1. Xi prioritizes ASEAN
On Friday, Xi Jinping spoke via video link at the opening ceremony of the 17th China-ASEAN expo and business summit.
Xi’s message – China is making ASEAN a top priority (Xinhua):
- “Today’s world is undergoing major changes unseen in a century.”
- “China regards ASEAN as its regional diplomatic priority and as a key area for high quality construction of the ‘Belt and Road.’”
Some context: China just signed the Regional Comprehensive Economic Partnership (RCEP) agreement with ASEAN and other regional partners on November 15 (see November 16 Tip Sheet).
Xi called for more cooperation on:
- Coordinating regional development plans and connecting infrastructure
- Expanding trade and supporting post-pandemic economic recovery
- Promoting technological innovation and building the Digital Silk Road
- Containing epidemics and strengthening public health capacity
Get smart: Xi knows the incoming Biden administration will renew efforts to engage with Asia that the Trump administration abandoned. He wants to shore up ties as much as possible before the new president takes office.
Get smarter: Regardless of who’s in the White House, China is always keen to expand its role in regional trade and diplomacy.
2. State Council plans next steps for social credit
On Thursday, the State Council met to discuss the future of China’s social credit system (SCS).
Some context: SCS policy formulation has been on pause for most of this year due to calls for better top-down planning from China’s legal and business communities.
- And, oh yeah, ‘cuz of COVID-19.
The meeting indicated that future social credit regulations will:
- Make it harder for regulators to blacklist companies arbitrarily
- Increase the severity of violations that can result in blacklisting
- Limit the types of penalties that can be imposed on blacklisted parties
- Standardize and streamline credit repair procedures
- Control the sharing of SCS data
This was interesting: The meeting also clarified that market actors (such as industry associations, credit rating agencies, and the media) will not be legally required to participate in penalizing blacklisted companies.
More context: Policymakers have been deeply concerned over the negative reception social credit has received among foreign businesses and governments.
- That’s because improving the business environment in order to attract more FDI was one of the arguments for implementing the SCS in the first place.
Get smart: This is a sneak preview of what we will see in Beijing’s second Social Credit Planning Outline, likely to be released in 2-3 months.
3. Wang Yi meets South Korean president
On Thursday, Foreign Minister Wang Yi continued his East Asian tour, stopping off in Seoul for meetings with South Korean President Moon Jae-in.
Some context: Beijing’s relations with Seoul are complicated, but have shown slight improvement recently as the US – traditionally a staunch South Korean ally – retreated into an “America First” stance during the Trump administration.
Wang said the joint struggle against COVID-19 had brought Beijing and Seoul closer together (Xinhua):
- “In face of COVID-19, the two countries took the lead to effectively control the pandemic and establish the fast-track entry system…setting a good example of cooperation in the joint fight against COVID-19.”
Wang also suggested some other possible points of cooperation, including:
- “[H]osting the year of cultural exchanges between China and South Korea.”
- “[Working] with South Korea to accelerate the negotiations of the China-Japan-South Korea free trade agreement and push for regional economic integration.”
More context: South Korea and China are both members of the recently signed Regional Comprehensive Partnership Agreement (RCEP) (see November 16 Tip Sheet).
- Wang hopes the pact can serve as a starting point for stronger economic ties.
Get smart: Beijing is trying to solidify relations with East Asian neighbors before the incoming Biden administration begins to repair ties damaged during the Trump years.
4. NDRC looking into NEVs
On Wednesday, domestic media reported on a leaked internal memo sent by the central macro policy planner (NDRC) to its provincial offices.
What it said: The memo asks for all information on new energy vehicle (NEV) manufacturing projects approved after 2015.
Specifically, the NDRC wants to know more about:
- The production and operation of NEV companies between 2019 and 2020
- All investments in and planned projects for purely-electric vehicles since 2015
This shouldn’t come as a surprise:
- Earlier this month, the State Council General Office dropped a plan guiding the development of the NEV industry from 2021 to 2035 (see November 3 Tip Sheet).
- The development plan pledged to address overinvestment and overproduction in the NEV sector.
But this is new:
- The leaked memo asked for additional details on two auto manufacturers – Evergrande Auto and Baoneng Auto.
- Requested information includes post-2017 investments and planned investment in both NEVs and auto parts, as well as land use.
Things that make you go “hmmm”:
- Evergrande Auto and Baoneng Auto both have giant real estate developers as parent companies.
- Their planned auto production outputs are higher than the industry average.
Get smart: Industry insiders have long suspected that these two companies’ investments in the auto sector are an elaborate scam to raise capital and hoard land to feed their property businesses by taking advantage of government NEV subsidies.
5. Shen Yiqin moves into contention for Politburo
Never fear, your update on provincial Party promotions is here!
Last week, Shen Yiqin was appointed Party secretary of Guizhou.
- Shen is taking over the role from Sun Zhigang, who is stepping down due to having reached retirement age.
A little about Shen:
- Shen is one of China’s most prominent female politicians.
- She is the only current female provincial Party secretary and only the third woman to head a province since 1978.
- Shen belongs to the Bai minority and has spent her entire career in her native Guizhou, including as head of the provincial propaganda department and of the political and legal affairs commission.
Shen has lots of friends in high places.
In her 13-year stint on the Guizhou Party Standing Committee, Shen served with many current top leaders, including:
- Politburo Standing Committee member Li Zhanshu
- Politburo member Chen Min’er
- State Councilor and Minister of Public Security Zhao Kezhi
- Hebei Party secretary Wang Xiaodong
Get smart: Since 2002, the Politburo has always included at least one woman. If tradition holds, Shen would be the frontrunner to take that slot in 2022 – most likely serving as a vice premier or state councilor.