Central Economic Work Conference; Prevent the barbaric expansion of capital; SMIC restrictions
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The Central Economic Work Conference has concluded. The readout is long, I have highlighted some things below, would love to hear from all of you what you think is important. There is not yet a good English summary of the readout.
Some of the things that stood out:
“China's economic development is facing three pressures: demand contraction, supply shock and weakening expectations;
“We should correctly understand and grasp the characteristics and behavior rules of capital.” The term “prevent disorderly expansion of capital 防止资本无序生长” does not appear, but “prevent the barbaric growth of capital 防止资本野蛮生长” does, and that sounds harsher. “Traffic lights 红绿灯” for capital are coming, whatever that means, but if I am a capitalist in China I am not thinking it is positive. I see some are translating “资本野蛮生长" as “wild growth of capital”. I guess that sounds better in English but I do not think it sounds good in Chinese;
The will continue to implement a “proactive fiscal policy and a prudent monetary policy;
Some infrastructure investment will be accelerated;
Language about strengthening anti-monopoly work and and fighting unfair competition is in here, a bit different than what was in the 2020 readout, some may see that as a positive change, especially for “platform companies”, but I am not sure it is;
The phrase “houses are for living in, not for speculation 房子是用来住的、不是用来炒” appears;
There is a long section on Common Prosperity;
There is a long section about thrift/conservation
Stability is a big theme - Key meeting aims to stabilize Chinese economy next year with proactive policies amid ‘triple pressure’ - Global Times:
The meeting prioritized stability [稳], a word that was mentioned 25 times according to the Global Times' calculation, for 2022, vowing to improve people's livelihood, stabilize the macro economy, and maintain social stability.
What else should we pay attention to?
Here is the Xinhua readout of the meeting - 中央经济工作会议在北京举行 习近平李克强作重要讲话栗战书汪洋王沪宁赵乐际韩正出席会议-新华网 and some longer excerpts:
The meeting pointed out that while fully affirming the achievements, we must see that China's economic development is facing three pressures: demand contraction, supply shock and weakening expectations. Under the impact of the epochal pandemic, the accelerating changes unseen in a hundred years the external environment has become more complicated, severe and uncertain. We should not only face up to difficulties, but also strengthen our confidence. China's economy is highly resilient and its long-term positive fundamentals will not change. No matter how the international landscape may change, we must unswervingly run our own affairs well, continue to strengthen the economic foundation, enhance our capacity for scientific and technological innovation, adhere to multilateralism, take the initiative to uphold high-standard international economic and trade rules, promote in-depth reform and high-quality development through high-standard opening-up…
会议指出，在充分肯定成绩的同时，必须看到我国经济发展面临需求收缩、供给冲击、预期转弱三重压力。世纪疫情冲击下，百年变局加速演进，外部环境更趋复杂严峻和不确定。我们既要正视困难，又要坚定信心。我国经济韧性强，长期向好的基本面不会改变。无论国际风云如何变幻，我们都要坚定不移做好自己的事情，不断做强经济基础，增强科技创新能力，坚持多边主义，主动对标高标准国际经贸规则，以高水平开放促进深层次改革、推动高质量发展…
First, macroeconomic policies should be sound and effective. We should continue to implement a proactive fiscal policy and a prudent monetary policy. Active fiscal policy should improve efficiency and pay more attention to accuracy and sustainability. It is necessary to ensure the intensity of fiscal expenditure and accelerate the progress of expenditure. We will implement the new tax reduction and fee reduction policy, strengthen support for small and medium-sized enterprises, individual industrial and commercial households, manufacturing industry, risk mitigation, etc., and carry out infrastructure investment moderately ahead of schedule. Party and government organs should insist on living a tight life. Serious financial discipline. Resolutely curb new implicit debts of local governments. A prudent monetary policy should be flexible and moderate, and keep liquidity reasonable and abundant. Guide financial institutions to increase support for the real economy, especially small and micro enterprises, technological innovation and green development. Fiscal policy and monetary policy should be coordinated, and cross-cyclical and counter-cyclical macro-control policies should be organically combined. We will implement the strategy of expanding domestic demand and enhance the endogenous power of development.
