Elderly Care Services; National unified market; Tibet earthquake; Zunyi Conference; "Profit-driven" law enforcement
Summary of today’s Essential Eight:
1. Deepening Reform and Development of Elderly Care Services - The Central Committee of the Communist Party of China and the State Council unveiled “Opinion of the CPC Central Committee and the State Council on Deepening Reform and Development of Elderly Care Services” in a document dated December 30, 2024. The opinion lays out three models of senior care, including a home-based model, 巩固居家养老基础作用, a community-based model, 强化社区养老依托作 and an institution-based model, 优化机构养老专业支撑作用. The opinion said that the government will play a leading role in developing senior care but also mentioned that market mechanisms will be relied upon to develop relevant sectors.
2. NDRC guideline for building national unified market - The NDRC issued a guideline to further efforts to construct a unified national market. The guideline stipulates that “local authorities must not impose policy barriers related to household registration, region, identity, personnel files, or employment status that hinder the flow of talent, thereby facilitating the rational mobility and effective allocation of human resources.” It also adds to chorus of official proclamations against local governments extorting businesses for revenue. According to an NDRC official at the press conference introducing the guideline:
Since 2024, problems such as profit-driven enforcement and so-called “distant-water fishing” (meaning extraterritorial enforcement) have occurred from time to time, hindering the normal development of private enterprises. Regarding the strengthening of unified foundational market institutions and rules, the Guidelines first emphasize improving a unified property rights protection system. In particular, it stipulates that local authorities must not use administrative or criminal measures to unlawfully interfere in economic disputes or infringe on the rights and interests of market entities. Authorities must not exceed their authorized scope, jurisdiction, amounts, or time limits in sealing up, seizing, or freezing the property of market entities. Nor may they engage in cross-regional law enforcement or implement cross-regional jurisdiction in violation of the law. The Guidelines also call for the prevention and rectification of profit-driven law enforcement and judicial practices in accordance with the law.
3. Cracking down on administrative inspections on companies and “distant-water fishing” - In addition to the NDRC guideline discussion of “problems such as profit-driven enforcement and so-called “distant-water fishing” (meaning extraterritorial enforcement)”, the State Council issued a “document on strictly regulating administrative inspections on companies, aiming to curb arbitrary inspections and effectively ease the burdens on companies”. The central government has gotten serious about trying to stop these business destroying extortions, but many local governments are desperate for revenue and will go where the money is, so until the center offers better solutions for the local government fiscal problems the squeezing of business for revenue will probably not go away.
According to the Caixin story How Profit-Driven Law Enforcement Can Kill Businesses:
Fines and confiscations are a growing source of local government revenue, jumping from 130 billion yuan in 2011 to 428.4 billion yuan in 2022, according to a study by Yang Liangsong, an associate professor at Southwestern University of Finance and Economics, and doctoral student Cao Mingbi. In the first 11 months of this year, local government incomes from fines and confiscations increased 11.7% from the same period a year ago.
Debt-laden regions are more dependent on this income, especially at the municipal and county levels, where fines made up 84% and 82% of local revenue, respectively, with public security agencies, courts and other judicial bodies being the primary authorities involved, according to the study.
4. Guidance on Promoting the High-Quality Development of Government Investment Funds - The State Council has issued guidance to try to fix some of the problems with the proliferation of government guidance funds (GGF). Caixin, in a nicely timed recent cover story, examined some of those issues in Venture Capital in China Flounders as State Takes Over. According to the Caixin story “GGFs are crimping the freedom of general partners (GP), senior managers in a VC firm responsible for picking investments and managing their fund’s portfolio of companies. They often impose onerous conditions on GPs related to the terms of their investments, the returns they want, and what sectors and even companies to invest in, industry insiders told Caixin.”
5. Final Biden dialogues with the PRC - US Treasury Secretary Yellen spoke with Vice Premier He Lifeng. According to the US readout she “raised issues of concern, including those related to China’s non-market policies and practices and industrial overcapacity, which harm U.S. workers and firms, and unless addressed, will continue to adversely affect the U.S.-China bilateral economic relationship. She underscored the significant consequences that companies, including those in China, would face if they provide material support for Russia’s war against Ukraine. Secretary Yellen also expressed serious concern about malicious cyber activity by PRC state-sponsored actors and its impact on the bilateral relationship.” According to the PRC readout “The Chinese side expressed concerns over U.S. restrictions on trade with China, particularly outlining its stance on the U.S.’s recent trade investigations.”.
State Councilor, Minister of Public Security and Director of the National Narcotics Control Commission Wang Xiaohong held a call with Dr. Rahul Gupta, Director of the White House Office of National Drug Control Policy to discuss China-U.S. cooperation on drug control and law enforcement. The Chinese side must be wondering if these dialogues will continue in the Trump Administration.
6. Earthquake in Tibet - There was a bad earthquake in Tibet early Tuesday. So far 126 people are confirmed dead.
7. Waiting for Biden Administration rule on global access to AI chips -Tech industry lobbyists are trying to get the Biden Administration to delay release of the expected rule controlling global access to AI chips - the Export Control Framework for AI Diffusion - and instead allow the incoming Trump Administration to make the decision.
8. 90th anniversary of the Zunyi conference - January is the 90th anniversary of the 1935 Zunyi Conference in which Mao was able to to take control of the military and the Party and begin the process of becoming the core of the leadership. As Qu Qingshan 曲青山, head of the Institute of Party History and Literature of the CPC Central Committee, writes in the January 7th People’s Daily:
The history of our Party during the New Democratic Revolution period spans 28 years, which can be divided into two 14-year periods with the Zunyi Conference as the dividing line. In the first 14 years, our Party made one rightist and three "leftist" mistakes, leading to two major setbacks in the Chinese revolution: the failure of the Great Revolution and the failure of the fifth counter-campaign against the encirclement and suppression in the Central Revolutionary Base Area, forcing the Red Army to undertake a strategic shift. In the subsequent 14 years, starting from the Zunyi Conference, our Party rose again, united and led the people to overcome numerous difficulties and challenges, first achieving victory in the Long March, overcoming the most difficult period, and opening a new chapter in the Chinese revolution.
Qu uses his article to reiterate the need for a core, and why it is so important that Xi is the core:
The history of the Party shows that the core issue is crucial. The core is the flag, the direction, and the strength. Marxism tells us that the core comes from practice, represents the people, guides the direction of progress, and is the choice of history and the people…
History marched to 2012. This year was extraordinary in the history of the Communist Party of China, as the Party held its 18th National Congress. The 18th National Congress marked a new historical position for China's development. This is: after long-term efforts, socialism with Chinese characteristics has entered a new era. Since the new era, the Central Committee with Comrade Xi Jinping at its core
None of this is new, but it will be interesting to see how Xi commemorates the 90th anniversary of the conference, if he does.