China Reform Monitor: No. 1128

September 30:

The Party Literature Research Office of the Communist Party of China (CPC) has published a collection of speeches and articles by General Secretary Xi Jinping. The official People’s Daily emphasized several quotes in its summary. Xi said the “lack of conscience” exhibited by many police officers is “a main cause of injustice.” He called for efforts to promote official frugality because “it’s heart wrenching to see food being wasted while some people still struggle with poverty,” and condemned “nepotism” and those “party members that rely on nothing but their personal relationships in daily work.” Xi said party organs do not “belong to an individual” and warned cadres to be “loyal to the party, not a person. Factions are absolutely banned.” Surprisingly, Xi acknowledged that for corrupt officials “underlying rules are rampant [and] can be seen in every corner of their lives.”

[Editor’s Note: The term “underlying rules,” in Chinese “qian guize,” perhaps better translated as “hidden rules,” dominate principle-agent interactions within the CPC. The term, created by journalist Wu Si in 1999, refers to “illegal or immoral” social codes that “conflict with the official rules,” but cadre “abide by in order to safeguard their interests,” the official Global Times reported in 2009. “Those who ignored the qian guize were usually punished or disfavored.” Well-known examples of qian guize include giving gifts to superiors and “sex for roles” in China’s media and entertainment industry.]

October 10:

Chinese and Russian nuclear scientists will work together to develop fast neutron reactors, RIA Novosti reports. Russia is among the few countries with fast reactor technology and is the world leader in the field. The construction of fast neutron reactors is a top priority in China’s national nuclear energy development program. Russia’s Beloyarsk nuclear power station will soon launch a new power unit with a BN-800 sodium-cooled fast breeder reactor. In 2008, Russia and China began cooperation on the Sanming nuclear power station in Fujian. The project includes the construction of two BN-800 reactor power units with 800 MW each. Fast neutron reactors use a closed nuclear fuel cycle that expands the nuclear energy fuel base and minimizes nuclear waste.

Beijing and Moscow have inked an agreement to deliver gas via the 1860-mile Power of Siberia pipeline. The new pipeline, which was launched in Yakutia on September 1, will begin deliveries in 2018, RIA Novosti reports. In May, Russia’s Gazprom signed a 30-year $400 billion contract with China National Petroleum Corporation to export 38 billion cubic meters per year of Russian gas to China.

October 13:

The official People’s Daily has published a scathing full-page article and a signed commentary accusing multinational corporations of tax evasion and “funneling away profits.” The commentary said: “Why do the multinational companies get all the profits while we let the tax revenues run away? Taxation is at the core of national sovereignty. We have to take effective measures to stop tax revenue losses to protect the national economic interests.” Last September, G20 nations including China endorsed an international plan to combat the global practice of shifting funds to low-tax jurisdictions to avoid taxes. More than 400,000 foreign companies are now operating in China, including 490 out of world’s top 500 businesses.

October 16:

“The corruption crackdown is having unintended consequences across many industries,” the official China Daily reports, and the gourmet crab industry is the latest victim along with high-end spirits and luxury cars. “Government officials’ crab consumption has dropped to almost zero. It is important for major crab sellers to adjust their prices to fit general consumers, otherwise they will suffer a great collapse just like the spirit maker Moutai,” said Yang Weilong of China Fisheries Association. Hairy crab retail prices have fallen as much as 40 percent. In August, Kweichow Moutai Co, which dominates the nation’s top-end liquor market, said: “Supply exceeds demand in the spirit sector. The whole industry continues to undergo a deep adjustment in a complex environment.