1. Li’s low expectations
What is the deal with the growth target?
That’s the Seinfeldian question on the minds of foreign businesses in China.
Some context: The government’s GDP growth target for 2021 is “above 6%.”
- That’s well below the 8-9% growth that most economists expect out of China this year.
On Monday, Premier Li Keqiang again attempted to explain the target when he met via videolink with overseas attendees of the China Development Forum (CDF).
More context: The CDF is an annual event hosted by the State Council’s top think tank, the Development Research Center. It’s primary purpose is to enhance exchanges between the government and the foreign business community.
Li got a bit defensive:
- “In reality… [growth] could be a little higher.”
- “We are not specifying plans, we are guiding expectations.”
We’ve got some advice for Li: If you want to set expectations that growth will be higher than 6%, then set a higher target. Then you won’t have to keep explaining why you set your growth target so low.
The bottom line: The low target means that officials will not be under pressure to boost growth. That means there is a good chance that growth disappoints to the downside this year.
2. CBIRC goes all the way
It’s the most scintillating thing we can possibly imagine…
On Friday, the China Banking and Insurance Regulatory Commission (CBIRC) announced that it had fully lifted restrictions on foreign insurers’ stakes in insurance joint ventures – opening the door for full foreign ownership.
Some context: The CBIRC has been steadily lifting equity stake restrictions on foreign insurers in recent months:
- Beginning in January 2020, the regulator implemented new rules allowing foreign institutions to hold up to a 100% of their China life insurance JVs.
- At the same time, they began allowing foreign players to hold up to 51% of other types of insurance JVs, up from 50%.
But don’t celebrate just yet…there’s a pretty big caveat to this whole thing (Global Times):
- “[T]he revised regulations also included a new requirement for national security reviews.”
- “A newly added clause stated that if investment ‘affects or could affect national security, a foreign investment security review should be conducted in accordance with the law.’”
Get smart: The CBIRC’s move is broadly indicative of regulators’ new approach to foreign participation in the Chinese financial system.
- That is, open more fields to overseas investment, but keep a closer eye on what that investment does.
3. Comrades in (nuclear) arms
There’s nothing like a good Cold War-esque alliance.
On Monday, Xi Jinping sent a personal message to North Korean (DPRK) Supreme Leader Kim Jong-un.
Xi wants Kim to know he has his back (Xinhua):
- “The traditional friendship between China and DPRK is a valuable asset shared by…the two countries.”
- “China is willing to work with the DPRK and other relevant parties concerned to uphold the political settlement of the Korean Peninsula issue and maintain peace and stability on the peninsula.”
Kim – his usual cuddly self – had some warm words for Xi as well:
- “Kim said that it is the unswerving position of the [North Korean people] to strengthen and develop DPRK-China relations.”
Some context: Last week, top US officials flew to Japan and South Korea to bolster Washington’s alliances with those two countries.
- Countering threats from China and North Korea were major topics of discussion, with US Secretary of State Antony Blinken calling on Beijing to use its influence to push Pyongyang toward denuclearization.
Get smart: As Washington builds a Sino-skeptic coalition in Asia, Beijing wants to present a united front with its regional ally.
4. Xi goes back to old stomping ground
On Monday, Xi set off for a leisurely trip down memory lane – heading south to Fujian.
Some context: Fujian is the province where Xi’s career started to take off in the 1980s. He worked there for 17 years between 1985-2002, ultimately as governor.
From what we know of the trip so far, Xi’s been taking it chill with visits to (Xinhua 1):
- Wuyishan National Park
- A park dedicated to Zhu Xi, an influential Neo-Confucian historian during the Song dynasty
- A tea garden
This is rare: Xi’s wife, Peng Liyuan, came along for the trip. The two were seen floating around in a bamboo raft in the national park.
- Fun fact: Xi and Peng met and got married in Fujian. 3
Xi’s visit is not just about relaxing with the wife.
It’s also about highlighting three policy priorities:
- Enhancing environmental protection
- Increasing confidence in China’s political system
- Promoting rural revitalization
Get smart: Every official in China watches Xi to understand what their priorities should be. Expect these three issues to get more attention in the coming months.
