Conditions for Trump-Xi meeting at G-20; Stabilizing the economy and talking down trade war effects; IMF bailout of Pakistan would be tricky for China; Sino-Australian relations; Media censorship

Happy Tuesday, commentary is interspersed below.

You might be interested in a couple of upcoming events:

At 6:00 p.m. EDT today the National Committee on United States - China Relations is hosting a China Town Hall interactive webcast with Dr. Condoleezza Rice. You can watch it here

There will be a screening of Hao Wu’s new film The People's Republic of Desire this coming Sunday October 14 at 1:45 in Washington DC. You can get more details at People's Republic of Desire - Double Exposure Investigative Film Festival and Symposium. Here is a trailer:

Thanks for reading.

View comments

The Essential Eight

1. US-China

This is a great story by Tom Mitchell and Lucy Hornby. It makes clear the Chinese are wary of any of the US interlocutors now, and that while they are willing to make some concessions there remains a wide gulf between what the US is asking for structurally and what the Chinese will consider. I believe Xi still wants to find a way to a palatable deal that defers the pain, but if a path is found do not mistake a short-term agreement for expediency with a fundamental fix for the structurally deteriorating US-China relationship. - US officials ‘warn’ China over trade talks at G20 summit | Financial Times:

US officials have warned China that Donald Trump will not engage in trade talks with Xi Jinping at next month’s G20 summit if Beijing does not produce a detailed list of concessions, according to two people briefed on negotiations between the countries.

The Chinese, however, say they have such a list but would not present it without some guarantee of it being received in a stable political climate in Washington, including a point person with a mandate to negotiate on behalf of the Trump administration, according to the two people.

Trump expands anti-China effort | TheHill:

Officials argue that the more muscular approach will actually make a real conflict with China less likely.

“In part, we are educating the American public, but we are also trying to help China understand where they are overreaching in ways that could lead down a very bad path,” said one senior administration official...

A source close to the administration said the National Security Council has begun the process of asking government agencies to develop options designed to limit Chinese technology companies' involvement in the coming rollout of a new 5G network in the U.S.

The measures could be aimed at companies such as Huawei and ZTE, whose technology Trump banned the government from using over security concerns.

China Commerce Minister Discusses U.S. Trade Dispute: Full Text - Bloomberg:

There is a view in the U.S. that so long as the U.S. keeps increasing tariffs, China will back down. They don’t know history and culture of China. This unyielding nation suffered foreign bullying for many times in history, but never succumbed to it even in most difficult conditions. China doesn’t want a trade war, but would rise up to it should it break out. We will resolutely safeguard the interests of the country and the people and resolutely uphold free trade and the multilateral trading system. The U.S. should not underestimate China’s resolve and will.

Commentary: US starts trade friction to hinder China’s industrial upgrading, diverting domestic contradictions - People's Daily Online:

China must come to realize why the US unilaterally initiated the trade friction in order to properly address it.

To hinder China’s industrial upgrading is a major reason for the US to start the trade friction...

The Occupy Wall Street Movement taking place after the 2008 global financial crisis proved the urgent need to address the social contradiction caused by the widening income gap.

However, the US government has given the wrong remedy, provoking international trade friction under the excuse of trade deficit, just like a patient forcing the healthy to take the medicine.

It is obvious that the US is not narrowing income gap and increasing saving rate to address domestic contradiction and reduce trade deficit, but transferring its domestic issues to other countries, in a hope that the others could pay the bills for the US itself.

(Yang Yingjie is a researcher at a research institute of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era under the Party School of the Central Committee of the Communist Party of China (CPC), and deputy editor-in-chief of Study Times affiliated to the Party School of the Central Committee of the CPC.)

The original-深刻认识美国制造经贸摩擦的原因 - 杨英杰 

Occupy Wall Street remains manna for Marxists…

Global Times editor Hu Xijin makes another appeal on his Weibo account for calm in the face of the US pressure, and again says China needs to resist the temptation to become more conservative and nationalistic. This is not the first time he has expressed these concerns, clearly he is very worried that Xi may choose that route. I try to ignore the editorials in the English-language version of The Global Times but Hu Xijin himself is always worth listening to. He is smart, savvy and an excellent weather vane. 中美只要不打仗,别的都是小事我们要力争... 来自胡锡进 - 微博:


China slashes U.S. LPG imports amid trade war | Reuters:

China has choked back on imports of liquefied petroleum gas (LPG) from the United States, traders and analysts said, turning to the Middle East for extra supplies amid the two countries' trade dispute.

China bought nearly 3.6 million tonnes of U.S. LPG in 2017, making the United States the country's second-largest supplier of the fuel used in petrochemicals, as well as for cooking, transport and heating.

However, U.S. imports have come off dramatically over the course of 2018, before stalling completely in late August when China imposed an additional 25 percent tariff on over 300 U.S. goods, including LPG, in retaliation for U.S. tariffs.

