World Newsletter

26 December 2019


Beijing and Tokyo have agreed to expand cooperation in coping with aging societies and other issues as they seek to foster new areas of bilateral economic and trade cooperation.

The consensus was made between Premier Li Keqiang and his Japanese counterpart, Shinzo Abe, onWednesday. The two leaders had talks in a hotel at the foot of Mount Qingcheng, a Taoist holy site and a UNESCO World Heritage Site, about one-hour drive from Chengdu, capital of Sichuan province.

The two leaders, together with Republic of Korea President Moon Jae-in, convened in the city for the eighth China-Japan-ROK leaders' meeting on Tuesday.

Li said China's ongoing efforts to further open up its services sector will provide more opportunities for both countries to expand win-win cooperation. There is broad space for greater bilateral cooperation in coping with aging societies and achieving mutual benefits, he said.

Both countries also face challenges of rapidly aging societies. New births in Japan have fallen below 900,000 per year for the first time on record, while births in China dropped for two consecutive years despite a universal two-child policy being adopted.

He highlighted the modern services — including securities, life insurance and healthcare — as sectors where the two countries can work together further.

"We can select some pilot areas where there will be greater opening-up so as to foster new highlights for bilateral cooperation. Chengdu could be a good option," Li said.

He also urged more cooperative measures in investment, innovation and tapping into third-party markets, as well as higher level people-to-people exchanges.

Abe echoed Li's proposal, saying that there is broad space for bilateral economic and trade cooperation.

He said Japan appreciates China's efforts to further open up its services sector, and it is willing to actively take part in the process.

During the meeting, Li also called upon both sides to stay committed to the principles set out in four political documents that are fundamental to Sino-Japanese relations, carefully handle sensitive issues and enable continuous new progress.

Abe said the two countries must conduct closer high-level exchanges, enhance communication and dialogue and jointly open a new era for bilateral relations.

After the meeting, Li accompanied Abe on a visit to the Dujiangyan irrigation system, another UNESCO World Heritage Site.

Relations between China and Japan were long clouded by issues including wartime history and territorial disputes. But they have come back on track since Li's visit to Japan in May 2018. Five months later, Abe visited Beijing.

When President Xi Jinping and Abe met in June on the sidelines of the G20 summit in Osaka, Xi agreed in principle to accept Abe's invitation to make a state visit to Japan next spring.

Ahead of his trip to Chengdu, Abe met Xi in Beijing on Monday.



China is working to stabilize the job market by supporting its employment-first policy and improving mechanisms for securing full, high-quality employment, according to a recent State Council guideline.

Six measures are included in the guideline, released on Tuesday, to help stabilize the job market and avoid the potential for elevated unemployment.

Service businesses, including domestic services, tourism and nursing, would get support for encouraging more job creation.

The government will provide more financial support to private enterprises and small and medium-sized enterprises to help them in the domestic market, while their job cuts will be regulated. Flexible employment and entrepreneurship will be emphasized to invigorate the job market. Loan application requirements for people wanting to start small and micro businesses will be relaxed.

The government also will improve the job information monitoring system and allow the jobless to register as unemployed in another province to make job information easier to access.

Large-scale skill training courses will be provided to the jobless under age 20 and those unable to obtain higher education after junior or senior high schools. Financial assistance will be given to those in training courses.

"Though we face great pressure in employment given the current economic landscape, the government is taking positive measures to stabilize the job market," said Chen Lixiang, vice-dean at Peking University's China Institute for Occupation Research. He said pressure on employment comes from adjustments in the domestic economic structure and the international landscape.

"Information technology also is bringing a revolution to the job market with automation," he said. "The emergence of the virtual economy did create some new professionals but it also shocked the real economy and people who serve the real economy."

Li Qiang, vice-president of Zhaopin, an online recruitment platform in Beijing, said some groups are facing greater difficulty in finding jobs.



China's tax and fee reduction initiative may boost overall economic growth by 0.8 percentage point this year, and policymakers are saving money to support economic growth through controlling unnecessary expenditures, Finance Minister Liu Kun reported to the country's top legislature on Wednesday.

Tax and fee cuts in 2019, predicted to exceed the annual target of 2 trillion yuan ($286 billion), will speed up the GDP growth, promote increases in fixed-asset investment by 0.5 percentage point and lift retail sales by 1.1 percentage points, Liu said at the ongoing bimonthly session of the Standing Committee of the National People's Congress.

