A Break In The North Korea Crisis?; 党进国退--The Party To Continue Swallowing The State; Beijing Is Not Cutting Government Spending; Patriotic Film Fervor; NPC

Today's note is a little thin, my brain is struggling to wade through the NPC propaganda and find much of value. There will be real NPC nuggets eventually, and thankfully we have 13 more days of the meeting...

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Thanks for reading. 

 The Essential Eight

1. A Break In The North Korea Crisis?

It is unclear if the PRC had much to do with this but it will certainly be happy to see this, as it reduces the immediate tensions, pressures the US, and may create daylight between Seoul and DC. 

North Korea Is Willing to Discuss Giving Up Nuclear Weapons, South Says - The New York Times:

China, which has pushed for direct talks between Pyongyang and Washington for many months, had no immediate reaction to the South Korean statement. One Chinese expert on North Korea characterized Pyongyang’s reported offer as “concessions that are dramatic and significant.”

“It will be hard for the U.S. government to resist,” said the expert, Cheng Xiaohe, of Renmin University in Beijing.

But Evans J. R. Revere, a former State Department official who was involved in past negotiations with North Korea, was less impressed. He said the formula of denuclearization for security guarantees had “been the basis of several sets of talks” between the two countries in the past.

“The U.S. has actually provided security guarantees to North Korea, including in writing by President Clinton,” Mr. Revere said. “Such guarantees have never been adequate or acceptable to the North Koreans, just as the U.S. provision of alternative energy sources, food and other assistance has never proved adequate.”

China says hopes North, South Korea can continue reconciliation efforts- Reuters :

“We hope that all relevant parties can seize the current opportunity, work for the shared goal and make concerted efforts to promote the process of denuclearization of the Peninsula and politically resolving the Korean Peninsula issue. China is willing to continue to play its due role to this end,” it said in a statement.

North Korea says willing to hold talks with U.S., halt nuclear tests: South - Reuters:

North and South Korea, still technically at war but enjoying a sharp easing in tension since the Winter Olympics in the South last month, will also hold their first summit in more than a decade next month at the border village of Panmunjom, the head of the delegation, Chung Eui-yong, told a media briefing.

“North Korea made clear its willingness to denuclearize the Korean peninsula and the fact there is no reason for it to have a nuclear program if military threats against the North are resolved and its regime is secure,” Chung said.

2. NPC Catchall 

Factbox: Names to watch in China's government reshuffle - Reuters:

- Liu Qibao. The party’s former propaganda minister was one of three members of the 18th Politburo who were passed over for further promotion to the Standing Committee after he voluntarily asked to be sidelined, allowing Xi to promote another of his men. As a consolation prize, he will be made the No. 1 vice-chairman of the CPPCC.

- He Lifeng. Minister of state planning since last February, He, 63, is to become a vice chairman of the CPPCC to pave the way for him to stay on after reaching the compulsory retirement age of 65 for cabinet ministers. The former hydropower plant worker spent more than three decades in Fujian, overlapping with Xi.

Comment: And of course we have the vice premier lineup. Will there be four this year, meaning in addition to Han Zheng which of Hu Chunhua, Liu He, Sun Chunlan and Yang Jiechi will be left out? Or could norm-buster Xi decide he wants five?

China continues largest poverty alleviation campaign in history - Xinhua:

China will reduce the poor rural population by over 10 million in 2018, including 2.8 million people to be relocated from inhospitable areas, Premier Li Keqiang said Monday.

"Poverty alleviation efforts will be carried on through the development of local industries, education, and healthcare," Li said when delivering a government work report at the first session of the 13th National People's Congress (NPC), the national legislature.

China will do more to support areas affected by extreme poverty, and the central budget's newly enlarged poverty reduction funds and related transfer payments will be weighted toward these areas.

Hainan Authorities Won't Intervene in Troubled HNA: NPC Update - Bloomberg useful rundown

Targets of Chinese government in 2018 - Gov.cn All the targets in one clean infographic

《中华人民共和国宪法修正案(草案)》(摘要) summary of all the proposed amendments to the Constitution

王晨作关于《中华人民共和国宪法修正案(草案)》的说明(摘要) Wang Chen's explainer on the process for the Constitution amendments

Chinese president stresses focus of developing high-quality economy - Xinhua 习近平:扎实推动经济高质量发展扎实推进脱贫攻坚 

3. 党进国退--The Party To Continue Swallowing The State

China’s Xi Readies Sweeping Government Overhaul to Empower Party - Bloomberg:

Chinese President Xi Jinping is preparing to extend a sweeping government overhaul that would give the Communist Party greater control over everything from financial services to manufacturing to entertainment in the world’s second-largest economy, two people familiar with the matter said.

