cp.signals • weekly • domestic policy movement

Agriculture has to date been de facto exempt from Beijing’s efforts to mitigate climate change, yet it is the source of some 8 percent of China’s emissions (CO2e terms). Now, as the Xi administration’s carbon neutrality campaign ramps up, ag emissions and carbon sequestration are appearing on the policy agenda. Ag methane emissions are targeted in the ‘US-China joint Glasgow declaration’, issued at COP26 on 10 Nov 2021, further suggesting a shift is coming.

cp.positions • audit of shifts across sectors • alternating weeks economy/governance

Among the most anticipated 5-year plans for industry sectors is one designated for ICT. Sorting out the tech sector is a new focus of the ICT 5-year plan. A new wave of support is offered to the myriad highly specialised manufacturing and IT SMEs: localities are expected to offer customised support, from IPO listing to management consulting. Tech giants face ever more pressure in this new normal, from paying higher taxes to supporting common prosperity. A designated National Anti-monopoly Bureau is now in place. 

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november: settling into the new era

The PRC’s third historical resolution, generated by the recent 6th Party Plenum, has proclaimed a new era, shifting from economic development via reform and opening to ‘national rejuvenation’. The resulting political order wins legitimacy by countering moral decay and corruption. The state demands that recently liberalised personal spaces, above all online and on stage, now reflect approved values only. The resulting nanny state is not new, but is empowering new modes of state intrusion.

cp.signals • weekly • domestic policy movement

post 6th plenum: can Xi reengineer public values?

For the best part of a decade Xi has poured resources into building his grand rejuvenation narrative, characterised by PRC-style puritanism and a system of pre-modern hierarchy in the service of building national strength. The resulting political order wins legitimacy by countering moral decay and corruption. The state demands that recently liberalised personal spaces, above all online and on stage, now reflect approved values only. The resulting nanny state is not new, but is empowering new modes of state intrusion.

cp.positions • audit of shifts across sectors • alternating weeks economy/governance

The PRC launched a ‘new era’ at the 18th Congress (2012). So claim the communiqué of the 6th Plenum and the third historical resolution. The Party’s core mission, the texts proclaim, switched from economic development via reform and opening to ‘rejuvenation of the nation’. Xi’s predecessors are lauded, underscoring Party continuity. Yet Deng’s criticism of Mao in the second historical resolution is maintained. Catastrophic risks flagged by Xi as characterising the reform era are listed: marginalised leadership, weak enactment of central directives, corruption and risk tolerance. 

cp.signals • weekly • domestic policy movement

Eating meat, long a preserve of the wealthy, now defines a modern diet in the PRC. Providing animal protein is a feather in the state’s cap. ‘Eating well’ has replaced ‘eating one’s fill’ as a policy test.  But, as ASF (African swine fever) and recent rising food prices demonstrate, minefields abound over issues of price, safety, environmental stress, logistics, cold chains and trade. Policies aimed at satisfying a domestic constituency quickly become sources of geopolitical friction.

cp.positions • audit of shifts across sectors • alternating weeks economy/governance

Despite its modest showing at COP26, the PRC had an inevitable outsized impact. It helped dilute some strong language targeting coal in the Glasgow Climate Pact. It partnered with India to lead a last-minute campaign to change ‘phase-out’ to ‘phase-down’, provoking the ire of vulnerable island states and wealthy European ones alike. Just as dramatic was Beijing’s announcement of cooperation with the US on 10 November, when the two top polluters agreed to joint action in the near future.

cp.signals • weekly • domestic policy movement

After years of rhetoric and a patchwork of policies, measures to replace real estate as the mainstay of the economy are gaining momentum. Restrictions on both housing purchases and developer financing have drawn headlines this year, capped by the rolling Evergrande debacle. Official demands that rents be affordable have been mounting: a slate of policies to promote the building of appropriate housing was rolled out across the summer. 

cp.positions • audit of shifts across sectors • alternating weeks economy/governance

Rules on cross-border data are to be tightened with certain transfers required to undergo state security review, according to a proposal from cybersecurity authorities. The draft rules are stricter and will apply more broadly, in line with the new data security and privacy laws. The rules also pressure foreign firms to build data centres in China, consistent with the trend led by Apple and Tesla. Data transfers and overseas listings are core to Beijing’s aspiration to lead on cross-border e-commerce. Walking both sides of the line will need to be resolved if IT companies are to expand overseas. Data security issues must be clarified and new rules implemented quickly. 

cp.signals • weekly • domestic policy movement

If we are to learn anything from earlier ‘super plenums’ Xi needs to segue into a new narrative echoed by voices both fresh and authoritative.

Since taking the helm Xi has been honing his innovation credentials. Early on he implicitly turned the Deng-era concentration on growth inside-out. Repurposing Party values and faith and reasserting Party control has seen his brand of socialist modernisation thrive—burnishing ‘high-quality’ development, law-based governance, common prosperity, ethnic assimilation, stability maintenance, and reunification (Taiwan).

cp.positions • audit of shifts across sectors • alternating weeks economy/governance

The collective Politburo study session on 18 Oct 2021 looked into critical technologies. Xi Jinping spoke on the digital economy, highlighting ICTs, big data, cloud computing, intelligent manufacturing and blockchain. Their contributions to the real economy, tech competitiveness and supply chain security have been on his mind. Focus for the Politburo was on regulatory compliance and curbing tax evasion, in line with the broader campaign to discipline big tech.

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october: powering down

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.