"Revolutionary" Reform of Party And State Institutions; More On The New Supervision Law; Huawei Fears Kill Broadcom-Qualcomm Deal; Fake Foreign Journalist Annoys Chinese Reporter
The big news Tuesday is the release of the plan to restructure the ministries and commissions under the State Council, to improve Party control, policy coordination, governance and efficiency. The big losers look to be the NDRC and probably the Premier. We still need much more detail on timing, implementation and leadership but there is no question this is the most ambitious restructuring in decades.
So far the 2018 NPC is the most interesting in years, and we still have another week.
Thanks for reading.
The Essential Eight
1. "Revolutionary" Reform of Party And State Institutions
The Party continues to eat the state…
The Communist Party of China (CPC) Central Committee's decision and plan on deepening reform of Party and state institutions are revolutionary, a senior Chinese economic and financial official wrote in an article published by the People's Daily on Tuesday.
"The reform is revolutionary in integrating existing vested interests and reshaping new interest patterns," wrote Liu He, a member of the Political Bureau of the CPC Central Committee and director of the General Office of the Central Leading Group for Financial and Economic Affairs.
The decision and plan were reviewed and adopted at the third plenary session of the 19th CPC Central Committee, according to a communique issued at the end of the session late last month.
Faced with new requirements for various tasks in the "new era," the current function and structure of Party and state institutions are not completely suitable for coordinately implementing the five-sphere integrated plan and the four-pronged comprehensive strategy, nor for modernizing China's system and capacity for governance, the document said...
Liu wrote that strengthening the overall leadership of the Party was a core issue in deepening the reform of Party and state institutions.
"The Party exercises overall leadership over all Party, government, military, and people's organizations as well as academic bodies in every part of the country," he wrote.
A primary task of deepening reform of the Party and state institutions is to strengthen the CPC's leadership in every sector, Liu cited the communique as saying.
Liu He's People's Daily article-深化党和国家机构改革是一场深刻变革
Proposed list of ministries, commissions of China's cabinet after reform - Xinhua full list of the changes
Infographic of the proposed 26 ministries and commissions under the State Council-图说国务院机构改革方案
A new regulatory structure with the PBOC as the pivot is emerging as the annual legislative meetings progress through their second week. Still to come are personnel appointments, including the expected anointment for Politburo member Liu He as a Vice Premier in charge of financial and economic affairs, making him President Xi Jinping’s go-to official as he seeks to avert a financial crisis after years of rapid credit growth.
“The PBOC has more power: It has added the role of lawmaking to its previous role as the adviser on monetary policy,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “The PBOC’s role will largely be policy making and the newly merged bank and insurance regulator will mainly be the policy executor. And the other thing for sure is that Liu He will play a more important role in China’s reforms.”
The Ministry of Environmental Protection has been renamed the Ministry of Ecological Environment and it will take over responsibility for climate change policy from the NDRC. The new ministry will also supervise the work of other ministries to prevent groundwater pollution, including pollution from agriculture and sewage, as well as marine environmental protection and nuclear radiation safety.
Li Shuo, a senior climate policy expert at Greenpeace East Asia, called the changes a “net positive” for the environment, but warned that moving the climate change policy away from the powerful NDRC into the historically weaker environmental ministry, could be a double-edged sword.
China is building a more powerful agriculture agency -- absorbing roles held by the NDRC and the ministries of commerce, land and water resources -- as growing Chinese appetites exacerbate historical food supply concerns.
According to the document submitted Tuesday to ongoing the national legislative session for deliberations, the State Administration of Press, Publication, Radio, Film and Television will be eliminated.
Question: So press and publications to go under a Party body, like the Propaganda Department?
The integrated offices will be responsible for collection of all items of taxes and non-tax revenue collection and administration, according to the plan on institutional restructuring of the State Council, or the cabinet, which was tabled to the first session of the 13th National People's Congress for deliberation.
The State Administration of Taxation will be these offices' main regulator, coupled with administration from local governments, the plan said.
China plans to establish a National Health Commission to replace the National Health and Family Planning Commission, according to a government reform plan proposed to the country's legislature. The new commission’s focus will shift from treating illnesses to improving people’s health, Wang Yong, a state counselor, said Tuesday during a session of the National People’s Congress. It will also actively deal with the country’s aging issues.
People's Daily calls the bureaucratic restructuring plan the boldest and most visionary in nearly 40 years-人民日报评机构改革：近40年来最有远见和魄力的方案_第一财经
The tasks were previously handled by the Ministry of Civil Affairs, Ministry of Human Resources and Social Security and the Central Military Commission, which President Xi Jinping heads and which has overall command of the armed forces.
