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TRIVIUM CHINA: The Tip Sheet, know china better



1. Chinese researcher edits human genes

He Jiankui, a Chinese researcher claims that he has made the world’s first genetically-edited babies. (AP):

“He altered embryos for seven couples during fertility treatments, with one pregnancy resulting thus far.”This is risky stuff (MIT Technology Review):“The genetic editing of a speck-size human embryo carries significant risks, including the risks of introducing unwanted mutations or yielding a baby whose body is composed of some edited and some unedited cells.”The Chinese research community has resolutely condemned He’s trial (sciencenet):“Researchers in the field of genetic editing in China have… reached consensus in recent years, namely: [we] resolutely oppose clinical experiments involving genetic editing for reproductive purposes at this stage.”

Everybody involved is disavowing responsibility. The hospital where the trial took place, the ethics committee that approved the trial, and the local government that funded it, have all said that they were unaware of what He was doing.

The national health authorities have ordered an investigation to find out what happened.

Get smart: China’s lack of a review process for researching cutting-edge technologies gives China a big leg up in some areas, such as big data. But it also can lead to major misuse.

AP: Chinese researcher claims first gene-edited babies
MIT Technology Review: EXCLUSIVE: Chinese scientists are creating CRISPR babies
He Lab: About Lulu and Nana: Twin Girls Born Healthy After Gene Surgery As Single-Cell Embryos
Sciencenet: 两家专业学会就“基因编辑婴儿事件”发声


2. The best stat to watch in China

If you want to know where China’s economy is headed, the single best stat to track is bank asset growth.

The latest numbers for October were just released on Monday, and they underscore how extraordinarily conservative Chinese banks are being right now.

The details:

Total assets in the banking system grew by 6.6% y/y in the month.That’s down from 7% y/y in September and represents a fresh all-time low.China’s five big SOE banks are expanding assets at 6.7% y/y – down from 7.2% in September.Assets at the 12 medium-sized joint-stock banks are growing at a measly 3.9% y/y – up a touch from 3.6% in September.Some context: Those 17 banks combined account for 53.3% of the banking system.

But here’s where the real action is:The roughly 133 city-level banks are growing assets at 7.9% y/y – down from 8.4% in September and a recent high of 12% back in January.

Get smart: Those city-level banks are the ones that regulators are pushing to support the private sector. But they are only becoming more risk-averse, along with the rest of the system.

Get smarter: With bank asset growth this incredibly low – and still decelerating – there is no way the economy can turn a corner.

CBRC: 2018年总资产、总负债(月度)


3. Still no word on fourth plenum in 2018

The big (non) news coming out of yesterday’s Politburo meeting: nothing was said about a forthcoming plenum.

Some context: Traditionally, the Central Committee holds a plenum around one year after a Party Congress. These plenums set out the economic agenda for the next five years. Since we had a Party Congress in October 2017, everybody had been expecting an economy-focused plenum some time in Q4 2018.

Full disclosure: There has been no positive confirmation that a plenum will not be held. But if one was going to be held before the end of the year, we would have expected it to be announced following yesterday’s Politburo meeting.

The rub: They could technically announce a plenum just days in advance, so it may still happen.

What it means: We understand the lack of a plenum to be evidence that Xi and other top officials are confident in the overall framework laid out five years ago at the 2013 plenum, and they see no need to change tack.

READ MORE 习近平主持中共中央政治局会议


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4. Xi wants to reinforce Party control over village life

Top of yesterday’s Politburo meeting agenda was how to improve Party work at the village level.

The meeting reviewed a revised version of the rules for grassroots Party work at the village level.

You are not going to believe this – Xi Jinping wants the Party to play a bigger role in village life (Xinhua):

“The meeting stressed that village Party organizations must comprehensively lead every organization and every kind of work in their villages.”“Every important affair and important issue in a village must be researched and discussed by a Party group.”

Some context: Xi used to be a village Party secretary back in the day.

