Highlights in recent extraordinarily frequent press briefings ahead of Two Sessions

The "hard" stuff, all from Ministers, in 8 parts

This newsletter is unusually long - nearly 9,000 words. So you’re strongly advised to view it in your web browser (by clicking on the title in the body of the email).

Why is it so long?

The State Council Information Office has been extraordinarily busy these days. (Look at the picture below.) From Feb. 22 to March 2, it hosted nine press briefings, inviting ministers in charge of banking and insurance regulation, transportation, industry and information technology, science and technology, human resources and social security, commerce, civil affairs, state-owned enterprises, and agriculture and rural affairs, to meet the press.

These press briefings came shortly before the annual Two Sessions of the National People’s Congress (starting Friday) and the Chinese People's Political Consultative Conference (starting Thursday), which traditionally hosted press briefings from central government ministers.

Given that so many ministers had already briefed the press, by common sense, would they do the same again in this year’s Two Sessions within such a short period of time?

Your Pekingnologist doesn’t know the answer. But if it’s a NO, then all the press briefings in the past two weeks probably deserve the same amount of extra attention as if they had been done in the middle of the Two Sessions - which is a lot.

Hence, this newsletter highlights the parts that your Pekingnologist believes are noteworthy, from the transcripts already published by the State Council Information Office on its website, with minor observations - there will be very few analyses down there.

If you have followed China news very closely in the past two weeks, the following may just be repetitive. But if you trust this newsletter’s judgment on China news, you should also read it - it’s full of the “hard” stuff.

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Table of Contents

Part I: Banking and Insurance

Part II: Transportation

Part III: Industry and Information Technology

Part IV: Human Resources and Social Security

Part V: State-Owned Enterprises

Part VI: Commerce

Part VII: Science and Technology

Part VIII: Agriculture and Rural Affairs

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Part I On Banking and Insurance

Guo Shuqing, the head of China’s banking and financial regulator, paints a bright picture in controlling financial risks, saying 防范化解金融风险攻坚战取得决定性成就 a decisive achievement has been made in the battle to prevent and resolve financial risks

银行业保险业风险从快速发散转为逐步收敛,一批重大问题隐患“精准拆弹”,牢牢守住了不发生系统性风险的底线。一是金融杠杆率明显下降,金融资产盲目扩张得到根本扭转。2017年至2020年,银行业和保险业总资产年均增速分别为8.3%和11.4%,大体只有2009年至2016年间年均增速的一半。金融体系内部空转的同业资产占比大幅度下降。二是银行业不良资产认定和处置大步推进,2017年至2020年累计处置不良贷款8.8万亿元,超过之前12年总和。三是影子银行得到有序拆解,规模较历史峰值压降约20万亿元。四是金融违法犯罪行为受到严厉惩治,不法金融集团风险逐步化解,一大批非法集资案件得到有序处置,互联网金融风险形势根本好转。五是外部风险冲击应对及时有效,金融体系保持较强韧性。六是房地产金融化泡沫化势头得到遏制,2020年房地产贷款增速8年来首次低于各项贷款增速。七是地方政府隐性债务增量风险已基本控制,存量风险化解正有序推进。八是大中型企业债务风险平稳处置。到2020年末,全国组建债委会2万家,市场化法治化债转股落地金额1.6万亿元,500多家大中型企业实施联合授信试点。

The risks in the banking and insurance sectors have shifted from rapid dispersion to gradual reduction, and a number of major problems and hidden dangers have been "precisely dismantled." (We have) firmly guarded the baseline of having no systemic risks.

First, the leverage dropped significantly and the blind expansion of financial assets was fundamentally reversed. From 2017 to 2020, the average annual growth rate of total assets in the banking and insurance sectors are 8.3% and 11.4% respectively, roughly half of the average annual growth rate between 2009 and 2016. The share of interbank assets idly circulating within the financial system has declined significantly.

Second, the identification and disposal of non-performing assets in the banking sector took a big step forward, with cumulative disposal of RMB8.8 trillion in non-performing loans between 2017 and 2020, more than the previous 12 years combined.

Third, shadow banking has been dismantled in an orderly manner, with the scale suppressed by about RMB 20 trillion from its historical peak.

Fourth, financial crimes were severely punished, the risks of unscrupulous financial groups were gradually resolved, a large number of illegal fund-raising cases were disposed of in an orderly manner, and the risky situation of Internet finance fundamentally improved.

Fifth, external risk shocks were dealt with promptly and effectively, and the financial system remained relatively resilient.

Sixth, the momentum of the financialization and bubbling of real estate was curbed, and the growth rate of real estate loans in 2020 was lower than the growth rate of loans in overall sectors for the first time in eight years.

Seventh, the risk of the local government hidden debt’s further increase has been largely controlled, and the resolution of the risk from existing local government hidden debt is progressing in an orderly manner.

Eighth, the risk of debt of large and medium-sized enterprises has been steadily disposed of. By the end of 2020, 20,000 debt committees will have been formed nationwide, 1.6 trillion yuan of market-based rule of law debt-to-equity swaps will have materialized, and more than 500 large and medium-sized enterprises have implemented pilot joint credit facilities.

Over 100 new banks and insurance companies partially or wholly owned by foreign investors have been approved since 2018, Guo says.

On shadow banking, Guo says

过去“影子银行”规模很大,最大特征就是叫投资也好,叫理财也好,叫P2P也好,实质上还是信贷,相当于银行信贷,或者叫类信贷,就是说做银行业务又不按照银行的规则办。比如办银行有足够的资本金,这些平台没有资本约束,没有监管约束,也没有市场约束,所以问题比较严重,“影子银行”的规模压降了大约20万亿,使得金融体系比较健康、比较稳定。

In the past, the scale of "shadow banking" was very large, and the most important feature was that whether it was called investment, wealth management, or P2P, it was still essentially lending, equivalent to bank lending, or called lending-like, that is, doing banking business but not in accordance with the rules of banks. For example, banks have sufficient capital to run, but these platforms have no capital constraints, no regulatory constraints, and no market constraints, so the problem is more serious. The size of "shadow banking" has been reduced by about $20 trillion, making the financial system healthier and more stable.

Guo also says China is ‘Worried’ About Bubbles in Property, Foreign Markets, and you can refer to the Bloomberg report.

Guo vows further disposals of bad loans despite the economic difficulties after the COVID pandemic, saying

2021年将保持处置力度不减。因为我们每年的贷款都是净增长,贷款增速保持12%左右。去年情况非常特殊,增长速度非常快,量非常大。但全年没有超过13%,这是为什么没有实行过度宽松的货币政策的原因。在疫情发生以后,一些企业的生产经营活动肯定处于不正常的状态,还款就会有困难,甚至有相当一部分企业可能会面临破产重整或者破产清算的状况,更没有能力偿还贷款。所以不良贷款上升是必然趋势。事实上2020年我们已经开始加大了不良贷款处置力度,全年处置不良资产3.02万亿。现在没有一个明确指标,还在和各家银行沟通,看看他们怎么估计自己银行的状况,可能2021年需要处置的不良贷款还会增长,甚至会延续到明年,因为有的贷款期限比较长。但是,我们有信心、有能力把不良资产处置处理好。

Disposals will remain unabated in 2021. This is because we have seen net growth in lending every year, with loan growth rates remaining at around 12%. Last year was a very special case, with a very fast growth rate and a very high volume. However, it did not exceed 13% for the whole year, which is why an excessively accommodative monetary policy was not pursued.

