Happy Tuesday, the 19th Party Congress is only a month away and speculation will soon reach a fever pitch. I will try not to feed too much of it but sometimes the rumors are just too juicy…Thanks for the comments on the latest logo idea, will stop bugging you all about it, will make some more changes.
The Essential Eight
1. North Korea Dominating US-China Relationship
If You Only Watch One Thing: Watch this sobering CNN interview with Seoul-based Andrei Lankov. He says sanctions will fail and Kim will not negotiate until he is confident he has nuclear missiles that can hit Washington DC, so the world will have to get used to a nuclear North Korea, and that will be very unpleasant.
North Korea watcher Andrei Lankov tells CNN both Russia and China are coming close to their own red line concerning North Korea.
President Donald J. Trump spoke today with President Xi Jinping of China to discuss North Korea’s continued defiance of the international community and its efforts to destabilize Northeast Asia. The two leaders committed to maximizing pressure on North Korea through vigorous enforcement of United Nations Security Council resolutions.
Comment: Interesting difference in emphasis in the US and PRC readouts of the call.
He also said Beijing attaches great importance to Trump’s state visit to China, and called on both sides to work closely so as to ensure a fruitful trip and inject new impetus into the development of China-U.S. relations. 习近平同美国总统特朗普通电话
The defense secretary also said he believed that the United States had found military options to handle the nuclear crisis on the Korean Peninsula that would not put the South Korean capital, Seoul, at grave risk, though he refused to elaborate on what those might be.
Next Steps: The US is signaling that it will impose more sanctions on Chinese entities and individuals if Beijing does not cut off oil exports to North Korea. In some ways the Trump administration is being tactically quite smart with China. The progressive ratcheting up of sanctions has Beijing’s attention, and the Chinese are very worried about sanctions against a major PRC bank. There are two likely approaches the US could take against a PRC bank that it thinks is not doing enough to stop any business with North Korea people/entities–a big fine, which is embarrassing but workable, or cutting said bank off from the US financial system, which would be seen by Beijing as an act of economic aggression and would lead to retaliation against US firms in China.
A big problem with this approach though is Beijing does not actually have the leverage to make Kim change course. The likely end game for the US is to find a face-saving climb down and negotiate.
2. More On The Preparations For The 19th Party Congress
Comment: Could the Four Comprehensives be the theoretical contribution written into the Party Constitution? And as expected the work report drafting sounds like it is nearly complete, the propaganda over the last few months has made it pretty clear what will be in there. If only the politics were as transparent as the policy…
“The people-oriented development thought should be implemented to solve the conspicuous problems faced by the country and a strategic plan should be made for the causes of the Party and the country to promote balanced economic, political, cultural, social, and ecological progress and coordinated implementation of the Four-Pronged Comprehensive Strategy,” the statement said.
The Four-Pronged Comprehensive Strategy 【四个全面”战略布局】 refers to building a moderately prosperous society, deepening reform, advancing law-based governance and strengthening Party self-governance.
Go Deeper: If you are interested in the process and history of amending the Party Constitution I highly recommend Alice Miller’s Xi Jinping And The Party’s “Guiding Ideology” in the most recent China Leadership Monitor
The report focuses on the efforts of the Political Bureau of the CPC Central Committee in implementing the eight-point frugality code, which was introduced in 2012, and the political bureau’s role in leading the Party to improve work styles.
Communist Party of China (CPC) members and government officials around China, especially those at the grass-roots level, are studying the book, Xi Jinping: The Governance of China, in a move that experts said is part of the momentum coming from the 19th National Congress of the CPC that will help implement Party policies in the future.
3. U.S. Trade Representative Calls Out China
The Big Question: Will the deals the Trump administration is trying to negotiate to announce during his Beijing visit be one-off commercial transactions, or is Trump pushing for the harder, structural changes? I am hearing Commerce Secretary is working on more transactional deals, which are relatively much easier for Beijing to deliver…
There is one challenge on the current scene that is substantially more difficult than those faced in the past, and that is China,” U.S. Trade Representative Robert Lighthizer said Monday in a speech in Washington. “The sheer scale of their coordinated effort to develop their economy, to subsidize, to create national champions, to force technology transfers and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented.”
