China Politics Weekly
China Politics Weekly aims to keep business leaders, investors, diplomats, scholars and other China hands up to date on important trends in China. It is produced by Trey McArver, a London-based consultant providing advice and intelligence to firms and investors engaged in China and the region. You can find out more about Trey and CPW in this interview.
Dear friends and colleagues,
I am back from Beijing. Thanks to all of you who took time to meet and share your thoughts on current developments. I’ll publish some impressions from the trip next week.
CPW is proud to be publishing its 50th issue this week- when I started the newsletter in early 2014 there was no guarantee that we would make it to issue 5, much less 50. Over that time readership has grown from eight close friends to 1,200 dedicated China watchers. I thank all of you for your support.
While happy with the progress that has been made, there is much more that I would like to do. First and foremost, I would like to create a database whereby users would be able to search leaders’ activities by person, place, issue area and date. I have already worked with a designer and the interface is beautiful and easy-to-use. I think it would be a great contribution to all interested in China’s policymaking. However, to build, populate and maintain the database will take time and money, both of which are in short supply at CPW HQ. If you or your organization would be interested in sponsoring or collaborating on this project, please get in touch.
There are plenty of other ways that readers can help CPW, including:
- Spread the word. If you like CPW, please tell your friends.
- Intern at CPW. There are several projects that we would like to undertake in the coming months that will require more manpower. If you or somebody you know would be interested in working with CPW, let us know.
- Help me monetize this, if only indirectly. For multiple reasons, I have no plans to charge for CPW, but I do need to make a living. If you or your company needs any China-related counsel, research or investment support, don’t hesitate to get in touch. My network of associates and I have experience across a broad range of sectors and disciplines.
Sound and fury
Official Q1 growth, announced Wednesday, may have come in right on target at 7%, but the economy looks increasingly shaky as other indicators point to significant weakness. Of particular worry was nominal GDP, reported to have grown at only 5.8%. That nominal GDP came in so much lower than real GDP signals that China may be entering into deflation or that the real GDP number was manipuated. There is a good chance both are true.
As growth slows, Premier Li seems increasingly frustrated. For the second week in a row he berated officials for failing to carry out reforms in an efficient and timely manner. Li called ministries’ efforts to carry out reforms a “joke” and asked why policies approved at by the central government are not implemented.
The Premier’s comments were reported in official media and are meant to send a message to officials in Beijing and around the country. Li’s tough words and acidic tone are supposed to convey his seriousness and determination. Unfortunately for the Premier, the effect- at least to my ears- is to show a government in dysfunction and a leader powerless to rectify the situation.
|PBSC Week in Review
|Xi spoke with Saudi King Salman bin Abdul Aziz Al Saud by telephone.
|Xi received credentials from nine new ambassadors to China.Including from South Korea, United Kingdom, South Africa, Kazakhstan and Thailand.
|Li inspected China Development Bank and Industrial and Commercial Bank of China.
|Li chaired an executive meeting of the State Council.Meeting reviewed an NDRC report outlining economic reform priorities for the year. Focused on five points:
|Li chaired a seminar on China’s economy with economists and corporate leaders.Sale of Piraeus Port to COSCO looks likely to proceed despite Economy Minister George Stathakis’s statement in February that the port would “remain permanently under state majority holding…as we made clear from the first day.”
|Li met with a trade delegation from Japan led by former chief cabinet secretary Yohei Kono.“It goes without saying that over the past two years Sino-Japanese ties have faced difficulties, and both sides wish to improve things,” Li said.
|Li spoke with Greek Prime Minister Alexis Tsipras by telephone.
|Li attended and gave the keynote address at the 54th Annual Session of the Asian-African Legal Consultative Organization.
|Li met with United States Secretary of Commerce Penny Pritzker.Pritzker led trade delegation that was first to be labeled as “presidential mission”.
|Zhang went on inspection tour to Henan.
|Yu met with King Norodom Sihamoni of Cambodia.
|Yu chaired a CPPCC chairmen’s meeting.
|Liu went on inspection tour to Guangxi.
|Wang addressed a training session for new CDIC accreditation agencies.
|Attended seminar on the economy.You can see from pictures that Zhang was there, but strangely he is not listed as an attendee in any of the official reports of the meeting, even though other vice premiers are reported as attending….
|Zhang met with Belarusian deputy director of the Presidential Office Nikolay Snopkov.
Dear friends and colleagues,
A busy week this week, so limited commentary. Thanks to all of those who responded to last week with offers of assistance; apologies that I have not replied to many of you- climbing out from under a mountain of work and admin, so you should hear from me soon.
One step closer to common destiny.
Xi made a state visit to Pakistan, where he upgraded the bilateral relationship to an “all-weather strategic partnership of cooperation”. He then headed to Jakarta, Indonesia to attend the 2015 Asian-African Summit and commemorate the 60th anniversary of the Bandung Conference. The visits come as China reorients its foreign affairs to give priority to regional diplomacy. China lavished money on Pakistan and promised in Jakarta to support developing countries with no political strings attached. The visits served to reinforce the perception that China is increasingly becoming the center of gravity for the region.
In Jakarta, Xi met with Japanese Prime Minister Shinzo Abe. Optics from the meeting looked a lot better than the famously frosty handshake in Beijing last November. Hopefully this means relations are thawing. 2015 could still be an explosive year as WWII commemorations to be held in both countries have the potential to stoke nationalist passions and further strain the relationship.
Monday’s State Council meeting stated that there is “growing pressure on employment” and announced several measures to address the issue. These include: tax benefits for companies hiring people who have been jobless for more than six months; easing location restrictions for new businesses; raising the maximum amount of guaranteed loans for startups; and other measures.
The meeting marks a distinctive shift in tone. Previously, Premier Li has touted the fact that employment grew by 13 million last year, well above the government target of 10 million. That the official line is now that there is “growing pressure” points to further weakening of the economy- and increasing anxiety in Beijing.
Allow the people to buy with confidence
China’s legislature held its bimonthly Standing Committee meeting this week. They passed new versions of the Food Safety Law and Advertising Law. The general thrust of revisions is towards enhancing consumer protection.
Free trade with the rebel province
After Monday’s State Council meeting, Li Keqiang headed to Fujian for a three-day inspection tour in Fujian. The purpose of the trip was to give support and momentum to the newly inaugurated Fujian Xiamen Free Trade Zone. The new FTZ is focused on promoting cross-straits trade and investment. During the trip Li was explicit in telling Taiwanese businessmen that new regulations limiting the ability of local governments to offer tax breaks and other investment incentives would not affect already existing agreements with Taiwanese firms. Yu Zhengsheng delivered the same message during his inspection tour to Nanjing.
Cross-strait relations don’t get much press these days, but they still constitute perhaps the greatest risk to regional stability. Despite increased economic integration, Taiwanese identity continues to develop in a way that makes reunification with a CCP-led mainland increasingly unpopular on the island. Presidential elections in January 2016 could very well see a return of the DPP to power; this would almost certainly complicate cross-strait relations. Beijing is right to make sure that it continues to court favor with Taiwanese businessmen as they provide an important pro-Beijing voice in Taipei.