8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 1/12

welcome to our complimentary monthly policy roundup. Please share with colleagues and friends.New subscribers can sign up here. view in browser

cp.observer 14 August 2015

july roundup: correcting ambitions

monthly roundup

First half GDP figures aside, disappointing data across manufacturing, trade, and, ofcourse, equities performance spurred a search for new growth models and drivers.Trade and industrial policy are due for reconfiguration, while central agencies embraceonce­threatening Internet finance as key to unlocking rural consumption and bankrollmarginalised entrepreneurs. As the closed­door Party conclave at Beidaihe approached,the stock market slump took top leadership into damage control mode. The A­sharesmarket should easily have handled the correction; why make such a meal of what reallycalled for a display of calm? Use of the Public Security Bureau to crack down on marketmanipulation steered blame away from the regulators, framing the issue as political, noteconomic.

Other crackdowns—on rights­defence lawyers—detracted from hard­won gainselsewhere in judicial reform. In the countryside, subsidy policies began the inevitable

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 2/12

decoupling of price support in favour of market­based approaches. Foreign relationssaw a string of successes running on from AIIB, culminating in a successful resolution ofthe Iran nuclear issue, in which China’s mediating role won acclaim.

featured story

the changing face of the Chinese consumerThe consumer market, once symbolised by folk who could afford Lamborghinis, polo horsesand bling, quickly broadened to take in upwardly mobile professional classes. Migrant andrural groups are now to gain access to consumer credit, as the state wakes up to theirgrowth­model transforming potential. full post open access →

policy moverscan’t put a name to the face? go to page footer

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 3/12

1. Chinese social media is demandingmy dismissal for causing, or at leastfailing to prevent, the stock markettumble in late June through July.Indeed, under my direction, CSRC’sattempts to curb margin finance focusedmore on visible, medium leverageumbrella trusts, rather than higherleverage lenders on the periphery of the

system. Nonetheless, my term has been productive, with a switch from approval­basedto registration­based IPO on the table in the upcoming Securities Law revision (dueautumn 2015).

2. A protégé of Hu Jintao’s 胡锦涛, Ihave a solid legal background and onceheld the post of Hunan Party Secretary.Since taking up office at the SupremePeople’s Court, I have pushed for amore professional, autonomous, andtransparent judiciary—a move that hasreceived general applause thoughdivided the legal profession over ways

and means. Specifically, my move to cap the number of judge positions in the courtshas caused panic among judges and clerks and threatens a mass talent exodus. Myprized judicial reform agenda, faced with backlash from the rank­and­file, is now at acrossroads and my career is at stake.

3. An experienced diplomat and formerAmbassador to Japan, I recentlyattended the ASEAN Regional Forum inKL, where my statement on islandbuilding in the South China Sea, ‘Chinahas stopped. You want to see who isbuilding? Take a plane and go see whois still building’, was dismissed as adefinitional word game. For my part, I

announced China’s rejection of proposals that ‘seemed just, but really expressed doublestandards’. At a joint press conference, Thailand Foreign Minister General TanasakPatimapragorn declared, ‘If I were a woman I will fall in love with His Excellency’; I wasuncertain how to respond.

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 4/12

foreign patent holders targeted by new anti­monopoly push

governance and lawtrials and tribulationsWidely reported recent action against lawyers and other institutions has had limited directimpact on international firms, agencies and individuals. Difficult to ignore, though, is the high­level policy gridlock it signals. Meanwhile, the SPC under reformist Zhou Qiang 周强 is stillset to clear up dysfunctional courts and raise the morale of the judiciary. full post clientaccess →

anti­monopoly: beware foreign IPR holdersA June NDRC announcement on drafting new anti­monopoly IPR guidelines, both industry­wide and ­specific, signals a tougher stance on IPR holders. Follows April SAIC regulationson IPR violations. full post client access →

mid july positions:

Security Law extends net: new law to sift security threats with a finer mesh

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 5/12

end july positions:

unwinding SOE corporate governance: strengthening Party role foreshadowsreturn to industry consolidation among SOEs; reduced role for mixed ownership

bailout prods an exhausted bull link

economywho took a profit last week?Plunging stock prices pose a political as well as economic test. The search for a scapegoatpervades conventional and social media, nurturing a host of conspiracy theories that foreignfund managers are behind malicious short selling, and that CSRC deliberately poured coldwater on the bull market. Wrapping themselves in the flag, some economists signed an openletter calling retribution down on ‘selfish’ stock dumping by big shareholders. full post clientaccess →

mid july positions:

markets: to save or not to save: reformists call to end state intervention,pragmatists ask ‘at what risk’?

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 6/12

end july positions:

more muscle for ‘leftover funds’ cleanup: 2015 ‘year of fiscal reform’:localities now instructed to return idle funds

following the China­France nuclear deal, Li Keqiang submitted China’s carbonpledge, Paris 30 June 2015

energy and environmentParis climate summit: in China’s national interest30 jun 2015. China officially submitted its Intended Nationally Determined Contributions(INDCs) to the UN for December’s Paris Climate Summit. China’s 2030 targets are to reach,or pass, per annum peak green­house gas emissions; reduce emissions per unit of GDP by60­65 percent against 2005 levels; increase alternative energy share to around 20 percent;and increase forest coverage by 45 million hectares against 2005 levels. full post clientaccess →

mid july positions:

Xi: the ecological redline is inviolable: top Party meeting reiterates priority of

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 7/12

ecological civilisation

end july positions:

Air Pollution Abatement Law amendment disappoints: regionally­coordinatedmonitoring and evaluation fail to show up

21 July Xi visits Northern Rail; promises their locos will find ready market onMoscow­Khazan railway link

geopoliticsforeign policy gear changeXi Jinping promises high­speed trains will be hot items on the Belt and Road, his signatureforeign policy and solution to domestic slowdown. A flurry of Sino­Vietnamese fence­mendingvisits foreshadow Nguyễn Phú Trọng’s visit to Washington next month, while Chinaunhelpfully redeploys its oil­rig in disputed waters. full post client access →

China­style PPP to support Belt and RoadPrivate investment champions and the MOF expect China’s innovative use of PPP willsupport cross­regional value creation along the Belt and Road. But as China’s major­playerstatus in the international arena becomes taken for granted, foreign policy specialists in

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 8/12

China encourage the state to use diplomatic language the world can understand. full postclient access →

waving on down the Belt and RoadDespite continued rumblings in around the stock market, the Xi­Li administration’s outwardpush has scarcely missed a beat. The AIIB, the BRICS, and SCO banks made progress, andstate visits to the EU kept up. What the market couldn’t supply in the way of competitiveenergy, it seemed, the central bureaucracy could. Foreign policy language was‘unintelligible’, some felt, but there was no lack of supply. full post client access →

Anjiagou eco­tourist park in Zhangjiakou, Hebei link

social policymigrant workers: next­gen entrepreneurs?21 jun: State Council releases policy encouraging migrant workers, graduates and veteransto start small and micro businesses back in their home towns. A forthcoming three­yearaction plan will detail the measures. full post client access →

mid july positions:

pension investment heads for the market: current chaos not withstanding

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 9/12

end july positions:

Beijing cluster plans take shape: coordinated development fund announced;cluster bank, structural adjustment fund expected to follow

policy ticker highlightsBeijing goes poly­centriccaixin | 22 julyMoving Beijing’s administration to Tongzhou, comments Yang Ming 杨明 BeijingMunicipal City Planning and Design Institute, cannot ease pressures on the city centrewithout additional centres elsewhere around Beijing.

Fengrui takedown: collateral damageTencent | 22 julyThe round­up of Fengrui lawyers is no isolated incident, argues Liang Jianbing 梁剑兵Liaoning Normal University, and should be seen in the wider context of Criminal Lawamendments, legal community divisions, and an incoherent judicial reform agenda.

