Death sentence for Lai Xiaomin and round-up of recent under-reported China news
Major reforms "accomplished"; confidence and patience in 5G investment; carbon featured in industrial policy; grain production & seeds
Today’s Pekingnology is not gonna dive deep into one single subject. This will be a round-up of some recent China news that your Pekingnologist believes went under-reported or under-analyzed, including:
1. Reform announced in 2013 now ordained as accomplished;
2. Minister in Industry & IT calls for confidence and patience in 5G investment to bear fruit
3. Minister in Industry & IT incorporates carbon reduction in his jurisdiction - crude steel production reduction, EVs, etc.
4. Minister in agriculture on grain production, including soybeans, and seeds, which was featured in a recent Pekingnology newsletter
But before that, here is today’s news that Lai Xiaomin, former head of China Huarong Asset Management, has been sentenced to death in a Tianjin court (ENG, brief Twitter thread).
Now, these few words may be redundant here since most subscribers to this newsletter are solid professionals on China. But judging from comments on Twitter, quite some people don’t understand that Lai was not JUST a top executive of a big Chinese financial company. Huarong is state-owned, Lai was first and foremost a cadre and official of the Communist Party of China and the Chinese state.
Therefore to an audience whose knowledge on China may be limited, his description, in this particular context, should probably NOT be a corporative executive or financial tycoon, much less “a billionaire.”
Lai was an official, a public servant - that’s who he was and the conviction is based on that identity. Technically, an official in his previous rank could be transferred to head a city or some govt department.
It is just surprising that many people on Twitter really don't understand this - a reminder to your Pekingnologist that basic knowledge of how China works should not be overestimated.
Death sentences are increasingly rare in "economic crimes" these days, but China’s Main Street largely distinguishes between "economic crimes" and corruption, which is viewed completely differently in Chinese 老百姓 commoners’ eyes from white-collar crimes. This tiny bit of nuance seemed lost in a New York Times report just published (no offense to the Gray Lady!)
China employs the death penalty widely, though government officials do not disclose figures. But its use for crimes like embezzlement, bribery, and corruption has dropped in recent years amid public disapproval.
The issue got an unusual public airing in 2012, when Wen Jiabao, then China’s premier, used his nationally televised annual news conference to caution courts overseeing the case of Wu Ying, a young woman who became a business tycoon but had been sentenced to death for financial fraud. Her sentence was later reduced.
For what is worth, Wu Ying was not a public official and held no official power. Her embezzlement was of private investors’ money while the key to Lai’s crime here is Lai abused official power.
Still, the death sentence in Lai’s case is indeed rare in recent corruption cases, as The Times report rightly pointed out. The Tianjin court said that’s because his criminal offense is particularly egregious.
According to China’s criminal law, Lai can appeal the sentence and if the appeal fails the Supreme People’s Court would still have to approve execution. Chances are he would be executed since his death sentence today doesn’t carry the more commonly-seen “two-year reprieve,” in which case the sentence would usually be reduced to life imprisonment.
The Tianjin court said in the verdict that Lai took bribes in the amount of 1.788 bln yuan (277 mln USD, how greedy is that OMG) and embezzling 25.13 mln yuan, plus bigamy. Your Pekingnologist will not indulge you with some licentious rumors, and here is the reasoning from the Tianjin court
Lai Xiaomin disregarded the law with extreme greed. Most of the criminal acts occurred after the Party's 18th National Congress (2012), and are typical in the sense that he did not cease his criminality after public warnings amid a national crackdown on corruption. His criminal acts led to particularly significant losses of the country and the people, with extremely serious harm to society and subjective malice extremely deep. His crime is extremely serious and should be severely punished according to the law.