China promises not to weaken yuan, criticizes US concern - AP:

China promised Tuesday not to weaken its currency to boost exports during a tariff fight with Washington and rejected U.S. concern about the yuan’s sagging exchange rate as groundless and irresponsible.

Beijing has no intention of using “competitive devaluation,” said a foreign ministry spokesman, Lu Kang.

Lu’s comments per the official transcript:

Q: The US Treasury Department said that it is still concerned about the depreciation of China's yuan and that it is looking for signs of manipulation. Do you have any comment on that?

A: I have seen relevant reports. I just want to reiterate that China's position and attitude on the issue of the RMB exchange rate is quite clear. We do not intend to stimulate our exports through competitive currency depreciation, nor will we use the RMB exchange rate as a tool to tackle disputes in trade and other economic fields. I also want to add that the statements you cited are irresponsible as they are just baseless speculations.

Comment: I think Lu means "no intention at this moment in time under the current circumstances"... The “no intention” usage has proven to be slippery. Remember Xi’s 2015 remarks with Obama about the South China Sea:

Relevant construction activities that China are undertaking in the island of South -- Nansha Islands do not target or impact any country, and China does not intend to pursue militarization.

I am not saying a devaluation is coming, just that this assurance by Lu Kang is non-binding…

Yuan Lending Rate Surges as China Struggles to Stem Currency’s Slide - WSJ

The yuan weakened beyond 6.93 per dollar this week, coming within striking distance of its lowest level since January 2017, after China moved over the weekend to free more funds for domestic banks. The currency briefly recovered to around 6.91 in Tuesday trading in mainland China and Hong Kong after a short-term lending rate jumped.

2. Stabilizing the economy and talking down trade war effects

Positive propaganda meets increasing flavors of stimulus it looks like

China plans to speed up renovating shantytowns - Xinhua:

China has decided to speed up renovation of its shantytowns to improve the living conditions of people with housing difficulties, according to a State Council executive meeting chaired by Premier Li Keqiang on Monday.

The meeting vowed to speed up revamping shantytowns and ancillary facilities, and tighten supervision over construction quality and safety in accordance with the requirements of the 2018 government work report.

It also urged improving the policy of monetary compensation for renovating shantytowns, which should be suitable for local conditions.

Didn’t they announce cutbacks to this program just a few months ago?

Are Chinese consumers losing power? Soft spending in Golden Week raises concerns | South China Morning Post:

Consumer spending during this year’s week-long National Day break grew at the slowest pace since the Golden Week holiday system began in 2000.

Sales at the country’s retailers and restaurants over the seven-day holiday, which begins on October 1, amounted to 1.4 trillion yuan (US$200 billion), according to China’s Ministry of Commerce. Total sales in last year’s super Golden Week, which had eight days, were 1.5 trillion yuan.

On a daily basis, that means retail sales over the whole National Day holiday rose only 6.7 per cent compared to a year earlier, although the commerce ministry reported growth of 9.5 per cent – either way, it was the first single-digit growth on record.

China Says Trade Conflict With U.S. to Have Broad, Lasting Impact - WSJ $$:

“Impacts from trade frictions on the Chinese economy will have both direct and indirect impact, both short term and long term,” Ning Jizhe, a deputy chief of the nation’s top economic planner, said in an interview with official Xinhua News Agency published late Monday.

As more Chinese products face hefty tariffs, new orders will decrease and hurt employment, said Mr. Ning, who also heads the country’s National Statistics Bureau.

Mainland media spun Ning’s remarks differently:

Impact of trade friction on Chinese economy controllable: official - Global Times:

China is capable of achieving the major economic targets for 2018 and the influence of China-U.S. trade friction on the Chinese economy is controllable, Ning Jizhe, deputy head of China's National Development and Reform Commission, the country's economic planner, said on Monday.

"China's economy was highly integrated into the world economy during the past 40 years of reform and opening-up, so it's inevitable that trade rows would have some impact and lead to fluctuations of certain indexes. But that won't change the Chinese economy's momentum of steady growth, with stability ensured," Ning said.

The Beijing News 发改委副主任宁吉喆:中美经贸摩擦影响总体可控  Impact of US-China trade frictions controllable

国家统计局局长宁吉喆:在“六稳”中做好“五个扩大”  Amidst the "Six stabilize" also do well the "five expands"

国家发改委副主任宁吉喆:中国经济稳中向好态势不会改变  The stable and general positive situation of China's economy will not change

New York Times from last week - China Censors Bad Economic News Amid Signs of Slower Growth 

A government directive sent to journalists in China on Friday named six economic topics to be “managed,” according to a copy of the order that was reviewed by The New York Times.

The list of topics includes:

Worse-than-expected data that could show the economy is slowing.
Local government debt risks.
The impact of the trade war with the United States.
Signs of declining consumer confidence
The risks of stagflation, or rising prices coupled with slowing economic growth
Hot-button issues to show the difficulties of people’s lives.”