Belt and Road to promote six economic corridorsThe Paper | 22 julyOn 21 July 2015, Vice Premier Zhang Gaoli 张高丽 addressed a meeting of the LeadingGroup for Building the Belt and Road, ensuring a good start for it this year—the task setby Xi Jinping—the group would strive to promote six international economic corridors:the new Eurasian Continental Bridge.

trade policy: vague aspirations, clear needsState Council | 15 julyA State Council trade policy will expand trade to benefit other economic goals byincreasing imports and exports.

Air Pollution Abatement Law amendment prematureState Council | 7 julyNPC’s third review of the Air Pollution Abatement Law amendment should be

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 10/12

postponed, argues Chang Jiwen 常纪文 State Council DRC. A great many critical issuesare yet to be addressed, agrees Wang Jin 汪劲 Peking University.

selected texts of the month (clients only)

geopolitics

why China’s foreign policy changed gearhow should ‘BRICS standards’ be built?instability and other hazards of pipelines in Myanmarleave EU­bashing to othersglobal governance: sharing the burdens and benefitsNational Security Law: evolving back to the way things wereinflated foreign policy language makes China harder to understandChina’s Greek interestsupgrading the oil and gas systemstraightening out China’s diplomatic narrativeforeign aid: the lessons of six decadeswhat is a good Belt and Road think tank?how will AIIB capitalise on financial networks?

governance and law

judges and lawyers divided over criminalising court order disturbanceslogic behind lawyer­petitioner relationsXi Xiaoming fall another hard hit for judicial credibilitytackling ‘unspoken rules‘ in the auto industrythe truth about China’s stakes in TD­LTE patentsforeign patent­holders not to blame for high pharma costs

energy and environment

unscrambling the China­US climate change agreementLi Junfeng 李俊峰: combating climate change is like running a marathonlimited results, Lima leaves the ‘drama’ to Paris

social policy

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 11/12

funding woes remain without promised fund for migrant entrepreneursthe entrepreneurial dream: encourage only those migrants who canreturnee migrant entrepreneurs urgently need equally able officials

lexiconstability maintenance 维稳wéiwěnCore policy since the mid 2000s aimingto nip challenges to party authority inthe bud. A carrot and stick approachapplying buy­offs as well as extrajudicialcoercion, its price­tag has exceeded thenational defence budget. In the cartoon,

‘detention’ is slammed on would be lodgers of ‘petitions’ (formal complaints lodged bycitizens). Associated with fallen public security chief Zhou Yongkang 周永康, the policyremains unmodified.

national condition 国情guóqíngUsed to legitimise policy and deflectcriticism on grounds of unique features:demography, geography, history andculture. In the cartoon, the child’s bowlis labelled nourishing lunches. Droppinga few cents into it, the rich and powerful

(official) donor explains: ‘in keeping with the national condition’. Xi Jinping’s view is thatSOE reform must conform to the ‘national condition': SOEs are to continue to becentrally controlled through SASAC.

unspoken rules 潜规则 qián guīzéIn a book of the same title by the historical writer Wu Si 吴思, these were rules ofbureaucratic power and payback, found to have persisted from imperial times down to

8/18/2015 cp.observer: july roundup: correcting ambitions

http://us2.campaign­archive2.com/?u=3fd756a9629015f7becc6e127&id=f94a5e2e34&e=f30fe6a933 12/12

forward this e­mail subscribe to China Policy

the present. Used loosely for shadydealings, the core meaning is theoperation of power, collusion and score­keeping behind a veil of public interest.

quiz answers: 1. Xiao Gang 肖刚 CSRC Chairman 2. Zhou Qiang 周强 SupremePeople’s Court President 3. Wang Yi 王毅 Foreign Minister of the PRC

China Policy is a Beijing­based research and advisory company. Supporting our clients atmultiple levels, from in­house research teams to CEOs and boards, we help them anticipate,understand and respond to China’s changing domestic policy and geopolitical environment.contact us for more information on our services

© Copyright 2015 Unsubscribe