Weakening economic data prompted the central bank to cut rates. The State Council pledged more stimulus but gave few details. With concerns that a ‘balance sheet recession’ is now imminent, economists warned monetary easing might not have the desired effect, suggesting there will be more fiscal stimulus and real estate support—antithetical to Xi’s ‘high-quality development’ hopes.
As trade figures tumbled, Beijing sought solutions abroad. MofCOM submitted documents to join the mega CPTPP trade pact, while a BRI plan was signed with Argentina. Planned priorities for pilot FTZs were issued, each zone being given its own mission to test out reforms. To offset decoupling and downturn, the PRC is doubling down on domestic consumption, promoting autos and home appliances. Yet scant attention is given to how to put money in shoppers’ pockets. Revealing continuing local protectionism, NDRC is heralding a ‘unified national market’ that can capitalise on the PRC’s massive size and population.
Draft guiding opinions regarding cyber violence were opened to public comment. A judicial convention of not penalising mass lawbreakers was addressed: perpetrators and participants in cybercrime would, in future, be equally liable—raising concerns about freedom of expression and managing public opinion online.
Coal imports were at record highs, partly due to Southern China’s drought reducing hydropower production—60 percent less rainfall than usual fell in Yunnan. Drought and flooding will likely both strike the PRC through summer 2023. Major granary province Henan was hit by unseasonal rainfall in early June, threatening its summer wheat harvest. Beijing and elsewhere in northern China contended with a historic heatwave.
With July to September, the most challenging months, yet to come, central and local authorities are racing to strengthen irrigation and drainage infrastructure.
NEA (National Energy Administration) issued a notice on new energy storage pilots, requiring provinces to submit projects for approval by 13 August. Better storage technology, safety standards and pricing mechanisms are urged. A revised NEA blue paper on new power system development underlines the importance of storage, calling for large-scale planning to support the renewable sector.
Sales of NEVs (new energy vehicles), critical to Beijing’s plans for green low, carbon transformation, got a boost from an extension to the purchase tax exemption to 2027, continuing to provide state support despite national subsidies ending in early 2023. The State Council outlined ‘four continuations’ on 2 June: expanding the consumer market, improving innovation, optimising the industrial layout and improving vehicle and charging infrastructure.
Configuring new, improved financing topped June’s scitech agenda. International venture capital investment has been in decline, making shortfalls in PRC bank-led finance for startups more visible. To address this, the State Council approved a ‘tech enterprise financing action plan’ to incentivise financial institutions to diversify services to tech. Fostering equity investment is the focus, aiding early-stage startups.
AI remained contentious in June, awaiting the rules on generative AI following the closing of the call for comment on the rules‘ draft. Major cities, including Beijing, Shanghai, and Shenzhen, are forging ahead in developing local‘artificial general intelligence’, a concept gaining traction at an April politburo meeting. The Beijing Academy of AI held an ethics-focused high-level annual conference. It released a series of generative models, but the focus was on AI safety and ethics.
In the world of semiconductors, domestic experts advocated for ‘re-globalisation’ rooted in collaboration, not merely division of labour.
As Beijing intensifies its push for closer partnerships between schools and businesses in vocational education, a joint-ministerial plan emerged on 13 June to incentivise corporate involvement. Central funding will be allocated to hands-on training centres. At the same time, local government special bonds will support integration projects, and firms will benefit from preferential finance, taxation, land, and credit schemes.
Beijing will cover certain assisted reproductive tech services under medical insurance from July. Other regions, shaken by dramatically falling birthrates, will likely follow suit. Experts question whether the move will have any impact on birth rates— affected by complex societal issues, demand remains low.