The Essential Eight
1. Trump Announces More North Korea Sanctions; Beijing Orders Banks To Halt DPRK Business
President Trump announced an executive order Thursday to grant additional authority to the Treasury Department to enforce economic sanctions on North Korea and foreign companies and individuals that do business with the rogue nation in Northeast Asia.
The president also said that Chinese President Xi Jinping had ordered Chinese banks to cease conducting business with North Korean entities. Trump called the move “very bold” and “somewhat unexpected,” and he praised Xi.
The document asked banks to fully implement United Nations sanctions against North Korea and warned of economic losses and reputational risks to banks that did not do so. Chinese banks received the document on Monday, the sources said.
“At present, management of North Korea-related business has become an issue of national-level politics and national security,” according to the document viewed by Reuters.
Comment: So US pressure is having an effect. If the US decides to ratchet up secondary sanctions another notch expect sanctions and/or penalties against a large PRC bank like China Merchants, but not one of the big four.
The decision to send aid to North Korea was not popular in South Korea, hitting President Moon Jae-in’s approval rating. It also raised concerns in Japan and the United States, and followed new U.N. sanctions against North Korea over its sixth nuclear test earlier this month.
Beijing needs to reconsider its quasi-alliance commitment toward Pyongyang, unless North Korea stops its nuclear weapons program and other provocative actions at the cost of China’s vital security interests. Beijing’s message toward Washington should also be clear and stern: China will intervene, including by military means, if the United States and its allies attempt any pre-emptive military action against North Korea for regime change. Innovative ideas should be encouraged, including the proposal of a joint security assurance from Beijing, Moscow and Washington to Pyongyang in return for freezing its nuclear weapons program.-Chen Dongxiao is president of the Shanghai Institutes for International Studies.
2. Overseas Influence Work
Yu Zhengsheng, chairman of the National Committee of the Chinese People’s Political Consultative Conference, made the remarks while meeting with members of the Fourth Executive Council of China Overseas Friendship Association (COFA), which was celebrating its 20th anniversary in Beijing.
Yu spoke highly of the association’s role in propelling China’s reform, establishing close ties with overseas Chinese, and safeguarding state sovereignty, security and development interest over the past two decades.
China Focus: China works hard to communicate its message – Xinhua Xi has told media groups to turn up their voices on the global stage, telling stories about the new, modern China, while developing flagship media groups with a strong global influence.
On Dec. 31, 2016, the China Global Television Network was launched, with six TV channels, three overseas channels, a video content provider and a cluster of services on new media platforms. State media outlets were established in almost all key regions and major cities across the globe.
If your take-away from all of this is that we can’t trust the Chinese among us, you are thinking about it wrong. Chinese Americans, Chinese Australians, Chinese Kiwis, et. al, are not the enemy. They are the victims. The Party has made clear that it believes any man or woman of Chinese blood, no matter their citizenship or locale, is their ward. The Party devotes an incredible amount of resources trying to shape the beliefs and behaviors of this diaspora. This includes extending its system of surveillance, censorship, and coercion into the heart of foreign countries. We ignore this because most of the threats and propaganda the Party spreads about are all spread about in the Chinese language
Mr. Caster noted that Interpol’s president, Meng Hongwei, is a veteran of China’s state security apparatus. Human Rights Watch recently reported that China was blocking the work of United Nations agencies investigating rights issues and preventing critics from testifying at hearings
The business ties of ex-Prime Minister Sir John Key also come in for scrutiny, with Brady noting both his recent appointment to help media company Comcast develop business projects in China, as well as the recent sale of his Parnell mansion.
“The property was sold for $20m, well above market rates for the area, to an undisclosed Chinese buyer. John Key refused to answer any questions about the transaction”.
3. Chinese Minority Report Starting In Minority Regions, How Do You Say Panopticon in Tibetan And Uighur?
Over the last year, Chen Quanguo (陈全国) has dramatically increased the police presence in Xinjiang by advertising over 90,000 new police and security-related positions.  This soldier-turned-politician is little known outside of China, but within China he has gained a reputation as an ethnic policy innovator, pioneering a range of new methods for securing Chinese Communist Party (CCP) rule over Uyghurs, Tibetans and other ethnic minorities in western China…
This dense network of surveillance is at the heart of what Party officials call “grid-style social management” (社会网格化管理), a practice that segments urban communities into geometric zones so that security staff can systematically observe all activities with the aid of new technologies (ChinaChange, August 8, 2013; China Brief, August 17). The system relies on big data analytics, connecting a network of CCTV cameras with police databases to achieve enhanced, even automated surveillance. Grid management was first trialed in Beijing in 2004 (Chinese Academy of Social Sciences, October 28, 2013).
