The National People’s Congress (NPC), will review 13 March a monumental restructuring of the Chinese state. Far from an arbitrary or sudden power grab, this rethinking of how China governs itself is the fruit of five years of painstaking work during Xi’s first term. With his authority renewed by the 19th Party Congress and the recent Third Plenum, Xi and his team are now ready to uproot the Byzantine network of overlapping responsibility that has defined Chinese governance for decades. Replacing it are ministries that are bigger, fewer, and, above all, have sole responsibility to implement the Party’s political agenda in their fields of competence.
China plans to import more—a lot more. The aim is to secure key economic goals: transition to higher-end manufacturing, and to consumption-led domestic growth. Some advisors have even recommended pursuing trade deficits.
The November 2018 China International Import Expo (CIIE), a centrepiece announcement of the 2017 Belt and Road Forum, is the first major step in this strategy. Countries that want to sell more into China’s domestic markets are lining up for exhibition space. But participants must prepare to manage the geo-economic challenges associated with the move to imports: Beijing is not looking for a new role in the established global trading system, but a leading role in a new system and global order envisaged by its strategists.
Regulators came down on outbound investment like a tonne of bricks in February despite signalling tolerance for capital outflows. SAFE and insurance watchdog CIRC tightened control over ‘offshore borrowing with onshore guarantees’ in a 12 February joint release. This has in recent years allegedly been a key instrument used by Chinese firms to bypass capital control measures, allowing them to finance overseas M&As and disguise capital flight. CIRC announced a temporary seizure of Anbang Insurance Group 23 February, a once avid shopper for overseas assets. Anbang founder Wu Xiaohui 吴晓晖 is currently detained for investigation of ‘economic crimes’. CIRC also reprimanded three other insurers for non-compliant overseas investments. But regulators insist that they are not trying to limit capital outflow.
One week, two dramatic breaks with Party norms. Together, they signal high-level commitment to seeing through an ambitious overhaul of the Party-state. China’s leaders called an unseasonal meeting of the CCP Central Committee 26-28 February. The Third Plenum, normally held in late autumn, was moved ahead of the Two Sessions, likely in order to build consensus for a massive package of state restructuring expected to be approved at the annual meeting of China’s legislature in early March. On 25 February, state media announced a January Central Committee decision to remove presidential term limits from the constitution, demonstrating the strength of Xi Jinping’s position among the Party elite and endorsing a commitment to the program he has championed up to and beyond 2023.
For the past 14 years, the first major central policy document of the year has focused on rural and agricultural policy, laying out the agenda for the year. 2018’s No. 1 Document, however, outlines an ambitious longer-term vision for ‘rural revitalisation’: dissolving institutional barriers between rural and urban policy, integrating farming with its upstream and downstream industries, adjusting rural property rights, and opening the countryside to industrial development and private capital.
A government push for industrial internet of things (industrial IoT) will quickly get this technology into Chinese factories. But state support is likely to leave domestic IoT firms stuck at the low end of the market, following the pattern of previous efforts in robotics.
Most international relations scholars examine China through one or another version of realism or liberalism. David Kelly offers an alternative approach that examines the nature of Chinese identity—or, rather, Chinese identities (plural)—and how they exhibit themselves in Chinese foreign policy.
Beijing has published its first ever Arctic policy white paper. It firmly stakes a claim to take direct part in Arctic governance as a ‘near-Arctic state’ whose interests are impacted by activity in the region. Stressing climate change, environmental protection and adherence to international law, the white paper portrays Beijing as entitled, given its capacity for protecting the global commons, to develop sea routes and utilise resources.
December saw deepening Party power and Xi Jinping’s political supremacy on show again. He proposed a constitutional amendment at a top political and legal meeting following the CCP Central Committee’s second plenary session. To be tabled at the March Two Sessions, the revision will confirm a new National Supervision Commission with sweeping oversight over the public sector.
The bid to detach local governments from companies set up to enable irregular borrowing is already in trouble in early 2018. Yunnan province is bailing out a former local government financing vehicle (LGFV), Yunnan Capital, which morphed into a state-owned asset management company in mid-2016. Like many LGFVs, it proved non-viable.
Xi’s anti-corruption campaign takes root as a new state agency, extending its reach over a broad swatch of society. Ambitions for predictability and transparency have limits, but are worth taking seriously.