And from the 9.27 Sinocism newsletter:

A recent propaganda directive I have seen had a section that directed media to focus on covering the “six stabilities” – employment, finance, foreign trade, foreign investment, investment, expectations – to stabilize society in the face of the trade war (六稳 – 就业,金融,外贸,外资,投资,预期).

IMF Cuts Global, China Growth Forecasts, Blaming Trade War:

The IMF cut its 2019 growth projection for the U.S. to 2.5% from 2.7% previously and for China to 6.2% from 6.4%.

The full World Economic Outlook, October 2018 

Credit and Credibility: Risks to China’s Economic Resilience | Rhodium Group:

The bargain between China’s leadership and led—households and investors—is changing because Beijing cannot for long assure stability for an increasingly risky and complex system as its credibility is stretched thin. In addition to implications for Beijing’s policy options and likely path forward, this analysis has implications for how the United States and other advanced economies should prepare for a riskier outlook for China’s economy.

Credit and Credibility: Risks to China's Economic Resilience | Center for Strategic and International Studies

Video of a special presentation of the newly released report by Freeman Chair in China Studies Senior Associate  Daniel Rosen and Adjunct Fellow Logan Wright, Credit and Credibility: Risks to China's Economic Resilience.

3. IMF bailout of Pakistan would be tricky for China

Pakistan Requests IMF Bailout Talks - WSJ:

The Pakistani request for an IMF loan could further test already-strained U.S.-China relations. In July, U.S. Secretary of State Mike Pompeo warned that the U.S. didn’t want to see any IMF lending to Pakistan “go to bail out Chinese bondholders or—or China itself.”

The IMF as part of its bailout financing will need to know the full extent of Pakistan’s financial obligations under the Chinese initiative, experts said, details that have up to now been shrouded in secrecy. It is unclear how it can be ensured that no money from an IMF loan to Pakistan goes toward payments to China.

But Pakistan still has cash to buy Chinese drones

China, Pakistan to jointly manufacture Chinese aerial drones: report - Global Times:

Pakistan will reportedly import 48 Chinese drones in what a Chinese military observer said must be the largest such arms deal of its kind.

Announcing the deal on its official Facebook account on Sunday, the Pakistan Air Force's Sherdils Aerobatic Team did not reveal how much it was worth, when it was struck or when the Wing Loong IIs will be delivered.

But the air force academy aerobatics team announced that in the future the Pakistan Aeronautical Complex Kamra and the Aviation Industry Corporation of China's Chengdu Aircraft Industrial (Group) Company will jointly manufacture the drones.

Wing Loong II, made by Chengdu Aircraft Industrial (Group) Company, is a high-end reconnaissance and strike multi-role endurance unmanned aircraft system.

4. Sino-Australian relations

Exclusive: Australia’s Prime Minister Says China Not Targeted by Investment Restrictions - Caixin:

Morrison spoke with Caixin about the state of Australia’s relations with China, his government’s approach to managing the ongoing U.S.-China trade tensions, and the contribution the country’s Chinese community has made to Australian life....

Q. Currently, the U.S. is trying to decouple its economy from China as the trade war continues. What is Australia’s approach to the situation?

A. We continue to seek to work closely with both China and the U.S. We have independent relationships with both countries, and I always believe it’s best to have those conversations directly and quietly in an encouraging and positive way because the prosperity and the security of our region depends on it. Australia is in a unique position to engage with both China and the U.S. and should always seek to de-escalate tensions, and to do so from a position of friendship with both countries.

Orica chairman Malcolm Broomhead blasts former government's handling of China |

"For some reason the recent government chose to go out of its way in rhetoric to almost insult the Chinese," he said noting there would always be differences in the relationship but these had been managed by both sides of politics previously.

Mr Broomhead, who chairs explosives maker Orica and sits on the board of BHP, went a step further, saying the axing of Malcolm Turnbull as prime minister would be good for relations with China...

Heather Ridout, who chairs Australian Super and sits on the board of the ASX, joined the pile-on, saying the China relationship had "gone off the rails" and was at best by "megaphone diplomacy".

She said this was causing a hold-up in Australian goods entering China, while warning that Canberra should not be seen as a lead promoter of democracy.

"We don't have to be evangelists for liberal democracy in the world," she said.

New database tracks Chinese investment in Australia | Crawford School of Public Policy:

Project leader Professor Peter Drysdale said measuring foreign investment is notoriously difficult, and CHIIA’s new methodology offers new insights and clarity on measuring foreign direct investment more generally.

“This is the most accurate data of its kind currently available to the public,” Professor Drysdale said.

“There has been a lot of recent discussion around Chinese investment in Australia, in both policy circles and the public arena.

“This database adds clarity about the scale and structure of Chinese investment in Australia in a way that we haven’t had before.

