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12 of more than 2100 CPPCC members given prominent floor time, why? Part I
Their remarks serve as foreshadows for future policy priorities and directions.
· 12 issues were raised during a key CPPCC meeting, reflecting the top priorities of China’s governance.
· The CPC comes first, then comes common prosperity, manufacture, supply chain, fiscal policies, scientific innovation, food security, clean energy, ending poverty, promoting the arts, Taiwan, and Hong Kong.
· The issues raised and their order of presentation offers foreshadow of policy priorities and directions in the near future.
This time your host would like to bring your attention to the second plenary meeting of the fourth session of the 13th CPPCC National Committee, which took place Sunday.
This is the 2nd major meeting convened by the entire CPPCC at this year’s two sessions. While the first meeting entailed remarks by national leaders and annual working reports, the second meeting gave a platform to more specific issues.
For this meeting, 12 CPPCC members were selected out of 2159 to speak. Who these speakers were and what messages they sent deserves a closer look.
*Note: All links provided in this newsletter are in Chinese.
First, an overview.
The 12 speakers and the main topic of their addresses were:
Liu Jiaqiang, deputy chairman of the Revolutionary Committee of the Chinese Kuomintang (RCCK) Central Committee——Emphasizing the central role of the CPC in China.
Xie Fuzhan, president of the Chinese Academy of Social Sciences——Underscoring the importance of achieving common prosperity.
Miao Wei, director of CPPCC Economic Committee, former minister of industry and information technology——Improving China’s manufacturing capability.
Qin Boyong, deputy auditor-general of the National Audit Office and Vice Chairman of China National Democratic Construction Association Central Committee——Securing China’s industrial chain.
Zhang Lianqi, vice president of China Taxation Society——Adopting more responsible fiscal policies.
Chen Wei, academician at the Chinese Academy of Engineering and a researcher at the Institute of Military Medicine under the Academy of Military Sciences——Promoting scientific innovation.
Huang Jiansheng, CPPCC chairman of Heilongjiang Province——Stressing the importance of food security.
Ma Yongsheng, president of Sinopec Corp——Implementation of clean energy.
Wei Zhenling, vice prosecutor general of Liuzhou city, Guangxi Zhuang Autonomous Region——Eradicating poverty.
Liu Jiacheng, vice chairman of China Television Artist Association, Beijing Chapter——Producing arts that boost social morale.
Wu Guohua, vice chairwoman of the Central Committee of the Taiwan Democratic Self-Government League——Promoting patriotism among youths across the Taiwan strait.
Wu Lianghao, chairman of the Board of Directors of Kingway Group Holding Co., Ltd——Advocating for the principle of “patriots administering Hong Kong.”
Though there is abundant official literature on each of the subjects, it is still worthwhile to examine the text of each speech and your host will try to provide some context for each issue.
For his speech, Liu hailed the CPC and its central role in China and said the democratic parties* are committed to working closely with the CPC, a fitting opening for the series of speeches that followed.
*"democratic parties" refer to the 8 political organizations that participate in the CPPCC. For further reading, please click on the link to its Wikipedia page.
--We always remember that the CPC led the people to completely overthrow the "Three Great Mountains" （imperialism, feudalism and bureaucrat capitalism）, achieved the great victory of the New Democratic Revolution, and established the People's Republic of China, in which the long-suffering Chinese people became the masters of their own country for the first time in history.
--We admire from the bottom of our hearts that the CPC has led the people of all ethnicities to persist in exploring and innovating, finding the socialist road with Chinese characteristics that best suits the national conditions, and through decades of development, especially more than 40 years of reform and opening up, it has completed the industrialization process that developed countries have gone through for hundreds of years. China has become the second largest economy in the world and won wide acclaim from the international community.
--Since the 18th National Congress of the CPC, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at the core, China has won the largest and most vigorous battle against poverty in human history, solving the problem of absolute poverty and overall regional poverty that has plagued the Chinese nation for thousands of years, and achieving great achievements in building a moderately prosperous society in all aspects.
--We are immensely proud that the CPC Central Committee, with Comrade Xi Jinping at its core, has always put the lives and health of the people first, leading us to quickly control the spread of the Covid epidemic, take the lead in achieving positive economic growth, and achieve a "double victory" in epidemic prevention and control and economic and social development. The "double victory" was achieved.
Liu recounted some of the CPC’s major achievements, namely the founding of the People’s Republic, the reform and opening, the eradication of extreme poverty, and successfully curbing the Covid epidemic.
On behalf of all the democratic parties, Liu pledged that
The democratic parties have never forgotten the original intention of cooperating with the CPC, always thinking, standing and working together with the CPC, and will continue to be good counselors, helpers and colleagues of the CPC, and assist the CPC in getting things done in China.
Xie’s speech mainly concerns the issue of common prosperity, or 共同富裕。
First, some context. The term common prosperity is by no means strange to the Chinese public, as Deng Xiaoping famously said in 1985 that “China could allow some region or some people to get rich first, and they would, in turn, help other regions and other people, gradually common prosperity could be achieved.”