Chinese President Xi Jinping said in a reception hosted by the National Committee of the Chinese People’s Political Consultative Conference on December 31 that (CHN)
Xi Jinping stressed that in 2020, we continue to unswervingly promote reform and opening up, the 50 key reform tasks and other 75 reform tasks deployed by the Central Commission for Comprehensively Deepening Reform were basically completed, the central and state organs of the relevant departments completed 143 reform tasks, and 268 reform programs were introduced in various areas. More than seven years after the Third Plenary Session of the 18th CPC Central Committee was held, a total of 2,485 reform programs have been launched by various parties, and the reform targets and tasks proposed by the Third Plenary Session of the 18th CPC Central Committee have generally been completed as scheduled.
This is significant because the Third Plenary Session of the 18th CPC Central Committee in 2013 drew a lot of attention at the time. See:
China Third Plenum: Leaders unveil key reforms via BBC
China reform plan: in summary by Lydia Guo via Financial Times
Xi Jinping’s Ambitious Agenda for Economic Reform in China by Arthur R. Kroeber via Brookings
Xiao Yaqing, China’s Minister of Industry and Information Technology, gave an interview to Xinhua which was published on January 4
He said that in accordance with the principle of being moderate ahead of times, we should complete the in-depth coverage of 5G in cities at the prefecture level and above as soon as possible, and gradually accelerate the extension of coverage to the counties and towns that are in a position to do so. At the same time, strengthen collaboration with relevant departments to jointly promote the pilot demonstration of 5G applications and promote the cultivation of 5G application ecology.
In terms of industrial digitization, we will further implement the smart manufacturing project, deepen the Project 512 in "5G+Industrial Internet", focus on 10 key industries, form 20 typical industrial application scenarios, and strive to implement 5G in more industrial enterprises.
"While we actively create a good environment for the development of 5G applications, we must also remain patient and leave room. I believe that in the near future, 5G will bring delightful and even unexpected changes." He said.
If you don’t know the background, you’d probably this made onto Pekingnology simply because it’s 5G.
Not exactly. The backdrop is there are voices in China that are concerned if the country is moving too fast on 5G deployment - investing too much too early.
Yes, as foreign press and Western powers cite China’s advancement in deploying 5G as an example here, there are public concerns here. In particular, Lou Jiwei, China’s former Finance Minister who is known for being blunt, raised the issue in late September.
Caixin’s report on this is paywalled, so here is another source (CHN) which at the time was splashed across Chinese news sites
The former Minister of Finance, Lou Jiwei, said that it is necessary for infrastructure to be moderately ahead of times, but some aspects are overly advanced, raising user costs or unsustainable public sector debt. Existing 5G technology is very immature, hundreds of billions of yuan in investment have been put into them, and the operating costs are extremely high. It will be difficult to find application scenarios to absorb the costs in the future.
It’s not unusual to have concerns and debates about industrial policy here. Xiao here is projecting confidence:"While we actively create a good environment for the development of 5G applications, we must also remain patient and leave room. I believe that in the near future, 5G will bring delightful and even unexpected changes."
Continuing with Xiao’s interview via Xinhua
The Central Economic Work Conference listed "doing a good job in achieving peak carbon and carbon neutrality" as one of the key tasks in 2021. Industry is an important area of carbon emissions, and it is crucial to achieving low-carbon emission reduction in industry.
In 2021, we must do our best to reduce energy consumption and emissions in the industrial sector. Implement the "double control" policy on energy consumption, strictly control the scale of new production capacity in the heavy chemical industry, resolutely reduce crude steel production, ensure a year-on-year decrease in crude steel production, and release a new version of the implementation of steel production capacity replacement (measures), improve the capacity information warning mechanism.
At the same time, develop action plan and roadmap of key industries’ carbon peak, encourage industrial enterprises and industrial parks to build green microgrids, give priority to the use of renewable energy, and build green factories and green industrial parks in various industries and regions.
The development of new energy vehicles is the focus of promoting energy conservation and emission reduction. Xiao Yaqing said that a roadmap for the implementation of the automotive industry will be developed around the goal of carbon peaking and carbon neutrality.
The gist is China’s pledge for striving for a carbon peak at 2030 and carbon neutrality at 2060 is apparently incorporated into the work of the Ministry of Industry and Information Technology, which is certainly welcome news.
