China's Interpol chief detained; More stimulus measures; Pompeo in Beijing; Yan Lianke; Rural revitalization plan; Bloomberg's hardware hack story crumbling?

Hi everyone, we are back to a regular schedule after the holiday week in China. There is already lots going on, including:

• China resigns Meng Hongwei from his post chief of Interpol and says he is under investigation for bribery and other violations;

• The PBoC cuts banks’ required reserve ratio for the fourth time this year as the government tries to stimulate the economy;

• US Secretary of State had a frosty visit to Beijing and was snubbed by Xi Jinping. China is not happy about VP Pence’s speech last week;

• Apple sent a letter to the US Congress denying the Bloomberg story last week about the alleged hacking of server motherboards made in China.

• China is making clear it will not back down on the decision not to renew the Hong Kong work visa of the Asia editor of the Financial Times. This decision is another reminder that the real basic law in Hong Kong is that the Chinese Communist Party can and will do whatever it wants in Hong Kong, and nothing can stop it. Hong Kong, PRC…

Thanks for reading.

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The Essential Eight

1. Chinese Interpol chief subject of Reds notice

China confirms detention of former Interpol chief Meng Hongwei | South China Morning Post:

Nevertheless, it would have been well aware of those risks before acting in the way it did, said Beijing-based political commentator Zhang Lifan.

“I’m pretty sure they would have expected an extraordinary response from the international community before taking such a decision,” he said.

“I guess something urgent must have happened. That’s why [the authorities] choose to take such immediate action, at the risk of losing face on the international stage.

“If what Meng is involved in is nothing more than an ordinary corruption case, there would have been no need for the authorities to handle it in such a manner.”

Comment: The reaction would certainly make sense if Beijing believed Meng was giving information to foreign intelligence services, and we know some espionage cases are actually spun publicly as corruption and discipline violations...I am just speculating but this looks like it could be more than your run of the mill dirty Zhou Yongkang crony cop case.

Interpol Chief Was China’s Pride. His Fall Exposes the Country’s Dark Side. - The New York Times:

On Monday, China’s minister of public security, Zhao Kezhi, told a meeting of senior police officials in Beijing that Mr. Meng was accused of taking bribes and other crimes.

Neither Mr. Zhao nor the Foreign Ministry gave details of Mr. Meng’s supposed transgressions, or said whether they had taken place before or after his election as Interpol’s president in 2016.

In any case, Mr. Meng’s abrupt and mysterious disappearance has left a cloud of uncertainty hanging over Chinese officials and the international bodies that are increasingly giving them leadership roles. It dealt a spectacular, self-inflicted blow to China’s efforts to prove itself ready for more prominent roles in global affairs.

Wife of detained former Interpol chief makes emotional appeal – video | The Guardian:

The wife of the detained former Interpol chief Meng Hongwei has told journalists she has not heard from him since 25 September, when he sent her a WhatsApp message that said: 'Wait for my call.'

Four minutes later, he sent her an emoji of a knife, Grace Meng said.

Comment: Interesting they use Whatsapp to communicate, the Party investigators won't be pleased to see that. 

Speculation: So they had worked out a code and a plan because he thought he may be detained? Is his wife now leveraging this into an asylum request? And will China decide it should return to the days when officials posted overseas had to leave their families back in China?

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2. More attempts to juice the flagging economy

PBOC Cuts Reserve Ratio Again as China Faces Bleaker End to 2018 - Bloomberg:

The People’s Bank of China lowered the required reserve ratio for some lenders by 1 percentage point, effective from Oct. 15, according to a statement on its website Sunday. The cut will release a total of 1.2 trillion yuan ($175 billion), of which 450 billion yuan is to be used to repay existing medium-term funding facilities which are maturing, the central bank said.

PBoC announcement - 中国人民银行决定下调部分金融机构存款准备金率置换中期借贷便利

Opinion: Sluggish Economy Is Behind Latest Cut to Reserve Requirement Ratios - Caixin Global:

In fact, with the U.S. Fed’s continued interest rate hikes, the relaxation of China’s monetary policy will continue to reduce the interest rate difference between China and the U.S., making the yuan exchange rate against the U.S. dollar face depreciation pressure on the fundamentals. The above statement by the central bank indicates its belief that domestic targets will take precedence over external targets. And on the other hand, the central bank has the will and ability to maintain the exchange rate of the yuan against the U.S. dollar at a certain level. The reintroduction of the countercyclical factor has strengthened the central bank’s ability to influence the middle price. Various control measures for capital outflows also continue to strengthen. In addition, the central bank retains the ability to initiate foreign exchange reserve intervention and offshore market intervention. In view of this, we believe that the probability of the yuan exchange rate against the U.S. dollar exceeding 7 yuan per dollar at the end of this year is very small. - Zhang Ming is the chief economist of Pingan Securities Co. Ltd., and a senior fellow and the director of the Department of International Investment, Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Services Expansion Picks Up Momentum: Caixin Survey - Caixin Global:

The Caixin China General Services Business Activity Index, which provides a snapshot of operating conditions in the country’s vast services sector, picked up to 53.1 in September from a 10-month low of 51.5 in August. The dividing line of 50 separates expansion from contraction. The larger the number above 50, the faster the expansion, while the further below 50, the greater the contraction.

The services sector, also known as the tertiary sector, includes finance, real estate services, marketing, transportation and retailing. It now accounts for more than half of China’s gross domestic product, according to government data.

China Stocks Tumble After Weeklong Holiday Filled With Setbacks-Caixin:

The benchmark Shanghai Composite Index closed down 3.72% at 2,716.51, while the Shenzhen Component Index lost 4.05%, closing at 8,060.83. China’s markets were closed all last week for the National Day holiday. But during that time Hong Kong’s benchmark Hang Seng Index fell more than 4% on a string of negative news stories about the U.S.-China relationship. The Hang Seng Index declined 1.39% on Monday to close at 26,202.57.

Investors Flee China Stocks as Foreigners Dump $1.4 Billion - Bloomberg:

Foreigners dumped 9.7 billion yuan ($1.4 billion) of A shares through exchange links with Hong Kong on Monday, just short of a record hit eight months ago, as mainland markets reopened after a week-long break. Ping An Insurance (Group) Co., Kweichow Moutai Co. and Hangzhou Hikvision Digital Technology Co. -- old favorites that jumped at least 97 percent last year -- were the most sold by overseas traders Monday.

China to adopt more proactive fiscal policy: finance minister - Xinhua:

Minister of Finance Liu Kun said the fiscal policy should be more forward-looking, flexible and effective to play a bigger role in boosting demand, restructuring the economy and promoting high-quality development.

In an interview with Xinhua, Liu said the proactive fiscal policy will prioritize four sectors, namely cutting taxes and fees, improving weak links, boosting consumption and improving people's livelihood.

Apart from policies to reduce taxes and fees unveiled at the beginning of the year, China has announced more policies to support the real economy and technological innovation, which will help reduce enterprises' burden by more than 1.3 trillion yuan (about 188.4 billion U.S. dollars) this year, Liu said.

China to raise export tax rebates amid trade war | Reuters:

The tax rebate will be raised to 16 percent for those exports currently getting a rebate of 15 percent or 13 percent, the cabinet said. The rebate will be raised to 10 percent for those exports that currently get a 9 percent rebate, though the rebate will be raised to 13 percent for some, the cabinet said.

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3. Will the stimuli lead the Yuan lower?

US growing concerned about China's falling currency and 'turn away from market-oriented policies' - CNBC 

U.S. officials are concerned about the recent depreciation in China's currency and plan to lay out details on China's policies in an upcoming foreign exchange report, according to a senior U.S. Treasury official. 

The official was speaking ahead of Treasury Secretary Steven Mnuchin's participation at the IMF-World Bank meeting in Bali this week. As trade tensions have risen and China prepares to retaliate against U.S. tariffs, the yuan's fall against the dollar has accelerated recently and is near a 21-month low. The currency was at 6.92 to the dollar, near its August low of 6.93.

China Bears Beware, the Yuan Will Weaken on Beijing's Terms - Bloomberg:

Meanwhile, the Ministry of Finance is coming to Hong Kong to sell dollar bonds again – on Oct. 11 – just about one year after its vanity issue that priced A+-rated China close to AAA-rated Germany. Do yuan bears seriously believe Beijing will allow the currency to tumble while its government is mounting a roadshow?

And don’t forget a new tool the PBOC can use to battle the bears in Hong Kong. On Sept. 20, the Hong Kong Monetary Authority, the city’s de facto central bank, agreed to allow its Beijing counterpart to issue yuan-denominated bills in the offshore market. Higher offshore yuan yields could deter speculation.

