Financial Tightening; Reform Promises; US-China Economic Dialogue; India-China Tensions-Sinocism-07.18.17

The Essential Eight


1. Xi Makes More Promises Of Economic Reform

Comment: There is a school of thought that once the 19th Party Congress convenes and Xi has more fully consolidated power we will see much more vigorous reform efforts along the lines of those outlined in the Third Plenum in 2013.

That certainly seems to be the propaganda messaging from the ten episode program “将改革进行到底 Carrying Reform Through To The End” that just started this week, as well as from the latest meeting of the Central Leading Group on Finance and Economic Affairs. 

Is that school of thought correct? I do not know but these promises are not new. Seek truth from facts… 

Xi urges faster opening up, better business environment – Xunhua:

The country should “create a stable, fair, transparent and predictable business environment, and speed up efforts to build an open economy in a bid to promote the sustainable and healthy development of the Chinese economy,” Xi said at a meeting of the Central Leading Group on Finance and Economic Affairs.

An important goal of building an open economy is to stimulate improvement of domestic institutions and laws for higher efficiency and greater competitive strength in the global market, said the president.

Foreign investment has played a significant role in China’s economic development, promoting reasonable allocation of resources and driving market-oriented reforms, he told the meeting.

China should continue to make good use of foreign investment to advance supply-side structural reforms, upgrade the economy, and catch up with global technology development, Xi said.

He urged faster efforts to lift restrictions on foreign access to and ownership in sectors such as child care, elderly care, architectural design, accounting, auditing, commerce, logistics, e-commerce, general manufacturing and services.

习近平主持召开中央财经领导小组第十六次会议强调 营造稳定公平透明的营商环境 加快建设开放型经济新体制-CCTV Evening News Report on the meeting 

China Focus: Inspirational political documentary drums up consensus for continuous reform – Xinhua:

A political documentary on China’s ongoing reform will remind the Chinese of the country’s glorious national achievements, while sending a clear message about the enhanced reform that will happen after the 19th National Congress of the Communist Party of China (CPC) to be held later this year.

Comment: First two episodes of 将改革进行到底 online here 

China rolls out TV series eulogising Xi Jinping ahead of key congress | South China Morning Post:

Ten documentaries on president’s reform policies to air on prime-time TV, with more propaganda to come before the Communist Party congress this autumn



2. Markets Have Decided The National Financial Work Conference Was A Big Deal

Xi’s Risk-Off Push Ripples Through China With Transition Nearing – Bloomberg:

“The message from the leadership last weekend was very clear — financial stability is now regarded as an important element of national security,” said Raymond Yeung, the Hong Kong-based chief economist at Australia & New Zealand Banking Group Ltd.

An editorial in the Communist Party’s People Daily newspaper on Monday pointed to the seriousness of the campaign, warning of potential “gray rhinos” — a variation on the black swan events popularized during the global financial crisis, with the difference that the danger from a charging rhino is more immediate and the animals are less rare.

Local Officials Now Liable for Bad Debt-Management Decisions for Life – Caixin Global:

Among the decisions from the National Financial Work Conference, concluded on Saturday, President Xi Jinping said local officials will be held accountable for life for their debt-management decisions. Officials who are found ignoring the risks of building up debt while pursuing economic growth will be pursued even after their terms end.

The “for life” element of accountability for public officials who recklessly borrow is unheard-of in China. Market watchers believe such a zero-tolerance stance highlights the seriousness of the local-debt problem that faces the world’s second-largest economy.

Mysterious Document Is Latest Blow for Dalian Wanda – New York Times:

A mysterious document circulating on Chinese social media purported that regulators had warned state-run banks against financing several overseas deals by the conglomerate, Dalian Wanda Group. Then a credit-rating agency expressed skepticism about the company’s debt.

The market reaction was swift on Monday, with shares and debt issued by several subsidiaries of Wanda falling sharply.

AMC Tries to Steer Clear of Chinese Owner’s Debt Worries – The New York Times:

AMC said on Tuesday, however, that Wanda had not been a source of acquisition funding and that mainland Chinese banks had never financed deals by the American cinema chain.

