driving the day
1. Bu yong keqi
On Friday, Xi Jinping spoke via video link at the G20 Global Health Summit in Rome.
His theme: China’s contribution to the fight against COVID-19 (Xinhua):
- “China has received support and help from many countries, and China has also carried out large-scale global humanitarian action.”
The aforementioned humanitarian action included China’s donation of the following to countries in need:
- 300 million vaccine doses
- 280 billion masks and 3.4 billion hazmat suits
- 4 billion test kits
And Xi said there’s more where that came from, pledging USD 3 billion in COVID-related aid for developing countries over the next three years.
The big guy also admonished the rest of the G20 to play its part (Xinhua):
- “G20 members need to adopt responsible macroeconomic policies…and give continued support to developing countries.”
And to quit it with the politics:
- “We should abandon ‘vaccine nationalism’…and enhance the accessibility and affordability [of the vaccine] for developing countries.”
Get smart: China’s COVID diplomacy is a big deal for under-resourced developing countries.
Didja catch it?: For the past several months, Chinese policymakers have been worried about inflation caused by loose global monetary policy in the wake of COVID-19.
- The “responsible macroeconomic policy” line was a plea to loosey-goosey central banks worldwide, particularly the Fed, not to overdo it.
politics & policy
2. Knowledge is (market) power
On Friday, Premier Li Keqiang delivered instructions to the National Teleconference on Combating Intellectual Property Rights (IPR) Infringement and Counterfeiting.
Specifically, Li called for:
- A broader focus on IPR across the industrial value chain
- Increased cooperation between law enforcement and the justice system on IPR issues
- Deeper international IPR cooperation
In an address to the conference, State Councilor Wang Yong concurred with Li’s prescription (Gov.cn 2):
- “Wang urged more IPR protection and intensified punishment on IPR infringement and counterfeits to meet the requirements [of] building the new development paradigm and boosting high-quality growth.”
Some context: Big changes are already in the works re: IPR.
- All subsidies and incentives for trademark and patent applications are set to be eliminated by the end of June in a bid to cut down on worthless or low-value add patents (see April 28 Tip Sheet).
Get smart: For Chinese leaders, boosting IPR protection used to be about assuring foreign companies that their rights and interests would be protected.
- While that’s still a concern, China now has quite a lot of its own cool IP that it wants to protect.
Get smarter: A robust IPR regime is crucial as China’s economy moves up the value chain.
3. Much stability, such crackdown, wow
On Friday, Vice Premier Liu He – China’s top economic policymaker – chaired a meeting of the Financial Stability and Development Committee (FSDC).
Some context: The FSDC was created in July 2017 and helps to coordinate financial and economic policy among various regulators.
The meeting repeated a lot of familiar talking points about shoring up China’s financial stability, but the big headline is that the meeting doubled down on Beijing’s campaign to bring cryptocurrency to heel (Gov.cn)
- “[We must] crack down on Bitcoin mining and trading, and resolutely prevent the transmission of individual risks to the social field.”
More context: Last week, the China Banking Association and two other industry associations banned banks and payments companies from offering crypto-related services.
Already depressed crypto prices tumbled further on the news (Reuters):
- “Bitcoin prices fell sharply again on the news and are on course for weekly losses of more than 15%.”
Get smart: The recent bull run on cryptocurrencies has prompted stability-obsessed regulators to nip this particular set of risks in the bud.
Get smarter: We expect regulators to continue to focus their efforts on bringing fintech risks squarely under control.
4. Survivor: S&T Policy Edition
On Friday, Xi Jinping chaired a meeting of the Central Committee for Comprehensively Deepening Reform (CCCDR).
Some context: The CCCDR was set up during the massive government and Party restructuring in March 2018. It’s the Party’s most important policymaking body.
Xi’s goal: Re-re-re-doubling efforts to spark sci-tech innovation.
Xi emphasized that to achieve the all-important goal of S&T self-reliance, it is crucial to develop a rigorous framework for evaluating S&T achievements.
The following key questions need to be answered:
- What to evaluate?
- Who will evaluate?
