India amends telecom rules, a wrap of the NPC, and reading the tea-cups in China

Welcome to today’s The India China Newsletter.

In this issue, I'm looking at:

- India amends telecom rules, with possibly significant ramifications for Huawei and other Chinese vendors

- A wrap of the National People’s Congress, which closed in Beijing today: the big decision on Hong Kong, the Five Year Plan is official, and takeaways from Li Keqiang’s press meet and comments on next week’s U.S.-China meeting in Alaska

- A look ahead to tomorrow’s Quad leaders’ meet and how it’s being seen in Beijing (vacillating from ‘attempt to contain China’s rise’ to ‘overhyped meet that’s all sound and no substance’)

The Times of India reports today on India ‘seeking to firewall telecom infrastructure from Chinese vendors’, by putting in place new rules effective June 15 that will only allow ‘trusted vendors’ and will require special clearance for those not deemed so.

This followed the news that Huawei had bagged a huge contract for Rs 300 crore from Airtel for upgrading telecom infrastructure. Huawei’s CEO in India has also given an interview to the Economic Times. Speaking before the news of the amended policy, I found it interesting he told ET that so far Huawei had not been subjected to any unfair policies in India.

The amended policy, according to the Times of India report at least, is less explicit in its reference to ‘trusted vendors’ than the amended FDI policy last year that imposed stricter regulation on ‘countries that share a border with India’. That elicited a sharp response from China. The new policy could have big implications for the 5G roll-out. The general view I’ve heard in Delhi is India is unlikely to give Chinese vendors a prominent role but may not, at least for now, explicitly make an announcement to bar them, as Australia, New Zealand and the U.S, for instance, have done.

At his 9th annual meet-the-press that’s probably likely to be his second-to-last one, Chinese Premier - and second-ranked leader - Li Keqiang held forth on the economy and focused mainly on economic targets and the domestic agenda, as he usually does.

The South China Morning Post has a useful summary of his comments on the economy front:

Chinese Premier Li Keqiang on Thursday defended the government’s decision to set a modest gross domestic product (GDP) growth target this year of “above 6 per cent”, adding it could surge beyond that level. Speaking at a press conference on the last day of the week-long “two sessions” gatherings, Li said the target was not low and the government would be happy to see more robust growth. “But we are also clearly aware of the considerable uncertainty involving the economic rebound in China, as well as global economic growth and development,” he said. “The Chinese economy has reached 100 trillion yuan (US$15.3 trillion) in value, and 6 per cent growth means generating an output of 6 trillion yuan.

“That is the same amount that would have been added by a growth rate of almost 8 per cent at the start of the 13th five-year [plan] period” in 2016, he said. Li said by setting the GDP growth target at above 6 per cent, the government had left the door open for “even faster growth”. “This target is not set in stone, it’s intended to guide expectations,” he said, adding the country still needed to consolidate the economic recovery…

He took a question from CNN on China-U.S. relations (like the Foreign Minister’s press conference I wrote about yesterday, this one too is highly scripted, probably even more so, and questions are usually arranged in advance). From the SCMP:

“We hope to see dialogue between the two countries in multiple areas and at various levels. Even if we can’t work everything out any time soon. Such an exchange of views will help boost trust and expel misgivings. It will also help us better manage and mitigate our differences,” he said.

The big decision out today was the changes to Hong Kong’s electoral system. Xinhua put out the details, here are the main points to flag:

The HKSAR shall establish an Election Committee which is broadly representative, suited to the HKSAR's realities, and representative of the overall interests of its society. The Election Committee shall be responsible for electing the Chief Executive designate and part of the members of the LegCo. The Election Committee shall also be responsible for nominating candidates for the Chief Executive and LegCo members, as well as for other matters. The Election Committee shall be composed of 1,500 members from the following five sectors: industrial, commercial and financial sectors; the professions; grassroots, labour, religious and other sectors; LegCo members and representatives of district organizations; Hong Kong deputies to the NPC, Hong Kong members of the National Committee of the Chinese People's Political Consultative Conference and representatives of Hong Kong members of related national organizations.

-- The Chief Executive shall be elected by the Election Committee and appointed by the Central People's Government. Candidates for the office of the Chief Executive shall be nominated jointly by not less than 188 members of the Election Committee, among whom the number of members of each sector should be not less than 15. The Election Committee shall elect the Chief Executive designate by secret ballot on a one-person-one-vote basis. The election of the Chief Executive designate shall require a simple majority vote of all the members of the Election Committee.

-- The LegCo of the HKSAR shall be composed of 90 members in each term. Members of the LegCo shall include members returned by the Election Committee, those returned by functional constituencies, and those by geographical constituencies through direct elections.

-- A candidate qualification review committee of the HKSAR shall be established. The committee shall be responsible for reviewing and confirming the qualifications of candidates for the Election Committee members, the Chief Executive, and the LegCo members. The HKSAR shall improve the system and mechanisms related to qualification review, to ensure that the qualifications of candidates are in conformity with the Basic Law, the Law on Safeguarding National Security in the HKSAR, the NPC Standing Committee's interpretation of Article 104 of the Basic Law, the NPC Standing Committee's decision on the qualification of HKSAR LegCo members, and provisions of relevant local laws of the HKSAR.

COMMENT: To put this all in a nutshell: Greater say for Beijing nominated politicians and the Election Committee in running Hong Kong, less share of directly elected seats in LegCo, and a diminishing role for democratically elected leaders who may now also face a veto deciding on how ‘patriotic’ they are. Hong Kong’s semi-democracy, as we know it, has been altered dramatically.

The Quad leaders’ meet tomorrow is going to look at ‘rare earths cooperation to counter China’, reports Nikkei.

Former PLA Senior Colonel Zhou Bo was interviewed today on CGTN on the Quad in the midst of its NPC coverage, and he presented a broadly representative view among many of the strategic experts in Beijing I’ve been reading (in short: too many divergent interests with respect to China among the grouping, or as he put it, ‘no country would put the interests of the other three above its interests [vis-a-vis China]’). Here’s the clip:

And finally…

Katsuji Nazakawa takes tea-leaf reading to another level in this entertaining piece in Nikkei:

In China, there is the four-character idiom, ren zou, cha liang, which means "Tea turns cold when people move away."

In the summer of 2015, the party mouthpiece People's Daily published a highly symbolic article that encouraged "ren zou, cha liang," in effect telling retired party elders to quietly step down and stay out of politics.

"Some retired officials are not willing to accept the post-retirement 'cold tea,' so they do everything possible to extend their powers and try to keep their cups of tea always hot," it noted.

But "ren zou, cha liang" is the norm, the signed article said.

What then are we to make of an unusual sight at this year's National People's Congress, China's parliament?

In front of President Xi Jinping were placed two teacups.

The six other Politburo Standing Committee members, including Premier Li Keqiang, had only one teacup in front of them.

It was as if to say, not only is Xi's tea not getting cold, approaching 10 years in office, there is another hot cup of tea waiting for him to sip.

COMMENT: I don’t necessarily endorse his method but it is revealing, at least, in how little we have to go on….

That’s it for this issue. Have a good weekend, and the newsletter will be back next week!