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Lunar New Year week roundup; Trade talks; Huawei; CGTN America; Xi and a riot shield

Happy Year of the Pig!

This issue is a roundup of some of the big stories in foreign media over the last week. China is effectively shut down until Monday, so starting then the newsletter will be back to normal.

Here are some of those stories:

  • The campaign to destroy Huawei's 5G ambitions in the US and its allied countries is intensifying, and looks to be succeeding;

  • President Trump announced that he will not meet Xi Jinping before the end of February. That however is not evidence there will not be some kind of a deal, or at least an extension by March 1. USTR head Lighthizer is leading a delegation to Beijing this coming week to continue the talks;

  • President Trump also announced that he will hold a second summit with Kim Jong-un in Hanoi, Vietnam from February 27-28. China's annual "two meetings" begin March 3 so scheduling a Trump-Xi meeting before the middle of March could be challenging, especially if Xi convenes the Fourth Plenum between the end of February Politburo meeting and the start of the "two meetings";

  • This is speculation on my part but I am working on a pet hypothesis about the 4th plenum. Last year’s 3rd was about term limits but even more so about bureaucratic restructuring to have the Party eat the State system. What if Xi has decided it makes sense to redo the plenum calendar on an ongoing basis, to have the annual plenum meet right before the 2 meetings in March, as a way to end the several month gap between the usual fall Party plenum and the spring State NPC meeting? It makes a lot of sense from a governance and bureaucratic perspective;

  • Xi is expected to visit North Korea this year so the announcement of the second summit raises the question of whether Xi will travel to North Korea before February 27;

  • CGTN America filed with the US government as a foreign agent but declared it has editorial independence.

Xi Jinping made an inspection tour in Beijing ahead of the New Year, including to the Beijing Garrison. This scene from the CCTV report on Xi's garrison visit showing him testing out a riot shield may sum up well 2019 in Xi's PRC:

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The Essential Eight

1. Huawei's bad start to the Year of the Pig

Trump likely to sign executive order banning Chinese telecom equipment next week - POLITICO:

President Donald Trump is expected to sign an executive order, banning Chinese telecom equipment from U.S. wireless networks before a major industry conference at the end of February, three sources told POLITICO.

The administration plans to release the directive, part of its broader effort to protect the U.S. from cyber threats, before MWC Barcelona, formerly known as Mobile World Congress, which takes place Feb. 25 to Feb. 28.

Mobile network operator's body GSMA considers crisis meeting over Huawei | Reuters:

Mobile communications industry body GSMA has proposed its members discuss the possibility that Chinese network vendor Huawei [HWT.UL] is excluded from key markets, amid concerns such a development could set operators back by years...

GSMA Director General Mats Granryd has written to members proposing to put the debate around Huawei onto the agenda of its next board meeting, a spokesman for the federation told Reuters on Saturday.

The meeting will be held in late February on the sidelines of the Mobile World Congress, the industry’s biggest annual gathering, in Barcelona.

Trump envoy urges Europe to ‘link arms’ against China – POLITICO:

Describing China’s influence as “malign,” Gordon Sondland, the U.S. ambassador to the European Union, told POLITICO that his country and the EU should overcome their current trade tensions and join forces against the Chinese.

“We should … combine our mutual energies — we have a $40 trillion combined GDP, there is nothing on the planet that is more powerful than that — to meet China and check China in multiple respects: economically, from an intelligence standpoint, militarily,” he said in an interview.

“That’s where the EU and U.S. really should be linking arms,” Sondland continued, advocating for “a quick resolution that would move our trade relationship in the right direction so that we can both turn toward China, which is really the future problem in multiple respects.”

Huawei Deals for Tech Will Have Consequences, U.S. Warns EU - Bloomberg:

“There are no compelling reasons that I can see to do business with the Chinese, so long as they have the structure in place to reach in and manipulate or spy on their customers,” Ambassador Gordon Sondland, Trump’s envoy in Brussels, said Thursday in an interview. “Those who are charging ahead blindly and embracing the Chinese technology without regard to these concerns may find themselves in a disadvantage in dealing with us.”

Huawei representative rebukes US ambassador's accusation, defends integrity and safety - China Daily:

"Recently, Huawei has been under constant attack by some countries and politicians. We are shocked, or sometimes feel amused, by those ungrounded and senseless allegations," said Abraham Liu, Huawei's vice-president for the European region and chief representative to the EU institutions.

"For example, yesterday, the US ambassador to the European Union, Mr (Gordon) Sondland, said (that) someone in Beijing (could) remotely run a certain car off the road on 5G network and kill the person that's in it. This is an insult to people's intelligence, let alone the technological experts across the world," Liu said.

Chinese firm Huawei blocked from ‘sensitive state projects’ and 5G amid security concerns-The Sun:

New laws on foreign investment in the UK will block Chinese firm Huawei from sensitive state projects, The Sun can reveal...

senior Cabinet ministers and Britain’s most senior civil servant Mark Sedwill fear Huawei’s involvement in such critical infrastructure could jeopardise national security.

They are planning reforms to allow the Government to ban Chinese firms like Huawei from future involvement in “strategically significant” UK tech projects.

Huawei Says U.K. Software Issues Will Take Years to Fix - WSJ $$:

The telecom giant also said in a letter to the U.K. Parliament that its board of directors has signed off on a companywide overhaul of its software engineering, budgeting $2 billion over five years for the effort..

German ministers meeting to discuss how to deal with Huawei in 5G auction: source | Reuters:

Chancellor Angela Merkel said on Tuesday that Germany needed guarantees that Huawei would not hand over data to the Chinese state before the telecoms equipment supplier can participate in building its 5G network.

German newspaper Handelsblatt said Wednesday's meeting would focus on whether a security catalog, prepared by the Federal Network Agency and the cyber defense agency (BSI), along with certification rules and a no-spy agreement with China, would be enough to ensure future 5G mobile networks are safe.

Norway’s PST warns against Huawei -

Justice Minister Tor Mikkel Wara of the Progress Party, who joined Bjørnland at Monday’s PST briefing, later announced that measures would be introduced to reduce the vulnerability of the Norwegian network. The goal is to hinder Norway’s large mobile operators Telenor, Telia and Ice from choosing equipment suppliers that could threaten the nation’s and their users’ security. Huawei is the prime target.

China hacked Norway's Visma to steal client secrets: investigators | Reuters:

Hackers working on behalf of Chinese intelligence breached the network of Norwegian software firm Visma to steal secrets from its clients, cyber security researchers said, in what a company executive described as a potentially catastrophic attack.

The attack was part of what Western countries said in December is a global hacking campaign by China's Ministry of State Security to steal intellectual property and corporate secrets, according to investigators at cyber security firm Recorded Future.

China says it is not a threat to Norway, denies cyber espionage | Reuters:

“China poses no threat to Norway’s security. It’s very ridiculous for the intelligence service of a country to make security assessment and attack China with pure hypothetical language,” the Chinese Embassy in Oslo said in a statement on its website.

Huawei Threatens Lawsuit Against Czech Republic After Security Warning - The New York Times:

The warning, which carries the force of law, requires all companies in the Czech Republic that are deemed critical to the nation’s health to perform a risk analysis that takes security concerns into account.

China denies ‘ridiculous’ spying allegations by Lithuania | AFP:

Earlier in the week, two Lithuanian intelligence agencies condemned China for an “increasingly aggressive” spy campaign, which they said included “attempts to recruit Lithuanian citizens”.

Darius Jauniskis, head of Lithuania’s State Security Department, said his agency was analysing the potential “threat” posed by Huawei, whose technology is being used to build the EU and Nato state’s new 5G telecommunications infrastructure.

Huawei offers to build cyber security center in Poland | Reuters:

Italy denies it will ban Huawei, ZTE from its 5G plans | Reuters:

Thailand launches Huawei 5G test bed, even as U.S. urges allies to bar Chinese gear | Reuters:

University of California Berkeley bans new research projects with Huawei after US indicts Chinese telecoms giant | South China Morning Post

Stanford halts research ties with Huawei amid surveillance controversy – The Stanford Daily

Vermont phone carriers in dispute over concerns about Chinese firm Huawei - VTDigger

2. FBI raids Huawei's San Diego offices

This is a damning story. One argument some defenders of Huawei have used is that the firm's culture has changed since inception and while it committed an "original sin" of IP theft in its early years now that it is a global tech firm its behavior has changed. This story destroys that argument.

Huawei Sting Offers Rare Glimpse of U.S. Targeting Chinese Giant - Bloomberg:

Diamond glass could make your phone’s screen nearly unbreakable—and its inventor says the FBI enlisted him after Huawei tried to steal his secrets...

The first sign of trouble came two months later, in May, when Huawei missed the deadline to return the sample. Shurboff says his emails to Han requesting its immediate return were ignored. The following month, Han wrote that Huawei had been performing “standard” tests on the sample and included a photo showing a big scratch on its surface. Finally, a package from Huawei showed up at Gurnee on Aug. 2. ..