China’s lending scrutiny spreads, catching asset buyer Sunac in its wake | South China Morning Post:

The China Banking Regulatory Commission verbally ordered commercial banks to examine their credit exposure to Sunac China, according to sources familiar with the matter. The order follows similar instructions delivered verbally on June 20 for banks to look into loans exposures to Wanda Group

China Tells Banks to Lower Returns on Wealth Products – Bloomberg

Three People’s Daily Editorials On The National Financial Work Conference: 

人民日报评论员:更好服务实体经济–观点–人民网

人民日报评论员:有效防范金融风险–观点–人民网

人民日报评论员:坚定深化金融改革–观点–人民网



3. Will The US-China Comprehensive Economic Dialogue Achieve Anything Significant?

Expect more process than progress at U.S.-China Comprehensive Economic Dialogue – David Dollar and Ryan Haas:

To the consternation of some in the U.S. business community, the new action plan likely will be general and non-specific, focusing more on principles and shared commitments than concrete steps or detailed deliverables. More broadly, we do not expect either side will take steps at this dialogue that would alter the trajectory of bilateral trade and investment, dynamics that have been markedly stable to date this year. Trump’s approach thus far demonstrates broad continuity with that of his predecessors—encouraging further Chinese opening while refraining from steps that might undercut the bilateral economic relationship.

What’s at stake at China-U.S. Comprehensive Economic Dialogue? – Xinhua:

After 33 rounds of negotiations over the past five years, the BIT talks have been shelved by U.S. President Donald Trump’s administration.

Chinese Ambassador to the United States Cui Tiankai urged Washington to revive the BIT negotiations, adding that reaching a high-level bilateral investment treaty was an important outcome of previous economic and trade dialogues between the two countries.

Comment: They should resume when the PRC side makes a sincere offer that has a chance of getting the treaty ratified.

China’s Richest Man Jack Ma Leads Chinese Business Tycoons to US | The Diplomat“:

During ‘Made in America’ Week, Ma and Blackstone CEO Stephen Schwarzman co-host the US-China Business Leaders Summit.

China drags its feet on opening market to electronic payments like Visa and MasterCard – POLITICO:

The payments market was one of the key planks of the Trump administration’s 100-day action plan to improve trade relations with China.

China Just Made the Most Steel Ever as Trump Gets Set to Act – Bloomberg:

Output of crude steel was 73.23 million metric tons in June, 5.7 percent more than a year earlier, and up 4.6 percent to 419.75 million tons in the first half, the statistics bureau said on Monday. Supply of aluminum rose 7.4 percent to 2.93 million tons last month, and gained 8.8 percent to 16.84 million tons over the six months. China is the world’s biggest maker of both.

官员答央视记者问 完美诠释装傻充愣整蒙记者

Comment: CCTV News goes to Wuan, Hebei to investigate steel mills operating and expanding illegally. The interview at the end with the local official is an absolute classic. No wonder steel output is increasing…

Trump’s trade warrior prowls the West Wing – POLITICO:

Navarro has earned a reputation for stalking the halls of the West Wing at night and on the weekends to find a moment to slip into the Oval Office to privately discuss trade with the president, according to one White House official and a close adviser to the administration. It’s his way of maintaining influence through proximity.

Ryan Hass Has Joined Brookings From 2013 to 2017, Hass served as the director for China, Taiwan and Mongolia at the National Security Council (NSC) staff.



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4. Hong Kong Media Reports On Xi’s Right-Hand Man Li Zhanshu 

How’s an investor in The Peninsula’s holding company linked to Xi Jinping’s right-hand man? | South China Morning Post:

A Hong Kong magazine tailed him for days before reporting last week that Chua had filed the same residential address on Stanley Beach Road as a woman named Li Qianxin (栗潛心), through a company called Chua & Li Membership…

The most famous, and highest-ranking Li out of the current clan, would be Li Zhanshu (栗戰書), the right-hand man to the Chinese president Xi Jinping.
His job titles are Director of the General Office of the Communist Party and the Chief of the General Office of the National Security Commission, roughly equivalent to the Chief of Staff in the US government…

On paper, Li Qianxin’s name looks the same as Li Zhanshu’s daughter. How is Chua, who owns 73.7 per cent of Tai United Holdings Ltd., related to an up-and-coming Chinese state leader?

