Eye on China: FDI Scuffle – Xi in Shaanxi – Pompeo Rages – PLA Medics Abroad – Lawsuits – New Tech

Eye on China is a weekly bulletin offering news and analysis related to the Middle Kingdom from an Indian interests perspective.

I. In China:

Epidemic Situation: Much of the focus within China this week was on reviving the economy. But before we get to that, let’s look at the epidemic control aspect. The National Health Commission says that there were no new cases reported in Hubei on Friday. Across the country, 12 cases were reported on Friday, with 11 being imported. As of Friday, the NHC said, the mainland had reported a total of 1,629 imported cases. The overall confirmed cases on the mainland had reached 82,816 by Friday, including 838 patients who were still being treated and 77,346 people who had been discharged after recovery, the commission said. Altogether 4,632 people had died of the disease, it said. In terms of the different regions, there are two big concerns for the moment. First, the city of Harbin and broader Heilongjiang province, which has seen a spurt of cases. In response, local authorities in Harbin say that they have ordered 28 days of quarantine for all arrivals from abroad, with two nucleic acid tests and an antibody test for each. A 28-day quarantine has also been called for in Inner Mongolia. Second, Beijing, where authorities designated the central Chaoyang district as China’s only high-risk zone for Covid-19. Caixin reports that authorities will carry out mandatory nucleic acid testing on several broad categories of people and will extend self-quarantine periods from two weeks to three to guard against a resurgence of the deadly disease.

In Shanghai, meanwhile, authorities are offering mass testing in order to ensure smoother opening of the economy. Bloomberg reports that companies and individuals in Shanghai can book the nucleic acid tests at their own expense in designated hospitals and clinics, according to the city government’s statement on Weibo. The tests will be conducted on a voluntary basis, aimed at helping companies and schools resume operations.Similar efforts are likely to be rolled out nationwide after Chinese Premier Li Keqiang called at a Wednesday meeting for large-scale nucleic acid and antibody testing to better prevent and control the epidemic.

Economic Activity: Last week’s newsletter covered Q1 data, but there are some more data points to note. SCMP reports that per capita disposable income in China dropped 3. 9 percent to 8,561 yuan ($1,209) in the first quarter from a year ago, the first fall since the series began in 2013, according to data released by the National Bureau of Statistics on Friday. China’s rural population suffered the most, with incomes dropping 4.7 percent to 4,641 yuan ($656), while urban residents saw their earnings fall by 3.9 percent to 11,691 yuan ($1652). Also, the number of rural migrant workers taking jobs outside their hometowns at the end of February plummeted by 30 percent to 122.5 million. And for those who returned to work, their monthly salary has plunged 7.9 per cent to 3,680 yuan ($520). This tells us that we should be approaching reports of economic activity resumption with some caution. The NDRC has highlighted some key metrics to keep in mind when assessing economic activity. These include power consumption, railway cargo freight, bank loans, spending and transport. Power consumption and bank loans have expanded, while cargo freight, transport and spending remain sluggish. In addition, restaurants are struggling, but car sales have rebounded.

Meanwhile, at the State Council meeting this week, it was agreed that “more will be done to enhance support to those living in poverty, living on minimum subsistence allowances or unemployed, and the country will ramp up financial services for micro and small firms.” The statement following the meeting added: “the construction of major national projects will prioritize employing those living in poverty, and the policy of using employment as a form of relief will be implemented in more areas with salary accounting for a higher percentage of the funding for the projects.” 

Six Ensures & New Leadership Group: Later in the week, Premier Li Keqiang held a video conference with heads of several provincial regions on the current economic situation. Xinhua reports that he said work must be done to safeguard jobs, people’s basic livelihood, market entities, food and energy security, the stability of industrial and supply chains, and the smooth running of communities, so as to boost economic recovery and push for high-quality development. Keep these six points in mind. They’ll get featured next. He spoke about the need to boost consumption and “demanded the implementation and improvement of policies such as tax and fee reduction, financial aid and cost reduction, as well as further support to help enterprises, especially small and medium-sized and micro enterprises as well as individual businesses to tide over difficulties.”

Finally, Xi this week was on a tour of Shaanxi province. But before I discuss that, the six points that Li mentioned came from last week’s Politburo meeting, as the “six ensures.” In other words, this is what Party officials across the board must ensure. This is the more immediate priority, and underscores the anxieties of the Party. Also to be noted in this context is Trivium’s Tip Sheet’s coverage of the creation of a new high-level coordination group – the Safe China Construction Coordinating Small Group. The group, it says, is comprised of the country’s top law enforcement officials, with the aim to “prevent and crack down on activities that endanger the political security of the country.”

Xi in Shaanxi: And all this is evident in reportage of Xi’s visit to Shaanxi. Xinhua reports that he urged for “more efforts to accelerate the transformation of economic growth modes and firm up the real economy, especially the manufacturing sector.” During his tour, Xi stressed on the need for “solid efforts to ensure stable performance in employment, finance, foreign trade, foreign investment, domestic investment and market expectation.” This is a reference to the “six stabilities” that were outlined by the Politburo in July last year. He then “stressed better safeguarding jobs, livelihood, market entities, food and energy security, the stability of industrial and supply chains, and the smooth running of communities,” i.e., the six ensures. Also noteworthy were his emphasis on meeting anti-poverty targets and a call for large state-owned enterprises to lead enterprises in both upstream and downstream sectors as well as small and medium-sized enterprises to fully resume production. Xinhua reports that Xi’s visit reignited the “westward relocation spirit,” which will fuel the nation’s drive to eliminate poverty and complete building a moderately prosperous society in all respects. Clearly the centenary goals are not being abandoned. But given the economic slump this year, one wonders how these will be met.

Amid all of this, there was also a message about the environment and corruption. The latter was in focus this week with reports that Sun Lijun, vice minister of public security was being investigated for suspected of serious violations of Communist Party discipline and the law. WSJ reports that just months ago Mr. Sun was assigned to a Communist Party task force overseeing the front-line pandemic response in China’s central Hubei province and its capital of Wuhan. In a Sunday meeting with senior colleagues, Public Security Minister Zhao Kezhi called the investigation the “inevitable result” of Mr. Sun’s longstanding disregard for party rules and political discipline, according to a notice published on the ministry’s website. Ministry officials urged loyalty to Mr. Xi’s leadership and warned against creating personal fiefdoms, forming political factions or withholding personal information from the party, the statement said, without explicitly associating Mr. Sun with such behaviour.

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