Exclusive Insight: The passing of Li Yining- policy advisor and mentor to government officials including the Chinese premier
Xi Jinping to focus on economic stability, technological self-reliance in China after two sessions; White House scales back plans to regulate U.S. investments in China
Welcome to the latest issue of The China Brief, where we provide you with a summary and analysis of the most important news and events shaping China and its relations with the world. In this issue, we will be focusing on the upcoming "two sessions," China's most significant annual political event, which will see a reshuffle of top government jobs. We will explore what this means for China's political direction and long-term goals, such as technological self-reliance. We will also examine the expected confirmation of Li Qiang as the new premier, who is a close ally of Xi Jinping, and how this will impact the State Council's decision-making process.
And here is today’s exclusive insight:
Exclusive Insight: Li Yining: policy advisor and mentor to government officials
Li Yining, the esteemed Peking University professor of economics, was born in Nanjing in 1930 and passed away in Beijing on February 27th at the age of 93. During the 1950s, Li studied economics under the tutelage of illustrious professors like Chen Daisun, a Harvard alumnus, to learn the tenets of Western-style economics theory.
In an era dominated by Marxist-Leninist theory, Li's knowledge of Western-style economics theory offered a counterpoint that emphasized how capitalist economies functioned and how they could be improved through policy interventions. The incompatibility between Li's knowledge system and the planned economy of China led him to experience political upheavals, including raids on his house, criticism, forced labor, head-shaving, and loss of personal freedom. He spent 20 years of his career sitting on a cold bench in the economics department's library until the introduction of the reform and opening up policies in the late 1970s.
Despite his extensive knowledge and expertise, Li's colleagues in the economics department initially overlooked him, and his ideas on microeconomic reforms that prioritized private enterprise and clarified ownership structures of state-owned entities were initially dismissed. Nonetheless, Li's contributions to China's economic policy are considerable. His advocacy for privatization, the development of a stock market, and other concepts was instrumental in China's transition to a market-based economy.
While Li Yining and his high school classmate Wu Jinglian, another prominent economist, disagreed on whether market-oriented reforms or microeconomic reforms should come first, Li's contributions to China's economic policy were essential to the country's economic reform and opening up. Despite facing numerous challenges throughout his career, including being labeled a "capitalist roader" during the Cultural Revolution and being forced to sit in the university library for 20 years, Li remained committed to his ideals and contributed to the development of China's economy.
Li's passing marks the end of an era. Nevertheless, his legacy will continue to be remembered and celebrated, hopefully among the many government officials he mentored.
SCMP: Xi Jinping to focus on economic stability, technological self-reliance in China after two sessions, analysts say
China's annual meetings of the legislature and political advisory body, also known as the "two sessions," are set to begin on March 4. Experts believe that Beijing will return to policy normality and focus on long-term goals, such as technological self-reliance, with a certain degree of necessary pragmatism. The expected confirmation of Li Qiang, who now ranks second in the party, as the country's new premier will arguably be the most watched moment of the legislative session. The transition is also expected to see top government positions dominated by Xi protégés following the departure of senior leaders with backgrounds in the Communist Youth League. With most key government positions filled by his protégés, Xi will try to balance their powers in the State Council. Still, when his followers have disagreements on some policy issues, Xi is likely to become the ultimate arbiter. Experts expect the new cabinet to be "very productive" when implementing Xi's policy directions, with a lot of very skilled politicians and technical people. All three newly promoted members of the 24-member Politburo have decades of experience in the space sector and defense industry, and they had only entered politics in recent years.
NYT: China Moves to Erase the Vestiges of ‘Zero Covid’ to Deter Dissent
China's ruling Communist Party is promoting a propaganda campaign to rewrite the public's memory of its "zero Covid" policy, which helped contain the virus for almost three years, but also smothered the economy and caused widespread opposition. The government is seeking to bolster Xi Jinping's authority and deter dissent by presenting every measure imposed as rooted in science and supported by the masses. The party's messaging omits the chaos that ensued after the policy's abrupt dismantling, but China's official death toll from Covid is widely regarded as a severe undercount, and feelings of whiplash, grief, and frustration are simmering just beneath the surface for many Chinese residents.
NYT: What We Know and Don’t Know About the Origins of Covid
The origins of Covid-19 remain a topic of debate among scientists and intelligence agencies, with no conclusive evidence to confirm whether the virus jumped from live mammals to humans at the Huanan Seafood Wholesale Market in Wuhan or whether it originated from a laboratory in Wuhan, such as the Wuhan Institute of Virology. While some scientists point to circumstantial evidence suggesting a lab leak, others have studied the virus's genetics and patterns of spread to support the natural origins theory. The Energy Department recently concluded, with low confidence, that a laboratory leak in China most likely caused the pandemic, but the nation's intelligence agencies remain divided.
POLITICO: White House scales back plans to regulate U.S. investments in China
President Joe Biden is expected to scale back a planned executive order to oversee American investments in China, with a focus on transparency rather than expansive new restrictions. The order may still prohibit US investments in advanced semiconductors in China, but it will likely not block money from flowing to other parts of China’s high-tech economy. The White House is expected to issue the order in late March or early April, but final details are still being resolved. The move represents a setback for China hawks in the White House and Congress, who have led a campaign to undermine Beijing’s high-tech industries.