The Chinese Investment in Australia (CHIIA) Database 

5. More on the crumbling of the Bloomberg hardware hack story

Bloomberg's story about secret Chinese spy chips is fraying - Axios:

Early Friday, one lawmaker’s office hinted to Codebook that Bloomberg's article might be accurate — but backtracked later in the day. Also on Friday, Sen. Gary Peters (Mich.) sent a letter to Secretary of Defense Jim Mattis asking about armed forces’ knowledge and exposure.

Our thought bubble: It’s possible that well-meaning sources confused malware Apple reportedly found in Supermicro firmware with a hardware-based espionage campaign. The two are not equivalent — the firmware problem was quickly dealt with.

Risky Business Feature: Named source in "The Big Hack" has doubts about the story - Risky Business:

In this podcast hardware security expert Joe Fitzpatrick, a named source in Bloomberg’s “Big Hack” piece, explains why he felt uncomfortable reading the story when it was published.

He also provided Risky.Biz with emails he sent to Bloomberg, prior to the story’s publication, that said the hardware back-dooring the article described “didn’t make sense”.

Global Times calls on Bloomberg to apologize and explain how it made such a mistake with its hardware hack story...--社评:彭博商业周刊应当就造谣公开道歉_评论_环球网 


6. Censorship in the New Era

Thanks to the excellent China Digital Times for translating this terrific Initium Media report so more people can read about the new reality in the journalists' own voices.

The Total Censorship Era: Chinese Journalists Reflect on Their Experiences – China Digital Times (CDT):

On September 9, Hong Kong-based Initium Media published a lengthy article by freelancer Jiang Yannan which included several oral accounts from journalists and media employees working in various publications and websites in China. In their interviews, they discuss the current state of journalism in China and how the increasing restrictions on the media under Xi Jinping are impacting their day-to-day work. These accounts provide valuable firsthand details about dealing with propaganda directives, sensitive words on internet platforms, and other forms of censorship that they face as a matter of routine. One interviewee asks, “Right now, the scariest thing is that we don’t know where the ‘bottom line’ is. In the end, how low will it go?”...

(Interviewee 9) Veteran editor at a current politics periodical, work experience: 18 years.

In the past, media sought “hot sensational news items.” Now we see these and take a wide detour around them. Some time ago I got my hands on material concerning the army and real estate and involving billions. My superior felt we couldn’t touch the topic. He said leave it for Caixin, the mainland’s only media entity that still dares to speak out. Half a year later, and the material still hasn’t come out.

There is mainland media that dares to speak, but previously they were beating dead tigers (original editor’s note: officials already fallen from power or confirmed problematic by government announcement). Now they don’t even dare to beat dead tigers. Reporting on leadership above the ministerial level is banned. Last year at an annual newspaper meeting, our venerable leader said, “Thank you everyone for the drop in quality. It has made us safe and helped us survive another year. We don’t have to stop publishing.” How could this have been said with sincerity? I despair of the times.

7. The next round of discipline inspections

China to launch new round of disciplinary inspection on poverty reduction - Xinhua:

The Communist Party of China (CPC) will launch a new round of disciplinary inspections to specifically target poor implementation of poverty-alleviation policies.

The inspection, approved by the 19th CPC Central Committee, will see inspection teams deployed to Party organizations at 13 provincial-level regions, mostly in the central and western parts of China, and 11 central government agencies, including the Finance Ministry and the Ministry of Agriculture and Rural Affairs.

Party organizations at the state-owned Agricultural Bank of China and Agricultural Development Bank of China, a policy bank, are also on the inspection list.

Zhao Leji's comments at the meeting announcing the new round - 赵乐际在中央第二轮巡视工作动员部署 会上强调 扎实做好专项巡视工作 为打赢脱贫攻坚战提供有力保障 



The targets:
Inner Mongolia, Jilin, Anhui, Jiangxi, Hubei, Guangxi, Chongqing, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Xinjiang, National Development and Reform Commission, and the Ministry of Education. Ministry of Civil Affairs, Ministry of Finance, Ministry of Human Resources and Social Security, Ministry of Housing and Urban-Rural Development, Ministry of Transport, Ministry of Water Resources, Ministry of Agriculture and Rural Affairs, National Health and Health Commission, Office of the Leading Group for Poverty Alleviation and Development of the State Council, China Agricultural Development Bank, Agricultural Bank of China

8.  More propaganda love for Xi

Looks like he personality cult work for Xi continues.

Here is episode 1 of the CCTV show on Xi's classical and historical allusions, on Youtube. The host is Kang Hui, one of the anchors of the CCTv Evening News--(1) 《平“语”近人——习近平总书记用典》 第一集:一枝一叶总关情 20181008 | CCTV - YouTube

This episode includes a villager from Liangjiehe who fed Xi when he was in the village...The Xi in Liangjiahe propaganda seems to be picking up again?

The episode ends with an overwrought expert leading a recitation of Xi Jinping's 1990 poem about Xi's favorite grassroots official Jiao Yulu 念奴娇·追思焦裕禄 

In China, a Quiz Show Is an Ode to Xi Jinping - The New York Times:

But on this show, one topic dominates: President Xi Jinping, the man, the leader, the Communist Party chief. Contestants face a daunting array of questions about his favorite books, the meaning of his speeches, and his formative years in a rural village.

