Analyses of PRC policies, pronouncements, and media reports
Policy|Cybersecurity
CAC | 12.2020
CAC Reduces Collection Scope of User Information
《国家互联网信息办公室关于《常见类型移动互联网应用程序（App）必要个人信息范围》征求意见的通知
The Cyberspace Administration of China (CAC) published a draft to limit the scope of personal information that is collected by mobile phone applications on December 1. Per the draft, it aims to protect personal information and standardize the collection of it. The document entails “necessary personal information” for 38 common apps, including ride-hailing and online shopping. Necessary personal information refers to personal information that ensures an app’s basic functions and includes identification details like names and addresses. According to the document, apps cannot prohibit installation and use as long as users agree to information collection requirements. Notably, the draft guidelines flesh out the 2017 Cybersecurity Law.
Policy|Environment
State Council | 12.2020
Han Zheng Convenes Yangtze Delta Protection Meeting
韩正主持召开推动长江经济带发展领导小组会议
Vice Premier Han Zheng chaired a high-profile meeting on carrying out improved environmental protection in the Yangtze River Delta region on December 1. During the meeting, a video was played revealing a series of environmental fractions that had occurred in the area. After, Han essentially called out local governments for failing to protect the environment and insisted on the following steps:
Strengthen political and ideological adherence.
Strengthen environmental protection and restoration.
Accelerate green innovation.
Improve governance in protecting the environment.
The meeting followed on the heels of General Secretary Xi Jinping’s remarks on developing the Yangtze region in November. Attendees included Vice Premier Liu He and other senior central and local officials.
Policy|Infrastructure
NDRC | 11.2020
NDRC Promotes Infrastructure to Alleviate Poverty
关于在农业农村基础设施建设领域积极推广以工代赈方式的意见
The National Development and Reform Commission (NDRC) published opinions on creating jobs via agricultural infrastructure projects on November 9. The document’s stated goals include improved rural living, tourism facilities, and agricultural production. More specifically, the opinions stress smaller and simpler investment projects that do not have a high technical threshold. Infrastructure projects include transportation and sewage treatment facilities, among others. The Central Agricultural Office, MARA, MOT, MOF, National Forestry and Grassland Administration, Ministry of Water Resources, the State Council Leading Group Office of Poverty Alleviation and Development, and the Ministry of Culture and Tourism jointly formed the opinions.
Policy|Finance
PBC | 11.2020
PBC Strengthens Supervision Over Financial Companies
中国人民银行关于《金融控股公司董事、监事、高级管理人员任职备案管理暂行规定（征求意见稿）》公开征求意见的通知
The People’s Bank of China (PBC) released measures tightening governmental supervision over financial holdings companies on November 2. The move comes after news that Jack Ma and senior Ant Group executives were called in for questioning by Chinese regulators. The draft for comments aims to increase the regulatory scope of financial holdings companies, including appointments and contract length of C-level executives. The policy also calls for:
The filing and supervision of senior executives to be managed by PBC.
Increasing top-down management over positions like general managers and chairmen.
Enhancing supervision and inspections.
Stipulating employment qualifications.
Policy|Energy
MIIT | 10.2020
MIIT Issues NEV Power Batteries Measures
对《新能源汽车动力蓄电池梯次利用管理办法（征求意见稿）》公开征求意见
The Ministry of Industry and Information Technology (MIIT) issued a draft for comments on new measures to clean up the production and use of new energy vehicle (NEV) power batteries on October 10. In essence, the policy aims to fix the battery recycling process and protect the environment while ensuring product quality. On a more granular level, the recycling process covers inspection, reassembly, disassembly, and repairs of used power batteries. The document likewise calls for better methods to ensure battery reliability, such as flame retardancy, electrical insulation, and thermal management. The draft encourages the R&D of battery products suitable for energy storage, charging, and replacement, while discouraging items like power banks that are not easily recyclable.
Policy|Agriculture
MARA | 9.2020
MARA Plans for More Soybean Industry Support
关于政协十三届全国委员会第三次会议第3885号（农业水利类323号）提案答复的函
The Ministry of Agricultural and Rural Affairs (MARA) published a letter signaling increased support for the soybean industry on September 22. In essence, the document reflects MARA’s goal to produce new varieties of high-yield and high-quality soybeans via innovation. MARA will rely on soybean breeding bases in Heilongjiang Province over the next five years in order to inaugurate a top-tier soybean production base, according to the letter. Likewise, MARA will continue to conduct research on soybean types to enhance China’s competitiveness. Other objectives include:
Pushing main production centers to help cultivate local grain industry clusters and retain local industrial chains.
