driving the day
1. ST LSG talks foundational technology
On Monday, Premier Li Keqiang chaired a meeting of the National Science and Technology Leading Small Group.
Some context: This advisory body has been around in some capacity since the 80s. The current iteration was set up in 2018, and has a powerful voice in scitech strategy and planning (see December 7, 2018 Tip Sheet).
- The group also includes Vice Premiers Han Zheng, Liu He, and Sun Chunlan as well as powerful Party cadres, military officials, and multiple ministers.
On the agenda:
- Better funding and support for basic science research
- Improving incentives and fostering innovators and researchers
- Expanding international science cooperation in parallel with domestic innovation efforts
Li waxed poetic, reminding attendees about the importance of basic science (Gov.cn):
- “You can’t build skyscrapers without a foundation.”
Not on the agenda: The forthcoming Medium and Long Term Science and Technology Development Plan (2021-2035).
More context: The last 15-year scitech plan, kicked off in 2006, will end this year – but details about the new plan are scarce.
Get smart: Basic science research and technological breakthroughs used to be aspirational. Now, top leaders view them as core to economic development and national security interests.
2. Data dump — trade
On Monday, China’s customs bureau dropped monthly trade data for November.
The headline: The total value of exports hit a record high last month, and export growth surged to the highest point since November 2018.
- Exports grew 21.1% y/y – beating expectations of 12% and up from growth of 11.4% in October.
Quick take 1 (CNBC):
- “China’s exports were supported by strong overseas demand for personal protective equipment (PPE) and electronics products for working from home, as well as seasonal Christmas demand.”
Import growth also continued, albeit a bit slower:
- Imports grew 4.5% y/y – missing expectations of 6.1% and down from growth of 4.7% in October.
- Despite the expectations miss, this was the third consecutive month of positive growth for imports.
Quick take 2: While not as eye-popping as the export number, the headline import number was still solid – showing domestic demand is on solid footing.
Get smart: A fast-appreciating exchange rate doesn’t seem to be hurting Chinese exporters.
Get smarter: Pandemic-related worries about China’s export sector were always misguided.
- Data shows that SMEs and service sector companies are hurting the most, globally.
- These aren’t the companies that import a bunch from China.
What to watch: Don’t expect this pace of export growth to continue in 2021.
3. 2035: A (Cyber)space Odyssey
On Monday, the Party Central Committee issued the first five-year segment of a 15-year plan to build a law-based society by 2035.
What it’s about: Implementing Xi Jinping Thought on the Rule of Law.
Some context: Xi has made rule by law a pillar of his governing agenda. His rule by law push has gone into overdrive after a big meeting last month (see November 18 Tip Sheet).
This jumped out at us: The plan specifically ties rule by law to internet governance.
The connection (Gov.cn):
- “Cyberspace is not a place outside the law.”
- “Social governance should be extended from the real society to cyberspace…and rule by law should be applied in cyberspace.”
Most core online regulatory areas are mentioned:
- Online services
- New technologies, e.g. artificial intelligence
- Personal information protection
- Intellectual property
- Protection of minors
- Cross-border ecommerce
- International standard setting
Get smart: Regulators have long seen the internet as a digital mirror of the physical world, and online regulation often reflects related offline rules.
Get smarter: To predict how cyberspace is likely to be regulated in any sector, look to that sector’s real-world regulatory environment.
4. Wang Yi calls for a reset
On Monday, Foreign Minister Wang Yi spoke via videolink to the US-China Business Council.
His message: Let’s get US-China relations back on track.
Some context: With the Trump administration on its way out, Beijing is guardedly hoping for a more productive and predictable relationship with incoming US President Joe Biden.
Here’s what Wang had to say (SCMP):
- “The most urgent task currently is for the two sides to work together to remove all sorts of barriers to achieve a smooth transition in China-US relations.”
- “At the same time…we need to strive to restart dialogue, return to the right track and rebuild trust in this next phase of relations.”
- “For problems that cannot be immediately resolved, we [must] manage the situation to avoid intensifying and escalating the overall situation of China-US relations.”
Wang also expressed a hope that bilateral ties would stabilize in the post-Trump era…in the shadiest way possible:
- “We expect and believe that the US’ China policy will return to objectivity and rationality sooner or later.”
Get smart: Officials like Wang have been crystal clear that the door to reconciliation with Washington remains open.
Get smarter: Bilateral ties will likely stabilize somewhat under Biden, but don’t expect to see a renaissance for Sino-American relations.
5. Liu Guiping appointed PBoC vice governor
On Monday, the State Council announced that Liu Guiping had been appointed vice governor of the People’s Bank of China (PBoC).
Some context: Liu will replace Zhu Hexin, who left the PBoC to become Party secretary of CITIC Group back in March.
A little about Liu:
- Liu hails from Hunan province.
- Liu spent the first 25 years of his career at the Agricultural Bank of China, serving variously as president of the bank’s Fujian branch and head of its Shanghai municipal branch.
- From 2014-2016, Liu was the executive vice president of China Investment Corp., China’s sovereign wealth fund.
- He served as deputy mayor of Chongqing from 2016 to 2019 where his portfolio included financial supervision.
- Most recently, Liu served as president of China Construction Bank.
Get smart: Liu is a finance industry veteran who also boasts some substantial regulatory chops. Specifically, his time in Chongqing means he has on the ground experience with financial oversight.
Get smarter: Tackling financial risk will be a major part of Liu’s new job.