U.S. Trade Policy Priorities: Robert Lighthizer, United States Trade Representative | Center for Strategic and International Studies-transcript and video of the speech
The chief of staff has limited the former academic’s access to the Oval Office, but the president has often leaned on Navarro, even asking ‘Where’s my Peter?’ when he’s absent from meetings.
Suspicious: Was Navarro demoted from assistant to the president to deputy assistant to the president? Compare his title “deputy assistant to the President” in this recent announcement to his title of “assistant to the President” in the original announcement, now deleted from the White House site, about his appointment.
4. Magic Weapons 法宝 : China’s political influence activities under Xi Jinping
Background: Australia and now New Zealand are waking up to the activities of a re-energized United Front Work Department. Other countries will soon follow, and it feels like this issue is starting to reach critical mass in Western capitals.
Professor Anne-Marie Brady from the University of Canterbury says Australia is planning to introduce a law against foreign interference activities at the end of the year and may ban all foreign political donations. She says New Zealand should do the same.
Brady, acknowledged internationally as an expert on Chinese affairs, has just presented a paper to a conference in the United States entitled Magic Weapons: China’s political influence activities under Xi Jinping.
Go Deeper: Here is a PDF of Dr. Brady’s paper Magic Weapons: China’s political influence activities under Xi Jinping
Lei Jin, deputy editor of Global Chinese Press, lost his job a week after his attempt to publish an obituary of China’s Nobel Peace Prize laureate Liu Xiaobo…
Global Chinese Press is the same publication that last year cancelled Gao Bingchen’s column after he criticized China’s Foreign Minister Wang Yi, who berated a Canadian journalist for asking about China’s human-rights record.
5. Self-Censorship In Panopticon 2.0
Get Smarter: The direction of Internet policy was really set at the 6th plenum of the 17th Party Congress in October 2011, then after Xi became General Secretary he formed in early 2013 the Cyberspace Affairs Leading Group and below it the Cyberspace Affairs Administration. That bureaucratic centralization was key to rolling out more Internet controls that would actually be implemented effectively, as we have seen over the last several years.
On China’s internet today, there truly is no land outside the law. The myriad laws governing cyberspace are designed not to delineate the rights and security of Chinese citizens, but to re-consolidate and legitimize the Party’s dominance over public opinion as a matter of political necessity.
Make no mistake: however “unrealistic,” the demand is most certainly what the People’s Daily disavowed back in 2012, that “everyone say the correct thing in the correct way.” And this demand is borne out quite explicitly in the most recent law to drop from the CAC.
Regulations released last week on the management of chat groups on social media services like WeChat, QQ and Baidu Post Bar, show us the extent to which media controls are now centered not, as they were in the past, solely on the gatekeeping media, but on users — which is to say, citizens — themselves
To some extent, WeChat users were already aware of the possibility that the Chinese government was able to read their private information and messages, but it is still striking when this fact officially hit us last Friday when the Tencent-owned messaging app detailed all the user information it collects as well as its readiness to share this data with the government.
6. Talk Of Independence Not Allowed in Hong Kong
Hong Kong’s leader urged an immediate end to independence debates in the Chinese-ruled global financial hub on Tuesday, warning that the issue was harming the city’s relationship with Beijing’s Communist Party leaders.
Insisting that the government did not want to intervene on university campuses against those who have been flying independence banners, Chief Executive Carrie Lam said the campaign was “organized and systematic” rather than simply an issue of freedom of speech.
In response to a suggestion by former Bar Association chairwoman Winnie Tam Wan-chi that the posters might breach the Crimes Ordinance, students at the Sha Tin campus said they were not worried about breaking the law, maintaining there were no clear laws on the legality of banners advocating independence.
7. Another Guo Wengui Accuser Speaks To Western Media
Comment: Interesting how the PRC security services are reaching out to the normally hated Western media to get these anti-Guo stories out. This time it is Reuters, previously it was the AP for the rape allegations.
