Good evening from rainy and finally Autumn-like DC…It is fairly quiet on the China news front, lots of 19th Party Congress Propaganda work and several Western media profiles of Xi Jinping.
The Party Congress is the focus over the next two weeks but we are less than a month away from President Trump’s visit to China.
am now hearing have confirmed that Trump will be in China for three days from November 8-10, but that will not be the longest stop on his trip. the longest stop on his Asia trip. North Korea and trade will top the agenda, and the latest China trade data will not make those trade talks any easier. Yang Jiechi and Rex Tillerson had a call Thursday to discuss the trip but so far the US has not sent the National Security Adviser to Beijing to prepare for the visit, as was done before prior trips.
The first Trump-Xi meeting became known as the “Citrus Summit”. Given the tensions with North Korea I hope this upcoming one does not end up known as the “Peking Duck and Cover Summit” (sorry, it’s late…).
I am not looking forward to Trump’s obligatory visit to the Great Wall, his inevitable wall envy and likely comments about how important it is to have such a beautiful wall to keep out the barbarians. Will any of his advisors tell him that the Great Wall didn’t actually work?
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The Essential Eight
1. Western Media Profiles of Xi Jinping
Comment: A strangely orange Xi is on the cover of this week’s Economist Magazine:
He Yiting, vice-president of the Central Party School, the institution in charge of training senior officials, recently wrote that the modern history of China can be divided into three periods: Mao’s; reform and opening up (ie, Deng’s); and the period since 2012 (ie, Mr Xi’s). A book published in July called “Xi Jinping’s Thoughts” (a collection of essays) says in its introduction that “China needs heroes who can usher in a new generation of thinking and achievement, heroes such as Mao Zedong, Deng Xiaoping and Xi Jinping.” Mr Xi presents himself as their true heir.
Not all of this started with Mr. Xi. China’s military expansion — its two new aircraft carriers, for example — is backed by decades of patient modernization. The shutting down of social media accounts also began before Mr. Xi took office, as did the creation of “stability-maintenance” bureaus that have aided the crackdown. And then there’s the broader issue of China’s being a wealthier and more powerful country; under any leader, Beijing was going to shake off its reticence.
But Mr. Xi has upped the ante.
Comment: And that last sentence is the key point to remember. So much of what Xi is doing stems from Party policies that predate him. And so much of the focus is on Xi as an individual actor but it is a huge mistake to believe China’s policies and behaviors stem from him alone.
The Thoughts of Chairman Xi – BBC News – Carrie Grace Xi Jinping is tightening his grip on power. How did one man come to embody China’s destiny?
2. PRC Embassy Gets Aggressive With The US Congress
Comment: Was the PRC Embassy so successful in killing the mooted legislation to rename the street in front the PRC Embassy to “Liu Xiaobo Square” that the Ambassador and his team have concluded Congress is susceptible to threats and easy to roll?
In a rare pressure campaign, the Chinese government is demanding that the U.S. Congress back off passing new laws that would strengthen the U.S. relationship with Taiwan. Beijing’s efforts are the latest sign that it is stepping up its campaign to exert political influence inside countries around the world, including the United States.
In response to proposed legislation in both the House and Senate, the Chinese Embassy in Washington lodged a formal complaint with leading lawmakers, threatening “severe consequences” for the U.S.-China relationship if Congress follows through. China’s tactics have angered lawmakers and staffers in both parties, who call them inappropriate and counterproductive.
Comment: Taiwan President Tsai will be traveling around the Pacific in a couple of weeks. Will anything happen to upset Beijing before Trump’s visit?
Taiwan President’s office announces Tsai Ying-wen will travel to Marshall Islands, Tuvalu, and the Solomon Islands 10.28-11.4.-總統府宣布 蔡英文28日出訪太平洋3友邦 | 政治 | 三立新聞網
3. Is China Really Serious About Clean Energy And Improving The Environment?
The U.S. is still creating technologies, the dozen experts interviewed for this article said. But China has blown past the U.S. in actually deploying them, and it’s beginning to edge out America on the innovation front too. Let’s take a look at three key areas:
The country’s top environmental watchdog has created a national research and development (R&D) taskforce to implement the more than two dozen research programs identified by the country’s cabinet last month.