Deng’s words had far-reaching impacts on Chinese society, they opened doors to loosening up of rigid economic policies and spurred the reform and opening. A host of market economy policies in modern China can be traced back to Deng’s words and is generally credited with the fast growth of the Chinese economy in recent decades.
But after decades of fast economic growth, the emphasis is undergoing a subtle change, from the former half to the latter. The understanding is that the regions and people who got rich before others are now in a position to hold up their end of the bargain and lend a helping hand to others.
After first affirming that helping to achieve common prosperity is a fundamental duty of socialism and a long-term mission, Xie added that pushing forward common prosperity is a “task closely tied with reality”, detailing some policies that are now needed to achieve common prosperity.
To promote the common prosperity of all the people is a task tied to the reality, and must be placed in a more important position. Achieving common prosperity for all the people is a long-term historical process, it is impossible to finish it in one go, and cannot be rushed or waited for. To exert more active effort toward this goal, we should take strong measures as soon as possible as allowed by the current condition, take action whereever is permissible. First, strengthen the weak links, take care to tilt resources to the rural areas, grassroots, less developed areas, and people in dire difficulties. The second is to focus on eliminating regional disparities, urban-rural disparities, income disparities and other issues, particularly investing in improving employment, income distribution, education, social security, medical care, housing, pensions, child support and other things related to people's livelihood, social justice. Progress should be made on childcare, education, labor protection, healthcare, senior care, housing and support for the weak. Third, make good use of the visible hand to perform the government's redistributive regulation function, increase the strength and precision of taxation, social security, transfer payments and other regulation, regulate excessive income and outlaw illegal income. Give roles to third-distributions such as charity and other social welfare, and mobilize the whole society to help the weak. Fourth, adhere to the best efforts according to their ability, not only to make the fruits of reform and development more and more equitable to benefit all the people, but also not beyond the stage and level of development so that people’s appetite doesn’t get too high. We must improve the basic public service system, improve the social governance system of common construction, shared governance, so that common prosperity is tangible.
What Xie alluded to covered some of the most hot-button issues in Chinese society right now, as people are demanding higher living standards and are questioning the widening disparity between regions and the haves and have-nots.
The fact that the issue of achieving common prosperity was given the number 2 slot on the itinerary is a testament that the Chinese central government understands the gravity of the concerns.
Manufacture is given the number 3 spot on the itinerary, and for good reasons.
Manufacture probably was the single biggest engine for Chinese economic growth in recent decades, and Bejing obviously wants that engine humming for the decades to come.
In his speech, Miao identifies the main challenges facing Chinese manufacturing jobs and identified a goal.
In recent years, the China's manufacturing industry has made strides, but what China achieved in terms of scale and all aroundness cannot be said for the level of prestige. China’s basic capacity is still weak, key core technologies still in the hands of others, risk of being in a chokepoint has visibly heightened, and the share of manufacturing industry in GDP has dropped too early and too much. The share of manufacturing industry in GDP has fallen too early and too fast, which will not only drag down the current economic growth and affect urban employment, but also bring about industrial security risks and weaken the risk resistance of our economy and international competitiveness.
To counter the risks, Miao laid out 4 recommendations.
It should be said that in recent years, all parties have attached great importance to the development of the manufacturing industry, the support has been greatly improved, but the whole society has not fully formed a consensus on accelerating the development of manufacturing. There are some who are neglecting the transformation and upgrading of traditional industries, or are advocating substituting manufacturing with the service industry as driver for economy. These ideas have brought serious trouble to the development of China's manufacturing industry.
Implement structural changes.
accelerate and improve the institutional mechanism which is conducive to the high-quality development of manufacturing industry. There are many problems that restrict the high-quality development of China's manufacturing industry, but the most fundamental one is that the market-oriented reform is not in place.
China's manufacturing innovation is not strong, the key is that the institutional mechanism of scientific and technological innovation is not sound, and the problem of "two skins" between science and technology and industry has not been effectively solved.
Cultivating a talent pool.
We should implement the "Strong Foundation Plan" for education and cultivate talents in STEM (Science, Technology, Engineering and Mathematics) fields. We need to offer a growth path of "skilled workers - skilled talents - highly skilled talents - great artisans", so that workers see a path of self achievement. We need to attach great importance to attracting talent, take advantage of the fleeting time window to attract more international top talent and ethnic Chinese scientists for China's science and technology innovation services.
Miao’s remarks laid bare some of the anxieties in Beijing about China’s manufacturing capacities. Miao signals that Beijing still vision manufacture as the centerpiece of the Chinese economy, and in order for it to remain competitive, actions are needed.
As China’s labor cost steadily rose, China’s competitiveness compared with other developing countries, particularly in lower-end manufacturing areas, has been diminishing. Coupled with the pressure of higher environmental standards, there have been talks of transferring some of the manufacturing jobs overseas, such as to SE Asian countries. Instead, China could make up for what it loses with higher-end manufacturing or the service sector, much like what the United States did.
