Good morning, get ready for more tension in the US-China relationship as President Trump and his principals have realized Xi is not going to deliver what they want.
We are taking our kids to camp today, there will not be another newsletter until Thursday at the earliest. Given how things are going I’d like to go hide out in the Maine woods with them…
The Essential Eight
1. Expect Trump’s China Policy To Get Much Tougher
My understanding is that last week’s US-China Dialogue was not as successful as some have tried to spin it, that the real disappointment at the principals’ level with the lack of movement on key issues was revelatory and may finally move Trump off his accommodative stance towards Xi and Beijing. I believe Beijing has dramatically overestimated its success in “managing Trump” and may be in for a rude awakening.
July’s 100 day deadline for trade may be a watershed moment. Buckle up….
White House sources tell us to look for increasing signs that the afterglow of China President Xi Jinping’s visit to Mar-a-Lago in April has long faded, and say the administration is going to be tougher on the world’s second largest economy…
It appears to be dawning on Trump — and it’s already dawned on senior White House officials — that China won’t apply the kind of pressure that’s needed to stop North Korea’s path to developing nuclear weapons that could strike American cities. Given Trump has told China to expect a better trade deal in return for help with North Korea, if the President gets disillusioned here, it could have profound economic consequences.
Comment: If you don’t subscribe to Mike Allen’s daily newsletter you are missing out. I find it to be the best daily source for developments in DC
Secretary of State Rex Tillerson has decided to drop China to “Tier 3,” the lowest grade, putting it alongside Iran, North Korea and Syria among others, said the sources, who have knowledge of the internal deliberations and spoke on condition of anonymity.
Comment: This move will enrage Beijing, but it is a sign that Secretary Tillerson has a very low view of Beijing’s human rights record, And given Liu Xiaobo’s condition, that view may soon result in much stronger action.
Full text: Consensus of first round of China-US Diplomatic and Security Dialogue Comment: Not a joint statement, this released by the PRC side
2. Nobel Peace Prize Laureate Liu Xiaobo Paroled To Hospital With Late Stage Cancer
Mr. Liu, who had been imprisoned in northeast China, was found in late May to have advanced liver cancer and was hospitalized soon after, said one of the lawyers, Shang Baojun, citing Mr. Liu’s relatives. Mr. Shang said the outlook for Mr. Liu appeared grim.
“It seems to be very serious, very serious,” he said. “If it was an early stage of cancer, then that would be easier to treat. But at this late stage, the treatment seems much more difficult.”
Mr. Liu, 61, was hospitalized in Shenyang, the capital of Liaoning Province, Mr. Shang said, as did Mr. Liu’s other lawyer, Mo Shaoping.
Comment: I believe the last Nobel Peace Prize Laureate to be effectively killed by his own government was Carl Ossietsky, in Germany in 1938. Does Xi care that the the likely precedent here for Beijing will be pre-World War II Nazi Germany? This is going to be hard for even the most diehard of CCP apologists to spin away. And it is more fuel for a much harder line US policy.
A heartbreaking video of Liu Xiaobo’s wife Liu Xia was going around Twitter Monday: “Several friends of #LiuXiaobo wife Liu Xia confirm to @AFP it is her in video crying and saying he can’t have surgery or chemo anymore.”
Beijing’s position is clear: China has no dissidents and Liu Xiaobo is a criminal. His offence was to co-author and gather signatures for a landmark call for reforms, though he did not initiate it and was seized before it was released. Though Charter 08 mostly called for the Communist party to uphold commitments made in its own constitution it was a coherent and forthright challenge to the party’s rule, calling for peaceful democratic reform.
There was no indication it had real mass appeal, still less a political impact. But it was a sign of the times. Liu believed the space for civil society was developing. By 2008, despite the tight political grip, China’s lawyers, intellectuals and grassroots campaigners had carved out a surprising amount of room for themselves
“The Chinese government’s culpability for wrongfully imprisoning Liu Xiaobo is deepened by the fact that they released him only when he became gravely ill,” said Sophie Richardson, China director at Human Rights Watch. “The government should immediately allow Liu Xiaobo and his wife, Liu Xia, to seek proper treatment wherever they wish.”
