driving the day
1. Going home for the holidays? Get tested.
As COVID-19 cases continue to rise, the State Council has offered some travel advice.
- China recorded 126 domestically transmitted confirmed cases and 97 asymptomatic cases.
- That’s up from the 88 new confirmed cases and 43 asymptomatic cases on Tuesday.
- The biggest jump in numbers came from Heilongjiang, which reported 41 new cases.
The outbreak has the State Council looking to limit travel to rural areas.
ICYMI: The recent COVID-19 cases have largely occurred in rural areas.
Those traveling back to their hometowns in the countryside are now required to:
- Present negative nucleic acid test results from the past seven days upon arrival
- Mostly stay home for 14 days upon arrival and monitor their health
- Take a new nucleic acid test every seven days during their stay in the village
This will further discourage traveling:
- Travelers may need to pay the nucleic acid testing fees out of pocket.
- Even those willing to pay will face difficulties in booking a test.
The Ministry of Transport (MoT) predicts reduced travel (Yicai):
- Roughly 1.7 billion trips will be made – a 40% drop from 2019.
That’s almost certainly an overestimate. The MoT made those predictions before the new restrictions were announced.
Get smart: Recent outbreaks have exposed weaknesses in rural testing and containment capabilities. Containing COVID-19 during the Chinese New Year will be a major test of the country’s epidemic control efforts.
Get smarter: This isn’t good for the economy. Travel and consumption are going to take a hit.
2. Central bank takes aim at payment companies
On Wednesday, the central bank (PBoC) issued draft rules for non-bank payment companies.
The goal: To curb monopolistic practices in the third-party payments industry.
Chinese payments giants could be broken up (Bloomberg):
- “[A]ny non-bank payment company with half of the market in online transactions or two entities with a combined two-thirds share could be subject to antitrust probes.”
- “If a monopoly is confirmed, the central bank can suggest the cabinet impose restrictive measures including breaking up the entity by its business type.”
Some context: Alipay and WeChat Pay together account for nearly 95% of China’s mobile payments by value (iResearch).
Big caveat: It’s all about how you define the market.
- If “online transactions” also include banks’ wholesale payments, then Alipay and WeChat Pay don’t qualify as monopolies.
The draft rules also stipulate that a single entity cannot control more than one non-bank payment company.
- This requirement could affect JD.com, which controls two such companies.
Get smart: No surprises here – regulators have been loud and clear that they plan to crack down on big tech for antitrust violations.
Get smarter: The antirust crusade is just getting started.
3. Perfect practice makes perfect
On Thursday, Xi Jinping presided over a meeting on preparations for the 2022 Beijing Olympic and Paralympic Games.
Some context: On Tuesday, Xi inspected several Olympic venues and spoke with athletes (see January 19 Tip Sheet).
His message: Adapt, overcome, but definitely don’t improvise (Xinhua 2):
- “Xi called on conducting the preparation work ‘with greater perfection,’ replanning and readjusting all work in accordance with new circumstances while focusing on both epidemic prevention and control and the organization of the Games.”
Specifically, Xi urged the planners to:
- Finish construction of Olympic venues on time and with an eye on reducing virus-related risks
- Ensure the games are efficiently managed and emergency response mechanisms are in place
- Communicate with the International Olympic Committee and other international sporting bodies to implement epidemic prevention and control measures
Xi reminded everyone what was at stake, calling the games:
- “An event of great significance at the outset of the 14th Five-Year Plan period.”
Get smart: Xi’s emphasis on epidemic control suggests that the games will go ahead regardless of how the rest of the world is managing COVID-19.
4. State Council reviews 14th Five-Year Plan
On Wednesday, Premier Li Keqiang chaired a State Council plenary meeting.
Top of the agenda: Reviewing key documents for the upcoming Two Sessions.
Specifically, State Council members reviewed drafts of :
- The 2021 Government Work Report
- The 14th Five-Year Plan (2021-25) outline
What’s next: The draft documents will be circulated for input from central government departments and provincial governments.
At the meeting, Li told his colleagues that a successful five years will hinge on a good start.
In 2021, Li urged officials to (Gov.cn):
- Improve epidemic prevention and control
- Maintain continuity, stability, and sustainability in macro policies
- Support the economic recovery
- Devote more resources to scientific innovation
- Expand reform and opening-up, so that enterprises can grow with confidence
Get smart: The 14th Five-Year Plan won’t be finalized until it is approved by the National People’s Congress in March. Between now and then, it will go through rounds of input and revision – with the Politburo Standing Committee getting a final say before it goes to the legislature for approval.
What to watch: Premier Li will convene experts over the next few weeks to comment on the draft.
5. China’s parting gift to the Trump administration
Early Thursday morning in Beijing, the Ministry of Foreign Affairs released its latest list of sanctions on US citizens.
Some context: The release came just minutes after the new US President Joe Biden was sworn in.
More context: In case you’ve been living under a rock, the Trump administration has sanctioned dozens of Chinese officials connected to the Hong Kong crackdowns, with the most recent sanctions announced in the past few days.
Until now, the Foreign Ministry’s response was more bark than bite – but Thursday’s list of 28 sanctionees might hurt a little.
It includes high-profile Trump China hawks, including:
- Former US Secretary of State Mike Pompeo
- Former Senior Trade Advisor Peter Navarro
- Former national security official Matt Pottinger
And, for good measure:
- Former White House Chief Strategist Steve Bannon
- No entry into mainland China, Hong Kong, or Macau.
- Companies and organizations connected to these individuals will face as-yet-unspecified restrictions in China.
Get smart: These sanctions could actually bite those who have commercial interests tied to China.
Get smarter: This is as much of a warning shot to the incoming Biden administration as it is an attempt to punish the Trumpers.
6. NPCSC gets with the new schedule
On Wednesday afternoon, China’s top legislative body – the National People’s Congress Standing Committee (NPCSC) – kicked off its January session.
Some context: The NPCSC used to hold its bi-monthly sessions on even-numbered months, but recently it has been meeting more frequently to keep up with an ambitious legislative agenda (see yesterday’s Tip Sheet).
At the meeting, ten pieces of legislation were up for review.
The legislators deliberated and planned to approve:
- A revision to the Animal Epidemic Prevention Law
- A revision to the Administrative Penalties Law
- The Coast Guard Law
The NPCSC also deliberated on seven drafts or amendments to:
- The Legal Aid Law
- The Licensed Physicians Law
- The Wetlands Protection Law
- The Family Education Law
- The Workplace Safety Law
- The Education Law
- A decision to establish a Beijing Financial Court
Get smart: Despite rumours in foreign media that an amendment to Hong Kong’s electoral system might be introduced at this session, no such bill made an appearance.
Get smarter: The session isn’t over yet, so the Hong Kong amendment could still make an appearance.