November: haze at the end of the tunnel
The Paris COP21 talks and 13th 5-year plan would, it was hoped back in mid 2015, provide light at the end of environmental and industry-economic tunnels. By end November, recession, terrorism and global warming filled policy space around the world; China was caught in the spotlight in all of them, with any moves it made looming as solutions—if not, as serious setbacks—to global issues.
The economy continued a downward trajectory, with manufacturing, currency and trade figures gracefully descending that a few years ago seemed headed inexorably upward.
Positives were reported in some of these contentious realms:
economy: the yuan was promised inclusion in the SDR, the IMF's basket of standard currencies; the AIIB geared up to start delivering $18 bn per year in infrastructure loans; the stock market showed signs of recovery.
security: China forthrightly condemned the mid-month Paris terrorist attacks, gesturing towards forming a common front; back home, the military was presented with a scheme for radical surgery, enhancing Party control of its upper echelons and shrinking the 'state within a state' profile.
environment: Xi's Paris performance was heralded at home as 'institutional voice'; the red alert issued by Beijing's environmental agency was a first, promising stronger regulation. ticker
featured analysis
cutting through the smoke
New restrictions on smoking promotion in the Charity Law (in draft) and the Advertising Law underpin Beijing city’s successful ban on smoking in public places and set the stage for further national efforts. full post open access →
policy movers
can't put a name to the face? go to page footer
1. A poster child for China's renewable overcapacity, I am domestically famous as an underdog, turning a dam-building project bigger than Hoover Dam, that I took over from NDRC in 2002, into the world's largest private hydropower station
A bad bet won me international fame: In 2010, I began moving horizontally into solar, investing heavily in 'thin-film solar'. Higher cost and low efficiency prevented the more versatile product from winning market share from conventional panels; meanwhile, excess subsidies led to a solar glut in China, while many of of our planned projects failed to come on-line and lines of credit were drying up. Nonetheless, general market euphoria helped boost our share prices through May 2015, when investors were spooked by revelation of a probe into HK-listed subsidiary. For a brief spell China's richest person, I lost half my value in hours—but not official favour.
2. A Communist Youth Leaguer, I became an agriculture vice-minister in 2001
After a mid-2000s term governing Jilin, a major grain-producing province, I became MoA Minister in 2009. I strive to transform farmers from a status to an occupation group. International integration, I always argue, is critical. Water, arable land and labour are the factor shortages I identify as deadly threats to food security. I travelled to more than 20 countries in 2015 to secure new partnerships boosting Capacity Cooperation.
3. Li Keqiang 李克强 may be the face of Chinese economic policy, but it’s no secret that Xi has his own plans. I am the conductor of those plans
People often describe me as ‘the man behind the man’ as I am responsible for coordinating the thinking behind the Third Plenum. Now, I have not only engineered CCP central committee’s suggestions to the 13th 5-year plan, but also undertakes its draft work, eclipsing previous responsible organs such as NDRC. My key position requires a relatively low political profile, but some of the Harvard-graduate’s thinking is evident in my earlier work from my mission at the State Council’s liberal think tank, the Development Research Centre. The 383 Plan preceding the Third Plenum, for instance, was hailed by Western media for embrace market principles and call for internal reform. Yet evident in the plan are broad strategic concerns, like bolstering energy security and reducing dependence that appear to inform Xi’s expanded notion of national security.
portfolio updates
economy
Post Fifth Plenum reflection on the economy brought renewed attention to fixing supply side problems—namely, escorting zombie firms out of the market—and rejigging financial oversight to prevent a recurrence of the summer's stock market downturn. On the eve of IPO reform, anticipated in spring 2016, leverage levels not half those of June's peak have prompted moves to rein in margin lending. The Yuan's SDR inclusion at the end of the month was a moment of celebration for some; for many within the system, it was a signal that the real work had begun.
mid november position:
IPOs to resume: investors surge back into market
geopolitics
expanding China’s role in global governance
A new buzzword was aired in the 5th Plenum Communiqué, and reiterated in the subsequent 13th 5-year plan guidelines. Framed as a prize won by the Xi administration’s proactivity and provision of global public goods, ‘institutional voice’ (zhìdùxìng huàyǔquán 制度性话语权) burnishes China’s claims to champion a higher realm of global governance. full signal client access →
mid november position:
institutional voice: proactive participation in international norm-setting, a highlight of Third Plenum meeting
end november position:
counter-terrorism: delivering global public goods via local issues
social policy
residence permits: halfway houses
The next step for hukou reform, a national plan granting migrants more rights via ‘residence permits’, further ties social services to where people live. The state’s ability to control population movement still trumps labour mobility or improving migrants’ second-class status. full signal client access →
mid november position:
more children, more growth?: unlikely
end november position:
housing woes worsen: fewer new starts amid growing overcapacity
agriculture and marine
A new 5-year Rural Development Plan re-engineers agricultural production, favouring upscaling, mechanisation and local specialisation. He Xuefeng 贺雪峰, a researcher long hostile to the upscaling drive, has swung into line into line behind top leadership. Meanwhile, Agriculture Minister Han Changfu 韩长赋 signaled a key change when he announced the 13th 5-year plan's focus on stabilising and strengthening production capacity, rather than increasing it at all costs.