China's forex reserves edge down in September - Xinhua:

China's foreign exchange reserves edged down 0.7 percent, or 22.7 billion U.S. dollars from a month earlier, to 3.087 trillion U.S. dollars by the end of September, the central bank said Sunday. Wang Chunying, spokesperson of the State Administration of Foreign Exchange, attributed the contraction to a number of factors including exchange rate conversion and changing asset prices.

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4. Bloomberg's motherboard hack story looks to be falling apart

It is one thing to issue press releases rejecting a story, quite another to send a letter to Congress and then offer to testify that that the alleged events never happened. If Apple is not telling the truth they just put themselves into a whole different realm of potential jeopardy.

Apple tells Congress it found no signs of hacking attack | Reuters:

Apple Vice President for Information Security George Stathakopoulos wrote in a letter to the Senate and House commerce committees that the company had repeatedly investigated and found no evidence for the main points in a Bloomberg Businessweek article published on Thursday, including that chips inside servers sold to Apple by Super Micro Computer Inc (SMCI.PK) allowed for backdoor transmissions to China...

The letter follows statements on Friday by Britain’s National Cyber Security Centre and on Saturday by the U.S. Department of Homeland Security that those agencies have no reason to doubt denials from Apple and Amazon.com Inc (AMZN.O) that they had discovered backdoored chips.

Apple v. Bloomberg - Axios:

This fight is going to get bigger. Apple is getting even more categorical in its denial of a Bloomberg Businessweek story saying that Apple was among nearly 30 U.S. companies that had computer equipment compromised by China, which inserted malicious chips during the manufacturing process.

Apple yesterday wrote to the House and Senate commerce committees to say that its internal investigations "directly contradict every consequential assertion made in the article — some of which ... were based on a single anonymous source."..

Apple has some high-profile backing: The U.S. Department of Homeland Security said Saturday that it has "no reason to doubt" the companies' denials. Britain’s national cyber security agency said the same on Friday.

Supply Chain Security is the Whole Enchilada, But Who’s Willing to Pay for It? — Krebs on Security:

Many readers have asked for my take on this piece. I heard similar allegations earlier this year about Supermicro and tried mightily to verify them but could not. That in itself should be zero gauge of the story’s potential merit...

The U.S. Government isn’t eager to admit it, but there has long been an unofficial inventory of tech components and vendors that are forbidden to buy from if you’re in charge of procuring products or services on behalf of the U.S. Government. Call it the “brown list, “black list,” “entity list” or what have you, but it’s basically an indelible index of companies that are on the permanent Shit List of Uncle Sam for having been caught pulling some kind of supply chain shenanigans.

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5. Xi Jinping snubs Pompeo while Yang and Wang berate him

Trump snubbed Liu He, why would Xi not return the favor, especially now when the relationship is even worse?

Remarks With Chinese Foreign Minister Wang Yi Before Their Meeting - US State Department:

Thank you, Foreign Minister Wang. Thank you for welcoming me to Beijing. I did indeed want to come here to have discussions (inaudible) the issues that you’ve characterized we have a fundamental disagreement. We have grave concerns about the actions that China has taken, and I look forward to having the opportunity to discuss each of those today because this is an incredibly important relationship...

I regret that the Strategic Dialogue between our two countries was something that you all chose not to undertake. It would have been an important opportunity for us to have a discussion about these longer-term, important issues that present opportunities for the people of our two countries.

Comment: Remember, Beijing went out of its way to say the US decided to postpone the dialogue scheduled for later this month...

Secretary Pompeo's Meetings in Beijing, China - US State Department:

On October 8, Secretary of State Pompeo met separately with Member of the Political Bureau and Director of the Office of the Foreign Affairs Commission of the Central Committee of the Communist Party of China Yang Jiechi and State Councilor and Foreign Minister Wang Yi in Beijing. They discussed the overall state of the bilateral relationship.

The two sides affirmed the importance of a constructive, results-oriented bilateral relationship. The Secretary directly addressed ‎areas where the United States and China do not agree, including on the South China Sea and human rights. He also emphasized the importance of maintaining cross-Strait peace and stability. The two sides reaffirmed their shared resolve to achieving the final, fully verified denuclearization of the DPRK, as agreed to by Chairman Kim in Singapore. The United States and China remain unified on our pressure campaign, and are committed to a bright future for the DPRK if Pyongyang denuclearizes quickly.‎

Chinese state councilor meets US state secretary, calling for win-win cooperation - Xinhua:

He said current China-U.S. ties were at a critical phase, and China would maintain peaceful development and continue reform and opening-up, to realize rejuvenation while avoiding the "power leading to hegemony" stereotype.