3. India Leaks News Of Border Shoving Match On Eve Of Modi’s DC Visit
The transgression report was confirmed hours after PTI reported that China on Monday said it was in talks with India over the denial of entry to 47 Indian pilgrims who were scheduled to travel to Kailash Mansarovar in Tibet through the Nathu-la pass in Sikkim. China last week refused entry to them. The pilgrims were scheduled to cross over to the Chinese side on June 19 but had failed to do so due to inclement weather. They had waited at the base camp and tried to cross again on June 23 but were denied permission by the Chinese officials.
According to spokesperson Geng Shuang, Indian border guards crossed the boundary in the Sikkim section of the China-India border and entered the territory of China, and obstructed normal activities of Chinese frontier forces in the Donglang area recently, and the Chinese side has taken counter-measures.
Colonel Ren Guoqiang, spokesperson for China’s Ministry of National Defense(MND), said on the night of June 26 that Indian troops’ unilateral provocation has violated the consensus and relevant agreements on border issues between the Chinese and Indian governments, seriously endangering the peace and stability of the border areas.
国防部发言人就印军在边界单方面挑起事端答记者问 – Chinese transcript
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4. The Party’s July 1 Hong Kong Party May Not Be Festive
Xi, general secretary of the Communist Party of China Central Committee, visited an exhibition at the National Museum in Beijing profiling the achievements made in Hong Kong since its return to the motherland in 1997.
At 3:00 p.m. Monday, Xi and other senior leaders arrived at the National Museum, accompanied by Leung Chun-ying, chief executive of Hong Kong Special Administrative Region (HKSAR).
习近平在参观香港回归祖国20周年成就展时强调 把握国家发展机遇 推进“一国两制”实践 – CCTV Evening News Report on the visit to the exhibition
Macau pro-democracy activist Chiang Meng-hin was refused entry into Hong Kong on Monday afternoon, ahead of the 20th anniversary of the transfer of sovereignty.
Comment: Nothing and no one will be allowed to mess up this CCP Party in Hong Kong, but Hong Kong is lot harder to lock down than other PRC cities. See below:
Demosisto secretary-general, People Power’s Tam Tak-chi and others from radical pan-democratic groups say move is protest against central government’s interference in Hong Kong’s internal affairs
5. 36th meeting of the Central Leading Group for Deepening Overall Reform
The group called for swift correction of problems uncovered during inspections and of lax implementation of reform. Departments and authorities should track reform implementation and assess overall outcomes, the statement said.
The meeting passed a plan to establish the Qilian Mountains National Park and explore coordinated ways to protect the environment, improve local standards of living and supervise the exploitation of natural resources.
The group stressed that mixed-ownership of state-owned enterprises (SOE) is important to SOE reform, with mixed-ownership to be well-established by the end of this year. Mixed-ownership should protect employees, prevent erosion of state assets and ensure the leading role of the CPC, said the statement.
Emphasizing the roles of Chinese enterprises overseas and outbound investment in maintaining China’s overseas interests, the group called for improved regulation of overseas investment.
China will continue innovation-driven development following two successful years of the Fujian, Guangdong and Tianjin pilot free-trade zones.
The group also discussed homogenizing local GDP calculations and experiences in the Fujian national ecological experimental zone.
Comment: Li Keqiang missed the meeting because he was in Dalian for Summer Davos. I wouldn’t read much into his absence.
“The safety of overseas businesses and outbound investments is an important part of [securing] China’s overseas interests,” the official Xinhua news agency reported, summarising the leading group’s decision.
“We must insist [on] the Communist Party’s leadership over the security of overseas businesses and outbound investments, and we must … improve statistics and monitoring of such businesses and investments to strengthen supervision,” the summary read.
习近平主持召开中央全面深化改革领导小组第三十六次会议强调 抓好各项改革协同发挥改革整体效应 朝着全面深化改革总目标聚焦发力_CCTV –Monday CCTV Evening News Report on the leading group meeting
6. Mass Line Coming To The Internet?
Zheng Bijian has a long essay on page 7 of the June 27 People’s Daily about the new stage of the mass line, includes much emphasis on youth and harnessing and managing the Internet, and using the masses to help. Is this another sign Internet policies are set to continue to tighten?
