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.

Issue No. 56 – June 1, 2015

The locus of control

Friday’s Politburo meeting focused on strengthening Party groups in both government and non-government organizations. From the official Xinhua release: “Leading Party members’ groups in State organs, economic, cultural as well as social organizations, and other non-Party units are important channels to guarantee the implementation of the line and policies of the Party and the system must be strengthened and improved”.

Since taking over as General Party Secretary, Xi has continuously sought to increase the Party’s authority over policymaking, a reversal of a general trend since the 80s to give government organs more autonomy. The moves potentially help to remove bureaucratic roadblocks to policy formulation and implementation, but they also make the process more opaque. This creates difficulties for businesses and investors attempting to predict the direction of policy and formulate strategies for the China market.

 

PBSC Week in Review
Xi Jinping  May 29 Xi chaired a meeting of the Politburo. 
    Xi chaired a Politburo study session.Meeting focused on public security. 
    Xi sent a congratulatory message to Andrzej Duda on his election as Poland’s new president. 
  May 27 Xi went on inspection tour to Zhejiang. 
    Xi extended a congratulatory message to the first meeting of a bilateral High Level People-to-People Exchange Mechanism (PEM) between China and Indonesia. 
    Xi approved the appointment of new ambassadors to Kuwait and Qatar. 
  May 26 Xi went on inspection tour to Zhejiang. 
    Xi issued instructions on protecting arable land. 
  May 25 Xi went on inspection tour to Zhejiang. 
    Xi sent a congratulatory message to the first annual session of the non-governmental forum of the Conference on Interaction and Confidence-Building Measures in Asia (CICA).Xi reiterated statements made at last year’s CICA summit that “Asian countries need to seek common, comprehensive, cooperative and sustainable security and discuss the establishment of a new regional security cooperation architecture.”Full text of the letter (in Chinese). 

 

    President Xi Jinping recently sent a congratulatory message to Ellen Johnson Sirleaf on the declared end of the Ebola epidemic. 
    Xi sent instructions regarding the fire in a rest home in Henan. 
Li Keqiang  May 29 Li arrived back in Beijing. 
  May 27 Li met with Spain’s Deputy Prime Minister Soraya Saenz de Santamaria. 
  May 26 Li addressed an economic forum commemorating 45 years of bilateral relations between China and Chile.Full text of the speech (in Chinese). 
    Li sent a congratulatory letter to the opening ceremony of the International Big Data Expo 2015 in Guiyang, Guizhou. 
    Li issued instructions on protecting arable land. 
  May 25 Li held talks with Chilean President Michelle Bachelet. 
    Li held a joint press conference with Chilean President Michelle Bachelet. 
    Li gave a speech to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).Full text of the speech (in Chinese). 
    Li met with Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). 
    Li placed a wreath at the monument to Bernardo O’Higgins. 
    Li sent instructions regarding a fire in a rest home in Henan. 
  May 24 Li flew from Peru to Santiago, Chile. 
Zhang Dejiang May 28 Zhang met with Jordanian Senate President Abdul Raouf Rawabdeh. 
  May 25 Zhang held talks with Peter Pellegrini, Slovakia’s Parliament Speaker.“Slovakia is an important partner to China in the European Union and in the Central and Eastern European region…[The two legislatures] should strengthen communication and coordination in international and multilateral events to safeguard common interests and instill positive energy in the push for peace, cooperation and development in the world,” said Zhang. 
Yu Zhengsheng May 28 Yu met with with 500 overseas Chinese youth representatives from 82 countries and regions. 
    Yu met with the Archbishop of Canterbury Justin Welby. 
  May 27 Yu met with Jordanian Senate President Abdul Raouf Rawabdeh. 
  May 25 Yu addressed the first annual session of the non-governmental forum of the Conference on Interaction and Confidence-Building Measures in Asia (CICA).Theme of the session was “Asia in the Next Decade – Security and Development.”“China will continue to make use of the CICA platform, discuss regional security and development issues and improve all sides’ capabilities to jointly respond to the security threats and challenges,” Yu said. 
Liu Yunshan May 26 Liu met with a delegation from the Communist Party of Cuba. 
Wang Qishan     
Zhang Gaoli May 27 Zhang attended and spoke at the opening ceremony of the ASEM (Asia-Europe Meeting) Industry Dialogue on Connectivity.Full text of the speech (in Chinese). 
    Zhang went on inspection tour in Chongqing.Speaking of the economy, Zhang said, “We will accelerate the construction of major transport projects and let investment stabilize economic growth…There are signs of stabilization and improvements, but the downside pressure remains considerable. We must work hard to secure a sustainable and healthy growth”.  
  May 26 Zhang met with Cambodian Deputy Prime Minister Yim Chhay Ly and Slovak Republic’s Deputy Prime Minister and Finance Minister Peter Kazimir. 
  May 25 Zhang met with a delegation from the Asian Development Bank (ADB) board of directors.Zhang said he hopes the ADB will lend even more support to China’s major development strategies by focusing on reform, development and poverty relief through loan projects. 

