Qiushi on July 1 Speech - H1 Economic Data - Pudong New Area Plan - Afghanistan and SCO - Carbon Trading Market - US Jet in Taiwan - Wang Yi on Russia Ties

Here are the stories and pieces from the July 16, 2021, edition of the People’s Daily that I found noteworthy.

Page 1: Let’s begin with a couple of short pieces. First, PD tells us that Qiushi has published Xi’s July 1 speech in the 14th edition of the journal this year along with an editorial piece on the speech. PD’s piece summarises the key points from the Qiushi article.

Here’s my summary of the Qiushi editorial piece. This article terms Xi’s speech as a “glorious Marxist programmatic document.” It describes Xi’s speech as a “scientific guide and action program to lead the whole Party and the whole nation to a new starting point and a new journey.” 是引领全党全国人民立足新起点、接力新征程的科学指南和行动纲领.

It adds that Xi’s speech was based on the outlook of “dialectical materialism and historical materialism,” putting forward “a series of new major ideas, major viewpoints and major theories,” which enriched Xi Thought and “embodies the latest theoretical achievements of contemporary Chinese Marxism and Marxism in the 21st century.”

Then we learn that the speech “made a series of solemn declarations to the whole party, the whole country and the whole world...reflecting the high self-confidence of the Chinese Communists in the new era, and is a bold political declaration and action program for the Chinese Communist Party and the Chinese people to grow in ambition, grow emboldened and become strong-willed.” 习近平总书记“七一”重要讲话,向全党、全国、全世界作出一系列庄严宣示,气贯长虹、振奋人心,展现了马克思主义政治家、思想家、战略家的宏大格局和宏伟气魄,体现了新时代中国共产党人的高度自信,是一篇让中国共产党和中国人民长志气、强骨气、增底气的豪迈政治宣言和行动纲领.

The piece emphasises China’s economic development as a major achievement. Then the piece emphasises that “For the past 100 years, the Chinese Communist Party has united and led the Chinese people in all struggles, sacrifices, and creations, all of this boils down to one theme: realizing the great rejuvenation of the Chinese nation.” 一百年来,中国共产党团结带领中国人民进行的一切奋斗、一切牺牲、一切创造,归结起来就是一个主题:实现中华民族伟大复兴.

In this context, the piece says that Xi’s speech made four solemn declarations:

  • There were bloody battles and perseverance to get to where China has gotten; this bit reiterates that the era of being subjugated and bullied is over.

  • The next bit is about being self-reliant and focussing on the socialist path.

  • The third bit is about emancipating the mind and emphasising reform and opening up.

  • The final bit is about maintaining the material foundation of China’s rise, and being innovative and undertaking great struggles and projects. 

The section following this focuses on party building. It outlines key points that will drive this effort.

  • First, it says “without Marxist beliefs and communist ideals, there would be no Chinese Communist Party...Along the way, no matter how difficult the conditions, no matter how bumpy the road, our party has always firmly believed in the scientific and truthful nature of Marxism and the bright prospects of socialism and communism.” Therefore, the piece calls on Party members to adhere to the “spiritual inheritance” of the Party and move forward.

  • The next point is about the need to adhere to the “original aspiration and mission.”

  • The third bit is about not being afraid of sacrifices and having the courage to win. It’s really something to think about why Xi keeps repeating this. He’s telling the Party that great things have been achieved but this doesn’t mean they should get complacent or arrogant. Also, one wonders if he thinks that this is how members down the chain have gotten.

  • The fourth point is as unambiguous as it can get: “Loyalty to the party is the primary political quality of communists.” 

It calls on Party members to follow the General Secretary’s requirements to “deepen their understanding, consciously practice and do their best, proceed from the root and source of the great spirit of party building, inherit the revolutionary tradition, continue the red bloodline, carry forward the spiritual pedigree of the Communist Party of China, and draw inspiration from the majestic power of the spiritual fire and light of faith to march forward.” 全党同志要按照总书记要求,不断加深领悟、自觉实践笃行,从伟大建党精神这个根、这个源出发,继承革命传统、赓续红色血脉,弘扬中国共产党人精神谱系,用精神之火、信念之光激励奋勇前行的磅礴力量. 

