1. Xi reminds top leaders that they are communists
On Thursday, the Politburo held a study session following its monthly meeting.
The subject: Xi Jinping’s “New Development Concept.”
Some context: Xi introduced the New Development Concept in 2015 as his overall approach to economic development. He has been fleshing it out ever since.
More context: On January 11, Xi laid out his latest thinking on the New Development Concept in a speech to senior officials (see January 12 Tip Sheet).
Xi is putting the Communist back in the Communist Party of China:
- “In order to fully implement the New Development Concept, it is necessary to pay more attention to the issue of common prosperity.”
- “We must consciously and actively resolve regional disparities, urban-rural disparities, and income disparities.”
- “[We must] promote social equity and justice, and make sure that the fruits of development are more equitably shared by all people.”
Get smart: Deng Xiaoping said the Party would “let some get rich first.” Xi Jinping is saying that enough people have gotten rich, and now it’s time to share the wealth more broadly.
Get smarter: This marks a major shift in how the Party approaches the economy. But it is still unclear what it means in practice.
2. Party-state issues roadmap to build a better market
On Sunday, the Central Committee and the State Council unveiled their five-year joint action plan to build a better market system.
Some context: The Party’s top policymaking body approved the plan in November (see November 3 Tip Sheet).
It’s an ambitious plan (Xinhua):
- “The plan proposes more than 51 specific measures…[related to] the basic institutions of the market, efficient allocation of production factors in the market, market environment and quality, high-level opening-up and the oversight mechanism of the modern market system.”
The plan is meant to achieve equal protection for –and fair competition among – all businesses, calling for:
- The scrapping of regulations that discriminate against certain companies based on their ownership type
- The establishment of a feedback mechanism for when the government’s policies hinder fair competition
It also prohibits local governments from restricting investment or market access:
- Businesses will be empowered to report violations.
The plan aims to improve intellectual property rights (IPR) protection, by:
- Trialing a mechanism requiring faster government response to reports of IPR infringement
- Speeding up patent and trademark registration procedures
Get smart: This is Beijing’s plan to build a more unified and competitive domestic market.
Big picture: A better functioning domestic market will be key to Beijing’s dual circulation strategy in the coming years.
3. Ximón Bolívar
On Thursday, Xi Jinping made a call to Bolivian President Luis Arce.
Xi said that China has Bolivia’s back (Xinhua):
- “The two sides have seen close high-level exchanges, rapid expansion of economic and trade cooperation and sound coordination in multilateral affairs.”
- “China supports Bolivia in exploring a development path that fits its national conditions, and in continuously raising the ‘better life’ index of the Bolivian people, Xi said.”
He also recommended some areas for future cooperation:
- “China supports businesses…in expanding cooperation in agriculture, mining, infrastructure construction, telecommunication and other fields.”
- “The two sides should conduct close cooperation within the United Nations and other multilateral frameworks [and] jointly safeguard the legitimate rights and interests of developing countries.”
That all sounded pretty good to Arce:
- “Bolivia is ready to better synergize its development strategies with China, [and] deepen cooperation in various fields.”
Get smart: There’s a lot of mutual benefit to be had here. Bolivia and other Latin American countries have resources that China wants, and they are all too happy to sell.
Get smarter: Eight of the 15 countries that recognize Taiwan are in Latin America and the Caribbean.
- Beijing wants to show that partnership with the mainland brings some serious benefits.
4. More on Politburo’s IPR protection studies
On Monday, Qiushi, the Party’s top theoretical journal, published excerpts of Xi Jinping’s remarks at the Politburo’s study session on intellectual property rights (IPR) protection in November (see December 2 Tip Sheet).
Xi identified some problemswith the current IPR protection system, including:
- IPR protection and enforcement has fallen behind the development of new technologies.
- There is a lack of coordination between the China National Intellectual Property Administration and the courts.
- Some companies abuse IPR protection rules by taking advantage of legal loopholes.
- Chinese companies lack the capacity to protect themselves in IPR disputes overseas.
