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

The PRC’s crude birth rate hit a record low in 2021, according to 17 Jan 2022 data. At 7.52 births per 1,000, it joins some of the lowest in the world. Population decline is inevitable in the near future, warns Yuan Xin 原新 Nankai University Population and Development Research Institute. Yet irreversible as it may be, slowing down the rapidly ageing demographic is imperative. Birth-promoting measures are now offered by localities, ranging from extended maternity to housing benefits. A baby bonus, i.e. direct cash transfers ‘rewarding’ childbirth, is stirring expert debate.

cp.signals • weekly • domestic policy movement

Despite the regulatory scrutiny and a profitability ceiling, outlined in our earlier signal, the PRC’s AI sector is not on the skids. AI itself is, as yet, simply not smart enough to solve all problems, but tech breakthroughs are on the cards, and Beijing is alert to capturing the benefits. Those who will make the breakthroughs are in training as computer science is popularised through sustained research funding and education schemes.

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

The new year kicked off with a wave of 5-year plans, further hammering out the roadmap hoped to guide ag and rural policy in the 14th 5-year plan (2021–25). National food security, above all in staple grains (wheat, rice, corn), remains imperative. Total output capacity is to stay above 650 million tonnes, supported by adjustments in production structure and stabilised acreages. The new output target, if achieved, will still pale in comparison with imports, reaching close to 100 million tonnes in 2021.

cp.signals • weekly • domestic policy movement

SenseTime, the PRC’s largest AI (artificial intelligence) unicorn, listed on the Hong Kong Stock Exchange on 30 Dec 2021; within two weeks its stock price had risen by 60 percent. Yet analysts forecast an industry downturn in the coming year. Fed up with big tech’s ‘unruly expansion’, Beijing is now outdoing the EU and US in regulating data and algorithms. US sanctions on the sector add more fuel to the political fire.

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

A stream of cybersecurity regs has emerged recently, clarifying rules set out in the previously released Cybersecurity Law, Data Security Law and Personal Information Law. Most prominent are new cybersecurity review procedures, based on which regulators vet overseas IPOs like that of Didi, which was then obliged to delist from New York.

cp.signals • weekly • domestic policy movement

After a torrid 2021 of regulatory tightening threatening domestic growth and global finance markets, the pursuit of stability marked the regular December policy planning conclaves. Yet a roster of tensions and setbacks may see more drama than stability in 2022. The 20th NPC (National Party Congress), at which Xi will extend his tenure, looms. 

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

Agrifood trade is expecting a boost as new measures take effect from 1 Jan 2022. Optimistic commentators anticipate more diversified ag imports boosted by RCEP, with Australia, New Zealand (beef, lamb and dairy) and ASEAN (tropical fruits) benefitting from China’s growing appetite for quality products. Firmer supply chains directly based in exporting countries will help secure food supplies, expect regulators.

cp.observer • monthly • complimentary roundup

december: stabilising stability for 2022

Weak demand, supply-chain issues and declining expectations are depressing the economy, confirmed the 2022 central economic work conference (CEWC), the annual conclave to set targets and near-term plans for the coming year. With the upcoming 20th National Party Congress, ‘stability’, will predictably, dominate economic policy, as it will every other sphere of activity.

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

Incomes of state employees are being cut, as attested on social media, though such moves will never be officially confirmed. The alleged cuts vary: some 15 percent of annual salary is typical; over 50 percent at the extreme. They are reported across provinces, indicating a measure sanctioned at the highest level. There are grounds to credit the reports as part of a structural crackdown on grey incomes and fiscal difficulties.

cp.public • open access to a selection of China Policy material

linking up the GBA

To expedite the merger of Hong Kong and Macao with Guangdong and the mainland, zones have been set up in the GBA (Greater Bay Area) to focus on cross-border flows and integration. Qianhai, a zone aspiring to maximise Shenzhen’s tech innovation potential by linking it to Hong Kong’s strengths in basic research; Hengqin, an island that is part of the city of Zhuhai, is set to restructure Macao’s casino economy. High-level plans were issued in September 2021, but stringent COVID control policies keep the borders closed. 

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

‘Stability’ dominated both the Central Economic Work Conference (8–10 December) and a Politburo meeting on the economy leading up to it (6 December). The implications for 2022, particularly the 20th Party Congress, will attract hot discussion. Weak demand, supply-chain issues and pessimistic expectations weighing on the economy were highlighted at CEWC. Candidate areas for state support were scouted to counteract the slowdown, painting a more optimistic outlook. Yet questions await, e.g. the ‘policy intensity’ of anti-monopoly, which remains hazy. 

cp.public • open access to a selection of China Policy material

real estate tax pilots revisited

‘Common prosperity’ has cast renewed light on tax reform, above all for property. Deemed crucial for ending the economy’s dependence on rising property values, easing local government fiscal woes and averting a national hard landing, real estate tax offers a sustainable path to funding local public goods.