Analyses of official policies, editorials, and government affairs
Policy | Education
State Council | 3.2020
Opinions on improving labor education 关于全面加强新时代大中小学劳动教育的意见
The “Opinions on improving labor education” are a set of guidelines issued by the Central Committee of the Communist Party of China (CPC) and State Council on March 20, 2020. The opinions call for greater incorporation of physical activities and manual labor across the education system—from elementary school classrooms to university lecture halls. The “labor education” guidelines also set out to promote physical labor outside the classroom, such as household chores. Schools will likewise be required to offer labor education as a mandatory course. For instance, elementary and middle schools must provide at least one class period of labor education per week.
The impetus behind the newly issued rules is to ameliorate a decline in physical labor activity among China’s younger generation. According to the document, a growing number of Chinese youth are less appreciative and less willing to perform manual labor tasks. The guidelines look to reverse this trend by enlisting the help of local governments, families, companies, social organizations, and society itself.
These guidelines build upon President Xi Jinping’s speech given in 2018 at the National Education Conference. The central theme of Xi’s speech was modernizing China’s exam-oriented education system while ensuring it remained firmly tethered to communist party doctrine and socialist principles. The labor education guidelines reaffirm the party’s long-held vision to shape China's education system into one that cultivates “all-around development”—specifically, “morality, intellect, physical ability, aesthetics, and work ethic (labor).” The policy’s ideological framework for educational reform is based on the traditional Marxist view of labor and socialism with Chinese characteristics.
The labor education guidelines call for:
Three types of labor education: daily labor, productive labor, and service-oriented labor
Elementary and middle schools to stipulate the amount of time students perform on daily labor activities outside the classroom
Vocational schools to focus on internships, offering no less than 16 class periods
Universities to offer no less than 32 class periods, as well as integrating labor education into other subjects
Compulsory education (elementary to high school), as well as universities, to hold a “labor week;” the latter can also hold a “labor month”
Elementary schools to emphasize hygiene and voluntary labor, and for middle schools to emphasize labor skills and community service
High schools to stress vocational activities, as well as service-oriented labor and productive labor
Secondary vocational schools to focus on cultivating talent in labor-intensive occupations
Universities to emphasize innovation and entrepreneurship, such as students organizing internships and social programs
Families to encourage their children to do more household chores; specifically, to learn one to two new life skills a year
Governments of all levels to elevate the importance of labor education in their political agendas and enact relevant policies
Editorial | Foreign Investment
Economic Information Daily | 7.2019
Accelerate the process of implementing regulations and improve the foreign investment environment 加快配套规则落地 全面完善外资政策体系
The author, Liang Guoyong (梁国勇), emphasizes China’s need to improve the foreign investment environment in light of the recently issued Foreign Investment Law.
This view reaffirms China’s seriousness in following through on investment reform and reversing a negative perception of engaging in long-standing unfair trade and investment practices. Liang suggests that by including the concept of “competitive neutrality” and optimizing market economic conditions, it will help create a more profound economic impetus for China—despite significant short-term hurdles.
Editorial | Foreign Affairs
21st Century Business Herald | 7.2019
Li Keqiang visits Europe; looks to elevate China-EU relations and expand BRI cooperation 李克强将出访欧洲 提升中欧关系并加强“一带一路”朋友圈
Chinese Prime Minister Li Keqiang’s official visit to Europe follows on the heels of President Xi Jinping’s European travels one month prior.
The trips are significant as they are the first-choice destination for both leaders in 2019; thus, highlighting China's determination to win support for multilateralism (e.g., key initiatives like the BRI and WTO reform). The timing is especially crucial as an economic and technological row with the US rages on.
Editorial | Trade
International Business Daily | 7.2019
Chinese export companies looking for new and different ways to expand amid pressure 外贸企业求新求变承压前行
Export companies in China are feeling the effects of the prolonged US-China trade spat. Both Chinese public and private sectors are noting the impact of bilateral trade tensions and thus, assert a new approach must be implemented to manage the uncertainty.
The author, Wu Li (吴力), remarks that other reasons, such as Southeast Asian countries growing competitiveness in the supply chain, are also causing anxiety for China’s domestic exporting industry. The Ministry of Commerce (MOFCOM) acknowledges issues facing domestic export enterprises—but suggests opportunities exist amid the downward pressure. For instance, China's trade policies and BRI expansion.
Policy | Trade & Investment
State Council | 7.2019
The State Council releases guidelines on developing bonded zones 国务院关于促进综合保税区高水平开放高质量发展的若干意见
On January 25, the State Council released guidelines on expanding comprehensive bonded zones, which are special trade zones with favorable tax incentive policies. In short, opening up bonded zones reflects China’s commitment to relaxing investment and trade restrictions in 2019. The opinions call for:
Preferential policies for research, innovation, and R&D
Trade restriction certificates, tax reimbursements, and goods not subject to import tariffs to be streamlined for entry and exit
Establishing logistics distribution centers and simplified trade procedures
Permitting remanufacturing operations for sectors like aerospace and engineering machinery
Exemptions from the cargo-handling list for import licenses for individual items within bonded zones, such as mobile phones and automobile accessories
Encouraging cross-border e-commerce, outsourcing, and next-generation delivery
Editorial | Trade
21st Century Economy | 7.2019
Is the WTO facing crisis or opportunity? “一个没有美国的WTO”？WTO改革的“危”与“机”
Governments around the world agree that the World Trade Organization (WTO) requires serious reforms. However, the issue for these same governments is forming a consensus on what specific problems need reform and the methods implemented to achieve change. The article urges China and the EU to collaborate to address structural issues in the WTO, but more importantly, deter US unilateralism, as the author puts it. With the Trump Administration’s recent tariff hikes against other WTO member countries, the urgency for reform is profound.
