1. Local governments attempt to revive vaccination campaign
China’s vaccination campaign slowed down significantly over the past several weeks.
- A daily average of 10.43 million doses were given last week, down from a daily average of 15.96 million the week before.
- That’s significantly lower than the last two weeks of June, which saw an average 20 million doses administered daily.
The slowdown in vaccination pace has authorities worried.
In the past few days, some counties and cities in Jiangxi and Zhejiang provinces put out notices subjecting – or looking to subject – unvaccinated people to certain restrictions.
- In some cases, vaccination records will be checked at shopping malls, tourist sites, public transportation, and movie theaters – unvaccinated people will be recorded, but not yet refused entry.
- Other localities forbid unvaccinated people from entering key public venues, such as government buildings, state-owned companies, schools, and hospitals.
Some additional creative restriction measures:
- Overseas travelers may not be allowed to complete the final seven days of quarantine at home unless they are vaccinated.
- Government employees, public servants, as well as workers at state-owned companies may not be allowed to vacation out of town unless they are fully inoculated.
Get smart: Putting travel restrictions on unvaccinated people will certainly nudge a greater percentage of the population to line up for shots.
What to watch: Will other regions adopt similar measures?
2. July data dump – trade
China’s General Administration of Customs released trade data for June on Tuesday.
- Exports rose 32.2% y/y in dollar terms in June, up from 27.9% y/y growth in May.
- Imports increased by 36.7% y/y last month, down from 51.1% y/y growth in May.
- The trade surplus was USD 51.5 billion in June, compared with a surplus of USD 45.5 billion in May.
Exports came in stronger than expected.
- The consensus forecast was for a 23% y/y expansion.
- Most analysts were expecting a weaker read because of the COVID-19 related disruptions to ports in southern China last month.
The stronger-than-expected increase in exports may reflect the fact that Chinese companies are passing through higher costs to overseas customers.
- This means that the value of exports rose even if the number of products sold did not grow by as much.
Higher commodity prices – rather than strong domestic consumption – likely also explains the continued strength in imports.
- For example, the value of iron ore imports increased 83% y/y by value last month.
- But by tonnage, shipments were down 12% y/y.
Exports continued to provide support to the Chinese economy last month – but the headwinds are stacking up:
- Chinese exporters need to raise prices not just to cover higher input costs but also to offset renminbi appreciation – this risks making Chinese goods less price competitive.
- As economies in the West lift COVID-19 restrictions, overseas household spending should shift from goods manufactured in China to domestic services.
The bottom line: China’s economy won’t be able to ride the wave of strong overseas demand much longer.
3. Improving ideological work
Running low on ideology after the end of the Party’s centenary celebration bonanza?
So imagine our delight when, on Monday, the Party’s Central Committee and the State Council dropped new opinions on how to strengthen ideological and political work in the New Era.
The document noted that ideological and political work is pretty dang important:
- “[It] has a significant bearing on the Party’s future, the country’s long-term law and order, and the unity and cohesion of the Chinese nation.” (Gov.cn)
- “It’s the lifeline for all work.” (Xinhua)
The Party-state now thinks it’s time to step up its ideological game, which includes plans to:
- Carry out in-depth ideological and political education
- Improve the quality of ideological and political work at the grassroots level
And this caught our eye: A “scientific evaluation system” will be established to evaluate leading cadres on their ideological and political work, in order to:
- “Make ’soft targets’ turn into ‘hard constraints.’”
What this means: No slacking off now, as the Party wants to survive and celebrate another century. Expect more waves of Xi Thought propaganda.
4. Cybersecurity: calling on the private sector
On Monday, the Ministry of Industry and Information Technology (MIIT) released the “Three-year Action Plan for the High-quality Development of the Cyber Security Industry (2021-2023) (Draft for Comment)”
Some context: Cybersecurity is always top of the agenda for the Chinese government. As Xi Jinping said as early as 2014:
- “Without cybersecurity, there is no national security.”
MIIT has ambitious goals for the sector:
- It wants the industry to exceed RMB 250 billion in annual revenue by 2023.
- That requires growth of more than 15% annually.
That’s not actually that fast:
- The cybersecurity industry averaged 17% annual growth from 2016 to 2020.
Get smart: The fact that there is a development plan for cybersecurity highlights its importance.
- And hints that the government perceives a market shortcoming.
5. Bigger than Didi, bigger than overseas IPOs
Another day, another take on the Didi fiasco.
On Monday, Zuo Xiaodong, Vice President of the China Academy of Information Security, gave an interview refuting some of the speculation surrounding China’s recent crackdown on ride-hailing firm Didi Chuxing.
Zou is worth listening to: He’s participated in drafting many of China’s key cybersecurity policies, and has a front-row seat to China’s deliberations on data security.
A quick refresher: Didi is at the center of a regulatory firestorm. Two days after listing in the US, Chinese cybersecurity regulators launched an investigation into Didi’s network security, and ordered the app pulled from app stores.
- China’s cyberspace watchdog then updated regulations requiring platform companies with over one million users to undergo similar network security reviews before listing abroad.
Rumors have swirled as the to the motivations behind the sudden move.
- Many pundits have taken this as a sign that China wants to discourage domestic companies from listing overseas.
Zuo’s take: The move was neither sudden nor unpredictable.
Nor was it related to decoupling.
- It was a natural progression of China’s emerging data governance regime.
Both China’s Cybersecurity Law, and the soon-to-be-effective Data Security Law, require companies to undergo security reviews if they process information that could affect national security.
- “The listing of companies abroad is only one specific situation in which data security risks may arise.”
Get smart: Cybersecurity and data security reviews have been a long time coming — and not just for companies looking to list.
- Tech companies will remain on uncertain footing until the new procedures have fully taken shape.
6. Slow climate change, one step at a time
Here’s how we save the world.
On Monday, National People’s Congress Standing Committee Chairman Li Zhanshu stressed the importance of ecological conservation, in a speech at the Eco Forum Global Annual Conference 2021.
As China’s top legislator, Li reiterated the nation’s commitment to addressing climate change (Xinhua):
- China has made resource conservation and environmental protection a basic state policy, and sustainable development a national strategy.
Like every good Party member, Li said that the first step means following Xi (Xinhua):
- “[Xi Jinping Thought on Ecological Civilization] has deepened the understanding of the laws of nature and human social development, and provided theoretical guidance and action guidelines for the construction of an ecological civilization in China.”
Steps two to five, were a tad less heavy on the ideology:
- Accelerate green and low-carbon development
- Strengthen pollution prevention and control
- Improve the legal system to protect the environment and promote green development
- Promote international cooperation
Get smart: It’s all hands on deck to meet China’s ambitious climate change targets.
Want to know what else China is doing to get to net zero?
- The Trivium team will dig into current policy debates and discuss how policy might evolve to achieve Xi’s goals. tomorrow (July 14) at 9:30pm Beijing time, 9:30am EST.
- Learn more here.