The changes are part of a proposed “CPC leadership system” approved by the party on Feb. 28, the people said. Details of that document, which called for merging more than a dozen state agencies, are due to be revealed by March 17 when the National People’s Congress -- China’s rubber-stamp legislature -- votes on the plan.

The leadership expected ministries to complete the reorganization within the year, said the people, who asked not to be identified because the details aren’t public. In some cases, party organizations would completely absorb state agencies, the people said.

4. More Investigators Needed For The National Supervision Commission

And more detention facilities too. Will Xi increase the rank required to get sent to Qincheng, since that prison is now overcrowded? 

Corruption surveillance to triple as China's new anti-graft agency tightens screws | South China Morning Post:

There will also be more staff to handle the extra workload but it will be “a huge job”, Minister of Supervision Yang Xiaodu said on the sidelines of the National People’s Congress.

The agency, the National Supervisory Commission, will be run according to a new supervision law that has been submitted to the largely ceremonial legislature for passage at the annual parliamentary session under way in Beijing.

It will see the ruling Communist Party’s anti-graft watchdog, the CCDI, merged with government departments tasked with tackling corruption. The new agency will coordinate with judicial and procuratorial bodies and law enforcement departments.

“The Central Commission for Discipline Inspection and local commissions will have a 10 per cent increase in manpower [after the merger],” Yang said. “The targets have been increased by 200 per cent so, based on our experience, we know this is going to be a huge job.”

5. How Hard Will Germany Push Back Against PRC Influence?

Angela Merkel eyes Chinese influence as her legacy challenge - Sydney Morning Herald:

Now she finally has a government to lead, Angela Merkel is free to pursue her legacy – and that is likely to include new safeguards to protect Europe from China’s growing economic and political influence.

Merkel has reportedly told close aides that China’s strategic interests in Europe have become her chief global concern – and she is unlikely to leave office without having taken significant steps to counter them.

6. Beijing Is Not Cutting Government Spending

Lower China budget deficit does not mean less government spending: finance official - Reuters

The surprise move, together with other official comments on other economic targets and the need for further reforms, was seen by some China watchers as an indication that the pace of fiscal expansion may be slowing as Beijing’s ramps up its campaign to contain risks in the financial system. 

Greater caution over spending and tightening monetary conditions could retard the pace of economic growth not only in China but globally. 

But Yang Weimin, the deputy director of the Office of the Central Leading Group on Financial and Economic Affairs, stressed that a separate government-managed funds budget has a substantially bigger deficit - almost 70 percent higher from last year with an increase of 550 billion yuan ($86.74 billion).

Don’t Read Much Into China’s Lower Deficit Target, Analyst Says - Caixin Global:

Capital Economics has added the omitted spending back to the budget deficit, which showed a different pattern of fiscal support over recent years. “Our estimate suggests that the officials have been reducing fiscal support since late 2016,” it said. “As such, the narrowing of the deficit in today’s projection is not really a new development.”

The reduction of the deficit target does not mean that fiscal policy is simply tightening, as the government has pledged tax cuts and has increased the projected amounts of local government-issued special bonds whose returns are derived from the earnings of investment projects, CEBM Group, a subsidiary of Caixin Insight Group, said in a note.

7. Patriotic Film Fervor

Patriotic documentary sweeps across China - Xinhua:

Earning about 125 million yuan (19.7 million U.S. dollars) in five days, "Amazing China," a documentary recording China's achievements over the last five years, has become the country's second highest-grossing documentary ever.

Debuting nationwide last Friday, the 90-minute documentary is expected to win total revenue of 295 million yuan, according to Maoyan, a major Chinese film database...

Scoring 9.6 out of 10 in Maoyan, "Amazing China" is not the only film currently causing patriotic fever across the country.

With two weeks into screening, "Operation Red Sea" has raked in nearly 3.1 billion yuan and scored 9.5 points on Maoyan.

Directed by Dante Lam, the movie tells the story of the Chinese Navy's elite special forces, Jiaolong Assault Team, as they save Chinese and foreign nationals from war and foil a terrorist plot to obtain nuclear materials to make dirty bombs.

厉害了,我的国 (豆瓣) More on "Amazing China" on Douban, including traliers

8. Trump Tariffs Help China?

The economic impact may be small while the political impact--giving Xi more propaganda ammunition to push the argument that China is a responsible power--could be large. 