 

 

Issue No. 57 – June 9, 2015

We are the reformers and we will define what reform is

The Party’s Leading Small Group on Comprehensively Deepening Reform (LSGCDR) held its thirteenth meeting this week. After only three meetings in the eight months following its formation, the group is now meeting on an almost monthly basis, and has become the most important body in China’s policymaking system.

The group has been successful in re-centralizing policymaking within the Party (as opposed to the government), as well as overcoming some of the bureaucratic bottlenecks that have historically bedeviled policy implementation in China. LSGCDR meetings are thus windows into policy priorities and important harbingers of things to come.

This week’s meeting focused on SOE reform (among other issues), passing two opinions on the matter. Reform of SOEs has long been seen as key to carrying out structural economic reforms. However, those heartened to finally see SOE reform taking a prominent position were likely disappointed. The two opinions focused on strengthening Party leadership over SOEs and preventing the loss of state assets, respectively. Full texts of the documents have not been released, but judging from their titles and official commentary it is safe to assume that the documents do little to move SOEs in a more market-oriented direction.

This appears to be a sign that market-oriented reforms will only go so far. While such an outcome is disappointing to liberal-minded reformers, it should not come as a surprise.

Confusion over the meaning of “reform” is common. Many China analysts see “reform” as necessarily implying movement towards a more liberal economic and political order. But for Chinese leaders, “reform” is a process of change to make the Party-state more powerful. Such an understanding of reform does not rule out a more market-oriented economy; in fact, for over three decades Chinese leaders have seen market-oriented reforms as invaluable to creating a strong Party-state. But it also means that free markets are seen as means to an end, and not as being good in and of themselves. Put simply, there are limits to reform.

In the case of SOEs it is likely that we will see efforts in some areas to make them more efficient. But this will not be done through privatization or severing ties between operations and ownership. Friday’s meeting makes clear that “state-owned” will continue to mean “Party-controlled”.

PBSC Week in Review
Xi Jinping  June 5 Xi chaired a meeting of the Leading Small Group on Comprehensively Deepening Reform. 
  June 4 Xi chaired a Politburo Standing Committee meeting.Meeting focused on rescue efforts for capsized Yangtze River cruise ship. 
  June 2 Xi sent instructions regarding rescue efforts for a cruise ship that capsized on the Yangtze River. 
  June 1 Xi exchanged congratulatory letters with South Korean President Park Geun-hye on occasion of the signing of a free-trade agreement (FTA) between the two countries.China is ROK’s largest trading partner. Bilateral trade was USD 235.4 billion in 2014. The new agreement is China’s largest bilateral FTA in terms of trade volume. 
    Xi attended and addressed the 7th National Congress of the Chinese Young Pioneers.Xi: “In you, I see the future of our nation… The socialist modernization drive, and the great rejuvenation of the Chinese nation will be obtained with your hands… A person can have a lot of aspirations but the most important are about the motherland and its people. You should aspire to seek truth and serve the country.” 
Li Keqiang  June 5 Attended a meeting of the Leading Small Group on Comprehensively Deepening Reform. 
  June 4 Li chaired an executive meeting of the State Council.Discussed measures to support entrepreneurs, increase private capital in healthcare and simplify business registrations. 
  June 3 Li continued to direct rescue efforts for a cruise ship that capsized on the Yangtze River. 
  June 2 Li went to Hubei to direct rescue efforts for a cruise ship that capsized on the Yangtze River. 
    Li visited rescued passengers from the capsized cruise ship. 
Zhang Dejiang June 8 Zhang attended the first meeting of the BRICS parliamentary forum in Moscow, Russia. 
Yu Zhengsheng June 8 Yu chaired a symposium to solicit opinions on the 13th Five Year Plan from non-Party organizations. 
  June 5 Yu met with private businessmen to discuss the 13th Five Year Plan.Attendees included Jack Ma of Alibaba, Yang Yuanqing of Lenovo and Liu Yonghao of the New Hope Group. 
  June 4 Yu chaired a biweekly CPPCC symposium.Meeting focused on treatment and prevention of echinococcosis, a parasitic disease caused by the larval stages of a canine tapeworm. 
  June 2 Yu met with president of the Senegalese Economic, Social and Environmental Council Aminata Tall. 
Liu Yunshan June 6-8 Liu went on inspection tour to Fujian. 
  June 6 Liu attended the National Village Grassroots Party-building Work Symposium in Hangzhou, Zhejiang. 
  June 5 Attended a meeting of the Leading Small Group on Comprehensively Deepening Reform. 
  June 1 Liu attended the 7th National Congress of the Chinese Young Pioneers.
     
Wang Qishan     
Zhang Gaoli June 5 Attended a meeting of the Leading Small Group on Comprehensively Deepening Reform. 
    Zhang met with Japanese Finance Minister and Deputy Prime Minister Taro Aso. 

 

China Politics Weekly – June 1-9, 2015
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