Hi everyone, feels even more this week that there are so many things to discuss.

Three quick notes:

Yesterday I linked to a good explainer of the new five-year plan and fifteen year vision by Geoff Yu of BNY Mellon. I put in a bad link, apologies, this one to the PDF should work.

The credit markets seem nervous - Default by Henan Coal Mining Company Sends Tremors Across China - Caixin:

Yongcheng Coal and Electricity Holding Group Co. Ltd., which just last month got the highest possible rating from a domestic credit rating company, failed to repay an ultra-short-term bond that matured Tuesday, according to a statement posted by the Shanghai Clearing House.

“The wind has changed direction,” a senior bond market participant said. Under the pressure of debt replacement, many local governments may have more incentive to let debt-ridden LGFVs or state-owned enterprises go bankrupt and restructure, the market participant said.

How worried should we be, and how might regulators fix this? Michael Pettis posted some thoughts on it to Twitter:

Michael Pettis @michaelxpettis

2/3 We'll probably soon see some sort of imposed restructuring that reverses the default. While regulators have long known that they must allow defaults if they want to impose lending discipline in the market, they always eventually retreat because of the same two problems.

November 13th 2020

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Xi is on an inspection tour of Jiangsu. As noted in yesterday’s newsletter he visited an exhibition of the life of Zhang Jian, “a Chinese industrialist and educator in the late 19th century and early 20th century”.

There is a direct thread to this visit from the July 21 meeting (See Sinocism July 21) he held with entrepreneurs, in which he expounded on the dual circulation strategy, to the September “Opinion on Strengthening the United Front Work of the Private Economy in the New Era 关于加强新时代民营经济统战工作的意见” and the National Private Economy United Front Work Conference 全国民营经济统战工作会议 and Xi’s instructions to it (See Sinocism September 16).

At the July meeting Xi mentioned Zhang Jian by name:

First, I hope we will enhance our patriotic feelings. Enterprise marketing knows no borders, and entrepreneurs have their motherland. Excellent entrepreneurs must have a high sense of mission and a strong sense of responsibility for the country and the nation, and closely combine the development of their enterprises with the prosperity of the country, the prosperity of the nation and the happiness of the people, and take the initiative to bear the responsibility and share the worries for the country. Patriotism is the glorious tradition of excellent entrepreneurs in China in recent times. From Zhang Jian in the late Qing Dynasty to Lu Zuofu and Chen Jiageng during the war, and then to Rong Yiren and Wang Guangying after the founding of the new China [Bill: Rong and Wang “donated” all their businesses to the government], and so on, are all examples of patriotic entrepreneurs. Since the reform and opening up, a large number of patriotic entrepreneurs have emerged in China. Entrepreneurs' patriotism can take many forms, but the first and foremost is to run a first-class enterprise and lead it to strive and strive for the best, so as to achieve better quality, higher efficiency, greater competitiveness and greater influence.

第一，希望大家增强爱国情怀。企业营销无国界，企业家有祖国。优秀企业家必须对国家、对民族怀有崇高使命感和强烈责任感，把企业发展同国家繁荣、民族兴盛、人民幸福紧密结合在一起，主动为国担当、为国分忧，正所谓“利于国者爱之，害于国者恶之”。爱国是近代以来我国优秀企业家的光荣传统。从清末民初的张謇，到抗战时期的卢作孚、陈嘉庚，再到新中国成立后的荣毅仁、王光英，等等，都是爱国企业家的典范。改革开放以来，我国也涌现出一大批爱国企业家。企业家爱国有多种实现形式，但首先是办好一流企业，带领企业奋力拼搏、力争一流，实现质量更好、效益更高、竞争力更强、影响力更大的发展...

The propaganda packaging and subsequent study sessions for Xi’s Jiangsu inspection tour will likely double down on the importance of “patriotic entrepreneurs”. A question one might ask about Jack Ma given his offending speech to regulators is whether or not Xi considers Ma a “patriotic entrepreneur”, and if he does not what might Ma need to do to change that view?

Thanks for reading and participating.

This week’s newsletters, in case you missed any:

11.12 - Xi's Pudong speech; Peaceful China and the knife handle; Did Xi kill the Ant IPO?; Hong Kong

11.11 - Peaceful China; Hong Kong, PRC; TikTok, Ant Group, SCO declaration

11.10 - Anti-monopoly rules coming for Internet platforms; SCO meeting; Xi’s latest book; Deep sea exploration

11.9 - Frozen imports and Covid-19; Foreign trade under the dual circulation strategy; Hong Kong; US-China