Hello,
I’m incredibly proud to launch ‘The Beijing Debrief’, the first in what will become a monthly series of short notes in collaboration with the excellent Trivium China. The aim is to get a monthly look at what is occupying the minds of senior policymakers in Beijing, and why it matters from a British political and business perspective.
We are deliberately keeping these notes short and punchy. Should you, your department, embassy, company or fund want a fuller joint briefing on any of the issues discussed, we’re more than happy to oblige.
Sam Hogg
The Beijing Debrief is a monthly look at what is occupying the minds of senior policymakers in Beijing.
Brought to you in collaboration with Trivium China.
The view from Beijing
January in Beijing is all about planning for the year ahead. To that end, over the past month, Xi Jinping gave his annual speech to top officials, in which he indicated that developing the financial sector will be a major focus in the coming year – and years ahead. While Xi promised further liberalization of the sector, it was far from an unalloyed positive message for financial institutions in China. Xi also promised stricter oversight of the sector. That the finance industry will be under increasing scrutiny was underlined earlier in the month at the annual meeting of the Party’s anti-corruption watchdog, which indicated that the sector will be a focus of its efforts in 2024.
These mixed messages on the financial sector add to a broader sense of uncertainty in China regarding the economy. There is still no word on when the much-anticipated Third Plenum of the Party Central Committee will be held. The Plenum, originally expected to be held in October 2023, is supposed to unveil a new round of economic reforms; however, the unexplained delay is now causing many to wonder if the Plenum will be held at all. This is compounding the already low business and consumer confidence that has held the economy back over the past year.
Premier Li Qiang will have a chance to change the narrative when he delivers his Government Work Report (GWR) on March 5. The GWR will reveal the government’s 2024 GDP growth target, as well as the government’s fiscal spending plans and economic priorities for the year ahead. Preparations for the GWR have dominated much of officials’ time in January, but leaks as to what the government is planning have been few and far between.
There was one bright spot, of a sort, in January. The January 13 election in Taiwan resulted in an outcome broadly acceptable to Beijing. Beijing was not happy that the independence-leaning candidate from the Democratic Progressive Party (DPP) Lai Ching-te won the presidency. But the fact that Lai won with only 40% of the vote (down from the 57% won by Lai’s predecessor Tsai Ing-wen in 2020) and the DPP lost its legislative majority has convinced many in Beijing that Taiwan is moving in the right direction. As a result, Beijing has signaled that it has no plans to change its Taiwan policy, and will continue to work towards peaceful reunification. That means that cross-strait tensions should be muted – at least until Lai’s inauguration speech on May 20.
– Trey McArver, Co-founder Trivium China
Five things from Beijing
On January 8, the Party’s anti-corruption watchdog (CCDI) held its annual plenary session. The meeting identified that it would focus on the “finance, state-owned enterprises, energy, healthcare and pharmaceuticals, and infrastructure projects, and other sectors where capital is concentrated and assets are gathered.”
On January 15, two days after the Taiwanese election, state media published previous remarks by Xi Jinping on Taiwan. The remarks indicated that Beijing would not alter its long-standing policy of peaceful reunification.
On January 16, Xi Jinping delivered his annual speech to ministerial-level officials; the speech serves as something akin to the US President’s annual State of the Union address. Xi’s speech focused on the financial sector, and indicated that China will seek to develop a distinctly “Chinese” (i.e. non-Western) approach to finance.
In the second half of January, Premier Li Qiang convened several meetings to solicit feedback on the draft annual Government Work Report, which is to be delivered on March 5. Notably, Baidu CEO Robin Li was asked to give his opinion on the report, signalling that the crackdown on the tech sector is well and truly over.
On January 31, Xi Jinping convened a Politburo study session to discuss the “new productive forces.” The meeting indicated that significant government resources will be focused on developing critical high-end technologies and fostering scientific innovation.
All of these developments (and much more) are covered by Trivium’s Neopol service. Sign up here for a free trial of Neopol.
The view from London
Thanks Trey.
It’s been fascinating watching where Westminster’s attention has gone over the last four weeks with regard to China, and how many of the stories you flagged above - all important - have simply not cut through the noise here at all.
Given the concerns raised around Chinese electric vehicles in the UK market, I think it’s worth highlighting Xi Jinping’s January 11 “Beautiful China” speech. As noted, the policy aims to promote environmental sustainability across a range of areas – including the auto sector, vowing to raise the market share of new energy vehicles (NEV) to 45% of all new vehicle sales in 2027 (up from a target of 25% in 2025). It’s understandably hard for British politicians and businesses to strategise around this with the consequent comments from Xin Guobin, China’s vice-minister of industry and information technology, saying there would crack down on “disorderly” competition among EV projects from local governments and new carmakers, and then the newer promises from the Ministry of Commerce to coordinate state support for NEV export growth. The UK’s own lack of strategy in this area only adds to the confusion politicians feel.
Obviously, the Taiwanese Elections dominated bandwidth in January. I think many British politicians will have been relieved to see that the PRC’s reaction was more subdued than they were expecting. As you say - and raised at an event in Parliament I was at with Taiwan’s new representative, H.E. Vincent Chin-Hsiang Yao 姚金祥 - the next marker to pay attention to will be Lai’s May speech and any action around that.
I read with interest Trivium’s update about Shanghai’s free-trade zone getting a makeover, potentially to help smooth the way for China’s own efforts to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). There is a real angst in Westminster around China acceding to this group. Oddly, I often end up having conversations split into two camps: some trade folks I speak to hold the view that China is so far off being compliant with any of the Auckland Principles - even if the changes to Shangai’s FTZ were rolled out nationally - that discussions around trying to block its entry are hypothetical. On the flip side, some politicos I talk to think that when the time comes to eventually decide on China’s entry, the Government of the day will likely not fancy the battle, hence why they are keen to at least give Parliament a chance to vote on the matter. I tend to hold the view that the PRC’s CPTPP journey will be slightly more complex than it’s made out to be and that several flawed assumptions are being made.
I was intrigued by a recent Trivium update regarding what China’s thinking may be in the Red Sea; clearly the lack of explicit action from China is causing friction in its relationship with the US and allies. The perception that “peacefully de-escalating the Houthi crisis” could be perceived as a “big win for China’s Global Security Initiative” in some quarters should be noted by British politicians and policymakers. Perceptions matter, and political communications around China’s (in)action should be clearer and more tactical - should the situation be resolved, it should not be viewed purely as a win for Chinese diplomacy. That being said, framing cooperation in the context of China's GSI could create space for coordinated action.
- Sam Hogg, Founder Beijing to Britain
Want to learn more about any of the issues raised in this note?
Reply to this email to schedule a briefing with Trivium and Beijing to Britain.