After having a conviction for embezzling 855 million yuan ($130 million) from a company owned by Guo quashed, Qu Long told Reuters he is out for revenge…
Qu’s interview with Reuters was arranged by the Chinese authorities, who also provided briefings by three members of a special police taskforce investigating Guo, who is living in New York. Chinese officials told Reuters they wanted to get Qu’s narrative out through the Western media to counteract a barrage of internet postings by Guo.
Qu Long, who was often described as the right-hand man of the now-fugitive businessman, was acquitted by the Hebei Provincial High People’s Court after serving more than six years in prison. He had been sentenced to 15 years in 2012 for embezzling 855 million yuan (about $135 million at the time).
Qu, 47, told Caixin after his acquittal that his case was a typical example of how Guo used his close alliance with high-level security officials, including then-State Security Vice Minister Ma Jian, to secure business deals and interfere with the justice system.
Grab the Popcorn: Boxun says Roger Stone will be going after Guo Wengui on his talk show. Seems strange…
8. Inside the EB-5 US Green Card Sales Machine
When the program started, in 1990, Congress was squeamish about creating the impression that U.S. visas were for sale, so the law specifies that investors’ money must be at risk. The hope was that the program would jump-start development in moribund rural areas. But it languished unused for years, until developers in New York and other large cities figured out how to get just about any area to qualify as distressed, and the program took off. In recent years more than 90 percent of EB-5 investments have been in cities, and about three-quarters in real estate—often luxury residential properties in Manhattan. Most of the money comes from Chinese investors lined up by fixers such as Ding, who flood WeChat with advertisements and bring over American politicians to attach their names to projects, like Hollywood stars hawking whiskey in Japan.
Business, Economy And Trade
China’s Backdoor Real-Estate Bailout – WSJ But another 2015-style collapse in Chinese commodity demand remains unlikely. The reason? Slum clearance. Local governments are directly buying up large quantities of houses developers haven’t been able to sell and filling them with citizens relocated from what they call “slums”—old, sometimes dilapidated neighborhoods.
China Sees Progress in Campaign Against Financial Speculation – Caixin Global The banking industry’s outstanding interbank assets, including holdings of interbank certificate deposits and acceptance bills, dropped by 13.8%, or 3.2 trillion yuan ($488 million), from the end of 2016 to the end of August, data from the China Banking Regulatory Commission show. That compares with a decline of 1.8 trillion yuan at the end of June. However, the industry’s interbank liabilities fell by 1.6% in the first eight months, narrowing from a 2.3% drop in the first six months. The CBRC did not provide figures for total interbank assets or liabilities.
China Increases U.S. Treasury Holdings to Almost One-Year High – Bloomberg China’s holdings of U.S. bonds, notes and bills rose for the sixth straight month by to $1.17 trillion in July, an increase of $19.5 billion from a month earlier, according to Treasury Department data released Monday in Washington. Japan owned $1.11 trillion, up by $22.3 billion from June, marking the biggest gain in almost four years.
China’s CEFC, Ant Face Growing Waits for U.S. Purchases – Caixin Global A Chinese buyer of 20% of U.S. brokerage Cowen Inc. has resubmitted its application with the national security regulator, marking the latest instance of a Sino-American investment facing delays during the review process. Cowen updated the status of its tie-up with CEFC China Energy Co. Ltd. as a separate media report said the much larger purchase of U.S. financial services firm MoneyGram International Inc. by China’s Ant Financial was getting held up for similar reasons.
Regulatory Vortex Intensifies Over Virtual-Currency Exchanges – Caixin Global On Saturday afternoon, OKCoin and Huobi amended their Friday announcements to say that they will halt all their respective cryptocurrency exchange businesses. Notices released on Friday had said only that their yuan-denominated businesses would be affected, leading market participants to believe that trade between cryptocurrencies would continue and that the exchanges could still provide information to facilitate exchange between individuals. These two platforms were given an extra month to close because they did not participate in ICO-related activities and their platforms are handling large volumes, a source close to regulators told Caixin.