Finally, we get lessons from history, and future agenda. These include:

  • Strengthening Party leadership across the board

  • Uniting people

  • Sinicizing Marxism by aligning it with China’s specific realities and with the excellent traditional Chinese culture

  • Upholding socialism with Chinese characteristics

  • Modernising national defense and military

  • Engaging in a “great struggle with many new historical characteristics”

  • Further engaging in Party building

Next in PD, we have a short piece with the ILD thanking (English report) everyone for their congratulatory comments on the CCP centenary.

Third, we have a report on economic data - more on Page 2. I am also pooling information from Xinhua, Caixin and WSJ here. So NBS said that China’s GDP expanded 12.7 percent year on year for 2021 H1. In the second quarter, GDP grew 7.9 percent year on year. That’s strong but obviously way slower than the incredible 18.3% year-on-year growth rate during 2021 Q1. Caixin says that the Q2 GDP number was below expectations of 8.2%. Importantly, on a quarterly basis, the economy expanded 1.3 percent in Q2.

Also, the service sector accounted for 53% of GDP and manufacturing accounted for 27.9% of GDP. The contribution rate of final consumption expenditure to economic growth reached 61.7%. 

The total value of imports and exports of goods was 18,065.1 billion yuan, a year-on-year increase of 27.1%. The scale of imports and exports hit the best level in the same period in history, an increase of 22.8% compared with the same period in 2019. Monthly imports and exports achieved positive year-on-year growth for 13 consecutive months, the NBS said.

Other key data points:

  • industrial output for H1 2021 grew 15.9 percent year-on-year. Value-added industrial output — which measures production by factories, mines and utilities — rose 8.3% year-on-year in June, above the median estimate of 7.8% in the Caixin survey, though slower than 8.8% in May.

  • retail sales for H1 2021 were up 23% year-on-year; the quarter-on-quarter increase was 13.9%. The June year-on-year figure was 12.1%, which was above the median estimate of 11% growth by Caixin’s pool of economists.

  • fixed-asset investment grew 12.6% year-on-year in the first half, decelerating from a 15.4% rise in the January-to-May period. The rate of expansion also beat the median expectation of 12.1% growth.

Caixin reports that “infrastructure investment — which includes spending on road and railway construction and is generally led by the government — rose 7.8% year-on-year in the first six months, slower than the 11.8% growth in the first five months. The slowdown was caused by China’s crackdown on local government debt, said economists at Macquarie Group Ltd.”

  • property development investment grew 15% year-on-year in June, slower than the 18.3% growth in the first five months.

  • investment in high-tech industries increased by an average of 14.6% in H1

  • surveyed urban unemployment rate stood at 5% in June. A total of 6.98 million new urban jobs, or 63.5% of the annual target, were created in H1.

  • per capita disposable income increased 12.6 percent year on year in nominal terms to 17,642 yuan ($2,731)

  • consumer prices rose by 0.5% year-on-year

  • China’s manufacturing PMI for June was 50.9%

  • Service industry business activity index was 52.3%

Next a report about Xi attending the APEC meeting via video conference; and a report (English report) about Xi sending condolences to the Iraqi president over a hospital fire that caused heavy casualties.

Finally, we have the guidelines for high-level reform and opening-up of the Pudong New Area in Shanghai. Is it just me or has the guiding ideology section of these documents now increasingly become limited to only Xi Thought and recent plenary decisions. If I am correct, till some time back, other leaders would get mentions in the guiding ideology section.

Anyway, Xinhua English tells us that:

“By 2035, Pudong will see its modernized economy comprehensively established, modern urban districts built, and modernized governance fully realized. Its urban development level and international competitiveness will be at the forefront globally, said the guideline. By 2050, Pudong is expected to become an important urban area which is highly attractive, creative, competitive and influential globally, a global model of urban governance and a ‘shining pearl’ of a great modern socialist country, it said.”

The story also calls the Pudong New Area as “a strategic link of China’s new development paradigm of ‘dual circulation,’ and is expected to play a better role in leading and stimulating the integrated development of the Yangtze River Delta.”

Also note:A core area for international technological innovation will also be built in Pudong to increase the capabilities regarding independent innovation, strengthen the leading role of high-end industries, and upgrade national industrial chains. China will build international financial, trade and shipping centers in Shanghai through the active allocation of global capital, information, technology and human resources to shore up support for the real economy, and take the lead in setting up a system of high-standard international economic and trade regulations.”