Comment: Surprised to see the South China Morning Post run a piece suggesting the perhaps the daughter and maybe son-in-law of Li Zhanshu are buying up assets in Hong Kong. Should Alibaba shareholders be nervous about Jack Ma’s paper covering this?



5. Border Tensions Between China and India

China flexes its military muscle in Tibet, close to border dispute with India | South China Morning Post:

Armed forces take part in live ammunition drill that one observer says was intended as a clear warning to India

Was China’s military drill in Tibet really just an exercise in logistics? | South China Morning Post:

The vast haul was transported to a region south of the Kunlun Mountains in northern Tibet by the Western Theatre Command – which oversees the restive regions of Xinjiang and Tibet, and handles border issues with India – the PLA Daily, the official mouthpiece of China’s military reported.

China rejects media reports of Indian soldier deaths in attack – CGTN:

A news report claiming that a total of 158 Indian soldiers had been killed during a military clash as China fired rockets along China-India border has been proved to be baseless, according to China’s state media People’s Daily on Tuesday.

Drill held on Qinghai-Tibet Plateau to boost combat capability-CCTV video



6. Fewer and Fewer Holes In The ChiComNet 

China Disrupts WhatsApp Service in Online Clampdown – The New York Times:

The last of Facebook’s major consumer products that still worked in China was disrupted by the government on Tuesday, as Beijing broadly tightens its controls over the internet.

WhatsApp, a messaging app used across the globe, was partly blocked by Chinese filters, leaving many unable to send videos and photos and some also unable to send text-based messages.

The noose tightens: Financial Times’ Chinese site, Singapore’s Lianhe Zaobao blocked in China: Shanghaiist:

Another two media organizations appear to have fallen behind the Great Firewall with Singapore’s Lianhe Zaobao website and the Financial Times’ Chinese site both rendered inaccessible in mainland China.

Remembering Liu Xiaobo: Analyzing censorship of the death of Liu Xiaobo on WeChat and Weibo – The Citizen Lab:

His death is also the first time we see image filtering in one-to-one chat, in addition to image filtering in group chats and WeChat moments.

Bilibili Will Restore Permitted Content After Chinese Media Watchdog Investigates | Yicai Global:

The Chinese media watchdog has been cracking down on video-sharing sites recently, with AcFun, Sina Weibo and Phoenix New Media also in the firing line. None of the firms were in possession of a license required by Chinese law to live-broadcast audio and video covering major activities and events, whether regarding politics, defense, the economy, society, culture or sports.



7. Beijing For Beijingers

Beijing Village Imposes Arbitrary Levies in Quest for ‘Zero Migrants’ – Caixin Global:

Migrant workers from other provincial-level areas who rent a home in Qiuxian village in Beijing’s Daxing district will be required to pay this special fee, which could be nearly four times their monthly rent, to the village committee, according to a government notice that has been circulated widely on the internet in recent days.



8. No More Foreign Trash For China

China says it won’t take any more foreign garbage | Reuters:

China notified the World Trade Organization (WTO) on Tuesday that it would stop accepting shipments of rubbish such as waste plastic and paper as part of a campaign against “foreign garbage”.



AnchorBusiness, Economy And Trade

Industrial recovery drives China’s second-quarter GDP as consumption slows On Monday, China reported second quarter growth CNGDP=ECI of 6.9 percent, unchanged from the first quarter and setting the country on course to comfortably meet its 2017 growth target.

China’s Growth Masks Unresolved Debt and Real-Estate Problems – WSJ But Beijing has to continue to clamp down on credit to shift to a more sustainable growth model, leaders say. If growth slows in the coming months, that clampdown could become more difficult. “We shouldn’t be too optimistic about the economic picture in the second half of the year,” said Sheng Songcheng, a senior adviser at the People’s Bank of China.

