China Reform Monitor: No. 882

February 14:

Beginning next month, the Ministry of Commerce and the National Development and Reform Commission (NDRC), China's top economic planning body, will lead a new process to review foreign companies’ attempts to buy or merge with Chinese companies in the defense, agriculture, energy, resources, infrastructure, transportation, technology or equipment manufacturing sectors. The new panel is China’s first formal process for scrutinizing national security questions that arise from international business deals. According to a statement, foreign deals will be evaluated based on their prospective effects on China's economic stability, social order and on their ability to research and develop technology used in protecting national security. China's chief difficulty in enforcing the new rules arises from its scant experience in reviewing foreign acquisitions, said Zhang Yansheng, director, Institute for International Economics Research, under the NDRC in comments carried by India’s The Statesman. China created a law in 2008 that requires foreign firms to prove that they pose no threat to China's national security and provides protection for important Chinese industries.

China has tightened rules for hosting international conferences stipulating that all such meetings will be subject to stricter approval procedures and sterner budget constraints. “Any bid to hold international conferences must be approved by the relevant authorities and events lacking substantial content will not be permitted,” a joint notice issued by China’s Foreign and Finance Ministries read. The order was issued following criticism that many meetings wasted state funds. It said the hotel budget of the conferences should be strictly monitored and toothpaste, towels, toothbrushes, souvenirs, and gifts “should not be given,” the official China Daily reports. Foreign participants, except VIPs, will now pay their own travel and accommodation expenses, sightseeing trips are banned, and only buffets, instead of banquets, will be served, the notice said. Furthermore, “the presumption that conferences with more participants are more important is wrong and should be corrected,” the notice said, adding, “Prudence should be exercised for events with more than 100 participants, or they face possible rejection.” The notice also stipulates that local governments and departments should restrict the number of international conferences featuring top leaders. The words such as “summit” or “international seminars” should not be used without approval.

[Editor’s Note: One curious aspect of this article is its claim that “netizens had left more than 5,600 comments at sina.com, a major news portal, by 8 pm on Sunday, which almost unanimously supported the new rules.” Sina.com, another state-run news website, regularly cleanses its pages of information not favorable to Beijing. This is an example of China’s official media’s reinforcing propaganda cycle and shows the regime’s sensitivity to online netizens perceptions of their policies.]

February 16:

The People’s Liberation Army (PLA) Daily and the Korea Times report that on February 10, Somali pirates in the Gulf of Aden pursued a South Korean cargo vessel, the CS DAISY, but were thwarted by China’s nearby navy escort group. Pirates in multiple speedboats gave chase but the Korean vessel radioed to the nearby Chinese navy patrol about 40 nautical miles away for help. The naval escort group, which had just completed its own mission, dispatched a ship-born helicopter to ward off the pirates.

February 18:

To make up their budget shortfalls, China’s public hospitals have been selling unnecessary drugs, expensive treatments and tests “creating a heavy burden on patients and wasting medical resources,” the official Shanghai Daily reports. In China, like the U.S., a serious illness can wipe out a family’s life savings, but on the macro-level families setting aside sizable earnings for potential medical costs is a drag on domestic consumption. To free up these funds Beijing has committed to reforming the healthcare system, which has been under-funded for years and suffers from high cost and low quality. In 2009, China announced it would add $124 billion to reform the system with the goal of providing basic medical coverage and insurance to all Chinese by 2012. The State Council has just issued a new directive outlining healthcare targets for 2011, including plans to expand medical insurance coverage for urban workers and residents to 90 percent or 440 million people. China aims to raise inpatient medical fee reimbursement rates for urban retirees, the unemployed, and farmers to 70 percent and increase annual government subsidies for insurance premiums to 200 yuan per person.