Meng said security forces should study patterns that might be spotted in cases of terrorist attacks and public security incidents and build a data analysis model to improve the authorities’ ability to predict and stop such events taking place.
The idea has echoes of the Steven Spielberg’s science fiction thriller Minority Report, in which the authorities use technology and genetic mutation to predict when and where crimes will take place.
Meng said the security services should break down any barriers in data sharing to enable smooth integration of various systems.
He also called for renewed efforts to integrate all the footage from surveillance cameras around the country.
Ministry of Public Security Party Committee in latest Qiushi on advancing “Safe China” construction-推进平安中国建设 确保人民群众安全 – 求是– 公安部党委
Follow The Money: The surveillance industrial complex is growing exponentially. Should US investors in venture capital and PE funds investing in China be worried about a backlash if some of their money may be going into Chinese firms building this technology?
4. Local Governments Hiding Debt, S&P Downgrades China
Shifting political incentives led to some unintended consequences. Instead of driving officials to exercise greater fiscal prudence, they have instead responded by, in many apparent cases, fostering the appearance of tightening their belts without meaningfully doing so. That is because economic growth—which has to be supported by more borrowing—has been retained as the single most important factor governing officials’ promotion prospects.
The results are, not surprisingly, rather different from what Beijing intended: local leaders have tried to prove that they are embracing an agenda of fiscal prudence, even going beyond what Beijing has asked of them, while continuing to stimulate growth by raising debt surreptitiously.
The downgrade, the second by a major ratings company this year, represents ebbing international confidence that China can strike a balance between maintaining economic growth and cleaning up its financial sector. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
5. Pollution Census, Environmental Capacity Alert System
Comment: Expect environmental work to get big play in Xi’s upcoming Party Congress Work Report, even though progress is very uneven.
Seven years after the results of the first national pollution census, the government launched a second survey to investigate the scale, structure and distribution of pollution sources.
The survey will cover industrial, agricultural and residential pollution.
China aims to finish the survey in 2018, releasing the results in 2019.
Regions with serious environmental and resource capacity overloading will not be allowed to start new projects, according to a document issued by the general offices of the Communist Party of China Central Committee and the State Council on Sept 20.
“Look at how much smoke we are making here, and look at Handan Steel,” Liu said, as the factory’s chimneys behind her belched columns of white smoke. “What they produce every day equals what we produce in a year.”
As part of its battle against smog, China has embarked on an ambitious plan to cut pollution generated by households, banning the use of coal-fired stoves and heating units.
But replacing coal with natural gas or electricity has imposed an unbearable burden on many families, especially in rural areas where people rely on cheap coal to endure the freezing winter.
It is unclear if the move means the prohibition is no longer in place, with an official at the Beijing Municipal Commission of Housing and Urban-Rural Development who gave his name as Yu saying the document had been pulled from the website due to misunderstandings over the rules in media reports. He declined to give further details.
6. Environmental Lawsuit Against Meal Delivery Services
China’s three main online meal-delivery services are in the crosshairs of public opinion over perceptions they’re not socially responsible. A nonprofit group is suing the companies—Ele.me, Baidu Waimai and Meituan Dianping—for generating huge amounts of waste that it alleges constitutes environmental harm. A Beijing court agreed early this month to hear the case.
7. More Details on Xiongan Plans
The Xiongan local authority plans to boost the construction of affordable rental properties for newcomers, according to an article published on the area’s official WeChat account Tuesday. The authority will also establish a point-based system supported by big-data technology to determine which migrants will be qualified to purchase these homes…
The article also said that Xiongan will ditch a common local government practice known as “land revenue,” which many provincial and county-level authorities have long used to accelerate urban development. In this practice, governments buy tracts of land owned by farmers at a low price and then sell them to real estate developers for higher prices. This method has been a ubiquitous feature of China’s rapid urbanization for several years.
