economic activity.”
- “[M]ake scientific and technological innovations to foster new growth drivers.”
- “[C]ontinue to deepen reforms and energize the market.”
These reforms will enable China to:
- “[F]ully unlock its market potential and create greater demand for other countries.”
- “[O]pen up wider and share more opportunities for mutual development.”
- “[C]ontinue deepening international cooperation for shared benefits.”
Xi concluded with a heartfelt wish for the assembled:
- “Let us stay true to openness and cooperation, and make development and circulation at home and abroad reinforce each other.”
What an orator, heh?
Get smart: Xi and other Chinese leaders are eager to showcase how planned domestic reforms will benefit foreign businesses and investors.
2. 14 things I hate about you
Beijing is having an airing of grievances down under.
On Tuesday, an anonymous Chinese diplomat released to several Australian news outlets a dossier outlining 14 of China’s major beefs with Australia .
Some context: Sino-Australian relations have been tense for a few years now, and have deteriorated dramatically in recent months as Canberra vocally criticized China’s handling of COVID-19 and looked to address perceived national security threats from Beijing.
- China has responded to rising tensions by banning certain Australian imports.
The list laid out Australia’s main missteps, including (Sydney Morning Herald):
- Blocking Chinese investment projects on national security grounds
- Banning Huawei and ZTE from Australia’s 5G network
- Calling for an independent inquiry into the origins of COVID-19
- Criticizing and “interfering” in Taiwan, Hong Kong, and Xinjiang affairs
- Providing funding to “anti-China” think tanks
- Searching and seizing the property of Chinese journalists without charges
Our take: We doubt Chinese leaders expect Canberra to reverse course on any of these points, but it will certainly send a message to other countries considering getting up in China’s face.
Get smart: The move may cow some would-be critics into silence, but it hardly helps China’s international image. If anything, it will galvanize anti-China sentiment in the region.
3. Hurry up and RCEP
On Wednesday, Premier Li Keqiang chaired the weekly State Council executive meeting.
Top of the agenda: Implementing the Regional Comprehensive Economic Partnership (RCEP).
Some context: China – and 14 other Asia-Pacific countries – signed RCEP on Sunday after eight years of negotiations (see November 16 Tip Sheet).
- It’s now the world’s largest free trade agreement (FTA).
Li explained why he thinks getting RCEP into action is so important (Gov.cn):
- “RCEP…reflects the common will of countries…to safeguard multilateralism and free trade.”
- “Building the world’s largest free trade zone will help stabilize industrial and supply chains.”
More context: When implemented, RCEP will reduce tariffs to zero on more than 90% of goods traded between member countries.
There’s more: Getting RCEP in place will also speed up the progress of other trade agreements, says Bai Ming, director of the International Market Institute at the Ministry of Commerce, including (NBD):
- A China-Japan-South Korea FTA
- The EU-China Comprehensive Agreement on Investment
Get smart: China wants firmly cement its place at the center of Asian trade. RCEP will help in that goal.
4. State Council to boost consumption
RCEP wasn’t the only agenda item at Wedensday’s State Council executive meeting (see previous entry).
- The assembled also discussed the perennially hot topic of boosting consumption.
Premier Li Keqiang said China’s recovery has been somewhat lopsided (Gov.cn 2):
- “At present, the prominent constraint on economic development lies in consumption.”
- “We need to explore new highlights in consumption to spur domestic demand.”
To get the economy back on track, the State Council wants to boost consumption of:
- Home appliances and furniture
- Food and beverages
In particular, the body wants to expand rural consumption.
The State Council also wants to support “Internet Plus” tourism:
- “The model of Internet Plus tourism will play a positive role in catalyzing consumption.”
- “Practices proven effective should be summarized and promoted,’ Premier Li said.”
Some context: Internet Plus is one of Li’s longstanding pet projects aimed at applying internet and IT technology to strengthen various industries.
Get smart: Consumer spending was up in October, but the numbers were inflated by the extended National Day holiday, and border restrictions that kept tourism spending at home.
Get smarter: Repeated government efforts to boost consumption show that there’s still serious concern in Beijing about the strength of the Chinese recovery.
5. Li Keqiang is conservative about growth
On Wednesday, People’s Daily published an article by Premier Li Keqiang laying out his thoughts on the forthcoming 14th Five-Year Plan (FYP).
Some context: It’s common for top policymakers and advisors to editorialize a bit in the weeks following a plenum, aiming to shed a bit more light on the decisions taken.
Spoiler alert: Li’s article is pretty boring compared to some of the other pieces we’ve read.
- Hot tip for the nerds – Liu He’s was much more interesting.
But one of Li’s statements grabbed our attention (People’s Daily):
- “Given the complex and volatile international economic and political landscape, for a large economy like ours, in a certain sense, stability means progress.”
Li then emphasized that the six stabilities will continue to be government priorities through 2025.
Some context: The six stabilities were introduced at a July 2018 Politburo meeting to refocus leaders on economic fundamentals as the economy slows. They target stable employment, investment, financial markets, foreign trade, foreign investment, and expectations.
Get smart: Li doesn’t want policymakers taking risks in an attempt to deliver high economic growth.
The bottom line: The government is not looking to supercharge growth. That means that growth in 2021 could disappoint to the downside.
6. MEE doubles down
The Ministry of Ecology and Environment (MEE) is already hard at work on the 14th Five-Year Plan (FYP) for environmental protection.
Some context: The national FYP will be finalized in March. Following that, topic-specific FYPs will be published, including one for environmental protection.
Following a three-day meeting, top MEE officials laid out their ideas for Yicai on Thursday.
The headline: MEE wants to ensure that the post-COVID economic recovery is “green.”
This caught our eye: MEE is squarely focused on achieving peak its goal of having CO2 emissions peak by 2030.
- That’s why it’s preparing to work backward, setting quantitative targets along the way.
The ministry also wants to prevent backsliding on environmental achievements, calling for improved supervision of fixed pollution sources.
Get smart: MEE is under pressure from large polluters to relax enforcement. But so far, regulators aren’t budging.
Get smarter: These policy agendas aren’t new, but there is increasing political will to get them done after Xi Jinping pledged in September that China will achieve carbon neutrality by 2060.