may: dreaming big but acting practical

featured story

Singapore-Sichuan hi-tech innovation park

reform frustration sees carrots trump sticks

Bold reformers are to be promoted, rules the latest meeting of the elite Decision-Making Group on Deepening Reform, chaired by Xi Jinping 习近平. Devolution and removing approvals has yet to yield substantial results. Positive inducements—carrots rather than sticks—are now in order. full post client access →

policy movers

can't put a name to the face? go to page footer

1. A veteran of the submarine fleet, I was considered a top favourite until in 2012 I was pipped at the post by Wu Shengli. As expert strategist, I chair the China Institute for International Strategic Studies; which is no doubt why I was delegated to attend the 2015 Shangri-la Asian Security Summit in Singapore. My remarks there on the South China Sea were considered balanced—both defending Chinese territorial claims while assuring others that China will not change its policy—I am nonetheless labelled a hawk, as evidenced by my claims that China faces a threat of invasion, which made headlines in March.

2. I was Party secretary, first in Shandong and then in Tianjin, before ascending to the Politburo Standing Committee. Lacking provincial credentials, I nonetheless have ties to former power broker Jiang Zemin. Not noted for my charisma in public, I am nonetheless a major player responsible for implementing the Xi-Li agenda, leading task forces on climate change, food safety, devolution and Belt and Road.

3. I am a rarity in Chinese politics—female, born in Inner Mongolia, and one of few high ranking officials to shun hair dye. After a successful diplomatic career, my attention has turned domestic; at the 2015 NPC meeting I held my ground as spokesperson, insisting tax powers be transferred back to the NPC. I faithfully follow the Party line, but don’t write me off as a mere mouthpiece; my quick-wit and charismatic TV presence ensure my place as a magnet for domestic and international media.

a doctor takes care of a young patient in a poorly-resourced rural county-level hospital

social policy

hospital service fee hike mooted to replace drug sales dependency

Hospital funding is to be less dependent on sales of over-prescribed and expensive drugs. Replacement revenue is to come from higher service fees and central fiscal transfers. Savings are to come from efficient accounting and operations. full post client access →

Xi Jinping welcomes Indian Prime Minister Narendra Modi on his state visit to China 14 May 2015

governance and law

reconsolidating while making nice

Xi Jinping’s 习近平 administration moved to reconsolidate this week. Assembled in Beijing, personnel from the State Security Ministry and the United Front agency (the Party’s interface with non-communist elites at home and abroad) were called upon to turn on the charm. Insiders read this as reflecting Xi’s hopes of refreshing the Party’s legitimacy by posing consultative as an acceptable alternative to electoral democracy. full post client access →

holding tigers to account

Whispers on the Chinese internet, echoing offshore speculation, suggest that while the administration can catch tigers, they are proving difficult to hold to account. Former Party disciplinarian Zhou Yongkang 周永康 has, it is said, recanted his confession. Delays to his trial throw into question moves on lesser tigers: retired military chief Guo Boxiong 郭伯雄, and former king-maker Zeng Qinghong 曾庆红. full post client access →

'Water contaminated. Drinking prohibited.'

energy and environment

appeasing public with results-based water action plan

16 Apr 2015: State Council released the ‘Action plan on water pollution prevention and control’. This signifies further recognition on the part of the state that environmental issues must be addressed to maintain political legitimacy. The Water Action Plan, complementing the Air Action Plan, promises a comprehensive response to all stages of the water pollution cycle. full post client access →

Fixed-asset investment remains a primary driver of the economy. Huaibei city, Anhui province, 20 Jan 2015

economy

domestic rebalancing and Russian roulette

Finance Minister Lou Jiwei 楼继伟 remains the man of the hour as his fifty-fifty ‘middle-income trap’ fears—confessed during a Tsinghua University speech—continue to send commentators into a flurry and stir uncertainty in markets. Lou’s sobering appraisal deflates this hubris and indicates ongoing reforms are petty, compared to the structural changes he advocates. Rebalancing the economy is now the indisputable top priority, yet all parties remain determined to work it to their advantage. full post client access →

re-aligning policy banks with national priorities

Environment policy continues to generate tension domestically, with the Ministry of Environmental Protection MEP caught in a never-ending game of snakes and ladders. It slid down a snake in April with the massive explosion of a paraxylene plant in Zhangzhou, Fujian, before zipping up a ladder by seemingly successfully blocking a major dam project on the Yangtze near Chongqing. full post client access →

selected texts of the month (clients only)

social policy

• TCM cannot shoulder drug markup cancellation
• full coverage critical insurance; system is designed to guarantee success
• mixed-ownership not popular in public hospital reform pilots?

geopolitics

• what China and India said about their border issues
• Sino-Indian ‘development’ linkages
• Beware of the ‘Thucydides trap’ in Sino-American relations
• US has suffered no setbacks due to the AIIB
• China should speed up adjustment of its South China Sea policy
• China and the US need to build a new economic cooperation framework

energy and environment

• making best use of public participation
• water action plan not another ‘paper tiger’
• how will water prices fare following the Action Plan’s implementation?

governance

• Devolution no soft path: Suqian mayor speaks out

economy

• RMB Internationalisation is about more than SDR
• correctly understanding ‘land finance’
• SASAC and CDB team up to promote PPP given a success rate of less than 20 percent
• capital injection for policy banks a bigger stimulus than the RRR cut
• disagreement over housing policy bank; too many interests involved experts claim

lexicon

healthcare system on a drip 以药养医 yǐyàoyǎngyī

Lacking government funding and unable to raise treatment fees, hospitals and doctors rely on drug sale commissions for their main source of funding. With drug markups capped at 15 percent, hospitals prefer to purchase expensive drugs. Legions of underpaid doctors can only increase their incomes by prescribing expensive medicines, exacerbating this rent seeking behaviour. Patients are hurt in the hip-pocket and health insurance funds are drained.

in the media

Lifting its game: a short and glorious history of soccer in China

ABC News | 24 May

'[Xi Jinping] has done a fairly good job, I think, of demonstrating himself to be a fan. And that's not a new thing. But, to be honest, I see it much more as being politically motivated. As we all know, China is facing a slowing economy. You know, unending tensions with its regional neighbours. And football: if they can get football to get the public onside, that is sort of a low-risk way for them to consolidate public support.'