After the epidemic, the production and operation activities of some enterprises are certainly in an abnormal state, and there will be difficulties in repaying the loans, and a considerable number of enterprises may even face bankruptcy restructuring or bankruptcy liquidation, and even less ability to repay the loans. This is why the rise in non-performing loans is an inevitable trend. In fact, in 2020 we have already started to increase our efforts to dispose of non-performing loans, with $3.02 trillion of non-performing assets disposed of for the year.

There is no clear indicator now, and we are still communicating with the banks to see how they estimate the situation of their own banks. It is possible that the non-performing loans that need to be disposed of will grow in 2021, or even continue into next year, as some of the loans have longer maturities. However, we are confident and capable of handling the disposal of non-performing assets well.

On fintech, Guo says

但与此同时,我们也要求不管任何业态的金融业务,都要按照相应的规则规范、法律法规管理,不能有特殊的例外。比如要发放贷款,最近刚公布了一个银行互联网贷款办法的通知,有一些要求,比如说联合贷款,至少互联网平台方面和其他银行开展合作在出资方面、资金方面不低于30%。另外在净资产比例中占比集中度都有要求,有关规则作了规定。另外,我们还给出了一年过渡期,逐步实现。

同时,我们也有一些互联网民营银行,像蚂蚁金服下面有网商银行,腾讯下面有微众银行,四川也有一个互联网银行,我们都是鼓励发展的,但是也必须按照金融规则实行统一监管。我们不认为有什么限制、不允许他们发展的金融业务,但是我们做任何业务比如保险、信托、租赁等金融业务,都必须按照行业相同的规则进行监管。我相信,这样的要求经过调整以后,这些机构会很好地适应,能够得到更健康的发展。

However, at the same time, we also require that no matter what type of financial business (they engage in), it must be managed in accordance with the corresponding rules and regulations, laws and regulations, and there can be no special exceptions. For example, in terms of issuing loans, a notice has just recently been published regarding banks issuing loans over the Internet with some requirements. For example, in joint loans (by Internet platforms and banks), at least the Internet platform has to contribute to no less than 30% in funds if they cooperate with banks. In addition, there are requirements in concentration and in the share of net capital, and the relevant rules provide for this. In addition, we have given a one-year transition period to achieve this gradually.

At the same time, we also have some private Internet banks, like MYbank under Ant Group, WeBank under Tencent, and Sichuan province also has a private Internet bank. We encourage all their development, but we also must implement unified supervision in accordance with financial regulations.

We do not think there are any restrictions on the financial businesses that they are not allowed to operate, but any business such as insurance, trust, leasing and other financial businesses must be regulated according to the same rules of the industry. I believe that after such a requirement is adjusted, these institutions will adapt well and be able to have a healthier development.

For background, refer to this Reuters report: China regulator finalizes guidelines on banks' internet loan businesses

Guo says China won’t enforce the laws of the United States or its sanctions

中国银保监会和整个银行业、保险业系统都不会执行美国的法律和法规,必须执行中国的法律法规。在香港的金融机构,包括中资机构、外资机构,肯定要遵守香港的法律和法规,我们不会执行美国的制裁,我们也坚决反对这种制裁,认为这种制裁是毫无约束力的。但是,我们愿意和他们合作,和美国的金融机构、和美国的企业方方面面,还有中介机构有很多合作

The China Banking and Insurance Regulatory Commission and the entire banking and insurance system will not enforce the laws and regulations of the United States and must enforce the laws and regulations of China. Financial institutions in Hong Kong, including Chinese and foreign-invested institutions, must certainly comply with Hong Kong laws and regulations. We will not enforce US sanctions, and we are firmly opposed to such sanctions, which we consider to be non-binding. However, we are willing to cooperate with them, and there is a lot of cooperation with US financial institutions, with US companies in all aspects, and with intermediaries

Guo also defends increased financial openness to domestic critics, saying further openness won’t threaten China’s security. He apparently finds it necessary and appropriate to raise this unprompted.

我这里也特别想和中方的媒体介绍一下,国内公众包括一些干部、知识分子,都很关心外资进入会不会对中国的金融市场造成很多的干扰和破坏。根据现在掌握的情况,这些外资机构在中国的经营总体上还是严格按照中国法律来办事的,在这个市场无论是总资产还是贷款,还是存款,绝对额都是上升的,占比是下降的。比如外资银行现在只有1%左右,过去有1.3%、1.4%的时候,现在占比是下降的,全部的外资银行在中国今年占比只有1%左右,对中国的竞争市场是非常有限的。保险公司要多一些,6%左右,影响也是有限的,所以我们继续鼓励外资金融机构进入中国共同发展。

In particular, I would also like to introduce to the Chinese media here that the domestic public, including some cadres/officials and intellectuals, are very concerned about whether the entry of foreign capital will cause a lot of disruption and damage to China's financial market. According to the information now available, the operation of these foreign institutions in China is generally in strict accordance with Chinese laws, and in this market both in terms of total assets and loans, as well as deposits, the absolute amount is up but the percentage is down.

For example, foreign-owned banks are now only about 1%, but they used to be 1.3% or 1.4% in the past. Their share is now down, and all foreign banks are only about 1% of the total in China this year, which is very limited. Foreign-owned insurance companies are a bit larger at around 6%, and the impact is also limited, so we continue to encourage foreign financial institutions to enter China to develop together.

However, looking at this from another angle, the incursion of foreign financial institutions into the Chinese market has indeed been extremely limited.

Zhao Huan, Chairman of the China Development Bank, said

2020年发放科技贷款1494亿,同比增长了23%,服务了集成电路、商用飞机等一系列重大科技项目……(我们)大力支持集成电路产业的投资。开行子公司已经圆满完成了集成电路国家产业基金一期投资,支持了集成电路领域里的重点企业快速发展,基金投资的财务效果也很明显。我们是按市场化运作,去年科技领域的企业估值显著上升,基金投资财务效果也非常明显,市场化运作非常成功。同时,我们也参与了国家集成电路产业投资基金二期的设立工作,募集了2000亿资金,现在已经全面进入了投资阶段。

(The CDB issued) 149.4 billion yuan in science and technology loans in 2020, an increase of 23% year-on-year, serving a series of major science and technology projects such as integrated circuits and commercial aircraft ...... (We) strongly support investment in the integrated circuit industry. One subsidiary of CDB has successfully completed the first phase of investment in the National Integrated Circuit Industry Investment Fund, supporting the rapid development of key enterprises in the field of integrated circuits, and the financial effect of the fund investment is also very obvious. We operate on a market-based basis, and the valuation of companies in the technology sector has increased significantly in the past year, and the financial results of the Fund's investment are also very obvious. We have also participated in the establishment of the second phase of the National Integrated Circuit Industry Investment Fund, which has raised 200 billion yuan and has now entered the investment stage.

On fintech complying with financial regulations, Guo said

如果金融业务是在网上开展,是互联网平台,他们办的银行也好,办的小贷公司也好,或者是消费金融公司也好,我的回答是很简单的,是的,我们要求他们必须和其他的金融机构一样,要有充足的资本……资本金的问题,我们要求互联网平台只要做同样的金融业务,就要有同样的资本充足率。但是我们考虑历史的原因,给了他们一个过渡期,有的项目是到今年年底,有的是到明年年底,甚至可以研究再长一些。因为过去一些金融机构服务小微企业的,特别是低端客户,要求比较低,提供助贷,这个时候出资2%、3%,我们不想影响这些客户,让这些客户还能继续稳步得到贷款,过渡时间可以再长一些,要看情况。但是最多两年,都回到正轨上来,所有机构都要受资本约束的要求。

If the financial business is carried out online as an Internet platform, whether they run a bank or a small loan company or a consumer finance company, my answer is very simple, yes, we require them to have adequate capital as other financial institutions ...... On capitalization, we require internet platforms to have the same capital adequacy ratio as long as they do the same financial business.

