Exclusive Insight: Decoding China's Party Leadership Structure for Financial Governance: What Officials Need to Know
Huawei has replaced more than 13,000 parts, redesigned 4,000 circuit boards to overcome US tech sanctions, founder says; Xi’s Embrace of Putin Dents His Chances of Playing Peacemaker on Ukraine
Welcome to today's edition of "The China Brief." In today's news, Chinese officials are promoting President Xi Jinping's upcoming trip to Moscow as a peace mission to promote talks between Russia and Ukraine, but US and European officials are skeptical. Meanwhile, despite China reopening its borders in January 2023, the number of American students studying in China during the 2020-21 academic year was down 97% from two years prior due to geopolitical tensions and growing mistrust. Additionally, Huawei founder Ren Zhengfei has revealed that the company has replaced over 13,000 parts and redesigned over 4,000 circuit boards to overcome US sanctions. Finally, China has launched its annual recruitment drive for college graduates, aiming to create around 12 million urban jobs this year while issuing its first guidance on eradicating sexual harassment of women in the workplace.
And here’s today’s exclusive insight:
Exclusive Insight: Decoding China's Party Leadership Structure for Financial Governance: What Officials Need to Know
During the recently concluded Two Sessions in China, a significant overhaul of the government's financial governance regulatory framework took place. This involved the establishment of National Financial Regulatory Bureau on the basis of the China Banking and Insurance Regulatory Commission and a realignment of regulatory responsibilities for the People's Bank of China, China Financial Regulatory Bureau, and China Securities Regulatory Commission. The Chinese Communist Party also set up a new framework within the Party to control the entire financial system, especially government regulatory departments. Specifically, the Party will create two new leadership bodies for the financial system: the Central Financial Committee (CFC in short) and the Central Financial Work Commission(CFWC in short)
The CFC is a high-level platform for unified management of financial affairs by the Communist Party of China, responsible for decision-making, deliberation, and coordination of financial stability and development. It is expected that Xi Jinping and Li Qiang will serve as Chairman and Vice Chairman, respectively. Leaders of government regulatory departments mentioned earlier, including the Governor of the People's Bank of China, the Director of the China Financial Regulatory Bureau, the Chairman of the China Securities Regulatory Commission, and the Minister of Finance, are expected to become members of the CFC alongside leaders of other relevant government departments.
The Office of the CFC is the general office of the CFC. It will be the core department for decision-making in China's financial system, overseeing top-level designs for financial industry development, monetary policy, regulatory policy, financial stability, and more. The People's Bank of China, China Financial Regulatory Bureau, and China Securities Regulatory Commission will implement policies formulated by this Office. Regarding financial stability, the US counterpart of the Office is equivalent to the Financial Stability Oversight Council (FSOC) . The director of the Office is expected to be Vice Premier of the State Council and member of the Communist Party of China's Political Bureau, He Lifeng. The Office should have several bureaus, including the Secretariat Bureau (responsible for secretarial work), the General Affairs Bureau or Confidentiality Bureau (responsible for document transmission and management between the office and the highest level of the Party), and several bureaus involved in financial (regulatory) work, such as the Banking Bureau, Non-bank Financial Institutions Bureau, Research Bureau, International Bureau, and others. These newly established bureaus will be named with numbers, following the tradition of secrecy in most bureaus within the Communist Party of China, such as Bureau One, Bureau Two, etc.
The Central Financial Work Committee is not as high-level as the CFC. Still, its importance should not be underestimated: it is responsible for managing personnel within financial regulatory authorities and state-owned financial institutions. While it does not directly handle specific business matters, it can indirectly intervene in business operations by influencing personnel. If the United States were a one-party state, with the ruling party always being the Democratic Party and state-owned financial institutions dominating the financial sector, the Central Financial Work Committee would be the equivalent of the Democratic Party's human resources department for the financial (regulatory) system. Ding Xuexiang, the First Vice Premier of the State Council and member of the Standing Committee of the Communist Party’s Politburo, will likely become Secretary of the CFWC.
It is important to note that the CFWC will co-locate with the Office of the CFC, implying the two new institutions are interconnected: personnel and resources can be flexibly utilized under the unified command and dispatch of higher-level authorities, and some leaders may hold positions in both departments. For example, the Director of the Office of the CFC could serve as the Deputy Director of the CFWC. The Deputy Director of the CFWC could also be the Deputy Director of the Office of the CFC. However, the leaders of these two institutions are not completely identical, as the Office of CFC focuses on business matters while the CFWC focuses on personnel. Establishing two Party institutions to manage the financial system likely reflects the intention to share power and supervise one another within the Party.
