finance economics
1. Baby you can buy my car
The Chinese Communist Party wants you to buy more stuff.
On Tuesday, the Ministry of Commerce (MofCom) and 12 other ministries issued a notice on boosting bulk consumption.
Some context: China’s supply side has bounced back from COVID-19, but sluggish consumption is hampering the economic recovery.
MofCom wants to see upticks in consumption for the following items and services:
- Autos
- Household appliances and furniture
- Catering
The notice also called for policy support to facilitate consumption and efforts to unlock the consumption potential of rural areas.
Specific measures include:
- Encouraging cities to reduce car purchase restrictions and increase the availability of license plates
- Instituting a program for rural residents to trade in old cars for new ones
- Improving automotive infrastructure like parking lots and charging stations
- Encouraging local governments to provide subsidies for replacing old home appliances
- Setting up recycling centers for old appliances
- Encouraging catering companies to innovative with online and offline business models
- Developing logistics stations for counties and towns
- Establishing oversight mechanisms to prevent fraudulent activity in rural areas
Get smart: Expanding consumption isn’t just a post-COVID expedient, it’s a core plank of the dual-circulation strategy (DCS).
Get smarter: It’s no accident that many of these initiatives focus on the countryside. Policymakers view tapping into vast but underdeveloped rural markets as a key plank of the overall economic development strategy.
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MofCom: 商务部等12部门印发《关于提振大宗消费重点消费促进释放农村消费潜力若干措施的通知》
21st Century Biz: 商务部等十二部门：稳定和扩大汽车消费 促进家电家具家装消费
2. Rewriting economics
On Tuesday, the Ministry of Education (MoE) announced the start of applications for authors of university textbooks on “Chinese economics.”
It’s the first time that the government has looked to adapt economic theories to explain China’s economic boom.
The MoE’s goal:
- “[To] better explain the great achievements and key issues of China’s economic development, systematically go through and collect the original contributions of China’s economic theories and tell the ‘China story’ well.”
Get smart: China is signalling that it will not embrace a Western economic model.
Get smarter: The 2008 financial crisis turned many a Chinese official off of Western-style capitalism.
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MoE: 国家教材委员会办公室关于开展首批中国经济学教材申报工作的通知
politics policy
3. Let’s be friends
On Tuesday, Xinhua published a revised set of regulations for the United Front Work Department (UFWD).
Some context: The UFWD liaises with non-Party groups to make sure they are down with the CCP agenda. Such groups include businesses, religious organizations, ethnic minorities, and overseas Chinese.
More context: This is an update to trial regulations released in 2015.
Check this: The new rules give the UFWD higher standing in the Party system.
- All provincial and city level Party secretaries are now required to set up and chair United Front Leading Small Groups.
- Grassroots party cells, such as those in colleges, also need to set up a dedicated mechanism for United Front work.
Your business is the Party’s business. The rules encourage UFWD officials to:
- Understand the issues and concerns of private businesses
- Defend their rights of private businesses
- Involve private business leaders in politics
The new rules also have a new chapter on uniting the “new social class.”
- The new class includes the management and technical staff of private and foreign businesses.
Get smart: Many of the Party’s thorniest issues are closely related to United Front work, including Taiwan, Xinjiang and its relations with civil society.
The big picture: Xi Jinping wants to increase Party influence in all aspects of society.
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Xinhua: 中共中央印发《中国共产党统一战线工作条例》
4. Environment ministry issues rules for national carbon emission trading
On Tuesday, the Ministry of Ecology and Environment issued finalized rules for national carbon emissions trading scheduled to take effect next month.
Some context: China’s emissions trading market has largely stalled since 2017.
Under the new rules:
- Only major emitters with emission levels higher than 26,000 tons of CO2 per year can participate in emissions trading.
- Major emitters can use certified emissions reduction credits to offset as much as 5% of their volume.
- Certified credits could come from sources such as renewable energy carbon sinks and methane recovery projects.
It sounds more serious this time around:
- The new scheme subjects the power industry to carbon emission trading first.
- Petrochemical, chemical engineering, construction, iron and steel, nonferrous metals, paper making and civil aviation industries will follow.
Get smart: There is newfound resolve to tackle emissions following Xi Jinping’s pledge in September to reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060.
Get smarter: A revived trading market will inject extra revenue into renewable energy companies that sell certified carbon reduction credits.
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MEE: 碳排放权交易管理办法（试行）
5. COVID spikes in Hebei
We are seeing the largest local COVID-19 outbreak since early November:
- Between January 2 and 5, Hebei reported 39 confirmed cases and 78 asymptomatic cases.
- Most were in Shijiazhuang, Hebei’s capital.
Some context: Several local outbreaks have emerged in recent weeks (see Monday’s Tip Sheet).
The stakes have risen. Since Tuesday, Shijiazhuang officials have:
- Designated an entire district as high-risk
- Closed all schools
- Initiated citywide testing
- Suspended intercity buses
- Closed parts of the provincial highway
National Health Commission head Ma Xiaowei was sent to Hebei to oversee the measures. He warned (Hebei Health Commission Wechat Account):
- “The epidemic situation in Hebei is still developing and severe.”
Other experts are also pessimistic. CDC vice director Feng Zijian said (Caixin):
- “The number of patients is still increasing, indicating that the virus has spread in secret for some time.”
Get smart: Numbers reported in the next few days will give us a better idea on the scope of Hebei’s outbreak.
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The Paper: 近4天河北累计新增新冠感染者117例，昨日新增58例
Hebei Health Commission Wechat Account: 马晓伟率国家卫生健康委一行到河北指导疫情防控工作 王东峰许勤与马晓伟进行座谈交流
Gov.cn: 河北省调整相关区域疫情风险等级
Caixin: 河北三日新增59例新冠感染者 石家庄启动全市核酸检测、中小学幼儿园线下停课
Beijing Daily: 因疫情防控，河北境内多条高速禁止上道、劝返车辆