But we consider historical reasons and give them a transition period - some projects until the end of this year, some until the end of next year, or even longer can be studied.Because some financial institutions that served small and micro enterprises in the past, especially low-end customers ......

we do not want to affect these customers, so that these customers can still continue to steadily get loans, the transition time can be a little longer, depending on the situation. But at most two years, all back on track, all institutions are subject to the capital constraint requirements

On Hong Kong, Guo says

在今后的发展过程当中,香港还可以为内地企业上市融资、发债融资提供支持,无论是外债、美元债、外币债种,还是人民币、港币等各种形式,我们都支持,我们也支持银行业、保险业机构到香港去上市,支持更多的香港银行业、保险业机构到内地发展。我们希望以后能够继续保持这个态势。

最近,我们制定了大湾区发展规划,其中金融领域占了很大的比重,也会有很多的新举措。特别是在理财方面,比如“理财通”会有更多新举措,正在研究论证规划,都会逐步实施。我们认为,香港的经济增速今年一定会由负转正,一定会有一个很好的前景。

In the course of future development, Hong Kong can also provide support to mainland companies in listing, financing and debt financing, whether in the form of foreign debt, US dollar debt, foreign currency debt, or various forms of yuan and the Hong Kong dollar, we support them all. We also support banking and insurance institutions to go public in Hong Kong, and support more Hong Kong banking and insurance institutions to develop in the mainland. We hope to continue this trend in future.

Recently, we have formulated a development plan for the Guangdong-Hong Kong-Macau (Greater Bay Area), in which the financial sector takes up a large part, and there will be many new initiatives. In particular, there will be more new initiatives in financial management, such as the "Wealth Management Connect", which are being studied and planned for gradual implementation. We believe that Hong Kong's economic growth will definitely turn from negative to positive this year, and there will definitely be a very good prospect.

Here is some background on the Wealth Management Connect from Bloomberg.

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Part II: Transportation

In a March 1 press briefing hosting Li Xiaopeng, Minister of Transportation, and other officials, Nation rolls out blueprint for transport, as China Daily reports.

One official said

到2035年,铁路网总规模将达到20万公里,其中高速铁路包含部分城际铁路,将达到7万公里左右

By 2035, the total scale of the railway network will reach 200,000 km, of which high-speed railways, including some intercity railways, will reach around 70,000 km

As of the end of 2020, the scale of the railway network stands at 146,300 km high-speed railways stands at around 37,900 km, according to a readout of the work conference of China Railway on January 4. Do some simple math and you can see China’s plans for its railways in the next 15 years.

China Business Journal pointed out that while 37,900 km in high-speed railway far exceeds the 30,000 km target set in the 13th Five Year Plan (2016-2020) for the Railway sector, the 146,300 km in total railway in fact misses the target of 150,000 km.

Another official says China is not ready to allow the Boeing 737 Max back in the air, as the Associated Press reported

***

Part III: Industry and Information Technology

Xiao Yaqing, the Minister of Industry and Information Technology, and other officials were invited to a March 1 press briefing.

And this is from Tian Yulong, chief engineer and spokesperson of the ministry:

“十三五”中国集成电路产业发展总体上是非常骄人的,产业规模不断增长。据中国半导体行业测算,2020年我国集成电路销售收入达到8848亿元,平均增长率达到20%,为同期全球产业增速的3倍。技术创新上也不断取得突破,目前制造工艺、封装技术、关键设备材料都有明显大幅提升。企业实力稳定提高,在设计、制造、封测等产业链上也涌现出一批新的龙头企业。

总的来看,芯片产业、集成电路产业,中国政府高度重视,发布了促进集成电路产业和软件产业高质量发展的政策,全面优化完善高质量发展芯片和集成电路产业的有关环境政策。主要有几项措施:

一是加大企业减税力度。对于集成电路企业自获利年度开始减免企业所得税,这些政策对企业发展给予了很大的推动力。二是在基础方面进一步加强提升。芯片涉及到基础问题比较多,有材料、工艺、设备,涉及比较长的产业链。只有把基础打扎实了,芯片产业才能不断创新和发展。另外,集成电路产业本身也需要很好的生态环境,搭建平台,能够在产业链上形成互补、互相支撑的过程,所以搭建平台、优化生态是非常关键的。芯片产业发展全靠应用引导,所以在汽车、工业、医疗、教育,特别是疫情以来线上经济、数字经济的快速发展,为芯片产业发展提供了非常广阔的市场。芯片产业发展还依赖于人才,所以在人才储备、人才培养上,政府、国家采取了一系列措施。芯片产业是一个全球性产业链,要加大合作。

总体来看,芯片产业发展面临机遇,也面临挑战,需要在全球范围内加强合作,共同打造芯片产业链,使它更加健康可持续发展,不仅为中国的信息化社会发展提供支撑,也为全球信息化发展提供有力支持。中国政府在国家层面上将给予大力扶持,共同营造一个市场化、法治化和国际化的营商环境和产业发展的生态环境。

The development of China's integrated circuit (IC) industry in the 13th Five-Year Period (2016-2020) is generally very impressive, and the scale of the industry continues to grow. According to China's semiconductor industry estimates, China's IC sales revenue will reach 884.8 billion yuan in 2020, with an average growth rate of 20%, which is three times the growth rate of the global industry during the same period. Technological innovation has also continued to make breakthroughs, and the current manufacturing process, packaging technology, and key equipment and materials have been significantly and substantially improved. The strength of enterprises has steadily improved, and a number of new leading enterprises have emerged in the design, manufacturing, packaging and testing along the industry chain.

In general, on the chip industry - the integrated circuit industry - the Chinese government attaches great importance to the release of policies to promote the high-quality development of integrated circuit industry and software industry, comprehensive optimization and improvement of high-quality development of the chip and integrated circuit industry related to environmental policies. There are several main measures.

First, increase the tax reduction for enterprises. For integrated circuit enterprises since the year of profit, there is the reduction of corporate income tax. These policies have given a great impetus to the development of enterprises. Second, improve the basics. Chip involves more basic science issues - there are materials, processes, equipment, involving a relatively long industrial chain. Only when the foundation is solid, the chip industry can continue to innovate and develop. In addition, the integrated circuit industry itself also needs a good ecological environment, build a platform to be able to form a complementary, mutually supportive process in the industry chain, so building a platform and optimize the ecology is very critical. Chip industry development has all been guided by applications, so the automotive, industrial, medical, education sectors provide a very broad market, especially since the rapid development of the online economy and the digital economy since the COVID pandemic. Chip industry development also depends on talent, so on the talent pool and talent training, the government, the state has taken a series of measures. The chip industry is a global industry chain, and it is necessary to increase cooperation.

Overall, the development of the chip industry faces opportunities and challenges, and it needs to strengthen cooperation on a global scale to jointly build a chip industry chain so that it can develop more healthily and sustainably and provide support not only for the development of China's informatization society, but also for the development of global informatization. The Chinese government will give strong support at the national level and work together to create a market-oriented, rule of law and internationalized business environment and ecological environment for industrial development.