In February of last year, Chinese military veterans staged two days of demonstrations in central Beijing, demanding unpaid retirement benefits in a new wave of protests highlighting the difficulty in managing demobilized troops.
China's massive cabinet reshuffle plan - Global Times -useful English language infographic
China plans to set up an international development cooperation agency to better coordinate foreign aid and promote its‘Belt and Road’ initiative, State Councillor Wang Yong said on Tuesday.
The new agency will be responsible for forming policies on foreign aid, as well as granting aid and overseeing its implementation, according to a parliamentary document released earlier in the day.
“This will allow aid to fully play its important role in great power diplomacy... and will better serve the building of the‘belt and road’,” Wang told parliament.
2. More On The New Supervision Law
New supervisory commissions will share staff and offices with the Party disciplinary inspection agencies.
The draft law has incorporated practices of the pilot reform of supervisory system, which began in Beijing, Shanxi and Zhejiang in December 2016, and then was expanded nationwide in November 2017, Li said.
Among the new practices in the pilot reform, a new detention system has been tested to replace the practice of "shuang gui," an intra-party disciplinary practice, exercised by Party disciplinary officials, where a Party member under investigation must cooperate with questioning at a set time and place.
"Replacing 'shuang gui' with rigorously-regulated detention will help settle a long-lingering legal problem," Li said. "This has displayed our resolve and confidence to realize a full law-based governance."
According to the bill, the new agency, ranked alongside the central government and above the judiciary, will monitor misconduct not only among the Communist Party’s 90 million members but also among managers of state-owned enterprises, hospitals, educational and cultural institutions, sports organisations and even village governments and research institutes....
There had been speculation that doctors and teachers would also fall under the NSC’s gaze but the draft released on Tuesday says the law would only affect their managers.
The bill would empower the new agency to interrogate and detain suspects, freeze their assets and search their premises.
It also spells out the practice of liuzhi, or detention for interrogation, saying it would apply to those who offered bribes – in the past often only those who took them were affected because those giving the inducements may not have been party members.The proposed law would allow for the detention of both bribers and bribe-takers at the same time.
3. Other NPC News
Xinhua published the timeline of the new Constitution amendments. It mostly mirrors what Wang Chen disclosed last week, sounds like the suggestion for ending term limits first came officially from a 12.15 meeting with non-Party members--为中华民族伟大复兴提供根本法治保障——《中华人民共和国宪法修正案》诞生记 _ 滚动新闻 _中国政府网
Police are checking various popular student hangouts in Beijing’s university district to make sure they have no more than 10 foreigners inside at any one time, as the stability-obsessed authorities ramp up security for China’s biggest annual political gathering.
4. Huawei Fears Kill Broadcom-Qualcomm Deal
The president said his decision to block Broadcom’s bid had been based on the review by the foreign investment committee. The panel had said that the leadership of Qualcomm, which makes wireless chips and also licenses key wireless patents, was too important to let go of. The committee argued that economic leadership in next-generation high-speed mobile networks known as 5G, in which Qualcomm is a key player, was also a national security interest.
“China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” a United States Treasury official wrote in a letter to the companies last week.
As part of the presidential order, the United States also barred the 15 individuals who Broadcom had proposed for Qualcomm’s board from running, saying they were “disqualified from standing for election as directors of Qualcomm.”
“What’s disturbing is the way Geely just crept up on Daimler out of nowhere,” says MP Kerstin Andreae, the Greens’ expert on economic policy. “One fine day Daimler’s CEO [Dieter Zetsche] woke up to find he had a new principal shareholder, and that’s a huge change in the company’s ownership structure.”
The latest in a series of controversial forays into German industry and financial services, the deal crystallised longstanding fears about Chinese intentions. The way some in Germany see it, China is on a mission to suck the country dry of its technological know-how and engineering expertise, and supplant it as one of the world’s leading industrial powers.
5. American Centers for Cultural Exchange Are Hostile Foreign Forces
Perhaps American policymakers worried about Confucius Institutes should start using language the CPC understands and warn that they are "hostile foreign forces" in America?
The US State Department documented more than 150 examples of Chinese interference in American public diplomacy efforts between January 2016 and April 2017, carried out in the name of countering “hostile foreign forces” – alleged saboteurs plotting to overthrow the Communist Party’s rule.
The pressure has disrupted numerous cultural initiatives from salsa concerts and movie nights to visiting scholar programmes, even as China scoffs at growing concerns about the political influence of its own “Confucius Institutes”, which have mushroomed around the world in recent years...