The five-part show, “Studying Xi in the New Era,” airing on Chinese state television this week, aims to inspire interest in Mr. Xi’s life and ideas among a younger generation. It is the latest sign of the predominance of Mr. Xi, China’s most powerful leader in decades, in the daily life of citizens.

Episode 1 is online at the People's Daily web site here 《社会主义有点潮》第二季《新时代学习大会》第一集

The opening credits with the space battle cruisers makes me think of the Borg...

Business, Economy, Finance And Trade

Top Financial Regulator Names 26 Department Chiefs - Caixin Several sources close to the China Banking and Insurance Regulatory Commission (CBIRC) told Caixin that the leadership appointments were announced at an internal meeting Monday, the first working day after the week-long National Holiday. Some department heads remained in place and others were promoted, transferred or removed. Reshuffling and official appointments at local CBIRC offices are expected be completed by the end of this year. The current heads of local offices will meet in Beijing in a few days, sources told Caixin...

Brazil's Soy Crushers Run Out of Beans as China Shuns U.S. Crops - Bloomberg Crushers in Brazil are running out of soybeans amid tougher competition from Chinese buyers for the remaining 2017-18 season supplies. Brazilian crushers have been working with negative margins since the second half of September, leading some to slow the pace of processing, according to Cepea, the University of Sao Paulo’s research arm. The soy rally that saw a doubling of premiums this year is squeezing domestic processors.

Beijing targets subleasing of affordable housing in city - Global Times Beijing authorities will accelerate the deployment of face-recognition technology to clamp down on illegal subleasing of government-funded affordable rental housing, reports said Monday. Face recognition technology will be installed in all Beijing's affordable housing and data will be gathered on residents' use of water, electricity, heating and the internet, Shanghai-based news portal reported on Monday. The technology had been installed with more than 20,000 pieces of data "gathered in Beijing's 12,600 affordable housing as of June 2018," the Xinhua News Agency reported in July.

With little explanation, 'U' abruptly cuts ties with China Data Center | The Michigan Daily Faculty and staff forwarded all inquiries regarding the CDC to University spokeswoman Kim Broekhuizen, who stated the decision was made after the center was found to be no longer cost-effective. “Following the recommendations of a recent internal review of the China Data Center, it has been determined that the University will not undertake remediations that would have been required to continue hosting the CDC,” the statement read...For now, the CDC has moved to a separate online domain but remains unaffiliated with the University. 

Luxury Investors Alarmed Amid Talk of China Border Crackdown - Bloomberg Chinese shoppers have taken to social media to decry the customs crackdown. One photo circulating on WeChat showed a tax receipt issued by customs at Shanghai Pudong Airport on Sept. 28 to a traveler surnamed Wang in which the shopper was slapped with 17,100 yuan in import taxes on Tom Ford lipsticks, SK-II skincare products and other goods from La Mer and Sulwhasoo. The traveler was assessed taxes of 30 percent to 60 percent for the items and was levied the highest rate on 10 Tom Ford lipsticks, according to the receipt. Those duties are in line with published rates on China’s customs website.

The “Going Out” of Innovation: A Look at U.S.-China Technology Partnerships – Project 2049 Institute his case study assesses U.S.-China technology innovation partnerships, with a focus on the University of Michigan (UM, Michigan). It looks at how Michigan benefits from these arrangements, how they might contribute to China’s MIC goals, and how the Trump administration views these joint ventures, especially as trade tensions between the U.S. and the PRC remain high. The future of these sorts of partnerships remains unclear as the Trump administration has released a variety of reports identifying predatory Chinese behavior in science and technology sectors, especially how Beijing has sought to benefit from the American culture of academic openness.

Three-year plan on restructuring transportation launched - According to the plan, compared with 2017, the country will witness a 30 percent increase in railway transportation volume, or 1.1 trillion tons, and the waterway transportation volume will be 7.5 percent and 500 trillion tons, by 2020. Accordingly, the road transportation volume for bulk cargo will see a reduction of 440 billion tons, whereas the multi-modal transportation volume will see a 20 percent annual increase. The plan concentrates on North China’s Beijing municipality, Tianjin, Inner Mongolia autonomous region, Hebei province, and Shanxi province, East China’s Shanghai, Shandong province, Henan province, Jiangsu province, Zhejiang province, and Anhui province, Northeast China’s Liaoning province, and Northwest China’s Shaanxi province.

China's HNA lists property assets worth $11 billion for sale: documents | Reuters Two sets of documents reviewed by Reuters listed more than 80 assets that HNA has either put up for sale or intends to sell, including hotels, commercial and residential buildings. They are mostly within China, with the bulk of them located in Hainan Island, where HNA is headquartered. The documents were sent to prospective investors in August, said sources.

