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China Changes to Two-Child Policy

On December 30, Xinhua released the full text of a directive issued by the China Communist Party Central Committee and State Council on changing the one-child policy to a two-child policy. 

According to the directive, if a spouse is the only child, the spouse may have two children.  This change to the two-child policy will, among other things: 
(1) “Help to sustain healthy economic development. At present, China’s low birth rate has declined steadily; the total working-age population for 15 to 59 year old has been decreasing; the average age of the labor force continues to increase. The aging of China’s population has been accelerating and the aging trend is obvious.” 
(2) “Help to bring family happiness and social harmony. In recent years, with structural diversification, the family size has been shrinking; one-child families and elderly people living alone are on the rise; births, support to the elderly, and other basic functions of the family have been weakened.” 
(3) “Help to promote the balanced long-term development of the population. In the early 1990s, China became one of the low birth rate countries. With economic and social development, improvement in the level of urbanization, and a change in the public attitude toward childbearing, women now have fewer total births.” 
Source: Xinhua, December 30, 2014 
http://news.xinhuanet.com/politics/2013-12/30/c_118770640.htm
Briefings | | |   Government/Politics

Communist Party Issued Five Year Anti-Corruption Work Plan

According to Xinhua, on December 26, 2013, the Central Committee of the Chinese Communist Party issued a “2013 to 2017 Work Plan to Establish a Sound System for Punishing and Preventing Corruption.” 

The Party’s notice announcing the Work Plan stated, “Moving forward with the establishment of a system to punish and prevent corruption is an important implementation of the Party’s 18th Congress and its 3rd Plenary Session. It is a major political task of the Party and the common responsibility of the whole society. … The Work Plan is an important basis that will guide the clean government and anti-corruption campaigns for the next five years.” 
The Work Plan states, “[We must] uphold that there should be no exception before the law of the country and the discipline of the Party, no matter who it is and no matter how high his rank. As long as the law of the country or the discipline of the Party is violated, [we] must conduct a thorough investigation to track it down all the way and will absolutely not tolerate it.” 
The work plan also stated that if the problems of corruption are not handled properly, “they will critically harm the Party, and even lead the Party or nation to perish." 
Source: Xinhua reprinted by People’s Daily, December 26, 2013 
http://politics.people.com.cn/n/2013/1226/c1001-23947118.html
Briefings | | |   Government/Politics

Three Gorges Dam May Cause Earthquakes

Shen Guofang, head of an assessment group for the Three Gorges Dam, acknowledged that the dam can definitely induce earthquakes. 

"It is certain that irrigation dams will induce earthquakes, but the magnitude is generally small. They are primarily microseismic or very microseismic. That is because the deep penetration of the reservoir water along the fault would reduce their resistance to shear. Also enormous pressure from the dam itself and from the water will lead to the formation of certain changes in the geological structure.” 
Sheng dismissed suggestions that the Three Gorges Dam may have caused the Wenchuan earthquake in May 2008 (8.3M) and the Lushan earthquake in April 2013 (7.0M). 
Source: Xinhua, December 18, 2013 
http://news.xinhuanet.com/local/2013-12/18/c_125875613.htm
Briefings | | |   Economy/Resources

Control of Local Government Debts to Be a Top Priority in 2014

According to the China Central Economic Work Conference, China’s highest-level economic conference, held from Dec 10 to 13, one of the top six priorities for next year will be the control of local government debts. 

The third item of the six reads, “Third, focus on prevention and control of debt risk. As an important task of economic work, take control and resolve local government debt risk. Combine short-term response and long-term institution building and defuse local government debt risk. Strengthen the standardization of the source of risk, categorize local government debts, put them under budget management, and tighten up government borrowing programs. Assign responsibilities and hold officials accountable. Governments at provincial, district and city levels should be responsible for their respective local debts, for strengthening education, and for tests, so as, ideologically, to rectify incorrect performance-driven behavior.” 
Source: People’s Daily, December 13, 2013 
http://politics.people.com.cn/n/2013/1214/c1001-23839592.html
Briefings | | |   Economy/Resources

Xinhua: One H10N8 Fatality Confirmed

The Department of Health in Jiangxi Province confirmed that a 73 year old woman died of H10N8 avian flu on December 6, 2013.

