driving the day
1. A regulatory hurricane
On Friday, the Politburo held its penultimate meeting of 2020.
Some context: Traditionally, this is the meeting where the body discusses economic work priorities for the next year – before the Party holds its annual Central Economic Work Conference in late December.
Spoiler alert: The 2021 economic agenda laid out by the Politburo closely maps onto the recommendations for the 14th Five-Year Plan that were offered at the Fifth Plenum in October.
Two themes stand out in particular:
- In addition to supply-side structural reform (SSSR), the Politburo is now calling for demand-side reform to reduce income inequality, improve logistics, and boost consumption.
- The Politburo is also calling for “strengthened antitrust efforts and the prevention of the disorderly expansion of capital.”
That second one is especially interesting:
- It’s not often that the Party calls directly for stronger antitrust measures.
Apparently, regulators got the message:
- On Monday morning, China’s anti-monopoly watchdog announced that Alibaba would be fined for failing to clear its equity acquisitions in three companies with the regulator earlier this year.
Get smart: Calls for demand-side reform are not new, but raising these efforts to the same level as SSSR will help to focus government efforts.
Get smarter: Tech companies can expect to face a regulatory hurricane in 2021.
2. The Politburo’s Party-building powwow
The economy wasn’t the only thing the Politburo discussed on Friday (see previous entry).
Xi Jinping made time to talk about his favorite topic: Party building (Xinhua).
- The meeting called on the Party’s discipline enforcement commission and state supervisory commission to push officials harder on implementing the Party’s decisions and policies.
And the anti-corruption campaign ain’t going nowhere, with Xi urging:
- “Efforts…to ensure officials ‘do not dare to be, are not able to be, and do not want to be corrupt’.”
The Politburo also deliberated a set of work rules for elections of local Party organizations, including:
- Continued efforts to encourage intra-Party democracy
- Promoting the Party’s democratic centralism
- Improving effective participation by Party members
- Respecting the democratic rights of Party members
Some context: Back in July, the Party published a set of rules governing the election of local-level Party organizations (see July 21 Tip Sheet).
By the numbers: 70% of all existing Party rules have been revised or formulated during Xi’s tenure.
Get smart: With over 80 million members, creating and enforcing a set of coherent rules for the Party is no mean feat.
Get smarter: Xi sees Party-building work as key to tightening his grip on power.
3. Ten commandments, national security edition
Hey, where are you going? There’s even more Politburo debriefing fun to be had!
As usual, the Politburo held a study session after its meeting.
This month’s topic: National security.
Some context: National security has moved up the Party’s priority list since the Fifth Plenum (see November 5 Tip Sheet).
The meeting kicked off with Yuan Peng briefing top leaders on the topic.
- Yuan is president of the China Institutes of Contemporary International Relations – a Ministry of State Security-linked think tank.
Xi Jinping then put forward ten requirements for pursuing a holistic approach to national security (Xinhua):
- Accepting the Party’s absolute leadership over national security work
- Developing an expansive security concept covering regime security, national interests, and economic security
- Prioritizing political security (aka the Party’s rule) as a top-level concern
- Mobilizing the public to help promote national security
- Placing equal emphasis on development and security
- Ensuring both traditional and non-traditional security
- Improving the state’s capacity for defusing national security risks
- Advancing international cooperation on common security concerns
- Harnessing technology to boost national security capabilities
- Building a loyal and capable national security enforcement apparatus
Get smart: The Party is increasingly concerned about foreign threats looking to destabilize its rule. This fear will inform not just national security policymaking, but all policymaking, in the coming years.
4. Xi outlines energy restructuring goals
On Saturday, Xi Jinping delivered a virtual speech laying out China’s climate-related and energy restructuring goals at the Climate Ambition Summit, hosted by the United Nations (UN).
Xi pledged that by 2030, China will (Xinhua):
- Lower carbon dioxide emissions per unit of GDP by more than 65% from 2005 levels
- Increase the share of non-fossil fuels in primary energy consumption to around 25%
- Have over 1,200 GW of total installed electricity production capacity from wind and solar power power
Some context: These promises are in addition to the targets Xi outlined in his speech to the UN General Assembly in September, where he said that China intends to achieve peak carbon before 2030 and carbon neutrality by 2060 (see October 29 Tip Sheet).
Get smart: Xi’s pledge to have 1,200 GW of installed wind and solar capacity by 2030 falls short of the expectations of China’s renewable energy industry.
- China had 440 GW of combined wind and solar capacity installed by the end of Q3 2020.
- That means only 760 GW of new capacity is needed to achieve the new target.
5. Wang Yi hedges his bets
On Friday, Foreign Minister Wang Yi took to the podium at the 2020 Symposium on the International Situation and China’s Foreign Relations in Beijing.
Wang once again called for a reset in US-China relations (MoFA 2):
- “China believes that as long as both countries adopt an objective and rational attitude, and seek greater mutual understanding and broader convergence of interests, we will surely be able to find a path of peaceful coexistence.”
More specifically, Wang thinks Beijing and Washington should:
- Reopen dialogue
- Restart cooperation
- Rebuild trust
Wang also pledged to deepen ties with Russia and Europe:
- “We will deepen China-Russia comprehensive strategic coordination, enhance bilateral strategic coordination in all areas and at all levels, and jointly build pillars for world peace and security.”
- “We will enhance strategic trust between China and Europe, build consensus on safeguarding multilateralism, upholding free trade and tackling climate change.”
Get smart: Mistrust of China runs deep in the US policy circles. The reset with Washington that Wang and other top leaders have called for simply isn’t in the cards.
Get smarter: Top policymakers understand this, and are looking to boost ties with other countries and regional blocs to counter US influence.
6. Putting a price on data
On Wednesday, the China Academy of Information and Communications Technology (CAICT) released a white paper calling for a standard framework to support the monetary valuation of data.
The problem: Since the ‘economics of data’ are ill-defined, markets and companies struggle to:
- Create accurate valuations of companies that own data
- Differentiate between the value of different types of data
- Maximize the value of existing data
CAICT’s recommendation: Policymakers should lay the legal groundwork so that data can be efficiently valued and traded, the same as any other asset (CAICT):
- “A catalogue of data assets should be created.”
- “[The Accounting Law] should [be updated to] explicitly require companies to record data assets in their accounting statements.”
Some context: Chinese policymakers see data as a key economic driver. In April, the State Council and Central Committee took the unique step of naming data as one of the core factors of production, alongside land, labor, technology, and capital (see April 10 Tip Sheet).
Get smart: These or similar recommendations are very likely to gain steam, as China is beginning a massive effort to develop and standardize a national data market.