In the U.S., Biden has ordered a sweeping review of U.S. supply chain weak spots. Xiao, the Chinese Minister, said China had done the same:

我们已经开始对41个大类的工业和下面的细类进行认真的全面的梳理和分析,绘制重点产业链的图谱,找出我们的空白点,也找出我们的弱项短板。

We have started a serious and comprehensive sorting and analysis of the 41 major categories of industry and the sub-categories below the major categories, mapping key industrial chains to identify our gaps and also our weaknesses and shortcomings.

Xiao also touched on rare earths, and here is the report from Reuters .

自立自强, which your Pekingnologist translates as self-reliance and self-improvement, has been one of the buzzwords on Chinese technology for some time. What does it mean? Xiao says:

自立自强就是说,很多东西自己也要生产,自己要掌握这个技术,要有这个能力……

我们是一个14亿人口的大国,这么大的一个国家,人民群众对美好生活未来的向往靠买是买不来的,没人能供给得了我们,群众的需要很多要自己生产。这个自立自强的过程是满足自己的过程,我个人体会,实际也是对世界作出的贡献。如果我们都买世界上的某一种产品,我相信谁也供应不起,所以我们自立自强的本身就是对世界的贡献。

科技技术是没有边界的,是全球的、是人类的共同智慧,所以中国的自立自强,一定会对世界工业和信息化的发展作出贡献……所以自立自强的目的不是为我们自己,而是人类命运共同体的一种努力和实践,自立自强的过程是一个为全球提供知识和正能量的过程,自立自强的结果一定是服务于全人类的。

Self-reliance and self-improvement means that many things have to be produced by ourselves, and we have to master this technology and have this ability ourselves ......

We are a large country with a population of 1.4 billion, and the people's aspirations for a better life cannot be bought (from the outside). This process of self-reliance and self-improvement is a process of satisfying ourselves and, as I personally know, is actually a contribution to the world. If we/China bought all (of its needs in) a certain product from the world, I believe that no one could be able to supply it, so our self-reliance is in itself a contribution to the world.

Technology has no boundaries, it is global and the common wisdom of mankind, so China's self-reliance and self-improvement will definitely contribute to the development of industry and information technology in the world…the purpose of self-reliance and self-improvement is not for ourselves, but an effort and practice for the community of human destiny. The process of self-reliance and self-improvement is a process of providing knowledge and positive energy to the world, and the result of self-reliance and self-improvement must be to serve all mankind.

Xiao also says China’s 钢铁行业应该是在这个行业里要率先努力 steel mills will have to lead in fulfilling China’s climate goals

钢铁产量主要从节能减排方面看,冶炼能力要大幅压缩,当然压缩多少、量多少,工业和信息化部也正在配合国家有关部门在制定规划。

Steel production capacity, mainly from the energy-saving and emission reduction aspects, will be significantly reduced. On how much reduction, the Ministry of Industry and Information Technology is working with the relevant departments in the development of planning.

我们一定要把节能减排作为钢铁行业一个重要目标任务,进一步做实做好。

We must take energy saving and emission reduction as an important target and task in the steel industry, and do a solid, good job.

***

Part IV Human Resources and Social Security

Minister Zhang Ji’nan says in 2020

看(城镇)调查失业率。去年2月份达到了6.2%(是历史最高值),以后逐步回落。去年年底是5.2%,与上年同期持平。全年平均是5.6%,低于6%的控制目标。

Look at the (urban) surveyed unemployment rate. It reached 6.2% (a historic high) in February last year and has gradually fallen since then. It was 5.2% at the end of last year, the same as a year earlier. The average for the year was 5.6%, below the control target of 6%.

on college graduates

去年高校毕业生的规模是874万,可以说是一个新高,加上去年受疫情的影响,高校毕业生就业面临需求下滑、招聘延后、求职受限等一系列困难,中国政府对此高度重视,作出了一系列的部署安排……公共部门在去年提供了大约300万个岗位……经过各方努力,实现了高校毕业生就业局势的总体平稳,好于预期,高校毕业生总体就业率达到了90%以上。

The number of college graduates last year was 8.74 million, which can be said as a new high. Coupled with the impact of the COVID pandemic last year, the employment of college graduates faced a series of difficulties such as declining demand, delayed recruitment and restricted job hunting, etc. The Chinese government attached great importance to this and made a series of deployment arrangements ...... The public sector provided about 3 million jobs last year ...... Through the efforts of all parties, the employment situation of college graduates was generally stable and better than expected, and the overall employment rate of college graduates reached over 90%. 

in 2021

就业总量压力不减。今年需要安排就业的城镇新成长劳动力仍然在1500万人左右,今年的高校毕业生909万人,达到新高。

The pressure on total employment is unabated. The new grown-up urban labour force requiring employment remains at around 15 million this year, with 9.09 million college graduates this year, reaching a new high.

On the corporate burden of social security payments

去年是个特殊时期,采取了特殊政策,为了减轻企业负担,我们以空前的力度减免了企业社保费。全年减免社保费1.54万亿元,这里面大头是养老保险,占到1.33万亿元,这为缓解企业经营压力、稳就业起到了重要作用,

Last year was a special time and a special policy was adopted. In order to reduce the burden on enterprises, we reduced and waived corporate social insurance premiums with unprecedented intensity. The annual reduction of social insurance premiums amounted to RMB 1.54 trillion, the bulk of which was for pension insurance, accounting for RMB 1.33 trillion, which played an important role in easing the pressure on enterprises' operations and stabilising employment.

There have long been worries if China’s government-run pension funds would be sustainable, and Minister Zhang said:

对于今后养老金能否按时足额发放,大家也比较关心,我说五个方面情况,供大家比较研判。第一,当期能平衡。也就是养老保险基金当期的收支相抵以后,还略有结余。2019年当期的结余是3400多亿元,去年情况特殊,今年恢复养老保险的正常征收以后,我们预判收支相抵以后也还会略有结余。第二,历史有积累。积累用了一部分以后,我们现在还有累计结余4.7万亿元。第三,财政有补助。中央财政对养老保险基金的补助力度持续加大,去年达到了5800多亿元,并重点向西部地区和老工业基地倾斜。第四,增值有渠道。就是结存的养老保险基金投资运营的规模在不断扩大,目前委托资金已经达到了1.2万亿元。在保证基金安全的前提下,实现了保值增值。第五,长远有储备。全国社会保障战略储备基金权益已经达到了2.4万亿元,2000年建立的时候是200亿元,通过划拨部分国有资产,这个基金还在不断充实和扩大。

For whether the pension can be paid in full and on time in the future, there are also concerns. I will say five aspects of the situation.

First, it can be balanced in the current period. The current balance for 2019 is more than 340 billion yuan, and the situation last year was exceptional, after the normal collection of pension payments (from companies and their employees) resumes this year, we expect that there will still be a small surplus after income and expenditure have been offset.

Secondly, there is an accumulation from history. After the accumulation has been partially used, we still have a cumulative balance of 4.7 trillion yuan.

Thirdly, there are financial subsidies (from the government). The central government has continued to increase its subsidies to the pension fund, which reached more than 580 billion yuan last year, with a focus on the western regions and old industrial bases.

Fourthly, there are channels to increase the value of the fund. The scale of investment and operation of the balance of the pension fund has been expanding, and the entrusted funds have now reached 1.2 trillion yuan. On the premise of ensuring the safety of the fund, it has achieved value preservation and appreciation.

Fifth, there are reserves for the long term. The equity of the national social security strategic reserve fund has reached RMB 2.4 trillion, compared to RMB 20 billion when it was established in 2000, and this fund is still being enriched and expanded through the allocation of some state-owned assets (into it).