Goldman Sachs: Trump's tariffs hurt allies more than China and Russia - Axios:

“Import tariffs make the U.S. less competitive by raising the prices of raw materials. By imposing across-the-board tariffs to all steel and aluminum imports, the larger economic impact is on Canada, Mexico and the EU, and it ironically eases the economic impact to China and Russia.”

Business, Economy, Finance And Trade

Regulator Gives China Banks a Break Over Loan Losses - Caixin Global Banks that fulfill the conditions will be able to reduce their loan-loss provisions to as low as 120% of their bad loans, the China Banking Regulatory Commission (CBRC) said in a note issued last week. The previous floor was set at 150%. The minimum ratio of provisions to total loans has also been relaxed to 1.5% from 2.5%. The changes mark a partial victory for commercial banks that have been lobbying regulators since early 2016 to loosen the requirements, although the drop falls short of the 100% to 120% range they were seeking, as previously reported by Caixin.

China to Ease Bad-Loan Provision Rules to Support Growth - Bloomberg The China Banking Regulatory Commission has issued a notice lowering the bad-loan coverage ratio to a minimum 120 percent from the previous 150 percent, the people said, asking not to be identified as the matter isn’t public. Relaxed bad-loan coverage rules will allow banks to extend more credit, supporting an economy the government expects to expand about 6.5 percent this year, a slower pace than in 2017. Additional lending from giants such as Industrial & Commercial Bank of China Ltd. would also counter some of the effects on the economy of President Xi Jinping’s campaign to curb financial risk, one of the government’s top priorities.

M2 Target Cancellation Signals Shift in Monetary Policy Towards Price-based Tools - China Banking News Analysts say the absence of a concrete M2 money supply target in China’s 2018 Government Work Report flags a shift towards the use of price-based tools to implement monetary policy.China’s Government Work Report for the year has omitted mention of a concrete M2 money supply or social financing growth target, instead stating that “the main sluice gate of money supply will be properly managed, and rational growth in the broader M2 money supply, lending and total social financing will be maintained.”

Trump Administration Stalls Largest Tech Merger in New Sign of Protectionism - The New York Times “Broadcom is ostensibly viewed as a Singapore-based company with entanglements in China,” said Tony Balloon, head of the corporate China practice for Alston & Bird, a law firm in Atlanta. “If this was a European company, it probably would have less scrutiny by Cfius.”

Citic boosts stake in Erik Prince’s security group Frontier - FT $$ FSG said in a filing that it had raised $107m in capital from Citic, Chinese state-owned insurance company China Taiping and another company called Trinity Gate. Citic now holds 28.4 per cent of the company. The capital will be used to set up new logistics businesses in countries such as Myanmar, Laos, Cambodia and Pakistan, as well as in the restive western Chinese province of Xinjiang. The company also plans to set up offices in Thailand, Cambodia, Kazakhstan and Uzbekistan, according to the filing.

Money gushes into China's ChiNext as Beijing woos tech giants - Reuters China may allow its offshore-listed tech giants to sell a form of shares on the mainland, or China depositary receipts (CDRs), people with knowledge of the plan have said, in a move that would pit Shanghai and Shenzhen against Hong Kong in the battle to host the country’s tech giants. Expectation of the move has already stirred investor interest, with money gushing into shares listed on the tech-heavy start-up board ChiNext Composite Index

China to take new measures to boost foreign investment - Xinhua China will take a series of new measures this year to solicit more foreign investment, Ning Jizhe, deputy head of the National Development and Reform Commission, said on Tuesday. The country will greatly relax market access, promote investment facilitation and encourage foreign capital entry in more regions, said Ning at a press conference on the sidelines of the national legislature's annual session. The negative list approach to market entry, which states sectors and businesses that are off limits to foreign investment, will be expanded nationwide.

Chinese courts accept more corporate bankruptcy cases in 2017 - Xinhua Chinese courts received 9,542 new cases concerning corporate bankruptcy in 2017, an increase of 68.4 percent compared with the previous year, the Supreme People's Court (SPC) said Tuesday.


Politics, Law And Ideology

Chinese grumble about 'emperor' as congress fetes Xi - AFP Li [Datong], the retired editor, knows there is little chance that legislators will reject the amendment. "Under this type of system can there be hope?" he asked, answering: "There's no hope." "At the very least when they raise their hands, I want them to consider how this will be remembered by history," Li said. "This will be a mark of shame on their voting record that they will have to tell their children and grandchildren about."