8. Astroturfing Academics Rewarded
China’s top universities are encouraging academics and students to write online articles promoting socialist values, with some offering authors the same academic credits they would get for papers published in journals…
Content that is posted on the websites and social media platforms of party mouthpieces such as People’s Daily and Xinhua would receive the most credits, the notice said.
“Many professors object to it, saying they do not want to be used for politics,” a PhD student at the university told the South China Morning Post.
Business, Economy And Trade
Trump’s Threats Loom as China Weighs Opening to Wall Street, Tesla – Bloomberg “If China continues to maintain the limits on foreign institutions, it could push Trump to an extreme and make the relationship worse,” said Xia Chun, a visiting associate professor at the University of Hong Kong. “The reform could serve multiple purposes. It gives a little pressure to domestic markets and shows a positive change to the outside.”
EU Chamber warns China: Open economy faster or risk backlash – AP The European Union Chamber of Commerce said in a report that Beijing is backtracking in some areas, including by imposing new restrictions on food imports, express delivery and legal services. It proposed hundreds of possible changes to open the state-dominated economy wider or simplify rules in fields from cosmetics to medical devices.
China hits back at U.S. over trade, says unilateralism is “unprecedented challenge” – Reuters Ministry of Commerce spokesman Gao Feng also said that foreign and domestic firms are treated equally in China and that foreign firms should not have concerns about investing in China.
Banking regulators tighten control on consumption loans –China Economic Net The banking regulatory unit of the People’s Bank of China, China’s central bank, released a series of circulars in the past week that banks need to examine the use of personal consumption loans above 200,000 yuan ($30,400) with residential properties as mortgages.
China’s Most Indebted Developer Sunac Faces Lender Scrutiny – Bloomberg Quint China Huarong Asset Management Co., a state-owned entity whose businesses include lending, asked units to temporarily suspend new project financing to Sunac China Holdings Ltd., according to an internal email seen by Bloomberg.
Chinese Developers’ Fat of the Land – Bloomberg Gadfly Evergrande, Country Garden and Sunac were smart. By hoarding sites, they can not only support future growth but also benefit from price appreciation. The three now own roughly half of the total territory controlled by the 18 developers. By comparison, the reserves held by China Overseas Land and China Resources Land haven’t moved much, and their share-price gains have lagged.
China’s Dangerous House Price Boom Is Spreading – Bloomberg Beijing and Shanghai are now well known for their ballooning house prices — double-digit gains last year prompted more regulatory tightening. But the the risk factors that could decide the fate of China’s property boom can be found well beyond the capital and biggest city.
US judge dismisses claim that sparked race to claim fugitive Guo Wengui’s luxury flat | South China Morning Post “New York has no interest in deciding a dispute between a Hong Kong investment fund and a citizen of the People’s Republic of China with respect to a transaction covered by Hong Kong law relating to real estate in the PRC, notwithstanding that the defendant citizen of the PRC presently lives in New York,” ruled Justice Barry Ostrager of the Supreme Court of the State of New York.
Manafort Working on Kurdish Referendum Opposed by U.S. – The New York Times Mr. Manafort participated in a May meeting in New York about a plan under which an investment fund linked to the Chinese government-owned China Development Bank would invest $30 billion in Puerto Rico through the bond debt owed by the island’s government, and possibly through investments in its critical infrastructure. And a spokesman for the Ecuadorean government, which has accepted billions of dollars in loans from the China Development Bank, said that Mr. Manafort met earlier this year with Lenín Moreno, who subsequently was elected president, to discuss possible investment opportunities.
China to extend transition phase for cross-border retail – Reuters Planned new rules will broadly increase taxes and regulations on products sold via cross-border channels, but Chinese authorities will extend a transition phase for implementation by a year, China’s ruling State Council said late on Wednesday, giving retailers more time to prepare and adapt.
Cream of China’s Dairy Firms Eyes Australian Milk Giant – Caixin Global The dairy firm manager said that one of the difficult elements of the buyout stems from a co-op structural reform that Murray Goulburn carried out in 2013, when it began requiring all suppliers to own at least 500 shares of the company. As a result, any bidder needs the support of more than 90% of suppliers. Another obstacle to a takeover by an offshore group, such as a Chinese one, would be scrutiny from the Australian and Chinese authorities, especially at a time when Beijing is restricting cash outflows.
