The Sinocism China Newsletter – November 12, 2015

Bill Bishop , November 13, 2015 11:53am


1. Notes from Latest Meeting of Party’s Economic Affairs Group-Caixin The leading group sent out five signals, including that more rate cuts and a bigger deficit are on the way-By Guan Qingyou and Zhu Zhenxin

Related: China Speeds Up Fiscal Spending in October to Support Growth – Bloomberg Business The stepped-up stimulus effort had taken the fiscal-deficit-to-gross-domestic-product ratio to a six-year high by the end of September, according to an October report by Morgan Stanley analysts led by Sun Junwei in Hong Kong. “The central government has been taking the lead in fiscal easing to support growth” as local governments’ off budget spending through financing vehicles have slowed, the analysts wrote. The country plans to raise the quota for regional authorities to swap high-yielding debt for municipal bonds by as much as 25 percent, according to people familiar with the matter. The quota of the bond-swap program will be increased to as much as 3.8 trillion yuan to 4 trillion yuan for 2015, according to the people, who asked not to be identified because the move hasn’t been made public. Increases have been made throughout the year from an originally announced 1 trillion yuan.

Related: 赤字率“红线”遭反思 财政扩张将至?_宏观_一财网 对3%的赤字率和60%的负债率“红线”,财政部副部长朱光耀近日提出质疑,认为这两条红线应该在实践中调整,引发市场对中国财政政策继续扩张的猜想。 接受《第一财经日报》采访的多名专家认为,上述两条“红线”的划定,只是当年欧盟内部谈判妥协的结果,既不合理也不科学。而在面对经济下行压力时,中国实施有力度的积极财政政策,未来赤字率有进一步扩大的空间。// CBN on the talk of increasing fiscal deficit/debt ratio “red lines” from 3%/60%. fiscal stimulus floodgates opening wider 

Related: 传地方债置换额度增至4万亿:或为在建项目续资|债券|地方债|利息_新浪财经_新浪网 在媒体11日称,中国财政部计划再次增加今年地方置换债券额度。今年额度将从现在的3.2万亿元人民币(6.3648, -0.0022, -0.03%)增至3.8万亿~4万亿元,增幅最高达25%。最终额度还可能调整,且需要国务院批准。 //  CBN-rumor going around that local debt swap quota 2b increased to 4T RMB

2. China plans maritime, space projects in next five years – Xinhua “China is on its way to building itself into a maritime, space and cyber power,” said Xu Qiliang, vice chairman of the Central Military Commission (CMC), in a signed article in Thursday’s People’s Daily. Calling the seas, space and the Internet “strategic fields for military competition” and “commanding grounds for boosting economic and sci-tech development,” Xu said concerted efforts from the whole nation and armed forces are needed to achieve major progress.

Related: 坚定不移推动经济建设和国防建设融合发展(学习贯彻党的十八届五中全会精神)–军事–人民网 Gen Xu Qiliang. a vice chairman of the CMC, in 11.12 People’s Daily on unswervingly promoting jintegrated economic and national security development, part of the “study and implement the spirit of the 5th plenum of the 18th party congress” leadership essay series  //  许其亮-适应国家安全和发展的现实需要。两千多年前的政治家商鞅有句名言,“国不富不可以养兵,兵不强不可以摧敌”。古今中外国家民族兴替沉浮的历史证明,安全是发展的前提,发展是安全的物质基础。今天,随着新的科技革命、产业变革、军事革命迅猛发展,社会生产力、国家竞争力、军队战斗力的关联越来越紧,国防经济与社会经济、军用技术与民用技术的融合度更深;网络信息时代的军队建设、作战和非战争军事行动都是军民一体的,对经济、科技、社会发展和能源资源的依赖性空前增强,不走融合发展之路将难以持续。坚持军民融合发展已成为许多国家的通行做法,也是我国实现安全与发展、富国与强军相统一的必然选择。还应看到,国防建设绝不是纯消耗性的,经济建设和国防建设融合得好,不仅产生军事效益,还会带来巨大经济和社会效益。美国的“曼哈顿”“阿波罗”计划,我国的“两弹一星”、“神舟”飞天、“嫦娥探月”等壮举,就是很好的例证。当前,我国经济发展进入了新常态,稳增长、促改革、调结构、惠民生任务十分繁重。做好军民融合发展这篇大文章,最大限度发掘融合发展这个潜力点、增长点,有利于培育发展的新动力,打开发展的新空间,推动“中国号”航船破浪前行。