The Department of Health in Jiangxi Province issued an emergency notice on the case. “According to the notice, Nanchang City detected the influenza type A virus in the samples taken for this case. The China Disease Prevention and Control Center further tested and identified the virus as the H10N8 avian influenza virus.” 
“The patient was a 73 year old woman who was diagnosed as having severe pneumonia, hypertension, heart disease, and a condition of muscular weakness, with a low level of immunity. She was admitted to a hospital in Nanchang City for treatment on November 30, and died due to respiratory failure on December 6. The patient had a history of contact with live poultry markets.” 
"According to expert analysis, initial assessments consider that the death is an individual case and that the risk of human infection and spreading is low." 
 Source: Xinhua, December 18, 2013 
http://news.xinhuanet.com/2013-12/18/c_118604007.htm
Briefings | | |   Social Stability

Scholar: Six Misconceptions That Hinder Reforms

Zhang Weiying, a professor at the Guanghua School of Management at Beijing University wrote that there are six misconceptions that hinder further reforms in China. 

1. “The ‘China Model theory’ is a very wrong idea. … We are actually a parasitic economy – others built the road and we now walk on it. It is natural that we walk faster. That does not prove that we are greater than others. Nor does it prove that our system is superior.” 
2. For the relationship between political system reform and economic system reform, Zhang expressed the belief that the era when an economic system could adopt the market mechanism without political system reform has long passed. “Without political system reform, there is little room for economic system reform.” 
3. Zhang noted that the current system does not necessarily benefit vested interest groups. “[They must] understand that human rights are better than special privileges. … Without human rights, one lives without security. Those who live in anxiety cannot be happy people regardless of how much wealth and privilege they have.”
4. As for the statement that State-owned enterprises are the foundation for Communist rule in China, Zhang said, “I think this notion is totally wrong. There was Communist rule first, then the State-owned enterprises, not vice versa.” 
5. “The statement that power comes from the gun is also wrong. The true foundation of political power is whether people consider it legitimate. When people have the idea that the legitimacy of political power has been lost, the military forces cannot maintain political power because the military follows that idea.” 
6. “The fallacy ‘the more the power, the stronger the government’ confuses power and authority. History and reality show that the stronger government is the one that restrains its power, not the one with unlimited power. The reason is that, in fact … a government that people do not trust cannot be a strong government.” 
Source: Financial Times (Chinese Edition), December 10, 2013 
http://www.ftchinese.com/story/001053841/?print=y
Briefings | | |   Government/Politics

PLA Daily: Military Forces in Urgent Need of Standardization

The People’s Liberation Army Daily published a report that highlighted the urgent need for standardization in the armed forces. The report stated that standardization would multiply the troops’ combat capabilities. Otherwise, the lack of coordinated standardization among the army, navy, and air forces could become the "Achilles heel" of the military forces. 

The report cited an example where, during a military exercise, sailors on the four ships were able to hear one another. However, they could not transmit combat data because their information system was not compatible with that of the recipients. In another instance, a brigade in the Second Artillery responded to an emergency with more than 300 vehicles and equipment, but there were as many as 90 different brands and models. The communications battalion alone had 12 different models of generators. The brigade commander complained that if there were a war, they would need to have several truckloads of spare parts. 
 Source: Ministry of National Defense of China, December 10, 2013 
http://news.mod.gov.cn/headlines/2013-12/10/content_4478350.htm
Briefings | | |   Defense/Military

Non-Performing Loans Continue to Grow

According to the China Banking Regulatory Commission, the total value of non-performing loans has increased for seven consecutive quarters. 

As of the end of the third quarter of this year, commercial banks saw their non-performing loans reach 565.6 billion yuan (US$92.85 billion), an increase of 70.7 billion yuan (US$11.61 billion) since the beginning of the year. This accounts for 0.97 percent of total loans, an increase of 0.01 percentage point compared to the end of the second quarter; the figures show that there has been an upward trend for seven consecutive quarters. 
The total of non-performing loans for 16 banks that are listed on stock exchanges amounted to 460 billion yuan (US$75.52 billion) in the third quarter, an increase of 18 billion (US$2.96 billion) from the second quarter. Of these 16 banks, 14 have seen both their non-performing loan ratio and the value of the loans increase. Meanwhile, the profit growth of the 16 banks has dropped from 17 percent for the same period last year to 13 percent. 
Source: Huanqiu, December 3, 2013 
http://finance.huanqiu.com/data/2013-12/4623461.html
Briefings | | |   Economy/Resources