Press release – Trade Package: European Commission proposes framework for screening of foreign direct investments The EU has one of the most open investment regimes in the world. Openness to foreign investment is enshrined in EU Treaties. However, in some cases foreign investors might seek to acquire strategic assets that allow them to control or influence European firms whose activities are critical for our security and public order. This includes activities related to the operation or provision of critical technologies, infrastructure, inputs or sensitive information. Acquisitions by foreign state-owned or controlled companies in these strategic areas may allow third countries to use these assets not only to the detriment of the EU’s technological edge, but also to put our security or public order at risk
China Pollution Inspections Disrupting Supply Chains | Bloomberg BNA “Tens of thousands” of factories have been affected in and near the major urban centers, with impacts ranging from “complete factory shutdowns [to] temporary closures” with unknown timeframes for resolution, Gary Huang, who sources products in China for Amazon.com sellers and is head of the supply chain committee at American Chamber of Commerce in Shanghai, told Bloomberg BNA.
Politics And Law
Chinese Officials Search Law Firm of Top Human Rights Lawyer – RFA The search on the office of Mo Shaoping, a prominent Beijing lawyer known for defending sensitive human rights cases, was conducted by the Beijing Municipal Bureau of Justice, a source with knowledge of the case told RFA’s Mandarin Service. “The searching personnel were led by about 10 Beijing local district judicial office managers,” the source said. “The purpose of the search was to begin what will probably be a 10-day ‘Special Inspection’ before the 19th Party Congress,” RFA’s source said.
Fei Chang Dao: Man Jailed Seven Months for Saving ISIS Videos on Phone and Baidu Cloud Storage On September 8, 2017, the People’s Court of China website posted the judgment of a court in Beijing imposing a seven month prison sentence on Duan Zheng on the grounds that he violated Article 120-6 of China’s Criminal Law (illegal possession of materials promoting terrorism and extremism) for saving seven terrorist videos on his cell phone and his Baidu cloud storage account.
The Book of Swindles: Selections from a Late Ming Collection (Translations from the Asian Classics): Yingyu Zhang, Christopher G. Rea, Bruce Rusk Comment: This book looks great, ordered it last night. A good reminder that very little is actually new…// The Book of Swindles, compiled by an obscure writer from southern China, presents a fascinating tableau of criminal ingenuity. The flourishing economy of the late Ming period created overnight fortunes for merchants―and gave rise to a host of smooth operators, charlatans, forgers, and imposters seeking to siphon off some of the new wealth. The Book of Swindles, which was ostensibly written as a manual for self-protection in this shifting and unstable world, also offers an expert guide to the art of deception. Each story comes with commentary by the author, Zhang Yingyu, who expounds a moral lesson while also speaking as a connoisseur of the swindle. This volume, which contains annotated translations of just over half of the eighty-odd stories in Zhang’s original collection, provides a wealth of detail on social life during the late Ming and offers words of warning for a world in peril. // Comment to me from the translator Christopher Rea: The full title is 江湖歷覽杜騙新書 and it’s more commonly called 杜騙新書 or 騙經. Here’s one early edition. It’s not a well known book, even to specialists in Ming literature, but the stories are entertaining and some of them find their way into late imperial literature, including 儒林外史. The book came together around 1617; first extant imprint of 金瓶梅 dates to 1610, so they’re close contemporaries.
Chinoiresie | Treating What Ails the Study of Chinese Politics There is nothing wrong with technical sophistication in one’s methods and there is absolutely a rightful place for research using ‘big data’, experiments, and other new tools. But we must prevent the stifling homogeneity of the methods arms race from becoming completely ensconced and crowding out all other work (especially by younger or emerging scholars). Diversity and bold experimentation must win out over any rigid orthodoxy if we have any chance to put our patient’s illness fully into remission.
