Beijing urged the EU not to engage in mutual rivalry and talked up future prospects at the EU-China summit (Beijing, 7 December). The PRC holds many of the cards for a rapid green transition in Europe, but Brussels chafes over a trade deficit that hit €400bn in 2022, falling only slightly in 2023. PRC commentators acknowledge the trust deficit but dub the EU an irreplaceable heavyweight partner. In other diplomatic moves, following a March 2023 Saudi–Iran, ‘security and cooperation agreement’, brokered by Beijing, a first meeting was held of the China–Saudi Arabia–Iran Tripartite Joint Committee in Beijing in mid-December. It called for an immediate cessation of military operations in Gaza.
Xi Jinping’s mid-December state visit to Vietnam follows Premier Li Qiang’s in July 2023. Enthusiastic support for a growing ‘community with a shared future’, reported on both sides, belies the strained relationship. A Southeast Asian ‘community with a shared future’ was again the flavour of a virtual fourth Lancang-Mekong Cooperation Leaders' Meeting attended by Premier Li and officials from the five states on the Mekong side of the river on 21 December.
December in Beijing is annual work conference season. Xi Jinping's symbolic visit to Shanghai on the last day of November—focusing on finance, trade, shipping, and scitech innovation and the future of Shanghai as a global metropolis—set the tone for the coming meetings.
2023’s woes were encapsulated at the Central Economic Work Conference (CEWC) in the now widespread meme ‘first build before breaking’: build future growth drivers before demolishing existing economic pillars. The meeting signalled that more must be done in 2024 to stabilise the main pillar—real estate. Threatened by falling mortgage rates and needing to secure net interest margins, banks announced a further interest cut on deposits for individuals and enterprises, the third in 2023.
In other macro moves, new draft rules for private equity funds envisaged tripling the minimum investment threshold to C¥3 million, with even higher thresholds for funds investing in fewer projects. This would concentrate the sector further, driving out smaller funds, argue columnists and fund managers.
The Central Conference on Work Relating to Foreign Affairs was held 27-28 December. This time, the periodic (2006, 2014, 2018) strategic conclave set out the high moral ground that Beijing believes is more and more for the taking. On the agenda as well were strengthening relations with key partners via the ubiquitous 'community with a shared future', addressing regional challenges, and promoting global governance reform.
The CEWC and the foreign affairs conference are both convened by the CPC Central Committee. In Beijing’s parlance, ‘central’ designates convened by the Party Central Committee; ‘national meetings’ are convened by State Council ministries.
Grain output remained the top priority in agriculture at the Central Rural Work Conference. Along with regular subsidies to farmers, regulators are mulling cross-provincial compensation. This would transfer funds and resources from wealthier grain-consuming regions to underdeveloped, grain-growing ones. Meanwhile, farm incomes are threatened by pressure from Beijing to grow more grain rather than income-boosting cash crops.
In other major agriculture moves, business licences were issued to 26 domestic seed firms to bring GM (genetically modified) corn and soybean varieties to market. This would not be done with much fanfare, given public suspicion of GMOs. But acreage is, based on official pilots in the past two years, expected to expand to at least 667,000 ha.
Energy security was ‘paramount’ at the National Energy Work Conference. Fossil fuels remain a backup for ever-expanding renewables. Plans to secure a coal backup system were issued for public comment. Natural gas pipeline transmission pricing was simplified, reducing costs and fostering competition.
Renewables, meanwhile, continue to be rolled out. Wind and solar power accounted for 15 percent of consumption in 2023, reports NDRC. 200GW in new wind and solar capacity is the target for 2024. Measures to boost renewable power consumption continue to be updated.
On the scitech front, ‘new industrialisation’ was the core theme of the Industry National Work Conference. It announced an upgraded version of the TORCH Program in the pipeline for 2024. It takes innovation to market. Given its innovative enterprise credit scoring, it is the de facto gatekeeper for state support.
A tech export restriction catalogue was updated, tightening control of certain rare earths. A 2022 draft sought to block the export of solar panel manufacturing tech. But the final version dropped this. It heeded expert advice voiced at the March Two Sessions that they would hinder PRC firms' ability to expand globally.
November imports fell after a rally in October, whereas exports rose slightly by percent over last year, the first gain since April 2023. However, Recovery remains weak: trade is almost the same low as when lockdowns were strangling it in 2022.
Exporters may be slashing prices for market share: the volume of exports spiked while their value fell. More support measures, e.g. for cross-border trade and credit insurance, are pledged.
‘Dual circulation’ bobbed up again on the agenda. More measures, blending domestic and foreign trade, emerged from State Council. Beijing still seeks to boost internal demand, consuming more export goods at home. But goods made to international specs cannot immediately pivot to local markets. Financial support for firms is also needed to support the shift. As with the first time around, experts are saying ‘dual circulation’ is a good idea: it will boost firms’ resilience against slowing external demand.
‘Institutional opening’, i.e. levelling the playing field for global trade and investment, remains a talking point for Beijing. Recent measures include
- State Council’s new plan to align the Shanghai free trade zone with high-level global trade rules
- fair competition in tendering and bidding to promote the ‘unified national market’
- customs procedures to be further clarified and streamlined
Functional bilateralism was the subtext of other trade moves. The free trade agreement with Singapore gets an upgrade. Anti-dumping duties on Australian wine are ‘under review’ following warming bilateral ties and the suspension of the WTO dispute. Meanwhile, Beijing confirmed that Taiwan’s trade restrictions on the PRC were ‘trade barriers’. Some tariff perks to Taiwan will be withdrawn.
On the environment, senior officials claim that the COP28 agreement struck a balance between ambition and pragmatism. As the world’s largest emitter, the PRC faced pressure to go further and faster. Yet, its team stuck to the theme of the historical responsibility of developed nations to lead the transition. Negotiations on global carbon trading stalled, with Beijing arguing against stronger oversight of international carbon credit cooperation.
Noting worsening air pollution levels through 2023, a third national-level air quality action plan was issued. Days with ‘severe’ pollution are imagined reduced to less than 1/100 by 2025. Meanwhile, efforts to reduce emissions from coal-fired boilers, which account for some 40 percent of PRC CO2, will be stepped up, per another new action plan.
A fifth edition of the 'Patent Law enactment rules' was issued over a decade after its last amendment. It seeks to reduce application fees and procedures. Patents will be better realised by raising the statutory standards of bonuses for inventors/designers of on-the-job inventions, etc.
On view is a drive to embed the PRC in the global tech community. Non-PRC actors are now entitled to handle some aspects of patents themselves, including applications, rather than via an agency. Publication at some conferences or by eligible international organisations of first-time inventions will not be deemed to come at the cost of novelty.
In health, focus is turning to rare disease drugs, as well as traditional Chinese medicine. Beijing aims to become a 'major pharmaceutical power'. This entails urging medical innovation and promoting domestically produced medicines internationally.
Commitment is claimed to a ‘people-centred approach’ to healthcare. Attention to mental health has improved, aiming for a care structure suited to the PRC. Meanwhile, persistent calls have been made to improve primary healthcare and reform long-term care insurance to cover the most needy, not least older people.
Investment in education for 2022 totalled C¥6.1 bn, a rise of close to 6 percent. Preschool education benefitted the most; higher education suffered the most. This reflects a shifting state focus but raises questions about how higher education, given its falling budget, will yield more students with tech and innovative skills. More action is in train to promote graduate employment, such as the launch of the autumn campus recruitment month and measures to support graduate job search and startup firms.
A directive to design new tertiary textbooks nationwide flags a mounting state grip over ideological instruction and a simultaneous ambition to boost the quality of higher education.