Finally, it is worth noting that one of the routine tasks of the Office of CWC is to prepare news briefings for the highest levels of the Communist Party of China. We welcome this office to subscribe to The China Brief.
(The article's author, Jin Huabin, is a financial industry expert and special analysis expert for The China Brief.)
NYT: China as Peacemaker in the Ukraine War? The U.S. and Europe Are Skeptical
Chinese officials claim that President Xi Jinping's upcoming trip to Moscow is a peace mission to promote talks between Russia and Ukraine, but US and European officials are skeptical. The US believes that China is considering giving weapons to Russia, which would strengthen Putin's battlefield position. American intelligence agencies have concluded that relations between China and Russia have deepened during the war, and the two countries continue to do joint military exercises. China remains one of the biggest buyers of Russian oil, which has helped Moscow finance its invasion. While some Chinese officials see Putin's war as destabilizing, they recognize a greater priority in foreign policy: the need to buttress Russia so the two nations can present a united front against their perceived adversary, the United States.
WSJ: Americans Encounter Hurdles to Studying in China Even as Covid Restrictions Ease
The number of American students studying in China during the 2020-21 academic year was down 97% from two years prior, despite China reopening its borders in January 2023. The decline is attributed to various factors, including geopolitical tensions between the U.S. and China, growing mistrust about China in the U.S., and fears that border controls could be reimposed. If they ever do, it could take years for American student numbers to return to pre-pandemic levels, say scholars and students. Meanwhile, many U.S. study-abroad programs are crafting protocols in case lockdowns occur again in China, slowing down efforts to restart short-term programs in the country.
Bloomberg: Xi’s Embrace of Putin Dents His Chances of Playing Peacemaker on Ukraine
Chinese President Xi Jinping's three-day visit to Russia will involve his efforts to broker an end to Russia's conflict with Ukraine, his most ambitious initiative yet. However, Xi's "rock-solid" support for Putin and a “let's give war a chance” attitude of both sides of the conflict have been viewed as a harder sell for Xi as an honest broker to mediate an end to the war. While it allows Xi to challenge US global dominance and tighten his relationship with Putin, Ukraine's allies in the US and Europe dismissed China's vague peace proposals.
WSJ: China’s M&A Star Told His Employees to Be Bold—Then He Disappeared
Fan Bao, the founder and chairman of China Renaissance Holdings, has been detained by Chinese authorities for over a month, leaving his colleagues, business partners, friends, and acquaintances worried about his safety. The boutique investment bank has been reassuring clients and employees that the business is operating normally. Still, the incident has rattled the finance community in China, which believed that the crackdown on businesses was over. The detention of Mr. Bao comes as more middle-class and wealthy Chinese citizens relocate to other countries due to anxiety over China's direction, its curtailing of people's rights, and how it managed the Covid-19 pandemic.
SCMP: Huawei has replaced more than 13,000 parts, and redesigned 4,000 circuit boards to overcome US tech sanctions, founder says
Huawei founder Ren Zhengfei has revealed that the company has replaced more than 13,000 parts and redesigned over 4,000 circuit boards in the past three years in a bid to overcome US sanctions. The company has developed replacement parts from domestic sources and will launch MetaERP, its own resources planning system, next month, as well as use its own operating system, data system, compiler, and language. Huawei has been hit by US sanctions in recent years, with the Trump administration adding the company to an export blacklist on national security grounds in 2019.
Reuters: China launches recruitment drive for college graduates
China has launched its annual recruitment drive for college graduates in large and midsize cities. The recruitment drive will last from March 20 to May 26 and includes 19 offline job fairs, eight cross-region job fairs, and job fairs featuring sectors such as manufacturing, medicine and health, internet, electricity and new energy. The Chinese government aims to create around 12 million urban jobs this year, up from the 2022 target of at least 11 million, and to keep the survey-based jobless rate around 5.5% this year.
SCMP: China’s first guidance on combating sexual harassment of women in the workplace gets mixed response
China has issued its first guidance on eradicating sexual harassment of women in the workplace. The reference document, issued by the Supreme People's Court and five government agencies, including the Ministry of Human Resources and Social Security, provides a detailed explanation for previous legal provisions on sexual harassment and increases protection for women. While some experts have welcomed the step, others have criticized the guidance for failing to address the problem of victimization and the power imbalance between superiors and subordinates in companies and wider society.
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