The 2017 government work report set the real GDP growth target at 6.5 percent, while scaling the growth target of M2, the broad money measure, down to 12 percent percent. With the GDP deflator forecast between three and four percent, the targets leave a small two-percentage-gap between M2 growth and that of nominal GDP, notes Shen Jianguang 沈建光 Mizuho Securities chief economist. Money is getting tighter, concludes Shen, pointing to the five-percentage-point gap in 2016.
The 2017 Two Sessions saw several proposals aired to boost the birthrate: baby bonus, state subsidies, lower legal marriage age, and higher childbirth insurance. Since the one-child policy ended late 2015, responses have been underwhelming, reports Economic Observer, with most families foregoing a second child on cost grounds.
Agriculture is likely to emerge as the largest source of pollution by sector as better monitoring comes on stream, according to the Research Centre for Rural Economy. Production may be better guided by consumer choices, it urges. Green, organic and non-polluting product labelling is developing well, reports the Ministry of Agriculture (MoA). Meanwhile, experts fault the livestock industry, calling for a shift to large-scale, intensive production to address food safety and environmental issues.
As with many top-level policy documents, the Cybersecurity Law is vaguely worded, with subsequent directives and regulations signalling priorities. These show the Party’s commitment to creating a ‘harmonious’ online environment in a period of political transition (2017-18). Longer-term plans, such as setting up a cybersecurity review mechanism, will be carried out in a more regular manner in line with strategic policy documents such as the 13th 5-year plan and ‘Made in China 2025’.
Severing trade associations from corresponding regulatory agencies is difficult due to a lack of legislative guidance. Yet the abrupt appointment of Yao Ming 姚明 to chair the Chinese Basketball Association (CBA), and withdrawal of the General Administration of Sports from micromanaging it, has restored confidence in the embattled devolution initiative, given Yao is pointedly a civilian leading a commercial organisation, rather than ‘an official’.
economy: H7N9 overshadows food safety, pushing steel de-capacity, soothing fears over capital controls
The closely linked 5-year plans for food safety and for pharmaceuticals were launched, laying out a new safety blueprint. China Food and Drug Administration called for comment on new regulations for online food and drink services, deleting a line from the 2015 draft on protecting consumers’ personal information.
Central doc no 1, the key rural affairs policy statement, omitted the standard nod toward self-sufficiency, reaffirming the state’s intention to globalise the food production sector. Now keen to narrow the gap with developed countries, a new green product system is also forming.
The current pollution fee system is both too flexible and unclear. The new regime seeks to address these issues with legal teeth. However, to avoid major economic disruption, it is heavily based on the current one, though leaving space for future adjustments.
Central doc no 1, issued 6 February 2016, is the key rural affairs policy document. In a major breakthrough in rural land reform, says 21st Century Business Herald, private capital can now invest in rural tourism and aged care projects via PPP, and peasants can sell contracted farmland or homestead land use rights to private businesses in these sectors.
China’s trade deficit in agriculture shrank in 2016. This was largely due to falling corn and corn substitute imports, following adjustments to the price support policy. The trade deficit in livestock products increased, however, by 22 percent, led by a 110 percent rise in pork product imports. In response to these trends and increasing demand for livestock products and other quality food, the annual central doc no 1 dropped the self-sufficiency goal, standard language in previous policy documents.
Xi burnished his global leadership credentials at Davos; back home the administration remains nervous on the eve of Trump-era America. Official media claim Xi’s ‘China Solution’ is the antidote to de-globalisation, whether or not that was what US voters really had in mind. Trump’s pledge to slash corporate taxes, weakening the RMB and investment into China, is more threatening than a tit-for-tat war over tariffs and exchange rates, but no one is ruling it out.
With NEV (new energy vehicle) sales hitting 500,000 in 2016, China, the world’s largest market for new cars, aims for sales of five million new energy passenger cars by 2020. The state designated NEVs—pure electric, plug-in hybrid electric and fuel cell vehicles—a key strategic emerging industry in 2010. Full-scale subsidies took off in 2013, and the industry grew rapidly as manufacturers cashed in, favouring short-term profit from low-end tech over R&D.