Shurboff says he knew there was no way the sample could have been damaged in shipping—all the pieces would still be there in the case. Instead, he believed that Huawei had tried to cut through the sample to gauge the thickness of its diamond film and to figure out how Akhan had engineered it. “My heart sank,” he says. “I thought, ‘Great, this multibillion-dollar company is coming after our technology. What are we going to do now?’”..

The FBI raided Huawei’s San Diego facility on the morning of Jan. 28. That evening, the two special agents and Assistant U.S. Attorney Kessler briefed Khan and Shurboff by phone. The agents described the scope of the search warrant in vague terms and instructed Khan and Shurboff to have no further contact with Huawei.

3. US-China

Statement from the Press Secretary | The White House:

United States Trade Representative Robert Lighthizer and Secretary of the Treasury Steven Mnuchin travel to Beijing for principal-level meetings that will take place from February 14 through February 15, 2019. These meetings will be preceded by deputy-level negotiations that will begin on February 11, 2019, led by Deputy United States Trade Representative Jeffrey Gerrish.

Trump Sees No Xi Summit by Tariff Date, Stoking Trade Worry - Bloomberg:

President Donald Trump said he won’t meet Chinese President Xi Jinping before a March 1 deadline to avert higher U.S. tariffs on Chinese goods, intensifying fears the two won’t strike a deal before the end of a 90-day truce.

Trump responded “No” and shook his head Thursday when reporters at the White House asked him if he would meet with Xi this month. Then he added, “Unlikely.” But the U.S. president said the two would “maybe” meet later.

Trump told reporters last month that he planned to meet Xi in late February, adding there was a “good chance” of striking a deal

Trade Hawks Quietly Bristle as Trump Guns for Deal With China - Bloomberg - Feb 4:

With less than a month before a March 1 deadline for either a deal or an increase in U.S. tariffs, hardliners inside and outside the administration fret Trump is being outplayed by Chinese President Xi Jinping and seduced by what they see as empty promises.

After Trump hosted Chinese Vice Premier Liu He at the White House last week, one administration official privately likened the direction of negotiations to the president’s caving to Democrats in the shutdown battle over funding for a border wall. Another person close to the talks said Trump appeared determined to turn a pile of crumbs offered by China into what at best might turn out to be a slice of bread.

Pressure Grows on U.S., China to Forge Trade Deal - WSJ $$

Among those pushing for a deal is Blackstone Group Chief Executive Stephen Schwarzman, who has been phoning Mr. Trump and his senior advisers to warn that the failure to strike a deal will undermine the economy and roil markets, which are anticipating an end to U.S.-China economic hostilities. 

Uncertainty about China is weighing on business investment and consumer confidence, Mr. Schwarzman and others are arguing, people familiar with the conversations say. 

At the same time, Mr. Schwarzman and other business leaders, including former Treasury Secretary Hank Paulson, are urging senior Chinese officials to make enough concessions to U.S. negotiators to allow Mr. Trump to claim a victory. That includes agreeing to a way the U.S. can enforce the deal should China fall short of its commitments.

US trade agency: WTO rule change efforts to rein in China will fail - Reuters:

Negotiating new World Trade Organization rules to try to rein in China’s “mercantilist” trade practices would be largely a futile exercise, the Trump administration’s trade office said on Monday, vowing to pursue its unilateral approach to protect U.S. workers, farmers and businesses.

In an annual report to Congress on China’s WTO compliance, the U.S. Trade Representative’s office said it would be “unrealistic to expect success in any negotiation of new WTO rules that would restrict China’s current approach to the economy and trade in a meaningful way.”

The USTR report in PDF 

Four mentions of China in Trump's speech - Remarks by President Trump in State of the Union Address | The White House:

We are now making it clear to China that, after years of targeting our industries and stealing our intellectual property, the theft of American jobs and wealth has come to an end. (Applause.) Therefore, we recently imposed tariffs on $250 billion of Chinese goods, and now our Treasury is receiving billions and billions of dollars.

But I don’t blame China for taking advantage of us; I blame our leaders and representatives for allowing this travesty to happen. I have great respect for President Xi, and we are now working on a new trade deal with China. But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs. (Applause.) Thank you...

While we followed the agreement and the rules to the letter, Russia repeatedly violated its terms. It’s been going on for many years. That is why I announced that the United States is officially withdrawing from the Intermediate-Range Nuclear Forces Treaty, or INF Treaty.

Perhaps — (applause) — we really have no choice. Perhaps we can negotiate a different agreement, adding China and others, or perhaps we can’t — in which case, we will outspend and out-innovate all others by far.

4. Australia blocks PRC billionaire from re-entering the country

How Huang Xiangmo lost his citizenship bid for Australia - Sydney Morning Herald:

The activities of Huang Xiangmo, and how Australia’s attitude to him has flipped, give rare insight into how our relationship with China under Xi Jinping is changing before our eyes.

Huang’s gradual fall from grace has been the product of an awakening in Australia, stoked by a few China experts in government, a small group of journalists and an increasing number of politicians. It involves a realisation that the Communist Party’s influence activities are not as benign, and far more entrenched in Australia, as many in government had once believed...

Huang’s philanthropy blitz spanned medical research and universities, including $1.8 million to help found the Australia China Relations Institute at the University of Technology Sydney. Huang later boasted about hand-picking its director, former foreign minister and NSW premier Bob Carr...

ACRI and Carr would become the main public foil to academics, politicians and security agencies warning that the Communist Party was using proxies in Australia to influence political debate and limit dissent among Australia’s local Chinese population.

Chinese billionaire Huang Xiangmo slams ‘lies’ and ‘prejudice’ behind stripping of his Australian residency over political links | South China Morning Post:

In his first statement since his residency was revoked, Huang proposed that Australian politicians return his donations to instead be given to charity, and argued the organisations he headed were in line with Canberra’s political stances on China.

“It is profoundly disappointing to be treated in such a grotesquely unfair manner,” he said, calling the accusations against him “baseless allegations and sheer lies”.

“The decision of visa cancellation was made based on unfounded speculations that are prejudiced and groundless. This is not the Australia that I believe in – the Australia of freedom, democracy, rule of law and fairness – but I keep my faith in law and justice.”

5. Xinjiang getting worse

The future of Uyghur cultural — and halal — life in the Year of the Pig - Darren Byler:

The Chinese version of the lunar new year came early for Uyghurs in 2019. In mid-January, Uyghurs were asked to begin to write couplets describing their hopes and dreams for the year of the pig. They began practicing their lion and dragon dances. A Uyghur government official made a public display of dividing up pork and distributing it among villagers near the Muslim-majority town of Ghulja in celebration of the coming year. Many Uyghurs in the diaspora who I spoke with fear that the “pig” in the year of the pig will be all too literal: that this will be the year when Uyghurs in their homeland will be forced to eat pork as yet another way to perform Han-ness, along with being forced to shave off their mustaches...

This fear is fed by the way Uyghurs are being forced to celebrate the arrival of the new year. Up until 2018, celebrating the lunar new year was a conspicuous absence in Uyghur society. Now, for the first time in Uyghur history, it has become the largest cultural event of the year, replacing the monumental sacred holidays of Uyghur traditional life, Eid al-Adha and Eid al-Fitr, and the traditional Uyghur spring festival Nawruz, which are all now forbidden as signs of “religious extremism.”

Chinese Officials Force Muslims to Drink, Eat Pork At Festival - RFA:

Residents of the Ili Kazakh Autonomous Prefecture in the Xinjiang Uyghur Autonomous Region (XUAR) told RFA that officials had invited them to celebratory dinners marking the Lunar New Year at which pork was served, then threatening to send them to a "re-education" camp if they refused to take part.

Photos sent to RFA also showed an official from Ili's Yining city visiting Muslim households and distributing raw pork, in the name of helping the less well-off on Monday, on the eve of the Year of the Pig.

Sen. Tom Cotton Addresses Hudson Institute on Xinjiang Province, China | Tom Cotton | U.S. Senator for Arkansas:

Thanks to the Hudson Institute for inviting me to speak about China's brutality in Xinjiang Province...

That's because there's perhaps no greater threat to freedom today than the communist regime in Beijing. One observer described Chinese communism as a system where the average Chinese subject "lives from birth to death under the eye of [the state]. Even when he is alone he can never be sure that he is alone. Wherever he may be, asleep or awake, working or resting, in his bath or in bed, he can be inspected without warning and without knowing that he is being inspected. Nothing that he does is indifferent . . . He has no freedom of choice in any direction whatever." Actually, that's how George Orwell described life in Oceania in his dystopian novel 1984. But it could just as easily describe life in China today.

No one suffers the oppressive weight of Chinese communism more than the predominantly Muslim minorities of far western China-especially the Uighurs. At least 800,000 and possibly several million Uighurs are currently detained in a modern-day gulag archipelago-run by a different communist power but no less wicked, atheist, and materialist...

We ought to use the Magnitsky Act to impose sanctions on Communist Party officials who are orchestrating these crimes, especially Chen Quanguo, the Politburo slave master of Tibet and Xinjiang.