Countries from Mexico to Japan have all released proposals, including China which has proposed '“three principles and five positions.”
The US has threatened to leave the WTO altogether. Its qualms revolve around state-owned enterprises (SOEs), state subsidies, and a host of other criticisms. In recent WTO meetings, the US has called out other members but has directed most of its ire towards China.
Zhang Xiangchen (张向晨), a WTO permeant representative, says the US is breaking WTO rules while simultaneously condemning violators. Frans Timmerman, vice president of the European Commission, remains unsure if the US wants to withdraw from the WTO or just change it.
The article advises the EU and China to work together to address structural concerns but also combat US unilateral actions. However, Tu Xinquan (屠新泉), the WTO’s Research Center director, suggests that even if the US leaves, the subsequent effect on the WTO will be minimal.
The author concludes that, “no matter the noise and gamesmanship surrounding the WTO this year, the WTO is not only facing a serious crisis—but also a profound opportunity for real reform.”
Policy | Innovation
State Council | 4.2019
The Guiding Principles for Mid-to-Long Term Scientific and Technological Development (2006-2020) 国务院关于印发实施《国家中长期科学和技术发展规划纲要（2006—2020年）》若干配套政策的通知
“Indigenous innovation” is a key concept put forth by the Chinese government in 2006. More specifically, it was an important slogan that year for the government’s “National Indigenous Innovation Program.” The initiative aimed to promote indigenous development and production in China’s information and communications technology (ICT) sector as it aims to move up the value chain.
In 2006, the State Council released “The Guiding Principles for Mid-to-Long Term Scientific and Technological Development (2006-2020).” In it, the key policy goals listed to enact “indigenous innovation” were tax incentives, financial aid, and technological investment. The most significant regulation involved government procurement. Essentially, certain “indigenous innovation” products would be given preferential treatment during the government procurement process. Later, authorities in Beijing clarified which products would be included by listing six high-tech industries, such as computers and telecom installations.
The regulation that sparked the most debate in the foreign business community was regarding intellectual property (IP). “Indigenous innovation” products granted Chinese counterparts significant IP control. For example, “indigenous innovation” products had to be produced by a company that owned IP in China. This would create significant vulnerability for the protection of foreign intellectual property rights (IPRs). One stipulation, nonetheless, excluded foreign-invested companies from government procurement if their market worth exceeded an annual profit of tens of billions (USD).
In the following years, modifications to China’s “indigenous innovation program” were implemented to flesh out the policy and appease concerns. This included then-President Hu Jintao’s reversal of the government procurement process in “indigenous innovation” and the removal of three key laws. That said, while the about-face was instituted at the national level, certain localities have listed their own “indigenous innovation” catalogs.
Government | Two Sessions
Chinese Government | 4.2019
The Two Sessions: Issues and Implications
The Two Sessions held in March 2018 in Beijing was historical for many reasons. The Two Sessions formalized the central direction of the Communist Party of China (CPC) in the wake of the 19th National Congress of the CPC, which was held in late 2017. The conference saw President Xi Jinping consolidate power and enshrine his key policies in the Party constitution, such as “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.” In essence, President Xi put himself and his ideology at the core of the Chinese party and state as the country embarks on his vision of a “new era.” The Two Sessions also formally abolished presidential term limits, effectively allowing President Xi to rule indefinitely.
The Two Sessions also saw greater control given to the party over the state, blurring the lines between the two as the former extended its grip over all aspects of Chinese society. This was reflected in a major top leadership reshuffle. The institutional shakeup restructured 26 Chinese ministries and departments. New entities were created and others were significantly weakened. For example, the National Supervisory Commission (NSC) was created to ensure the continuation of President Xi’s anti-corruption campaign. On the other hand, the National Development and Reform Commission (NDRC) saw its power erode with the removal of its anti-trust investigatory powers and oversight of China’s carbon emissions.
Amid this unprecedented restructuring that saw President Xi consolidate his power, the ratification of his key policies, and Xi likewise surrounding himself with allies in key positions of authority, are the implications on foreign business operating in China. The outcome of the 2018 Two Sessions will require foreign entities to realign their operational goals with the development plans of the CPC. For example, China merged the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC). This move allows the central bank to command more authority over the country’s financial and regulatory policies. The goal of this merger was also to clarify responsibilities and cross-regulation activities.