7. Technology And Political Will Converging To Allow The Communist Party To Create The World’s First National Panopticon
Facial-recognition technology, once a specter of dystopian science fiction, is becoming a feature of daily life in China, where authorities are using it on streets, in subway stations, at airports and at border crossings in a vast experiment in social engineering. Their goal: to influence behavior and identify lawbreakers….
The Chinese Ministry of Public Security—its national police force—and other agencies called in 2015 for the creation of an “omnipresent, completely connected, always on and fully controllable” nationwide video-surveillance network as a public-safety imperative. In a policy statement, the agencies included “facial comparison” in a list of techniques to be used to improve surveillance networks.
How China is Preparing for an AI-powered Future | Wilson Center U.S. leadership in artificial intelligence (AI) research and development (R&D) may be challenged by China’s recent and centralized policy planning aimed at rapidly developing AI-related technologies. The Chinese government supports AI as a strategic area supported by high-level policies with ambitious and quantifiable targets, inter-ministry coordination, government funding for research and development, support for workforce development, and suggestions for international collaboration and expansion. Still, as a relative latecomer in the global AI race, China faces numerous challenges to implement its policy planning, including short-term skills gap and long-term institutional constraints.
8. Did Official Malfeasance Play A Role In The Deadly Sichuan Landslide?
Meanwhile, angry villagers have demanded that local officials be held accountable for failing to heed their repeated warnings about a cave-in years ago on top of the mountain where the landslide occurred early Saturday.
Business, Economy And Trade
Property Games Leave Homebuyers out in Cold – Caixin In the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, the amount of floor space for new homes granted presale permits in May plummeted 53% from April and by 61% year-on-year, CRIC, a Shanghai-based property consulting firm and data provider, said in a report released in early June. In 10 of the 15 “hot cities” monitored by the National Bureau of Statistics (NBS), the amount of new housing in terms of floor space fell in May from the previous month.
China’s bank regulator cracks down on graft in deposit-raising | Reuters In a notice published on Monday, the China Banking Regulatory Commission (CBRC) told banks to strengthen their auditing and performance appraisal system to avoid “the illicit transfer of benefits”.
High-Frequency Trader Found Guilty of Manipulating Futures Market – Caixin Global The landmark case marks the first time a Chinese court has issued a verdict on high-frequency trading, which involves using algorithms to buy and sell large amounts of shares automatically at very high speeds. The practice is not illegal in China, but its use in trading stock-index futures was seen by regulators as having exacerbated the turmoil in the market that started in June 2015 and saw the benchmark Shanghai Composite Index slump 42% in two months.
China Jails Workers From Crown Resorts of Australia in Message to Casinos – The New York Times A court in Shanghai on Monday sentenced three Australian employees of Crown Resorts to less than a year in prison each for illegally promoting gambling in China. Including the time they have already spent in prison, all three should be released in weeks or months. Thirteen other employees, one Malaysian and 12 Chinese, received similar sentences, the company said
Alibaba-Backed Logistic Company Best Inc. Files for U.S. IPO – Bloomberg Best’s biggest business line by revenue is its express-delivery unit, followed by its freight-delivery division and supply-chain management services. Alibaba, whose 23 percent stake makes it the biggest existing shareholder, accounted for about 70 percent of Best’s express deliveries in the three months through March.
Chinese Premier Li Keqiang opens Summer Davos 2017 with keynote speech – YouTube Comment: video of his speech, did not sound like anything new. Xinhua-Premier Li calls for building of equitable, open world economy.
China’s industrial profits up 22.7 pct in Jan.-May – Xinhua Industrial companies with annual revenue of more than 20 million yuan (about 2.93 million U.S. dollars) reported profits of 2.9 trillion yuan in the first five months, a 22.7-percent increase from one year earlier, the National Bureau of Statistics (NBS) said in a statement. The profit growth was down from 24.4 percent in the first four months but much faster than the 8.5-percent increase in 2016.