一是宏观政策要稳健有效。要继续实施积极的财政政策和稳健的货币政策。积极的财政政策要提升效能，更加注重精准、可持续。要保证财政支出强度，加快支出进度。实施新的减税降费政策，强化对中小微企业、个体工商户、制造业、风险化解等的支持力度，适度超前开展基础设施投资。党政机关要坚持过紧日子。严肃财经纪律。坚决遏制新增地方政府隐性债务。稳健的货币政策要灵活适度，保持流动性合理充裕。引导金融机构加大对实体经济特别是小微企业、科技创新、绿色发展的支持。财政政策和货币政策要协调联动，跨周期和逆周期宏观调控政策要有机结合。实施好扩大内需战略，增强发展内生动力。。。。
It is necessary to boost the confidence of market players, further promote the implementation of fair competition policy, strengthen anti-monopoly and anti-unfair competition, and ensure fair competition through fair supervision.
要提振市场主体信心，深入推进公平竞争政策实施，加强反垄断和反不正当竞争，以公正监管保障公平竞争
We should adhere to the positioning that houses are for living in, not for speculation, strengthen the expected guidance, explore new development models, insist on both renting and purchasing, speed up the development of long-term rental market, promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the virtuous circle and healthy development of the real estate industry due to urban policies.
要坚持房子是用来住的、不是用来炒的定位，加强预期引导，探索新的发展模式，坚持租购并举，加快发展长租房市场，推进保障性住房建设，支持商品房市场更好满足购房者的合理住房需求，因城施策促进房地产业良性循环和健康发展。
We should correctly understand and grasp the characteristics and behavior rules of capital. The socialist market economy is a great creation, and there will inevitably be various forms of capital in the socialist market economy. We should give full play to the positive role of capital as a factor of production while effectively controlling its negative role. It is necessary to set up "traffic lights" for capital, strengthen effective supervision of capital according to law, and prevent the barbaric growth of capital. We should support and guide the standardized and healthy development of capital, adhere to and improve the socialist basic economic system, unswervingly consolidate and develop the public sector of the economy, and unswervingly encourage, support and guide the development of the non-public sector of the economy.
要正确认识和把握资本的特性和行为规律。社会主义市场经济是一个伟大创造，社会主义市场经济中必然会有各种形态的资本，要发挥资本作为生产要素的积极作用，同时有效控制其消极作用。要为资本设置“红绿灯”，依法加强对资本的有效监管，防止资本野蛮生长。要支持和引导资本规范健康发展，坚持和完善社会主义基本经济制度，毫不动摇巩固和发展公有制经济，毫不动摇鼓励、支持、引导非公有制经济发展…
We should correctly understand and grasp the strategic objectives and practical ways to achieve common prosperity. Under China's socialist system, it is necessary to constantly liberate and develop social productive forces, create and accumulate social wealth, and prevent polarization. To achieve the goal of common prosperity, we must first make the "cake" bigger and better through the common efforts of the people of the whole country, and then cut and divide the "cake" well through reasonable institutional arrangements. This is a long-term historical process, and we should steadily move towards this goal. It is necessary to strengthen the employment priority orientation in promoting high-quality development and improve the employment driving force of economic growth. We should give full play to the function and role of distribution, adhere to the principle of distribution according to work, improve the policy of distribution according to factors, and increase the adjustment of taxation, social security and transfer payment. Support willing and capable enterprises and social groups to actively participate in charity. We must persist in doing our best, do what we can, improve the public service policy system, and provide basic public services accurately in areas that people are most concerned about, such as education, medical care, old-age care and housing.
要正确认识和把握实现共同富裕的战略目标和实践途径。在我国社会主义制度下，既要不断解放和发展社会生产力，不断创造和积累社会财富，又要防止两极分化。实现共同富裕目标，首先要通过全国人民共同奋斗把“蛋糕”做大做好，然后通过合理的制度安排把“蛋糕”切好分好。这是一个长期的历史过程，要稳步朝着这个目标迈进。要在推动高质量发展中强化就业优先导向，提高经济增长的就业带动力。要发挥分配的功能和作用，坚持按劳分配为主体，完善按要素分配政策，加大税收、社保、转移支付等的调节力度。支持有意愿有能力的企业和社会群体积极参与公益慈善事业。要坚持尽力而为、量力而行，完善公共服务政策制度体系，在教育、医疗、养老、住房等人民群众最关心的领域精准提供基本公共服务。..