Editorial: Why China’s Private Sector Is So Anxious - Caixin Global Some irrational theories about China’s private sector have raised heated debate in recent days. Arguments that “the private sector is leaving the stage” or that there is a “second socialist takeover of business” go against China’s fundamental economic system, and run counter to the experience of 40 years of reform and opening-up. They are not worth refuting in themselves, but these arguments have exacerbated anxiety in the private sector. This kind of negative public sentiment must be taken seriously in order to improve private enterprises’ expectations and boost private investment. Recently, Chinese President Xi Jinping reiterated publicly on a tour of Northeast China that the government will “continue to unwaveringly support the development of the private sector.” Both the timing and location of his statement are of utmost relevance

中国今年或再度启动进口煤限制措施|界面新闻 China may cap coal import late this year to sustain profits in the domestic coal business

Outstanding Medium-term Lending Facilities of Chinese Central Bank Hit Record High - China Banking News Official data indicates, however, that the balance of outstanding MLF rose to a record high of 5.383 trillion yuan at the end of September, and will still remain at a historically high level of 4.9315 trillion yuan following scheduled maturations this month. “There were already too many MLF in the market before,” said Wu Qing (吴庆), chief economist with China Orient Asset Management, to 21st Century Business Herald. “There were so many that collateral was lacking, so a reduction in the reserve ratio is a move that the market has long predicted.” Wu said that the upcoming reserve ratio cut isn’t for the purpose of injecting liquidity as much as achieving a structural adjustment and reducing the volume of outstanding MLF.

China is buying fewer cars. GM and VW are feeling the pain - CNN The Chinese market has gotten a lot tougher this year as the wider economy has lost momentum and a trade war with the United States has ramped up. VW said Tuesday that its sales in China dropped nearly 11% last month. A day earlier, GM said its sales in the country slumped 15% in the third quarter. Jaguar Land Rover is shutting down one of its British factories for two weeks after its China sales plummeted 46% in September. Ford's (F) sales in the country have been sliding for months.


Politics, Law And Ideology

Probe of vice-minister proves equal treatment - China Daily According to the statement of the meeting of the Ministry of Public Security on Monday, efforts should be made to fully understand the harm Meng's case has brought to the Party and the public security sector, and draw lessons from it. There should be a lasting momentum to fight corruption and continuous efforts to build a clean and honest police force, according to the meeting's statement. It also said the lingering negative effect of Zhou Yongkang must be completely cleared, it said. Zhou, formerly a member of the Standing Committee of the Political Bureau of the CPC Central Committee who was in charge of the country's legal affairs, was sentenced to life imprisonment in June 2015 for accepting bribes, abusing his power and deliberately disclosing State secrets.

Ex-Interpol chief Meng Hongwei ‘was never close’ to disgraced former security tsar | South China Morning Post  “Meng was working for the public security ministry long before Zhou was parachuted in to take the helm of the powerful agency in early 2003,” the source said. “Meng was an assistant minister for some time before Zhou was appointed. It was by no means Zhou’s idea to promote Meng.”..“If Meng were really a member of Zhou’s clique, he would never have been named [by Beijing] to lead Interpol,” Zhang [Lifan] said. “I think Meng may have made other mistakes, rather than being found to have been involved in any of Zhou’s conspiracies, or to have been his political ally.“The statement released after the police leaders met doesn’t say if there is any direct link between Zhou and Meng other than them being colleagues in the police force.”

AP: Wife of ex-Interpol boss describes threats After a week with no subsequent news, and on an evening when she was at home in Lyon having put their two young boys to bed, she then got a threatening call on her mobile phone from a man speaking in Chinese.“He said, ’You listen but you don’t speak,’” she said. He continued: “We’ve come in two work teams, two work teams just for you.” She said the man also said, “We know where you are,” and that when she tried to ask a question, he repeated: “You don’t speak, you just listen to me.” As a result, Mrs. Meng is now under French police protection.

Why China’s Disappearance of Interpol’s Chief Matters - Lawfare - Julian Ku this episode should serve as a wake-up call to that small segment of elites who care and influence the governance of international institutions. Those elites would like China to share the burdens of international governance through financial and political support. The U.S., for instance, has long called for China to become a responsible stakeholder and to join the international system. This approach made sense in an abstract sense, but it requires ignoring the unusual and difficult nature of working with the Chinese government. China has its own narrow goals, and its opaque authoritarian domestic system makes certain kinds of cooperation extremely difficult—especially in human rights and law enforcement, as the Meng saga illustrates.

China Expands Its Cybersecurity Rulebook, Heightening Foreign Corporate Concerns - WSJ $$ Starting Nov. 1, police officers will have the authority to physically inspect businesses and remotely access corporate networks to check for potential security loopholes, according to the regulations released Sunday by the Public Security Ministry. Police will also be authorized to copy information and inspect records that “may endanger national security, public safety and social order,” the rules said. The regulations flesh out some of the broad powers that regulators were granted last year in an expansive cybersecurity law, according to William Nee, an analyst at Amnesty International: “It strengthens the state’s authority to inspect and requires that internet service providers and companies using the internet are fully complying with the government’s cybersecurity prerogatives.”