The Chinese interference has perhaps been felt most acutely at the American Centres for Cultural Exchange (ACCs), a network of US government-funded language and cultural facilities hosted on college campuses in China.
The US State Department has provided American universities and NGOs with grants to operate 29 such centres in conjunction with Chinese partners, such as universities.
6. Fake Foreign Journalist Annoys Chinese Reporter, Sets Internet On Fire
The blue dress journalist named Liang Xiangyi (梁相宜) works for the Shanghai-based media outlet Yicai (第一财经), whereas the reporter in red (Zhang Huijun 张慧君) works for a news media channel named AMTV (全美电视台).
The moment happened during the National People’s Congress press conference when journalists are expected to ask short and concise questions. When the AMTV reporter poses her question in a dull and long-winding way, it apparently greatly annoys the Yicai reporter, who then cannot contain her contempt for her colleague.
The scene made the term ‘Question-Asking Bitch’ (提问婊) emerge on Chinese social media to make fun of self-important women working in the media industry. It also launched the term ‘Lianghui Personality Sister’ (两会气质姐), which is a term that was allegedly used by Zhang Huijun to describe herself on WeChat.
The questioner is from AMTV USA , which looks to be a CCP front. The reporter rolling her eyes is 梁相宜 Liang Xiangyi from China Business News. Or was, as there are rumors she has been fired. Here is the video on Youtube:
AMTV, American Multimedia Television USA was first one American local television signed cooperation with CCTV in West Coast region in the States. AMTV has signed a cooperation agreement with China Central Television (CCTV) and through Asia-Pacific 2 satellite to transmission the American news program aired on CCTV-4 channel directly with AMTV logo. The most prominent programs on CCTV NEWS include Chinese World and News Hour, providing comprehensive global coverage; China 24 and Asia Business, Shows such as Dialogue and World Insight extend balanced and critical perspectives on current affairs affecting all corners of the globe.
7. A "Water Army Commander" Speaks
China’s water armies comprise real people and are better-coordinated than internet trolls or China’s own brand of keyboard warrior: “little pinkos” who fanatically defend their motherland. And water armies are also not to be confused with groups who are paid to post nationalist comments.
Water armies were born in the early 2010s on online forums and shopping websites such as Taobao, China’s eBay-like platform. In recent years, the entertainment industry has become their main battleground, where celebrity agencies and die-hard fans are willing to shell out millions of yuan to generate buzz. Entertainment agencies can hire water army troops — ranging from a handful of people to hundreds, usually operating under the guise of online marketing companies — to bump up film ratings, become followers of a celebrity, or smear a rival’s reputation...
After an incident earlier this year in which a musician’s angry fans paid a water army to flood Weibo with a slanderous but mistaken hashtag, China’s internet regulator temporarily shut down Weibo’s list of top searches, saying the social media platform had failed to stamp out “vulgar and pornographic” content. In a post, Weibo acknowledged that despite its efforts to keep water armies from overrunning the platform, it’s hard to completely prevent malicious attacks by illicit businesses, and it’s “embarrassingly difficult” to punish such activity under the country’s current internet laws.
8. We All Need A Break
Business, Economy, Finance And Trade
HNA Seeks Stake in Dangdang Amid Debt Battles - Caixin Global: After months of slowdown in acquisition pace amid public concerns over its debt-driven investment spree, Chinese conglomerate HNA Group Co. is moving toward another deal to buy a stake in one of the country’s e-commerce forerunners — Dangdang Inc... Caixin learned from sources close to the matter that HNA has held talks with domestic institutions on the possible sales of some of its domestic assets, including properties in Shanghai, Haikou, Beijing and Suzhou. A document viewed by Caixin listed assets that HNA is considering selling, including the Tangla Hotel in Beijing, a commercial complex in Haikou, and the Crown Plaza Resort in Sanya. Most of the assets are priced between 2 billion yuan and 6 billion yuan.//Question: Why Dangdang? For the cash on its balance sheet?
HNA Sells Two Property Firms to Sunac for $300 Million - Caixin Global In its latest move to divest its assets, debt-ridden Chinese conglomerate HNA Group Co. is selling two real estate-related companies on tropical island Hainan to Sunac China for a total of 1.93 billion yuan ($300 million). The company’s listed unit, HNA Infrastructure Investment Group Co. Ltd., said in a filing to the Shanghai Stock Exchange late Monday that it plans to sell Hainan Gaohe Property Development and Hainan Haidao Construction Logistics to Sunac China, one of the country’s largest developers.