Various research facilities in China are separately studying green technology and pollution, but the Joint National Center for Air Pollution Prevention can pool all these resources together and will be more efficient, a person briefed about plans for the center told Caixin.
A centralized system would also have the strength to push forward new environmental technologies and policies when dealing with regional governments, according to the source who wished to remain anonymous.
Three cities recently joined other regions in northern China in implementing measures to fight air pollution as the heaviest pollution season approaches.
China is embarking on a wide-ranging program to develop and commercialize clean energy technologies in a bid to clean up the nation’s pollution and create cutting-edge products that can be exported. But its aggressive support for such industries through subsidies and other assistance often leads to oversupply and the creation of mediocre products.
The United States and China welcome three new EcoPartnerships for 2017. Over the past nine years, the State Department-sponsored Ecopartnerships program has facilitated 42 partnerships among experts and innovators from U.S. and Chinese cities, companies, universities, and NGOs.
Answer: It sure looks like it.
4. New Discipline Officials In The Financial Sector Signal The Regulatory and Corruption Crackdowns Likely To Deepen
Comment: Caixin, which has very good sources at the CCDI, looks at the appointments of Li Xinran and Lin Guoyao
Now the recent appointment of Li — who has a history of tackling corruption — and Lin — who has been working in government bodies in Fujian province for his over two-decade-long career — signal that the anti-graft campaign won’t be coming to an end in the near term, even as the key National Party Congress approaches in mid-October.
Li was a go-getter in the central discipline commission system, where he worked for more than two decades, sources told Caixin. During Li’s time as the director of the No. 6 Discipline Inspection Office at the central discipline commission from March to November in 2015, Shangguan Yongqing, a former party secretary and president of state-run Shanxi Guoxin Investment Group Co., was detained over bribery and corruption allegations…
Lin was born in 1966 and served as an official in the Xiamen city government and the provincial government of Fujian province. His appointment to the insurance watchdog was widely seen as a demonstration of the government’s growing emphasis on tackling regulatory problems in the insurance industry.
5. China Wants To Recognize All Its 1.3 Billion Faces; Panopticon 2.0 Is Approaching
Comment: If the only barriers are technical then China will get it done. Are there any American LPs in the VCs funding the companies behind these efforts? That could get awkward…
The project, launched by the Ministry of Public Security in 2015, is under development in conjunction with a security company based in Shanghai.
The system can be connected to surveillance camera networks and will use cloud facilities to connect with data storage and processing centres distributed across the country, according to people familiar with the project…
The 1.3 billion-person facial recognition system is being developed by Isvision, a security company based in Shanghai..
The system developed by Isvision will use an algorithm developed by SeetaTech, a start-up established by several researchers from the Institute of Computing Technology at the Chinese Academy of Sciences in Beijing.
上海银晨智能识别科技有限公司 IS’Vision-website of IS’Vision
中科视拓 SeetaTech Seeta Tech Website. SeetaTech has Linear Venture as an Investor
Comment: One of Linear cofounders is a former Facebook employee 线性资本 (Linear Venture) 由Facebook早期员工王淮和京东、天猫原高管张川共同创立
6. Trade Data: Surplus With US Up, Trade With North Korea Down
Comment: Mixed messages ahead of Trump’s CHina visit
China’s trade surplus with the United States in September rose to $28.08 billion versus $26.23 billion last month, Chinese customs data on Friday showed.
The surplus was the highest ever with the U.S. for any single month, based on Reuters calculations based on official data going back to 2008.
Exports to North Korea fell 6.7 percent last month versus a year ago, while imports fell 37.9 percent, customs administration spokesman Huang Songping said at a briefing in Beijing. North Korea’s deficit with China more than tripled in the first nine months of the year from the same period in 2016, to $1.07 billion, he said, without giving further explanation.
7. Red Entrepreneurs Required
Comment: During a late 2000s crackdown on mobile value added services that had a huge impact on the revenue and stock prices of US-listed Chinese Internet firms a story went around that one of the CEOs was telling people that the crackdown was a reminder to even an unimaginably rich person like himself that “in the eyes of the Party we are all peasants”. It does not look like that view has changed…
The “patriotism edict,” as observers have called it, is in line with Xi Jinping’s model of state capitalism. The leadership aims to regain control over large parts of the Chinese economy that had been allowed to develop outside the Party’s oversight. Throughout this year, the CCP has taken steps to increase the influence of party committees within private companies to a level that was previously only seen in state-owned enterprises (SOEs).