China’s bitcoin miners in limbo after Beijing shuts down exchanges | South China Morning Post If Beijing does decide to cut off the bitcoin network in China, it could make it difficult for mining pools to sync their data on blockchain with the rest of the world, according to Jiang Jiazhi, a product manager at Bitmain, which operates a full supply chain of mining – from machines to mining contracts – in China. “It will eventually hit the bitcoin mining business,” Jiang said.
The graphite fix: Inside China’s newest commodity addiction – Reuters Steelmakers typically buy graphite electrodes on yearly contracts, but now suppliers are only quoting prices for six months, the Asian producer said. “With prices rising, nobody wants to commit to today’s prices for a year,” he said. In China, nearly 300,000 tonnes of graphite electrode manufacturing capacity has been shuttered since the second half of 2016 due to environmental concerns, CRU’s Brooks said in a report.
Tencent to Buy 5% Stake in Investment Bank CICC – Caixin Global Chinese tech giant Tencent Holdings agreed to buy an almost 5% stake in China’s leading investment bank, China International Capital Corp. (CICC), creating a partnership between two of the country’s tech and finance majors, according to a regulatory filing Wednesday by Hong Kong-listed CICC.
市场准入负面清单制将全面实施 _ 经济参考网 _ 新华社《经济参考报》官方网站 我国将于2018年1月1日起全面实施市场准入负面清单制度，各方准备工作正在全面提速。《经济参考报》记者获悉，目前国家确定的第一批试点已进入总结阶段，国务院发展研究中心日前分别前往广东和福建等地区开展评估调研，第二批试点也在陆续上报试点总体方案，将抓紧推进完善法规及规章体系、健全市场准入机制等改革任务。
Politics And Law
坚持党的基本路线 推动社会全面进步—理论–人民网 （深入学习贯彻习近平同志“7·26”重要讲话精神）Comment: Jia Gaojian, head of the central translation and compilation bureau, page 7 9.21.17 People’s Daily
Party committees study Mao’s books ahead of 19th congress – Global Times CPC committees in several provinces and municipalities, including East China’s Fujian, South China’s Hainan and Guangdong, Southwest China’s Sichuan and North China’s Tianjing are studying On Contradiction and On Practice, which were written by Mao, new China’s founding father, in 1937 after the War of Resistance against Japanese Aggression began in 1931, Shanghai-based Jiefang Daily reported Wednesday. This year marks the 80th anniversary of the publication of these two books.
China top graft buster says corruption fight ‘world class hard’ – Reuters Meeting Singapore Prime Minister Lee Hsien Loong at the central leadership’s Zhongnanhai compound in Beijing, Wang said the party’s anti-corruption campaign and efforts to supervise itself had been highly effective. “Carrying out an operation on yourself to cure an illness is world class hard,” the commission cited Wang as saying, in a statement late on Wednesday
Former aide to ousted Communist Party leader to be removed from home as party congress approaches | Hong Kong Free Press HKFP Bao Tong, the former top adviser to ousted party chief Zhao Ziyang, has said that he will be taken from his home and sent on “vacation” by police as the 19th party congress approaches.
China lifts 10-year travel ban on feminist activist – AFP Wu Rongrong plans to fly to Hong Kong on Sunday to pursue a master’s degree in law in the semi-autonomous city, which has a separate legal system and border controls.
China has one of the lowest murder rates in the world – People’s Daily Online “The homicide rate in China in 2016 was 0.62 per 100,000 residents, better than most countries in the world,” said Meng Jianzhu, head of the Commission for Political and Legal Affairs of the Communist Party of China Central Committee, during a national conference in Beijing.
Police in China’s Guangdong Target Two Current Affairs Commentators- RFA Authorities in the southern Chinese province of Guangdong have stepped up political pressure on two prominent current affairs commentators amid a nationwide crackdown on dissent ahead of a five-yearly congress of the ruling Chinese Communist Party.
