1. Can’t we all just get along?
Is it just us, or does it seem like the world is going to hell in a handbasket these days?
Apparently Xi Jinping agrees with us.
Here’s Xi at Tuesday’s CPC and World Political Parties Summit:
- “Humanity is once again at a historic crossroads.”
- “Will the future be about hostile confrontation or mutual respect?”
Xi said everything can work out fine, as long as we all get along.
What that means:
- “[We need to understand] with a broad mind the values of different civilisations.”
Translation: The West should stop harping on about human rights and electoral democracy.
Xi said that the current international order needs a redo (Xinhua 1):
- “International rules should be based on universally recognized norms, rather than formulated by the few.“
- “Cooperation between countries should be aimed at serving all mankind, rather than seeking hegemony through group politics.”
Get smart: Xi is more than happy to cooperate with the rest of the world – as long as it’s on China’s terms.
The big picture: Capitalist democracies have largely written the rules of the current global order. Xi is intent on changing that.
2. Ying-Zhong Xiangchanghui
On Tuesday, Premier Li Keqiang held a virtual meeting with more than 30 UK business leaders organized by the China-Britain Business Council (CBBC).
- Foreign Minister Wang Yi and head of the China’s macro planner He Lifeng were also there.
Manel alert: As far as we can tell, all of the conference’s 30+ UK attendees were male.
Heedless of the gender imbalance, Li hailed the healthy development Sino-British economic ties (CBBC):
- “UK-China trade has increased against all odds. Investment is also on the rise.”
- “These trends show that between China and the UK there are not just shared interests, but space for growth.”
Li also intimated that harmonious relations were good for business:
- “A sound and steady UK-China relationship is also critical for the growth of trade and investment between our two countries.”
To that end, Li expressed hope that Britain would (Gov.cn 2):
- “Provide a fair, just and non-discriminatory business environment for Chinese enterprises investing and doing business in the UK.”
Get smart: This is the second time since February that Li has personally addressed a group of UK business leaders.
- That’s a clear indication that Beijing wants to nail down economic ties with London even as bilateral ties grow more brittle.
3. Foreign Ministry presses US on Trump-era student visa revocations
At a Ministry of Foreign Affairs (MoFA) press conference on Tuesday, spokesperson Zhao Lijian took on a US move to revoke student visas for thousands of Chinese graduate students.
Some context: Last month, some 500 Chinese students studying in the US signed a letter condemning former President Trump’s Presidential Proclamation 10043, which remains in place under the Biden administration.
- Officially, the June 2020 proclamation authorizes visa restrictions and suspensions for graduate students currently or previously affiliated with Chinese institutions believed to support the Chinese military.
- Top US universities and the American Council on Education have also objected to the proclamation’s premise, vague language, and application to 1,000+ previously approved student visas.
Zhao’s remarks were characteristically blunt:
- “Relevant US visa restrictions carry on a poisonous legacy of the Trump administration and run counter to the US statement of ‘welcoming Chinese students.’“
- “This is nothing short of historical backpedaling.”
- “China urges the US side to correct its mistakes…”
Get smart: It’s a sticky situation.
- Plenty of US universities agree that the restrictions run counter to US interests.
- But the Biden administration has gone to great lengths to avoid looking “soft” on China, leaving nearly all of Trump’s policies in place during its ongoing review of China policy.
Get smarter: Wolf Warrior diplomacy will only make the situation worse.
- MoFA knows that these strident callouts would make a US reversal look like caving.
- Given that, the Ministry seems more interested in a quick rhetorical “win” than substantive progress.
4. Beijing to tighten data security requirements for overseas listings
On Tuesday, the Party Central Committee and the State Council released high-level guidelines for cracking down on misbehavior in the securities industry.
Why it matters now: This is a big, comprehensive policy doc on securities compliance, but it also touches on overseas listings – a hot topic this week.
ICYMI: The recent probe into Didi – which resulted in the app being removed from stores – was reportedly triggered by the firm’s decision to IPO in the US despite warnings from domestic regulators over cybersecurity concerns.
The listing exposed a weakness in China’s regulatory system:
- Authorities don’t have the ability to halt private companies from listing abroad – unlike domestic IPOs.
The new guidelines aim to patch that hole, by mandating:
- Revision of laws and regulations on “data security,” “cross-border data transfer,” and “classified information management”
- Revision of rules to better hold companies accountable for data security during any overseas listing process
- Stricter requirements on how companies disclose data to foreign regulators
Translation: Companies will have a new, complex data security hurdle to clear before listing abroad.