Home Prices Surge in China’s Smaller Cities as Risks Spread – Bloomberg New-home prices, excluding government-subsidized housing, rose month-on-month in 60 of 70 cities, the National Bureau of Statistics said on Tuesday. That compared with 56 in May.

China’s railway diplomacy hits the buffers – FT a Financial Times investigation has found that China’s high-speed rail ambitions are running off the tracks. Far from blazing a trail for One Belt, One Road, several of the projects have been abandoned or postponed. Such failed schemes, and some that are under way, have stoked suspicion, public animosity and mountains of debt in countries that Beijing had hoped to woo.

Chinese Firm Launches Bid to Make Credit Ratings More Transparent – WSJ Beijing-based Dagong Global Credit Rating Co. plans to launch a digital credit-rating platform in the coming months that requires companies to submit financial information daily.

Tencent Shares Hit Record High After Investment Invitation From State Rail Operator – Caixin Global State-owned China Railway Corp. (CRC) welcomed Tencent into its share-holding reform program, which involves securitization and capitalization of assets, CRC’s General Manager Lu Dongfu said on Friday and reported by state-run newspaper People’s Railway Daily.

Painful Losses Cast Ever-Darker Shadow Over Once-Dazzling LeEco – Caixin Global An investors meeting on Monday was cut short by mobs of upset creditors protesting outside the conference room, waving signs that read, “LeEco Needs to Pay Its Debt.”

China eyes merger of metals giants Minmetals and China National Gold – sources The talks between two of China’s largest metals producers are part of Beijing’s broad efforts to shake up its indebted and inefficient state sector, streamline the number of companies and create globally competitive firms in sectors including power generation, shipping and metals.

Red Bull Owner Locks Horns With Chinese Partners – Caixin Global The case is part of a larger dispute between T.C. Pharma and Beijing-based Reignwood Group, which introduced the popular drink to China in the 1990s on a 20-year licensing agreement that expired last year.


AnchorPolitics And Law

The Path Forward in the Wake of Liu Xiaobo’s Passing | China Change Meanwhile, the Party has been working overtime to cage in and lock down incipient civil society in China — an aspiration that has grown out of the economic and social transformations since the 1990s — by passing one draconian law after another from late 2014 to the present. This includes the law on the management of foreign NGOs, the National Security Law, the Internet Security Law, the revised Criminal Law, the Charity Law, the Counter-Terrorism Law, the counter-espionage law, and more recently, the draft Intelligence Law.

China’s Evolving Case Law System In Practice | Tsinghua University Law School This article will first describe how Chinese legal professionals are using cases, other than those approved as guiding cases, as “soft precedent,” explain why they are doing so, the role of the SPC in this development, and what this portends for the evolution of China’s case law system.

夺取中国特色社会主义新胜利的强大精神力量 —— 学习习近平总书记关于“四个自信”的重要论述–2017年07月15日  来源:《求是》2017/14  作者:秋 石


AnchorForeign And Defense Affairs

The secret lives of Chinese missionaries in northern Iraq | South China Morning Post Used to persecution at home, two young Chinese Christians say life can be more peaceful in northern Iraq, where they work with Yazidi refugees

Russia-China Relations: Assessing Common Ground and Strategic Fault Lines This NBR Special Report analyzes both the drivers of and brakes on closer cooperation between Russia and China. Each essay assesses the trajectory of Sino-Russian relations and draws implications for the United States and the Asia-Pacific region.

China is training Africa’s next generation of aviation and transport officials — Quartz Plans to build five transportation focused universities and a China-Africa aviation school on the continent are going ahead, according to the dean of Chang’an University in Xi’an, China, speaking at a conference in South Africa last week. Starting this year, 500 aviation personnel from Africa will start training in China each year, Chinese officials said earlier this year.

China’s Xi pledges ‘unremitting’ efforts for Middle East peace – Reuters Speaking to reporters after meeting Abbas in Beijing’s Great Hall of the People, Xi said the international community paid close attention to the Middle East peace process. “As the Palestinian people’s good friend, partner and brother, China hopes Palestine and Israel can achieve peace as soon as possible and live and work in peace. China will make unremitting efforts for this,” Xi said, after receiving a Palestinian medal of honor from Abbas.