Anyway, there’s also a PD commentary related to this new guideline, calling the decision a “strategic choice.”

Page 2: First, let’s look at a report about the new national carbon emissions trading market. Trading on the Shanghai Environment and Energy Exchange began today. The PD piece tells us that “Zhao Yingmin, deputy minister of the Ministry of Ecology and Environment, said that the relevant construction tasks of the national carbon market have been basically completed, and all preparations are in place. ‘The carbon emissions of companies covered by the first batch of carbon markets exceeded 4 billion tons of carbon dioxide. This means that once China's carbon emissions trading market is launched, it will become the world's largest carbon market covering greenhouse gas emissions’.”

The report also quotes Li Gao, Director of the Department of Climate Change Response of the Ministry of Ecology and Environment. Li informed that since October 2011, local pilots of carbon emission trading have been carried out in Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong and other places. These covered more than 3,000 units in more than 20 industries such as power, steel and cement. As of June this year, the cumulative trading volume of the pilot carbon markets was around 480 million tons of carbon dioxide equivalent, with a turnover of approximately 11.4 billion yuan. 试点市场覆盖了电力、钢铁、水泥等20多个行业近3000家重点排放单位,到今年6月,试点省市碳市场累计配额成交量达4.8亿吨二氧化碳当量,成交额约114亿元. 重点排放单位履约率保持很高水平,市场覆盖范围内碳排放总量和强度保持双降,促进了企业温室气体减排,强化了社会各界低碳发展的意识,为全国碳市场建设积累了宝贵经验. 

However, the new national market will initially only involve 2,225 companies in the power sector. WSJ reports that these companies are responsible for a seventh of global carbon emissions from fossil-fuel combustion, according to calculations by the International Energy Agency.

WSJ’s story adds:

“Under the trading program, emitters such as power plants and factories are given a fixed amount of carbon they are allowed to release a year. They can in turn buy or sell those allowances. That pushes emitters to think of controlling and reducing emissions in terms of a market. Bloomberg earlier reported that the carbon market would start trading on Friday. Over the next three to five years, the market is set to expand to seven additional high-emissions industries: petrochemicals, chemicals, building materials, iron and steel, nonferrous metals, paper, and domestic aviation. Rather than be subject to the absolute caps on emissions in other trading programs and proposed by environmental officials, Chinese companies will start off with allowances that use benchmarks based on previous years’ performances, giving them more wiggle room. They can be traded by negotiation or auction, among other means.”

Next, we have a report on inspections being carried out by the State Council. 

Page 3: Wang Yi’s comments at the SCO meeting. I covered this yesterday. Next, we have a report on the SCO meeting on Afghanistan. MoFA has a longer English readout

Wang said “due to the hasty withdrawal of the U.S. and NATO troops, Afghanistan is once again faced with the grave challenge of moving toward war or peace, chaos or stability...The situation in Afghanistan not only concerns the fundamental interests of the Afghan people, but also bears directly on the overall security and development of the region.

Wang Yi made five big points:

  • “Prevent the United States from shirking its responsibility. As the initiator of the Afghan issue, the United States cannot simply walk away, create more problems for the Afghan government and dump the ‘burden’ on regional countries.”

  • Prevent the resurgence of terrorist forces. “The SCO should step up counter-terrorism cooperation with Afghanistan and urge the Taliban to honor its commitment to break with international terrorist organizations.”

  • Work together to promote the reconciliation process. “The SCO member states should leverage their respective advantages to make joint efforts for mediation, and urge all Afghan factions to clarify the road map and timetable for reconciliation.”

  • Actively strengthen multilateral coordination. The SCO should earnestly safeguard Afghanistan's sovereignty, independence and territorial integrity…”

  • Continue to help Afghanistan rebuild peace. “make active use of existing cooperation mechanisms in economy, trade, culture and other fields to support Afghanistan in enhancing its capacity for independent development and achieving genuine and sustainable development.”