Comment: I hear from that there is near unanimity in the Trump Administration about US actions including sanctions, but that the President is not yet ready, so the hope is that Congress will force actions. 

China Secretly Transferring Uyghur Detainees From Xinjiang to Shaanxi, Gansu Province Prisons - RFA:

Ethnic Uyghurs held in political “re-education camps” in northwest China’s Xinjiang Autonomous Region (XUAR) are being sent to prisons in Shaanxi and Gansu provinces, officials have confirmed, pointing to an expansion of a secretive system transferring detainees out of the region.

In October last year, RFA’s Uyghur Service reported that authorities in the XUAR had begun covertly sending detainees to prisons in Heilongjiang province and other parts of China to address an “overflow” in overcrowded camps, where up to 1.1 million Uyghurs and other Muslim ethnic minorities accused of harboring “strong religious views” and “politically incorrect” ideas have been held since April 2017

Uighurs fled persecution in China. Now Beijing’s harassment has followed them to Australia. - The Washington Post:

With Abdughufur living in Adelaide, a city in southern Australia, and her mother in the Xinjiang region of China, it was a rare chance for the two to connect. At first, Abdughufur said, she was excited because she hadn’t talked to her mother in a long time.

Then came “disaster.”

Abdughufur’s mother appeared on the screen in handcuffs, sitting next to a police officer. “They started interrogating me,” Abdughufur said. Fearing for her safety, she complied, sharing sensitive details and documents the police demanded from her, including her Australian driver’s license.

No halal please: meet China’s pig vigilantes | South China Morning Post:

Vocal vigilante groups angered by what they see as creeping Islamisation in Chinese society

The fight to ‘take back’ the Year of the Pig is the newest battle in an escalating confrontation between the vigilantes and ‘religious extremists’

And then there is this:

6. Facebook's 5 billion reasons to keep Beijing happy

How Facebook’s Tiny China Sales Floor Helps Generate Big Ad Money - The New York Times:

In Shenzhen’s Futian district, on the ninth floor of a concrete tower, there is an open-air sales floor that works as a sort of corporate embassy for the social network. The 5,000-square-foot space is run by the local partner, called Meet Social, but has been designed with Facebook’s guidance. It functions as an experience center for the Silicon Valley giant — the only one of its type in the world.

The desire by Chinese companies and other entities to get in front of people internationally has unexpectedly turned China into one of Facebook’s largest sources of advertising revenue, even though the social network itself is not available in the country. Charles Shen, chief executive of Meet Social, said his company anticipated doing $1 billion to $2 billion in ad sales on Facebook and Instagram this year. Each day, he added, Meet Social’s software puts up about 20,000 Chinese ads on Facebook.

In total, Facebook’s revenue from Chinese-based advertisers reached an estimated $5 billion in 2018, or about 10 percent of its total sales, according to Pivotal Research Group.

Opinion | China’s Online Censorship Stifles Trade, Too - The New York Times - Tim Wu;

Even though Facebook has been banned in China for years, Mark Zuckerberg, its chief executive, has made embarrassing efforts to ingratiate himself with China’s president, Xi Jinping. (At one point gossip pages even reported that Mr. Zuckerberg asked, in vain, for Mr. Xi to give an honorary Chinese name to his unborn child; Mr. Zuckerberg denied that this happened.)

Appeasement does not make effective foreign policy or trade policy. The United States, with the world’s largest economy and its most important internet sector, should be negotiating from a position of strength. If the Trump administration wants to be tough with China on trade, it should demand meaningful access to the Chinese internet market, on pain of denial of access to American markets for Chinese firms.

The Internet, Divided Between the U.S. and China, Has Become a Battleground - WSJ $$

The two zones are beginning to clash with the advent of the superfast new generation of mobile technology called 5G. China aims to be the biggest provider of gear underlying the networks, and along with that it is pushing client countries to adopt its approach to the web—essentially urging some to use versions of the “Great Firewall” that Beijing uses to control its internet and contain the West’s influence

Comment: I bought the domain a few years ago when I was thinking about writing a book on the topic...never did, but maybe the domain will be useful in the future

7. CGTN America files with the US under the Foreign Agent Registration Act (FARA)

CGTN America filed with the US Department of Justice on February 1. The filings, signed by Ma Jing, director general of CGTN America, state that:

CGTN America is not engaged in "political activities," as that term is defined for purposes of FARA, and has elected to file this registration statement out of an abundance of caution and in the spirit ofcooperation with U.S. authorities...

CGTN America enjoys editorial independence from any State direction or control.

That is interesting statement in light of how Xi Jinping view's CGTN - Chinese President Xi Jinping visits with CCTV America via video call - CGTN Feb 19 2016:

Chinese President Xi Jinping spoke with the team at CCTV America as part of a research and fact-finding mission on China’s main state media organizations.

Xi spoke to the team in Washington, D.C. via video call from China Central Television’s main headquarters in Beijing..

During the video conference with Ma Jing, the Director General of CCTV America, Xi said he hopes the CCTV America team can “objectively, truly and comprehensively introduce China’s social and economic development to the world audience.”

A Leaked Memo Says Chinese State TV Registered As A Foreign Agent "In The Spirit Of Cooperation":

One journalist told BuzzFeed News that the memo angered the Washington-based staff of CGTN America: "There was some very upset people that employees weren't given a heads-up before the paperwork was filed and the registration went active."

"Lots are also mad about the line in the memo about how the registration was voluntary 'in the spirit of cooperation.'"

"The feeling is, 'Oh, so you didn't actually fight for us or even tell us?'"

A CGTN source said, "It's already hard describing who we work for. ... This makes it even more complicated and uncomfortable when talking to anyone on the outside."

China's multi-billion dollar media campaign 'a major threat for democracies' around the world - China power - ABC News (Australian Broadcasting Corporation):

In a slick 2017 video produced as part of a documentary series showcasing some of China's best journalists, CGTN host Pan Deng said many outside China are "brainwashed" by "Western values of journalism".

Meanwhile another CGTN presenter slammed Western media on air for its partiality in painting the CCP "in a one-dimensional, superficial way".

"That has been the fallacy of the Western media when it comes to reporting on China, not lying, but never telling the whole truth," she said.

8. Xi's New Year's inspection tour of Beijing

China Focus: Xi visits cadres, residents in Beijing ahead of Spring Festival - Xinhua:

President Xi Jinping on Friday visited Beijing's primary-level cadres and residents in downtown neighborhoods ahead of the Spring Festival and extended Lunar New Year greetings to Chinese people of all ethnic groups.

Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, also inspected the preparation work for the Beijing 2022 Olympic and Paralympic Winter Games.

When inspecting the Beijing Municipal Public Security Bureau, Xi stressed the city's glorious mission and weighty responsibility to safeguard the social stability of the national capital as 2019 marks the 70th anniversary of the founding of the People's Republic of China.

The Feb 2 CCTV Evening News on his Beijing inspection tour 习近平春节前夕在北京看望慰问基层干部群众 向广大干部群众致以美好的新春祝福 祝各族人民幸福安康祝伟大祖国繁荣吉祥 

Xi extends festive greetings to all servicemen - Ministry of National Defense:

Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission (CMC), visited the PLA Beijing Garrison Command ahead of the Spring Festival (Chinese New Year), which falls on Feb. 5 this year..

Xi asked the Beijing Garrison Command to efficiently perform their guard duties, well handle counter-terrorism and emergency response, ensure absolute safety of whoever they guard, and maintain the capital's security and stability.

The Feb 2 CCTV Evening News on his visit - 习近平春节前夕视察看望北京卫戍区 向全体人民解放军指战员武警部队官兵民兵预备役人员致以新春祝福 

Business, Economy, Finance And Trade

China's inter-bank payment system passes severe test on Lunar New Year's eve - Xinhua China's inter-bank payment and settlement system passed a tough test on Lunar New Year's eve as the Chinese zealously snatched lucky money in virtual red envelopes for good fortune. China UnionPay, a leading payment network, processed inter-bank payment and settlement deals worth 261.7 billion yuan (about 39 billion U.S. dollars) Monday night, the Lunar New Year's eve, up 81.3 percent from the same day of last year, Shanghai Securities News reported Tuesday on its APP. The average response time for each deal processed by China UnionPay's network was only 220 milliseconds, and no deals failed.

Macro Outlook 2019: Don’t Hold Your Breath for China’s Stimulus - MacroPolo Concerns about a near-term sharp contraction or potential recession are likely misplaced. Any stimulus measures will be front-loaded in 1H2019 ahead of the 70th Anniversary of the founding of the People’s Republic of China in the fall. The front-loading of stimulus means pro-growth efforts will taper off in 2H2019, leading to a sharper slowdown toward the end of year. As such, those expecting another bout of Chinese stimulus to bolster global growth will likely be disappointed.

Canada's Expanding Canola Pile Spurs Intrigue on China Trade - Bloomberg Canada’s inventories of canola, the cop used in everything from salad dressing to deep-frying, rose to a record 14.6 million metric tons in December, largely because of lower exports, Statistics Canada said Tuesday in a report. The data may suggest that shipments to China, the biggest buyer, slowed in the weeks following the arrest in December of Huawei Chief Financial Officer Meng Wanzhou, said Brian Voth, president of Intelli Farm Inc.