mid november position:
food security: food grains, not feed grains
end november position:
cultivated landscape: dramatic change
energy and environment
China’s green leap-forward: fixing the mix
China aims to reach 20 percent non-fossil fuel energy by 2030. Green energy is reported to be in oversupply, yet currently contributes under 10 percent to consumption. Undoing the gridlock seems no nearer. full signal client access →
mid november position:
renewables: three-fold dilemma
end november position:
air pollution plans: misplaced hopes, hollow promises
targeting pollution control targets
Fallout from summer 2015’s weak Air Pollution Law centres on target-based pollution reduction. Previously absent from public discussion, it has become the focal point for environmental governance in the next 5-year plan. full signal client access →
mid november position:
civilian vs official lawsuits: more cases, no more victories
end november position:
lawyers and the judiciary: united friction
policy ticker highlights
risks of going global: attacks on Chinese businesses
The Paper | 23 november
The death of three China Railway Construction Corporation executives in the Mali terror attack has brought to light the risks of ‘going global’.
companies flock to go public following IPO restart
Economic Information | 20 november
Since IPOs were restarted, the number of enterprises registering their intention to go public has risen to 85 (from 28 when the restart was announced).
ChemChina acquisition of Syngenta unlikely
Jiemian | 17 november
China National Chemical Corporation's (ChemChina) rumored purchase of Syngenta, the world's largest pesticide manufacturer, has a less than 10 percent chance of succeeding, says Sunshu Baobiao 孙叔宝表 China Pesticide Industry Association president.
concern about excess housing stock reaches top levels
Xinhua | 13 november
Xi Jinping 习近平 acknowledged housing overcapacity and the need to clear stocks by promoting a more sustainable real estate industry, the first time since he took charge of the CCP.
legal community decries proposed lawyer ratings
Ministry of Finance | 10 november
Tying lawyers’ eligibility to stand in court to state-approved rankings is paternalistic and anti-market, said Xu Xin 徐昕 and Wang Jianxun 王建勋 leading judicial reform advocates.
energy consumption may fall in 2015
China Energy News | 5 november
Energy consumption may fall in 2015, predicts Zhou Dadi 周大地 NDRC and member of the 52-member advisory committee to the 13th 5-year plan.
selected texts of the month (clients only)
geopolitics
social policy
governance and law
when can environment data be in sync with public perception?
reforming the environmental protection system, improving environmental governance capacity
energy and environment
don’t denigrate coal: clean energy is no energy security elixir either
phasing out fossil fuel subsidies vital to reducing carbon emissions
lexicon
counter-urbanisation 逆城市化 nì chéngshìhuà
people opting to leave big cities to live in rural villages or towns. As disillusion grows with overcrowded cities and the struggle for urban hukou status, the trend becomes a preferred option. In policy terms, it complements ‘new-style urbanisation’, a bid to steer growth away from megacities and develop poor rural areas. Counter-urbanisation measures include promoting rural entrepreneurship, and rural tourism for city dwellers who want to escape pollution and noise.
community of shared destiny 命运公共体 mìngyùn gōnggòngtǐ
reiterated by President Xi Jinping 习近平 at the Bo’ao Forum, March 2015, this expression was used as early as 2007, when then President Hu Jintao 胡锦涛 applied it to relations with Taiwan. The picture celebrates the slogan’s peaceful intent as employed by Xi. Often used to describe ideal relations with bordering states and territories, it has also been applied to the world at large. Commentary in China obliquely criticises it as ambiguous, open to charge, of being disingenuous.
voice 话语权 huàyǔ quán right to be heard’
denied this by other powers, China has to win it back by strenuous diplomacy; on some accounts by providing global public goods like security and economic growth. Huayu is ‘discourse’ or ‘utterance’, quan ‘right’ or ‘power’. ‘Institutional’ (zhiduxing 制度性) was added by the Fifth Plenum (November 2015), implying a legitimate voice within institutions. In the cartoon, World Bank and IMF microphones lean to the developed world (left-hand side), denying the developing world its right to be heard.
hukou 户口 hùkǒu
document entitling residence in a given locality. Traditionally a statistical term for registered permanent residents (hu referred to households, kou to individuals), it now means the control system tying rural people to their mother’s place of birth, blocking access to social services when they ‘migrate’ to work in cities. ‘The city welcomes you’, says the sign in the picture; the eager migrant family must, however, cross a chasm over a plank marked ‘accumulate points to gain hukou’ in the city.
in the media
Infant formula shortage no threat to Australia's food security
The Sydney Morning Herald | 13 nov
"There's a market here [in China] but, even with a free trade agreement, the market for fresh food is controlled by how much [China] allows in and it ends up to some extent being political," says Philippa Jones, managing director of Beijing-based research house China Policy.
Analysts: China Two-child Policy Could Spur Economy
Voice of America | 10 nov
“Two-income families may be reluctant to go for a second child because it will mean loss of job and incomes for the women at least for a short period. Besides, a vast number of women who underwent caesarian section during the first birth may not want to risk a second pregnancy,” [David] Kelly said. Taiwan's president forced to defend historic Singapore meeting with Xi.
Taiwan’s president forced to defend historic Singapore meeting with Xi
The Sydney Morning Herald | 7 nov
Ben Herscovitch, research manager at China Policy, said the move was more likely to backfire, given the suspicions Taiwanese with which voters in Taiwan viewed the meeting. "It seems like a product of backroom negotiating, and it comes so close to an election that it's seen as potentially an attempt by Beijing to exert some influence on the electorate, which is something that would be really strongly resisted by a significant portion of voters in Taiwan," he said.
quiz answers: 1. Li Hejun 李河君 Hanergy Holding Group Chairman, All-China Federation of Industry and Commerce’s New Energy Chamber of Commerce Chairman 2. Han Changfu 韩长赋 Ministry of Agriculture minister 3. Liu He 刘鹤 Leading Group for Financial and Economic Affairs
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