Politics And Law
Senior Rail Official Held on Suspicion of Corruption in Coal-Rich Shanxi – Caixin Global Yang Shaoqing, former head of the rail bureau in the city of Taiyuan, was taken into custody in mid-April following his removal by the local legislature from his post as delegate of the 12th National People’s Congress in March, sources close to the China Railway Corp. and its Taiyuan bureau said.// Comment: Remembering Evan Osnos’ 2012 classic on the downfall of Railways Minister Liu Zhijun, “Boss Rail”
HNA’s founder calls fugitive Guo Wengui’s patronage claims “a pack of lies” | South China Morning Post HNA, one of China’s most aggressive global asset acquirers, is suing fugitive Guo Wengui for defamation for the allegations
13 Chinese sentenced to death for drugs offences as thousands look on in public trial | South China Morning Post Eight executed immediately after open hearing in a stadium in notorious drug producing area of Guangdong province
海伍德翻版？央视女主播丈夫死亡内幕_中国-多维新闻网 6月25日，有报道引述知情人士披露，刘芳菲丈夫狱中死亡案，非常蹊跷，因为刘希泳知道的情况太多，它可能涉及比当初海伍德（Neil Heywood）案件更高的政治人物。 // Comment: Liu Xiyong, businessman husband husband of CCTV host Liu Fangfei, died mysteriously in prison a few months ago, sparking all sorts of rumors that he was murdered because he too much about dirty dealings…rumors flying…
警惕西方学术话语的战略误导– 学习时报 June 26 Study Times–Be On Guard Against the Strategic Misleading of western Academic Discourse
Tycoon’s Claims Reverberate in China Despite Censorship and Thin Evidence – The New York Times Though some opponents of the party’s rule inside China and abroad have embraced Mr. Guo as a folk hero, others warn he is an opportunist who could drag democracy advocates into perilous undercurrents of party infighting. Mr. Guo has denounced some of these critics, accusing them of lacking the backbone to support him. “He’s become a divisive force in the democratic movement abroad,” said Li Weidong, a former Chinese magazine editor living in New Jersey who has fought with Mr. Guo. “There’s a clash of views over whether to back him or keep a distance.”
Foreign And Defense Affairs
North Korea asks U.S. not to involve China in bilateral talks：The Asahi Shimbun Robert Gallucci, former U.S. assistant secretary of state, and Leon Sigal, a member of the Social Science Research Council, a U.S.-based nonprofit organization, who met Vice Foreign Minister Han Song Ryol and other high-ranking officials of North Korea in Kuala Lumpur last October briefed The Asahi Shimbun on key points of the meeting.
Xi to visit Russia, Germany, attend G20 summit – Xinhua Chinese President Xi Jinping will pay state visits to Russia and Germany from July 3 to 6, the Foreign Ministry announced on Tuesday.
New U.S. ambassador to China says North Korea a top priority | Reuters “Resolving the bilateral trade imbalance, stopping the North Korea threat, and expanding people-to-people ties will be my top priorities,” Branstad said in the video message, which was released on a popular Chinese video-streaming platform.
China, South Korea likely to hold talks at G20 amid strained ties over missile shield, says diplomat | South China Morning Post Enna Park, South Korea’s ambassador for public diplomacy, said Beijing first needs to show flexibility over the deployment of the Terminal High Altitude Area Defence (THAAD) system to avoid the strained ties between the two nations getting further damaged.
North Korea at the top of agenda as South Korea’s new president comes to D.C. – The Washington Post Moon Jae-in will be going to the White House for what is shaping up to be a challenging summit, with the leaders taking sharply different approaches to dealing with North Korea and a continuing disagreement over an American antimissile system deployed to South Korea.
Canada and China strike corporate hacking deal – The Globe and Mail “The two sides agreed that neither country’s government would conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors,” an official communiqué drawn up between China and Canada says.
Chinese billionaire hits back at ASIO: I’m not a communist agent “For the record, I have never been a member of the Chinese Communist Party and I have never been a member of an advisory group called the People’s Political Consultative Conference. “As to the entity referred to by the ABC as the ‘united front work department’, I have no idea what this is.” // Comment: Strangely poor memory for a billionaire, given this photo of Chau meeting with UFWD representatives last year
经中央军委批准 《习近平论强军兴军》（基层官兵使用）印发全军 – 中国军网 中国军网北京6月27日电 为帮助基层官兵全面系统学习习主席国防和军队建设重要论述，更好地夯实忠诚核心、拥戴核心、维护核心的思想政治根基，更好地武装头脑、加强修养、指导工作，经中央军委批准，军委政治工作部组织编印《习近平论强军兴军》（基层官兵使用），日前由解放军出版社出版，并印发全军。
Tech And Media
Uber Left China, but Its Influence Lingers — The Information When Uber agreed to sell its China arm to local rival Didi Chuxing last August, many China-based employees of the U.S. company were suddenly left with little to do. They were cut off from U.S. headquarters but not quite part of Didi yet. Then headhunters started calling.