As highlighted by your Pekingnologist, resolutely reduce crude steel production, ensure a year-on-year decrease in crude steel production in the year 2021 is now promised.
Reuters does a good job in tracking crude steel production so check it out there - the production in November 2020, while slipping from earlier months, stood higher than November 2019.
China’s crude steel production, one of the most frequent trade objections raised by the United States and European Union in the past years, had its ups and downs. But a key difference is that the curtail of crude steel production now takes a new role of being part of striving to reach carbon peak and carbon neutrality, whereas in the past its significance usually lie in just curtailing overcapacity and reducing pollution (in the Chinese context, before the commitment to carbon emissions, pollution refers to cleaner air and water, not carbon emission).
Also, develop action plans and roadmaps of key industries’ carbon peak, which is gonna have last impacts rather than temporary effects. The development of new energy vehicles is the focus of promoting energy conservation and emission reduction is further good news for EVs. No details are given here, but perhaps some policies favoring EVs or restraining traditional vehicles are in the pipeline?
China’s agriculture minister Tang Renjian gave an interview to Xinhua which was published on January 3rd where he said
(The ministry) has made a solemn promise to ensure that the 2021 grain production is stable at more than 1,300 billion jin (650 million tons), and strive for an increase upon stablization of the production. Specifically, it is to achieve "two stability and an increase":
stablizing production of staple food……
stablizing production of soybeans, continue to implement the soybean revitalization program, and strive to stabilize the growth area of 140 million mu (933 million square kilometers) or more, improve yields and quality, to ensure domestic self-sufficiency of edible soybeans for soybean products.
increase production of corn…
Nothing much to add except China takes grain production seriously. Not an expert on agriculture at all but since China is a big importer of soybeans, including from the United States, so maybe some of you are interested in the soybean part.
Continuing with Tang’s interview via Xinhua
China clearly proposed to carry out the “chokeneck” technology research in seeds, does it mean that China’s seed industry is not safe?
Tang said, since the 18th Party Congress (2012), the development of modern seed industry has achieved significant results. China-bred varieties accounted for more than 95% of the area to grow crops. On rice and wheat, two major food crops, China is 100% self-sufficient in seeds. Domestic supply of seeds in corn, soybeans, pigs and others are safeguarded. At present, foreign enterprises account for about 3% of China's seed market share, imported seeds accounted for 0.1% of the seeds used nationally. Overall, China's seed supply is guaranteed and the risk is controlled.
"The independent innovation of China's seed industry has indeed a gap with developed countries. If there is an extreme embargo situation (by other countries), some varieties, fields and links, although will not come to a halt instantly, but will affect the speed, quality and efficiency of agricultural development." Tang said.
Tang said that the seed industry will be the key task in implementing agricultural science and technology research in the 14th Five Year Plan (framework), as well as the key in agricultural and rural modernization. China will accelerate “chokeneck” technology research in seeds, maintain the competitive advantage in varieties of rice, wheat and others, narrow the gap between international advanced level in corn, soybeans, pigs, cows and other varieties, and resolutely win the war to achieve a turnaround for the seed industry. China will ensure that the Chinese bowl is mainly loaded with Chinese grain, Chinese grain is mainly produced with Chinese seeds.
Pekingnology is the first in English to highlight China’s recent emphasis on seeds, publishing After microchips, what's the next big (small) thing on Beijing's self-reliance list? a few days ago, pointing to two recent central-level conferences mentioning seeds.
If you have read that, maybe you could recall that your Pekingnologist wrote But whatever reasoning or rationale at the time, because he found that even from Chinese press reports, the value of imported seeds to China was disproportionately low.
So it’s good to see some clarity here, including foreign enterprises account for about 3% of China's seed market share, imported seeds accounted for 0.1% of the seeds used nationally.
Penned by Zichen Wang, founder of Pekingnology, a personal newsletter that does NOT represent the views of anybody else.
Errors may well exist, so suggestions for corrections and feedback are welcome - feel free to reply or send an email to firstname.lastname@example.org .