十九大召开在即 在组织生活会上普通党员习近平说了啥？–专题报道-人民网 2017年8月13日，习近平总书记以普通党员身份参加了所在党支部的专题组织生活会，这是三年来习近平总书记第三次参加所在支部的生活会。在这次党支部组织生活会上，习近平总书记讲话提到了哪些内容呢？为帮助读者深入学习习近平总书记重要讲话精神，人民网·中国共产党新闻网受权对有关情况作进一步介绍，供大家学习参考。
Foreign And Defense Affairs
China offers support to Myanmar at U.N. amid Rohingya crisis – Reuters China supports efforts by the Myanmar government to protect its national security and opposes recent violent attacks in the country’s Rakhine state, Chinese Foreign Minister Wang Yi told U.N. Secretary-General António Guterres.
Aung San Suu Kyi gains popularity with Chinese netizens – Global Times Despite being heavily criticized by the Western media over the Rohingya issue, Myanmar State Counselor and former Nobel laureate Aung San Suu Kyi has gained popularity with Chinese netizens, who praised her defiance against “outside pressure while safeguarding her people’s interest.” Suu Kyi had long been seen as a proxy of the West by nationalistic Chinese netizens due to her close relationship to the Western countries, but she has won cheers recently from the Chinese online communities who are routinely indignant over Western pressure on developing countries over issues concerning national security.
China Quickens Work on Pakistan Utility in Area Claimed by India – Bloomberg Construction on the 720 megawatt Karot power station being built on Jhelum river began in December 2016 and looks set to finish nine months ahead of its December 2021 completion date, a first for a Pakistan hydro-project said Qin Guobin, chief executive officer of the state-owned China Three Gorges Corp. South Asia Investment Ltd. The company has put in place an aggressive strategy to cut the project’s financing costs.
新华社、解放军报推出长篇综述：《奏响人民军队法治建设时代强音》 – 中国军网 ——以习近平同志为核心的党中央领导和推进强军兴军纪实之五
China begins building new mother ship for old sub – People’s Daily Online Sun Shuxian, a deputy chief of the State Oceanic Administration, said on Saturday that construction of Shenhai No.1 will help boost Jiaolong’s performance and improve China’s deep sea exploration.
Lyndon LaRouche Is Running A Pro-China Party In Germany | Foreign Policy outdated obsessions have been replaced with LaRouche’s newfound fascination with Chinese President Xi Jinping’s Belt and Road Initiative, also called the “New Silk Road” — which explains why campaign posters promoting the initiative as Germany’s saving grace now paper Berlin.
China, Laos Hold New Defense Meeting | The Diplomat Over the weekend, China and Laos held the first iteration of a new defense consultative mechanism. The convening of the so-called high-level frontier meetings, led by the defense ministers of both sides, has been billed yet another step in the development of security ties by Beijing and Vientiane despite some of the recent challenges inherent in the relationship.
China to launch two more groups of BeiDou-3 satellites_China | Asia Pacific Daily 18 BeiDou-3 satellites will be sent into space around 2018, which are expected to cover the countries and regions along the Belt and Road.
Tech And Media
China En Route to Driverless-Car Road Testing – Caixin Global The Ministry of Industry and Information Technology (MIIT), the Ministry of Public Security and the Ministry of Transport are working on the draft regulations, and a source close to the MIIT told Caixin that an outline of road testing rules for unmanned vehicles has been completed.
China’s digital economy: A leading global force | McKinsey & Company China is already more digitized than many observers appreciate and has the potential to set the world’s digital frontier in coming decades.
Fast and furious: Chinese unicorns to overtake American counterparts says BCG report – TechNode China’s internet industry has developed at a phenomenal speed. A recent report (in Chinese) by the Boston Consulting Group (BCG) together with the research divisions from Alibaba, Baidu and Didi reveals just how fast Chinese unicorns, or internet companies that have a valuation of over $1 billion, have grown compared to their American counterparts
China Communist Party complains about ‘fabricated’ Twitter account – Reuters In a brief statement on its Weibo account, China’s answer to Twitter, the Youth League labeled the @ComYouthLeague Twitter account “completely fabricated”, saying it had asked for it to be “handled”. The statement did not elaborate.