He called on the U.S. side to stop "groundless accusations against China and wrong actions undermining China's core interests."

"China is committed to developing good relations with the United States, meanwhile, China will firmly safeguard its sovereignty, security and development interests," Wang stressed.

Wang illustrated China's positions on trade friction with the United States, as well as the Taiwan issue and the South China Sea issue.

He said a trade war would never solve problems and promised that China was still willing to negotiate with the United States "on the basis of equality, honesty and solemnity."

China tells Pompeo U.S. actions misguided - The Washington Post:

It appeared that President Xi Jinping, who met Pompeo during the American’s visit in June, decided to snub him this time. There had previously been slots in the schedule for three meetings, but Pompeo had only two.

Separately, it emerged that Xi would soon make his first visit as president to North Korea. He will visit “soon,” South Korean President Moon Jae-in told a cabinet meeting Monday.

This came out last week but worth mentioning again--US Navy proposing major show of force to warn China - CNN:

The plan suggests sailing ships and flying aircraft near China's territorial waters in the South China Sea and Taiwan Strait in freedom of navigation operations to demonstrate the right of free passage in international waters. The proposal means US ships and aircraft would operate close to Chinese forces.

The defense officials emphasized that there is no intention to engage in combat with the Chinese.

The Deeper Meaning of Pence’s China Broadside - WSJ $$

He asserted that the Chinese have embarked on a governmentwide effort to “interfere in the domestic policies of this country.” In this concerted program, he charged, China seems to expand its influence by “rewarding or coercing American businesses, movie studios, universities, think tanks, scholars, journalists, and local, state, and federal officials.”

This isn’t a casual accusation. For months, a team of national-security officials has been compiling a study on the many ways China uses money, power and rewards to affect the way it is viewed in the U.S. The study was intended in part, say those familiar with it, to shame American institutions that the administration believes are being used by China.

Comment: This study is very important, still not leaked but expect some of it to soon. And if you want to share some of it with me I love tips on Signal at +13012460858

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6. US-China Trade

Exclusive: U.S. Commerce's Ross eyes anti-China 'poison pill' for new trade deals | Reuters:

Under the provision, if any of the three countries in the USMCA enters a trade deal with a “non-market country,” the other two are free to quit in six months and form their own bilateral trade deal.

“It’s logical, it’s a kind of a poison pill,” Ross said...

Ross said he did not expect much movement on China trade talks until after the Nov. 6 U.S. congressional elections, adding that Chinese officials do not appear in a mood to talk at the moment.

He said the view among some Chinese officials that Trump will be weakened by Democratic Party gains in Congress is a miscalculation, because “the real farmers, the real ranchers are hanging in there” and are not likely to turn away from Trump and Repubulicans in Congress.

U.S. Trade Gap Hits Six-Month High as Soybean Exports Plunge 28% - Bloomberg:

The gap in goods and services trade increased 6.4 percent to $53.2 billion, from a revised $50 billion in the prior month, Commerce Department data showed Friday. Imports rose 0.6 percent and exports fell 0.8 percent. Soybean exports dropped $1 billion, or 28 percent, to $2.58 billion, reversing a run-up earlier this year ahead of retaliatory levies from China.

China Wants to Strike Back on Trade. Big U.S. Deals Could Suffer. - The New York Times:

A number of global deals involving American companies are under review by Chinese market regulators. Among the biggest is Walt Disney Company’s $71 billion acquisition of 21st Century Fox, which has an Oct. 19 deadline. United Technologies — owner of Pratt & Whitney, the jet engine maker, and other industrial businesses — is waiting to close a $30 billion purchase of Rockwell Collins, the aerospace parts maker.

China’s antitrust regulators disclose little about their deliberations. But some companies worry that this opacity could provide cover for retaliation in response to tariffs that the United States has placed on Chinese goods — and wonder if long-negotiated deals could become collateral damage in the trade war...

“China has valid reasons to be angry with the Trump administration’s protectionist tariffs,” said Fred Hu, the chairman of Primavera Capital Group and a former chairman of Goldman Sachs for China. But, he added, “it is unlikely to direct its anger at American businesses.”

“On the contrary, China is trying to cultivate ties with them,” Mr. Hu said

Comment: Hu offers the hopeful guess about China's next steps, that in order to demonstrate substance to the global propaganda campaign that China will only become more open it can not harshly penalize US firms...