And on one of the hottest topics in the Chinese society: the delay of mandatory retirement age, vice-minister You Jun says:

大家知道,我们国家现行法定退休年龄规定男职工60周岁,女干部55周岁,女工人50周岁,这个规定是在建国初期根据当时的人均预期寿命、劳动条件、用工方式等诸多因素确定的,应该说符合当时的情况。改革开放以后,我国的经济社会发生了巨大变化,退休年龄总体偏低的问题就显得十分突出了……

从国际上来看,延迟退休年龄是世界各国应对人口老龄化的普遍做法。近几十年来,多数国家都不同程度地提高了退休年龄,目前世界主要经济体的退休年龄普遍都在65岁以上。目前,我部正会同相关部门在研究具体的改革方案,方案既要借鉴国际上通行的做法和经验,更要充分考虑我国的现实国情、文化传统以及历史沿革这些情况,因为只有立足国情的方案,才会是最佳的方案。由于延迟退休年龄涉及到广大职工的切身利益,我们在方案的研究制定过程中,将会广泛听取各方面的意见,充分吸收社会各界的意见建议,凝聚社会共识,要取得最大公约数,确保方案科学可行、平稳实施。

As we all know, the current statutory retirement age in our country is 60 for male workers, 55 for female cadres and 50 for female workers, which was set at the beginning of the founding of the PRC based on many factors such as average life expectancy, labour conditions and employment practices at that time, and should be said to be in line with the situation at that time. After the reform and opening up, China's economy and society have undergone tremendous changes, and the problem of the overall low retirement age has become very prominent……

From an international perspective, delaying the retirement age is a common practice in countries around the world to cope with the ageing of the population. In recent decades, most countries have raised the retirement age to varying degrees, and the retirement age in the world's major economies is now generally above 65.

At present, the Ministry, together with relevant departments, is studying specific reform proposals, which should not only draw on internationally accepted practices and experiences, but also take full account of China's realistic national conditions, cultural traditions and historical past, as only a proposal based on national conditions will be the best one.

As the delayed retirement age involves the immediate interests of the majority of workers, we will listen extensively to the views of all parties in the process of formulating the proposal, fully incorporate the views and suggestions of all sectors of society, and forge a consensus in society, so as to achieve the greatest possible consensus and ensure that the proposal is scientifically feasible and smoothly implemented.

***

Part V State-Owned Enterprises

Hao Peng, director of the State-owned Assets Supervision and Administration Commission, says:

2020年,中央企业实现净利润1.4万亿元,同比增长2.1%。这个增速并不算高,但是来之不易。

In 2020, central enterprises achieved a net profit of RMB 1.4 trillion, an increase of 2.1% year-on-year. This growth rate is not high, but it is not easy to come by.

去年底中央企业的资产负债率降到64.5%,圆满完成了国务院确定的“三年降两个百分点”目标任务。从2017年以来,中央企业没有发生一起债券违约事件,守住了不发生重大风险的底线。

At the end of last year, the asset-liability ratio of central enterprises fell to 64.5%, successfully completing the target of "reducing two percentage points in three years" set by the State Council. Since 2017, there has not been a single bond default by central enterprises and the baseline of no major risks occuring has been safeguarded.

NOTES from your Pekingnologist on the differences between different SOEs.

First of all, the State-owned Assets Supervision and Administration Commission (SASAC) does not directly supervise local (provincial and lower-level) SOEs, which are not central SOEs.

Secondly, some SOEs, even if they are affiliated with the central government - for example, China’s central-level state-owned financial institutions - are not supervised by the SASAC. They could be under, say, the Ministry of Finance.

Thirdly, there is also the category of SOEs under the supervision of the entire state-owned capital system, which includes the SOEs under the supervision of the SASAC and lower-level SASACs.

Hao gave some further breakdowns:

据统计,全国国资系统监管企业去年底资产总额达到218.3万亿元,2020年的营业收入59.5万亿元、利润总额达到了3.5万亿元,“十三五”期间年均增速分别是12.7%、7.4%、10.7%

规模体量上,“十三五”期间,中央企业资产总额连续突破50万亿、60万亿关口,去年底是69.1万亿,年均增速达到了7.7%。

According to statistics, the total assets of enterprises under the supervision of the entire state-owned capital system reached RMB 218.3 trillion at the end of last year, with operating revenues of RMB 59.5 trillion and total profits of RMB 3.5 trillion in 2020, with average annual growth rates of 12.7%, 7.4% and 10.7% respectively during the "13th Five-Year Plan" (2016-2020) period.

In terms of scale and volume, during the 13th Five-Year Plan period, the total assets of central enterprises exceeded the 50 trillion and 60 trillion mark consecutively, and stood at 69.1 trillion at the end of last year, with an average annual growth rate of 7.7%.

On bond defaults at some local SOEs, Peng Huagang, secretary general of the State-owned Assets Supervision and Administration Commission, says:

个别地方国企发生债务违约,既有疫情冲击、市场波动的外部原因,也有企业自身盲目做大、管理不善等内部因素,是多重因素叠加的结果。

对这个问题,我们持几个观点:第一,通过风险出清实现优胜劣汰是资本市场的正常运行机制,有利于促进金融市场的长期健康发展。第二,虽然近期国企债券违约比例有所上升,但仍低于市场平均水平,违约风险总体可控。第三,任何欺诈发行、虚假披露、恶意逃废债等违法违规行为都应该受到严厉打击,投资者合法权益必须得到保护。第四,政府落实好监管责任,发债企业履行好主体责任,投资机构切实提高风险资产的定价能力,才能够共同维护好金融生态和信用环境。近期,在国务院金融委的领导下和相关部门指导下,地方党委政府切实采取有力措施化解债务风险,已经取得积极成效。

Debt defaults by individual local SOEs are the result of a combination of external factors such as epidemic shocks and market fluctuations, as well as internal factors such as the enterprises' own blind expansion and mismanagement.

We hold several views on this issue: Firstly, it is a normal operating mechanism of the capital market and is conducive to promoting the long-term healthy development of the financial market.

Second, although the proportion of (local) SOE bond defaults has increased recently, it is still lower than the market average and the risk of default is generally manageable.

Third, any fraudulent issuance, false disclosure, malicious debt evasion, and other illegal and unlawful acts should be severely cracked down on, and the legitimate rights and interests of investors must be protected.

Fourth, the government should implement its regulatory responsibilities, debt-issuing enterprises should fulfill their main responsibilities, and investment institutions should effectively improve their pricing capabilities of risky assets in order to jointly maintain a good financial ecology and credit environment.

Recently, under the leadership of the Financial Stability and Development Committee of the State Council and the guidance of relevant departments, local party committees, and local governments have effectively taken strong measures to resolve debt risks, and positive results have been achieved.

Hao Peng, the Director of SASAC, added:

一是国务院国资委对地方国企债券违约问题高度重视,我们落实国务院金融委的要求,前期专门约谈了部分省级国资委,对稳妥化解地方国企债券违约问题提出了明确要求。我们近期还将联合人民银行、证监会专门召开防范地方国企债券违约风险专题会议进行工作部署。

同时我想强调,市场经济是信用经济、法治经济,发债企业及其股东、金融机构、中介机构等各类市场主体都必须严守法律法规和市场规则。企业要加强风险防范,提高经营水平。投资者也要提高风险意识,深入了解发债人的实际经营情况,理性作出决策,这样才能整体上有效防范债务风险发生。

First, the SASAC attaches great importance to the issue of local SOEs' bond defaults, and we have implemented the requirements of the Financial Stability and Development Committee of the State Council by specifically interviewing some of the provincial SASACs in the early stage and putting forward clear requirements for the steady resolution of the issue of local SOE bond defaults. We will also join the People's Bank of China and the securities regulator in the near future to hold a special conference on preventing the risk of default on local SOEs' bonds.