More context: China has been experimenting with the direct election of village-level administrative leaders for over 20 years. The goal has been to effectively build a dual-leadership system, with village leaders who are elected and and Party secretaries who are appointed.

Get smart: Xi is determined to empower the Party secretaries.

Xinhua: CPC meeting reviews work rules of rural organizations, disciplinary inspection agencies


5. Discipline inspection enforces political correctness

The Politburo meeting also discussed Party rules that govern the work of discipline inspection bodies – i.e. the Central Commission for Discipline Inspection and the National Supervisory Commission.

What’s interesting about the rules – Xi wants these bodies to do much more than just punish malfeasance (Xinhua):

“[Disciplinary agencies] take the lead in…elevating political ability, accurately grasping the political direction, [and [standing firm in political stance.”“[Disciplinary agencies] should use iron discipline to strengthen daily management and supervision [of the political system], and seriously deal with violations of the Party constitution and Party rules.Don’t forget: Much of Xi’s policy agenda has been written in to the Party constitution, so enforcing the constitution means making sure that agenda is implemented.

The rules also tried to address a perennial dilemma – how to make sure that the disciplinary agencies stay in line.

Surprise, surprise…the rules simply call for them to supervise themselves:“[Disciplinary agencies must] strengthen self-discipline and have ‘zero tolerance’ for those discipline and law enforcers who violate discipline and the law.”

Get smart: Xi has empowered disciplinary authorities, expanded their remit, and is using them to keep cadres in line on politics and policy.

Xinhua: CPC meeting reviews work rules of rural organizations, disciplinary inspection agencies


6. State Council shows love to local governments

On Monday, the State Council issued a circular singling out 130 various initiatives by local governments for special praise.

The idea was to point out specific developments that have improved the business environment in different cities (

“The circular praised the reform of the work permit system for foreigners launched by the Beijing municipal government, the platform for attracting investment established in Tianjin Binhai new area, and efforts to prevent pollution in Shanxi province.”We were interested to see who’s been excelling in administrative reform. The big winners:Shanghai’s Pudong District was praised for its pilots to separate business licenses and operating permitsQuzhou, Zhejiang, was praised for its simplifying of registration proceduresHengqin New District in Zhuhai, Guangdong, was praised for its self-service tax platformDalian, Liaoning, was praised for its random inspections of business operationsGuiyang, Guizhou, got some props for putting more government services onlineHuangshi, Hubei, was praised for its pilot reforms that allow projects to move forward without first getting prior approval

Our question: How meaningful are any of these? If any readers have experience, please let us know!

Get smart: The central government is trying to incentivize local governments to improve their business environments by making them compete against one another.

The bigger picture: Regulatory and governance systems have become more centralized under Xi Jinping. But there is still plenty of experimentation at the local level, which the central government learns from to establish nationwide best practice.

READ MORE 国办通报表扬国务院第五次大督查发现的130项典型经验做法 国务院办公厅关于对国务院第五次大督查发现的典型经验做法给予表扬的通报


7. Alibaba restructures to deliver that sweater set, like, yesterday

Alibaba is on a mission.
They plan to sink 100 billion RMB into building a logistics network capable of handling 1 billion packages per day, with 24-hour delivery anywhere in China, and 72-hour delivery to international markets.
On Monday, the company announced an internal reshuffle to help them get there. The restructuring is designed to place more focus on both cloud computing and import-export operations via their logistics wing, Cainiao.
This follows the unveiling of Cainiao’s smart logistics platform earlier this year, and a series of plans for expansion beyond Greater China, including a USD 1.5 billion logistics center at the Hong Kong airport and four delivery hubs in Dubai, Kuala Lumpur, Belgium, and Moscow.
Get smart: With Jack Ma slated to step down as executive chairman in September, 2019, this may be one of his last opportunities to point the ship in the right direction.
Get smarter: Fast, reliable delivery is a must-have resource for Chinese enterprises expanding beyond national borders and a crucial component of the Digital Silk Road.

Technode: Alibaba restructures to focus on cloud computing and new retail


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