Cultivating leading enterprises, soybean industry clusters, promoting breakthroughs in key technologies, and enhancing joint research between academia and industry.
Policy|Education
Opinions on improving labor education in school for a new era
关于全面加强新时代大中小学劳动教育的意见
The “Opinions on improving labor education in school for a new era” are guidelines issued by the Central Committee of the Communist Party of China (CPC) and State Council on March 26, 2020. The opinions call for greater incorporation of physical activities and manual labor across the education system—from elementary school classrooms to university lecture halls. The “labor education” guidelines also set out to promote physical labor outside the classroom, such as household chores (e.g. doing laundry and cooking). Schools will likewise be required to offer labor education as a mandatory course. For instance, elementary and middle schools must provide at least one class period of labor education per week.
The impetus behind the newly issued rules is to ameliorate a decline in physical labor activity among China’s younger generation. According to the document, “some Chinese youth are less appreciative, less willing, and less able to perform manual labor tasks.” The guidelines look to reverse this trend by enlisting the help of local governments, families, companies, social organizations, and society itself while under the direction of the central government.
These guidelines build upon President Xi Jinping’s speech given in 2018 at the National Education Conference. The central theme of Xi’s speech was modernizing China’s exam-oriented education system while ensuring greater adherence to communist party doctrine and socialist principles. The labor education guidelines reaffirm the party’s long-held vision to shape China's education system into one that cultivates “all-around development”—specifically, “morality, intellect, physical ability, aesthetics, and work ethic (labor).” The policy’s ideological framework for educational reform is based on the Marxism-Leninism view of labor, socialism with Chinese characteristics, and “Xi Jinping Thought.”
The labor education guidelines call for:
Three types of labor education: daily labor, productive labor, and service-oriented labor
Elementary and middle schools to stipulate the amount of time students perform on daily labor activities outside the classroom
Vocational schools to focus on internships, offering no less than 16 class periods
Universities to offer no less than 32 class periods for undergraduates, as well as integrating labor education into other subjects
Compulsory education (elementary school up until high school), as well as universities, to hold a “labor week;” the latter can also hold a “labor month”
Elementary schools to emphasize hygiene and voluntary labor, and for middle schools to emphasize labor skills and community service
High schools to stress vocational activities, as well as service-oriented labor and productive labor
Secondary vocational schools to focus on cultivating talent in labor-intensive occupations
Universities to emphasize innovation and entrepreneurship, such as students organizing internships and social programs
Families to encourage their children to do more household chores; specifically, to learn one to two new life skills a year
Governments of all levels to elevate the importance of labor education in their political agendas and enact relevant policies
Media|Investment
Economic Information Daily | 7.2019
Accelerate implementing regulations and improve the foreign investment environment
加快配套规则落地全面完善外资政策体系
The author, Liang Guoyong (梁国勇), emphasizes China’s need to improve the foreign investment environment in light of the recently issued Foreign Investment Law.
This view reaffirms China’s seriousness in following through on investment reform and reversing a negative perception of engaging in long-standing unfair trade and investment practices. Liang suggests that by including the concept of “competitive neutrality” and optimizing market economic conditions, it will help create a more profound economic impetus for China—despite significant short-term hurdles.
Media|Foreign Affairs
21st Century Business Herald | 7.2019
Li Keqiang visits Europe; looks to elevate China-EU relations and expand BRI cooperation
李克强将出访欧洲 提升中欧关系并加强“一带一路”朋友圈
Chinese Prime Minister Li Keqiang’s official visit to Europe follows on the heels of President Xi Jinping’s European travels one month prior.
The trips are significant as they are the first-choice destination for both leaders in 2019; thus, highlighting China's determination to win support for multilateralism (e.g., key initiatives like the BRI and WTO reform). The timing is especially crucial as an economic and technological row with the US rages on.
Media|Trade
International Business Daily | 7.2019
Chinese export companies looking for new and different ways to expand amid pressure
外贸企业求新求变承压前行
Export companies in China are feeling the effects of the prolonged US-China trade spat. Both Chinese public and private sectors are noting the impact of bilateral trade tensions and thus, assert a new approach must be implemented to manage the uncertainty.
The author, Wu Li (吴力), remarks that other reasons, such as Southeast Asian countries growing competitiveness in the supply chain, are also causing anxiety for China’s domestic exporting industry. The Ministry of Commerce (MOFCOM) acknowledges issues facing domestic export enterprises—but suggests opportunities exist amid the downward pressure. For instance, China's trade policies and BRI expansion.