Kevin Hassett tells businesses to stay away from China - Yahoo News:

“If I were a business, I would basically just stay away from China right now. Their misbehavior is so terrible.” Kevin Hassett, chairman of the Council of Economic Advisers said on Yahoo Finance’s Market Mover Friday. “That’s why President Trump is taking a hard line with them. They’ve got to change the way they behave if they want to be part of this modern world global economy.”

Hassett also cited the bombshell story from Bloomberg Businessweek, which claims China’s military deployed a microchip to attack hardware in the supply chain and had infiltrated U.S. tech giants like Amazon and Apple. Both companies have denied the report. But it still raised many concerns about Chinese electronic manufacturers. Hong Kong-listed Lenovo and ZTE saw share prices drop by 15% and 10%, respectively, on Friday.

The U.S.-China Trade Battle Spawns a New Era of Tariff Dodges - WSJ $$:

Every product imported into the U.S. carries a 10-digit designation called an HTS code, of which there are 18,927 in all. Like a taxonomic version of Noah’s Ark, the code provides a common language to bridge disparate markets and identify products in all their variety.

In a world of increasing tariffs, the code has another function: evading those levies. The business of code-fudging is expanding in step with tariff increases, undermining U.S. efforts to shield American business from foreign competition, according to importers, customs officials, trade attorneys and shipping brokers.

As trade conflict grows between the two largest economies, these professionals say, code misclassification is starting to compete with transshipment—the rerouting of goods through third countries—as a way to duck tariffs.

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7. More on rural revitalization

The excellent Dim Sums blog read the new plan

Dim Sums: Rural China Economics and Policy: Rural Revitalization With Chinese Characteristics:

The sprawling 36,000-character Plan is a little more than twice as long as the "Number 1 Document" that laid out the Rural Revitalization initiative earlier this year, yet this "Plan" includes a similar stream of general statements with few details and only a few minor new items. The Plan has great ambitions to overhaul the countryside--to make it richer, cleaner, more scenic, more ecologically balanced, and more closely integrated with cities.

In some ways the plan is similar to the 1958 "Peoples Communes" and the 1970s "Learn From Da Zhai" campaigns that also offered ambitious plans promising a modern, industrialized, idyllic and orderly countryside. This Plan digs up the bones from those earlier plans and will use them as the socialist skeleton for 21st-Century Rural Revitalization: village collectives, state farms, state-owned enterprises, supply and marketing cooperatives, rural credit cooperatives, model farms, and state-owned enterprises are all endorsed as core actors in this year's Revitalization

China’s Small Farms Are Fading. The World May Benefit. - The New York Times:

Other wealthy countries, like the United States, saw farms grow as the rural population shrank. Only relatively recently has that begun to happen in China. In the 1980s, the government broke up the giant communes favored by Mao Zedong and redistributed the rights to farm individual plots to households. Further changes in government policy in the mid-1990s made those land rights secure enough for farmers and others to have the confidence to rent land on a wide scale. China’s agriculture sector is far from being dominated by big commercial farms, as it is in the United States, but the process has begun.

Award-winning Chinese photographer Fu Yongjun changes course in effort to chronicle endangered villages before they vanish | South China Morning Post:

Now 49 and a photojournalist for 15 years, Fu – a winner of multiple photo awards domestically and internationally – wants to dedicate the next phase of life to the country’s vast rural areas.

Amid rapid urbanisation and President Xi Jinping’s initiative to alleviate poverty by 2020, many villages across China are disappearing, and Fu hopes to build an archive of images for 100 that remain.

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8. New Yorker on Yan Lianke

Excellent profile by Jiayang Fan

Yan Lianke’s Forbidden Satires of China | The New Yorker 

No one here has actually read anything I’ve written, or knows that my books are banned. To live in China in 2018 is to inhabit a reality that makes you question the very nature of reality.” The absurdity of the evening’s events seemed, ever so slightly, to please the author. “The people we met today, they know the name Yan Lianke and that he’s a Henanese who’s come by a bit of fame,” he said. “But, in their minds, I might as well be a character in a story.”