The SCO foreign ministers also issued a joint statement on Afghanistan. It said:

“We condemn the violence and terror attacks that continue in Afghanistan, killing civilians and representatives of government bodies and call for their cessation as soon as possible. We note that the activities of international terrorist organisations remain one of the key factors of instability in that country. We express our deep concern over the escalation of tensions in the northern provinces of Afghanistan as a result of a sharp increase in the concentration of various terrorist, separatist and extremist groups. We consider it important for the SCO member states to enhance their joint efforts in order to counteract terrorism, separatism and extremism. We urge all parties involved in the conflict in Afghanistan to refrain from the use of force and actions that may lead to destabilisation and unpredictable consequences near the Afghan borders with the SCO states...We believe that reaching an early settlement in Afghanistan is a major factor in maintaining and strengthening security and stability in the SCO space. In this context, we emphasise the need for the Government and people of the Islamic Republic of Afghanistan to intensify their efforts to restore peace, promote national economic development and counter terrorism, extremism and drug-related crime. We confirm the position of the SCO members that the conflict in Afghanistan can only be settled by political dialogue and an inclusive peace process conducted and led by the Afghans themselves.”

On the ground, however, the violence is continuing. In fact, Afghan vice president Amrullah Saleh on Thursday accused the Pakistan Air Force of warning Afghan security forces that it would retaliate against any move to dislodge Taliban fighters in the strategic border region of Spin Boldak. Also, we had Suhail Shaheen, the Taliban’s Political Office Spokesman for International Media based in Qatar, saying that India is welcome to continue its aid and reconstruction work in Afghanistan after a government of the Taliban comes to power. But New Delhi should remain neutral and not give the current Kabul administration any military support. This came as Foreign Minister Jaishankar met with Afghan President Ashraf Ghani in Tashkent.

Back to PD now, we have a Zhong Sheng commentary, which warns the US not to misjudge the situation with regard to Taiwan. This comes in the context of a report that a US military transport plane landed in Taiwan on Thursday. Here’s the Taiwan Affairs Office and Chinese Defense Ministry’s response to this:

“Wu Qian, spokesperson for the Ministry of National Defense, said Taiwan is an inalienable part of the Chinese territory. ‘Landing of any foreign military aircraft on China's territory can be made only with permission from the government of the People's Republic of China. Trespass by foreign ships or planes into China's airspace will cause serious consequences,’ he said. ‘We solemnly warn the United States not to play with fire and immediately stop its risky and provocative actions, not to send a wrong signal to 'Taiwan independence' separatist forces and avoid exacerbating tensions in the Taiwan Strait,’ said the spokesperson. ‘We warn (Taiwan's) Democratic Progressive Party authority not to misjudge the situation and invite trouble to the island. Making provocations and seeking 'independence' by colluding with external forces will only lead Taiwan into a dangerous situation,’ he said.”

The commentary says that this “adventurous and provocative act” by the US is nothing but playing the “Taiwan card.” And that, “any political calculations on the Taiwan issue are self-deceiving and will not only not shake China's strong determination to defend national sovereignty and territorial integrity…”

“For some time, the United States has repeatedly violated the one-China principle and the provisions of the three Sino-US joint communiques on the Taiwan issue, and tried to win over other countries to speculate on the Taiwan issue. Fundamentally, the United States frequently plays the ‘Taiwan card’ because it embraces the Cold War and zero-sum mentality, and continuously escalates its confrontational pressure on China in an attempt to contain China's development.” 一段时间以来,美国在台湾问题上屡屡违反一个中国原则和中美三个联合公报规定,还企图拉拢他国一起炒作台湾问题。美方频频打“台湾牌”,从根本上看,是因为其抱持冷战和零和思维,不断升级对华对抗施压,企图遏制中国发展.

The piece also quotes recent comments by Kurt Campbell, but only selectively. So his comment that ​​”We do not support Taiwan independence,” and “We fully recognise and understand the sensitivities involved here” are quoted without referencing this bit below.

“We do believe that Taiwan has a right to live in peace. We want to see its international role, particularly in areas like vaccines and issues associated with the pandemic, they should have a role to play here, they should not be shunned in the international community.”

Finally, the commentary says that the US “must be consistent with its words and deeds, implement its adherence to the one-China principle, and refrain from sending any false signals to the ‘Taiwan independence’ separatist forces…” Of course, folks in the US will tell you that there is a difference between the one-China principle and one-China policy, and that the US is committed to the latter. Recall that fracas over this after the February Biden-Xi call? Essentially, principle entails that there is only one China and that must be recognised. The policy formulation creates room for maneuver, on the other hand.