Policy|Trade & Investment
State Council | 7.2019
The State Council releases guidelines on developing bonded zones
国务院关于促进综合保税区高水平开放高质量发展的若干意见
On January 25, the State Council released guidelines on expanding comprehensive bonded zones, which are special trade zones with favorable tax incentive policies. In short, opening up bonded zones reflects China’s commitment to relaxing investment and trade restrictions in 2019. The opinions call for:
Preferential policies for research, innovation, and R&D
Trade restriction certificates, tax reimbursements, and goods not subject to import tariffs to be streamlined for entry and exit
Establishing logistics distribution centers and simplified trade procedures
Permitting remanufacturing operations for sectors like aerospace and engineering machinery
Exemptions from the cargo-handling list for import licenses for individual items within bonded zones, such as mobile phones and automobile accessories
Encouraging cross-border e-commerce, outsourcing, and next-generation delivery
Media|Trade
21st Business Herald | 7.2019
Is the WTO facing crisis or opportunity?
“一个没有美国的WTO”？WTO改革的“危”与“机”
Governments around the world agree that the World Trade Organization (WTO) requires serious reforms. However, the issue for these same governments is forming a consensus on what specific problems need reform and the methods implemented to achieve change. The article urges China and the EU to collaborate to address structural issues in the WTO, but more importantly, deter US unilateralism, as the author puts it. With the Trump Administration’s recent tariff hikes against other WTO member countries, the urgency for reform is profound.
Countries from Mexico to Japan have all released proposals, including China which has proposed '“three principles and five positions.”
The US has threatened to leave the WTO altogether. Its qualms revolve around state-owned enterprises (SOEs), state subsidies, and a host of other criticisms. In recent WTO meetings, the US has called out other members but has directed most of its ire towards China.
Zhang Xiangchen (张向晨), a WTO permeant representative, says the US is breaking WTO rules while simultaneously condemning violators. Frans Timmerman, vice president of the European Commission, remains unsure if the US wants to withdraw from the WTO or just change it.
The article advises the EU and China to work together to address structural concerns but also combat US unilateral actions. However, Tu Xinquan (屠新泉), the WTO’s Research Center director, suggests that even if the US leaves, the subsequent effect on the WTO will be minimal.
The author concludes that, “no matter the noise and gamesmanship surrounding the WTO this year, the WTO is not only facing a serious crisis—but also a profound opportunity for real reform.”
Policy|Innovation
State Council | 4.2019
The Guiding Principles for Mid-to-Long Term Scientific and Technological Development
国务院关于印发实施《国家中长期科学和技术发展规划纲要（2006—2020年）》若干配套政策的通知
“Indigenous innovation” is a key concept put forth by the Chinese government in 2006. More specifically, it was an important slogan that year for the government’s “National Indigenous Innovation Program.” The initiative aimed to promote indigenous development and production in China’s information and communications technology (ICT) sector as it aims to move up the value chain.
In 2006, the State Council released “The Guiding Principles for Mid-to-Long Term Scientific and Technological Development (2006-2020).” In it, the key policy goals listed to enact “indigenous innovation” were tax incentives, financial aid, and technological investment. The most significant regulation involved government procurement. Essentially, certain “indigenous innovation” products would be given preferential treatment during the government procurement process. Later, authorities in Beijing clarified which products would be included by listing six high-tech industries, such as computers and telecom installations.
The regulation that sparked the most debate in the foreign business community was regarding intellectual property (IP). “Indigenous innovation” products granted Chinese counterparts significant IP control. For example, “indigenous innovation” products had to be produced by a company that owned IP in China. This would create significant vulnerability for the protection of foreign intellectual property rights (IPRs). One stipulation, nonetheless, excluded foreign-invested companies from government procurement if their market worth exceeded an annual profit of tens of billions (USD).
In the following years, modifications to China’s “indigenous innovation program” were implemented to flesh out the policy and appease concerns. This included then-President Hu Jintao’s reversal of the government procurement process in “indigenous innovation” and the removal of three key laws. That said, while the about-face was instituted at the national level, certain localities have listed their own “indigenous innovation” catalogs.
Media|Science & Tech
21st Century Business Herald | 3.2019
The state should update its industrial policy toolbox to cultivate high-tech firms
不应以传统产业政策刺激高科技企业成长
In this editorial, the author argues that the state’s outdated measures to stimulate China’s technology sector—specifically in gene technology—are inefficient. In short, China’s model of using old policies to implement new concepts impedes innovation and therefore growth. According to the author, the solution is less state influence, increased oversight of local governments, and more transparency, fairness, and protection in competition.
