- robot industrial chains
- low safety standards put children in harm’s way
- fair competition, or is it?
- agriculture going global now state priority
- Xi and Putin eye Brexit
- corporate sector debt skyrockets
An ambitious remodelling of the bankruptcy system is underway. Agreeing in principle that insolvent SOEs can no longer expect taxpayer bailouts, central agencies are exploring ways to both respect market forces and to ‘maximise M&As, minimise liquidations’.
Since 2013, Li Keqiang’s key initiatives, including devolution and innovation, have avoided politically tricky SOE reform. Amid growing political pressure, and with economic troubles continuing, Li is now interceding.
- social support going beyond the state
- water regulations focus on conservation
- SOE reform changing directions
- CCDI moving from fighting graft fighting to implementing policy
- developing precision medicine
- overseas voices given domestic coverage
A page one People’s Daily interview with an ‘authoritative person’ on 9 May set the tone for the month, reaffirming the decisive role of markets, and reiterating the priority of supply-side structural reform. Reassuring those fearing economic reform had gone off the rails, talk of an L-shaped growth curve set out to modify expectations of a rapid recovery. Instead, it led to widespread speculation of a growing divide at the top.
Ageing pressure has increased the urgency of pension reform. Growing urgency has sparked fundamental debates among leading scholars and policymakers about how to make the pension system fairer, stronger and more sustainable.
Publicly accessible social credit platforms compile information on firms and individuals and rate their trustworthiness. Designed to increase transparency and curb dishonest behaviour, they address the so-called social trust deficit.
- general aviation the next infrastructure frontier
- expanding the ‘middle income group’
- NEEQ stratification plan released
- golden shares to increase media control
- restructuring crops to increasing influence
- belt and road criticism mounts
A new central strategy ‘linking people, land and money’ better incentivises local governments to realise ‘deep urbanisation’: offering full urban entitlements to new residents, while limiting urban sprawl and soaking up housing oversupply.
- low growth to continue
- changing leaders at State Grid
- reassurance on foreign NGO law
- agricultural restructuring pushing ahead
- pension investment opportunities
- European Parliament rejects China’s market status
Economic questions continued to dominate April. Respected reformist, Gao Xiqing 高西庆 stated current policy will see too many zombie firms survive, undermining policy rhetoric that would allow markets to kill them off. This was underpinned by more defaults of SOEs, and bleak export figures. Whether Tianjin’s or Henan’s efforts to restructure SOE debt will inform a national model remains to be seen. The surge of Chinese firms engaged in overseas M&As may well represent an overlap between ‘going global’ and capital flight.
Looser credit to prop up growth has spurred unregulated deposit lending, threatening a housing bubble in tier 1 cities. Regulators will seek a fragile balance between simultaneously expanding credit, regulating financial innovation, and tightening housing policy.