At the same time, I would like to emphasize that the market economy is an economy based on credit, and based on the rule of law. Bond-issuing enterprises, their shareholders, financial institutions, intermediaries and other types of market players must strictly abide by laws, regulations and market rules. Enterprises should strengthen risk prevention and improve their operation. Investors should also raise their risk awareness, gain an in-depth understanding of the actual business situation of debt issuers and make rational decisions, so that they can effectively prevent debt risks from occurring on the whole.

On the merging of central SOEs, Peng, the secretary general of SASAC, says:

“十三五”时期,我们加快推进国有资本布局优化和结构调整,先后完成了12组24家中央企业的重组,新组建和接收了5家企业,中央企业的数量和“十二五”末比,从“十二五”末的106家调整到目前的97家。

下一步,国务院国资委将聚焦战略安全、产业引领、国计民生、公共服务等功能,支持中央企业按照市场化原则,采取重组整合等多种途径,加快国有资本的布局优化和结构调整。

主要有几个方面的考虑:一是推动国有资本向关系国家安全和国民经济命脉的重要行业领域集中,加大对国防军工、能源资源粮食供应、骨干网络、新型基础设施等领域的投入。二是补齐产业链供应链短板,提升供应链保障能力和产业体系抗冲击能力。三是推动创新资源的整合协同,加快突破一批行业共性技术和关键核心技术。四是切实解决部分央企之间的产品相似、资源分散、重复建设等问题,形成资源合力。

During the 13th Five-Year Plan period (2016-2020), we have accelerated the optimization of the layout and restructuring of state-owned capital, and have completed the restructuring of 24 central enterprises in 12 groups, and have formed and taken over 5 new enterprises, with the number of central enterprises being adjusted from 106 at the end of the 12th Five-Year Plan to 97 at present.

In the next step, the SASAC will focus on the functions of strategic security, industrial leadership, national livelihood and public services, and support central enterprises to adopt various ways such as restructuring and integration in accordance with market-oriented principles to speed up the layout optimization and restructuring of state-owned capital.

There are several main considerations: Firstly, we will promote the concentration of state-owned capital in important industry sectors that are related to national security and the lifeline of the national economy, and increase investment in areas such as defence and military industry, energy resources and food supply, backbone/major networks and new infrastructure.

Secondly, we will make up for the shortcomings of the supply chain of the industrial chain and enhance the supply chain's ability to guarantee and the industrial system's ability to resist shocks.

Third, promote the integration and synergy of innovation resources, and accelerate the breakthrough of a number of technologies that are commonly needed across one industry, as well as key core technologies.

Fourth, to effectively solve the problems of similar products, scattered resources and duplicated construction among some central enterprises.

On the overseas assets of central SOEs, Hao says:

首先我向大家报告一组数据,目前中央企业在海外的资产有大约8万亿元人民币,在全球180多个国家和地区拥有的机构和项目超过8000个,海外员工达到125万。“十三五”期间,中央企业实现的海外营业收入超过24万亿元,利润总额接近6000亿元,对外投资收益率达到6.7%。

……

我们海外企业有125万中外员工,其中中方员工将近30万。

First of all, I would like to report a set of figures to you. At present, central enterprises have about RMB 8 trillion in overseas assets, with more than 8,000 institutions and projects in more than 180 countries and regions around the world, and 1.25 million overseas employees. During the 13th Five-Year Plan period (2016-2020), central enterprises have achieved overseas business revenues of over RMB 24 trillion, total profits of nearly RMB 600 billion, and a return rate of 6.7% on foreign investment.

……

Our overseas companies have 1.25 million Chinese and foreign employees, of whom nearly 300,000 are Chinese.

***

The original Chinese texts are provided above because the translations are done by your Pekingnologist himself (with the help of DeepL), so that you can do cross-checks. They are not provided below, because the English translations are from The State Council Information Office website itself.

***

Part VI Commerce, held on Feb. 26

Wang Wentao, the Minister of Commerce, looks forward to working with his counterparts in the United States:

In his call with President Biden, President Xi stressed that China and the U.S. should re-establish the various dialogue mechanisms, read each other's policy intentions accurately, and avoid misunderstanding and miscalculation. China is willing to deepen bilateral exchanges in economic and trade, and cooperate on the basis of mutual respect, equality and mutual benefit. This serves the interests of the people in both countries and benefits the whole world. In the next stage, I look forward to joint efforts with our colleagues in the United States. By following the spirit of the phone call between the presidents of the two countries, we would like to step up communication, enhance understanding, focus on cooperation and manage differences in order to take bilateral economic and trade relations back on the track of cooperation.

Wang Shouwen, vice-minister of commerce and deputy China international trade representative, on CPTPP:

On Nov. 20 of 2020 at the APEC Economic Leaders' Meeting, President Xi said that China would favorably consider joining the CPTPP. In December last year, the Central Economic Work Conference proposed again that China would actively consider CPTPP membership. As you know, the CPTPP covers a wide range of content, and we are doing our work in two aspects. The first is that we are conducting assessments, research and deep analyses of all CPTPP clauses including those you mentioned. Second, we have made informal contacts with some of the 11 members of the CPTPP. We also plan to engage with the rest of the members as well to talk at the technical level on issues involved, so we can have a more accurate understanding regarding the content of relevant agreements.

Wang Shouwen on WTO:

Our trade policies have been reviewed by the WTO seven times and we are going to undergo the eighth. We have specially established a China Program, helping the Least Developed Countries (LDCs) integrate into the WTO mechanisms along with the efforts of the WTO Secretariat. 

After the paralysis of the Appellate Body of the WTO dispute settlement mechanism, China, together with other members such as the E.U., worked to establish the Multiparty Interim Appeal-Arbitration Arrangement. In this way, China as a member of WTO has made its own contribution to strengthening the authority and effectiveness of the WTO. As you have just mentioned, the WTO has encountered some difficulties, such as the challenges posed by unilateralism and trade protectionism, the paralysis of the Appellate Body and tough WTO negotiations. It needs to change in such a situation and China supports necessary reforms. In this regard, Dr. Ngozi Okonjo-Iweala, was officially appointed as the new director-general of the global trade body on Feb. 15. China will actively support Okonjo-Iweala, and hopes the WTO, under her leadership, will resume its normal functions as soon as possible. For example, we hope the 12th WTO Ministerial Conference could be successfully held this year and an agreement on fisheries subsidies could be reached. 

With regard to WTO reform, China has released its position paper and submitted a proposal to the WTO Secretariat. In our view, the first thing on the agenda is to restore the normal operation of the Appellate Body. If it is functioning normally, we can effectively fight against unilateralism and trade protectionism. In addition, we believe the WTO needs to properly reform some excessive agricultural subsidies, especially in regard to some developed countries, where subsidies in agriculture can be huge. The issue of public food security and reserves is also an issue about which the developing countries are concerned, which we believe should be a priority for WTO reform. 

We also hope that the WTO can keep pace with the times and consensus can be reached on domestic regulation in trade in services, investment facilitation and e-commerce.

