Politburo meeting; New productive forces; US to investigate risks from PRC connected vehicles; Liu Jianchao; PRC-Australia

Summary of today’s Essential Eight:

1. February Politburo meeting - The Politburo met Thursday to discuss the draft government work report. The readout was short and the language used to discuss the economy was the same as what the used at the December Central Economic Work Conference and since then. The hope has been that Premier Li Qiang, in his work report to the NPC, will outline more robust stimulus policies. I have been skeptical. and nothing in this readout changes that view. The policies for 2024 were likely set at the Central Economic Work Conference in December, and other than the stock market turbulence this year it is not clear anything else in the economy has materially worsened since then, so why would they suddenly shift policies so soon after? As expected, there was no mention of a Third Plenum, so those hoping for one before the Two Sessions will be disappointed.

2. New Productive Forces - I will guess we will hear more about new productive forces than stimulus at the upcoming two sessions. What exactly the focus on "new productive forces" means in substantive policies remains unclear, but since, as Party media has said, "Xi Jinping's series of important expositions and major deployments on new productive forces represent an innovation and development of Marxist theory of productive forces" it is a big deal. The Thursday People's Daily has an interview with Chen Binkai, Assistant to the President and Dean of the School of Economics at Central University of Finance and Economics titled "Shaping New Advantages in High-Quality Development with the Development of New Productive Forces". I have posted a full translation here in Google docs. Feel free to suggest improvements. There is also a commentary in the new issue of Qiushi titled “Deeply Understand and Accelerate the Development of New Productive Forces” that places Xi’s contribution to the Marxist theory of productive forces in a progression from Mao’s liberating productive forces to Deng’s developing productive forces and now to Xi’s contribution. Who were the two guys after Deng and before Xi again…?

3. US to investigate risk from connected vehicles from the PRC - US President Biden announced an investigation by the Department of Commerce into the potential national security risks posed by connected vehicles. As Biden said in the statement announcing the investigation “China imposes restrictions on American autos and other foreign autos operating in China. Why should connected vehicles from China be allowed to operate in our country without safeguards?” I assume he is referring to the fact that the PRC security services have made clear what they believe the capabilities of connected cars are with restrictions on where Teslas can go. As I wrote Thursday about the news of BYD looking to set up a manufacturing facility in Mexico, to get around US tarrifs on PRC vehicles, if the US government determines there are national security risks from PRC connected vehicles then the Mexico backdoor for BYD won’t work. And if the US does move forward on something related to national security and connected vehicles the concerns should not be just about hardware components but also software, and especially the advanced driver-assistance system (ADAS) software, as so much of that development for global automakers is done in the PRC. US firms like Tesla and GM have a lot to lose if the US moves forward and the PRC retaliates, and if the US blocks any of their software developed with input from staff in the PRC from being used on vehicles in the US. The lobbying over this rulemaking study is going to be intense. Congrats to Bloomberg for having this story on February 8 - Biden Is Looking Beyond Tariffs to Keep Chinese ‘Smart Cars’ Out of the US.

4. Liu Jianchao meets US Chamber of Commerce delegation - Liu Jianchao, head of the International Department of the Communist Party of China Central Committee, met with the visiting U.S. Chamber of Commerce delegation led by the Chamber’s CEO Suzanne Clark. Covid disruptions aside, the Chamber I believe usually has an annual CEO-led visit, but I do not remember them ever meeting with the head of the Party’s International Department. Liu has been active in US-China relations recently, having made a tour in January, and of course there is lots of speculation that if Wang Yi is going to give up the post of Foreign Minister at the upcoming NPC session the likely replacement is Liu. The wonderful thing about this kind of speculation is that we should have a yes or no answer within two weeks. Of the assumed possible replacements for Wang only Liu Jianchao is a member of the Central Committee, which if precedent holds I believe is a prerequisite for the job. I discussed this in a bit more detail last week.

5. Yao Yang on China’s New Era -

   Thomas des Garets Geddes
   of Sinification has done great service by publishing a two-part translation of a long article by Yao Yang, Director of the China Centre for Economic Research and executive director of the Institute of South-South Cooperation and Development at Peking University and until last month Dean of the National School of Development at Peking University. To quote from the introduction by David Ownby to the Sinification articles: “Yao has been an engaged intellectual throughout his career, and has spoken out on the issues of the day in the discourse available to him. The text discussed here is of a piece with Yao’s engagement. He is both proud of what China has accomplished and concerned with where China finds itself. He seeks to provide an explanation of how China has reached this point, why the measures taken by the Xi regime have been inadequate and even counterproductive even if grounded in certain political and economic realities, and he offers hints at solutions to problems which are basically ideological.”

6. PRC-Australia - The PRC Foreign Minister may visit Australia in late March. Is this one of the reasons the ASIO Director General did not mention China by name Wednesday even though everyone knew he was talking about China? New Zealand’s Foreign Minister has said the PRC FM will be visiting that country “in the near future”, so if he is going to New Zealand it makes sense to combine that with a visit to Australia. Will the visiting Foreign Minister be Wang Yi, or someone new appointed at the NPC that start March 4? We will know soon enough.

7. More on the i-Soon files - Another good report on the i-Soon files dump, this one from Margin Research. These files are the gift that keeps giving to researchers who know what to look for.

8. Podcast on Chen Guangcheng - The 8 episode podcast series on Chen Guangcheng by Crooked Media has concluded. It is excellent.