Xi said that better IPR protection is important to keeping foreign businesses happy (Qiushi):
- “Only by strictly protecting IPR can we optimize the business environment and build a higher-level [of economic opening].”
But he also has Chinese companies in mind:
- “Only by strictly protecting IPR can we effectively protect core technologies that our country has developed indigenously.”
Xi’s other big priority is safeguarding China’s technological security.
He called for:
- No sacrifice of China’s rightful interests in international IPR disputes
- The development of countermeasures in IPR-related anti-monopoly and fair competition laws
Get smart: IPR protection will be politicized as it becomes more crucial to securing China’s national security goals.
5. Li talks reports with non-Party members
On Friday, Premier Li Keqiang met with representatives from China’s eight democratic parties, personnel with non-Party affiliations, and individuals from the China Federation of Industry and Commerce.
On the agenda: The group discussed the draft government work report and the draft 14th Five-Year Plan (FYP) (2021-2025).
Li’s a big fan of this setup (Gov.cn):
- “Inviting non-Party members to make suggestions to the government work report and the 14th FYP is a major manifest of China’s system of multiparty cooperation and political consultation led by the CCP.”
The participants shared some suggestions, including on how to:
- Improve the consumption environment
- Strengthen pollution control
- Support enterprises in research and development
- Build a sound business environment and modern industrial system
Despite their non-Party affiliations, the attendees sounded a lot like a loyal Party members (Gov.cn 1):
- “In their speeches, everyone believed that the past year was extraordinary.”
- “Under the strong leadership of the CCP Central Committee with Comrade Xi Jinping as the core, the whole country has worked together to overcome difficulties and forge ahead.”
Get smart: While these meetings are indeed designed for policy input, they are primarily a forum for senior leaders to wish some non-Party members a Happy Spring Festival.
6. Meet me halfway
On Friday, Vice President Wang Qishan held a video conference with US business leaders and former officials.
His message: Can’t we all just get along?
Wang acknowledged that are were thorny issues in the bilateral relationship (Xinhua):
- “In the long run, China and the United States will still play complex games across many fields.”
But he was sanguine that there is a constructive way forward (SCMP):
- “Upholding the spirit of non-conflict and non-confrontation, mutual respect and win-win cooperation…are the keys to promoting the healthy and stable development of Sino-US relations.”
- “Although there have been low tides of friction, conflict, contradictions and differences, we also have enjoyed the profits of moving closer, which proves that China and the United States have more common interests than differences.”
Get smart: Senior leaders like Wang are under no illusions that a new US administration means a reset for fraught US-China ties, but they’re hopeful that the bilateral temperature can be lowered from its current boiling point.
Get smarter: Wang is right that the US and China have both gained from economic engagement.
- But as China’s economy has upgraded, its companies are increasingly competing with US firms – particularly in the tech space and other high value-add industries.
7. Central government tells local governments: no COVID overkill
COVID-19 outbreaks look (relatively) contained.
On January 31, China added:
- 33 confirmed cases and 10 asymptomatic cases – compared to 73 confirmed cases and 5 asymptomatic cases reported the day before
Now Beijing has something else to worry about…
On Sunday, the central government criticized localities for “overkill” on epidemic control efforts (Gov.cn):
- “Taking a one-size-fit-all approach is lazy administration and a waste of public resources.”
Specifically, local officials should stop:
- Arbitrarily prohibiting people from returning to their hometowns
- Quarantining or testing people beyond the scope of central government requirements
Still, there’s good news on COVID-19 containment efforts:
First, it seems people are limiting their Chinese New Year (CNY) travel:
- Over the weekend, the number of railway passengers was down 75% relative to recent years.
Second, more people are getting vaccinated:
- As of January 31, China had administered 24 million doses of COVID-19 vaccines, 1.3 million more than on January 26.
Get smart: The central government is balancing COVID containment with the need to allow Chinese New Year travel.
- One wrong move in either direction hits both the economy and public satisfaction.
Get smarter: The central government wants local governments to take the same measured approach, but they’re not all up to the task.