Xi in Liaoning; New plan to get long-term capital into the markets; Trump threatens 10% tariffs; TikTok; Dear Li Hua; Fukushima
Summary of today’s Essential Eight:
1. Xi goes to Liaoning for his annual pre-Spring Festival trip - State media today reported that Xi visited a village in Huludao, Liaoning Province, that was heavily damaged in floods last summer. We so far only have a short report on his trip. but should get the full propaganda package Thursday.
2. Plan to get more medium- and long-term funds into capital markets - The Central Financial Work Commission Office, the China Securities Regulatory Commission (CSRC), the Ministry of Finance (MOF), the Ministry of Human Resources and Social Security (MHRSS), the People’s Bank of China (PBOC), and the National Financial Regulatory Administration (NFRA) jointly issued the “Implementation Plan on Promoting the Entry of Medium- to Long-Term Funds into the Market”. This may be positive for the markets, and fits with the attempts at reforms over the last year to clean up the stock markets and bring in more “patient capital”. Among the measures:
Increase the proportion and stability of commercial insurance funds' investment in A-shares;
Optimize the investment management mechanism for the National Social Security Fund and Basic Pension Insurance Fund. Steadily increase the proportion of equity asset investment in the National Social Security Fund, and promote the expansion of Basic Pension Insurance Fund's entrusted investment scale in qualified regions.
Policymakers likely want the market to head into the Spring Festival holiday next week on an uptrend.
3. Trump threatens 10% tariffs - Investors had found some comfort in the fact the President Trump did not impose more tariffs on the PRC on his first day in office, but they forget his earlier promise to impose 10% tariffs, in addition to any other tariffs that may come on, because of fentanyl. He reiterated the 10% tariff threat Tuesday. If there is any lesson for US-China relations from Trump 1.0 it is that he is a volatility machine, and predicting what he will do is a sucker’s game.
4. TikTok - Apple and Google have still not added TikTok back to their app stores, in a clear sign their lawyers are not comforted by the promises in President Trump’s Executive Order that tries to shield them from liability - “the Department of Justice shall not take any action to enforce the Act or impose any penalties against any entity for any conduct that occurred during the above-specified period or any period prior to the issuance of this order, including the period of time from January 19, 2025, to the signing of this order.”. Even the Wall Street Journal editorial page, not usually critical of a Republican President, wrote today that “in other words, TikTok must sever all ties with ByteDance and China. Mr. Trump can’t suspend laws like an English King before the 1689 Bill of Rights”. Trump’s attempt to ignore the law is causing indigestion among Republican supporters of the bill, as Politico documents in the article GOP China hawks mum as Trump throws TikTok a lifeline. It is remarkable to watch how supporters of the law are now just trying to avoid any discussion of how the new President is flouting the law. It is not a good look for US rule of law, but probably an enjoyable spectacle for the PRC leadership.
5. “Dear Li Hua” an the TikTok migration to Xiaohongshu/Rednote - What’s on Weibo has the best and most poignant piece I have read so far on the migration from TikTok to Xiaohongshu/Rednote. The piece talks about the surge in discussion of “Dear Li Hua (李华)” letters PRC students responded to in the English section of the Gaokao, and how now with the migration to Xiaohongshu/Rednote some have started posting their letters to “John” and asking why they never got a response. Xiaohongshu/Rednote is even it promoting the phenomenon on its usually dormant X account.