Foreign And Defense Affairs
Defence bans on Chinese drones – The Australian US officials last month ordered army personnel to cease the use of Da-Jiang Innovations Technology (DJI) drones, citing “cyber vulnerabilities”. US Army staff were directed to un-install all DJI applications and remove batteries and media technology from their devices. The Australian can reveal the ADF suspended the use of “all commercial off-the-shelf unmanned aerial systems” following a US Army report in May, which examined the threats and “user vulnerabilities” associated with the drones.
Zheng Zeguang – Vice Minister of Foreign Affairs Comment: Is he about to replace Cui Tiankai as Ambassador to the US
Forecasting China’s Largest Ever Turnover of Military Elite at the 19th Party Congress – CHINA US Focus it appears that only 17 percent (seven out of 41) of military leaders with full membership on the 18th Central Committee will retain their seats. In other words, about 83 percent of the military representatives who are full members of the 19th Central Committee will be new, assuming the military maintains the same quota of full members as it did for the 18th Central Committee. This would constitute the largest-ever turnover of military elite in the history of the People’s Republic of China (PRC).
Beijing Adopts New Tactic for S. China Sea Claims Ma, the Foreign Ministry official, announced during the meetings in Boston on Aug. 28 and 29 that China is asserting sovereignty over the Four Sha through several legal claims. He stated the area is China’s historical territorial waters and also part of China’s 200-mile Exclusive Economic Zone that defines adjacent zones as sovereign territory. Beijing also claims ownership by asserting the Four Sha are part of China’s extended continental shelf. U.S. officials attending the session expressed surprise at the new Chinese ploy to seek control over the sea as something not discussed before.
China’s showing off its new helicopters | Popular Science At the 4th China Helicopter Exposition, an airshow in Tianjin, the nation flaunted its latest in aviation tech. Here are the highlights
China Opens Highway To Nepal Via Tibet, Ready For Military Use If Needed China has been stepping efforts to improve road connectivity between Tibet and Nepal while speeding up plans to build a railway line connecting to Nepal’s border after KP Sharma Oli, pro-China former Nepalese Prime Minister, signed a Transit Trade Treaty with Beijing last year during his tenure.
PLA Navy gets new nuclear submarine – People’s Daily Online A new nuclear submarine has been turned over to the People’s Liberation Army Navy, one of the largest State-owned naval shipbuilding enterprises revealed on Tuesday, but experts believe that this submarine is not the most advanced Type 096, which is China’s next generation strategic nuclear submarine.
Risky Business, Chinese Style – MacroPolo Do China’s government and firm-level choices reflect a political agenda, national security goals, a desire to mitigate economic risks, or perhaps a combination of all three? My answer is that we are seeing the sprouts of a more sophisticated Chinese approach to managing—and then balancing—multiple forms of investment risk: geopolitical risks, political and physical security risks, and, of course, pure economic risks.
Hong Kong, Macao And Taiwan
Former Hong Kong student leader escapes jail sentence for campus protest – Reuters Billy Fung, 23, who helped lead a protest last year by about 200 students seeking talks over the governance structure of the University of Hong Kong (HKU), was given 240 hours of community service for disorderly conduct in a public place, criminal damage and attempted forcible entry.
Taiwan suspends oil exports to North Korea, imports of clothing – Reuters Taiwan has suspended refined oil and LNG exports to North Korea, as well as clothing and textile imports, to comply with United Nations resolutions, a largely symbolic move by the island to show it is a responsible member of the international community.
Tech And Media
Director of Gangster Movie on Trial for Threatening Promoter – Sixth Tone Before “The Choice,” a movie about Shanghai’s World War II-era underworld, ever made it onto the silver screen, its director was accused of dabbling in the gangster life himself. On Monday, director Jiang and three other employees from the film’s production company stood trial in Beijing’s Chaoyang District court, reported The Beijing News. Prosecutors have charged the four with “picking quarrels” on the suspicion that they assaulted and threatened employees of a promotion company to get them to buy the rights to their film.
Baidu Revs Up Autonomous Driving Project With $1.5 Billion Fund – Caixin Global The company discussed the new fund as it launched the official 1.5 version of its Apollo platform, which includes a wide range of functions aimed at helping automakers and related companies develop autonomous driving technologies. Baidu rolled out the first version of the platform earlier this year, which includes hardware and software tools for developers, as well as supporting cloud services.
