driving the day
1. Xi promises coal cap
On Thursday, Xi Jinping gave a speech – via videolink – to the Leaders Summit on Climate, hosted by US President Joe Biden.
That Xi was there at all was news in and of itself.
- Xi refused to confirm his participation until the day before the summit.
Xi made a big announcement: He said that China would use less coal.
Pretty huge, right?
- Not really.
Xi said that China won’t reach peak coal until 2025 (Xinhua 2):
- “China will strictly control coal-fired power generation projects, and strictly limit the increase in coal consumption over the 14th Five-Year Plan period [2020-2025] and phase it down in the 15th Five-Year Plan period.”
Nevertheless, this is the first time that the big man has laid out a concrete timeline for peak coal use.
Get smart: Although not terribly ambitious, Xi’s pledge should be understood as the absolute minimum that China will do on this front. Peak coal in 2025 should be seen as a floor – not a ceiling – for expectations.
2. China’s universities are Party schools
Remember how much fun college was?
You know what would have made it even better?
More study of Xi Jinping Thought, obvs.
That’s what the Party thinks, anyway. On Thursday, the Party issued revised rules governing Party groups in universities.
Some context: These rules were first issued in 1996 and then revised in 2010.
Guess who was in charge of the 2010 revisions?
Xi. Jin. Ping.
- At the time, Xi was head of the Party’s leading small group on Party-building.
If Xi oversaw the 2010 revisions, why did he revise the rules again this year?
Simple. Now that he’s the Party’s head honcho, he needs to make sure that university Party groups are down with his thinking.
Here’s a typical addition to the new rules (CPC People):
- “Promote Xi Jinping Thought on Socialism with Chinese Characteristics in the New Era to enter teaching materials, enter classrooms, and enter brains.”
The bigger picture: Xi has been tightening his grip over universities – and the education system more broadly. He wants to make sure that universities cultivate committee comrades, not foster freethinking firebrands.
3. I’m just a bill, yes I’m only a bill, and I’m getting feedback that’s kinda shrill
Of all China’s many accomplishments, this might be the most momentous:
- It’s created consensus in Washington DC.
A bipartisan bill – the Strategic Competition Act of 2021 – is now up for consideration in the US Senate.
- The bill aims to bolster Washington’s ability to compete with Beijing in the geopolitical and economic spheres and to punish China over human rights issues.
The bill is not going down well in Beijing.
On Thursday, Foreign Affairs Committee of the National People’s Congress spokesperson You Wenze offered some withering criticism (The Paper):
- “[T]he bill is full of Cold War thinking and ideological bias, wantonly misinterprets and slanders China’s development strategy and domestic and foreign policies, [and] grossly interferes in China’s internal affairs.”
According to You, the US has no reason to be so upset:
- “China has always advocated building a Sino-US relationship of no conflict, no confrontation, mutual respect and win-win cooperation, while firmly safeguarding national sovereignty, security and development interests.”
- “We strongly urge the US Congress to…stop deliberating and promoting the bill.”
Get smart: Getting “tough on China” is just about the only thing that US Republicans and Democrats agree on.
Get smarter: Despite calls for improved ties, Beijing knows that a long period of intense competition with the US is now inevitable.
4. Locking the revolving door
A growing number of Chinese officials are going to work for big tech companies.
- On Wednesday, the Financial Times reported a list including many former anti-monopoly regulators.
The “revolving door” between regulators and corporations is fairly common in the US and Europe.
It’s now a growing trend in China (FT):
- Over 4,8000 executives and board directors at China’s listed companies had government work experience as of 2019.
- That’s up from just 99 two decades ago.
The Party’s anti-corruption watchdog (CCDI) is already on high alert.
In early April, the CCDI promised to lock the revolving door between anti-monopoly officials and big tech companies by (CCDI):
- “Refining rules and regulations for former SAMR employees being hired by big internet companies.”
- “Severely punishing antitrust law enforcement personnel should they collude with companies.”
Get smarter: With CCDI on the prowl, antitrust officials will be extremely cautious in engaging with tech companies.
- It’s another ominous sign for big tech.
5. It’s not you, it’s me
The hits just keep coming for Ant Group.
The latest: Investments in Yu’e Bao – Ant’s money market fund – have fallen to a more than four year low.
Some context: Earlier this month, we told you that regulators had put forward a list of demands for Ant Group’s restructuring (see April 13 China Markets Dispatch).
- Among other stipulations, the regulators required Ant Group to reduce the size of Yu’e Bao.
Ant had little choice but to grin and bear it (FT):
- “Funds invested in Ant’s flagship Yu’e Bao fund fell 18 per cent in the first three months of the year to Rmb972bn ($150bn) as the group pushed users to switch to other providers’ funds.”
- “Alipay users said they had recently received notifications encouraging them to shift their savings elsewhere.”
Ant even stepped in to help users seek greener pastures:
- “Constance Zhou, a 28-year-old law firm employee, said she transferred Rmb100,000 at the end of January after receiving an in-app notification that highlighted higher interest rates with another fund.”
Oof. That’s gotta hurt.
Get smart: Regulators have told Ant in no uncertain terms that total obedience and complete restructuring is non-negotiable.