Sinica Podcast: Tim Stratford and Craig Allen talk U.S.-China trade - Sinica Podcast Kaiser and Jeremy spoke with Tim Stratford, the chairman of the American Chamber of Commerce (AmCham) in the People’s Republic of China, and with Craig Allen, the president of the US-China Business Council. Stratford has also headed the leading law firm Covington’s office in China for many years, while Allen has had a long career representing American economic interests at the Department of Commerce and in the State Department, most recently as the U.S. ambassador to Brunei. The wide-ranging conversation covers everything from technology policies to the structural changes that China is being asked to make to address U.S. complaints over unfair trade practices.

When Plastic Goes Bad - Credit Card Debt and the Business of Debt Collection - MacroPolo For decades, debt collection firms were illegal. However, today there are anywhere between 2,500 and 3,000 such firms that together employ about 300,000 people. Such companies have become essential for dealing with not just delinquent credit card payments, but also online consumers loans, P2P, and auto loans. Unlike in the United States, where debtors are protected by the Fair Debt Collection Practices Act, China’s borrowers aren’t protected by explicit laws governing the behavior of debt collectors. Instead, they’re covered by a patchwork of regulations that provide significant protection for credit card holders, but not as much to customers of non-bank lenders.

China's information consumption surges in 2018 - Xinhua Total business volume of the telecommunication sector rose by 137.9 percent from the previous year, the MIIT has said. Services of 4G continued to develop last year, with the number of users reaching 1.17 billion. The average household usage of mobile traffic reached 6.25GB per month in December 2018, more than double the amount in the same period in the previous year, the ministry said.

Politics, Law And Ideology

New village loudspeaker campaign aims to spread ideological message - Global Times Those born in the 1950s and 1960s in Chinese villages are familiar with the presence of loudspeakers, as they played a key role in community life when there were no other entertainment activities.  "In the old days, production teams used loudspeakers to make important announcements," said a 78-year-old villager surnamed Gao, referring to them as a symbol of China's rural life.  Although TVs and smartphones have become the main tools for rural residents to obtain information today, local authorities see these programs played automatically through loudspeakers as being necessary for delivering information, news, and, more importantly, government policies.

China Censors Law Textbook Over 'Western' Influences - RFA China's ruling Communist Party's censors have removed a textbook on constitutional law from bookshops in recent weeks, amid a nationwide crackdown on teaching materials relating to the country's constitution. The book, titled "Constitutional Law," by Peking University (Beida) scholar Zhang Qianfan has been removed from bookshops following a nationwide order to universities to report back to their provincial governments on any teaching materials dealing with the topic.

Beijing’s Intensified Control over China’s Higher Education – Chinascope A Duowei News article put together information about the Chinese Communist Party’s (CCP’s) practices of tightened control over the nation’s higher education. At the beginning of 2019, for the first time, the Chinese media reported a case of the CCP Central Disciplinary Committee intervening in the personnel appointment at a Chinese university. Observers believe that this is a new signal that the CCP is strengthening its discipline and supervision of its universities.

From the Outside Looking In: A Response to John Garnaut’s Primer on Ideology – Made in China Journal - Christian Sorace Garnaut insists, however, that Xi and Mao are the same because for him ideology is simply another word for power/dictatorship/control: ‘For Xi, as with Stalin and Mao, there is no endpoint in the perpetual quest for unity and regime preservation.’ By Mao, is Garnaut referring to the same person who launched the Cultural Revolution, which nearly toppled China’s political system? The one who called on the masses to ‘bombard the headquarters’ (轰炸总部) and sanctified the ‘right to rebel’ (造反有理)? The only possible way to describe Maoist politics as a part of a ‘perpetual quest for unity and regime preservation’ is by disavowing the complex political significance of the Cultural Revolution...In a time when policy analysts are debating a low-intensity revival of the Cold War, Garnaut’s speech is an attempt to rekindle the fire. People like Garnaut and his target-audience of hawkish policymakers need the spectre of a ‘brainwashed’ China to defend their own ideological platform. The issue here is not to deny that there are serious problems but to reflect on the framework in which these problems are discussed. What kind of world do we want to live in? For me, the problem with China is not that it poses an ideological threat to global capitalism but that it is has abandoned its revolutionary potential and failed to open up an alternative future to capitalism.

Foreign and Military Affairs

Second Trump-Kim summit to take place in Hanoi - The Washington Post “My representatives have just left North Korea after a very productive meeting and an agreed upon time and date for the second Summit with Kim Jong Un,” Trump said in the tweet. “It will take place in Hanoi, Vietnam, on February 27 & 28. I look forward to seeing Chairman Kim & advancing the cause of peace!”  //  will Xi and Kim meet again before this meeting, perhaps Xi making the trip to North Korea this time?

China will build 4 nuclear aircraft carriers in drive to catch US Navy, experts say | South China Morning Post China’s plan to have at least six aircraft carrier battle groups by 2035 will include four that are nuclear-powered as it builds up its naval capability closer to that of the US Navy, Chinese military experts believe...“China’s nuclear-powered aircraft carriers with [EMALS-like systems] are expected to join the navy by 2035, bringing the total number of carriers to at least six – although only four will work at the front line,” Wang Yunfei, a naval expert and retired PLA destroyer naval officer, said in a recent interview with the South China Morning Post.

Understanding China's AI Strategy | Center for a New American Security - By Gregory C. Allen In the second half of 2018, I traveled to China on four separate trips to attend major diplomatic, military, and private-sector conferences focusing on Artificial Intelligence (AI). During these trips, I participated in a series of meetings with high-ranking Chinese officials in China’s Ministry of Foreign Affairs, leaders of China’s military AI research organizations, government think tank experts, and corporate executives at Chinese AI companies.

China: China 'firmly opposes' Modi's Arunachal visit - The Economic Times China on Saturday "firmly opposed" Prime Minister Narendra Modi's visit to Arunachal Pradesh, asserting that it has never recognised the sensitive border state and the Indian leadership should refrain from any action that may "complicate the boundary question". Prime Minister Modi Saturday inaugurated and laid foundation stone of projects in Arunachal Pradesh worth over Rs 4,000 crore and said his government was giving a lot of importance to improve connectivity in the border state.

Chinese student sentenced to a year in prison for taking photos of naval base - CNN According to court documents, Zhao entered the Joint Interagency Task Force South military property, located on Naval Air Station Key West, on September 26 without permission "by circumnavigating the installation's primary fence line, and entering the military property from the beach." Upon clearing the base's main fence line, Zhao went directly to an area that contains a range of satellite dishes and antennas called "the Farm," court documents say. Zhao took videos and multiple photographs of the equipment in the Farm, the court said.

Under Pressure: Philippine Construction Provokes a Paramilitary Response | Asia Maritime Transparency Initiative China has responded to this new construction by deploying a large fleet of ships from Subi Reef, just over 12 nautical miles southwest of Thitu. These include several People’s Liberation Army-Navy (PLAN) and China Coast Guard (CCG) ships, along with dozens of fishing vessels ranging in size from 30 to 70 meters.

Lorenzana defends Pag-asa Island construction as China deploys ‘militia’ - CNN Philippines The country's Defense chief on Friday stood by government efforts to improve facilities on Pag-asa Island in light of China's alleged force deployment in the disputed area. Defense Secretary Delfin Lorenzana said the Philippines did not violate international law with its construction and repair works on Pag-asa, one of the biggest islands in the contested Spratlys in the South China Sea, and seat of the Kalayaan municipal government under the province of Palawan.


Press Release | U.S. Senator Cory Gardner of Colorado “This invitation would be consistent with U.S. law, enhance U.S. leadership in the Indo-Pacific region, and justly reward a true friend and ally of the United States and the American people,” the Senators wrote. “. . . President Tsai is a genuine democratic leader engaged in a struggle against an authoritarian and oppressive system that seeks to deny the Taiwanese people democratic rights and fundamental freedoms.  Extending an invitation for President Tsai to address a joint session of Congress in this historic year for U.S.-Taiwan relations would send a powerful message that the United States and the American people will always stand with the oppressed, and never the oppressor.”

The problem with inviting Taiwan’s Tsai Ing-wen to speak to a joint meeting of Congress - Richard Bush - Brookings The first flaw in the proposal is that it is contrary to a fundamental principle of U.S. relations with China. That is, when we established diplomatic relations with the People’s Republic of China in 1979, we pledged that we would carry out substantive relations with Taiwan and its government on an unofficial basis...The second flaw in this proposal is Taiwan would suffer. This initiative began in the United States, and Beijing would take the opportunity to pressure and squeeze Taiwan even more than it is already doing.

Salvadoran president-elect to assess relationship with China -aide | Reuters During the campaign, Bukele, who emerged victorious at the polls as an outsider candidate on Sunday, was critical of the benefits that El Salvador received after establishing diplomatic relations with China. Federico Anliker, a close member of the Bukele team and secretary general of his New Ideas party, said the incoming administration would investigate why the outgoing government forged ties with China.

