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At China’s annual meeting of its top legislative body, three draft reports are usually submitted for delegates to discuss and approve.

They comprise the premier’s government work report, the National Development and Reform Commission’s economic development report, and the Ministry of Finance’s budget report.

The documents provide a review of the past year and explain how the central authorities will govern the country in the coming year.

This year’s plenary session will also review and approve the proposed 13th five-year plan for the period from 2016 through to 2020. 


Here are the five key points to take away from the draft plan and reports.

1. Growth target set at 6.5 to 7 per cent

This year’s proposed target for gross domestic product expansion has been set at a range between 6.5 per cent to 7 per cent.

The range, rather than a specific number, reflects China’s dilemma between pursuing economic growth and pushing ahead with reforms.

Innovation would be the top driving force for future growth, according to Li’s work report.

2. Hong Kong, Macau to play bigger roles in China’s economic development; Taiwan policies to be maintained

Beijing will “elevate Hong Kong and Macau’s positions and roles in China’s economic development and opening up” according to their “distinctive strengths”, Li said.

In its draft 13th five-year plan, also released on Saturday, China pledged to support Hong Kong in furthering its status as a global financial, shipping and trading hub.

He added that Beijing would adhere to previous policies on Taiwan, “firmly oppose secessionist activities” and maintain peaceful development of cross-strait ties.

3. Further interest rate liberalisation; government-managed floating system to stay

China has pledged to further liberalise interest rates and stick to a government-managed floating system.

Beijing aimed this year to keep the yuan generally stable on a “reasonable and balanced level” and to control “abnormal flow of cross-border capital effectively”, according to the annual report of China’s top economic planner, the National Development and Reform Commission.

4. China to boost overseas defence

The premier also pledged to improve China’s ability to protect its citizens and businesses abroad.

China would ensure that the G20 summit in Hangzhou this September would go smoothly, Li said. Beijing would “participate constructively” in seeking solutions for global issues, he added.

The government has budgeted 954 billion yuan (HK$1.13 trillion) for defence spending this year – a 7.6 per cent increase from last year. 

5. Slack officials warned, blundering ones to get second chance, rewards for innovators

Li warned officials against neglecting their duties.

China has been facing a situation in which many cadres chose not to perform their duties at all for fear of making mistakes and getting hauled up amid the country’s ongoing corruption crackdown.

Li warned that the Communist Party would have zero tolerance for officials who slacked off on their jobs. There was room for correction for those who made mistakes and rewards for innovators, he said.

See the full article from the South China Morning Post here.



Alibaba has been on an acquisition spree, most recently with a Hong Kong newspaper:

China’s Alibaba confirmed that it has “entered into a definite agreement to acquire” the struggling Hong Kong-based newspaper the South China Morning Post (SCMP). It includes all the assets of the SCMP Group, which includes stakes in some web startups. The financial terms are not disclosed.

“The South China Morning Post is unique because it focuses on coverage of China in the English language. This is a proposition that is in high demand by readers around the world who care to understand the world’s second largest economy,” said Joe Tsai, executive vice chairman of Alibaba Group, in a statement. “Our vision is to expand the SCMP’s readership globally through digital distribution and easier access to content.”

Alibaba’s buy-out of the SCMP is the latest in many big moves into media and content by the ecommerce titan. A few months ago, Alibaba paid out US$4.2 billion to acquire China’s top video site company, Youku Tudou. It runs the Youku and Tudou sites, which combine user-generated content with licensed movies and TV series. It also has a film studio.

Tsai explained their decision to the sub-100,000 readership of the SCMP: “So, you’re probably wondering why. Why is Alibaba buying into traditional media, considered by some a sunset industry? The simple answer is that we don’t see it that way.” He adds that SCMP will continue to focus on “editorial excellence” and keeping readers’ trust as it adapts to fit in with fast-evolving new media and the way news is read via social media. No specific plans are revealed.

The newspaper was founded in 1903. Alibaba is acquiring it from Malaysian tycoon Robert Kuok’s Kerry Media, which bought the controlling interest from News Corp in 1993. The SCMP has a paywall, but its slowly rising digital revenues are not making up for tanking print sales.

See the full article from TechinAsia here.

Alibaba also recently invested in music streaming- see more here.

A media release from state news agency Xinhua explained the goals of the latest round of guidelines. ‘China will modernise SOEs, enhance state assets management, promote mixed ownership and prevent the erosion of state assets… The government will improve the competence of SOEs and turn them into fully independent market entities,’ said the release.

Why are they doing this? Efficiency.

China says that state owned enterprises are a pillar of the economy. These government companies enjoy a range of benefits. For example, they have easier access to loans. And they have what’s euphemistically described by the state as ‘more favourable policies’. Basically, they have monopolies over certain products.

But SOEs are inefficient. At least, compared to private firms they are. Which is what really matters here. This inefficiency means they’re less resilient when the economy is going south. Like it is now. The State Council said that reforming SOEs is a top priority for Chinese lawmakers at the moment.

What the SOE reform guideline says

Promoting mixed ownership is a top goal for China. The guideline says that SOEs should bring in diverse types of investors. There will be multiple ways they can do this. A few examples are: bonds, share rights swaps, and outright buying stakes in the enterprise. For the first time, the SEOs will be allowed to test the waters of selling shares to employees. Eventually, the government wants these firms to go public. 

guideline holes

In the official report, China claims that executives will be more tightly supervised. They say that a ‘mechanism for accountability’ will be put in place. Apparently, this will help stop corruption and embezzlement. But so far, there are no details on what this mechanism will look like. Or how violations will be investigated and prosecuted.

Also briefly mentioned was the fact that government agencies will no longer be able to intervene in SOE decisions. The thing is, the SOEs will still be ‘administered’ and overseen by the State-owned Assets Supervision and Administration Commission (SASAC). There isn’t an effective separation of state and corporation here — yet.

New foreign stakeholders may or may not have much chance to influence this. Under Chinese law, it is illegal to threaten to withdraw ‘registered capital’. That’s the amount the investor has put in, according to official records. Registered capital can only be withdrawn to pay company expenses. 

Then, there’s the problem of timing. An institutional investor with a significant proportion of shares cannot profit from a purchase or sale within six months. It’s meant to be a defence against insider trading. But it also applies to investment companies.


The main takeaway is: from an investor’s point of view, SOE reform would have to be thorough and transparent to be worthwhile.

And the Chinese administration is not famous for being transparent.

See this article in full from Money Morning Australia here. And more on the topic form the FT here.