1. Gain the courage and strength to advance
On Thursday, Qiushi, the Party’s top theoretical journal, published remarks by Xi Jinping from the launch of the Party history education campaign back in February (see February 22 Tip Sheet).
Xi’s message was simple (Qiushi):
- “We review history not to seek reassurance from success…but to gain the courage and strength to advance.”
Xi explained that it’s getting harder to make progress, and challenges are mounting:
- “At present, our country’s development is facing unprecedented risks and challenges, both domestic and international, and in political, economic, cultural, and social fields, as well as those from the natural world.”
- “‘Black swans’ and ‘gray rhinos’ will emerge unexpectedly.”
- “We must get enlightenment from history.”
- “[We must] prepare to respond to changes in the external environment for a long time.”
Get smart: China’s senior officials are clear-eyed that rising geopolitical tensions are here to stay, and they are preparing for protracted confrontation with the West.
Xi also pointed out that the Party can’t rest on its laurels:
- “We must soberly recognize that our party has been in power for a long time, and party members and cadres are prone to a slack mentality.”
Get smarter: A lot of lazy China analysis suggests that because the CCP has been in power so long, it’s rule must inevitably crumble, and likely soon.
- Xi knows the history of Communist regimes and is hell bent on not repeating it.
Finally, he offered a warning: Xi said cracks in Party discipline are the biggest risks to Party rule, since they can bring down the Party from the inside.
The big picture: Holding on to power will require the Party to be flexible and pragmatic – learning from its own successes and failures is critical to achieving this aim.
2. Li Keqiang: Gig Economist
On Wednesday, Premier Li Keqiang did his thing, presiding over the State Council’s weekly executive meeting.
This week, Li returned to one of his favorite topics:
- Cutting red tape for businesses
Some of Li’s suggestions for reducing bureaucratic burdens were familiar, including:
- Reducing the number of professions requiring a government license
- Delegating the authority for issuing vocational certifications to non-governmental actors
- Digitizing the process of trademark and patent registration
- Streamlining government review procedures for businesses
- Reducing and combining port fees
But Li also ventured into new territory, supporting protections for gig economy workers (Gov.cn 2):
- “While stabilizing full-time employment, we must attach great importance to flexible employment, which holds broad prospects.”
- “Occupational injury insurance for flexible employment will be piloted, and the coverage of work injury compensation insurance extended, to safeguard the lawful rights and interests of people engaged in flexible employment.”
Get smart: As gig workers change the face of the Chinese labor market, Li and co. are eager to ensure that legal protections keep pace.
Get smarter: Provided they’re safe, side gigs can raise incomes, aid in the economic recovery, and ultimately boost consumption.
3. Snip snip, more tax cuts
Red tape wasn’t the only thing getting cut at Wednesday’s State Council meeting (see previous entry).
Premier Li Keqiang also announced preferential tax policies to support small- and micro-enterprises, and self-employed individuals.
Some context: The State Council just announced more tax benefits for companies conducting research and development last week, in a bid to spur innovation.
A few types of businesses can expect lower taxes:
- Income taxes will be halved for micro and small enterprises, and self-employed individuals that make less than RMB 1 million in annual taxable income.
- The VAT threshold for small-scale taxpayers will be raised to RMB 150,000 in monthly sales (from RMB 100,000).
- Manufacturers of transportation equipment, electrical machinery, instrumentation, medicine, and chemical fibers will now qualify for the monthly VAT credit refund policy for advanced manufacturing enterprises.
More context: Premier Li Keqiang noted these tax cuts were coming in his Government Work Report at the Two Sessions in early March.
That’s a whole lot of tax cuts: Around RMB 550 billion to be precise.
Get smart: The government is playing the long game – taking a hit now in hopes that leaving more money with these businesses will spur growth, and, eventually, more tax revenue.
4. Chemical giants mega-merge
It’s official – Sinochem and ChemChina are merging.
On Tuesday, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) announced the approval of a merger between the two state-owned chemical giants.
- There’s no name yet – but we think SinoChemChina is pretty catchy.
Some context: The merger has been quietly underway for years – it is thought to have been a precondition for approval of ChemChina’s landmark US 43 billion acquisition of Syngenta announced in 2016.
More context: The first big move toward merging the chemical giants was in 2018, when Sinochem chairman Ning Gaoning was appointed to simultaneously serve as chairman of ChemChina.
SASAC will set up a new mega-SOE to facilitate the reorganization.
- ChemChina and Sinochem will become subsidiaries of the new company.
- The entity will control well over RMB 1.5 trillion in assets.
- Some 17 publicly listed subsidiaries will be impacted by the merger.
Get smart: A merger of this size is easier said than done. It will probably be years before the dust settles.
Get smarter: Done right, integrating the diverse assets of these two companies could catalyze more efficiency – and boost indigenous innovation, a top policy priority.
5. Yin Hong ascends the Party career ladder
Gansu’s got a new Party boss, ya’ll.
- On Tuesday, the Politburo appointed former Henan governor Yin Hong as Party Secretary of the northwestern province.
Yin is taking over in Gansu from Lin Duo, who is stepping down due to having reached retirement age.
A little about Yin:
- Before his promotion to Henan governor in December 2019, Yin had spent his entire career in Shanghai.
- Yin was made an alternate member of the Party Central Committee 2017.
- Yin spent nearly five years as secretary-general of the Shanghai Party Committee (Jun 2012 – Feb 2017).
- Yin also served as deputy Party secretary of Shanghai for almost three years, making him the third-ranked official in the city (Feb 2017 – Nov 2019).
- Yin is thought to be close with Politburo Standing Committee member Han Zheng – serving as his chief-of-staff when Han was Shanghai Party secretary from 2012-2017.
Get smart: Yin’s Shanghai pedigree and relative youth mean his career prospects are bright – and this promotion makes him almost certain to accede to higher office.
- Yin is now a frontrunner for the 2027 Politburo.