Objecting – China Heritage ‘I Object’ is a poem that circulated on the Chinese-language Internet following the Lunar New Year. It appeared around the time that Beijing announced a proposed revision of the Constitution of the People’s Republic of China that would open the way for the unlimited tenure of state leaders (see The Real Man of the Year of the Dog — Dog Days (III), China Heritage, 2 March 2018). Online expressions of outrage and objection were swiftly quelled.

China's party system is great contribution to political civilization: Xi - Xinhua Xi said upholding the CPC leadership was not meant to do away with democracy. Instead, it aims to create a form of democracy that is broader and more effective, he said.

Home | Journal of Democracy-China in Xi’s ‘New Era’: The Return of Personalistic Rule After more than thirty years of institutionalized collective leadership, Xi Jinping is taking China back to a personalistic dictatorship. How has Xi accomplished this, and what does it mean for the future of Chinese politics? For answers to these and more questions, please see Susan Shirk’s article "China in Xi’s ‘New Era’: The Return of Personalistic Rule,” now available here in a special pre-release version.

Big brother stops millions boarding planes, trains in China - Sydney Morning Herald Many people have been blocked from using planes and trains for unpaid fines, with more than 815,000 court debtors placed on the blacklist... Zhang Yong, deputy director of the National Development and Reform Commission, which is overseeing the social credit system, on Tuesday conceded there were problems with it, telling reporters that "quite often" someone placed on the blacklist is unable to travel even after the debt was repaid... Zhang said the first phase of the national credit sharing information platform was being used by 44 departments, across all provinces and 60 private enterprises, to disclose information and mete out "joint punishment"."We have set up more than 30 joint incentives and joint disciplinary mechanisms with relevant departments in areas such as taxation, industry and commerce, court enforcement, safety production, food and drug safety, and unpaid migrant workers," he said.

Stop treating all Tibetans like separatists, army soprano tells political meeting | South China Morning Post An army soprano with more than 20 years of service appealed to China’s central government on Tuesday to stop treating ethnic Tibetans as if they were separatists. Speaking during a panel session at the Chinese People’s Political Consultative Conference (CPPCC), Guowa Jiamaoji, who was born in a Tibetan area of northwest China’s Qinghai province, said the discrimination shown by the authorities against people from her ethnic group was “detrimental to national unity”.

陈敏尔:为肃清薄孙余毒 拟了两份清单_凤凰资讯 6日下午,全国人代会重庆代表团全体会议上,重庆市委书记陈敏尔在回答记者关于在薄熙来、孙政才之后重庆如何修复政治生态的问题时表示,薄熙来、孙政才的腐败是方方面面的,二者共同点最突出的是政治腐败。党在十八大和十九大之前查处他们非常英明,为党消除了政治隐患,也为重庆消除了政治污染源。重庆根据他们的作风、用人、思想等问题,列了10个负面清单,然后对应列了包括用人标准在内的10个正确清单。陈敏尔介绍,过去重庆在经济发展和指导思想上有偏差,片面追求速度。在用人导向上也有偏差,我们就要纠正过来,哪里有错哪纠正。他表示,在党中央的正确领导下,重庆重整行装再出发,重庆明天会更好。


Foreign and Military Affairs

Uighur journalist Gulchehra Hoja: ′I have my own sad story to tell′ | Asia| An in-depth look at news from across the continent | DW | 05.03.2018 DW spoke to Uighur journalist Gulchehra Hoja who, along with some of her colleagues, accuses the Chinese authorities of arresting her family members as retribution for her reports about the plight of the Uighurs

Beijing bulks up diplomacy budget as China extends global reach | South China Morning Post In its annual fiscal report to the national legislature on Monday, Beijing said spending on diplomacy would rise by 15.6 per cent to 60 billion yuan (US$9.45 billion), while the defence budget would grow by 8.1 per cent to 1.1 trillion yuan. The report did not break down the outlays, but observers said it underlined China’s desire to have a bigger say in the international arena.

A stronger China is giving the world ‘more and more security’, Communist Party newspaper says In an editorial waxing lyrical about Chinese blockbuster movie "Operation Red Sea," the powerful Chinese Communist Party-owned newspaper took the opportunity to laud the country's military operations. 中国实力与道义兼具的底气(钟声) 

Lift-off in space plane race as China tests hypersonic drone model | South China Morning Post China launched a scaled-down model of a multipurpose, reusable space plane from a test site in the Gobi Desert late last month, part of its race to develop space travel technology.