College sparks debate with Internet celebrity course – ECNS The Chongqing Institute of Engineering is now cooperating with a local communications firm to train students on how to make live video streaming a hit. It has attracted 19 students, mainly from those majoring in e-commerce and marketing.
Society, Art, Sports, Culture And History
Peak Capitalism: Why Mountaineering Is a Fad for China’s Rich Hu’s anecdotes about fellow amateur climbers on Muztagh Ata reveal how casual enthusiasts obsess over summiting mountains at the expense of taking pleasure in the country’s pristine slopes. Many see safety protocol as optional: One wealthy businessman hired four Sherpas to accompany him to the top of the mountain and breathed with the aid of an oxygen tank throughout the trek. At the summit, he discovered that his oxygen supply had run out, so he had the Sherpas to carry him all the way back down to base camp, tipping them 10,000 yuan each. // Comment: And Arc’teryx clothes are a fashion item in China now
Energy, Environment, Science And Health
Europe is Designing a New Particle Collider to Take On China – Bloomberg Chinese scientists would like to build a electron-positron circular collider twice the size of the LHC, which smashes protons together. After building this initial accelerator, China would eventually expand it into an even bigger proton collider. But initial plans to start construction in 2021 suffered a setback when the Chinese government opted not to fund the collider in its 2016 five-year plan. The research team will now to need to wait until 2020 to apply again.
China builds world-class astronomical base in Tibet – People’s Daily Online Chinese scientists are building a world-class observatory base at an altitude above 5,000 meters at Ngari, in the west of China’s Tibet Autonomous Region. They have launched a project to detect primary gravitational waves there. They also plan to conduct high-precision detection of cosmic rays and build China’s largest optical telescope. // Comment: I was in Ngari Prefecture in 2014. The night skies are unbelievable
Food And Travel
Bullet Trains Take Aim at Short-Haul Flights, As Longer Routes Stay Out of Range – Caixin Global Thursday, China’s rail operator increased the maximum speed to 350 kph (217 mph) for some trains running between Beijing and Shanghai. The speed bump cut the time it takes to travel between the two cities to as little as four and a half hours.
China’s Millennials Are Driving World Travel Growth – Bloomberg “China, led by younger adults, has become vital to the global travel market’s growth,” according to Bloomberg Intelligence analysts Brian Egger and Margaret Huang, citing industry tracker Phocuswright Inc. “As China’s travel market takes off, all eyes should be on the country’s roughly 400 million millennials, who will drive spending on airfare, hotels, theme parks, casinos and cruises.”
Books And Literature
Meet LARB China Channel Team: Academic Editor Eileen Cheng-yin Chow This is the fifth in our BLARB series made up of interviews with some of the people who will be playing key roles in the soon-to-launch LARB China Channel. This week’s Q&A is with Eileen Cheng-yin Chow, who has, like some other interviewees, worked as both a writer and a translator—in her case, in one very high profile case, also as a co-translator, of the bestselling Yu Hua novel Brothers. She also has two institutional homes, which I’ll ask her about, one at Duke and another in Taipei.
Beijing unveils joint ownership housing scheme – Xinhua According to a document issued by the city’s housing authorities, individual buyers will be able to buy a share in such homes and still have the full right of use. The policy has several restrictions. Buyers and their families cannot already own homes in their name. They should have no records of home transfers. Single people making purchases must be at least 30 years old. And a family can only apply for one home. The buyers enjoy equal rights in household registration and children’s schooling as other home owners.
Beijing mulls banning fireworks in city proper – Xinhua The Beijing municipal legislature is discussing amending its fireworks management regulations to ban fireworks all year long in light of the city’s heavy air pollution and casualties caused by fireworks during festivals.
Beijing may hit negative population curve this year – ECNS With a population of 21.7 million, Beijing is likely to see a turning point in its population numbers in 2017, with a possible drop in residents amid transformation, said a report. The Blue Book of Social Work in Beijing jointly complied by Beijing University of Technology, Municipal Committee of Social Work and Social Sciences Academic Press found the city had a population of 21.7 million in 2016, a yearly growth of 2.4 percent.
Jobs And Events
CRS Job Announcement-DC The Congressional Research Service (CRS) seeks an Analyst in Asian Security Affairs to join its Foreign Affairs, Defense and Trade Division (FDT).