driving the day
1. CAI(n) on the dotted line
On Wednesday, after seven years of wrangling, China and the European Union verbally committed to sign the Comprehensive Agreement on Investment (CAI).
A joint statement by the European Council and European Commission read:
- “The CAI…will help rebalance the trade and investment relationship between the EU and China.”
Chinese Foreign Minister Wang Yi was also bullish on the deal (SCMP):
- “This not only injects great momentum into Sino-European cooperation but is also great news for the depressed world economy.”
Stop the clock: In September, Xi Jinping and German Chancellor Angela Merkel committed to getting the deal done by the end of 2020 (see September 15 Tip Sheet).
- That means the agreement got the verbal okay with less than 48 hours to spare.
But the deal still faces a major, and potentially fatal, political hurdle (NYT):
- “A large faction in the European Parliament, which must ratify the agreement before it can take effect, opposes the accord on the grounds that it does not do enough to stop human rights abuses in China.”
Get smart: In the past, foreign governments were happy to overlook Beijing’s shady economic practices in the name of getting in on the rapidly expanding China market.
- Those days are over.
2. CEWC lays out economic tasks for 2021
The Central Economic Work Conference (CEWC) wrapped up on December 18, just as we here at Trivium went on holiday.
Some context: Each December, top leaders gather at the CEWC to hash out economic policy priorities, targets, and plans for the coming year.
This year’s top three priorities were all about minimizing external vulnerabilities, by (Xinhua):
- Strengthening strategic tech innovation. In 2021, Beijing will identify its strategic tech focuses and make a ten-year action plan for basic research.
- Securing supply chains with an emphasis on strengthening weak links.
- Boosting domestic demand, with a focus on shoring up job security, improving the social safety net, and expanding the middle class.
Policymakers also identified three other issues that need to be addressed:
- Boosting food security by improving the domestic seed industry, pushing the commercialization of GMO products, and protecting arable land.
- Bringing tech companies into line by curbing monopolies, preventing the disorderly expansion of capital in the tech industry, and better protecting consumer data privacy.
- Restructuring industry and energy consumption to make good on China’s promise to achieve peak carbon by 2030.
Get smart: It’s not often that senior policymakers single out such specific issues to tackle at the CEWC.
- This means the above three problems are top-of-mind concerns for China’s leaders.
3. Xi Jinping’s new year message
On Thursday, Xi Jinping’s New Year’s Eve speech was broadcast nationwide.
Xi began by hailing China’s efforts in the battle against COVID-19 (CGTN):
- “Facing the sudden coronavirus pandemic, we put people and their lives first.”
- “With solidarity and resilience, we wrote the epic of our fight against the pandemic.”
The big guy then professed his love for the masses:
- “Greatness is forged in the ordinary. Heroes come from the people. Every person is remarkable!”
Xi reminded everyone that an important anniversary is fast approaching:
- “2021 will see the 100th birthday of the Communist Party of China.”
Some context: 2021 is also the deadline set by the Party to transform China into a “moderately prosperous society.”
But Xi urged the country to look even further ahead – to 2049.
- That year will mark the 100th anniversary of the founding of the People’s Republic of China, when Party leadership wants to have officially developed China into a “modern socialist country.”
As Xi put it:
- “The new journey of comprehensively building a modern socialist country is about to start.”
- “The road ahead is long; striving is the only way forward.”
Get smart: The goals that the Party sets for itself are more than just symbolic milestones.
- They inform policy decisions and determine how officials allocate their time and energy.
4. Meet the new year, same as the old year
On Saturday, Foreign Minister Wang Yi sat down for a wide-ranging interview with Xinhua, in which he discussed the outlook for US-China relations in 2021.
Surprise! Time is a meaningless construct.
- Wang’s message is basically the same as it was in 2020.
Wang began by pinning Sino-American tensions squarely on the US (MoFA):
- “Fundamentally, it all comes down to the serious misconceptions of US policymakers about China.”
- “Some see China as the so-called biggest threat and their China policy based on this misperception is simply wrong.”
Even so, Wang was hopeful that better times are just around the corner:
- “We hope that the next US administration will return to a sensible approach, resume dialogue with China, restore normalcy to bilateral relations, and restart cooperation.”
He also said that the door to a productive working relationship remains open:
- “We are ready to develop with the United States a relationship based on coordination, cooperation, and stability.”
Get smart: The structural conflicts responsible for heightened tensions between Beijing and Washington are here to stay, no matter who’s in the White House.
Get smarter: Wang and other top leaders know this. Despite the rosy rhetoric, Beijing is preparing to counter increased American pressure.
5. Shot in the arm!…and you’re to blame
In recent weeks, COVID-19 has been attempting a worrying comeback in China (Xinhua):
- In December, China confirmed 104 domestically transmitted COVID-19 cases – up 76.3% from November.
Over the last two weeks, local infections have broken out sporadically in several cities, including:
- Dalian and Shenyang, Liaoning
- Heihe and Suifenhe, Heilongjiang
- Shijiazhuang and Qinghe, Hebei
- Chengdu, Sichuan
- Hangzhou, Zhejiang
- Guangzhou, Guangdong
Luckily, a new lifeline is on the way.
- On Thursday, China’s drug regulator approved one of Sinopharm’s COVID-19 vaccines for widespread domestic use.
The approved vaccine:
- Generates antibodies in 99.52% of those vaccinated
- Is 79.34% effective
- Protects against the virus for at least six months
Authorities are determined to vaccinate huge swathes of the population as quickly as possible.
- 18 companies have been ramping up vaccine production capacity.
- Officials have promised to make the vaccine free for all citizens.
The efforts have been paying off.
- In the first two days of 2021, Beijing alone vaccinated more than 73,500 people.
Get smart: Armed with a new weapon in the fight against COVID-19, officials are focusing their efforts on scaling up vaccine production and expediting the vaccine’s rollout.