- How to evaluate?
- How to use the S&T results?
More context: This is a component of a larger S&T reform project spearheaded by the Ministry of Science and Technology (MOST) (see the May 11 Tip Sheet).
- The project revolves around developing targets, milestones, and timelines for scientific and technological achievement.
- The idea is to reward high-performers, and kick the failures off the island.
Get smart: China has long struggled to find the right mix of planning, funding, and talent to kickstart scientific discoveries.
- This evaluation scheme aims to better perfect the recipe.
What to watch: The system as a whole will likely be codified in the forthcoming Medium and Long Term Science and Technology Development Plan (2021-2035).
5. CCCDR keeps on pushing health care
Friday’s meeting of the Central Committee for Comprehensively Deepening Reform (CCCDR) had more than just sci-tech development on the agenda (see previous entry).
The CCCDR also reviewed and approved several policy documents, including on:
- Relieving the burdens on students in compulsory education (for more on the market fallout on this front, check out today’s China Markets Dispatch)
- Improving the compensation system for ecological protection
- Strengthening the cultural heritage protection in urban and rural development
And this caught our eye: The meeting approved a pilot program for pricing reforms in medical services.
Some context: Healthcare has been high on the CCCDR’s agenda of late.
- At the group’s last meeting back in February, it pushed for the high quality development of public hospitals and pharmaceutical sector supervision (see February 22 Tip Sheet).
The meeting readout pretty much spelled out the reason why (Gov.cn):
- “The meeting pointed out that the price of medical services is the most straightforward and real issue of concern for the people.”
Get smart: Focusing on issues close to the heart of the average citizen will help boost enthusiasm for the Party – in all its endeavors.
The bigger picture: Getting millions of people better access to affordable healthcare is a major quality-of-life issue in a rapidly aging China.
6. RIP YLP
Tributes are flowing for agronomist Yuan Longping following his death on Saturday.
Yuan – known as the “father of hybrid rice” – is a household name in China.
- He developed the world’s first hybrid rice varieties in the 1970s.
- A fifth of the rice grown globally is hybrid rice, meaning that Yuan’s breakthroughs have supported a huge number of lives and livelihoods worldwide.
- He received the World Food Prize in 2004 for his contribution to global food security.
China is mourning his death in a big way:
- A rare and spontaneous outpouring of public grief was visible across Chinese social media on Saturday.
- State media followed – with Xinhua calling to fly the flag at half-mast as a tribute.
Even the big man himself paid tribute (Xinhua):
- “ Xi Jinping lauded comrade Yuan Longping’s contribution to China’s food security.”
- “Our best memorial to [Yuan] is to learn from him.”
Get smart: With food security and innovation at the top of the national priority list, celebrating Yuan as a national hero is also politically expedient.
Get smarter: Yuan himself was largely apolitical – and he wanted politics to stay out of science.
- Some of his views have been sanitized in the official coverage of his death.
7. Policymakers leave renewable energy subsidy deficit unsolved
On Thursday, the National Energy Administration (NEA) released the finalized version of the 2021 wind and solar power development plan.
- Under the plan, the central government will stop subsidizing most renewable energy projects this year – except for household solar projects.
Some context: China began promising subsidies for renewable energy production back in 2006.
- Since then, the government has largely failed to deliver on its promises.
- By December 2019, the national renewables subsidy deficit exceeded RMB 300 billion (see October 22 Tip Sheet).
The big news is what’s not in the finalized development plan – namely, a subsidy trade-in program, which was outlined in an earlier version of the plan leaked in March.
Under the subsidy trade-in program:
- Existing renewable energy projects experiencing subsidy delays could “voluntarily forego” owed subsidy payments in exchange for priority approval of new renewable energy power production capacity in the same region.
After enormous industry pushback, the finalized plan removed all references to the program.
Get smart: In case you didn’t know, the Chinese government is susceptible to lobbying and industry pressure.
Get smarter: China’s renewable subsidy deficit remains a fraught issue despite several attempts by policymakers to resolve it.
- Renewable energy generators don’t want to give up the subsidy money they were promised.