Tightening of live streaming leaves future of many Chinese platforms unclear – TechNode The reason for the ban remains unclear, especially since Weibo’s videos are actually hosted by a company called Yixia Technology which holds a video streaming license. Weibo also has a partnership with the National Football League to stream games. However, according to one Weibo KOL, “[t]he new regulation does not ban all the videos on Weibo, only those shows without a license from the government. If you post anything from your life, it’s not banned.”
Bilibili requires real-name registration for posting videos – Global Times Bilibili, one of the most visited ACG websites in China, announced on its website that based on relevant national regulations and policies, real-name registration is required for all users to post videos on its website, starting July 5. “Domestic users can use mobile phones to register and overseas users should provide valid identity information such as passports,” read the website statement.
Hollywood Is Auditing China’s Box-Office for First Time – Bloomberg Hollywood’s audit is part of a market-access agreement Chinese officials reached with the MPAA almost two years ago, details of which haven’t been disclosed to the public.
Society, Art, Sports, Culture And History
China Actress Yao Chen Denies Refugee Call Rumors | China Film Insider Yao, who has more social media followers than the population of the UK, has been forced to clarify her position on refugees after receiving an onslaught of online criticism.
Mixed martial arts vs tai chi group brawl stopped by police in Shanghai but battle rages on online | South China Morning Post Planned event likely sought to end the argument between supporters of the two combat styles, which has been bubbling over since MMA fighter defeated tai chi master in April
The Six The Six is the incredible untold story of Titanic’s Chinese survivors.
杭州豪宅纵火案：保姆、赌徒、毁灭者_深度_新京报网 Comment: The nanny accused in the Hangzhou arson that killed a mother and three children reportedly had huge gambling debts
Turn Off, Drop Out: Why Young Chinese Are Abandoning Ambition As the economy slows and social expectations rise, youngsters are rejecting traditional notions of success and embracing a culture known as ‘sang.’
Energy, Environment, Science And Health
China’s new environment minister urges ‘protracted war’ on pollution | Reuters Xinhua news agency named the minister as Li Ganjie, 52, who takes up the job less than a month after he was named the new party chief of the Ministry of Environmental Protection. On his first day in that job, he told staff to take environmental protection to “a new level” and wage a “protracted battle” against pollution. He takes over the job from Chen Jining, who was appointed acting mayor of Beijing last month.
Police punish Beijing students for bullying – Xinhua Five students have been put in administrative detention and fined, after a video of them bullying a schoolmate went viral on the Internet. // Comment: Awareness of bullying 凌辱 has increased significantly in recent months after a series of awful events. Here is another recent case 16岁女子带6名未成年凌辱裸体情敌 已全部被抓
Hillhouse Capital’s Zhang Lei Establishes US$43M Education Fund For Renmin University – China Money Network “From US$20 million in 2005 (when we started) to (assets-under-management of) US$30 billion, Hillhouse used 12 years to become one of the largest private equity management funds,” said said Zhang Lei. “In the future, with the university’s encourage and support, we will provide more support for the university’s development, and for the young who are fight for their dreams.”
Food And Travel
New High-Speed Train Promises Beijing-Shanghai Travel in Just 3 Hours | the Beijinger China’s high-speed railway may once again be offering passengers quick travel times by introducing a new train model that can conceivably make the trip from Beijing to Shanghai in just three hours. Topping out at 400 kilometers per hour during test runs, the “Revival” (复兴 fùxīng) high-speed train made a trial run on the busy Beijing-Shanghai high-speed corridor today.
Beijing Subway Wants to Go Cardless – Caixin As far back as 2013, subway stations across the capital were equipped with the technology to accept mobile phone payments, but only 1 million commuters — a fraction of the passengers who take the metro every day — have used the service so far. One reason for the feature’s low popularity is that it requires mobile phones to have a special SIM card with embedded NFC (near-field communication) technology.
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