Tech And Media

The Incredible Rise and Fall of China’s Bike Firm Ofo — The Information $$ At the height of its growth in late 2017, the bicycle-rental startup had trucks driving around cities across China, dropping off brand-new yellow bikes continuously throughout the day for customers to use. Each bike cost Ofo nearly $100. They were meant to last two years. Instead, many lasted only a month or two, either breaking or going missing. As a result, only about half of the bikes supposedly in circulation were usable, former Ofo managers estimated. Ofo’s revenue? It charged as little as 15 cents a month for unlimited use of each bike. No wonder, then, that Ofo burned through the $1.5 billion-plus it raised between 2016 and 2017 from such high-profile investors as Yuri Milner’s DST Global, Didi Chuxing, Alibaba and Coatue Management. Ofo now owes hundreds of millions of dollars to bike manufacturers. Its workforce has been slashed from about 3,600 to a few hundred. A company once valued at $3 billion is now on its knees.

Reddit is raising a huge round near a $3 billion valuation | TechCrunch Reddit is raising $150 million to $300 million to keep the front page of the internet running, multiple sources tell TechCrunch. The forthcoming Series D round is said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation.  //  Comment: In response to the news of Tencent's participation images of "tank man" were pushed to the near the top of the site Friday

Energy, Environment, Science And Health

Stanford Reviews Faculty Links to Chinese CRISPR Scandal | AP Stanford University has started a review of interactions that some faculty members had with He Jiankui, the Chinese scientist who claims to have helped make gene-edited babies. Several Stanford professors have said they knew or strongly suspected He wanted to try gene editing on embryos intended for pregnancy.

Trump and Xi to meet; Restrictions on PRC scholars coming to America; Huawei

Hi everyone, to celebrate the upcoming Year of the Pig I decided to make today’s issue free to everyone.

President Trump took to Twitter Thursday morning to tell us that the trade talks are progressing and that he will be meeting Xi Jinping soon:

A Trump-Xi meeting in the “near future” is not a surprise, as I wrote last Thursday:

My neck hurts from all the US-China trade talks whiplash. I wish everyone could chill out but that is not how the markets work. Be wary of leaks and “scoops”, what matters next is the the Liu He visit next week. The two sides are still far apart, but there are also 35 days until the March 1 deadline and I don’t expect any deal will truly happen until Trump and Xi meet again.

I concluded my CNBC appearance Wednesday by saying:

When Liu He meets with President Trump tomorrow…he is likely to..convey a message from Xi Jinping that Xi would like to meet with Trump some time in the near future…because ultimately the Chinese believe that the only way they are going to get a deal is if there is another face-to-face between Trump and Xi and ultimately they believe if they can get face-to-face with Trump they will probably get a more favorable deal for China.

My guess is that the meeting will be scheduled around the Trump-Kim summit, and if Trump and Kim meet in Vietnam or Thailand then Hainan, and perhaps Bo’ao (China’s Palm Beach…) is the likely location.

But even if Trump and Xi get to yes on a trade deal the broader friction and competition in the relationship, including around technology, is only going to intensify.

One wildcard: When they meet will Xi make a last-minute request to release Meng Wanzhou and settle the Huawei indictments with a fine? It worked for Xi in the ZTE debacle.

Back in August after a trip to Beijing I wrote:

One other thing I heard from several PRC scholars during my Beijing trip is that the US has started revoking visas of some PRC America scholars, and in least one case I was told an academic’s visa was revoked after pressure from the FBI for information during visits to the US, pressure this person resisted and reported. Maybe this is visa reciprocity for some of the problems foreign scholars have with Beijing, but I do wonder if limiting visits from PRC US experts at this moment is helpful?

I am hearing now that several more well-known PRC American scholars were denied visas, or had existing ones cancelled, including for some planning to attend US for a recent seminar at a well-known institution to celebrate the 40th Anniversary of the establishment of US-China relations. At least some of the lucky scholars who did get visas were subject to secondary searches upon entering the US, as well as in some cases visits from law enforcement.

I am not going to name names or places but I would expect to read about this in mainstream media at some point. Six months later, as US-China relations feel like they are on the precipice, my question remains “is limiting visits from PRC US experts at this moment helpful?”

I know there is the argument that this is reciprocal as the Chinese have done this to US scholars for years and playing nice got no results, so now the US has to change its approach. Maybe that will work, or maybe it will cause Beijing to double down.

Regardless of the answer to the wisdom of this approach, it is clear that the US government has shifted to a more aggressive stance to this class of PRC citizens, and that it is a symptom of the broader and likely accelerating deterioration in US-China relations, and I have no expectations that a trade deal will arrest that. The New Era of US-China relations may be akin to wrestlers fighting while in a tight embrace.

One housekeeping note: Today’s issue is the last before the Lunar New Year. I will not be publishing at least through next Wednesday unless there is something really big, and given that China is effectively shut down next week I see no point in clogging your inboxes with fluff.

For those keeping track, this upcoming year of the pig is the 己亥 (ji3hai4) year, or the 36th year in the 60-year sexagenary cycle. If you were born in the year of the pig you might find this backgrounder and horoscope interesting. And remember to wear something red every day and go to as many weddings possible, to ward off bad luck in your 本命年 (ben3ming4nian2; year of your zodiac sign).

Happy Year of the Pig!

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The Essential Eight

1. US-China

Trump Says ‘Good Chance’ U.S. Reaches Trade Deal With China - The New York Times:

A person familiar with the negotiations said that there were signs of progress on Wednesday, the first day of talks, but that it did not appear that major breakthroughs were imminent on many of the major concessions the United States is seeking. There continues to be division within the Trump administration over what would constitute a sufficient deal, with some advisers such as Robert Lighthizer urging Mr. Trump to push China harder for major concessions, including ending its practice of forcing American companies to hand over valuable trade secrets as a condition of doing business there. Other advisers, such as Steven Mnuchin, the Treasury secretary, have warned Mr. Trump that a protracted trade war and additional tariffs will be counterproductive to the president’s economic agenda and spook financial markets.

China Is Counting On Trump-Xi Meeting to Settle Trade Fight - WSJ $$:

China is pinning its hopes on another meeting between President Trump and Chinese leader Xi Jinping to help solve the trade dispute between the world’s two largest economies, according to people briefed on the matter, as a wide gap remains between U.S. demands and what Beijing is willing to offer.

The Chinese delegation led by Vice Premier Liu He—Mr. Xi’s economic czar who is holding talks with American negotiators in Washington this week—has proposed to the U.S. that Mr. Trump meet with Mr. Xi in the seaside Chinese resort island of Hainan after his planned summit with the North Korean leader, Kim Jong Un, in late February, the people said.

China Protesters Scuffle With Security as Trade-War Talks Begin - Bloomberg:

Several protesters jostled with security on Wednesday as members of the Chinese delegation left the Willard International hotel in Washington for a meeting with Trump administration officials. The protesters, who said they were from Shanghai, distributed documents accusing the government of forcing Chinese residents to relocate. A woman was knocked down in the scuffle, but no one appeared to be injured.

Chinese digital radio maker Hytera vows to outlast Trump trade war - The Washington Post:

Earlier this month, the International Trade Commission barred Hytera from importing several of its products after concluding that the Chinese company had “wrongfully copied” trade secrets from Motorola Solutions, the U.S. company that dominates the $5 billion mobile digital radio market.

Even as U.S. and Chinese diplomats are scheduled to resume trade talks Wednesday amid mounting hopes for a deal, this little-known manufacturer illustrates how the fight for global technology dominance could escalate. Administration officials are preparing to continue the battle by pushing for new measures against Chinese companies like Hytera, according to several people familiar with the discussion.

2. Huawei and the pressures for technology decoupling

EU considers proposals to exclude Chinese firms from 5G networks | Reuters:

The European Union is considering proposals that would effectively amount to a de-facto ban on Huawei Technologies Co. equipment for next-generation mobile networks, four senior EU officials said, adding to mounting international pressure on the world’s largest maker of telecom gear...

While efforts by the EU’s executive are still at the very early stages, and could prove complicated to implement, the move marks a shift in the EU’s stance amid growing security concerns in the West about China...

According to an internal Commission document reviewed by Reuters, the EU shift has been prompted by changes to Chinese intelligence and security laws in recent years. In one example cited in the Commission document, China’s National Intelligence Law states that Chinese “organizations and citizens shall, in accordance with the law, support, cooperate with, and collaborate in national intelligence work.

U.S. wants Western tech to be used instead of Huawei kit | Reuters:

The United States wants to steer people away from Huawei towards Western products because of its concerns over the security of the Chinese company’s technology, the U.S. envoy to the European Union said on Thursday...

Huawei faces international scrutiny over its ties with the Chinese government and allegations that Beijing could use Huawei’s technology for spying, which the company denies

However, Gordon Sondland said that there was classified evidence on security breaches by the Chinese firm, saying he had raised the U.S. concerns with EU officials.