From January to October, tax and fee cuts totaled 1.97 trillion yuan, with the full year's amount to be over 2 trillion yuan, representing about 2 percent of GDP, much higher than any other country, Liu said.

The Ministry of Finance said that in the April-October period, the value-added tax in manufacturing and wholesales industries dropped by 459.88 billion yuan, down by 25.7 percent from the level before April 1, when VAT reform was launched.

For small and micro-enterprises, about 186 billion yuan in taxes had been reduced by the end of October. The average per-person income tax payment dropped by 1,786 yuan by the end of October, compared with a year earlier.

Li Xuhong, a senior researcher with the Beijing National Accounting Institute, said that given the tax cuts, "attention should be given to the sustainability of fiscal policies." The cuts will put pressure on the fiscal budget and push the government to increase debt.

To maintain stable fiscal spendingthe major force behind infrastructure investmentthe government's daily administrative expenditures may drop by over 10 percent this year, given that the top leadership pledged to "tighten the belt" in some areas, Liu said.

Given less tax income, local government budgets may see a shortage this year, while the central government is able to achieve its budgeted income. Any shortages, if amounts are small, will be supplemented through reducing spending that is not urgent, Liu added.



The Chinese Football Association is determined to make Chinese soccer leagues more professional, as the nation's governing body for the sport is busy developing new policies ahead of the 2020 season.

The CFA had a "policy clarification" meeting with representatives of Chinese Super League clubs on Wednesday in Beijing.

Many details of the new policies, which will include salary caps, youth training, player transfers and registration, are yet to be released. But the CFA has made it clear the aim is to ensure the healthy and sustainable development of Chinese soccer leagues.

The new regulation on player salaries has attracted the most attention. The CFA will install an annual salary cap of 10 million yuan ($1.43 million) for Chinese players in professional leagues, Xinhua News Agency reported. Players selected for the national squad will have an annual cap of 12 million yuan. The policy is meant to regulate contracts that were signed after Nov 20.

For foreign players, the annual salary cap will be 3 million euros ($3.3 million) for contracts that are signed after Jan 1. The limit for total expenditures for CSL clubs in 2020 would be 1.1 billion yuan, with salaries representing no more than 60 percent. In 2021, the total limit would shrink to 900 million yuan, with salaries not exceeding 55 percent.

A strict salary cap is seen as a way to make Chinese clubs healthier financially and encourage more Chinese to gain experience in high-quality leagues abroad. Wu Lei, playing for Espanyol in La Liga, is the only Chinese playing in a top European league. Fans blame the high salaries and less competitive environment at home for weakening Chinese players' willingness to compete in foreign leagues.

CFA officials said during the meeting that Chinese soccer should learn from Japan and South Korea to improve soccer management and teams' competitiveness. The CFA also said it would establish a joint working group for policymaking and refining details of the new policy.

"The purpose of making new policies is to ensure the healthy growth of our professional leagues and keep them energetic," said Dong Zheng, leader of the working group. "We are working to give our clubs healthier finances and facilitate the growth of young players.

"We hope to reach an agreement with our clubs and achieve the goal together. This is not like ordering our clubs to do something. We are collecting opinions from clubs, and we now have a general direction for our policy."



A commercial suborbital carrier rocket developed by a private Chinese company was launched from the Jiuquan Satellite Launch Center in Northwest China at 4:50 pm Wednesday (Beijing Time).

The rocket, Tansuo-1, was developed by Space Trek. It completed the whole maneuver flight and fairing separation at high dynamic pressure during the flight.

The rocket can serve purposes of meteorological observation, microgravity testing as well as satellite payload experiments.

It was the maiden flight of the first rocket developed by the company.

The Chinese government encourages the participation of private enterprises in the space industry. The country had more than 60 private companies in the commercial space industry as of December 2018.



Civil Affairs Minister Li Jiheng pledged on Wednesday to strengthen supervision to curb misconduct within the social relief system, which is considered a crucial bottom-line buffer that could be used to help the last remnant of China's have-nots escape dire poverty before 2021.

Li made the remarks in a report delivered at a bimonthly session of the Standing Committee of the National People's Congress, China's top legislature, which opened in Beijing on Monday.

