1. Data dump – inflation
2. CBIRC approves establishment of national pension company
3. It’s important to keep your promises
On Wednesday, the State Council passed the Measures for the Implementation of the Commitment System for Securities and Futures Administrative Enforcement (Draft).
- Sexy title, hey? But it’s important.
ICYMI: In 2019, Beijing revised the Securities Law, adding an article that allows listed companies to correct suspected securities violations and compensate investors for losses.
Some context: This is all part of China’s administrative reconciliation system.
- Introduced by the securities regulator in 2019, after a trial program that began in 2015, administrative reconciliation is a way of settling investigations into individuals, legal persons, or institutions who have violated securities and futures regulations.
- As long as investors are compensated for losses, and issues are identified and corrected, the regulator is likely to suspend or even terminate investigations into wayward entities.
Get smart: The complexity of securities and futures regulations, paired with regulators’ limited investigative resources, mean that investigations into violations can take ages.
- This ties up regulatory resources, affects the operations of the party under investigation, and prevents investors from receiving timely compensation and protection.
Get smarter: Expanding administrative reconciliation should ameliorate some of these issues.
Gov.cn: 李克强主持召开国务院常务会议 部署在部分城市开展营商环境创新试点 支持地方深化改革先行先试更大力度利企便民等
The Paper: 证券期货行政执法当事人承诺制度草案通过：保护合法权益
4. LKQ taps major cities for biz environment reform pilots
On Wednesday Premier Li Keqiang did what Li Keqiang does – hosted the State Council’s weekly executive meeting.
The big agenda item (as usual): Business environment reform.
Something new: Li flagged six cities as future pilot zones for business environment optimization.
Li’s chosen ones include China’s most economically important cities:
Aiming high, but packing some key details too, Li called for these pilot programs to (Gov.cn):
- Eliminate regional segmentation and local protectionism, and further promote a unified, open, and competitive market system
- Remove “unreasonable” restrictions on cross-regional operations
- Promote standardization of cross-regional certification for certain types of transportation
- Simplify commercial registration for investors in Hong Kong and Macau
- Establish a compensation mechanism for enterprises negatively affected by policy changes
Get smart: Most of this is old stuff – Li’s been on a rampage against red tape for as long as we can remember.
- That said, the calls for cross-regional and international business optimization in pilot zones are a somewhat new twist.
Get smarter: The point about compensating business losses due to policy changes, while ambiguous, is potentially significant.
5. The sky is low and the emperor is nearby
On Wednesday, the Beijing municipal government published its five-year plan (FYP) for improving the city’s business environment.
We’ll admit it, we were underwhelmed…at first.
- The plan is full of familiar vague goals like better protecting intellectual property and making government registration processes simpler.
But there are a few juicy tidbits for foreign businesses that invest in or trade via Beijing.
There, the plan proposes to (21st Century Business Herald):
- Set up an international commercial court to facilitate dispute arbitration and mediation
- Improve services and approvals to boost foreign investment into the capital city
- Fix customs and inspection processes to make it easier to ship international cargo via multiple modes of transport
- Unify most trade-related rules and procedures across the Beijing-Tianjin-Hebei region
Don’t forget: China’s capital is so much more than a political hub.
- It’s a megacity of nearly 22 million residents, and a major commercial center – home to the headquarters of countless domestic and multinational companies (including Trivium China!).
Get smart: Don’t expect Beijing to become a laissez-faire business paradise.
6.Xi calls Tajik president
On Tuesday, Xi Jinping had a phone call with his good buddy, Tajik President Emomali Rahmon.
- (Editor’s note: The Central Asian leader, in power since 1992, could give Xi some tips on longevity, but they spoke of other things.)
Xi congratulated Tajikistan on the 30th anniversary of its independence, and hailed the health of Beijing-Dushanbe ties.
He also said China has Tajikistan’s back in its role as rotating president of the Shanghai Cooperation Organization (SCO) (MoFA):
- “China will fully support Tajikistan in fulfilling the duties of the SCO presidency and ensuring the [SCO’s 20th anniversary summit] is a success.”
Emomali was also bullish on the bilateral future, saying his country is ready to:
- “[D]eepen cooperation in such fields as economy and trade, security, people-to-people and cultural exchanges, and enrich the Tajikistan-China comprehensive strategic partnership.”
The two leaders broached the topic of Afghanistan, pledging to:
- “[C]ontinue deepening counter-terrorism and security cooperation and to jointly maintain regional security and stability.”
Some context: As Tajikistan scrambles to absorb Afghan refugees, Rahmon is the region’s most openly anti-Taliban leader.
Get smart: Like Afghanistan, Tajikistan borders China’s Xinjiang region.
- Beijing’s focus: don’t let regime change in Kabul create wider instability along China’s frontiers.