Hedge Fund Launches Proxy Fight Against China’s Sina – WSJ Aristeia Capital LLC, a Greenwich, Conn., hedge fund with about $3 billion in assets, has proposed a range of options to address what it calls a persistent discount to Sina’s underlying value—especially considering its stake in Weibo.
With New Terms, Weibo Claims Exclusive Rights Over User Content – Sixth Tone The rule change follows an ongoing dispute between Weibo and Toutiao, a popular media aggregator that Weibo accused of appropriating its content without authorization. Toutiao had asked its own users to allow automatic reposting of their Weibo articles on Toutiao.
Alibaba Is Said to Buy $100 Million in Best Inc.’s Downsized IPO – Bloomberg Alibaba Group Holding Ltd. plans to invest about $100 million in Best Inc.’s initial public offering, after the Chinese logistics provider cut the size of the deal nearly in half, according to people with knowledge of the matter.
Society, Art, Sports, Culture And History
Problems at Alisports as more tournaments are canceled – China SPorts Insider One canceled golf tournament might not, at first glance, seem like a huge deal, but a worrying trend of overreaching has dogged Alisports since its inception – and the cracks are starting to show.
John W. Lewis, China Expert and Vietnam War Critic, Dies at 86 – The New York Times Professor Lewis served as an adviser to the Defense Department and the Senate Select Committee on Intelligence and had made scores of visits to China since 1972 and to North Korea since the mid-1980s
Story of Shanghai Bund “Attack by Muslim Man” Triggers Online Furor in China | What’s on Weibo A personal story by a Weibo netizen about an altercation with a Muslim man on the Bund in Shanghai has stirred wide debate on Chinese social media. The case has evoked both anti-Islamic sentiments and anger about censorship in the name of ‘ethnic unity.’
三部门：婚恋平台严格执行实名制 严厉打击婚托婚骗–时政–人民网 new marriage matchmaking rules issues
Hip-Hop Gives Chinese Dialects Fresh Expression – Sixth Tone On his recent track “Stupid Foreigners,” rapper Cai Zhenhong — better known as “Xie Di” or “Fat Shady” — rails against arrogant and entitled expatriates living in his homeland. Although it drew attention primarily for its provocative subject matter, the track is also notable for being entirely in the Chengdu dialect, part of the family of Sichuan dialects spoken by over 100 million in China’s southwest.
Ai Weiwei: ‘Without the prison, the beatings, what would I be?’ | The Guardian He describes his present base in Berlin as a dormitory existence. He says that he doesn’t speak German and rarely leaves his studio. He works through the weekend and says he never takes vacations. And all this is OK; the work keeps him occupied. “Also, it’s still very dangerous for me to go back to China. Twelve of my lawyers are still serving sentences. One for five years, another for 10. I call my mum on the phone; she’s well over 80. And she always tells me, ‘Don’t ever come back.’”
Agriculture And Rural Issues
Getting savvy? China corn farmers set to hold on to crops, bet prices will rise – Reuters That has sparked worries about short-term supply in China, triggering an unseasonal rally in markets, with physical prices of first grade corn at the port of Jinzhou, Liaoning province, in early September hitting their highest in two months at 1,720 yuan ($260.97) per tonne.
Food And Travel
Chinese air passengers could soon be allowed to use smartphones and tablets during flights | South China Morning Post New regulations give individual airlines discretion to decide whether they will allow passengers to operate portable devices
The World’s Best Caviar Doesn’t Come From Russia Anymore – Bloomberg But because most consumers still associate Chinese brands with inexpensive knockoffs, the provenance of Kaluga Queen caviar is rarely mentioned. Alexandre Petrossian, vice president of the namesake caviar purveyor, sells Kaluga Queen-sourced products at the company’s boutiques worldwide but doesn’t label the caviar as Chinese on its tins, where 30 grams can average $150.
The last days of a ‘village’ in China’s Silicon Valley | South China Morning Post Migrants from China’s relatively undeveloped southwestern region have lived precariously for two decades in Zhongguancun – which is also the base of hi-tech companies including Lenovo, Baidu, Tencent and Sohu, which help their employees from other regions obtain legal rights to live in the capital.
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