However, foreign companies should also take note of China’s current macroeconomic conditions, as well as geopolitical factors that may affect the implementation and efficacy of certain policies. For example, current US-China trade tensions may expose certain foreign companies to the calibration of Beijing’s industrial policies as it evaluates its options. These discriminatory measures include delaying governmental approvals and business licenses. Foreign businesses ought to seek and promote positive consultation with local and provincial authorities in China, as well as central regulators in Beijing during this time.
Editorial | Science & Tech
21st Century Business Herald | 3.2019
The state should update its industrial policy toolbox to cultivate high-tech firms 不应以传统产业政策刺激高科技企业成长
In this editorial, the author argues that the state’s outdated measures to stimulate China’s technology sector—specifically in gene technology—are inefficient. In short, China’s model of using old policies to implement new concepts impedes innovation and therefore growth. According to the author, the solution is less state influence, increased oversight of local governments, and more transparency, fairness, and protection in competition.
The author’s primary concerns are state policies and local governments. State policies like tax incentives, encourage local governments to focus on quantity instead of quality. Likewise, the state’s performance targets for local governments and departments push high-tech firms to over-emphasis industrial competition. These policies and performance targets can lead to the excessive production of counterfeit and low-end technological goods, as well as misuses of market resources.
The author uses the gene industry as an example of the state’s systemic policy failures to cultivate an environment of innovation and quality tech products. The situation is made worse in light of immature gene technology and a lack of industry oversight, which poses a significant risk to consumers.
The author’s solution to reversing these negative trends is less state interference, more regulations of local governmental activity, and policies that benefit the development of firms themselves. The author summarizes, “in the shift to high-quality development, China has unveiled new developmental concepts and goals. However, the system lags. As a result of using an old system to enact new concepts, the entire structure is prone to failure.”
In essence, the biggest impediment and challenge confronting China’s path to innovative development is the conceptualization of new ideas and goals while using traditional policies to implement them.
3-year action plan for promoting business linkages among small, medium, and large enterprises 关于印发《促进大中小企业融通发展三年行动计划》的通知
The “3-year action plan for promoting business linkages among small, medium, and large enterprises” was announced by the Ministry of Industry and Information Technology (MIIT), National Development and Reform Commission (NDRC), Ministry of Finance (MOF), and the State-owned Assets Supervision and Administration Commission (SASAC) on November 28, 2018. The main goal of this plan is to strengthen the business linkages among enterprises of all sizes in order to boost innovation and economic growth. The 3-year action plan calls for:
Greater collaboration among small, medium, and large-sized enterprises in the supply chain, as well as in innovation, data, and industry, etc.
Large enterprises in supporting small and medium-sized enterprises
The creation of more platforms to promote business linkages, such as 50 cooperation parks and “joint innovation” pilot programs within three years
The creation of 500 state service platforms for small and medium-sized enterprises within three years
Cultivating local talent, high-skilled experts, and a large number of enterprise champions within three years
Upgrading the capabilities of small and medium-sized enterprises by developing more local talent and innovation
Improving the environment for business linkages, such as upgrading digital infrastructure, intellectual property protection, and foreign partnerships
Improving intergovernmental coordination and providing more financial support, as well as more financing options
Policy | Science & Tech
Ministry of Science and Technology & Ministry of Finance | 3.2019
Opinions on consolidating state key laboratories 关于加强国家重点实验室建设发展的若干意见
The “Opinions on consolidating state key laboratories” is a joint announcement issued by the Ministry of Science and Technology (MOST) and the Ministry of Finance (MOF) on June 22, 2018. In this directive, the two ministries lay out an actionable vision to transform China into a global leader in science and technology—achieved in part by consolidating state key laboratories. The core problems addressed include structural issues, a lack of significant home-grown achievements and world-class talent in the field of science and tech.
The essence of consolidating state key laboratories is reflected in the announcement’s objectives and developmental goals. The objectives are to improve the development, innovation, cooperation, and management of state key laboratories.
Likewise, development goals are to be realized by 2020 and 2025. By 2020, state key laboratories are directed to produce significant academic achievements and to have expanded their international influence in research fields. By 2025, state key laboratories are called to deliver major international scientific results, including the establishment of several world-renowned academic and innovation centers. Additionally, there should be world-renowned experts helping solve the world’s most pressing needs and acting as a source of innovation. The opinions also call for the creation of:
Around 700 state key laboratories, including—
300 state academic laboratories
270 state enterprise laboratories
70 provincial-municipal laboratories
Editorial | Science & Tech
People’s Daily | 3.2019
How to make high-tech firms more competitive? 增强高科技企业竞争优势
The author of this editorial stresses the importance of domestic high-tech firms’ role in China’s “new economy.” The importance of fostering healthier competition and reforming policies to nurture indigenous innovation in science and technology is a prominent theme in this essay. The author shines a spotlight on the core issues confronting innovation and development, such as policy and structural deficiencies.
Regarding remedies, the author suggests utilizing industrial clusters to promote innovation and development. Likewise, the author recommends placing greater emphasis on cultivating a culture of entrepreneurship.
The editorial also points out other existing issues, such as the significant discrepancy in scale and development between different science and tech industries. Another imbalance exists regarding geographical area—about three-quarters of China’s high-tech industry’s profit is concentrated in China’s eastern provinces.