Tillerson says China 'encourages dependency' in Africa - AP Secretary of State Rex Tillerson warned Tuesday that China’s approach to development in Africa “encourages dependency” that undermines its sovereignty as he prepared for his first official trip to the continent. Tillerson, who departs later Tuesday for Ethiopia, said that the Asian power’s projects on the continent had involved predatory loans, corruption and vague contracts. He contrasted that to America’s approach, which he described as partnering with African countries while promoting rule of law and democratic development.


Tech And Media

Tencent to Introduce Videogame Contracts for Parents and Children - WSJ Chinese videogame company Tencent Holdings Ltd. TCEHY -0.52% plans to introduce digital contracts that allow parents and their children to negotiate reasonable play times, following criticism last year that school children were neglecting their studies to play one of Tencent’s games. 

Xiaomi Eyes U.S. as It Banks on Microsoft’s Global Connections - Caixin Global Microsoft has had a relationship with Xiaomi Inc. for much of its brief life, initially through tie-ups involving the latter’s licensing of mobile versions of the software giant’s popular programs for applications like word processing, spreadsheets and operating systems. More recently the pair have extended that relationship to Xiaomi’s use of Microsoft’s patents and cloud services, helping the Chinese company as it tries to go global, Microsoft Asia President Ralph Haupter told Caixin in an interview. As an example of their collaboration Haupter pointed to India, where Microsoft has been supplying cloud services to Xiaomi.

YY's esports video streaming arm Huya files for US IPO · TechNode In the fourth quarter of 2017, driven by both YY Live and Huya, our mobile live streaming monthly active users increased by 36.6% year over year to 76.5 million, and our total live streaming paying users increased by 25.0% year over year to 6.5 million,” stated David Xueling Li, Chairman and acting Chief Executive Officer of YY. Huya’s improving financial performance may add appeal to investors. Its total net revenue nearly doubled YoY from RMB 339 million ($53 million) to RMB 741 million in the fourth quarter of 2017.

‘Beijing’s Silicon Valley’ offers express green cards for foreign spouses of top Chinese talent | South China Morning Post The benefits for workers at the Zhongguancun Science Park – an area with ambitions to be “China’s Silicon Valley” – are similar to concessions already in place for foreign specialists. The municipal government announced last week that Chinese citizens who worked in the park and qualified as “high-level talent” could apply for green cards for their foreign spouses and children through a streamlined scheme.

Alibaba, NetEase Ally on Music Copyright Sharing-Marbridge Consulting Chinese internet conglomerate Alibaba Group's (NYSE: BABA) Ali Music Group and Chinese internet company NetEase's (Nasdaq: NTES) NetEase Cloud Music recently announced a mutual music copyright licensing partnership. Under the partnership, the two platforms will jointly explore optimal models for music platform copyright licensing, cooperation, and operations. Ali Music Group previously announced the formation of a mutual copyright licensing partnership with Chinese internet conglomerate Tencent (0700.HK), and its music library now includes more than 18 mln titles.

Chinese Internet Domain Name System On the Basis of the article 5 of the "Measures on the Administration of Internet Domain Names" (Ministry of Industry and Information Technology Order No.43) , the adjusted Chinese Internet Domain Name System is hereby announced, effective from the date of release.


Energy, Environment, Science And Health

Hebei to Rid Qinhuangdao of Coal in Bet on Tourism - Caixin Global One of China’s largest port cities, Qinhuangdao, plans to move its core coal-transport activities out of the city, amid Beijing’s anti-pollution campaign. Qinhuangdao will instead focus on tourism, multiple sources close to the Hebei provincial government told Caixin.

South China Sea marine park proposed - Global Times A national park in the South China Sea is needed to better preserve the marine ecology in the region, deputies from China's top legislature said Tuesday on the sidelines of the annual session of the National People's Congress (NPC). Protection of unique and rich resources in the South China Sea has always been given great importance, especially when some of the resources, such as coral reefs, are very fragile, Deng Xiaogang, an NPC deputy, told the Global Times on Tuesday.


Agriculture And Rural Issues

City-Dwelling Farmers Who Forsake Rural Homes to Be 'Rewarded' - Caixin Global China is to compensate farmers who voluntarily forgo their rural homes after they resettle in cities in a bid to free up more land for agriculture and speed up urbanization. According to a work report delivered by Chinese Premier Li Keqiang at the annual session of the country’s top legislature on Monday, his administration is drawing up policies to better protect the land rights of rural residents who have relocated to cities and to allow payments to be made for rural homes. But, he did not offer specifics in his speech to the National People’s Congress.