The author’s primary concerns are state policies and local governments. State policies like tax incentives, encourage local governments to focus on quantity instead of quality. Likewise, the state’s performance targets for local governments and departments push high-tech firms to over-emphasis industrial competition. These policies and performance targets can lead to the excessive production of counterfeit and low-end technological goods, as well as misuses of market resources.
The author uses the gene industry as an example of the state’s systemic policy failures to cultivate an environment of innovation and quality tech products. The situation is made worse in light of immature gene technology and a lack of industry oversight, which poses a significant risk to consumers.
The author’s solution to reversing these negative trends is less state interference, more regulations of local governmental activity, and policies that benefit the development of firms themselves. The author summarizes, “in the shift to high-quality development, China has unveiled new developmental concepts and goals. However, the system lags. As a result of using an old system to enact new concepts, the entire structure is prone to failure.”
In essence, the biggest impediment and challenge confronting China’s path to innovative development is the conceptualization of new ideas and goals while using traditional policies to implement them.
3-year action plan for promoting business linkages among small, medium, and large enterprises
关于印发《促进大中小企业融通发展三年行动计划》的通知
The “3-year action plan for promoting business linkages among small, medium, and large enterprises” was announced by the Ministry of Industry and Information Technology (MIIT), National Development and Reform Commission (NDRC), Ministry of Finance (MOF), and the State-owned Assets Supervision and Administration Commission (SASAC) on November 28, 2018. The main goal of this plan is to strengthen the business linkages among enterprises of all sizes in order to boost innovation and economic growth. The 3-year action plan calls for:
Greater collaboration among small, medium, and large-sized enterprises in the supply chain, as well as in innovation, data, and industry, etc.
Large enterprises in supporting small and medium-sized enterprises
The creation of more platforms to promote business linkages, such as 50 cooperation parks and “joint innovation” pilot programs within three years
The creation of 500 state service platforms for small and medium-sized enterprises within three years
Cultivating local talent, high-skilled experts, and a large number of enterprise champions within three years
Upgrading the capabilities of small and medium-sized enterprises by developing more local talent and innovation
Improving the environment for business linkages, such as upgrading digital infrastructure, intellectual property protection, and foreign partnerships
Improving intergovernmental coordination and providing more financial support, as well as more financing options
Policy|Science & Tech
MOST/MOF | 3.2019
Opinions on consolidating state key laboratories
关于加强国家重点实验室建设发展的若干意见
The “Opinions on consolidating state key laboratories” is a joint announcement issued by the Ministry of Science and Technology (MOST) and the Ministry of Finance (MOF) on June 22, 2018. In this directive, the two ministries lay out an actionable vision to transform China into a global leader in science and technology—achieved in part by consolidating state key laboratories. The core problems addressed include structural issues, a lack of significant home-grown achievements and world-class talent in the field of science and tech.
The essence of consolidating state key laboratories is reflected in the announcement’s objectives and developmental goals. The objectives are to improve the development, innovation, cooperation, and management of state key laboratories.
Likewise, development goals are to be realized by 2020 and 2025. By 2020, state key laboratories are directed to produce significant academic achievements and to have expanded their international influence in research fields. By 2025, state key laboratories are called to deliver major international scientific results, including the establishment of several world-renowned academic and innovation centers. Additionally, there should be world-renowned experts helping solve the world’s most pressing needs and acting as a source of innovation. The opinions also call for the creation of:
Around 700 state key laboratories, including—
300 state academic laboratories
270 state enterprise laboratories
70 provincial-municipal laboratories
Media|Science & Tech
People’s Daily | 3.2019
Strengthen the competitiveness of high-tech firms
增强高科技企业竞争优势
The author of this editorial stresses the importance of domestic high-tech firms’ role in China’s “new economy.” The importance of fostering healthier competition and reforming policies to nurture indigenous innovation in science and technology is a prominent theme in this essay. The author shines a spotlight on the core issues confronting innovation and development, such as policy and structural deficiencies.
Regarding remedies, the author suggests utilizing industrial clusters to promote innovation and development. Likewise, the author recommends placing greater emphasis on cultivating a culture of entrepreneurship.
The editorial also points out other existing issues, such as the significant discrepancy in scale and development between different science and tech industries. Another imbalance exists regarding geographical area—about three-quarters of China’s high-tech industry’s profit is concentrated in China’s eastern provinces.