1. Time to change the COVID thinking?
COVID-19 infections are still on the rise in China.
On Monday, China reported (NHC 1):
- 108 new domestically transmitted symptomatic infections, up from 94 on Sunday
- 20 new domestically transmitted asymptomatic infections, up from eight on Sunday
Meanwhile, vaccination rates have slowed (NHC 2):
- Last week’s daily administered doses averaged 15.2 million – down from an average of 17.54 million the week before.
This most recent outbreak is spurring debate over the government’s approach to containing the virus. In particular, some are advocating that China should abandon its “zero tolerance” policy, and instead think about how to live with sporadic outbreaks.
The Chinese Center for Disease Control and Prevention deputy director Feng Zijian and chief scientist Zeng Guang have both recently advocated for a more COVID-tolerant approach.
But it seems clear that Beijing is not on board:
- Feng’s remarks have since been pulled from all major news sites in China.
- Zeng said he didn’t authorize the release of his remarks.
Get smart: Censorship of the “zero tolerance” debate is a clear indication that central authorities are uncomfortable even talking about relaxing current pandemic control policies.
Get smarter: Changing those policies is necessary to fully reopen China’s borders, but also a huge political risk, according to Trivium Senior Analyst Andy Chen (Bloomberg):
- “Once it decides to change that approach, a lot of people who believe that the government’s genuinely trying to protect them will have second thoughts. They will be very confused.”
2. Sinopec chairman CAST in new role
You thought we weren’t gonna cover who took over at the China Association for Science and Technology (CAST) after former chairman Huai Jinpeng was appointed minister of education last week.
- You thought wrong.
On August 2, former Sinopec top dog Zhang Yuzhuo was appointed Party secretary of CAST.
What’s he ever done?
- Zhang is a coal specialist with a PhD in engineering.
- He did postdoc research in the UK and US.
- Zhang spent the first 14 years of his career at the China Coal Research Institute (1985-1999).
- He then worked for 15 years at Shenhua Group – China’s largest coal miner – including as Shenhua chairman between 2011-2017.
He’s polished his political resume too:
- Between 2017-2020, Zhang was a member of Tianjin’s Party Standing Committee, and served as Party boss of its Binhai New Area.
- In January 2020, Zhang was appointed chairman of Sinopec Group – China’s largest oil refiner.
- He’s an alternate member of the 19th Central Committee (2017-2022).
Get smart: CAST is meant to serve as a bridge between the Party and China’s scitech community.
- It is a key stakeholder for China’s innovation policies.
What to watch: Zhang’s successor at Sinopec has not yet been announced.
- We’ll keep our eyes peeled.
3. Shanghai data regulations in the pipeline
On Monday, 21st Century Biz reported that the Shanghai city government will soon release new municipal data regulations to support the development of its digital economy.
- Among other things, the regulations will lay down some ground rules for what local state agencies should do with their data.
Some context: China’s government agencies are sitting on mountains of useful, non-sensitive data that is stagnating in state databases.
More context: Part of China’s big-picture strategy centers around making that data available to enterprises, startups, and the general public to supercharge innovation.
But there are a zillion questions that must be answered first. Those sparking debate right now include:
- Which types of government data should be made publicly available?
- Where should that data be distributed?
- Should the government authorize certain third-party companies or platforms to process its data?
- Should government bodies be able to make money through providing data to such platforms?
What to watch: It sounds like the Shanghai regulations will strive to answer some of these questions.
Get smart: China now sees its non-sensitive government data as a critical – and underutilized – economic asset.
Get smarter: When it comes to data policy, China is feeling its way forward in uncharted waters.
- No government in the world has yet standardized a unified approach to assetizing government data.
4. Guangdong issues 14th FYP for high-end manufacturing
On Monday, the Guangdong provincial government dropped the 14th five-year plan (FYP) for boosting high-quality manufacturing in the province.
Some context: China’s leadership has long sought to move the domestic manufacturing sector up the value chain.
- Developing high-end manufacturing was a top priority at this year’s Two Sessions.
Guangdong’s 14th FYP covers a wide range of goals in high-end manufacturing, ranging from robotics to medical devices.
But the centerpiece is – ta-daaah!
The goal: To develop Guangdong into a semiconductor manufacturing powerhouse.
That means having all points of the supply chain covered, including:
- Key semiconductor materials
- Design software for high-end chips
- Advanced fabrication technologies
- Advanced packaging and testing
- High-end chip manufacturing equipment
Get smart: This is a long-range plan, and considering China’s massive semiconductor talent shortage, there’s no guarantee it will succeed.
Get smarter: China’s semiconductor woes are not going away anytime soon.
5. Read my lips
On Tuesday, Securities Daily indicated that the Ministry of Finance (MoF) may be (once again) exploring the introduction of a carbon tax.
A quick definition: A carbon tax directly imposes a price on carbon by collecting taxes on the basis of businesses’ CO2 emissions.
On Thursday, MoF revealed they are leading the drafting of a policy document on financial support for peaking emissions and achieving carbon neutrality that includes plans to (MoF):
- “Actively build a fiscal and taxation policy system that…promotes green, low-carbon development.”
Multiple experts at research institutes affiliated to MoF told Securities Daily that they have recommended:
- “Integrating existing environmental protection taxes, refined oil consumption taxes, and coal resource taxes, and researching the introduction of a carbon tax.”
This is far from a done deal. This isn’t the first time regulators have explored taxing carbon.
- It’s not even the second time.
- Since 2010, MoF officials have periodically proposed imposing a tax on greenhouse gas emissions.
But this time could be different – in part because regulators are on the hook to deliver Xi Jinping’s climate targets.
Get smart: If pricing carbon via a market-based emissions trading system doesn’t work, there are more direct ways of getting it done.