Global China-watching has been abuzz with the disappearance, radio silence about, and eventual replacement of Qin Gang 秦刚, foreign minister only as of this year. Qin's unusual ascent, reportedly as a Xi Jinping favourite, murky connection with a TV celebrity, and apparently deeper intrigue between rival intelligence communities are unlikely to be clarified.
A brief draft of the Criminal Law Amendment was mulled in haste by a special National People's Congress Standing Committee session in late July. The formal deliberation of a handful of clauses, along with the routine appointment of Pan Gongsheng 潘功胜 as governor of the Bank of China, seemed set up to provide a little cover for the reappointment of Wang Yi 王毅 as foreign minister.
Debate on a PRC ‘balance sheet recession’ surfaced in July; is the PRC facing one, as did Japan in the 1990s? Ill health in the post-COVID economy was evident in H1 data. Supporters and critics of the ‘balance sheet’ story differed little in their remedies, urging increased domestic demand via fiscal stimulus. Yet a Politburo meeting seemed more relaxed about the data than did the market. There were real issues, it admitted, adding that it expects wave-like improvements and a winding road to recovery. Old promises to the private sector were renewed. Stimulus was indeed urged at the conclave, but a massive package is unlikely.
Trade figures took another hit and could drop further in H2. The fall only reinforces that boosting consumption will be critical to jumpstarting an upturn. NDRC and MofCOM rolled out measures to support household spending, the aged, more car purchases and private investment. Beijing still shies away from putting money in the pockets of those with the highest propensity to consume: low-income earners and those receiving basic welfare.
MoUs were signed with the Solomon Islands; a deal proceeded for an FTA with Nicaragua. The text of the WTO agreement on investment facilitation sponsored by the PRC and other developing countries was finally agreed.
A million tonnes of summer wheat was admitted lost due to unseasonal rain in Henan. Further extreme weather is expected in the summer and autumn. With food security more of a worry than ever, Beijing stepped up pressure on grain production, using enforcement muscle to ensure that every inch of farmland prioritises grain. Even marginalised saline-alkali and acidic land are now reconsidered as possible production bases.
More fruit, vegetables and animals may be moving indoors and to multi-story farms as competition for arable space tightens. Large-scale and tech-intensive, controlled-environment ag requires R&D, much capital, and professional skill. Current ambitious schemes may see serious investment in the sector.
Hopes for a restart of Beijing’s long-awaited CCER (Certified Emissions Reduction Scheme) were sparked with a call for public comment on updated Management Measures by MEE (Ministry of Ecology and Environment). MEE and SAMR must now approve third-party verification agencies. In an effort to improve data quality, MEE will have greater oversight of project methods. Doubts remain, not least on the inclusion of renewable energy. Such projects can at present gain multiple income streams, leading to double counting, notes Zhang Jianhong 张建红 China Society for Technology Economics Environmental Technology Economics.
The PRC and EU have scheduled dialogue on the recently passed CBAM (Carbon Border Adjustment Mechanism). Beijing called out CBAM at the WTO. But a fraction of export sectors are impacted, and experts advise high-carbon industries to adapt to the scheme’s criteria—Beijing aspires for the PRC to be ahead on climate.
On the scitech front, Beijing is promoting a ‘new infrastructure’, spanning the three broad categories of information
information infrastructure (5G, internet of things, gigabit networks and data centres)
integration infrastructure (integration of 5G and AI technologies)
innovation infrastructure (National Industrial Innovation Centres)
It will ideally feature private and state-owned capital working closely together. Boosting demand is yet again the target, argues Liu Jinhe 刘金贺 Dagong International, laying the groundwork for long-term scitech advance.
Meanwhile, more measures are out to regulate new tech, not least AI, e.g. 'interim management services' for generative AI, echoing ChatGPT, Bard, and others.
In health policy, market forecasts for biotech promise to be more accurate. Drugs listed on NRDL (national reimbursable drug list) for eight years will not face more price cuts. Those for four years and more will qualify for less drastic cuts and simplified contract renewal. Yet risks persist, notes Chen Yi 陈怡 Tsinghua University. Many similar products are too similar and there is an over-dependence on BMI (basic medical insurance) to pay for expensive options.
More focus will be seen on primary health care in H2 2023, one initiative being regional medical centres at city and county levels, building multi-level care and diverting patients away from top-tier hospitals in the few wealthier regions. Resource shortages and physical security put primary care doctors at risk. Experts warn that the proposed centres may only intensify the decline in visits to lower-level institutions.
Parents in Xi’an took to the streets to protest against students from Henan taking advantage of hukou policies to flood local high school entrance exams, impacting local students’ prospects of qualifying for elite schools. ‘Educational migration’, argues analyst Chu Zhaohui 储朝晖, is a last resort for students in poorly resourced regions.
Discussion of a proposed ‘Shanhe University’ serving provinces with few top-tier universities but many exam applicants (Shanxi, Shandong, Henan, Hebei) went viral online. A cross-provincial schooling industry generated by the imbalance is now under increased public scrutiny.