Bloomberg: US Hedge Funds’ Selling of Chinese Stocks Picks Up in February
US-based hedge funds have intensified their selling of Chinese stocks in February, with $5.7bn in American depositary receipts (ADRs) for Chinese companies sold this month, up from $300m in January, according to Morgan Stanley. Analysts at the Wall Street bank attributed the selling spree to a cooling of investor sentiment toward Chinese shares after a three-month rally triggered by the country’s reopening. Chinese ADRs with long-duration exposures, particularly those connected to electric vehicle makers and internet firms, were disfavoured because of trading technicals and the macro backdrop, the bank's quantitative strategy team said.
Nikkei: China eyes cash rewards, newlywed leave to reverse birthrate slump
China is rolling out cash rewards and increasing paid marriage leave in an attempt to reverse its first population decline in decades. However, many couples are still not swayed, with one young woman saying that a grant of CNY5,000 ($720) for a second child and CNY20,000 for a third is "not even enough to hire a confinement nanny." Many couples blame childcare costs, including soaring education expenses, for their reluctance to have children. Some Chinese provinces have also unveiled plans to raise paid leave for newlyweds to as much as 30 days, up from a mandatory three-day leave.
Caixin: China's struggling bus operators highlight local fiscal woes
Bus operator Shangqiu Public Transportation announced that it would suspend services from March 1 due to pandemic-related losses and dwindling subsidies but later reversed the decision. Similar incidents have been reported across China, revealing the fiscal struggles of local governments amid a lack of revenue and subsidies due to COVID-19 controls. The operators have been left to find alternative funding sources, but public transport prices cannot be raised without government approval. The transportation departments of some cities have seen their budgets for subsidies shrink or expire, with NEV subsidies also expiring in December 2022, causing financial difficulties for operators.
Reuters: Hong Kong to scrap COVID mask mandate from March 1
Hong Kong will end its mask mandate starting on Wednesday, becoming one of the last places globally to do so. The move is part of the government's "Hello Hong Kong" campaign to attract tourists and businesses back to the financial hub, which has been under stringent COVID-19 rules since 2020. While Hong Kong has been easing restrictions, mask-wearing has remained constant until now. Students will no longer be required to wear masks outside their homes, but they will still have to take daily rapid antigen tests to check for COVID-19.
Reuters: Canada bans TikTok from government devices over security concerns
Canada has banned the Chinese-owned social media app TikTok from government-issued devices, citing an "unacceptable" level of risk to privacy and security. Federal employees will also be blocked from downloading the application in the future. The ban comes amid concerns over TikTok's proximity to Beijing and hold over user data across the world. The move follows similar bans in the European Union and the United States. China has urged Ottawa to stop what it describes as unwarranted speculation and smearing.
FT: How Singapore stacks up against Hong Kong in the battle of Asia hubs
Hong Kong has lost ground to Singapore as a regional financial center, according to an analysis of real estate prices, air traffic, and other indicators by the Financial Times. Singapore, which was one of the first countries in Asia to reopen its borders during the pandemic, has gained ground as Hong Kong has suffered from its strict pandemic restrictions and quarantines. Despite being ahead in capital market activity, Hong Kong has fallen behind in the asset management and advisory service industry, with Singapore closing the gap. The IMF has forecasted Hong Kong's economy to grow 3.9% in 2023, faster than Singapore's 2.3%.
FT: Congress to examine operations of US companies in China
The US congressional panel on the Chinese Communist party is planning to look at the role of private equity, venture capital, and Wall Street firms in China in a series of hearings. Lawmaker Mike Gallagher, who chairs the committee, said it would seek to engage with prominent CEOs and industry representatives to understand better how US companies invest and operate in China. Gallagher said the panel could hold hearings with companies from those industries, but no decision had been made. He added that the panel would examine private equity and venture capital firms with substantial investments in Chinese technology companies that may have connections to the Chinese military.
SCMP: China raises the status of international law studies in the push for home-grown global expertise
China is set to upgrade the status of international law studies in its education system and plans to develop a team of home-grown international law scholars by 2035. The directive, which has been issued by the General Office of the Communist Party Central Committee and the State Council Office, aims to reform the country’s law-related education and research. The move is seen as a signal that Beijing is looking to rely more on a legal approach to advance its interests on the global stage. The directive will enable qualified institutes to upgrade international law studies from a second-grade discipline to first-grade.
SCMP: Apple’s iPhone supplier Foxconn leases new site in Zhengzhou in a sign of commitment to China’s supply chain
Apple's major supplier, Foxconn, has leased a 293-acre plot in the Zhengzhou Comprehensive Bonded Zone in China for about $28 million. The Taiwanese company plans to build smart warehouses at the new site, and the deal comes days after Foxconn CEO Liu Young-way met the Chinese Communist Party’s Secretary in Henan province. Foxconn's operations in Zhengzhou were severely disrupted last year due to worker protests amid a Covid-19 outbreak. Foxconn and other Apple suppliers have been stepping up moves to expand production outside mainland China, with Foxconn recently securing a new site in Vietnam and investing $500 million in its Indian subsidiary.
SCMP: Former husband of slain Hong Kong model Abby Choi appears in court for 7 cases of alleged theft over last decade
Alex Kwong Kong-chi, the former husband of Hong Kong model Abby Choi Tin-fung, appeared in court for seven theft cases spanning eight to 10 years ago. Kwong, who is already remanded in custody without bail in connection with Choi’s murder, is charged with the alleged stealing of 39 necklaces, 32 bracelets, 13 gold bars, 102 gold grains, six pendants, and 10 taels of gold across seven separate incidents, between May 2013 and January 2015. Kwong had absconded from the theft case in 2015 but was arrested last week by police in connection with Choi’s death.
That's all for this issue of The China Brief. We hope you found our coverage informative and insightful. We will continue to keep you updated on the latest developments. Join us next time for more news and analysis on China and its role in the world: