| This week's newsletter was written by Bloomberg Senior Editor Chris Anstey. Andrew Browne is on vacation. Political slogans mean a lot more in China than they do elsewhere. For one thing, they have resonance in a country with a rich history of studying philosophical sayings. In a one-party state, they can be useful in getting everyone on the same page, becoming catch-phrases that lay out organizing principles for economic and social life. Mao Zedong unleashed the Cultural Revolution with "smash the four olds" —old ideas, customs, culture and habits. Deng Xiaoping's "let some people get rich first" was a powerful representation of the new embrace of a private-sector economy starting in the 1970s. Decades later, President Xi Jinping seemed in some ways to support Deng's approach. In 2013, the Communist Party under his leadership called for markets to play a "decisive role" in the economy. Five years on, Xi was proclaiming the "Two unwaverings"—that is, unwavering support for both private and public-sector companies. But lately, it's become increasingly clear for private companies that Beijing's support—or perhaps better put as tolerance—comes with a condition: aligning with the Communist Party's social and economic objectives. Or, as China's authorities have been putting it, following "rule of law."  President Xi Jinping as seen on screen during celebrations of the 100th anniversary of the Chinese Communist Party in Beijing on June 28. Photographer: Noel Celis/AFP What appeared to be a series of Beijing regulatory measures against individual companies or corporate sectors—fintech, online gaming, tutoring companies, ride hailing, food delivery and others—was this week folded into an overarching policy rubric. In a joint statement by the Communist Party's Central Committee and the State Council (China's rough equivalent of a cabinet), Beijing announced a five-year plan to strengthen the "rule of law," as it applies to matters ranging from big data, drugs, food and technology. "Rule of law" in a single-party state is whatever those in charge decide it is. Part of the rallying cry relates to efforts to address inequities, such as escalating housing costs (the real estate sector came under further pressure this week). Part of it is simply power: This year's moves precede the quinquennial leadership reshuffle in 2022, at which Xi is set to extend his rule indefinitely. For some overseas private equity firms and hedge funds, which might have thought they were helping to develop China's swelling middle class, this all comes as a wake-up call. Others, however, have benefited from the latest ructions. Under Xi's "rule of law," the education-technology industry was acceptable until it wasn't. Tutors have gone underground as a result. The online insurance industry is now among those under scrutiny, too. Bars and KTV (China's karaoke establishments) have also come in for criticism in the new push for "correct values." For two Canadians, the "rule of law" has had dire consequences. The fortunes of each had changed in the wake of Canada's 2018 detention of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou in connection with a U.S. extradition request. This week, Michael Spavor, an organizer of tours to North Korea, was jailed for 11 years for alleged spying. Robert Lloyd Schellenberg, whose 15-year prison term was converted into a death penalty ruling in 2019, saw his bid to challenge the new sentence denied.  Louis Huang of Vancouver Freedom and Democracy for China holds photos of Michael Spavor and Michael Kovrig outside British Columbia Supreme Court on March 6, 2019, during a hearing in the extradition proceeding of Huawei Chief Financial Officer Meng Wanzhou. Photographer: Jason Redmond/AFP Canadian Prime Minister Justin Trudeau condemned the moves as arbitrary. China's embassy in Canada responded that "there is no such thing as 'arbitrary detention' at all." The "rule of law" rallying cry will be increasingly familiar to Chinese and foreigners alike. Indeed, U.S. Treasury Secretary Janet Yellen may soon get a chance to survey the new regulatory and policy landscape on her first visit to China since taking on her current post. And further measures may be unveiled next week. An arm of China's top legislative body, the National People's Congress Standing Committee, begins a four-day meeting in Beijing starting Aug. 17.
The fourth annual Bloomberg New Economy Forum will convene the world's most influential leaders in Singapore on Nov. 16-19 to mobilize behind the effort to build a sustainable and inclusive global economy. Learn more here.
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