We will further open up to the outside world and are also willing to work with other WTO members to continue to support the strengthening of the WTO's authority and effectiveness, while at the same time, as the world's largest developing country, we are also willing to make more contributions and fulfil our obligations commensurate with our capabilities, based on the principle of balancing rights and duties.

Wang Wentao on FDI:

China's actually utilized non-financial foreign investment increased by 4.5%, becoming the world's top destination for FDI. This January, the growth is also impressive. But we believe ensuring stable foreign investment this year remains complicated and severe because of ongoing uncertainties. As you mentioned, these uncertainties are arising from the epidemic and economic recovery. On the other hand, competition for investment across the world is increasing. However, we also see some opportunities. For example, the United Nations Conference on Trade and Development (UNCTAD) has projected that we'll see a further 5-10% decrease in FDI in 2021 based on a global decrease of 42% last year. The situation is severe but also provides opportunities.

First, we will continue to open up, which is fundamental…As for the MOFCOM, we will continue to lower the entry threshold for FDI as well as implement the 2020 national negative list for foreign investment and the negative lists for foreign investment in pilot free trade zones and ports. We will also employ the new version of the Catalogue of Encouraged Foreign Investment Industries to create more opportunities for investment. The new version has 127 more items.

Second, we will make the best use of platforms for opening up. The MOFCOM will step up efforts to build pilot free trade zones and ports and national economic development zones. These are the major platforms and means for attracting foreign investment. We will build high-quality pilot free trade zones and ports and improve the planning of free trade zones, implement the overall plan for building the Hainan Free Trade Port, and carry out policies that support the liberalization and facilitation of trade and investment. China now has 217 national economic development zones. We need to further expand opening-up, push forward the transformation and upgrading of economic development zones, and build new highlands for reform and opening up in a bid to better serve the new paradigm of development. We will also launch further comprehensive trials for opening up the service sector to guide these pilot areas to take bold steps in exploring new ground and methods that are best suited to local conditions.

Third, we will create a better business environment…We will well implement the rules on handling complaints from foreign-invested enterprises, intensify the protection of legitimate rights and interests of foreign businessmen, and continuously promote the marketization, legalization and internationalization of business environment.

Wang Wentao on China-EU CAI:

At present, we are carrying out relevant work including text reviewing and translating, and striving to sign it as soon as possible based on established procedures.

Wang Shouwen on trade with Australia:

…while Australia's global trade declined, its trade with China increased. Australia's global export dropped as much as 8% but its export to China was down by less than 3%. You can see that the China-Australia bilateral economic and trade relationship has brought benefits to Australia, and of course, it also brought benefits to China. We believe that this is a mutually beneficial and win-win relationship. This economic and trade relationship is worth attention and care from both sides.

However, it is very regrettable that some individuals in Australia have stigmatized bilateral economic and trade relations, investment projects, and some normal economic and trade cooperation, adopting some restrictive and even discriminatory measures which have damaged bilateral economic and trade cooperation. We always believe that a healthy and stable China-Australia relationship is very beneficial to economic and trade cooperation, and is of common interest for both sides. We hope that Australia can take more actions that are conducive to increasing trust and cooperation and that are more in line with the spirit of the comprehensive strategic partnership between the two countries. This in turn will promote the healthy and stable development of bilateral economic and trade relations. 

Wang Wentao sums up numbers in Hainan:

The building of the Hainan free trade port has acted as a model and a flagship of China's reform and opening-up efforts. It also represents a significant and novel approach in this field. Since the release of the master plan for the Hainan free trade port last year, we have seen some promising results.

According to statistics from Hainan province, its regional GDP in 2020 grew by 3.5% and the import and export of goods increased by 3%, both higher than the national average.

Policies also started to pay off since the master plan (for Hainan free trade port) was released. A total of 310,000 new market entities were established in 2020, up 30.9%. Meanwhile, 1,005 new foreign companies opened businesses in Hainan, up 197.3% year-on-year. The province attracted some 122,000 talents overall, up 177% year-on-year. Since implementing the offshore duty-free policy, the average daily sales of offshore duty-free shops in Hainan exceeded 120 million yuan by the end of 2020, up more than 200% year-on-year.

The future of the Hainan free trade port is very promising.

***

Part VII Science and Technology, held on Feb. 26

Wang Zhigang, minister of science and technology, says decisive achievements have been made:

Our scientific and technological strength and innovation abilities have been greatly improved since the 13th Five-Year Plan period (2016-2020), achieving historic, systematic, and structural changes. The total R&D investment increased from 1.42 trillion yuan in 2015 to an estimated 2.4 trillion yuan in 2020. Last year, China's spending on R&D was estimated to be 2.4% of its GDP.

Specifically, spending on basic research was estimated to exceed 150 billion yuan in 2020, almost double that of 2015. As estimated, the contribution of scientific and technological advances to economic growth would exceed 60% in 2020, meeting the expected target. Citizens with scientific qualities accounted for 10% of our population.

According to the "global innovation index" released by the World Intellectual Property Organization, China rose from 29th place in 2015 to 14th in 2020. On the whole, we have made decisive achievements in building China into a country of innovators.

Some concrete goals:

step up breakthroughs in key technologies, intensify the arrangement of frontier technologies, and establish a batch of key technological projects in the areas of artificial intelligence, quantum information, and bio-breeding…

enhance R&D and application in the prevention and treatment of major diseases, as well as innovative medicines and medical equipment.

to realize our goals in cutting carbon dioxide emissions and achieving carbon neutrality, we will advance technological breakthroughs and promote their application in pollution prevention and control, efficient utilization of energy and resources, and combating climate change…

On basic research funding:

China’s basic research funding practically doubled during the 13th Five-Year Plan period, reaching 133.6 billion yuan in 2019, surpassing 6% of the total R&D expenditure for the first time. It is expected to exceed 150 billion yuan in 2020. The overall growth rate reached into double digits at 16.9% during the 13th Five-Year Plan period.

We will take further measures to increase investment in basic research during the 14th Five-Year Plan period. First, the central government will continue to increase investment. Second, we will guide companies and society to invest more in it. In this regard, we will formulate some motivating policies.

揭榜挂帅, or “selecting the best candidates to lead key research projects," has become a popular phrase in China’s state discourse:

In terms of specific reform measures, the first is regarding what you said just now about "selecting the best candidates to lead key research projects," which is a top priority in the 14th Five-Year Plan's goal to reform the science and technology program. In fact, during the vaccine research and development project last year, we already implemented such a model.

The "best candidates" are actually the clinical task approval documents. When an approval document is obtained, we will provide support in stages and mobilize the research and development forces of all aspects of society.

As a matter of fact, the core reform is to design our R&D tasks based on the urgent needs of the high-quality development of our economy and society. In the process of implementation, responsibilities are consolidated through reforms and via something akin to 军令状 "(guarantees so serious and must be completed as if they are) military orders" Eventually, users will be required to evaluate our results so that our science and technology plans are able to focus more on national needs and strengthen our ability to tackle tough problems.

***

Part VIII Agriculture and Rural Affairs, held on Feb. 22

Tang Renjian, Minister of Agriculture and Rural Affairs, vows China's food security is completely guaranteed

China has seen bumper harvests for several years in a row. Last year it reached 669.5 billion kilos, a record high, and an increase of more than 5 billion kilos compared to the previous year. The country's grain inventory is currently very abundant, so whether it is regarding production, sales, or inventory, I can report that China's food security is completely guaranteed and we can secure our rice bowls. In response to the COVID-19 epidemic last year, grain and all-important subsidiary agricultural products were well-produced, supplied, and sold. We withstood the big test. 