Yan’s mother, who is in her mid-eighties, has been getting frail, and not long ago it occurred to him that, if he wired her allowance annually, rather than in monthly installments, she would be spared many walks to the bank. His mother was horrified by the suggestion: what was the point of receiving money from a rich, filial son if the whole village didn’t witness you hobbling up the road to collect it? Yan describes her as “the most traditional countrywoman you’ll meet”—illiterate and lacking even basic arithmetic skills, but possessed of an inviolable sense of propriety…

Yan is not exactly a political dissident, and he remains a member of the Communist Party—a club that’s much easier to join than to leave. Over the years, he has honed an instinct for self-preservation through pliancy, deflection, and bemused forbearance. Yan used to joke that the day he managed to learn ten words of English he would move abroad, but he suspects that he wouldn’t feel the same urgency in his work if he left China. “It’s ironic,” he told me. “There is so much anxiety about writing within Chinese borders, but that anxiety is also what I write from.”

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Business, Economy, Finance And Trade

Better prices, services boost holiday travel - China Daily Nearly 730 million trips were made by Chinese travelers within China over the seven-day National Day holiday, a year-on-year increase of 9.43 percent, thanks to cheaper tickets and higher-quality travel services, according to the Ministry of Culture and Tourism. The figure was even more impressive given the fact that National Day 2017 overlapped with Mid-Autumn Festival. Travel and tourism-related revenue tallied between Monday and Sunday hit nearly 600 billion yuan ($87 billion), up 9.04 percent compared with 2017.

Train services put to test by travel peak at end of National Day holidays - Global Times Train services faced heavy pressure with over 15 million passengers on the last day of China's Golden Week holiday, with a total passenger traffic hitting 100 million during the holiday, reports said. Nationwide train services were expected to handle a peak of 15.2 million passengers on Sunday, the end of the seven-day holiday in China, Shanghai-based news website thepaper.cn reported on Sunday.

Allegations Emerge of Fraud at Scandal-Hit Bad Asset Manager Scandal-ridden bad asset giant China Huarong Asset Management Co. Ltd.’s crisis shows no sign of ending, as possible links to two suspected cases of fraud have emerged. Altogether, these two cases may have caused the company to lose over $1 billion. Speculation began last month after Hong Kong’s Securities and Futures Commission (SFC) ordered three brokers to freeze assets up to HK$10.17 billion ($1.3 billion) owned by an unnamed chairman of a public company, pending a probe into possible fraud in which the chairman colluded with certain executives from a group to pull off two deals that might have lost the group HK$10.17 billion.

Huarong and the Chung Nam Network - Webb Site Now here's where we circle back to Monday's story, on massive state-controlled China Huarong Asset Management Co Ltd (Huarong, 2799), the bad-debt manager, or possible the bad debt-manager. The more we scrutinise Huarong, the worse it looks. Ironically for a company that was originally set up by the State to bail out a State-owned bank before listing, it now looks possible that the State will end up having to bail out Huarong too, or otherwise trigger a cascade of losses at the other (state-owned) entities which have lent to Huarong.

Statement of CCPIT on behalf of Chinese Business Community on the B20 Policy Recommendation Paper However, it is regretful that some recommendations in 2018 B20 policy paper turn a blind eye to the legitimate concerns of Chinese business community and state a biased and unbalanced viewpoint on SOEs’ behaviors in market competition, production overcapacity,  special focus on implementation standards of integrity and compliance of SOEs etc..This policy paper has not reflected the actual discussion of the business communities and their recommendations, thus gravely violated the most basic consensus-building principle of B20. Therefore, the Chinese business community holds strongly that this policy paper shall never be disseminated or published in the name of B20, neither should it be submitted to the G20 leaders in any form.

Structured Deposits Exceed 10 Trillion Yuan, Beijing Expected to Tighten Derivatives Licensing - China Banking News The “2018 Financial Institution Credit Balance of Payments and Receipts Statistics” (2018年金融机构信贷收支统计) released by the People’s Bank of China in May indicated that as of the end of March the structured deposits of Chinese national banks had reached 8.8 trillion yuan, for an increase of 1.84 trillion yuan in the first quarter alone, as compared to growth of 1.8 trillion yuan in 2017. The surge prompted speculation at the time that Chinese regulators would crack down on the use of structured deposits, particularly given that many banks were providing the products without licenses required to engage in derivatives transactions.

 

Politics, Law And Ideology

Legal experts urge theoretical studies for work of Party, state - Xinhua At a forum held by the China Law Society (CLS), Wang Lequan, director of the CLS, said the studies should focus more on solving problems, meeting the needs of building a moderately prosperous society in all respects and drawing new experiences from the country's reform and development practices.