Foreign Ministry Spokesperson Geng Shuang's Regular Press Conference on January 31, 2019:

Q: Vice Chairman of the Senate Select Committee on Intelligence Sen. Mark R. Warner recently said that the relevant actions by China's large-scale technological companies have been a cause for concern. They have been acquiring and copying sensitive technologies with the help of the Chinese government. Also on the same day, US Senate Minority Leader Chuck Schumer said that China wants to replace the US in leading the technological world and has been stealing for that end. What is your response?

A: I have noted relevant reports. In science and technology, the US is second to none. This is a fact we recognize. But we also hope that the US can accomodate other countries' technological development and progress in an open and inclusive attitude. There is no justification at all for the US to applaud its own progress in science and technology and have little tolerance for the development of others. It even makes no sense to throw mud and bricks at other countries' technological development whenever it feels like to do so.

I want to stress that China has achieved its technological development, not by stealing or robbing, but by the wisdom and hard work of all the Chinese people including Chinese scientists.

Huawei woes fail to bolster telecoms rival Nokia’s outlook | Financial Times $$:

Nokia is not yet showing signs of benefiting from the troubles facing its Chinese rival Huawei as the Finnish telecoms equipment maker announced a worse than expected outlook for this year.

Rajeev Suri, Nokia’s chief executive, said it was “early days” in the race to win extra business as countries such as the UK, Germany and Norway weigh a ban on Huawei due to heavy US pressure over security concerns.

Do not underestimate the risk of an iron curtain in tech supply chains | Financial Times $$:

Shut your eyes and imagine a world where American technology companies were prevented from sourcing components from Chinese suppliers, or exporting equipment to them. What would that new iron curtain do to global economic growth? Or the lofty valuations of western tech groups?..

But last week this once-fanciful question sparked some heated — and nervous — debate at private dinners at the World Economic Forum in Davos. And this week, two of the biggest US financial groups told me they had quietly asked their investment committees to conduct scenario planning for these formerly outlandish ideas. “It’s a big talking point now,” said one top finance executive.

3. New tech board to accept VIE structures

Comment: "Foreign-funded mainland companies structured as variable interest entities (VIE) will be allowed to list " is big, reducing reliance on US capital markets for top tech firms has been a long-term goal, even more important now in this New Era, and this could help.

Regulators Spell Out Trading Rules for New High-Tech Board - Caixin:

Formally known as the Science and Technology Innovation Board, the new board was proposed by President Xi Jinping in November as part of broader efforts to encourage innovation. It is also seen as a key move by Beijing to gear up mainland markets to compete with Hong Kong and New York for high-tech listings to revitalize the country’s capital market. The new board won approval last week...

Money-losing startups for the first time will be allowed to raise funds from public listings in China as long as they meet certain criteria regarding market value, financial and business operations.

Foreign-funded mainland companies structured as variable interest entities (VIE) will be allowed to list on the high-tech board through the issuance of Chinese depositary receipts..

The new board will also accept companies with a dual-class shareholding structure, or weighted voting rights, if they meet certain financial requirements. Such arrangements will make Shanghai more competitive with the Hong Kong bourse in luring tech listings...

4. Xi on ecological civilization

Xi's article on building ecological civilization to be published - Xinhua:

An article by President Xi Jinping on building an ecological civilization will be carried in the third issue of Qiushi Journal this year, to be published Friday.

In the article, Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, demands the coordination of economic and social development and the building of ecological civilization.

The people's attention, aspirations and needs should be responded to in an active manner so as to meet their ever-growing demands for a beautiful environment, Xi writes.

Xi orders concrete efforts to control pollution, promote green development, contain environmental risks and improve governance on environment issues.

He stresses the need to enhance the Party's leadership to win the battle of pollution prevention and control, and asks governments at all levels to thoroughly carry out the decisions and policies of the CPC Central Committee.

Xi's article in Qiushi -《求是》杂志发表习近平总书记重要文章 《推动我国生态文明建设迈上新台阶 

Deadly Hebei Chemical Factory Blast Was Years in the Making - Caixin:

Soon after the blast, on the evening of Nov. 30, 15 Shenghua employees were detained by police. Since then, “responsible persons” from the enterprise, its parent company, and the Zhangjiakou government have been interviewed by officials from the State Council, China’s cabinet.

But leaking vinyl chloride gas is not the only environmental breach that has been attributed to the plant. Provincial officials found it to be violating environmental and safety standards on at least three occasions in 2018, 2017 and 2014. And people living in Beiganzhuang and Meijiaying villages around the plant said they had filed many complaints because of excessive pollution. But no changes were ever made.

China’s Coal Plants Haven’t Cut Methane Emissions as Required, Study Finds - The New York Times:

China, the world’s coal juggernaut, has continued to produce more methane emissions from its coal mines despite its pledge to curb the planet-warming pollutant, according to new research.

In a paper published Tuesday in Nature Communications, researchers concluded that China had failed to meet its own government regulations requiring coal mines to rapidly reduce methane emissions, at least in the five years after 2010, when the regulations were passed.

It matters because coal is the world’s dirtiest fossil fuel, and China is, by far, the largest producer in the world.

Shuttered at home, cement plants bloom along China's new Silk Road | Reuters:

Hundreds of cement plants have been shuttered in China under the pollution crackdown, according to state media, and the China Cement Association says that the country aims to eliminate about 400 million tonnes of capacity - about one-tenth of the total - by 2020...

Chinese majors such Gezhouba, Anhui Conch Cement and Shangfeng Cement in 2018 announced investments in at least 18 plants across Africa, Asia and South America with total annual capacity of more than 20 million tonnes - larger than the output of most European countries - according to industry publication Global Cement.

5. PRC ground station in Argentina

Paranoia or legitimate security concerns?

China's military-run space station in Argentina is a 'black box' | Reuters:

The United States has long been worried about what it sees as China’s strategy to “militarize” space, according to one U.S. official, who added there was reason to be skeptical of Beijing’s insistence that the Argentine base was strictly for exploration.

Other U.S. officials who spoke to Reuters expressed similar concerns.

“The Patagonia ground station, agreed to in secret by a corrupt and financially vulnerable government a decade ago, is another example of opaque and predatory Chinese dealings that undermine the sovereignty of host nations,” said Garrett Marquis, spokesman for the White House National Security Council.

Some radio astronomy experts said U.S. concerns were overblown and the station was probably as advertised - a scientific venture with Argentina - even if its 35-meter diameter dish could eavesdrop on foreign satellites.

6. Foreign affairs need better Party leadership

Diplomatic novice picked for top Communist Party job at China’s foreign ministry amid deteriorating relations with US | South China Morning Post:

The announcement on Tuesday night that Qi Yu, 58, former deputy head of the party’s all-powerful Organisation Department, would be the ministry’s party secretary took many Chinese diplomats and veteran China observers by surprise because of his lack of diplomatic experience...

Zhu Lijia, a professor at the Chinese Academy of Governance, said Qi’s promotion was in line with Xi’s focus on tightening party control, and showed the importance the Chinese leaders attached to foreign affairs...

Zhang Lifan, a Beijing-based political observer, said the ministry was an executive body without much say in making decisions and bringing an outsider into the diplomatic team showed that its standing could decline even further.

“Party building is one of the seven major risks confronting China that were cited by Xi in his recent speech [on controlling risks] and it is likely that top leaders have attributed the deteriorating international environment to inadequate efforts [by the foreign ministry] on party building rather than errors in decision-making,” he said.

7. Pharma's China supply chain

Chinese Heart Drug Valsartan Recall Shows FDA Inspection Limits - Bloomberg:

Treatments made by Chinese companies now account for almost one of every 10 generic drugs cleared by the FDA for sale. But agency inspections meant to ensure that approved drugs are meeting U.S. standards fell almost 11 percent, to 125, in China for the fiscal year that ended Sept. 30, compared with the previous year, according to data obtained by Bloomberg through public-records requests...

Using hundreds of pages of the U.S. government documents, Bloomberg has spent the last year reporting on a supply chain that reaches around the world and ends inside American medicine cabinets. While overall inspections of that network are down, records show that those that do get done—from West Virginia to China and India—raise doubts about the data meant to prove drugs are safe and effective...

The FDA inspector who visited Zhejiang Huahai’s factory in the city of Linhai wrote in his inspection report that the company has a practice of recording passing scores for drugs that originally fell short of U.S. standards on routine quality tests. He said his findings cast “a cloud of uncertainty over the accuracy of test results” that are used to gain clearance to sell drugs in the U.S., according to documents from the public-records request.

8. The West as “the hidden force behind China’s rise”

'The Real Problem Comes From the West': Ai Weiwei Slams the US and Canada for Their Complicity in Tensions With China | artnet News:

In an extensive statement released today via the Gardiner Museum in Toronto, where a large-scale exhibition of Ai’s work will open on February 28, the artist chastises the West as “the hidden force behind China’s rise” and accuses it of “profiting from the status quo.”..

