THE ESSENTIAL EIGHT *
1. Shanghai Composite Tumbles Below 4,000 as State Support Fails – Bloomberg The drop below 4,000 is a blow to investors who had speculated authorities would intervene to support shares, a strategy employed near closely watched levels in the past. While China’s securities regulator eased margin-trading rules and the nation’s exchanges announced fee cuts overnight, the moves failed to revive confidence in a market that has wiped out the equivalent of France’s entire equity capitalization in three weeks // ugly, very risky if this does not stabilize soon…not just mom and pops have lost a lot in the last two weeks, plenty of “elites” getting hammered too….
Related: Gov’t Once Again Tries to Pull Stock Market out of Nosedive-Caixin “Speaking of the damage we saw over the past half a month wrecked by the sell-offs of leveraged investors, we are seeing only the tip of an iceberg,” Xu Gao, chief economist at Everbright Securities, wrote in a commentary published on Caixin’s Chinese website. He says the most urgent task the regulator faces is to break the cycle of lower prices and forced sales to avoid triggering an avalanche of sell-offs, which he suggests may happen if the Shanghai Composite Index falls to about 3,400 points. A plunge could cause banks to suffer because they have lent indirectly to stock investors, he said. “The consequences will be grave enough to be called a financial crisis.”
Related: Trader Fights the Market Tide in Shanghai – WSJ The 36-year-old said he has gone through wild market swings before—he became interested in stocks as a teenager—and it doesn’t break his nerve at all. But a lot of his clients are new to the market, he explained, and need comforting at times like these. He took a few calls from nervous investors after Wednesday’s drop. “Confidence comes from within, and if you still have money you still have confidence,” he said, as his put his bulky black laptop and cables into his backpack to catch a train to Hangzhou for more marketing. “The bull market will come back eventually, and money may fall from the sky.”
2. Jitters in Tech World Over New Chinese Security Law – The New York Times New language in the rules calls for a “national security review” of the technology industry — including network and other products and services — and foreign investment. The law also calls for technology that supports key sectors to be “secure and controllable,” a catchphrase that multinationals and industry groups say could be used to force companies to build so-called back doors — which allow third-party access to systems — provide encryption keys or even hand over source code. As with many Chinese laws, the language is vague enough to make it unclear how the law will be enforced, but it suggests a new front in the wider clash between China and the United States over online security and technology policy. // and may effectively kill the Bilateral Investment Treaty under negotiation with the US?
Related: China Law Translate | 国家安全法-National Security Law of the People’s Republic of China (Passed on July 1, 2015 at the 15th meeting of the Standing Committee of the 12th National People’s Congress) // 中华人民共和国国家安全法 At first glance new national security law & clear references to role of central body aka National Security Commission announced at third plenum seem like big bureaucratic wins for Xi
3. Xi demands improved regulations, forceful implementation in anticorruption drive – Xinhua Chinese President Xi Jinping said efforts to weed out undesirable work styles and corruption should rely on improved law and regulations and forceful implementation of such rules. Xi, also general secretary of the Communist Party of China (CPC) Central Committee, made the remarks at a study session attended by members of the Political Bureau of the CPC Central Committee on Friday. As the CPC prepares to celebrate the 94th anniversary of its founding next Wednesday, top leaders gathered to discuss how the Party can rid itself of corruption. At the study session, Xi called for efforts to intensify and improve the construction, management and supervision of the Party and said that weeding out undesirable work styles and corruption fundamentally relies on law and regulations, which must be at the heart of the drive. // Saturday CCTV Evening News on this 习近平在中共中央政治局第二十四次集体学习时强调 加强反腐倡廉法规制度建设 让法规制度的力量充分释放 Zhang Gaoli, travelling overseas, missed the Politburo meeting and study session
Related: Top leadership studies anticorruption ahead of CPC anniversary – Xinhua Xi stressed the importance of the Party’s fight against corruption in carrying out the “Four Comprehensives,” a strategic layout for national renewal. He said that though previous efforts had succeeded in refreshing the Party and government, and renewing the faith of Party members and the public, problems remain and the CPC still faces an uphill battle against corruption. “There can be no rest or turning back in our anticorruption drive,” Xi said. To improve the anticorruption system, current rules and regulations must be revised and new ones drafted, said Xi. On the same day, the CPC issued a new regulation on the performance of officials, promising that ineptitude could result in demotion or dismissal. It also revised a regulation on discipline inspection, the first change since the rule came into force in 2009.
