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Download this week’s newsletter as a PDF here: CPW No. 59
Dear friends and colleagues,
I apologize for the lack of a newsletter last week. The last two weeks of public appearances by your favorite seven are below. Your comments and feedback are always welcome. Old issues are always available at www.chinapoliticsweekly.com. Sign up or unsubscribe by sending an email to email@example.com.
Are you listening?
The NPC Standing Committee will finish its bimonthly legislative session on Wednesday, when it is expected that they will pass the new National Security Law. Criticisms of earlier drafts have been frequent and vocal, particularly regarding a lack of market access in any industry related to “national security”. It will be interesting to see to what extent the final version takes these criticisms into account; the law will serve as an important litmus test for the Chinese government’s responsiveness to the concerns of foreign businesses and governments.
Still not done
In recent weeks, many have speculated as to whether or not the anti-corruption campaign might be winding down following the sentencing of Zhou Yongkang. Developments in the past week show that Xi and company are still very much focused on efforts to clean up the bureaucracy and create a more disciplined Party.
On June 23 CDIC chief Wang Qishan announced the latest round of discipline inspections. This round will target 26 government and party agencies and state-owned enterprises, with a particular focus on the transportation sector. The Ministry of Transport, National Railways Administration, Civil Aviation Administration of China (CAAC), China Air, China Eastern, China Aerospace Science and Technology Corporation (CASC) and Commercial Aircraft Corporation of China (COMAC) among others will be targeted.
The announcement of new inspections was followed on Friday with a Politburo meeting and study session that focused on corruption and improving the mechanisms for evaluating and promoting officials. At the study session, Xi said “there can be no rest or turning back in our anticorruption drive.” The Politburo meeting meanwhile approved a new draft regulation that will make it easier to demote or fire officials who do not follow Party rules or are otherwise found to be corrupt, irresponsible or incompetent.
More growing pains
Premier Li continues to strike a positive tone on the economy, saying on Friday, “We have the capability and conditions to keep the Chinese economy growing at mid-to-high speed.” It’s clear that this will only be possible with concerted government support. State Council executive meetings on June 17 and June 24 both focused on measures to boost economic growth. Measures revealed at the meetings show a three-pronged approach:
- The government will continue to cut red tape. Relevant measures include simplifying the business registration procedure so that certificates required by new businesses will be reduced from three to one. The new system is supposed to be rolled out nationwide by the end of the year.
- Continued investment in infrastructure. The June 17 meeting promised to invest more in railways, water conservation projects, power grids in rural areas, grain storage facilities and wastewater treatment facilities as well the relocation or renovation of traditional industrial and mining areas. The following week the government unveiled a new RMB 300 billion insurance investment fund that will invest in shantytown redevelopment, infrastructure, irrigation projects and transport facilities among other things.
- Increase credit. The June 24 meeting scrapped the loan-to-deposit ratio for commercial banks. This was followed a few days later by an announcement by the PBOC that it was cutting benchmark lending and deposit rates by 25 basis points, while also lowering reserve requirement ratios (RRR) for selected financial institutions that serve agriculture and small businesses.
We get you Vlad
Zhang Gaoli just completed a trip to Russia that was further evidence of the strong ties between China and its northern neighbor. Zhang was the third PBSC member to have visited the country in the past month, and was explicit about the special regard which Xi Jinping has for Vladimir Putin, saying “there is no other foreign leader with whom President Xi Jinping would have such close contacts, such frequent meetings and such understanding.”
The meeting was filled with usual pronouncements to increase cooperation across a broad range of industries and other fields. The rhetoric was followed by action on Monday June 29 when Zhang announced the start of construction on the Chinese portion of the China-Russia Eastern Route natural gas pipeline. Construction on the Russian portion began last year; if everything goes well the pipeline will be completed in 2018.
China Politics Weekly aims to keep business leaders, investors, diplomats, scholars and other China hands up to date on important trends in China. It is produced by Trey McArver, a London-based consultant providing advice and intelligence to firms and investors engaged in China and the region. You can find out more about Trey and CPW in this interview.
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