October: all together on the 13th Five Year Plan
2015 has in no way been a quiet year; October may well prove to be its climax, clustering a set of (as seen in China) good, bad and ugly dramas:
good: Xi’s high-visibility visit to the UK; the 5th Plenum; the 5-year plan proposals, not least relaxation of the one-child family policy; liberalisation of deposit interest rates; and promised capital account convertibility in Shanghai
bad: Obama’s TPP agreement announced 5 October, mooted to cost China's GDP 2 percent annually, amid unrelenting bad news on the economy
ugly: The US naval challenge to sovereignty claims in the South China Sea; domestically, the anti-corruption campaign, far from winding up, switched to financial and security sectors
Centre-local arm-wrestling continued; the Ministry of Finance's year-long cleansing of local balance sheets was challenged by the NDRC's last-minute bid to meet growth targets. And despite harsh National Audit Office reports on implementation, endless additional miles of railway are planned.
Social policy saw all hands manning the urbanisation pumps. Under-resourced localities made scant headway attracting migrant workers—megacities have the momentum on their side.
What, then, will China look like in 2020? Debate on the 5-year plan reveals a dilemma: either further entrench homegrown models, or turn outward to harness economic reform momentum.
policy movers
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1. In charge of treaty and law, and boundary and ocean affairs, I regularly defend China’s claims to disputed territory in the East and South China seas and on the Indian sub-continent
With four postings to the UN in New York and Geneva and long stints in MFA’s Department of Treaty and Law, I am one of the ministry’s most experienced international law hands. Now appointed China’s special envoy to Sri Lanka, I recently led a successful visit to Colombo to reinvigorate Sino-Sri Lankan diplomatic and commercial relations after the electoral defeat of the pro-China Mahinda Rajapaksa. A career diplomat, I graduated in English and law from Peking University, where Li Keqiang 李克强 and Meng Hongwei 孟宏伟 were my classmates.
2. As the head of the Ministry of Human Resources and Social Security, I am the public face of social policy in China
A member of the 18th CPC Central Committee, I have pushed forward plans to gradually delay the retirement age—a policy workers dislike but economists strongly endorse as part of the solution to less favourable demographics. I have long made clear that employment issues are the ministry's top priority, which has become a more pressing task as the economy slows.
3. With a posting to the UN in Geneva and close to 10 years in senior roles at the Department of International Organisation and Conferences in MFA, I am a seasoned multilateralist
I have said that attempts to raise China’s UN membership fees are unfair. I have also criticised the United States’ outstanding UN debts, and suggested that China is willing to take on as much budgetary responsibility as befits a developing big power.
portfolio updates
economy
fair weather state support for internet finance
The long-awaited internet finance regulations offer ambivalent support to the booming third-party payment industry, and qualified tolerance of P2P. Financial stability and state bank interests will remain the final arbiter. full signal client access →
mid october position:
innovation, industrial policy and employment: a friendlier environment for small business
end october position:
the next economy: can China leap into advanced tech?
geopolitics
international public goods: made in China
China will provide 8,000 additional troops and more than US$1 bn to UN peacekeeping efforts over the next decade. Announced at the UN General Assembly on 28 September by President Xi Jinping 习近平, it will make China one of the largest contributors of personnel to UN peacekeeping missions. full signal client access →
mid october position:
trade policy as geo-strategy: TPP as bitter but beneficial medicine
end october position:
gateway to Europe: gearing up for an amplified voice in Europe
social policy
Grabbing headlines in both the domestic and international media, all families can now have two children, marking the official end of the one-child policy that has formed the core of China’s family planning strategy since the 1980s. The final change, however, was a top-down Party decision not a deliberated policy from the National Health and Family Planning Commission. It is suspected loosening the one-child policy is unlikely to have a dramatic effect on raising the low birthrate or addressing China’s growing demographic challenge.
Meanwhile, the plan to delay the retirement age has been drafted, the first step towards codifying controversial measures scheduled to begin in 2022.
mid october position:
a tale of two city sizes: battling to move growth away from megacities
end october position:
mobile labour, immobile benefits: a safety net full of holes for migrant workers
agriculture and marine
new Food Safety Law: a step closer to a single agency?
Lack of single agency ownership of food safety in China has taken a grim toll. The new law, effective 1 October, in which CFDA takes decisive control of ‘edible agricultural products’ on the market indicates change may be finally on the way. This brings China closer in line with international norms of farm-to-fork oversight. full signal client access →
mid october position:
revised Food Safety Law enacted: trust and detail lagging
end october position:
marine overhaul: regearing fleets for the high seas
energy and environment
This month, the State Council pressured the National Development and Reform Commission (NDRC) to complete the gas and oil reform plan to dismantle the monopoly of the three big state-owned oil companies by end 2015. Meanwhile, the update on measures for managing Environmental Impact Assessment (EIA) certifications will come into effect on 1 November.
Overseas, China attempts to move closer to its energy re-construction target with the signing of nuclear and LNG deals with the UK.
mid october position:
Beijing flies the flag of ecological civilisation: tiered natural gas pricing and more emission fees
end october position:
boost for EIA: better certification, agencies and engineers
governance and law
This month, Global Times declared the Trans-Pacific Partnership (TPP) is incomplete without Chinese membership, and, in any case, is really just a glorified US-Japanese free trade agreement.