Also noteworthy that there had been some talk of preparatory work being done behind the scenes for a Biden-Xi meeting. That’s also not happening anytime soon apparently. Financial Times reports that

“Beijing has snubbed the US by refusing to grant Wendy Sherman, deputy secretary of state, a meeting with her counterpart during a proposed visit to China that would have been the first top-level engagement since acrimonious talks in Alaska. The US halted plans for Sherman to travel to Tianjin after China refused to agree to a meeting with Le Yucheng, her counterpart, according to four people familiar with the decision. China offered a meeting with Xie Feng, the number five foreign ministry official who is responsible for US affairs ... While the state department had not said Sherman would travel to China, she had planned to visit after a trip to Japan, South Korea and Mongolia. The Chinese snub follows a similar stand-off between the two countries’ militaries.”

Page 6: We have a piece by Wang Yi on the anniversary of the China-Russia Treaty of Good-Neighborliness, Friendship and Cooperation. I think it’s interesting that this was published while Wang Yi is traveling to Central Asian countries. Anyway, Wang writes about some key pillars of the relationship: 

  • The two countries regard equality and respect as the most basic way of getting along. The two sides respect each other's development path based on their own national conditions, and always treat each other as equals and live in harmony, setting a model and benchmark for exchanges between major powers.

  • The two sides firmly support each other's core interests, independence when it comes to managing each other’s own affairs, and each other's development and revitalization.

  • The two sides have established a complete mechanism for high-level contacts, held in-depth consultations, exchanged frankly and forged consensus on major issues of mutual concern, and did not waver from the established course because of a single moment, ensuring that bilateral relations always operate at a high level.

  • The two sides pursue win-win cooperation. In this he talks about trade and expanding areas of economic engagement. He also talked about people to people engagement.

The two sides have closely coordinated and cooperated in international affairs, promoted the political settlement of hotspot issues, promoted the international community to continuously improve global governance, and jointly responded to new threats and challenges, becoming one of the most important stabilizing forces in the world today. 双方在国际事务中密切协调配合,推动热点问题政治解决,推动国际社会不断完善全球治理,合力应对新威胁新挑战,成为当今世界最重要的稳定性力量之一.

“At present, the world is in a special historical period. The global governance system has undergone unprecedented profound adjustments, and international peace and security are facing complex and severe challenges. Countries are interrelated, interdependent and have a closer influence on each other. It has increasingly become the common choice of the international community to unite rather than split, open rather than close, and cooperate rather than confront. Good-neighborliness and friendship between China and Russia, and the success of strategic cooperation between China and Russia are increasingly of exemplary significance.” 当前,世界正处在一个特殊的历史时期. 全球治理体系经历前所未有的深刻调整,国际和平安全正面临复杂严峻的挑战. 各国相互联系、相互依存、相互影响更加密切,要团结不要分裂、要开放不要封闭、要合作不要对抗日益成为国际社会的共同选择. 中俄睦邻友好、中俄战略协作的成功愈发具有示范意义.

But going forward, Wang wants:

  • The two sides to “adhere to the principles of non-alignment, non-confrontation and non-targeting of third countries, and at the same time, carry forward the pioneering spirit of cooperation having no limits and no forbidden areas, and develop a new type of international relations that transcends civilizational differences and ideologies. 双方要牢牢把握中俄关系的前进方向,坚持不结盟、不对抗、不针对第三国原则,同时发扬没有止境、不设禁区的开拓精神,发展超越文明差异、超越意识形态的新型国际关系.

  • The two sides should become “reliable” “priority” partners, particularly when it comes to “strategic” projects.

  • The two sides should “intensify people-to-people exchanges.”

“China is willing to work with Russia to firmly safeguard the international system with the United Nations as the core and the international order based on international law, practice true multilateralism, promote the democratization of international relations, advocate the common values of peace, development, fairness, justice, democracy and freedom, and work together to build a community of common destiny.” 中方愿同俄方一道,坚定维护以联合国为核心的国际体系和以国际法为基础的国际秩序,共同践行真正多边主义,共同推进国际关系民主化,共同倡导和平、发展、公平、正义、民主、自由的全人类共同价值,携手构建人类命运共同体.