“The West’s apparent conflict with the situation in China is because of its refusal to acknowledge its complicity in creating this monstrous regime,” Ai writes. “In the end, nothing will change. China completely ignores so-called universal values. It is under the control of a one-party system where its citizens have never had the right to vote… China has done quite well under those circumstances. The real problem comes from the West where there is a complete lack of vision and responsibility.”

Business, Economy, Finance And Trade

China Frustrates Foreign Firms With Accelerated Investment Law - WSJ $$: While the current draft responds to some longstanding criticisms from foreign firms, vowing to protect their intellectual-property rights and ban coerced technology transfers, it contains vague language on national security reviews, government expropriation and other matters officials could use against foreign firms. It also ignores the long-running practice of subsidizing state-owned enterprises—a sore point for the Trump administration that some businesses hoped would be addressed. Foreign business groups such as the American Chamber of Commerce in China and the U.S.-China Business Council say they are now at a disadvantage under the legislature’s new timetable.

Lawmakers Debate How to Reconcile Domestic Law, International Treaties on Foreign Investment - Caixin: Chinese lawmakers have recently debated how to bridge the difference between domestic law and international treaties, as they ended a two-day deliberation of a draft law on foreign investment on Wednesday.

China to further step up IPR protection - Xinhua MOC spokesperson Gao Feng told a press conference that more efforts would be made to improve IPR reviews, introduce punitive damages and crack down on IPR violations. IPR protection is a significant part of the draft foreign investment law that will be reviewed by lawmakers at the annual session of the National People's Congress slated for March.

Yuan Strengthens As Fed Holds Interest Rates Steady - Caixin The yuan briefly dipped below the 6.7-per-dollar line in morning trading on Thursday for the first time in six and a half months, after the People's Bank of China (PBOC) set the yuan's daily parity rate at 6.7025 per dollar, 318 pips below the previous day's rate. The PBOC allows the yuan to trade at 2% either side of this rate.

Hundreds More Chinese Companies Just Warned on Their Profits - Bloomberg Some 440 firms disclosed on Wednesday -- the day before a deadline to do so -- that their 2018 financial results deteriorated, according to data compiled by Bloomberg. Of the more than 2,400 mainland-listed firms that have announced preliminary numbers or issued guidance this season, some 373 said they’ll post a loss, the data show. About 86 percent of those were profitable in 2017.

China's P2P lending sector a 'disaster zone' of fraud: government official · TechNode The Chinese online peer-to-peer (P2P) lending industry is a “disaster zone” of fraudulent activity and illegal fundraising, according to a senior official at the country’s Ministry of Public Security. Wang Zhiguang, deputy director of the economic crimes investigation unit at the ministry, made the comment on Wednesday at a press conference organized by the Supreme People’s Procuratorate in Beijing, according to state media outlet Xinhua

Another Apple Engineer Accused of Stealing Autonomous Vehicle Trade Secrets - NBC Bay Area For the second time in six months, the FBI is accusing a Chinese national working for Apple of attempting to steal trade secrets related to the company’s secret autonomous vehicle program, NBC Bay Area’s Investigative Unit learned Tuesday. Apple began investigating Jizhong Chen when another employee reported seeing the engineer taking photographs in a sensitive work space, according to a federal criminal complaint unsealed this week.

Apple’s China Problem May Require a New iPhone - WSJ $$ The call for change is rooted in the belief that Apple’s top-down management system and secretive culture have weakened its China business. Over the years, the company’s “Designed by Apple in California. Assembled in China.” ethos meant staff in China couldn’t always deliver iPhones that fit well with local apps and user habits.

State Council requires reducing time needed for immovable property registration This may help with launching a property tax, but wasn't it supposed to have been done years ago?  //  An interagency information pooling and sharing mechanism will be established so that information related to immovable property registration, including household registration, business license, tax payments and transactions, can be shared by the end of this year.

Too Many Investment Bankers in China Has Them Working for 0.001% - Bloomberg Competition among Chinese investment banks has become so intense that five firms recently agreed to split a 0.001 percent fee for arranging a private share placement. That compares with the more than 5 percent that’s usual for follow-on stock offerings on Wall Street, data compiled by Bloomberg show. It’s the latest example of a price war in China that helped cut average equity underwriting fees in half last year and prompted a trade group to call for measures to prevent “vicious competition.”

China Factory Slowdown Eases for Now as U.S. Trade Talks Resume - Bloomberg The first official gauge of China’s economy in 2019 showed a slowdown in the manufacturing sector eased off a little in January, though uncertainty over the future of trade with the U.S. remains a headwind. The official manufacturing purchasing managers index came in at 49.5 in January from 49.4 in December, remaining below the 50 mark that signifies contraction. A gauge of new export orders also improved slightly, while a measure of activity in services and construction showed robust expansion, improving for a second month.

Fed's China Concern Is Behind Its Pause on Rates - Bloomberg The Fed took a big step on this front Wednesday, scrapping a preference to hike interest rates, citing global economic and financial conditions and waning price pressures. The principal worry is China and the weakness and deflationary pressures it’s exporting. China isn’t mentioned directly in the Federal Open Market Committee’s statement; 1  it’s there in all but name.

Indebted Steelmaker Moves Toward Reorganization - Caixin Representatives of Bohai Steel’s more than 100 creditors approved a bankruptcy and reorganization plan Wednesday, ending a long series of twists and turns since a creditors committee was formed in March 2016 to try to restructure the debt-ridden company. The bankruptcy reorganization of Bohai Steel is China’s biggest-ever effort to rescue a financially crippled company. Under a court ruling in August, the reorganization would involve 48 companies under Bohai Steel’s umbrella, while 160 more subsidiaries would be liquidated.

Bloomberg to add Chinese government bonds to flagship index | Financial Times $$ Bloomberg has confirmed that Chinese renminbi government bonds will be added to the $54tn Bloomberg Barclays Global Aggregate index from April 2019. The data provider said that the inclusion of the government bonds, as well as policy bank securities, will be phased in over a 20-month period.

Cost-conscious Chinese tourists staying closer to home for Lunar New Year | Reuters Hotels and travel agencies in Asian countries from Thailand to Japan anticipate higher numbers than a year ago of Chinese tourists, who have become a powerful spending force with the ability to make, or break, the fortunes of retailers and tourism brands. But recently, the numbers going to the United States, Australia and New Zealand have fallen or only show small increases.

China Launches Sweeping Audit of Power Grid - Caixin China has launched the second phase of its overhaul of the country’s opaque power grid, announcing a major audit of involved companies in a bid to shed light on the true cost of electricity transmission and pass savings on to industries facing fierce economic headwinds.

Politics, Law And Ideology

Artists, scientists receive festive greetings from Party leadership - Xinhua Wang Huning, a senior Communist Party of China (CPC) official, extended festive greetings to artists and scientists Thursday morning, on behalf of General Secretary of the CPC Central Committee Xi Jinping and the CPC Central Committee. Wang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and a member of the Secretariat of the CPC Central Committee, visited several prominent artists and scientists and extended greetings ahead of the Spring Festival, China's traditional Lunar New Year.

Anime Series on Karl Marx Debuts to Mixed Reviews - SixthTone Less than 24 hours after its release on Bilibili, the first installment of “The Leader” had received over 2.8 million views online. The seven-episode series was a collaboration between the central government’s Office for the Research and Construction of Marxist Theory, Inner Mongolia Autonomous Region’s publicity department, and a film production company based in the region to commemorate the 200th anniversary of Marx’s birth, which was observed on May 5, 2018.

Canada-based pop star Wanting Qu pleads for mother in Harbin death-penalty corruption case – but China’s netizens are unimpressed | South China Morning Post Canada-based pop star Wanting Qu has issued a heartfelt plea for justice in the long-delayed Chinese corruption case against her mother, a former Harbin city official who prosecutors want executed for allegedly embezzling 350 million yuan (US$52 million). Qu’s posting on Weibo, telling how her “heart aches” for her mother Qu Zhang Mingjie, went viral this week. Posts carrying a hashtag referring to her comments have been viewed more than 230 million times, but elicited an overwhelmingly negative response from Chinese netizens.

‘My Responsibility to History’: An Interview with Zhang Shihe | by Ian Johnson | NYR Daily | The New York Review of Books: “Tiger Temple” (Laohu Miao) is the nom de guerre of Zhang Shihe, one of China’s best-known citizen journalists and makers of short video documentaries, many of them profiling ordinary people he met during extraordinarily long bike rides through China, or human rights activists who have been silenced but whose ideas on freedom and open society he has recorded for future generations... After nearly twenty years in Beijing, Zhang was caught up in the hardening political climate and, in 2011, sent him back to his hometown of Xi’an. This is the most important metropolis in western China and also one of the country’s most famous ancient cities. I went there with the help of a Pulitzer Center travel grant late last year to find out how civil society was faring outside of the narrow confines of Beijing.

