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.
- internet finance clampdown
- cash and land incentives in urban tournament system
- civil nuclear getting smarter and safer
- debate over urban land lease renewal
- Chinese firms increase their global M&As
Finance minister Lou Jiwei 楼继伟 has crossed agency boundaries to call for revisions to the 2008 Labour Contract Law. With lower growth, and the state moving to reduce enterprise burdens, expect changes to the law in favour of business as soon as end 2016.
- courts to connect stricken SOEs with private capital
- central funds for new industry
- moves to better regulate the fishing industry
- banks picky about debt-for-equity swaps
- Li give health care reform a boost
- foreign policy divisions made public
General Administration of Customs (GAC) implemented a new tax regime for 1,142 categories of direct retail imports on 8 April 2016, formalising e-commerce trade under the import tax system. These new regulations are not a strike against foreign exporters, but a regulatory lever to build markets, and develop logistics chains and consumer protections.
Political pageantry usually dominates the annual Two Meetings, with policy coming a poor second. This year the domestic Charity Law was the only significant legislation to pass, though last-minute changes left doubt as to its intention and effects. The 13th 5-year plan, placing innovation at the centre of industrial development, was also given final shape.
- Tianjin zombie restructuring not another bailout
- MofCOM releases logistics plan
- hog prices surge
- concerns over Charity Law
- thinking outside the box on housing reform
- Xi takes the high road, Li takes the low road
New regulations on digital industries tighten market entry for foreign firms, and increase risks for those already present.