学习时报 - 中国何以实现从赶上时代到引领时代的伟大跨越 —— 庆 祝 中 华 人 民 共 和 国 成 立 69 周 年 very long piece in Study Times by Lin Zhenyi, the general secretary of the Xi thought center at the Central Party School, on its front page today that celebrates the 69th anniversary of the foundation of the PRC and exalts Xi for leading the country in the new era

Deputy Secretary-General of CPPCC Liang Chao in Xinjiang under investigation - CGTN Liang Chao, deputy secretary-general of the Chinese People's Political Consultative Conference in northwest China's Xinjiang Uygur Autonomous Region, is under investigation for suspected violation of disciplines and laws, according to an official statement released by the CPC Central Commission for Discipline Inspection and China's National Supervision Commission.

Programmer Sentenced To 3-Year Jail Time For Selling VPN Services Illegally In China – China Money Network A programmer has been sentenced to three years in jail and a fine of RMB10,000 (US$1,446) for selling VPN services in China illegally, according to announcements made by Shanghai Baoshan District People’s Court. The court announced the case that the defendant Dai Mou provided the procedure of intrusion, illegal control of computer information system procedures and tools. He was sentenced to three years in prison, suspended for three years, and fined RMB10,000. It is reported that the case is the first case in Shanghai that has given criminal penalties to VPN service providers.

刘志丹:群众领袖 民族英雄(为了民族复兴·英雄烈士谱)--时政--人民网 The 10.9 Martyr of the day in the People's Daily ongoing series documenting the heroes and martyrs who sacrificed for National Rejuvenation is Liu Zhidan. That is interesting, given that it was a novel about Liu Zhidan by Li Jiantong, wife of Liu Zhidan's younger brother Liu Jingfan, that led to the downfall of Xi Jinping's father Xi Zhongxun in 1962. The article makes no mention of the novel or the problems it caused Xi Zhongxun.


Foreign and Military Affairs

China backs Philippines’ revamp of battle-hit Marawi | Financial Times $$ Nearly a year after the Philippine military defeated Isis-affiliated militants who had occupied the southern city Marawi, the government is poised to launch a $1bn project to rebuild the ruined town. Controversially, for a country historically allied with the US — which helped the government win the battle — it wants to do so with Chinese help.

Thousands of Chinese Army Veterans March Over Police Beatings - RFA Authorities in the eastern Chinese province of Shandong have sealed off a city after thousands of People's Liberation Army (PLA) veterans converged there over a weekend of protests and clashes over police beatings of their former comrades-in-arms, local activists and residents told RFA on Monday. Video footage of the protests showed police in full riot gear backing off in the face of elderly men in camouflage gear wielding wooden sticks during the protests in Shandong's Pingdu city on Sunday.

South Koreans now view China as the greatest threat to peace on the peninsula – Shanghaiist The survey, released on Tuesday by the Institute for Peace and Unification Studies at Seoul National University, asked 1,200 South Korean men and women what in their opinion was the country that posed the greatest threat to peace on the Korean peninsula. 32.8 percent said North Korea. 46.4 percent said China.

Why is China funding a military outpost in Afghanistan? - Inkstone It is more about China’s western region of Xinjiang than about Afghanistan. The Wakhan Corridor is a piece of barely accessible land. But it borders Xinjiang, which Beijing sees as the main source of the “three forces” – separatism, terrorism and extremism – behind a series of violent attacks in the region in recent years.

CrowdStrike Report Reveals Cyber Intrusion Trends from Elite Team of Threat  Uptick in Chinese Targeting. OverWatch data identifies China as the most prolific nation-state threat actor during the first half of 2018. Data shows that Chinese adversaries have made targeted intrusion attempts against multiple sectors of the economy, including biotech, defense, mining, pharmaceutical, professional services, transportation, and more.

Chinese Firms Now Hold Stakes In Over A Dozen European Ports : NPR In the past decade, Chinese companies have acquired stakes in 13 ports in Europe, including in Greece, Spain and, most recently, Belgium, according to a study by the Organization for Economic Cooperation and Development. Those ports handle about 10 percent of Europe's shipping container capacity.

China concerned about US drill during Xi's Philippine visit - AP China has raised concerns about a joint U.S.-Philippine military exercise that coincides with Chinese President Xi Jinping’s visit to the country in November, a Philippine official said Tuesday. Presidential spokesman Harry Roque said Chinese Ambassador Zhao Jianhua raised the concern in a meeting Monday with President Rodrigo Duterte, who assured the Chinese envoy that the Philippines would not take part in the military maneuvers. “China of course expressed concern over a naval, a military exercise that the United States will be conducting in the area at about the same time that the Chinese President will be in the Philippines,” Roque told a televised news conference.