We should correctly understand and grasp the supply guarantee of primary products. We should persist in giving priority to saving and implement the overall saving strategy. In the field of production, promote comprehensive conservation, intensive and recycling of resources. In the field of consumption, we should enhance the awareness of national economy and advocate a simple, moderate, green and low-carbon lifestyle. It is necessary to strengthen the domestic resources production support capacity, accelerate the development and application of advanced exploitation technologies for resources such as oil and gas, and accelerate the construction of waste recycling system. It is necessary to put the improvement of comprehensive agricultural production capacity in a more prominent position, continuously promote the construction of high-standard farmland, thoroughly implement the action of revitalizing the seed industry, improve the level of agricultural machinery and equipment, and ensure the reasonable income of grain farmers. Chinese people's rice bowls should be firmly in their own hands at all times.
要正确认识和把握初级产品供给保障。要坚持节约优先，实施全面节约战略。在生产领域，推进资源全面节约、集约、循环利用。在消费领域，增强全民节约意识，倡导简约适度、绿色低碳的生活方式。要增强国内资源生产保障能力，加快油气等资源先进开采技术开发应用，加快构建废弃物循环利用体系。要把提高农业综合生产能力放在更加突出的位置，持续推进高标准农田建设，深入实施种业振兴行动，提高农机装备水平，保障种粮农民合理收益，中国人的饭碗任何时候都要牢牢端在自己手中。
The readout of the August 30 meeting of the central committee for deepening overall reform used the following language about “barbaric growth” and “disorderly expansion of capital”. From the August 30 Sinocism:
In view of the outstanding problems such as barbaric growth and disorderly expansion of some platform enterprises, we strengthened anti-monopoly supervision, investigated and dealt with the monopolistic and unfair competition behaviors of relevant platform enterprises according to law, prevented the disorderly expansion of capital and achieved initial results, and the market fair competition order steadily improved.
针对一些平台企业存在野蛮生长、无序扩张等突出问题，我们加大反垄断监管力度，依法查处有关平台企业垄断和不正当竞争行为，防止资本无序扩张初见成效，市场公平竞争秩序稳步向好。
So is this where the term “prevent the barbaric growth of capital” comes from?
There are increasing reports of layoffs in the tech sector. The monopoly and unfair competition crackdowns have raised costs for lots of companies while reducing revenue growth opportunities, at least in the short-term. Have these policies been well thought through?
It is worth paying attention to reports of salary reduction for cadres and civil servants in certain local governments. It does not appear to be a central government policy, but it may spread, and this year’s CEWC readout includes the same language that was in the 2020 readout “Party and government bodies must tighten their belts 党政机关要坚持过紧日子“。 How will that be for cadre morale? I think it will be very popular among the masses.
The Wall Street Journal reported last night that the US government is considering closing some of the export control loopholes:
officials are planning to discuss this month a Defense Department proposal to close regulatory loopholes that have allowed Semiconductor Manufacturing International Corp. to purchase critical U.S. technology, the people said. SMIC, as the company is known, has been able to continue buying U.S. tools to make chips despite its inclusion on the Commerce Department’s entity list, which is designed to limit access to key U.S. exports…
Under the current designation, SMIC is restricted from buying U.S. tools “uniquely required” to build chips with 10-nanometer circuits and smaller, which is close to the leading edge of semiconductor manufacturing technology. Since many manufacturing tools can be used to produce chips at a variety of sizes, exporters took the view that they were still able to sell tools that could be adjusted to produce the smaller chips and the restriction “became effectively language that means nothing,” one of the people said.
The WSJ reports that some Commerce department officials are opposed:
Some Commerce Department officials are trying to block the Defense Department’s proposal to close the loopholes for SMIC, the people familiar said.
Commerce officials and U.S. toolmakers have told other officials that any changes to the SMIC restrictions will hurt U.S. companies’ bottom lines and exacerbate a global chip shortage that has affected a broad swath of industries.
