1. State Council discusses flood control measures
As flooding continues in Henan, the top guys are on the job.
On Wednesday, Premier Li Keqiang presided over the executive meeting of the State Council where he made tackling the deluge the government’s top priority, calling for (CGTN):
- “…relentless efforts to control floods, ensure people’s safety, prevent damage to property, and strengthen the disaster relief work.”
What that means:
- Mobilizing funds and materials
- Rescuing and treating the injured
- Resettling those affected
Some context: The death toll in the province has reached 33 – and heavy rain keeps falling.
Li took the opportunity to demand action to prevent similar tragedies, including:
- Better flood control work around major rivers, lakes, and reservoirs
- Improving meteorological monitoring and early warning
- Crisis-planning for abnormal weather
- Preventing secondary disasters
- Preparing emergency plans for transportation facilities
Get smart: The focus right now is on making sure displaced populations are properly resettled.
- And keeping the death toll as low as possible.
One question: Why don’t more Chinese officials publicly attribute extreme weather to climate change?
2. One more brake on local government debt
On Wednesday, the National People’s Congress Standing Committee (NPCSC) published a Q&A on a new Party document on strengthening local legislatures’ oversight of government debt.
Why that’s interesting: Calling for greater scrutiny of government debt isn’t new, but delegating that power to local legislatures is.
Some context: The NPCSC has been formulating the document since 2020.
- The doc has been released for internal reference but has not yet been made public.
Local governments will need to report detailed numbers to the legislature, including:
- Debt ceilings
- Outstanding debt
- Annual new debt
- Big projects funded by new debt
- Debt ratios
- Debt interest rates
Local legislatures will then be tasked with supervising:
- Borrowing through government investment funds, public-private partnerships, and state-owned enterprises
- The formulation and implementation of sustainable borrowing and debt payment plans
Get smart: Beijing has massively ramped up efforts to rein in the local government debt problem over the past year.
- The issue is too dangerous to ignore.
Get smarter: The focus on debt control will limit the government’s ability to resort to fiscal stimulus.
3. A hand up
On Thursday, the State Council released its 14th Five-Year Plan for People with Disabilities.
Some context: A similar plan has appeared every five years for at least the past twenty.
And this time? Beijing seeks to expand training, employment, access to basic public services, and the economic inclusion of China’s disabled population.
The plan sets a bunch of quantitative targets, including:
- Extending vocational training to an additional 2 million people by 2025
- Ensuring 100% of people who meet requirements are granted basic income support and subsidies
- Retrofitting over a million homes for better access by disabled residents
And it outlines improvements to basic support measures, like:
- Subsidizing wheelchairs and other assistive devices
- Improving accessibility on public transit, rail, and airlines
- Reducing barriers for people with disabilities to drive motor vehicles
This might seem like basic stuff, but it’s a huge deal.
- Some 85 million Chinese people live with disabilities – that’s more than Germany’s entire population.
Get smart: Beijing’s efforts to better include people with disabilities in the national economy are real, and worth celebrating.
Get smarter: Helping people with disabilities to live and work independently also reduces pressure on public welfare systems.
4. Diplomatic whiplash
It’s back on!
On Wednesday, the US State Department announced that Deputy Secretary of State Wendy Sherman would travel to Tianjin for meetings with Chinese Foreign Ministry officials on July 25 and 26.
On the agenda (State Department):
- “[A]reas where [the US has] serious concerns about PRC actions, as well as areas where [Chinese and US] interests align.”
Do they have any idea how little that narrows it down?
Some context: Last week we told you that Sherman’s trip had been cancelled after the Chinese side refused to grant an audience with Vice Foreign Minister Le Yucheng.
- Now, Sherman’s getting face time with the Vice Foreign Minister in charge of US affairs, Xie Feng, AND Foreign Minister Wang Yi.
So what gives?
- We suspect the back-and-forth boils down to misunderstandings over protocol and who should be speaking to whom.
- The US request to speak with Le was probably viewed as a breach of etiquette, while the Chinese’s side’s refusal to grant the meeting was seen as a snub.
Get smart: Both sides want to lay the groundwork for a possible Biden-Xi meeting later this year.
- But with ties as strained as they are, neither side wants to seem too eager.
5. Open for the right kind of business
The terrible flooding wasn’t the only topic up for discussion at Wednesday’s State Council executive meeting (see entry #1).
Premier Li Keqiang also guided the assembled in talking about financial opening.
Some context: Lost in some of the recent negative cross-border capital markets news (we’re looking at you, DiDi) has been the steady opening of China’s onshore financial markets.
More context: Over the last year or so, a growing number of foreign banks and asset managers have received approval to set up wholly-owned shops on the mainland.
- At the same time, foreign investors have been piling into mainland stocks and bonds at an unprecedented rate.
Li talked big picture (Xinhua):
- “We need to continue advancing opening-up in an orderly way, and fully leverage both the domestic and international markets and resources, so that China remains a popular destination for foreign investment.”
He also got specific, pledging:
- More market access for foreign banks and insurers
- Improved rules concerning cross-border transactions between foreign parent companies and mainland-based subsidiaries
- Optimized channels for foreign capital to participate in Chinese domestic markets
Here’s the key needle Li and co. are looking to thread vis-à-vis financial opening:
- “As a developing country, China’s development must rely on the real economy.”
- “Greater financial openness should better serve the real economy, which is of great importance to maintaining the country’s economic stability.”
Translation: Hot money need not apply.
Get smart: Chinese leadership broadly wants financial opening.
Get smarter: But it wants that opening to serve the growth and development interests of Beijing, not simply the bottom lines of foreign financial institutions.
6. State Council proposes more support for trade
On Wednesday, Premier Li Keqiang also steered the State Council to talk trade.
On the agenda – A series of moves designed to help traders, including:
- Simplifying customs clearance processes
- Reducing or eliminating port use fees and improving port services
- Speeding up the payment of export tax rebates
- Improving overseas warehousing and logistics capacity
ICYMI: China’s H1 foreign trade data looked great.
But regulators have still spent the past few weeks introducing a series of support measures aimed at shoring the sector up.
Our take: The positive H1 trade data is masking several underlying issues – from high commodities prices to skyrocketing shipping costs to CNY appreciation – that are causing real problems for importers and exporters.
- Beijing is acutely aware of these and is looking to lend a hand.
The meeting’s read-out also called for progress on implementing trade facilitation measures in the Regional Comprehensive Economic Partnership (RCEP).
Some context: Inked back in November 2020, RCEP links 15 major Asia-Pacific economies in what is now the world’s largest free trade agreement.
- The deal is now in the long process of getting ratified by signatories – most recently, Japan, on June 25.
Get smart: We may have forgotten about RCEP, but top leaders sure haven’t.
- Beijing views the deal as central to cementing its dominant place in the Asian economy.
Get smarter: Most of this is Li’s bread and butter – chipping away at administrative and bureaucratic inefficiencies that create drag on the economy.