Related: China needs focus on military-industrial complex, officer says – Yahoo News In a collection of essays released this week by top officials on the 13th five-year plan, which maps out economic targets up to 2020, Xu Qiliang, a vice chairman of the powerful Central Military Commission, said China needs security to be able to develop its economy. Citing ancient Chinese philosopher Shang Yang, who helped create a powerful military force in one of the early Chinese states, Xu said a country cannot get rich without decent armed forces. “Security is a precondition for development, and development is the material base for security,” Xu wrote. // for those thinking that economic difficulties may dent future defense expenditures, there are lots of reasons to argue why you may be wrong, including the fact that the massive US defense buildup started under Reagan during a horrible period in the US economy…I expect we are entering a golden era for the PRC’s “military-industrial complex”

3. 军改如箭在弦!军报:听党话是最可贵军魂,进退走留要看大局_舆论场_澎湃新闻-The Paper Thepaper on the latest in series of PLA Daily commentaries preparing the propaganda battlespace for the coming PLA reforms  //  2015年10月27日起,《解放军报》推出《面对改革大考,我们如何作答》系列谈文章。至11月12日共推出五篇,分别为:10月27日《忠诚,就是面对改革绝对服从》;10月29日《调整好心态 保持“在状态”》;11月5日《利益得失算“大账”》;11月10日《用行动为军人荣誉增光添彩》;11月12日,《发扬“一切行动听指挥”好传统》。 最新推出的文章指出,当前,深化国防和军队改革如箭在弦。在这种情况下,必须按照习主席的要求,“严明政治纪律和政治规矩”“加强纪律建设,把守纪律讲规矩摆在更加重要的位置”,也就是牢固树立“一切行动听指挥”的观念。

4. China warns WTO its cheap exports will soon be harder to resist | Reuters But the terms of China’s membership stated that — because it was not a “market economy” — other countries did not need to use China’s domestic prices to justify their accusations of Chinese dumping, but could use other arguments. China’s representative at a WTO meeting on Tuesday said the practice was “outdated, unfair and discriminatory” and under its membership terms, it would automatically be treated as a “market economy” after 15 years, which meant Dec. 11, 2016.

5. Falling oil prices and slow growth push China to find new friends – “The Chinese government has become more cautious when it comes to loans since Xi and Li took power, especially loans to countries like Venezuela and Ecuador,” says Li Renfang, Latin American analyst at Southwest University of Science and Technology, of Xi Jinping and Li Keqiang, respectively China’s president and premier. “In the past, Chinese investment in those countries had ideological and political undertones but today we give more weight to economic concerns,” says Mr Renfang.

6. A City Choking on Cars Hopes Commuters Will Return to Two Wheels – The New York Times Mr. Sun’s 30-minute commute is emblematic of a battle brewing on roads across the country. As China has urbanized, families have become more prosperous and many city residents have moved to suburbs many miles from their jobs. The resulting growth in car use combined with lax law enforcement has undermined a half-century tradition of commuting on bikes. Nowhere is that battle more obvious than in Beijing, where buses, automobiles and electric scooters vie with cyclists for space. Today, only 12 percent of commuters in Beijing pedal to work, compared with 38 percent in 2000, according to government data.

7. China’s Bottled Water Industry to Exploit Tibetan Plateau | ChinaFile Water in Tibet is abundant and much cheaper than in other parts of China. Water bottled upstream among snow-capped peaks is also perceived as pure, commanding a premium. This has led to a huge influx of companies hoping to cash in on the region’s water resources. Though it only makes up a very small proportion of China’s annual bottled water production, such premium water is seen as the new point of growth for the country’s booming bottled water industry. But tapping glaciers will come at a huge cost to Tibet’s fragile environment, warned China Water Risk’s recent report, “Bottled Water in China: Boom or Bust? 

8. The political history of China’s economic growth targets | Andrew Batson’s Blog It’s interesting how Xi presents the growth target as just a necessary consequence of another, more important goal: doubling 2010 GDP by 2020. And indeed there is no problem with his arithmetic: given how much the economy has grown since 2010, to double that level in 2020 requires annual growth of at least 6.5% after 2015. The GDP-doubling target is itself the specific expression of a general slogan: to make China a “moderately prosperous” (xiaokang) society by 2020. Xi has emphasized this target as one of his “two centenary goals“: achieving prosperity by the 100th anniversary of the Party’s founding in 2021, and achieving modernization and national revival by the 100th anniversary of the founding of the People’s Republic in 2049. Official propaganda under Xi has made a big deal out of these two centenary goals, but in fact they are not that new, and indeed were inherited from previous leaders.

You can read the rest of today’s newsletter here.

Bill Bishop

Author and curator of the daily Sinocism newsletter.