Related: China’s Anti-Corruption Campaign Enters Phase Two | The Diplomat On June 26, at the Politiburo collective study session, Chinese President Xi Jinping stressed the importance of laws and regulations in the anti-corruption campaign. According to Xi’s speech, though China has made great achievements in anti-corruption campaign since the 18th Party congress, the overall situation is still serious. Xi stressed that anti-corruption campaign will not stop despite some skeptical views in Chinese society. What is most important now is the building of institutions, which includes the attendant laws and regulations. Xi also emphasized that the Party will not allow the so-called “broken window” effect to occur. From this study session, the message is clear enough: the first stage of anti-corruption campaign is largely over-chen Dingding
4. Share Price Tumble Puts Tycoon Linked to Fallen Officials, Businessmen in Spotlight-Caixin According to people with knowledge of the matter and transaction documents, Che profited handsomely from a deal in 2002 in which he purchased stakes in Ping An Insurance and Haitong Securities through a Tianjin businessman named Liu Zhiyuan. The two companies’ listings brought Che net profits of 6 billion yuan and 2 billion yuan. The deals prompted speculation that Che used his family connections to profit. Che is the son-in-law of a former central bank governor. A source close to the matter said after Che was detained that Liu had also become the subject of a probe. Several sources said the inquiry into Che was triggered by an investigation into Ma Jian, a former vice minister of state security, and Guo Wengui, a property tycoon who controls Beijing Pangu Investment Co. and was a stakeholder in Digital Domain. Ma was detained in January by the Communist Party’s graft buster. Guo is overseas. // sounds like this case is about much more than Ma, Guo, Che Feng and Dai Xianglong
5. China nurtures better environmental supervision – Xinhua Chinese President Xi Jinping presided over the 14th meeting of the Leading Group for Overall Reform on Wednesday afternoon, which he also heads. Several topics were discussed at the meeting, including an environmental protection supervision plan for a better monitoring network, a plan for independent auditing of officials and a plan to hold officials responsible for damage their decisions cause to the environment. Xi urged officials to implement the “three stricts and three honests”, a series of requirements for officials to improve their life and work raised by President in March last year. The slogan refers to: “be strict in morals, power and disciplining oneself; be honest in decisions, business and behavior.”
Related: 习近平主持召开中央全面深化改革领导小组第十四次会议-新华网 新华网北京7月1日电 中共中央总书记、国家主席、中央军委主席、中央全面深化改革领导小组组长习近平7月1日下午主持召开中央全面深化改革领导小组第十四次会议并发表重要讲话。他强调，领导干部是否做到严以修身、严以用权、严以律己，谋事要实、创业要实、做人要实，全面深化改革是一个重要检验。要把“三严三实”要求贯穿改革全过程，引导广大党员、干部特别是领导干部大力弘扬实事求是、求真务实精神，理解改革要实，谋划改革要实，落实改革也要实，既当改革的促进派，又当改革的实干家。
Related: China Says Retired Officials Can Be Punished For Pollution Under new guidelines on environmental monitoring, it is officials in senior positions who will be held accountable for whether or not the environment is being protected, state television said on its main evening news. “For officials in leadership positions who are responsible for environmental damage, it does not matter whether they have been reassigned, promoted or retired, they will be held seriously accountable,” state television said in its summary of the rules. Protecting the environment was a key part of a move toward a more sustainable economic model, it added.
6. Report claims victory for information controls in China – China Media Project In the simplest sense, the past decade of media policy and propaganda practice in China has been all about the Chinese Communist Party regaining control of public opinion, increasing its capacity to “guide” the agenda against the backdrop of social and technological change. The recently released report on mobile public opinion suggests that — at least for now — the Party might be winning the battle for dominance over information and public opinion, thanks to tighter controls on commercial media and the internet. As Yan Hongshuang (阎虹爽), at People’s Daily Online, summarises the report: “According to the analysis, since 2014 there has been strengthened integration of the mainstream public opinion sphere and the popular public opinion sphere, and both the degree of consensus in online public opinion and the level of approval of the government rose rapidly, so that [China’s] online public opinion ecology got on the right track.”
7. The Pentagon’s Fight Over Fighting China – POLITICO Magazine “Listen, AirSea Battle is about China, and there’s no doubt about that. But it’s also about a lot more,” Princeton’s Aaron Friedberg says. “Just because we’re thinking about ASB, about ways to protect ourselves, doesn’t mean we think we’re going to have a war with China. Our military talks to their military all the time. But our military has to prepare for every option—which is precisely what we should be doing. We have exaggerated concerns about offending the Chinese, but I think at some point we have to be more candid.” Army senior officers remain convinced that ASB is aimed at them more than at China. Recently, a retired Army colonel and consultant to the Joint Chiefs of Staff spoke with a roomful of young Army officers. “I asked them, ‘How many of you think that AirSea Battle is just an attempt by the Navy and Air Force to grab a greater share of the defense budget?’ Every hand in the room went up, every single one,” he told me. “It’s an article of faith.”
8. China Economic Update – June 2015 – World Bank China’s growth will keep moderating as the transition to more sustainable growth consolidates Balancing reforms and short-term demand management remains a priority in 2015 The transition to the “new normal” requires a better allocation of credit and indigenous capacity for innovation.
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