Chinese official pledges greater cybersecurity measures - Xinhua Liu Liehong, deputy director of the Cyberspace Administration of China, said at a press conference that the research for and drafting of a regulation, which stipulates security control over exporting Chinese citizens' personal information and the country's important data, is underway.

传承中深化 创新中发展--法制网 江苏深化“枫桥经验”本地化实践

CCTV has a new TV show on Xi's use of classical idioms and historical allusions..guess that personality cult thing has some legs...《平“语”近人——习近平总书记用典》将播出--时政--人民网 新华社北京10月7日电  （记者白瀛）由中共中央宣传部、中央广播电视总台联合创作的《百家讲坛》特别节目《平“语”近人——习近平总书记用典》将于8日至19日在央视综合频道晚间播出。节目从习近平总书记一系列重要讲话、文章、谈话中所引用的古代典籍和经典名句为切入点，旨在推动习近平新时代中国特色社会主义思想的生动阐释与广泛传播。

The preview, on Youtube:

坚定信心，推进新时代东北全面振兴--观点--人民网 ——论学习贯彻习近平总书记在深入推进东北振兴座谈会上重要讲话

Beijing police to review child-snatching case - CGTN Beijing police, in a statement released on Chinese social media platform Weibo, announced on Friday that the investigation into a recent case of attempted child abduction will be reviewed. The incident first came to light when a Weibo user "@liuyuedeyuzainali," reportedly operated by the baby's father, said that the three women who allegedly snatched his 11-month-old son in a shopping mall were let off after a five-day administrative detention without facing any serious charges.

 

Foreign and Military Affairs

DPRK praises friendship with China on anniversary of ties - Xinhua China and the DPRK established diplomatic relations on Oct. 6, 1949, and it is a meaningful day for both the DPRK people and the Chinese people, said the official Rodong Sinmun. The official daily of the ruling Workers' Party of Korea said in a commentary that the establishment of diplomatic ties served as an epochal occasion to develop the friendly relations between the two peoples.

PLA Rocket Force think tank recruits 13 civilian science, tech experts - China Military The think tank of China’s People’s Liberation Army Rocket Force recently recruited 13 Chinese technicians from private companies, PLA Daily reported on Saturday. Zhang Hao and 12 other science and technology experts received letters of appointment at the founding ceremony of the PLA Rocket Force national defense science and technology experts panel, according to a report published by the PLA Daily on Saturday.

China has quietly altered its boundary with Bhutan after Doklam stand-off with India Analysis of satellite imagery by ThePrint has found that Beijing has managed to effect this change through frenetic activity through last winter and the monsoon season. At the Doklam plateau, India’s boundary with Bhutan has now become the de facto boundary with China. This is a change of status quo.

Japan and Vietnam join hands over disputed South China Sea | Kyodo News Japan does not face the South China Sea but views the vital shipping lane, where Beijing has built artificial islands with military infrastructure, as strategically important. The Japanese prime minister Shinzo Abe and his Vietnamese counterpart Nguyen Xuan Phuc met in Abe’s Tokyo office on Monday where they also confirmed their readiness to promote free and fair trade through regional trade agreements, including the 11-member Trans-Pacific Partnership, despite the spreading trend of protectionism.

Chinese students in US fear backlash after Vice-President Mike Pence’s inflammatory speech | South China Morning Post Despite the students’ dismissal of any sinister links between CSSAs and diplomatic organs, a Chinese man who has worked for a state-owned firm in the US for more than a decade said there was some justification for American people’s concerns. “There seems to be a trend among [Chinese] people who can’t get jobs in the US of trying to build connections through the Chinese embassy and officials,” he said on condition of anonymity. “This creates the impression that [they] … are under the direction of the Chinese government.”

China's vice president to visit Israel - Haaretz.com Jack Ma, founder of China’s top e-commerce firm Alibaba, will join as well. Ma visited Israel in May.  Israel was chosen to host one of eight research and development centers for Alibaba, to build overseas research hubs to help it compete with global leaders in e-commerce, logistics and cloud technology.

 

Tech And Media

In Depth: Tencent Refocuses on Business Customers in Major Overhaul The Shenzhen-based gaming and social media company unveiled a plan Sept. 30 to revamp its business structure, including consolidating several content-focused business groups and creating a new division devoted to cloud computing and data services aimed at corporate customers.The restructuring, which will affect the company’s 50,000 employees and more than 30 vice president-level executives, comes as Tencent faces growing challenges to maintaining its momentum after years of uninterrupted growth. The 19-year-old company posted its first quarterly profit drop in 13 years in the second quarter as its core gaming business grappled with increasing government scrutiny...