Do those Commerce officials have a point, or are they mostly channeling industry lobbyists, or a bit of both?
And when it comes to technology, the CEWC readout also included this about technology：
Fourth, the science and technology policy should be solidly implemented. It is necessary to implement a three-year action plan for the reform of the science and technology system and formulate a ten-year plan for the implementation of basic research. Strengthen the national strategic scientific and technological strength, give full play to the role of national laboratories, reorganize national key laboratories and promote the reform of scientific research institutes. Strengthen the main position of enterprise innovation and deepen the combination of Industry-University-Research. Optimize the ecology of scientific and technological innovation and form a solid scientific research style. Continue international scientific and technological cooperation.
四是科技政策要扎实落地。要实施科技体制改革三年行动方案，制定实施基础研究十年规划。强化国家战略科技力量，发挥好国家实验室作用，重组全国重点实验室，推进科研院所改革。强化企业创新主体地位，深化产学研结合。完善优化科技创新生态，形成扎实的科研作风。继续开展国际科技合作。
Today’s People’s Daily has a long piece by Han Wenxiu, Executive Deputy Director of the General Office of the Central Financial and Economic Affairs Commission, on building he new development pattern 加快构建新发展格局, in which he talks about the importance of technology:
Correctly handle the relationship between self-reliance and open cooperation. Science and technology innovation is the basic element to support national modernization. Experience shows that if the late-developing countries don't want to be stuck in the low-end of the industrial chain value chain and stagnate, they must firmly promote the self-reliance and self-improvement of science and technology, and enhance the self-control ability of the industrial chain supply chain. At the same time, self-reliance is by no means a return to traditional self-sufficiency, nor does it mean doing everything by yourself. We should always adhere to the basic national policy of opening to the outside world, actively participate in international division of labor and cooperation, and actively embed into the global value chain innovation chain in combination with our own advantages, so as to form a pattern of interconnected interests...
正确处理自立自强与开放合作的关系。科技创新是支撑国家现代化的基础要件。历史经验表明，后发国家如果不想被卡在产业链价值链的中低端而停滞不前，就必须坚定推进科技自立自强，增强产业链供应链自主可控能力。同时，自立自强决不是回到传统的自给自足，决不意味着什么都自己干。要始终坚持对外开放的基本国策，主动参与国际分工合作，结合自身优势积极嵌入全球价值链创新链，形成你中有我、我中有你的利益格局…
Promote self-reliance in science and technology. Give full play to the advantages of the new national system under the socialist market economy, strengthen the national strategic scientific and technological strength, gather superior resources, and focus on solving major problems that restrict national development and security. Improve the system and mechanism of scientific and technological innovation, promote the reform of the management and evaluation system of scientific research projects, vigorously and orderly promote the system and mechanism of tackling key innovation problems, such as "exposing the list and making them the priority 揭榜挂帅", clarify the road map, timetable and responsibility system, and continuously make new breakthroughs in key core technologies. Give full play to the main role of enterprise technological innovation, strengthen the connection between innovation chain and industrial chain, improve the financial support innovation system, and greatly improve the transformation effect of scientific research achievements. Adhere to open cooperation, attract global high-quality scientific and technological innovation resources, build a big stage for global scientific and technological open cooperation, and speed up the construction of important talent centers and innovative highlands in the world.
推进科技自立自强。发挥社会主义市场经济条件下新型举国体制优势，强化国家战略科技力量，集合优势资源，着力解决制约国家发展和安全的重大难题。完善科技创新体制机制，推进科研项目管理和评价制度改革，有力有序推进创新攻关“揭榜挂帅”等体制机制，明确路线图、时间表、责任制，在关键核心技术上不断取得新突破。发挥企业技术创新主体作用，加强创新链和产业链对接，完善金融支持创新体系，大幅提高科研成果转化成效。坚持开放合作，吸引全球优质科技创新资源，搭建全球科技开放合作大舞台，加快建设世界重要人才中心和创新高地。
There is no turning back from the PRC’s efforts to end reliance on core US technology. Should US firms maximize their revenue while selling everything they can until the PRC can replace them, or should the US government step in with more export restrictions to make the PRC’s transition to technological self-reliance harder?