China policy round-up: trade negotiations back on the table, Hong Kong withdraws extradition bill, state council sends easing signals
In this round-up, the US and China agree to meet in October in Washington, Hong Kong's chief executive formally withdraws the extradition bill and the Chinese state council is set to release local government bond quotas for 2020 early.
On Thursday, China and the US agreed to hold a face-to-face meeting in Washington DC in early October. The agreement was reached after a phone call between Chinese vice premier Liu He, US trade representative Robert Lighthizer and US secretary of treasury Steven Mnuchin, according to an official statement by the Ministry of Commerce.
Both sides will start communicating in mid-September to create good conditions for the October meeting.
That was not before China lodged a case against the US with the World Trade Organization (WTO) on Monday.
“The latest tariffs violated the consensus reached by leaders of China and the US in the Osaka meeting,” according to a statement by the Chinese Ministry of Commerce. “China is unsatisfied and firmly objects to the escalation of tariffs. China will firmly defend its legal rights in accordance with the WTO rules.”
Despite the scheduled October talks, the WTO case against the US will not be withdrawn, Gao Feng, spokesperson at the Ministry of Commerce, said in a Thursday press conference.
China softened its tone towards Hong Kong protesters in a Tuesday press conference. For the first time, officials made a clear distinction between violent protesters and those marching peacefully through the city, condemning only the rioters.
“A few rioters have done things that are far more than normal gatherings,” according to a spokesperson. “What they have done will be classified as violent crimes in any country, any region, under any laws.”
On Wednesday evening, Carrie Lam, Hong Kong’s chief executive, announced that the government will withdraw the extradition bill that sparked the unrest in the first place.
However, withdrawing the bill is only one of the five demands of the protesters. The other four demands are launching an independent probe into the police behaviour, retracting the characterisation of the violent clashes as riots, freeing all those arrested and implementing universal suffrage.
China's central government will announce next year’s local government bond issuance quotas ahead of schedule, premier Li Keqiang announced during the Wednesday state council meeting.
This will be the second time the state council has taken this step. The National People’s Congress (NPC) announced the initial annual bond quotas for 2019 last December instead of the usual time in March. Local governments have already been asked to submit calculations for how much funding they will need for 2020.
The meeting also mentioned that both broad-based and targeted reserve requirement ratio (RRR) cuts may be implemented.
“While it is not clear if this is more the result of considerations about perception, as the RRR is often seen as a blunt loosening tool or about financial stability, there appears to have been some reluctance to use broad-based RRR cuts after the first cut in January,” Yu Song, the chief China economist at Beijing Gao Hua Securities, wrote in a Thursday note.
The state council appointed Ho Iat Seng as the new chief executive of Macau on Wednesday. Ho will take over from Fernando Chui, the chief executive since 2009, on December 20. Ho was “elected” – he was the only candidate – by a 400-member committee on August 25.
On top of Ho’s agenda is the development of the Greater Bay Area initiative to integrate Hong Kong, Macau and Guangdong. Ho has been a member of the NPC Standing Committee since 2011.