roundup from our portfolios

Power sector interest groups were finally put on notice as sweeping liberalisation of the sector took effect 15 October. Months of power shortages across the nation, brought on by coal supply and demand mismatch, led to rationing in 20 provinces and blackouts in the worst-affected northeast. Severe underpricing of electricity saw plants shut down rather than incur further losses. New rules allowing greater price fluctuations, and ending price ceilings for energy-intensive industries, are intended to better balance power supply with demand.

Biting the bullet in reforming the power sector puts Beijing’s emissions reduction plans on a firmer footing. Top-level guidance on reduction emerged in the lead up to Glasgow’s COP26. Non-fossil fuels are set to supply 80 percent of energy by 2060, but no new short- or medium-term reduction pledges are offered.

New energy vehicle sales continue to set records. The penetration rate is reaching 17 percent—nearing the target 20 percent set for 2025.

The first leg of the biodiversity COP15 was held from 11 Oct. A Kunming Biodiversity Fund and 1.5 bn initial funding for developing countries were pledged.

The economy, hit hard by repeated COVID-19 outbreaks, bad weather and the power shortage, continues to slow in Q3 and will slow further by year’s end. But policymakers are sticking to most of their guns. Hard hit localities have been allowed some easing of real estate restrictions, but bringing it under control is still the point, demonstrated in renewed property tax pilots. But with five-year timeframes, they may be no more than can-kicking exercises. Large cities with hot-property markets e.g. Shenzhen or Hangzhou are expected to host the pilots.

Massive rain and floods across crop-growing regions, including the northeast and the Huang-Huai basin, raise fears of lost yield; post-harvest storage and processing of wet grain is at further risk from power shortages. Delaying autumn planting, the weather is also harming prospects for next year’s summer harvest. The role of trade becomes even more prominent amid short-term loss of output and long-term mounting food demand.

Addressing the 20th anniversary of China’s WTO accession, ag leaders renews calls to lead global agrifood governance, speeding up WTO reform and ushering in a more ‘equitable’ ag trade order. Regional cooperation platforms—BRI, RECP and SCO—must be leveraged.

Liberalising cross-border trade in services and opening them to foreign investment continue amid the rollout of two 14th 5-year plans (FDI; trade in services). Digitising services trade and leading its global governance via the WTO and multilateral FTAs (e.g. RCEP, and potentially CPTPP) are ranked as priorities. More market access is slated for services investors, above all for value-added industries like advanced manufacturing, high-tech and modern services. But the media sector has seen tightened access. This can also be expected for other security-sensitive sectors.

Trade talks have resumed with US and EU leaders, political hurdles hindering anything more substantial.

Shipping costs fell, but may rise again, given holiday demand and intractable port congestion.

Plans to groom Shanghai as a global innovation hub by 2035 emerged, with massive urban development planned along the Hong Kong-Shenzhen border, expanding the existing Hong Kong Science Park 16-fold. The focus is on innovation and talent, not least the once-a-decade Central Talent Work Conference.

A new national standardisation strategy, likely a reframing of ‘China Standards 2035’, is imminent.

Stronger regulation is on the cards in cyber-security and cultural content, with new data security measures and a plan to regulate algorithms over three years. Tech-giants will remain under pressures of anti-monopoly, content regulation and common prosperity.

Countering Western democracy, ‘whole process people’s democracy’ has become a buzz-phrase. Party leadership, regional obedience and national consciousness plug gaps filled elsewhere by elections.

10-year plans for women and children marked another step in rolling out a three-child policy to halt declining birth rates. The plan for women aims to improve gender equality on all fronts; the plan for children vows to put ‘children first’ in public policy, infrastructure and services. Together, the two plans sit within the transition to an ageing society, while promoting mantras of common prosperity, social justice and human rights.

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China Policy–Asia Society Australia partnership

solar array, Taihang Mountains

On the eve of COP26, paper 4 in our China Executive Briefing series, jointly produced with Asia Society Australia:

China sprints to a green future

analyses the sectors facing the biggest changes to cut emissions: energy, industry and transport, We discuss Beijing’s current position, looming milestones and risks ahead. Read the brief and join the online expert panel discussion ‘Cooperating with China on climate change’ on 11 November. Register here.

Visit the China Executive Briefing portal to read the series.

featured analysis

idealising Mao

must-haves for a ‘super’ 6th Plenum

The fast approaching 6th Plenum is being tipped to rank with two earlier ‘super plenums’, each marking a radical retelling of the Party narrative. Official media is telegraphing that a change is coming and that the incumbent and his doctrine (known as his ‘line’) have what it takes to ‘rejuvenate the Chinese nation’. Indeed, to be invested as Party general secretary for life. full post open access →

october policy movers

policy professionals in and out of the establishment

Lin Boqiang 林伯强 | Xiamen University China Energy Policy Research Institute dean

The new power market reforms are the most significant in the PRC’s history, proclaims Lin. Expanded caps on price fluctuations, now of up to 20 percent from benchmarks, are not the most important aspect, he argues; more significant is that energy-intensive firms will not fall under the 20 percent fluctuation limit. Industrial and commercial users consume 70 percent of China’s electricity; energy-intensive industries alone consume 40–50 percent. Removing price ceilings for them hence constitutes a huge leap in marketising the sector as a whole. This is consistent, Lin argues, with Beijing’s ‘dual control’ goals, industrial restructuring and high-quality development requirements. Implemented effectively, he forecasts, power prices would rise and prices of entire supply chains increase.