Get smart: Beijing is insecure about cybersecurity.
- It’s not clear exactly what data risks are associated with listing abroad, but it doesn’t matter – the fact that tech companies can ignore regulatory warnings makes Beijing uncomfortable.
Get smarter: This move is not meant to block overseas listings.
- US equity markets remain an important source of capital, and Beijing knows that.
The big picture: Beijing has promised to put a stop to the “disorderly expansion” of capital.
- Getting control over overseas listings is part of the effort.
5. Private messaging
Rumors are swirling.
On Tuesday, Reuters reported that Charlie Chao, chairman of Weibo – China’s Twitter equivalent – is in talks with a state-backed investor to take the Nasdaq-listed company private.
- The article citied multiple anonymous sources with “knowledge of the matter.”
- The state-backed investor was not named.
Hours later, Weibo denied the story in a statement saying delisting is not under discussion.
- Related articles were swiftly pulled from state media.
Speculation abounds: Is Weibo looking to move itself out of the firing line of China’s latest regulatory smackdown on U.S.-listed tech companies?
Some context: In recent days, multiple Chinese tech companies, including ride-hailing giant Didi Chuxing, have come under investigation for data security issues linked with recent U.S. IPOs.
- But Weibo has been publicly listed in the U.S. since way back in 2014.
Our take: Even if the delisting rumors are true, a connection to the Didi incident is unlikely.
But that doesn’t mean there’s no connection to China’s efforts to rein in big tech more broadly…
…Not least because the rumored delisting could allow Alibaba, Weibo’s largest shareholder, to divest (Reuters):
- “Three separate sources with knowledge of the matter told Reuters the plans stem from Beijing’s drive to have Alibaba Group Holding Ltd and affiliate Ant divest their media holdings to rein in their sway over Chinese public opinion.”
Get smart: Companies like Alibaba currently dominate a plethora of sectors – from ecommerce and finance to gaming.
- The state is increasingly uncomfortable with the monopolistic cross-industry reach of China’s mega-platforms.
- Regulators are especially nervous about powerful private companies controlling major media outlets.
6. Reduce, reuse, recycle
The recycling industry has a lot to look forward to in the next five years.
On Wednesday, the National Development and Reform Commission (NDRC) published its Five-Year Plan (FYP) for developing China’s circular economy.
FYI: “Circular economy” refers to reducing, reusing, and recycling.
Some context: In February, the State Council released guidelines on building a “green and low-carbon circular economy,” and put NDRC in charge of getting it done.
The plan lays out a few big targets for making the economy more resource-efficient by 2025, including:
- Increasing resource productivity by 20%
- Reducing energy intensity by 13.5%
- Reducing water intensity by 16%
The plan also sets targets for better utilizing various kinds of waste, including:
- Crop waste
- Construction waste
- Scrap steel
- Non-ferrous metals
As the plan is translated into implementation, it will impact a long list of industries.
For example, the plan calls to:
- Improve recycling of electronic products and batteries
- Ensure management of some products – like automobiles and plastics – throughout their entire lifecycle
- Make packaging in the e-commerce and delivery sector greener
Get smart: More reuse and recycling is a no-brainer. It cuts polluting emissions and reduces trade dependencies to boot.
agriculture and rural affairs
7. Farm to table
On Tuesday, Vice Premier Hu Chunhua spoke at a national conference on rural commerce held in Liaoning province.
Hu said he wants to ensure high-quality farm products are reaching customers in cities. He called to (Gov.cn):
- “Improve the efficiency and standard of agricultural product circulation, increase commercial food processing capacity, address shortcomings in cold chain logistics, and better connect agricultural products with urban markets.”
Hu also wants to improve the business environment in rural areas – in part to boost food safety and security. He instructed the gathered to:
- “Severely crack down on infringement and counterfeiting, ensure the safety of rural commercial operations and…strengthen supervision of the agricultural inputs market.”
Some context: For decades, counterfeit seeds, agrochemicals, and equipment – along with banned pesticides – have plagued rural markets.
- Over the past few months, we’ve seen a huge push to fix these issues by better linking rural market regulators with law enforcement bodies.
Get smart: Ensuring farm products reach profitable urban markets, and cleaning up the rural business environment are both critical to revitalizing the rural economy – and boosting consumption there.
Get smarter: Some 500 million Chinese still live in rural areas – expanding consumption in this massive, underserved market has big implications for the macroeconomy.