Two years into a heavily top-down reform agenda, Xi Jinping 习近平 and Li Keqiang 李克强 surprised many by giving a green light to localities to launch pilots without central approval, as Shanghai did with its pilot on ride-hailing apps.
mid october position:
burqas banned in Xinjiang: targeted as symbols of extremism
end october position:
getting things done: local pilots can go ahead without a nod from the centre
policy ticker highlights
family planning 2.0
Xinhua Net | 29 october
The CCP further eased China’s family planning policy with the 5th plenum communique, allowing families to have two children, the 5th plenum communique stated.
TPP regulations on SOEs clash with State Council guiding principles
Caixin | 26 october
Pension funds now have the green light to invest in new channels. A new organisation under State Council will invest up to 30 percent of the nation’s pension funds in the stock market.
local vitality requires room for reform failures
Caixin | 15 october
Centralisation has delayed local government reforms that would otherwise have been in place long ago, argues Yu Jianxing 郁建兴 Zhejiang University.
standards raised for environmental impact assessment
Legal Daily | 15 october
An updated version of the 2005 measures to manage the certification of firms that perform environmental impact assessments will come into effect on 1 November.
China should more actively manage biodiversity in international waters
China Radio International | 14 october
Fishing unsustainably in international waters will have a direct impact on China's interests, warns Xu Wang 许望, Zhejiang Business University.
China sends special envoy to Sri Lanka to mend ties
Foreign Ministry | 8 october
Sri Lankan President Maithripala Sirisena and Liu Zhenmin 刘振民 special envoy and vice foreign minister met in Sri Lanka.
selected texts of the month (clients only)
economy
Interpreting ‘Guiding opinions on promoting the healthy development of Internet finance’
Ma Mingzhe: 99 percent of high hopes for internet banking are the ‘emperor’s new clothes’
‘Basic law’ of internet finance released, industry veterans provide detailed interpretation
agriculture and marine
the difficulties of implementing the ‘strictest food safety law in history’
severe punishments targeting food safety and the chaos in advertising
geopolitics
lexicon
converting collective assets into shares 折股量化 zhégǔ liànghuà
peasants lack clear rights to collectively-owned assets like rural land, and the forests, water, factories, and investments on it; their claims to the profits from such assets are easily ignored. Pilot programs launched nationwide in September 2014 calculate the total value of collectively-owned rural assets, convert it into individual shares, and divide them among ‘shareholders’ who can hold or sell shares as in a market. The aim is to make it easier to consolidate land and urbanise rural residents, empowering them in the process.
ecological civilisation 生态文明 shēngtài wénmíng
a policy slogan most fully defined in Central Document No. 12 (April 2015). At the 17th National Party Congress (2007), Hu Jintao 胡锦涛 added it to a long-accepted series of spiritual, material and political ‘forms of human civilisation’. In this one, the natural environment is respected and safeguarded. A reform plan for ‘building an ecological civilisation system’ was eventually issued in September 2015, targeting improvements in the existing system, and a balance between economic development and environmental protection.
in the media
Why Xi Jinping’s UK hosts should remember the national characteristics of risk
Lowy Interpreter | 21 oct
Having arrived in the UK on Monday, President Xi Jinping is set to have talks with Prime Minister Cameron in which nothing, it is claimed, will be off the table. Top of the agenda is likely to be the Franco-Chinese bid to build the C¥240 bn Hinkley Point C nuclear plant in Somerset, in England's southeast. In September UK Chancellor George Osborne announced £2 bn in financial guarantees for this project when he visited China.
Xi Jinping confirms Britain visit next week
EXAME.com | 19 oct
"The performance of stock markets is of little importance in the Chinese economy, which is slowing gradually, but within expectations. At some point, contraction may mean systemic risk for the financial sector, because banks are exposed to some degree. But estimates vary as to what point this is", said Philippa Jones, Charles Horne and David Kelly, directors of consultancy China Policy.
China’s Belt and Road initiative likely to bypass Australia
Lowy Interpreter | 16 oct
China's Belt and Road initiative – a vast array of promised Chinese investments in transport, energy and communications across Eurasia and Africa – is emerging as one of the key foreign policy priorities of Xi Jinping's presidency.
Some Experts Question Rosy Picture About Xi's UK Visit
Voice of America | 16 oct
"When such apparent 'pro-China' positions are advanced in public, the result is, paradoxically, to polarize public opinion," David Kelly, an expert with research firm China Policy said. "An incumbent political party advancing a pro-China policy will eventually be challenged by an opposition party that may in various ways 'dog-whistle' an anti-China policy to the electorate." China, which is struggling to meet its economic growth target of seven percent and counter a slew of bad news on the economic front, also needs some major business contracts in foreign countries to boost its image, David Kelly at China Policy said.
New world order: Xi bent on securing bigger role for China in global affairs, analysts say
South China Morning Post | 14 oct
Benjamin Herscovitch, research manager of China Policy, a Beijing-based research and advisory company, said Xi’s vision “entails a relationship of equals between China and the United States”. Xi wanted a world where “Washington would no longer lecture Beijing from on high about human rights, cybersecurity and territorial disputes, and would instead recognise China’s so-called legitimate right to conduct its affairs as it sees fit”. “In short, Xi wants a world order in which no power is able to interfere in what China considers its ‘internal affairs’.”
quiz answers: 1. Liu Zhenmin 刘振民 Vice Minister of Foreign Affairs 2.Yin Weimin 尹蔚民 Minister of MoHRSS 3. Wang Min 王民 Ambassador to the UN
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