5. China goes tit-for-tat with EU
On Monday, the EU – soon followed by the UK, US, and Canada – announced sanctions on Chinese officials and entities for human rights abuses in Xinjiang.
Why it’s a big deal: This is the first time the EU has issued sanctions on China for human rights abuses since 1989.
As expected, Beijing was not happy.
The foreign ministry called the sanctions groundless (MoFA):
- ”This move, based on nothing but lies and disinformation… severely undermines China-EU relations.”
The ministry also announced sanctions on 10 European individuals and four institutions, including:
- The European Council’s Political and Security Committee
- The Mercator Institute for China Studies in Berlin
- Dutch legislator Sjoerd Wiemer Sjoerdsma, who has called for a boycott of the 2022 Beijing Winter Olympics
- Lithuanian legislator Dovilė Šakalienė and Belgian legislator Samuel Cogolati, who introduced Xinjiang genocide bills in their respective legislatures
- German scholar Adrian Zenz, most known for his work detailing the buildout of Xinjiang’s re-education camps
Get smart: Sanctioning lawmakers and research institutes will only lead to more critiques and scrutiny of China’s handling of Xinjiang.
6. The next battle
Tip Sheet readers know that China declared victory in its battle to alleviate extreme poverty last November (see December 4 Tip Sheet).
On Monday, the Party Central Committee and the State Council published their plan of attack for the next big challenge – linking poverty alleviation efforts with the rural revitalization agenda.
The plan posits that:
- “Ending poverty is not the goal, but the beginning of a…new struggle.”
That new struggle? Revitalizing rural areas– which requires:
- Supporting development of rural industries in poor areas
- Building labor assistance programs to boost employment
- Expanding rural infrastructure and improving rural public services
Existing support for poverty alleviation should be refocused on rural development efforts, including:
- Direct national and province-level fiscal support to counties recently lifted out of poverty
- Efforts to expand rural financial services
- Incentives for teachers, doctors, and entrepreneurs to work in rural areas
Also on the agenda: Improving social security, public health, and pension programs for low-income rural populations.
Get smart: The poverty alleviation campaign has been a major political winner for Xi and the Party. They are keen to keep the momentum going.
7. Legislators to revamp HK electoral system
Mark your calendars!
The next National People’s Congress Standing Committee (NPCSC) meeting will be held on March 29-30.
- Zang Tiewei, spokesperson for the Legislative Affairs Commission of the NPCSC, announced the dates on Monday.
On the NPCSC’s agenda: Two bills amending Hong Kong’s electoral system.
Some context: The legislature wrapped up this year’s Two Sessions by adopting a decision on improving Hong Kong’s electoral system on March 11.
- The decision authorized the NPCSC to revise the annexes of Hong Kong’s Basic Law.
The bills will revise two sections of the annexes which detail:
- The election of the city’s chief executive
- The formation of Hong Kong’s Legislative Council
Zang said that the NPCSC is keen to move fast:
- ”During this year’s [Two Sessions], many lawmakers and political advisors suggested that the NPC Standing Committee initiate the amending process as soon as possible for its early completion, Zang said.”
Get smart: The decision to dismantle Hong Kong’s democracy was taken long ago. Now Beijing is keen to get the practicalities over and done with.
8. A little less conversation, a little more vaccination
In China, progress on vaccinating the population has been slow (see March 22 Tip Sheet).
Vice Premier Sun Chunlan wants to do something about it.
- On Monday, she held a national videoconference with local cadres to push for progress on mass vaccination.
Sun said mass vaccination is essential for public health – and the economic recovery.
Sun’s message to officials was unambiguous (Gov.cn):
- “Ensure that the vaccination goals and tasks are completed on schedule.”
Almost immediately, local officials started scrambling.
- Shanghai Mayor Gong Zheng immediately elevated the importance of the mass vaccination campaign, calling it “an important political task” (Shanghai Gov.cn).
Get smart: Thus far, officials have not been under much pressure to achieve high vaccination rates. That looks like it is set to change.