Still no US-China talks; Disappointing April data; Private enterprise law passes; Miao Hua; Xi on 15th Five-Year Plan; New white paper on Covid-19

Happy May holiday! Sinocism is off until next Tuesday, unless something particularly interesting happens.

In this week’s Sharp China podcast we discussed the current state of the trade war and whether or not the PRC may be under more pressure than some assume - ‘Protracted War’ and ‘Struggle’; The Looming Risks for the PRC; A Politburo Study Session on AI; Apple’s Attempt to Pivot:

On today’s show Andrew and Bill take stock of the trade war one month after “Liberation Day.” Topics include: Domestic messaging on “struggle” and external promises to never kneel down, the risks facing the PRC as US tariffs threaten to compound overcapacity controversies and invite heightened scrutiny around the world, Week 3 of speculation on whether the US and China are negotiating on trade, and why talk of a resolution and return to the March status quo seems increasingly unrealistic. At the end: The April Politburo meeting reflects both caution and confidence, a study session on AI spells bad news for Nvidia, thoughts on Apple’s story in China as the company tries to relocate US iPhone assembly to India, and Netflix gets the last laugh 15 years after being rebuffed by PRC censors.

You can listen to it here.

Summary of today’s top items:

1. US-China trade war - The PRC Ministry of Foreign Affairs spokesperson said Wednesday that in the last 24 hours “as far as he knows, the two sides had not engaged in any consultations or negotiations on the tariff issue”. CCTV’s Yuyuan Tantian put out an interesting post Wednesday evening in which it claimed that “the U.S. side has proactively reached out to China through multiple channels, hoping to discuss tariffs”. The post also said “unless the U.S. takes substantial action, China has no need to enter into talks. However, if the U.S. wants to engage, doing so does no harm to China at this stage. On the contrary, China can use this opportunity to observe, and even draw out, the U.S.’s true intentions—seizing the initiative in both negotiating and countering 在美国没有实质性举动前，中方没必要和美方谈。但是美国如果希望同中国接触，现阶段对中国来说也没有坏处，中方需要观察甚至逼出美方的真实意图，掌握谈和打的主动权.” Is that actually signaling an opening?

2. Disappointing April manufacturing data - The April official manufacturing purchasing managers’ index came in below expectations at 49, while the Caixin China General Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.4 from 51.2 in March. Both are likely signs that the trade war is starting to bite.

3. Private economy promotion law passes - The NPC Standing Committee passed the Private Economy Promotion Law and it will go into effect May 20th. On paper it looks promising, implementation will be key, and policymakers will probably need to find some demonstration cases to show they are taking the law seriously. In his statement at the conclusion of this NPC SC session, Zhao Leji said:

Zhao Leji emphasized that the newly adopted Law on Promoting Private Economy implements the major policies and measures formulated by the CPC Central Committee to foster the development of the private sector. The law clearly establishes the principles of equal treatment, fair competition, equal protection, and common development. It is significant for building a high-standard socialist market economic system, promoting healthy and high-quality development of the private economy, and fully leveraging the crucial role of private enterprises in advancing Chinese modernization. It is necessary to thoroughly study and implement the spirit of General Secretary Xi Jinping's important speech at the symposium on private enterprises and follow the central authorities' deployment. Efforts should be made to properly publicize, interpret, and implement this law, thereby creating a favorable environment for the growth of the private economy.

4. Personnel moves at the NPC Standing Committee session - The Standing Committee of the NPC also announced the removal of several deputies to the 14th National People's Congress, the most notable being Central Military Commission member Miao Hua. The meeting removed Jin Zhuanglong from his position as Minister of Industry and Information Technology and appointed Li Lecheng to replace him. He Weidong and Miao Hua are both still listed on the CMC page, but Miao's name has been unclickable for several weeks. He Weidong’s is still clickable, whatever that means…

5. Preparing for the 15th Five-Year Plan - Xi chaired a symposium in Shanghai about preparatory work for the upcoming 15th Five-Year Plan. This symposium is likely the first of several over the next few months. According to the readout:

Xi Jinping pointed out that when planning economic and social development for the "15th Five-Year Plan," it is necessary to prospectively evaluate the impact of evolving international conditions on China and proactively optimize economic arrangements accordingly. China should remain resolute in managing its own affairs, firmly expanding high-level opening-up, taking multiple measures to stabilize employment, enterprises, markets, and expectations, thus effectively stabilizing the economic fundamentals. It is crucial to accelerate the construction of the new development paradigm and comprehensively promote high-quality development. Greater emphasis should be placed on integrating development with security considerations, thoroughly considering domestic and external risks, enhancing national security systems, and strengthening security capabilities. High-efficiency governance should foster a positive interaction between high-quality development and high-level security, ensuring a new security framework supports the new development paradigm [要更加注重统筹发展和安全，通盘考虑内外部风险挑战，健全国家安全体系，增强维护安全能力，以高效能治理促进高质量发展和高水平安全良性互动，以新安全格局保障新发展格局]...

So does that mean calibrating more towards development over security, or more towards security over development?

More from the readout:

Xi Jinping noted that Chinese modernization is socialist modernization aimed at common prosperity for all the people. When planning economic and social development for the "15th Five-Year Plan" period, we must remain true to our original aspiration, keeping people's well-being as the fundamental orientation, safeguarding and improving people's livelihoods through development, and steadily advancing common prosperity.

6. “Covid-19 Prevention, Control and Origins Tracing: China's Actions and Stance” - The State Council Information Office issued a white paper titled "Covid-19 Prevention, Control and Origins Tracing: China's Actions and Stance". The paper has three sections: Contributing Chinese Wisdom to the Study of the Origins of SARS-CoV-2; China's Contribution to the Global Fight Against Covid-19; and The Mismanaged Response of the US to the Covid-19 Pandemic. The paper again suggests the virus originated in the US:

While unrelenting in its domestic efforts to contain the virus, China has unreservedly shared its experience to facilitate global pandemic control, done all it could for international anti-epidemic cooperation, fulfilled its international responsibilities, and demonstrated its ethical commitment as a major country.

Despite being the world’s largest economy and most developed country, the US failed to make contributions commensurate with its capabilities. It sabotaged collaborative global efforts to address the crisis, and left its own people as the primary victims of the fallout.

The US should cease shifting blame and evading responsibility, stop finding external excuses for its internal malaise, and genuinely reflect on and overhaul its public health policies. The US cannot continue to turn a deaf ear to the numerous questions over its conduct. It must promptly respond to the legitimate concerns of the international community, proactively share with the WHO data on its early suspected cases, disclose information about Fort Detrick, its global network of biological laboratories, and the so-called research conducted therein, and provide a responsible account to the global public.