SOE über-agency SASAC, sidelined in the 2015 reform plan, has been making a comeback. The plan had reduced SASAC’s functions to Temasek-style management of capital, and corporate conversion pilots. Ministry of Finance’s (MoF) star was on the rise, given charge of ‘state capital investment and operation pilots’, an initiative to shift state capital to more profitable sectors. With MoF cast as a more effective reformer than the conservative SASAC, this was welcomed. But SASAC has managed to wrest control of the initiative, announcing a series of pilots in 2016 and 2017 and setting up new bureaus to oversee them.
The National Financial Work Conference 14–15 July, held every five years, chimed with the regular themes of the past year: making the sector better serve the real economy, greater Party control over financial affairs, and tamping down on financial risks. Regulatory consolidation, long called for by commentators, was deferred at least, in favour of a new, underwhelming Financial Stability and Development Committee under State Council. The central bank (PBoC) is to have a greater role in macroeconomic management.
Plans to open up state data—80 percent of all data, according to premier Li Keqiang 李克强—aim to nurture the industry and create ten world leading firms by 2020. In 2015 State Council called for interdepartmental data-sharing by end 2017. But some agencies and local governments have created isolated data silos that hamper innovation, said Li at a June 2017 meeting. All internal government information systems under State Council will be integrated in 2017, he insists, with this system linked to a national sharing platform before June 2018.
Praising India at a 7 July 2017 BRICS conclave on the sidelines of the G20 Summit in Hamburg, Xi Jinping politely overlooked a Sino–Indian border standoff over Doklam (Donglang), a strategic plateau claimed by both Bhutan and China, by then in its third week. Indian troops stopped a Chinese road project as harmful to Indian security. Misjudging its own capabilities and China’s baseline, India risks military confrontation, warns Wang Dehua 王德华 Shanghai Municipal Centre for International Studies South and Central Asia Institute director.
The industry’s image went from bland to ‘barbaric’ between 2012 and 2016. Deregulation had been a strong theme under Xiang Junbo 项俊波, the China Insurance Regulatory Commission (CIRC) chair, whose March 2017 detention and dismissal for corruption transmitted a major shock to the financial sector. Under Xiang, restrictions had been relaxed on insurance companies’ investments across all asset classes, traditional and alternative, domestically and overseas (see a breakdown here). Risk management was left to firms, holding them accountable for investment decisions.
China’s homegrown BeiDou Navigation Satellite System is planned to have global coverage by 2020, with 35 satellites in orbit. Named after a constellation (the Big Dipper), it will challenge the US Global Positioning System (GPS) while competing with Europe’s Galileo and Russia’s GLONASS. China will launch 18 satellites by end 2018, enough to provide basic services for Belt and Road countries, with six to eight launches planned for H2 2017. Achieving metre-level precision earlier this year, the new vehicle chip now outperforms GPS. Experts cited by China Daily anticipate a global take-up of BeiDou from 2021.
Twenty major food companies including Shuanghui Logistics, Synear Food, China National Foodstuffs Group, and CP Group set up an industry blockchain alliance at the China Food Safety and Cold Chain Logistics Summit. The alliance will help some of the largest producers comply with new traceability rules stated in CFDA’s ‘Requirements for food processors to build a traceability system’ from early spring. In late June, further blockchain initiatives were announced including a pioneering system for tracing chickens ‘from egg to table’, and notably, a partnership targeting ‘green’ certified food fraud on e-commerce platforms.
‘Window guidance’ from China Banking Regulatory Commission (CBRC) in early June asked commercial banks to examine credit extended to a list of companies with large overseas investments, including Anbang and HNA. Worries over the effective credit rating prompted asset managers to pre-emptively reduce their holdings. A flash crash of these companies’ stocks and bonds ensued. Wang Shi 王石 stepped down as CEO of Vanke, sparking speculation about CBRC’s next move to clamp down on illicit shadow banking activities that enabled the unresolved hostile takeover battle between Baoneng and Vanke.
New agribusiness operators, designated modernisers of agriculture, need money. Since the household responsibility system was launched in the early 1980s, China’s average farm size has hovered around half a hectare. Scaling up requires expensive investments in professional farming equipment, but China Academy of Social Sciences (CASS) in August 2016 identified a C¥3 tn rural credit shortfall.
Development of an all-encompassing internet control framework has sped up since the Cybersecurity Law took effect on 1 June. Cyberspace Administration (CAC) released its first list of vital devices and products, showing resolve in the face of foreign criticism. Meanwhile, CAC extended the crackdown on gossip platforms to WeMedia fashion and film review accounts.
China’s debt problem is rooted in politicised GDP growth targets. Since the financial crisis (2007–08), growth has been driven by investment in real estate and infrastructure. Short-term bank loans, unsuitable for the long-term nature of infrastructure projects, have financed this investment.
China’s sugar industry includes two interest groups—upstream producers and downstream processors—with distinct and often conflicting interests. Processors want cheap, high-quality sugar no matter its origin. The state wants to protect poor farming households and state-owned farms.