China’s property market slows, Beijing prices down for first time since 2015 The cooling effect is most visible in China’s the biggest cities. Price growth in Shenzhen, Shanghai and Beijing slowed to 2.7 percent, 8.6 percent and 10.7 percent, respectively, from a year earlier. From a month earlier, prices in Beijing fell 0.4 percent, marking the first fall since February 2015. Shanghai prices slipped by a further 0.2 percent, while Shenzhen prices remained unchanged.

North Korea fuel prices surge after China cuts oil sales – Reuters Kang Mi-jin, a defector who speaks regularly to market sources inside North Korea and reports commodity prices for Daily NK, said the price spikes in recent weeks were caused initially by the rumors – later confirmed – that China was restricting the flow of oil to North Korea.

China upset about ‘negative’ Taiwan content in U.S. defense bill The National Defense Authorization Act (NDAA), passed by the House on Friday, also proposes expanding training and exercises with Taiwan. Chinese foreign ministry spokesman Lu Kang said “negative content” related to Taiwan went seriously against the “one China” principle and was an interference in China’s internal affairs.

深入学习贯彻习近平总书记外交思想 不断谱写中国特色大国外交新篇章 Yang Jiechi in latest Qiushi on studying Xi’s diplomatic thought

Unable to Buy U.S. Military Drones, Allies Place Orders With China – WSJ China’s sales have enabled multiple countries—including some with weak legal systems and scant public oversight of the military—to use unmanned aerial vehicles to spy and kill remotely as the U.S. has done on a large scale since 9/11.


AnchorHong Kong, Macao And Taiwan

Sale of Beijing critic Jimmy Lai’s Next Magazine stokes concern over Hong Kong media landscape, East Asia News & Top Stories – The Straits Times Hong Kong media company Next Digital Ltd, founded by tycoon and outspoken Beijing critic Jimmy Lai, said on Monday (July 17) it plans to sell its flagship magazine and four others to a local businessman for HK$500 million (S$87.78 million).


AnchorTech And Media

Apple Attempts Mobile Payment Catch-Up With China-Wide Store Discounts – Caixin Apple Inc. launched a full-blown promotional campaign in China this week, offering up to 50% discounts when customers choose to pay with the company’s Apple Pay service, in a bid to take a bite out of the world’s largest mobile-payment market.

Baidu sues GQ Daily for making fun of its maps – TechNode GQ Daily published an account from a reader that used Baidu Maps to find a children’s clinic in Shenzhen but ended up with search results showing a hospital 460 miles (730 km) away in Putian city of Fujian province. The media outlet then invited readers to share their own misadventures with Baidu’s services by joining a creative writing contest. The contestants were asked to fill in the slogan “Baidu it, and you can… (百度一下,你就–)” GQ also published its own contribution for the new slogan competition, “Baidu it, and you’re done (百度一下,你就完了)” which earned the wrath of the tech titan.


AnchorSociety, Art, Sports, Culture And History

Project 2049 Institute – Negotiating History Robert L. Suettinger –Over the decades, leaders of the Chinese Communist Party (CCP) have used the control of history to bolster their own political standing, as well as the continued primacy of the CCP in ruling the People’s Republic of China (PRC). This paper illustrates one of the most important cases of CCP historical manipulation through analysis of the political process surrounding the 1981 “Resolution on Certain Questions in the History of Our Party Since the Founding of the People’s Republic of China.”

An Audi commercial in China compared women to used cars. It didn’t go well. – The Washington Post On Weibo, a Chinese social media platform similar to Twitter, people criticized the commercial as sexist and “disgusting.” Several users called on Audi to apologize, while some urged a boycott of the automaker.


AnchorEnergy, Environment, Science And Health

China’s magic mushrooms made from grass – Xinhua Comment: One of the foreign editors having some fun…


AnchorEducation

中央巡视办到清华大学督查巡视整改工作——中央纪委监察部网站 Comment: CCDI Inspection Team revisits Tsinghua University to check on the schools progress in fixing the problems found in the recent inspection


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