Energy economics and policy pundit Lin holds a PhD in economics from UC Santa Barbara. He has served on NDRC, China Energy Society and World Economic Forum committees, and is currently a distinguished professor at Xiamen University and dean of its China Energy Policy Research Institute.

Ma Youxiang 马有祥 | MARA vice minister

At a 14 Oct 2021 conference marking the 20th anniversary of China’s WTO accession, Ma promoted China’s active market opening. It has cut tariffs, reduced non-tariff barriers, adjusted domestic subsidies and optimised ag-related laws. China will support WTO ag negotiations, he said, as it seeks to overhaul ag trade by incorporating ‘China solutions’. China will leverage regional cooperation schemes, such as the Belt and Road Initiative, G20, BRICS and SCO, as alternative platforms to lead global campaigns on food-waste, soil improvement and south-south cooperation. Free trade zones, frontrunners in global ag business and investment, will expand ag trade partnerships. Ag cooperation pilot zones, not least larger ones in Ningxia and Weifang, Shandong, are to prioritise innovative policies that facilitate two-way trade and investment.

A MARA veteran, Ma led the animal husbandry department before his promotion to vice minister in May 2021. He also headed up the ag trade promotion centre (responsible for WTO issues) 2003–05 and was China’s permanent representative to the UN Agencies for Food and Agriculture, directly communicating with FAO, WFP and IFAD 2005–08.

Huang Xiaowei 黄晓薇 | National Women and Children Working Committee vice director, All-China Women's Federation Party secretary

Party leadership, Huang told a 27 Sep 2021 press conference on guidelines for women and children’s development, is indispensable for institutional change to help women feel ‘safe, happy and accomplished’. Her address finessed the specifics of the still-patriarchal Party’s hold on the moral high ground of population control; wielding family- and women friendly policy means pledging to help women balance work and child-raising. She announced new areas of focus including ‘women and family building’, ‘children and family’ and ‘children and safety’.

Huang’s impressive Party career started in Liaoning. Promoted to the CCDI in 1998, she then rose through provincial Party positions to lead the All-China Women’s Federation. She is known as the ‘anti-corruption woman general’ after bringing down 19 cadres in Shanxi within two months in 2019. An alternate member of the 19th CCP Central Committee, given her age (b. 1961), she may well miss promotion to the Central Committee at next year’s Party Congress.

policy ticker highlights

gems from our feed of policy releases and domestic debate

energy and environment

overarching road map to carbon neutrality launched

21st Century Business Herald | 24 October

context: This document constitutes the ‘1’ in the government’s ‘1+N policy system’, meaning that it will set the general direction for socioeconomic development and emissions reductions; more detailed plans are likely to follow in the ‘N’ supporting plans.


expansion of property tax pilot formally approved

State Council, Economic Observer, Yicai, | 24 October

context: While hailed as a long-term solution to the housing problem, property tax has only been trialed in selected cities since 2011 with marginal results achieved. Bound to cross powerful interests, the wider adoption of property tax has met vocal resistance among official circles and beyond. Economic wounds of the pandemic slowed the process in 2020, but the following recovery offers tax advocates a window of opportunity. As ‘common prosperity’ is fasttracked as a major policy, property tax is rising on the policy agenda with the hope that it might tame house prices and redistribute wealth.


ag vice minister lays out China’s position on global ag trade

China Trade News | 14 October

context: 2021 marks the 20th anniversary of China’s accession to the WTO (World Trade Organisation). Speaking at a high-level meeting on 11 October, the PRC’s top ag official took stock of the nation’s agricultural opening-up. The speech signals a continued commitment to global ag trade—but increasingly on China’s own terms.

trade policy

private capital to be prohibited from investing in media activities

National Development and Reform Commission | 8 October

context: The market access negative list has been shortened annually since 2018 and applies to both foreign and domestic non-public sector investors. In the 2021 list, the banning of private investment across a range of media and news service activities has raised concerns on the squeezing of space for non-official public opinion and independent media platforms. Meanwhile, Chinese experts point out that similar media industry restrictions have already been in place since 2010 under flexible implementation guidelines, and the new ban mainly targets independent media influencers that reproduce foreign anti-China rhetoric and disrupt official discourse. Despite ongoing debates, it’s likely that investors will start to shun media ventures amid the recent wave of crackdowns across the private sector.

science and innovation

China Standards 2035 stresses market-driven standards

State Council | 10 October

context: Widely expected by international observers as a document on a par with Made in China 2025, the strategy is revealed in technical documents highlighting areas that technocrats will focus on.


tightening regulations on algorithms to uphold state ideology

Ministry of Education | 29 September

context: Under the current campaign to regulate cyberspace content, Beijing is cracking down on unfettered competition among tech giants and regulating algorithms to keep cyberspace content in line with ‘correct’ ideology. New guiding opinions call for preventing algorithms from countering state ideology and disturbing social stability. These opinions, for the first time, also call for banning tech companies from using algorithms to hammer their rivals and for protecting the IPR of algorithms.


developments in PRC pharma innovation

Weixin | 12 October

context: The age of COVID-19 presents a historical juncture for pharma innovation. The revamped pharma approval system will prioritise original R&D while rapidly expanding centralised procurement, pushing the industry towards innovation as profit margins narrow for generics. Ultimately, on the PRC’s path towards being a ‘global pharma powerhouse’, those with a lower capacity for breakthrough innovation will be weeded out.

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