1. Guangdong tightens travel restrictions to stifle outbreak
The COVID-19 outbreak that was first detected in Guangdong province in late May is showing no sign of receding.
The deets: Since last Monday, Guangdong authorities have reported a total of 68 new domestically transmitted confirmed cases and 23 asymptomatic cases.
- The vast majority of these cases were discovered in Guangzhou – including 61 confirmed cases and 19 asymptomatic cases.
- The cities of Shenzhen, Foshan, and Zhanjiang have also found new infections.
To stifle the outbreak, some records are being attempted:
- Guangzhou, a city of 18 million people, is planning to test everyone within three days in order to identify any remaining asymptomatic carriers.
- That makes this the shortest timeline to test the highest number of people since China started fighting COVID-19.
That’s not all: Guangzhou has also instituted stricter lockdown measures to prevent potential COVID-19 carriers from spreading the virus to other regions.
- Beginning Monday, travelers must show a negative COVID-19 test from the past 48 hours in order to leave Guangzhou.
- That threshold was tightened from a 72 hour testing window mandated a week ago (see May 31 Tip Sheet).
Guangzhou’s neighboring city, Foshan, followed suit and imposed similar restrictions.
Get smart: Guangdong is China’s most populous province with the highest GDP output. If lockdown measures start to impact local production, it will have a ripple effect on China’s broader economy.
2. The Ministry of Finance wants your land sales revenue
Beijing just snatched the purse strings.
On June 4, the Ministry of Finance and several ministries issued a notice ordering four kinds of non-tax revenues to be collected by central tax authorities.
- Seven regions, including Shanghai and Zhejiang, will pilot the measures starting July 1, with a nationwide rollout planned for January 1, 2022.
The four nontax revenues are from:
- Land sales
- Sea area utilization
- Uninhabited sea island utilization
Land sales caught our eye in particular because this revenue is critical to local government budgets:
- Land sales generated RMB 8.4 trillion for local governments in 2020.
The notice insists it’s only a change in who will collect the money:
- The central government will still transfer the entire sum back to local governments.
- But the new process adds a layer of oversight and reduces flexibility for local governments.
Get smart: Claiming the power to collect and disburse local governments’ nontax revenues hugely expands Beijing’s influence.
Get smarter: It also ensures that local governments are not sneakily inflating assets and worsening debt levels.
3. Han Zheng wants more and cheaper pills
On Friday, Executive Vice Premier Han Zheng chaired a symposium on the government’s bulk procurement of drugs.
Some context: Since 2019, the central government has completed four rounds of bulk drug procurements, which helped reduce the average price of drugs by more than 50% (see January 18 Tip Sheet).
The symposium was attended by:
- Representatives from public hospitals and pharmaceutical companies
- Healthcare experts
Han was so happy with the bulk procurement efforts so far that he called on the National Healthcare Security Administration (NHSA) to expand the program (Gov.cn):
- “[Han] emphasized [the need] to cover more drugs…in the scope of procurement.”
More context: The NHSA has already started the fifth round of bulk drug procurement, in which high value medical equipment is also included.
But one big question remains: Will these cheaper drugs have the same effectiveness as their more expensive counterparts?
According to a recent study by the NHSA (China Pharmaceutical News):
- Yes they do.
But just to make sure, Han also called on the government to do more to ensure the drugs’ efficiency and quality.
Get smart: Getting millions of people better access to good and affordable drugs is a major quality-of-life issue in a rapidly aging China.
4. Graveyard shift
On Thursday, Foreign Minister Wang Yi held the fourth session of the China-Afghanistan-Pakistan Trilateral Foreign Ministers’ Dialogue with his respective counterparts.
- The dialogue was initiated in 2017.
The timing is interesting: The US officially began withdrawing troops from Afghanistan on May 1.
Wang offered a few suggestions for navigating the post-occupation era, including:
- Adhering to the principle of an Afghan-led future
- Supporting negotiations with the Taliban
- Assisting an orderly withdrawal of US troops
During the meeting, Wang was up front about his concerns over “war” and “chaos” in the wake of Washington’s exit.
- A May 8 bomb attack in Kabul that killed 68 people underlined the risk of deterioration.
But not to worry: China has already positioned itself to deal with this challenge.
- Beijing engages in security patrols inside the Wakhan Corridor, near Xinjiang.
- It has also quietly held meetings with the Taliban in support of reconciliation.
However, China is well aware of Afghanistan’s reputation as a “graveyard of empires.”
- And Beijing has therefore indicated its strong preference for a multilateral approach to Afghan security.
Get smart: While cooperation on natural resources and an eventual BRI extension could be in the cards, such concerns are firmly secondary for Beijing to guaranteeing stability.
Get smarter: China is not necessarily stoked about this. But has accepted its role in preventing the worst possible post-occupation outcome.
5. Beijing wants more emissions data
Beijing wants more data on companies’ carbon emissions.
On Friday, People’s Bank of China (PBoC) Governor Yi Gang said that China aims to make carbon emissions disclosures by companies compulsory.
Speaking at an event hosted by the Bank for International Settlements, Yi said (Bloomberg):
- “Our goal is to make a uniformed disclosure standard, and in the future, we will go in the direction of mandatory disclosure of climate-related information.”
Yi also said the PBoC will:
- Assess the impact that the economy’s transition to green energy will have on inflation
- Require some commercial banks and listed companies to make emissions disclosures first, on a trial basis
Meanwhile, the Ministry of Ecology and Environment is now requiring local governments to consider CO2 emissions as part of environmental impact assessments, per a new guideline published May 30.
- The guideline requires local authorities to start considering emissions when reviewing projects by energy- and emissions-intensive sectors like petrochemicals and chemical engineering.
- Local authorities must also consider emissions when assessing the environmental impact of industrial parks.
Get smart: Beijing can’t control what it doesn’t measure. Multi-pronged efforts to capture data on companies’ emissions is a key first step toward bringing emissions down.
Get smarter: The PBoC is positioning itself at the center of emission-reduction efforts.
agriculture and rural affairs
6. Black gold
On Friday, Vice Premier Hu Chunhua traveled to Suihua – a small city in Heilongjiang province – to attend a meeting about dirt.
- Yup, you read that right.
Q: What kind of dirt could be important enough to inspire a trip by a vice premier, you ask?
A: Black, or chernozem soil – a rare and highly fertile soil type that is ideal for growing crops, but which covers less than two percent of the world’s arable land.
Hu explained that (Gov.cn):
- “Black soil is the ‘giant panda of arable land.’”
- “[It] plays an irreplaceable role in guaranteeing food security, which is of highest national priority.”
Then, Hu offered some fairly technical recommendations for protecting the soil, like:
- Better managing erosion
- Practicing conservation tillage
This caught our eye: Hu told localities to do a better job of managing chernozem farmland, because it will be included in national evaluations of local cadres’ performance on ensuring food security.
Get smart: Under Xi Jinping, Beijing has increasingly prioritized food production capacity – protecting farmland, reducing post-harvest losses, and expanding logistics systems – instead of pushing for maximum yields.
Get smarter: Burning through limited soil and water resources to hit food production targets only makes sense during a crisis.