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.
In a rare official note on key financial statistics, the central bank (PBoC) said there is sufficient liquidity for the business sector. This comes despite its continued clampdown on overleveraging in the financial one. Institutions have promoted new, robust RMB-denominated loans to make new off-balance-sheet credit look smaller, an attempt to put credit business back on balance sheets.
Public healthcare is under increasing strain. A rapidly ageing population, expanding government health insurance coverage, the two-child policy, and, with rising affluence, more diverse service demand are key factors. The state is promoting the private sector as part of the solution, seeking to develop a more efficient, varied, multi-level healthcare system to relieve pressure on crowded public hospitals.
‘We Europeans truly have to take our fate into our own hands’. Angela Merkel’s words made the page-one headline of Global Times 31 May 2017, as millions of Chinese returned to work after the Dragon Boat Festival holiday. Yet hopes of China helping the EU manage its US relations were far-fetched, warned the nationalist daily in its editorial. China, it seems, stands at the threshold of a position of global authority, its aspirations for ‘major power’ status suddenly favoured by breakdowns in the hitherto dominant order courtesy of Brexit and Trump.
Education is in the spotlight, thanks to the annual gaokao university entrance exam, and measures to address imbalances in the compulsory schooling system. Reform of the gaokao, considered needlessly stressful and rigid, has been mooted since 2014. The recently released ‘2017 higher education recruitment survey report’ makes special mention of Zhejiang and Shanghai pilots, which test students on mandatory Chinese, mathematics and English, plus three subjects of their choice.
Anti-graft authorities turned their attention to the financial sector on 21 March 2017, when Premier Li Keqiang 李克强 announced a campaign against ‘crocodiles in the capital market’. In its biggest catch yet, Central Commission for Discipline Inspection (CCDI) announced they had detained Xiang Junbo 项俊波 former chief of China Insurance Regulatory Commission (CIRC) on 9 April. State media, backed by Xi Jinping 习近平, have since declared the hunt the highest anti-graft priority. Regulators are now targeting malpractice in a much more aggressive and public fashion.
Healthcare provision is severely imbalanced, with expertise, pharmaceuticals and equipment concentrated in big top-tier public hospitals, and patients following suit. Lower-level hospitals and community clinics, which should treat the majority of medical cases, lose out. Doctors are reluctant to leave comfortable, higher-tier public hospital posts, which provide lifelong employment and generous benefits, for grassroots positions, offering lower salaries and prospects. Even patients diagnosed at community clinics often have to visit large hospitals to undergo medical examinations and have prescriptions filled. The problem is compounded by low insurance coverage at lower levels.
Plummeting pig prices since Lunar New Year continue to puzzle experts. Pork, accounting for 8 percent of domestic meat consumption, is a major item in CPI and inflation; China produces 50 percent of the world’s pigs. The industry’s sheer size and economic impact has left analysts and officials scrambling to explain the drop and reassure the industry it will remain stable, and perhaps profitable, when this pork cycle ends.
The northbound link of the long-awaited bond connect will likely be launched 1 July 2017, allowing foreign investors to trade onshore bonds without investment quotas or onshore accounts. This is the latest move in PBoC’s two-year campaign to open the onshore bond market, part of its broader agenda to promote RMB internationalisation. The medium-term aim is to get Chinese bonds included in global benchmark bond indices, as Zhou Xiaochuan 周小川 central bank (PBoC) governor stated in March 2017.
Having sent a delegation to the B&R Forum and making former Prime Minister Lee his personal envoy to Beijing, shoring up bilateral ties is a priority for new South Korean President Moon. The surprise US resumption of Freedom of Navigation operations (FONOPs) in the South China Sea 24 May is unlikely to alter this, despite Trump’s earlier halt on FONOPs, in exchange for China’s cooperation on Korean issues.
The Belt and Road Forum on 14-15 May saw further massive funding boosts for the initiative, despite doubts over its long-term risk/benefit ratio. Funding and risk sharing by markets and third countries is now a sub-theme. While India was conspicuously absent, last-minute attendances by the US and South Korea were received positively.