However, on the other hand, we must also realize that the situation of food supply and demand in China has always been tightly balanced. In the future 14th Five-Year Plan period, or a longer period of time, as the population continues to grow, especially with the upgrade of consumption, the demand for food will increase steadily. At the same time, external uncertainties and instabilities will also increase significantly. So on the issue of food security, we must not take it lightly and we must also make our outlook as secure as possible, produce as much grain as possible, and store more food. We also need to counter external uncertainties by stabilizing domestic production and supply, so that when we truly have food in our hands, we feel safe in our hearts. 

We will take hard measures to implement the most stringent farmland protection system, resolutely curb the "non-agriculturalization" of cultivated land and prevent the "non-grainization" of cultivated land, and firmly maintain the red line of 1.8 billion mu of arable land, and at the same time ensure that 1.55 billion mu of permanent basic farmland is planted with annual crops such as grains, melons, and vegetables.

At the same time, we must also establish a mechanism guarantee of "two supplements," which is supplement by benefits and supplement by obligations. "Supplement by benefits" refers to allowing farmers to make additional profits from growing grain and to adhere to and improve agricultural prices and subsidy policies in terms of policy measures. "Supplement by obligations" is to consolidate the obligations and responsibilities of local Party committees and governments on food security.

Zhang Taolin, vice-minister of Agriculture and Rural Affairs, elaborates on seeds:

Generally speaking, we can guarantee the security of agricultural use of seeds and control its risks. Especially since the 18th CPC National Congress, the science and technology and industrial development of the seed industry has achieved significant results. Currently, China is self-sufficient in agricultural products seeds, especially grain seeds. The planting area of agricultural grain varieties independently selected by China accounts for more than 95% of the total planted area, mainly meeting the goal of "Chinese grain depends on Chinese seeds."

The provenances of some characteristics of aquatic products, poultry, and livestock such as pigs, cattle, and sheep, are guaranteed to be based in China. At present, the self-sufficiency rate of core provenances of livestock and poultry, as well as aquatic products have reached 75% and 85%, respectively. All of these have provided essential guarantees and support for stable production and assured the supply of grain and important agricultural and sideline products.

Shortcomings on seeds, from Zhang:

First, there is a distinct gap in agricultural breeds. We all know that the per unit area yield of Chinese soybeans and corn is still not high; less than 60% of that of the US. The planting area of foreign vegetable varieties accounts for 13% of the total area. Of course, different varieties achieve different proportions. Among them, the import ratio of a few special varieties such as storable tomatoes and sweet peppers is relatively high, exceeding 50%.

The efficiency of pig reproduction, feed conversion rate, and cows' annual milk yields are only about 80% of the advanced international level, especially of the white-feathered broiler, whose breeding hens are mostly imported. The development level of these breeds is directly related to the quality, speed, and benefit of the development of China's agriculture-related industries.

Second, the problem also exists within the seed industry itself. This issue mainly manifests in the insufficient protection and utilization of agricultural germplasm resources. Some local or rare germplasm varieties are at risk of extinction. Our independent innovation capacity is not strong, especially regarding theory and key and core breeding technologies. There remains a relatively large gap in advanced levels. The innovative competitiveness of seed companies is still weak. Some of them are overlapping projects, or projects of sub-scale, fragmented, with low yields.

Third, we need to take action to keep abreast of the times. The requirements to ensure domestic food and seed security of important agricultural products have become urgent. The diversified demands of agricultural products grow continuously when people pursue a better life. We lack high-quality species and products with special functions and we must cultivate more high-yield, high-quality, water-saving, feed-saving, and machine-friendly (suitable for mechanization), professional, and fine varieties.

At present, the world's seed industry is embracing a scientific and technological revolution in modern biological breeding marked by technology integration development such as gene editing, synthetic biology, and artificial intelligence. Facing this situation, we should grasp the opportunity, accelerate innovation, and "fight a turnaround," to achieve leapfrog development in the seed industry.

China suffered heavily from African Swine Fever. Here is Minister Tang predicting hog production returning to normal in the second half of 2021:

Since last year, we have been taking various measures to support the restoration of hog production capacity, and stabilize the production and market supply of hogs. According to the original plan, by the end of last year, the hog inventory was to be returned to that of normal years, in other words, 80% of the level in 2017.

By the end of last year, the inventory had returned to more than 92%, which was 12 percentage points higher than expected. Therefore, recently, and especially before and after the "two festivals" (New Year's Day and Chinese New Year), there has not been such a substantial increase as in the previous period. At present, the overall momentum of market supply and demand remains good.

Going forward, as the newly increased hog production capacity gradually turns into pork production, the tensest period of pork market supply has now passed, and the relationship between supply and demand will become more and more relaxed. It is estimated that in the first quarter of this year, around March, the pig population will be around 40% higher than it was during the same period last year.

By the second quarter, or around June, the hog inventory will have returned to the normal level of 2017. In the second half of the year, market pigs slaughtered and pork supply will gradually return to the normal annual level.

China has been walking a tight trope in rural land reform. See experiments with 宅基地 rural residential land below

Last year, the Office of the Central Leading Group for Rural Affairs and Ministry of Agriculture and Rural Affairs, in collaboration with relevant departments, launched a new round of trial reforms on the system of rural residential land in 104 counties and three prefectural-level cities across China.

The core of the pilot scheme is to explore forms of separation of ownership, eligibility and use rights on rural residential land. The trial reform prioritizes protecting the land rights and interests of farmers who have registered as urban residents. We are exploring mechanisms to safeguard farmers' eligibility, and at the same time, increase the property income of farmers via transfer, mortgaging, voluntary paid withdrawal and paid-use of their land usage rights. 

The reform of rural residential land is in the vital interest of all farmers, and is a sensitive and complex issue. We must act on the requirements of the central government and be patient in dealing with the issue. We should strictly keep the three bottom lines: never change public ownership of land, ensure that China's arable land remains at or above the red line, and fully protect farmers' interests.

At the same time, we should make it clear that it's forbidden for urban residents to build villas and private clubs on rural residential land. It's also forbidden to force famers to give up their homesteads and move into apartment blocks. We should always make sure that reform is moving forward in the right direction. 

Vice Minister Zhang Taolin said the following on agricultural genetically modified organisms (GMOs), which is too diplomatic for your Pekingnologist, who is unapologetically pro-GMOs. A ray of hope though:

My colleagues have answered questions on GMOs many times. China's attitude toward GMOs is consistent and clear. That is, insisting on independent innovation in research, ensuring safety in promotion and application, and implementing strict supervision in management. Publishing the notice is one of our daily jobs, which demonstrates our work requirements to promote innovation on the one hand and strengthen management on the other hand.

You may have noticed that the Central Economic Work Conference and the "No. 1 Central Document" all made it clear that we should respect science, tighten supervision, and push forward with the industrialization of bio-breeding in an orderly manner. Agricultural GMOs are a major part of modern bio-breeding technology, which is also the fastest-growing and most widely used modern biological technology. According to statistics, since GMOs were approved for commercial use in 1996, genetically modified crops have taken up over 40 billion mu of land across the world, spanning 29 countries. That means 29 countries have planted genetically modified crops. There are also more than 40 countries and regions that import genetically modified agricultural products.

For the industrialization of agricultural GMOs, we will continue to push forward in line with the principles of respecting science, strict management, abiding by laws and regulations,, and ensuring safety, so that GMOs and other modern agricultural biological breeding technologies can better benefit our people.