Miao effectively cautioned that the U.S. model of de-industrialization comes with great costs and Beijing should mitigate those risks by actively preserving manufacture inside the country.
Qin’s speech on China’s industry chain can be seen as a compliment and furtherance of Miao’s speech on manufacturing.
Like Miao, Qin points out flaws in China’s supply chain, saying
General Secretary Xi Jinping pointed out that the industrial chain and supply chain should be optimized and stabilized. Various places have duly implemented the important instructions of General Secretary Xi Jinping on the industrial chain, and have successively introduced relevant policies and measures, which have achieved certain results, but there are also some problems.
Qin observed that the industrial chain lacked overarching planning and recommended that a national plan be developed.
She also made 4 other recommendations.
Improve the industrial chain security policy system. The central gov’t should accelerate the development of evaluation, standard and incentive mechanisms to promote the modernization of the industrial chain and enhance the stability and competitiveness of the industrial chain supply chain.
Improve the cross-regional coordination mechanism of the industrial chain. Promote the formation of administrative coordination mechanism for cross-regional industrial chain development, and conduct studies into how to use tax policies to incentivize aross-regional distribution of industrial chains.
Strengthen the security assessment and risk warning of the industrial chain. Establish a national industrial chain security assessment system, regularly monitor the risk and security assessment of key industrial chains from the perspectives of industrial technology advancement and autonomy, supply chain diversity and resilience, and market substitutability.
Fostering an enviroment that is more friendly to opening up China’s industrial chain. Fully implement foreign investment policies, give full play to the advantages of the pilot free trade zone and other systems, further optimize the business environment, promote trade and investment facilitation, guide foreign high-quality enterprises to increase investment in the short board areas and key links of China's industrial chain.
Like other countries during the Covid pandemic, China has become acutely aware of the importance of industrial chain independence, and Qin’s speech underscored the concept of “industrial chain security”, which stresses the stability of China’s industrial chain and mitigating volatility in cases of disturbance of the global market.
Zhang, an economist, highlighted a host of economic risks for China and made fiscal policy recommendations.
Here’s Zhang’s description of China’s economic risks:
It should also be taken into account that some regions are economically underdeveloped, there are shortcomings in the business environment, the aging rate and the debt ratio are both high, the trend of fiscal reduction aggravates the risk; certain localities are burdened with large and opaque debt; the structural problems of stock debt maturity and incremental debt control are highlighted, and the growth rate of local government debt and leverage ratio are on the rise again in the short term.
Zhang says due to the economic impact of the Covid epidemic, China needs some time to recover economically, and the government may see lower revenue in the meantime. Zhang thus made the following recommendations:
Be on high alert for and fiscal risks.
Focus on the balance between development and security, be vigilant against major risks involving the financial sector. From now to sometime in the future, A variety of foreseeable and unforeseeable risk factors increased significantly .
More important is the following paragraph, in which each sentence acknowledged a specific risk.
To achieve financial security, the key is to rein in local government debt. We should fill the shortcomings, strengthen the weaknesses, plug the loopholes, improve monitoring mechanism, and seal off the possibility of local governments launching new projects that are financed by hidden debt.
Toughen constraints on budget, expand the scope of the zero-base budgeting reform, conduct comprehensive financial sustainablity assessments for projects and budget review, involve all financial expenditures into the budget management in accordance to law.
For context on budget control, see here.
Developmental and policy-oriented financial institutions must operate in a prudent and compliant manner, and are strictly prohibited from providing financing to local governments in violation of the law or cooperating with local governments to raise debt in disguise.
For context on policy bank’s relationship with local governments, see here.
Clean up and standardize local financing platform companies, divesting their government financing functions.
For context on local financing platforms, see here.
Perfect market-oriented, rule of law debt default disposal mechanism, and resolutely prevent the accumulation of risk to form a systemic risk. Strengthen inspection and audit accountability, and strictly implement the government's lifelong accountability for debt and debt problem reversed probe mechanism.
For context on local government debt, see here.
Energize businesses with tax incentives.
Cut tax and fees where needed, reduce expenditure where warranted, and collect all due tax. Efforts should be made to optimize the implementation mechanism for tax and fee reduction, make sure pro-business policies bring tangible results to businesses, and remove all obstacles for businesses to take advantage of tax-cut policies.
Can adopt a cocktail of temporary and long-term policies.
Focus on the combination of 1)phased policies and institutional arrangements, 2) tax and fee cuts and improving the tax system, 3) financial sustainability and benefitting enterprises and the public.
Design tax incentives to promote innovation.
To promote scientific and technological innovation, to stimulate market players to increase the intensity of research and development. Expand the scope and proportion of additional deductions for R&D expenses of manufacturing enterprises, and support high-quality development with tax incentives that encourage innovation.
Disclaimer: Your host used DeepL to translate the text into English, and apologizes in advance for any incomprehensible English that was overlooked during editing.