First held in 2012, the annual Moganshan forum commemorates a 1984 meeting of young economists who shaped China’s market reforms. Held at the mountain resort of Moganshan 24-26 September, the 2016 forum discussed, among other reforms, regulating the wealth management market, creating a ‘super Ministry of Finance’, and supporting government initiatives (like Belt and Road) through financial institutions. Bringing together major policy influencers, Moganshan foreshadows the possible agenda for the more secretive Fifth National Financial Work Conference.
PBoC allowed the RMB to depreciate against the USD past 6.70 in the first day of trading after the National Day holidays, raising concern over capital flight. The weaker RMB is due to a strengthening dollar, says Liu Dongliang 刘东亮 Merchants Bank analyst, estimating the exchange rate may approach 6.73 if the Federal Reserve raises interest rates in 2016.
At a little-noticed forum in Zhejiang, Shen Jianguang 沈建光 Ruisui Securities chief economist repeated his call, first made in 2013, for merging the NDRC into the Ministry of Finance (MoF), giving the latter power over government finance, investment and state-owned assets.
Concern has returned to real estate, with recent data showing the government again resorting to property markets to support growth. Tier-2 are following tier-1 cities in restricting housing purchases, as usual based on hukou. The state has abandoned talk of deleveraging, aiming instead to stabilise the skyrocketing debt to GDP ratio.
Public hospitals dominate health services in China, hindering private industry and multi-level care development. Scandal-prone, they are blamed for escalating healthcare costs and inefficient services, causing deep public dissatisfaction. The state is pushing to abolish payroll quotas in public hospitals. A fully marketised, contract-based personnel system is the goal.
Since deleveraging initiatives were announced at the Central Economic Work Conference in late 2015, SOE and housing market debt has grown. China Railway Corporation, with a debt to asset ratio of 64.6 percent, will issue C¥300 bn in bonds this year, some to be used for debt restructuring.
As part of the 2015 Paris Agreement, China committed to reducing CO2 emissions per unit of GDP by 60-65 percent on 2005 levels and increasing the share of non-fossil fuels in primary consumption to around 20 percent by 2030. In line with this, the 13th 5-year plan, passed March 2016, made ‘green development’ central to the long-term growth strategy. Seven agencies released ‘Guiding opinions on building a green finance system’ on 31 August 2016, setting a framework for financing green development goals and COP21 commitments.
The murder-suicide of a rural Gansu family led many to question state efforts to help those most in need. A since-deleted viral WeChat post, ‘Those forgotten in the age of prosperity’, blamed the hukou system, falling crop prices, growing coastal-inland disparity and lack of mental health support for rural women.
Just before the US and China ratified the Paris agreement, seven agencies swiftly issued ‘Guiding opinions on developing a green financial system’, while NPC Standing Committee began reviewing the Environmental Protection Tax Law. Experts note bureaucratic hurdles in coordinating environment and taxation departments.
It was puzzling that the leadership did not make more of significant ‘Guiding opinions’ on central-local fiscal relations, which re-centralise many expenditure responsibilities like environmental impact assessments.
- ‘modest’ fiscal recentralisation
- P2P rules leave platforms playing catchup
- less state, more Party for NGOs
- dreams of Northeastern rejuvenation
- safeguarding future food
- after the frenzy, turning outward again
A new infant milk formula regime, coming into force 1 January 2018, opens for registration on 1 October 2016, as Food Safety Law ramps up. Many cross-border e-commerce suppliers sell foreign milk formulas that are not required to meet national standards, arguably penalising the domestic industry. Standardising registration and quality requirements will level the playing field and improve market regulation.