Foreign and Military Affairs

Competitive Coexistence: An American Concept for Managing U.S.-China Relations | The National Interest Rather than let Beijing dictate terms in bilateral interactions, Washington should proactively and consistently promote its own ideas and phrasing. Describing the United and China as strategic stakeholders that should pursue competitive coexistence realistically is a good place to start. by Andrew S. Erickson

Xi's special envoy to attend 7th World Government Summit - Xinhua Chinese President Xi Jinping's special envoy Wang Zhigang will attend the 7th World Government Summit to be held in the United Arab Emirates (UAE) on Feb. 10, Foreign Ministry spokesperson Geng Shuang said Thursday. Wang, also minister of science and technology, is attending the summit at the invitation of the UAE government

Maldives seeks to renegotiate with China over Belt and Road debt | Financial Times $$ Maybe BRI should be called the BBRI--Bribery, Belt & many of the target countries did not agree to Chinese deals without massive payoffs to local leaders?  //  “This was wilful corruption,” Ibrahim Ameer told the Financial Times. “[The former government] knew what they were doing, getting kickbacks from contractors . . . That’s why the contract prices were too high.” Mr Ameer is part of a new administration that took charge in November after the electoral defeat of Abdulla Yameen, who had overseen a huge surge in Chinese-funded projects during his five years as president. Beijing had promoted the investments in the Maldives as a success story in its Belt and Road Initiative, a large-scale programme to fund and develop infrastructure across Asia and beyond.

India china relations: China signals it will continue to block India from NSG | Times of India China signalled on Wednesday that it would continue to block India’s entry into the Nuclear Suppliers Group despite the special rapport struck between Prime Minister Narendra Modi and Chinese President Xi Jinping during the past three meetings starting with the Wuhan talks in April last year.

Ex-envoy to China does about-face, says OK Chinese will manage Haifa port - Israel News - Jerusalem Post Three weeks after former ambassador to China Matan Vilna’i told The Jerusalem Post that Israel should rethink and reverse its decision to let a Chinese firm manage the new port in Haifa, Vilna’i did an about-face on the matter on Wednesday and said there is no harm in letting the Chinese manage the private port. “If they want to spy, they have other ways, they do not need the Haifa port,” Vilna’i said at a briefing organized by Media Central.

Beijing opens maritime rescue base in South China Sea - ABC News The centre was opened on Fiery Cross Reef in the Spratly Islands — which China calls Yongshu reef and the Nansha Islands — according to China's state-run Xinhua news agency, which regularly carries official announcements. It will "better protect navigation and transport safety in the South China Sea", Xinhua said.

China naval gun ready for warfare by 2025: US intelligence - CNBC China tested the world's most powerful naval gun earlier this month, and it is expected to be ready for warfare by 2025, according to people with direct knowledge of a U.S. intelligence report. China's railgun was first seen in 2011 and underwent testing in 2014, according to the people, who spoke to CNBC on the condition of anonymity. Between 2015 and 2017, the weapon was calibrated to strike at extended ranges, increasing its lethality. By December 2017, the weapon was successfully mounted on a warship and began at-sea testing, a feat no other nation has accomplished. The Chinese are expected to complete at-sea testing by 2023.

White House map showing Taiwan as separate from China catches the eye of island’s internet | South China Morning Post Is this a new map in that room or does it predate the Trump Administration?  //  The map was displayed on Monday during a press conference by White House national security adviser John Bolton and Treasury Secretary Steven Mnuchin. The pair were discussing sanctions on a Venezuelan state oil company after the US declared it would no longer recognise Nicolas Maduro as president. While much of world is focused on the ongoing turmoil in the South American country and the possible US response, eagle-eyed internet watchers in Taiwan noticed that while China and Russia were marked in red, along with other supporters of the embattled president, the island was not.

Erik Prince company to build training center in China's Xinjiang | Reuters Hong Kong-listed Frontier Services Group (FSG), co-founded by former U.S. military services contractor Erik Prince, has signed a deal to build a training base in China’s far western region of Xinjiang, the company said in a statement.

Police looked at letter claiming widespread censorship of Chinese media in NZ: Anne-Marie Brady - NZ Herald A letter making claims of widespread censorship amongst Chinese-language media in New Zealand is understood to have been looked at by police investigating the still-unresolved burglaries of professor Anne-Marie Brady. Days before the University of Canterbury professor and China researcher's home and office were burgled in February, she received the anonymous letter that also included specific claims made about coverage in the Chinese New Zealand Herald (CHNZ).

中央军委印发《关于全面从严加强部队管理的意见》 - 中华人民共和国国防部 中央军委日前印发《关于全面从严加强部队管理的意见》(以下简称《意见》),旨在深入贯彻习近平强军思想,加快构建新型军事管理体系,推进治军方式根本性转变,加强和改进新时代部队管理工作。

Tech And Media

Chinese Sci-Fi Movie 'The Wandering Earth' to Get U.S. Release | Hollywood Reporter Made for more than $50 million, the movie is directed by Frant Gwo and stars Chinese action hero Wu Jing, the writer, director, and star of Wolf Warrior 2, the military action flick that earned a historic $850 million in China in 2017. Perhaps most notable for international sci-fi fans, the movie is an adaptation of a short story by author Liu Cixin, whose novel The Three-Body Problem won the Hugo Award in 2015 — China's first win of science fiction's highest honor. Banking on at least a modicum of curiosity factor in the West, Beijing-based distributor CMC Pictures has secured the international rights and is planning a sizable North American release on Feb. 8.


More Hollywood Movies May Play in China Due to Lack of Local Content – Variety That’s because the local industry is still reeling from the twin hits of the tax-evasion scandal surrounding Chinese superstar Fan Bingbing and, in recent months, the government’s move to tighten enforcement of national tax rules and close regional loopholes. The combined effect has been to sharply slow the greenlighting of homegrown movies and TV series, to drive numerous small production companies into bankruptcy, and to scare off some outside speculators. Last September, the number of registrations per month for new film projects dropped below 200, compared with 300 earlier in the year.

K-pop star Hwang Chi-yeul sparks online pollution storm between China and South Korea | South China Morning Post Hwang Chi-yeul was discussing his recent trip to Changsha, in the central Chinese province of Hunan, during an appearance on the South Korean talk show Radio Star last Wednesday when he said his managers had warned him about China’s bad water and air quality beforehand. “When I arrived at the airport [in China], I couldn’t see what was in front of me. The air quality was really that bad,” Hwang said. “I took a sip of water, and even the taste wasn’t the same. But it did not matter overall … The environment doesn’t really affect me.”

Society, Art, Sports, Culture And History

Teaching China Through Black History – Fairbank Center for Chinese Studies, Harvard University To commemorate Black History Month in the United States, the Fairbank Center presents a reading and teaching introduction to the history of Black and African Americans’ interactions with the People’s Republic of China. This guide includes blog posts, journal articles, books and book chapters, audio-visual resources, digital archives, and other materials that can be used to teach the confluence of black and Chinese history in the 20th century.

Energy, Environment, Science And Health

For science, or the ‘motherland’? The dilemma facing China’s brightest minds - SupChina Part of China’s strategy to become a science and technology superpower is aggressive pursuit of foreign-trained talent. The top of the homepage for the government’s flagship talent recruitment program reads in red, bold Chinese characters: “The motherland needs you. The motherland welcomes you. The motherland places her hope in you.” The sentences do not begin with “China.” It’s “the motherland.” The Chinese government sees itself as not just ruling over a territory but in ownership of a people, whose basic rights it routinely denies. When Chinese scientists cross water, where is their motherland, and who are their people?

Advancement in Quantum Entanglement Earns 2018 AAAS Newcomb Cleveland Prize | American Association for the Advancement of Science A team of 34 physicists based at various institutions in China will receive the 2018 Newcomb Cleveland Prize, presented by the American Association for the Advancement of Science, for research that could provide the basis of a next-generation internet. The Newcomb Cleveland Prize, AAAS’ oldest award, has honored the most impactful research paper published in Science each year since 1923. This year’s winning paper describes an exponential increase in the distance at which particles can remain in a mysterious state called “quantum entanglement,” laying the groundwork for ultra-secure communication networks of the future.

The demise of caterpillar fungus in the Himalayan region due to climate change and overharvesting | PNAS Global demand for species used in traditional medicine is increasing among wealthy urban consumers. This growing trade provides livelihood opportunities for harvesters, but also risks causing resource overexploitation. A dearth of reliable data hinders assessments of whether these species are declining, and why. We investigate these issues for Himalayan caterpillar fungus—one of the world’s most expensive medicinal species—by integrating local harvesters’ knowledge of production trends with ecological modeling. We find that harvesters increasingly attribute declining production to overexploitation, while models indicate that climate warming is also contributing to this decline. Our results underscore the “double whammy” threatening highly valuable species, and demonstrate the complementarity of different knowledge systems for assessing the sustainability of the medicinal resource trade.

Uncaged: saving China's songbirds from the poachers' nets – video | Environment | The Guardian Bird poaching – for meat or for the pet trade – has become a silent epidemic across China, resulting in the deaths of tens of thousands of migratory birds each year. Gu Xuan, a young conservationist, is determined to break this cycle of death and destruction, and set the birds free

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