Moving targets

finance economics

1. Legislature pushes for new economic targets

Get excited!

The Two Sessions – China’s most important annual political gathering – kicks off on March 4.

This year’s meeting is especially worth watching as the NPC, China’s legislature, will approve the 14th Five-Year-Plan (FYP), which will set the country’s development targets through 2025.

On Thursday, Yin Zhongqin, deputy director of the NPC’s Financial and Economic Affairs Committee, published an article requiring the legislature to review the government’s 14th FYP through the lens of the new development concept (NDC).

Some context: Xi Jinping introduced the NDC in 2015 as his overall approach to economic development. It has five components:

Innovative development
Coordinated development
Green development
Open development
Shared development

More context: Xi gave the NDC a further push in January when he made it the focus of his annual address to ministerial-level officials (see January 12 Tip Sheet).

Now Yin says that the government needs to change its economic targetsto better reflect the NDC.

Specifically, he proposed several benchmarks, including (NPC):

Total factor productivity
Input-output ratio
Land utilization ratio
Energy utilization ratio
Government debt ratio
Gini coefficient
Engel’s coefficient

Get smart: Policymakers are fundamentally rethinking China’s growth model.

Get smarter: This debate over targets bears close watching, as such targets have an outsized effect on how policy is formulated and implemented.

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politics policy

2. Fly me to the moon (and back)

On Monday, Xi Jinping and his six Politburo Standing Committee colleagues met with scientists and engineers involved in China’s Chang’e 5 lunar exploration mission.

Some context: Chang’e 5 (named after the moon goddess Chang’e) was China’s fifth lunar exploration mission. The Change’e 5 spacecraft left Earth on November 23 and returned to Earth on December 16.

More context: Chang’e 5 was a big success. It returned with samples from the moon, making China only the third country – after the US and Russia – to collect and return samples from the moon.

Xi was all smiles (Xinhua 2):

“[The mission] is another significant achievement in overcoming difficulties by employing the advantages of the new system of pooling national resources and strengths.”

Pay attention: The “the new system of pooling national resources and strengths” is a big deal. It’s Xi’s effort to mobilize the entire country to develop core technologies.

Get smart: The Chinese state is hellbent on developing self-sufficiency in key technologies.

What to watch: The next five-year plan will be unveiled next month. It will designate which technologies will get government support.

3. MARA officials discuss seed sector overhaul

On Monday, officials from the Ministry of Agriculture and Rural Affairs (MARA) gave us some more context on the No. 1 Document.

ICYMI: We gave you a quick run-down of the Party Central Committee’s No. 1 Document, which typically focuses on rural development, in yesterday’s edition (see yesterday’s Tip Sheet).

MARA minister Tang Renjian kicked things off, highlighting the importance of food security:

“We must not take the issue of food security lightly for even a moment.”

Then, Zhang Taolin, MARA vice minister, turned his attention to the seed sector, where MARA plans to focus on:

Preserving agricultural genetic resources
Supporting independent innovation and addressing chokepoints
Supporting domestic seed companies to become more competitive
Better protecting seed IP and strengthening market supervision

Some context: Supporting the seed sector made the agenda of the Central Economic Work Conference in December (see January 4 Tip Sheet)

Get smart: China’s imports of corn, wheat, and soybeans all hit record highs in 2020. It’s unlikely seed sector reforms will make a dent in China’s demand for these staples.

Get smarter: Top policymakers’ recent emphasis on the seed sector is widely viewed as a signal that more GMO crops may finally be approved for planting on China’s farms.

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4. State Council goes green

On Monday, the State Council released guidelines on how to build a green and low-carbon economy.

The goal: To make every part of the economy green, from planning and investment to production, logistics, and consumption.

So, you know, no biggie.

Some context: The Central Committee for Comprehensively Deepening Reform approved the guidelines on December 30.

The guidelines focus specifically on achieving breakthrough results in:

Energy conservation
Environmental protection
Clean production
Clean energy

The guidelines also push for efforts to:

Promote clean production and implement mandatory clean production audits
Control the export of highly polluting and energy-intensive products
Promote green procurement
Encourage local governments to provide subsidies and perks to drive green consumption
Promote wind and solar power
Limit newly installed coal power capacity
Accelerate the construction and interconnection of natural gas infrastructure

Coordinating all of this: The National Development and Reform Commission.

Unfortunately, targets were not spelled out in detail (Gov.cn):

“By 2025, the industrial, energy, and transportation structures will be significantly optimized, the proportion of green industries will increase significantly, and the quality of green infrastructure will continue to increase.”

Get smart: Without clearer targets, it’s hard to tell what kind of impact these measures will have.

5. Nice (multi)lats, bro

On Sunday, the foreign ministry published an article by China’s top diplomat Yang Jiechi.

Yang’s message: Multilateralism is the way forward.

Yang said that multilateralism is under attack (MoFA):

“In recent years, certain countries attempted to put unilateralism and bullying practices above the basic norms of international relations, including the norms of sovereign equality, peaceful resolution of disputes and non-interference in internal affairs.”

Whoever could that be about?

Yang urged the international community to keep the faith:

“[The] principles of the UN Charter remain the greatest consensus of the international community.”
“For the international community, cooperation is the most powerful weapon, and the path of multilateralism is the only right choice.”

After highlighting some of China’s contributions to the global community, Yang pledged his country to the path of multilateralism:

“China will continue to be a builder of world peace, a contributor to global development, and a defender of the international order.”

Get smart: None of this is new. Over the past several years, Chinese leaders have positioned themselves as staunch advocates of multilateralism.

Get smarter: A major goal of Chinese diplomacy is to increase the country’s influence in multilateral institutions to make them more supportive of Chinese prerogatives.

6. Xia Baolong propose Hong Kong electoral system overhaul

On Monday, Xia Baolong, director of the State Council’s Hong Kong and Macao Affairs Office, gave a speech on how to improve the “one country, two systems” model in Hong Kong.

His solution: Reforming the city’s electoral system.

Xia urged system-wide adherence to five principles:

Acting in strict accordance with the constitution and the Basic Law
Respecting the central leadership in Beijing
Making sure the electoral system is in line with the actual situation in Hong Kong
Implementing the administrative leadership system with the chief executive at the core
Adhering to the “patriots govern Hong Kong” principle

Clarifying that last point, Xia stressed (Xinhua):

“[We must] ensure that the members of Hong Kong’s executive, legislative, and judicial organs, and the people in charge of important statutory bodies, are all real patriots.”
“Under no circumstances shall important posts be held by anti-China elements.”

Get smart: Making sure that Hong Kong is governed by a correctly-minded crowd has been a top priority for the central leadership since the city’s anti-government protests of 2019.

What to watch: When China’s legislature and political consultative body meets next month for its annual Two Sessions, Hong Kong electoral reform looks likely to be on the agenda.

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