The private sector, however, was born outside of the party’s control. To borrow an analogy from the popular geopolitical theory known as the “Thucydides trap,” China’s entrepreneurs are the rising power destined to battle the established power of the party and the state. “It’s been clear from before Xi’s time that if entrepreneurs try to use their business networks for political power, the party will quickly cut them down,” said Ding Xueliang of the Hong Kong University of Science and Technology. “But the party cannot control everyone in China in the private sector forever.”
8. US Ceding Multilateral Institutions to China
Beijing on Friday said it would continue participating and cooperating with other countries in the United Nations Educational, Scientific and Cultural Organisation after Washington announced it would leave the agency the previous day.
“China values the importance of Unesco and would like to contribute more to the organisation’s cooperation,” foreign ministry spokeswoman Hua Chunying told a regular press briefing in Beijing.
The prospect of a wave of “America First” protectionism and US tax reform in the US has loomed large over this week’s annual meeting of the International Monetary Fund and World Bank. Yet across dozens of public events a Trump administration that has been advertising its disregard for multilateral institutions has been largely absent.
Filling in is a China eager to assume the US’s place as the new advocate for economic openness and international co-operation in the world.
Comment: Perhaps Trump really means to MCGA-Make China Great Again?
That shift is readily apparent at this week’s annual meetings of the World Bank and the International Monetary Fund in Washington, according to Scott Morris, who oversaw U.S. global development policy and worked with the World Bank while in the Treasury Department during the Obama administration.
“You have a China that is looking to showcase its multi-trillion dollar ‘Belt-Road’ initiative with very high-profile events and then you have American officials who want to say no to everything: No to ambition at the World Bank, no to trade agreements,” Morris told CNBC’s “Squawk Box.”
Jim Yong Kim, the World Bank’s president, has been pushing for extra financial resources and had hoped that shareholders would agree on at least a timetable for the increase at this week’s annual meetings in Washington.
But the Trump administration has been resisting those plans and this week aired its demands, saying it wanted the World Bank to examine its own balance sheet first and in particular its lending to China, which is presently the bank’s biggest borrower.
Comment: In this case is the Trump Administration wrong?
Business, Economy, Finance And Trade
China banking regulator, Hubei chief front runners to head central bank: sources – Reuters Guo Shuqing and Jiang Chaoliang. Jiang was at the Politburo study session on financial risk Guo, chairman of the China Banking Regulatory Commission (CBRC), whose rich experience and reformist credentials are similar to Zhou‘s, is seen as more qualified for the job, the sources said. However, Jiang, the Communist Party chief of Hubei province, has the backing of some top leaders and is seen as having a roughly equal chance of getting the post, they noted.
China’s electricity consumption picks up – Xinhua Electricity consumption rose 7.2 percent from one year earlier, up from the 6.4-percent increase in August, according to the National Energy Administration (NEA). For the first nine months, electricity consumption totaled 4.7 trillion kilowatt hours, up 6.9 percent year on year, the NEA said.
LDK Solar Stares Into the Abyss – Caixin Global The future of debt-laden LDK Solar, once a star of the global photovoltaic industry, looks increasingly precarious as creditors owed almost $8 billion remain locked in a standoff with court-appointed administrators trying to find investors to buy parts of the group and save it from liquidation.
Chinese Mainland Dominates Global Venture-Capital Investment in Third Quarter – Caixin Global Companies on the Chinese mainland were recipients of half of the world’s 10 largest venture-capital financings in the third quarter, auditing firm KPMG said.
Tencent Will Sell You Insurance — in Its Apps – Caixin Global The China Insurance Regulatory Commission (CIRC) said Wednesday it granted an operating license to Wemin Insurance Agency Co. Ltd., a new insurer in which Tencent owns a 57.8% controlling stake. Other shareholders of Weimin include Taiwan-based Fubon Property & Casualty Insurance Co. and a Chinese private equity fund.