China tells entertainment industry to sort out their taxes – and pay their bills in full | South China Morning Post The announcement on Monday came after Fan Bingbing was told to pay 884 million yuan (US$129 million) in fines and unpaid dues that she avoided by using split, or “yin-yang”, contracts to disguise her true earnings from the tax authorities. In a notice, the State Administration of Taxation said individuals and companies in the entertainment industry must pay any taxes owing for the last two years. The tax bureau said those who paid their bills by the end of the year would be exempted from any penalties.

Tencent to Invest in Brazilian Fintech Startup at $4 Billion Valuation — The Information Tencent’s first investment in Brazil makes Nubank one of the most valuable startups in Latin America. It is the latest sign of how China’s tech titans are seeking new opportunities in major emerging markets such as Southeast Asia, India and Latin America, creating new challenges for their Silicon Valley counterparts. Nubank was valued at $2 billion in March, according to startup tracker CB Insights.

Tencent injects $317.6m into Chinese anime streaming site Bilibili Tencent Holdings Ltd will invest $317.6 million in Chinese streaming site Bilibili in return for a 12.3 per cent stake, the two companies announced this week. Bilibili’s other shareholders include Tiger Global Management, Wells Fargo, JPMorgan Chase, BlackRock and Alkeon Capital Management.

How China's biggest social network fights fake news | Abacus One of the ways WeChat deals with rumors? They post the top ten rumors every month on an official account -- to debunk them. So what rumors spread on WeChat this month? The top one claims that the government ordered that nobody is allowed to post “anything harmful to the Communist Party, the country and society” on WeChat, including any “political sensitive” topics. The official rumor-debunker says that’s not true!

China launches campaign against tax evasion in film, TV industry - Xinhua hina has decided to initiate a campaign to regulate tax payment in the film and TV industry and promote its healthy development, according to a notice from the State Administration of Taxation. The notice demands all levels of taxation authorities inform the film and TV firms and relevant personnel with exorbitant casting fees to conduct self-examinations of their tax payments since 2016 from Oct. 10.

Axios China - Taxman cometh for Fan Bingbing The official “Sword of Chang’an 长安剑“ WeChat account [of the Politics & Law Commission] noted (长安剑：超8亿！范冰冰逃税被重罚！除此之外还有四大新闻) that the case reflected the naked worship of money in entertainment circles as well as the complete disregard for art, morality, personal integrity and the law.

China punishes taxmen who investigated superstar Fan Bingbing- The Straits Times At least five people have been disciplined, including the head of the taxation bureau in the eastern city of Wuxi, where Fan's company is based, the official Xinhua news agency reported. The State Administration of Taxation has instructed the provincial tax bureau in Jiangsu to "hold accountable" those involved in Fan's case for poor management, Xinhua said, before going on to list a number of individuals who have been issued with official and verbal warnings about their shortcomings.

 

Society, Art, Sports, Culture And History

Xinjiang-born Uyghur Rapper Wins "The Rap of China 2018" as Kris Wu Calls Out Haters | RADII China Season two of The Rap of China concluded on Saturday night amid a near-two hour-long flurry of advertising, product placement and a little bit of music, with two Uyghur rappers from Xinjiang facing off for the 2018 “R!CH” title. Aire, born in the region’s far western city of Kashgar, ultimately swept to victory over Nawukere (who hails from Urumqi) to land the much sought-after prize of a hug from Kris Wu.

China Focus: Shanxi police crack down on tomb raiding, relic smuggling - Xinhua The operation, beginning in March, has been the province's largest police operation of its kind. The police campaign has helped retrieve 5,730 historical artifacts, among which 33 are on the list of China's national-level cultural protection. Both the number of suspects and the retrieved relics surpassed the total numbers between 2013 and 2017, according to the Shanxi provincial bureau of public security.

 

Energy, Environment, Science And Health

Hidden Stories of Chinese Migration and Culture Found in Giant Genetic Study - The New York Times Comb through the DNA of Chinese people and you’ll find a trace of this culinary story, according to the largest-scale genetic study of Chinese people to date, published Thursday in Cell. The authors reported that a mutation of FADS2, a gene involved in metabolizing fatty acids, is more common in northern than southern populations, indicating a diet richer in animal content. It is one of an assortment of findings resulting from a sweeping analysis of genetic information from 141,431 participants.