$103 Billion Quant Firm Piles Into China as Foreigners Welcomed - Bloomberg The world’s No. 2 stock market is ripe for a quantitative style of investing, according to a $103 billion money manager that lists a cement maker, pharmaceutical brand and bank as its top picks in China. "The Chinese market is very compelling," Asha Mehta, who oversees emerging markets at Acadian, said by phone from Boston. "The cornerstone of China’s strategy has been growth and economic liberalization."
China's Planned $9 Billion Stake in Russian Oil Partner Delayed - Bloomberg CEFC China Energy Co.’s planned $9 billion purchase of a stake in Russian oil giant Rosneft PJSC has been delayed, according to a Chinese rating agency, citing discussions with the Chinese company that’s recently come under scrutiny.
China’s buyers defy the law to satisfy thirst for foreign homes - FT $$ Chinese households spent about $40bn on residential property overseas in 2017, according to Juwai.com, one of the country’s biggest international property platforms. Despite that figure being 25 per cent lower than the year before, it still makes 2017 one of China’s top three years for such investment.
Agricultural Bank's non-public offering raises US$15.8 bln | Asia Times Agricultural Bank of China, one of the four big state-owned banks, announced the non-public issuance of A shares worth 100 billion yuan (US$15.8 billion) while releasing its 2017 annual report, The Paper reported.
China Bars Foreign Fund Managers From Selling Products That Invest Offshore - MoneyBeat - WSJ The verbal instruction given to foreign money managers by Chinese market regulators, known as “window guidance,” is the latest example both of Beijing’s determination to support its domestic financial markets, and of its continued wariness of rapid capital flight from the country. Eleven global investment firms, including BlackRock Inc., Man Group, UBS AG and Schroders PLC, have gained approval to offer private investment-fund services in China since Beijing opened the door in mid-2016. Previously, such firms had to operate joint ventures with a local Chinese partner.
China's Inner Mongolia finance chief says scaling back project investment - Reuters Zhang Lei, the head of the finance office for the Inner Mongolia Autonomous Region, said state projects were put on hold as the local government takes a more conservative approach to major outlays in line with Xi Jinping’s call to prevent risks. Some projects that exceed current financial resources will be temporarily stopped, Zhang said, while others may be scaled back and some canceled altogether.
Gov't plans blockchain standardization committee - China Daily The Ministry of Industry and Information Technology said on its official website that it had discussed plans to build a blockchain technical standardization committee.
Politics, Law And Ideology
More Nanjing Massacre Miscreants Detained by Police - Sixth Tone “Nanjing is a pit,” Wang wrote. “We should let the Japanese come slaughter again.” Local police were alerted to the incident after screenshots of Wang’s messages were circulated on social media, and they arrested him two days later. The same Weibo post from the Nanjing police referred to a second man who had encouraged users of QQ, another social messaging app, to take violent action against the authorities because of how they had handled — or in his view, mishandled — the case of a failed Nanjing-based investment platform called Qianbao.
Foreign and Military Affairs
China may pare back 'divisive' eastern Europe summits - Reuters The diplomats said there were indications China could delay the next“16+1” summit, scheduled for the Bulgarian capital Sofia later this year, and hold future meetings every two years instead of on an annual basis. The possible shift comes amid unease in Beijing over criticism of the summits in Brussels, Berlin and other capitals, at a time when the EU is discussing steps to more strictly control corporate takeovers of European firms by Chinese rivals.
Chinese History Isn’t Over | ChinaFile - Julian B. Gewirtz Even if the snapshot of the present feels totalizing or overwhelming, the logical consequence of accepting a deterministic view of China today would be to give up on even hoping for a more open China. That would be premature, as well as deeply unfair, to the many people in China who hope to move their society in a different direction. The C.C.P. may try to limit that human agency by crackdowns and restrictions, but can at most constrain rather than destroy it. As we assess China’s future and the future of U.S.-China relations, we must be careful to avoid falling into a habit of denying agency to anyone but Xi himself. Instead, we should fully recognize and even celebrate the human agency that will continue to exist throughout Chinese society, not just in one powerful leader.
US slammed for 'smearing' China's development in Africa | IOL News In a no-holds barred and strongly-worded rebuke, China's ambassador to South Africa, Lin Songtian, on Monday took strong exception to United States Secretary of State Rex Tillerson's criticism of China's African policy, saying that the US wanted to create an impression that China was aiding and abetting corruption and looting the resources of the continent whereas it was the US that feared losing its grip and influence in Africa.
Australia's Defence Department bans Chinese app WeChat | afr.com In a move which further highlights growing concerns around Chinese espionage activities in Australia, the Department said it did allow limited use of Facebook, but not WeChat. "Defence does not provide or support the use of unauthorised software, including the WeChat social media application, on Defence mobile devices," a spokesman told The Australian Financial Review in response to questions.