Xi’s power grab might drag the economy down | East Asia Forum – Yukon Huang For China’s leaders, delivering the growth agenda is critical to preserving the credibility of the Chinese Communist Party (CCP). This legitimacy could be questioned in the event of a dramatic slowdown in growth, yet whether the right policies will be implemented to prevent this is still unclear. The answer is likely to depend on how Xi resolves the major contradiction highlighted in the CCP’s 2013 Third Plenum reform statement. The statement proposed that the market should play a ‘decisive’ role in resource allocation, but it also reaffirmed that the state would continue to play a ‘leading role’ in the economy. This ambiguity has clouded the formulation and implementation of reforms since then.
Is Xi a Threat to Foreign Businesses in China? – Bloomberg John Thornton, who helped build Goldman Sachs Group Inc.’s business in China in the 1990s and is now executive chairman of Barrick Gold Corp., says China’s policymakers have long worried that liberalizing too quickly might open the economy to foreign domination. “For the last 20 years, maybe even longer, the Chinese leadership as a whole, and this would include the current leadership, has been conscious about pacing reform and opening,” he says. What’s changed is that while U.S. policymakers were once comfortable allowing China that rein, today they’re more inclined to push back, Thornton says.// Comment: The New York Times reported Thornton arranged the Steve Bannon-Wang Qishan meeting. I keep hearing he is doing amore behind the scenes between Beijing and Trump.
South Korea says renewed FX swap lines with China, amid signs of easing tensions – Reuters The $56 billion currency swap, which was due to have expired on Tuesday will be extended for another three years, according to South Korea’s finance ministry and the Bank of Korea.
Meet the New Stock Market Regulators: Marx and Mao – MoneyBeat – WSJ . “It is very rare for the securities regulator to cite Marxism works as guidance,” said Zhang Gang, an analyst at Central China Securities. “The stock regulator’s pledge of solidarity with the highest authorities shows the rising sway of politics over markets.”
China establishes yuan-ruble payment system – Reuters China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions.
China strives to develop supply chain – Gov.cn The document was aimed at establishing a smart supply chain system that basically covers major industries in China by 2020, with the introduction of a batch of new supply chain technologies and models, and the cultivation of about 100 world-advanced enterprises in China’s supply chain sector
China says EU, U.S. trade moves lack awareness of WTO rules – Reuters The European Union agreed to new rules last week to guard against lower-priced Chinese imports, ending 18 months of wrangling over trade ties with Beijing. When asked about the United States deferring a decision on anti-dumping tariffs on imports of Chinese aluminum foil and China’s non-market economy status, Gao said the phrase non-market economy showed “Cold War” thinking.
Chinese Cities Buy Off Housing Glut With Borrowed Money – WSJ Under Beijing’s direction, more than 200 cities across China for the last three years have been buying surplus apartments from property developers and moving in families from condemned city blocks and nearby villages. China’s Housing Ministry, which is behind the purchases, said it plans to continue the program through 2020. The strategy, supported by central-government bank lending, has rescued housing developers and lifted the property market, which accounts for a third of China’s economic growth according to Moody’s Investors Service.
Politics, Law And Ideology
19th CPC National Congress to feature more grassroots delegates – Xinhua According to a circular issued by the CPC Central Committee in November 2016, frontline workers should account for no less than one-third of the delegates. A total of 771 grassroots delegates have been selected from various social sectors, accounting for 33.7 percent of the total, up by 3.2 percentage points from five years ago.
The rare moment when every vote counts at China’s party congress | South China Morning Post There are usually two rounds of voting. In the preliminary round of voting – held at the start of the congress – each delegate nominates his or her least favourite candidates. The number of people they have to select depends on how many more candidates there are than seats available on the central committee. The ballots are then tallied and those candidates with the most votes are eliminated from the contest. The aim of the preliminary vote is to whittle down the number of candidates so that it exactly matches the number of seats available. A final vote is then held at the end of the congress in which all of the remaining candidates are guaranteed a seat on the central committee.
