february: hunkering down

'Stabilising' the economy, promised in the December 2021 CEWC, is driving fiscal policy. More tax and fee cuts have shored up private firms, and local government bonds have been issued faster. The roll-out of monetary policy, as reported by the PBoC, gave no hint of any dramatic moves on the horizon. Housing prices performed better in January, but developers still face wipe-out. Restrictions have been mildly eased for real estate financing: loan caps for affordable rental housing projects were removed and lending for M&As restricted. Yet state developers are the primary beneficiaries, given the weak finances of most private firms.

China's abstention from the UN security council resolution condemning Russian aggression in Ukraine attempts to avoid reputation damage and protect the security of its international assets. Trade is also at stake as export credits, tax cuts and other sweeteners continue to be offered to boost exports.

CBEC (cross-border e-commerce) pilot zones were expanded for a 6th round to 27 new cities and regions, covering third- and fourth-tier cities in the hinterland. Giving consumers more choice, an updated list of CBEC retail imports added 29 items including tomato juice, ski and golf equipment. CBEC firms are urged to set up their own platforms and overseas warehouses, localising global operations and boosting data capture. More supporting infrastructure and novel regulations are however needed.

The anomaly of skier Eileen Gu 谷爱凌 competing for China in the Winter Olympics sparked feuding over what it means to be ‘Chinese’. As she competed in the halfpipe, the public was shocked by a horrendous case of local female trafficking. The commotion fuelled debate on women's rights and the upcoming amendment to the ‘Women’s Rights and Interests Protection Law’.  Social justice under a closed political elite is once again under the spotlight. All this sets the scene for get-togethers across the PRC on International Women's Day, 8 March.

SpaceX and Blue Origin’s high-profile missions have spurred Beijing to reinvigorate its space industry: in a quinquennial white paper sketching the space exploration program, the State Council portrays a Beijing keen to commercialise high-precision mapping, space tourism, satellite internet services (like Starlink) for ocean-going ships and civil airliners, and space biopharmaceuticals.

MoE has started the second cycle of the World Class 2.0 initiative announcing an overhauled world-class universities list highlighting basic STEM and frontier research that will support cutting edge science and tech, not least the space program. 

Provinces currently set rules for their power sectors; interprovincial trading is minimal. A unified power market by 2030 is pledged, its preliminary set-up in place by 2025. With Xi Jinping’s blessing in November 2021 and now a concrete timeline to boot, steps to unify will pick up speed. A national market promises efficiency, security and decarbonisation—dubbed a ‘win-win-win’ by pundits. Renewable power, which, per new guidelines, should meet all incremental energy demand and begin replacing fossil fuels ‘at scale’ by 2030, will be absorbed in higher volumes under a unified national system.

First announced in November 2021, a recently issued 5-year plan for ag and rural modernisation is another step towards modernising the sectors by 2035. Transition from small- to large-scale and mechanised agriculture is as ever deemed necessary. Changing the game, the priority now is ‘high-quality’, offering consumers more choice. The ag and rural sectors are to be equipped with techniques, models and governance. The State’s No. 1 Document, as usual rural-focused, dropped 22 February, reiterating rural revitalisation messaging of the post-COVID period.

A 5-year plan for enhancing rural voc ed and aged care promotes a rural aged care safety net and improves rural voc ed by providing better online education in partnership with agribusinesses, ag science universities and research institutions.

Province-level ‘Two Sessions’ conclaves ended early February, issuing official reports. Almost all underline safety (above all in industrial production), welfare, and natural disaster threats. The interests of commerce get a little new TLC, not least better markets allocation of production factors, anti-monopoly and law-based market regulation.

Lawyers’ fees are included in the scope of anti-monopoly and promoting fair competition. Standard fees must now be declared, and, for a minimum 12 months, held constant. The dominance of large legal firms will not be affected, but the market for legal service providers will increase.

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