The 16-page report focused on the relief system's role in helping combat absolute poverty-defined as a family living on less than 2,300 yuan ($328) a year, set in 2010 and adjusted annually for inflation. The central authorities have pledged to eradicate absolute poverty by the end of next year.

China allocated 562 billion yuan as subsidy funds to help people in need from 2016 to 2019, he said.

The funds were used to help people in extreme poverty, orphans, the homeless and beggars, among others.

In his report, Li said his ministry will work with relevant authorities to iron out details, including the targets, measures and standards of social relief, and accelerate the process to codify them in laws.

"We'll strive to lay a solid legal basis for social relief work, coordinated urban-rural development, poverty reduction and rural revitalization," he said.

China has seen a rapid decline of its impoverished population over the last few years. China's rural poor, which stood at almost 100 million in 2012, plummeted to 16.6 million by the end of last year. Poverty relief authorities estimate another 10 million or more will shake off poverty this year.

The remnants of the impoverished Chinese are mainly from a mosaic of ethnic communities scattered across western regions-commonly referred to as the Three Areas and Three Prefectures-which are deeply impoverished, officials said.

A large percentage of the impoverished Chinese are sick, frail with age or have disabilities, which has made it difficult for authorities to lift them out of poverty through conventional means such as fostering local industries or developing tourism.



China announced the revision of implementation measures for regulations on the administration of foreign-invested banks on Wednesday.

The revision of implementation measures, issued by the China Banking and Insurance Regulatory Commission on Dec 18, became effective since the day it was released.

After soliciting public opinions for a draft of the implementation measures earlier this year, the CBIRC lifted the restriction that limited the scope of business of foreign banks to wholesale banking, which refers to the provision of services by banks to larger customers or organizations such as corporate and institutional clients, while they established branches and subsidiaries in China simultaneously.

The revised implementation measures, on the other hand, allow foreign bank branches to choose their business direction based on a clear functional positioning, said the regulator in a media note posted on its website on Wednesday.

Regarding the suggestions made by certain banking institutions on clarifying the prerequisites for foreign bank subsidiaries and branches to share their systems, staff members and management, and clarifying the standards and procedures to waive requirements on the renminbi working capital adequacy ratio of foreign bank branches, the regulator said these will be clarified in proper forms after the release of the implementation measures.

The CBIRC set prerequisites for foreign banks to establish subsidiaries and branches in China simultaneously and added regulatory requirements accordingly. It removed the total asset requirement for foreign banks to set up institutions in China and obtain regulatory approval for conducting renminbi business.

The regulator also said it will assess the interest-earning assets ratio, the renminbi working capital adequacy ratio and the liquidity ratio of a foreign bank's branches combined, rather than a singular foreign bank branch.

Foreign bank branches are also required to hold interest-earning assets designated by the CBIRC that is worth at least 5 percent of their public debt, but they do not need to increase interest-earning assets if the outstanding volume of their interest-earning assets reached 30 percent of their working capital, according to the implementation measures.



China is likely to publish the draft of the country's first tariff law for public opinion in the near term, experts close to the Ministry of Finance told on Wednesday, a further indication that the country is speeding up the tax legislation process.

"Work on publishing of the draft tariff law is likely to be pushed in the near term. And we expect a breakthrough in tariff legislation next year," said Li Xuhong, a senior researcher with the Beijing National Accounting Institute and a consultant to the State Taxation Administration, which is tasked with drafting tax laws.

The tariff law is a significant legislative work for China next year as it is closely related to the international trade and economic opening-up, Li told China Daily.

Shi Zhengwen, director of the Center for Research in Fiscal and Tax Law at China University of Political Science and Law, said earlier that the tariff legislation process will be accelerated, as the country is planning to complete the entire process by the end of next year.

In the upcoming tariff law, experts said, the existing tax framework and overall tax burden level will remain unchanged so as to stabilize market expectations, amid a complex and uncertain external environment.

During the first 11 months of this year, total tariffs reached 263.8 trillion yuan ($37.7 trillion), down by 2.2 percent from a year earlier, according to data from the Ministry of Finance.

The government decided on Monday to lower tariffs on a broad range of imported goods, including frozen pork and high-tech products, to satisfy domestic consumption and reduce production costs, starting Jan 1.

Temporary tariff rates, which are set for a specified period, will be applied to 859 items. Designated items will enjoy import tariffs that are lower than the existing most-favored-nation rates in 2020.


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