19th Chinese Communist Party Conference Preview Part 1, Oct 6 2017 | C-SPAN.org Doug Paal, Michael Swaine, Alan Romberg
19th Chinese Communist Party Conference Preview Part 2, Oct 6 2017 | C-SPAN.org Alice Miller, Joe Fewsmith, Jessica Battke
理论创新引领航程（人民观点）–观点–人民网 本版今起刊登“从十八大到十九大”系列评论，回顾5年来的理论创新、实践创新、制度创新，以凝聚我们的力量、增强我们的信心，共同迎接党的十九大胜利召开。 ——编 者
This Digital Device Now Helps Chinese Police Catch Traffic Violators | What’s on Weibo The automated device can be placed on the guardrail and is directly connected to the smartphone of the police officer controlling it. Through the camera on the device, the police can see when someone is driving on the emergency lane and can send out police warning signs and sounds through the speakers on the device.
Foreign and Military Affairs
Cyberattack Captures Data on U.S. Weapons in Four-Month Assault – WSJ The identity and affiliation of the hackers in the Australian attack weren’t disclosed, but officials with knowledge of the intrusion said the attack was thought to have originated in China. Alastair MacGibbon, the government’s chief cybersecurity adviser, said the type of information stolen made it more likely that the hackers were working for a foreign nation than for a criminal enterprise.
PLA guidelines to open units’ doors – China Daily The guidelines were made and published by the Central Military Commission’s General Office and have been put into effect. The idea is to display the PLA’s “new images”, strengthen the public’s passion for the military and their respect toward service members and encourage officers and soldiers to dedicate themselves to building a strong military, according to a news release from the office.
Victim mentality motivates scholar to accuse China of denying data to India – Global Times India seems to view whatever China does as suspicious and deem it a threat, like a victim of persecutory delusion. Brahma Chellaney, an Indian strategic professor, criticized China for withholding hydrological data on upstream flows so as to pressure downstream countries, especially India, in an article published Tuesday on the Project Syndicate.
Chinese Power Projection Capabilities in the South China Sea | Asia Maritime Transparency Initiative Since 2014, China has substantially expanded its ability to monitor and project power throughout the South China Sea via the construction of dual civilian-military bases at its outposts in the disputed Spratly and Paracel Islands. These include new radar and communications arrays, airstrips and hangars to accommodate combat aircraft, shelters likely meant to house missile platforms, and deployments of mobile surface-to-air and anti-ship cruise missile systems at Woody Island in the Paracels. How these capabilities overlap is highlighted in the map above.
Asia Expert: Bannon ‘Today’s Paul Revere’ on China—‘The Bannon Express’ Putting ‘Communists Giants’ & Globalists in ‘Grave Danger’ – Breitbart Renowned Asia expert Gordon Chang believes former White House Chief Strategist Steve Bannon is “today’s Paul Revere” when it comes to his warnings about China’s economic war with the United States.
Hong Kong, Macao
Generation HK: Seeking Identity in Chinas Shadow: Ben Bland: Amazon Teenage activists turned politicians, multi-millionaire super tutors, and artists fighting censorship—these are the stories of Generation HK. From radically different backgrounds yet with a common legacy, having grown up in post-handover Hong Kong, these young people have little attachment to the era of British colonial rule or today’s China. Instead, they see themselves as Hong Kongers, an identity both reinforced and threatened by the rapid expansion of Beijing’s influence. Amid great political and social uncertainty, Generation HK is trying to build a brighter future. Theirs is a truly captivating coming-of-age story that reflects the bitter struggles beneath the gleaming facade of modern Hong Kong.
Two very different young democrats in Hong Kong tell their stories: book excerpt | Post Magazine | South China Morning Post Ben Bland’s Generation HK: Seeking Identity in China’s Shadow attempts to define what it means to be a Hongkonger 20 years after the handover
Alarm in Taiwan over triad ties to pro-China groups – FT $$ Chang An-le is accustomed to being on the wrong side of the law. The former gangster, known as the White Wolf, spent 17 years as a fugitive from Taiwanese justice in mainland China and a decade behind bars in the US on drug-trafficking charges. Now Mr Chang, back in Taiwan since 2013, runs the Chinese Unity Promotion party that backs unification between communist China and democratic Taiwan, which Beijing regards as a renegade province.
