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News: A national conference on public security was held in Beijing on 7 and 8 May. The conference was attended by a number of senior officials including Chinese president Xi Jinping, PBSC member and Vice Premier Han Zheng, and PBSC member and Central Committee Secretariat Wang Huning. In his keynote speech, Xi stressed the importance of police loyalty and competence, and the need to reform through technology. Last but not least, Xi also pointed out the “zero-tolerance” to any violations of party discipline within the police force. Quick Take: It’s been 16 years since last such conference on public security was held, under the lead of then-president Hu jintao in 2003. The implication is two-fold—firstly, it was Xi’s first appearance at such high-profile conference centered on public security. The department has previously been relatively sidelined from core political dynamic; however, as the former Public Security Vice Minister Meng Hongwei (孟宏伟) was taken down for corruption and political wrongdoings in October 2018, it has then gained much attention and became a key target of CCDI’s antigraft investigation in 2019. There have recently been countless disruptions within the department and multiple departmental and county-level officials taken down nationwide. Secondly, loyalty to the party and to Xi personally becomes an increasingly important factor in officialdom, not just in public security but also in all government organs.

News: China’s State Council released a new regulation on government investment on 5 May. It draws out a clear-cut investment scope, and specifies that for any investment plan to get approved, it must align with national economic and social development goals. Moreover, budgetary constraints are also hardened on government investment funds, which are now prohibited from being raised through illegal borrowing. The new regulation will come into effect on 1 July 2019. Quick Take: This is yet another effort to tackle down China’s rampant borrowing and risky lending practices, as well as the country’s alarming local debt issue over the years. The enormous amount of off-balance-sheet local debt, mostly originated from local governments’ unsafe financial operations and reckless investments to hit GDP targets in previous years, has become a grave concern especially amid the economic slowdown. Struggling to maintain stability in the economy while fendig off such potential threats, the central government is now toughening up its hold in financial activities. Following the regulation, investments will now be mostly directed to public sectors including infrastructure facilities, agricultural sectors, social services, and environmental protections etc.

News: According to the latest announcement from the Ministry of Finance, local governments are asked to accelerate the process of issuing local bonds, and should “scientifically” determine the maturity structure of the bonds. The issuance of all new bonds, which are worth of CNY 3.08 trillion, is expected to complete by September 2019. Quick Take: As China seeks to bolster market growth this year amid economic downturn, great pressure has fallen onto local governments on selling more debt to aid local development, particularly on the financing for infrastructure and constructions. However, considering that many local governments has been facing huge amount of invisible debt which poses tremendous threat of default, such requirement from the central government indeed seems difficult to achieve. The biggest question remains whether the region’s fiscal revenue is able to catch up with its increasing debt; if not, the sustainability of economy would be of serious concern. Now how regional governments would maneuver to accomplish the requirements by September without curbing its balance sheet remains to be seen.

News: Former Inner Mongolia Political and Legal Affairs Commission Chairman and Secretary-General Luo Yonggang (罗永纲) was appointed Hubei CCPSC today. Quick Take: Originally from Shanxi, Luo has indeed based his entire political career in Inner Mongolia since 1986. He was appointed Inner Mongolia CCPSC and Secretary-General in 2016, and took on the post of Political and Legal Affairs Commission Chairman in October 2018. In 4 April 2019 he was replaced by Lin Shaochun (林少春), the newly appointed Inner Mongolia Vice Party Secretary in March who was then concurrently appointed head of Political and Legal Affairs Commission. Luo’s specific post in Hubei CCPSC remains to be seen, but will most likely fill up the vacancy of the province’s head of Political and Legal Affairs Commission. It was left by Wang Xiangxi (王祥喜), who departed in March to become Chairman of China Energy Investment Co., a central SOE and China’s largest power company.