J-20 stealth fighter's capabilities to be enhanced - China Daily Yang Wei, a deputy director of science and technology at Aviation Industry Corp of China and an academician of the Chinese Academy of Sciences, told China Daily in an exclusive interview that designers will develop variants of the radar-evading J-20 and will open research on its successor－a sixth-generation fighter jet. "We are not complacent about what we have achieved. We will develop the J-20 into a large family and keep strengthening its information-processing and intelligent capacities. At the same time, we will think about our next-generation combat plane to meet the nation's future requirements," Yang said.
Hong Kong, Macao
The Drop - FT $$ So far at least a dozen people, many of whom worked for Hong Kong gangs, have been convicted of laundering money through the Commonwealth Bank of Australia (CBA), the country’s biggest bank by assets. The money laundering has created a scandal that has engulfed that business and cast a light on the behaviour of the nation’s banking sector and its links with the global drugs trade.
The Daybreak Project an interactive encyclopedia and oral history archive of the 2014 Sunflower Movement.
Tech And Media
ofo announces $866 million funding round led by Alibaba amid cash strain rumors · TechNode ofo uses a combination of debt and equity financing for this round, the company noted. Rumors circulate in Chinese media earlier this month that ofo has secured RMB 1.77 billion ($280 million) funding from Alibaba through chattel mortgage financing. ofo declined to comment on the relation between these two pieces of news.
How a Little-Known Startup Became a Tech Behemoth — The Information - $$ In less than a year, the startup behind China’s most popular newsfeed Toutiao has transformed itself into a $30 billion empire of more than a dozen media and entertainment apps. Its breakneck expansion and skyrocketing valuation are prompting questions about whether it is on course to become the next Alibaba or Tencent, or if the rapid growth is unsustainable. Those questions have risen to the forefront as the company, Beijing Bytedance Technology, discusses a new round of fundraising, according to people familiar with the matter. While the talks are in the early stage, some investors say they anticipate a $50 billion valuation.
wusa9.com | Dangerous content lurking on app popular with kids Muscial.ly currently has around 200 million users, mostly children and tweens. It's designed to create and share videos of lip-syncing. However, if you type in certain code words, disturbing videos appear on the user's screen.
Society, Art, Sports, Culture And History
Liberal Writer Li Jingrui Angers Chinese Feminists: “Weaklings and Warriors Are Not Defined by Gender” – What's on Weibo The discussion was triggered when Li Jingrui (李静睿), a well-known female author and supporter of Chinese democratic activists, spoke out about China’s feminist movement. An online crackdown affecting various feminism-related social media accounts fuelled the debate...
Energy, Environment, Science And Health
Taboo-Busting Professor Who Dared to Teach About HIV Due to Retire - Caixin Global When Central China was ravaged by the rapid spread of HIV in the mid-1990s, local governments initially responded by keeping mum, hoping the problem would just go away. Journalists, activists and nongovernmental organizations working on the issue were banned from operating in the region or coerced into leaving. Gao Yanning, a professor of public health at Shanghai’s prestigious Fudan University, was one of the few people able to document the impact of the epidemic caused by illicit blood dealers and a government-backed unsanitary blood-for-cash drive in the late 1980s and 1990s. The revolutionary work done by Gao, who at 60 is set to retire this year, to pioneer China’s understanding of the intersection between gender, sexuality and public health, to de-stigmatize the study of the LGBT community and to raise awareness of China’s HIV situation has inspired college courses around the country. But many now worry about who will keep his legacy alive.
China's Yunnan defends dam building as activists head to court - Reuters Officials from southwest China’s Yunnan province have defended a plan to build a dam in the region as“fully legally compliant”, after an environment group took developers of the project to court last month for violating laws. The Beijing-based Friends of Nature had filed a suit against the 113-megawatt Huilong Mountain hydropower plant on the Mekong river in rural Xishuangbanna, near the Myanmar border, saying it would destroy rain forest and encroach upon nature reserves.
Agriculture And Rural Issues
China’s Top Food Company Goes Global to Feed 1.4 Billion at Home - Bloomberg “We will make sure we have a strong global supply chain to serve our goal in the China market and food security in China,” Cofco Corp. President Patrick Yu said in a Bloomberg Television interview at the state-run firm’s headquarters in Beijing. “Our strength is in China. We have to keep strongly in mind that we’re a Chinese company, we know China’s markets.”
"网红教授"向北大提交“辞呈”，他在网上讲课收入已达5000万！_搜狐财经_搜狐网 Peking University professor so successful charging people to watch him lecture online that he quits his job...may be making as much as 50M RMB/Yr