Taiwan seeks to build soft power with retooled southbound policy – Reuters Taiwan is targeting deeper economic and political relations with 10 countries from the Association of Southeast Asian Nations (ASEAN), six South Asian countries, as well as Australia and New Zealand,
Tech And Media
Alibaba CEO Jack Ma sings at surprise music festival appearance – Business Insider On October 11, Ma joined Chinese singer Li Jian on stage for a surprise appearance at Yunqi Music Festival, where he sang a duet on Li’s hit song “Legend.” Adorned in a hip jacket, jeans and sunglasses combo, he didn’t stop there.// Comment: The kind of KTV singer everyone has to flatter and so never gets anything but rapturous applause no matter how he sings?
Qualcomm Seeks China iPhone Ban, Escalating Apple Legal Fight – Bloomberg The San Diego-based company aims to inflict pain on Apple in the world’s largest market for smartphones and cut off production in a country where most iPhones are made. The product provides almost two-thirds of Apple’s revenue. Qualcomm filed the suits in a Beijing intellectual property court claiming patent infringement and seeking injunctive relief
Chinese video giants are becoming production powerhouses – TechNode Gone is the Youtube model of traffic-driven user-generated content that makes money from advertising; Chinese video giants are now going all-in to make expensive, producer-driven content. iQIYI, for example, shelled out over 250 million RMB (about $38 million) for The Rap of China and nabbed two highly respected TV veterans: Chen Wei, who produced the popular singing contest The Voice of China at Zhejiang Television, and Che Che, who directed So You Think You Can Dance China for Star China Media.
Society, Art, Sports, Culture And History
Beijing Philanthropist He Qiaonv Commits $1.5 Billion to Conservation – Bloomberg This Saturday, Oct. 14, in Monaco, He Qiaonv will announce the first step in a $1.5 billion plan that may represent the largest-ever personal philanthropic commitment to wildlife conservation. The number isn’t the only thing that’s surprising about the announcement. The source might equally raise eyebrows: The donation isn’t coming from a known Western conservationist like Paul Allen, but from a landscape planner-turned-environmental steward who’s based in Beijing.
Chinese philanthropy contributes greatly to sustainability goals: UN official – Xinhua Philanthropy in China has grown into a sector that has been really contributing a lot to achieving UN Sustainable Development Goals (SDGs), thanks to the fast development of both Chinese economy and society, UN Development Program (UNDP) China director Agi Veres said on Friday.
Women ‘Lean In’ Together in China – Caixin Global When Carol Li Rafferty opened Yale Center Beijing, she was 38 weeks pregnant. In addition to being the founding director of the center, which facilitates dialogue between businesses, governments and universities, Li Rafferty is also the founder of Lean In China, which engages more than 100,000 women across China in professional support networks.
Chinese Museum Pulls Exhibit Comparing Animals to Black People – The New York Times A section of the “This Is Africa” exhibit at the Hubei Provincial Museum in Wuhan included side-by-side photographs of animals and people displaying similar expressions. One pair included a young boy and a howling chimpanzee, each photographed with their mouths agape. Other sets paired a man and a lion, both gnashing their teeth; and a man and a baboon.
Technology helps identify missing characters in ancient military classic – Xinhua East China’s Shandong Province is using high-tech methods to identify missing characters in “Sun Bin’s Art of War,” an ancient Chinese military masterpiece written more than 2,000 years ago. Unearthed in 1972 from an ancient tomb in Yinque Hill, Linyi City, the text, recorded on bamboo slips, has many characters missing.
Energy, Environment, Science And Health
Government Limit on Number of Baby Formulas Sets Off Stampede – Caixin Global The policy, which analysts consider the “toughest” announced so far, is designed to stop some formula makers from repackaging the same recipe under two brands just to occupy shelf space. The food safety watchdog wants to limit the number of infant formula products in China to about 1,000, said Ma Fuxiang, deputy head of the CFDA’s product registration department. So far, about 400 applications have been approved, according to CFDA data. So 60% of the quota remains unfilled.
Food And Travel
Window or Aisle? China Train Riders Can Finally Choose – Caixin Global Such simple but important decisions, which have been open to travelers in the West for years, have officially come to China’s high-speed railroad with the launch of a feature that allows for seat selection when booking online. The move comes as the rail operator, China Railway Corp. (CRC), tries to become more customer-friendly as it breaks from its history as a government entity.