Chinese clients of New York ‘asylum mill’ lawyers may face deportation threat | South China Morning Post The US is reviewing more than 13,000 cases handled by immigration lawyers, agents and others convicted after a 2012 investigation called Operation Fiction Writer. Those who were found guilty helped more than 3,500 immigrants, mostly Chinese, win asylum status, US authorities said.


Hong Kong, Macao

Hong Kong leader refuses to explain journalist visa denial - AFP Facing questions for the first time since the visa denial emerged last week, Chief Executive Carrie Lam, who is appointed by a pro-Beijing committee, said the decision had been handed down by immigration authorities. She said linking it to the Chan talk was "pure speculation". "As a rule -- not only locally, but internationally -- we will never disclose, the immigration department will not disclose, the individual circumstances of the case or the considerations of this decision," Lam told reporters.

Journalist Victor Mallet questioned at airport, as Financial Times says visa denial amounts to 'retribution' | Hong Kong Free Press HKFP The Financial Times’ Asia News Editor Victor Mallet was stopped and questioned by immigration officials at the airport on Sunday night as he reentered the city. Local authorities have refused to renew his work visa, but he was allowed to enter as a visitor for seven days.

With Journalist's Ouster, China Draws New Red Line for Hong Kong - Bloomberg The push, which took shape after the Occupy Central movement locked down swaths of the city four years ago, has seen the Beijing-backed government expand the zone of national security threats to include pro-independence activists and journalists who give them a platform. The ultimate goal, say China’s supporters and critics, is passage of long-dormant legislation giving Hong Kong expansive powers to limit speech, protest and the activities of foreign groups.

Calls to enact the legislation -- known as Article 23 for the section of local law requiring its passage -- have reached their loudest level since 2003, when half a million protesters persuaded the government to abandon its last attempt. The day after the Foreign Correspondents’ Club hosted a pro-independence activist’s speech in August, China’s top minister overseeing the city, Zhang Xiaoming, blamed “Hong Kong’s inadequacies in protecting national security.”



Taiwan to hold referendum on special law for same-sex marriage | Reuters Taiwan will hold a public vote on whether the island’s civil law should recognise same-sex marriage, two election officials told Reuters on Tuesday, reviving a debate over whether a separate law should be enacted for civil unions between gay couples.


Tech And Media

Tencent's $220 Billion Rout Is Breaking All Kinds of Records - Bloomberg Not only has the Chinese Internet giant lost more market value than any other company worldwide this year, its 38 percent drop from a closing high in January is now the deepest since Tencent’s 2004 listing in Hong Kong. The stock has been mired in a downtrend for a record 259 calendar days and on Tuesday matched its longest streak of consecutive losses after falling for an eighth session. It has never fared worse relative to global technology shares.

Messaging Upstart Touted as WeChat Rival Wiped From Apple Store - Bloomberg “Bullet Message is temporarily removed from the Apple Store because news content provided by our partner drew complaints of possible image copyright issues,” a Smartisan representative said in a message in response to Bloomberg inquiries. “We are verifying the details with our partner and will notify the public once downloads resume.”

Inside Apple’s War on iPhone Fraud in China — The Information $$ After some investigation, Apple discovered the skyrocketing requests for replacements was due to a highly sophisticated fraud scheme run by organized teams. Rings of thieves were buying or stealing iPhones and removing valuable components like CPUs, screens and logic boards, replacing them with fake components or even chewing gum wrappers, more than a half-dozen former employees familiar with the fraud said. The thieves would then return the iPhones, claiming they were broken, and receive replacements they could then resell, according to three of those people. The stolen components, meanwhile, were used in refurbished iPhones sold in smaller cities across China, two of the people said.

China Veggie-Selling App Is Said to Raise More Than $600 Million - Bloomberg Meicai, a Chinese startup that helps farmers sell vegetables to restaurants, raised at least $600 million in a funding round led by Hillhouse Capital and Tiger Global Management, people familiar with the matter said.

Curtain Descends on Xinjiang Movie Tax Haven - Caixin Chinese film and TV production firms have rushed to deregister their corporate entities in the tax-haven northwest border town of Khorgas in the Xinjiang Uygur autonomous region. Their actions follow a heavy fine that was handed down to Chinese A-list actress Fan Bingbing for tax evasion, and come as authorities step up scrutiny of tax practices in China’s entertainment industry. Caixin has identified over 70 film and TV production and distribution firms that have issued notices of cancellation of their company registration in Yi Li Daily, Xinjiang’s local newspaper, since June 1.

Leaked Transcript of Private Meeting Contradicts Google’s Official Story on China The second part of what I think we do that is the value of going into China, is that China I think is one of the most interesting markets, arguably the most interesting market in the world today. Just by virtue of being there and paying attention to the Chinese market, we will learn things, because in many ways China was leading the world in some kinds of innovation. We need to understand what is happening there in order to inspire us. It’s not just a one-way street. China will teach us things that we don’t know. And the people, as you work on this, both in the Chinese offices and elsewhere, paying attention to the things that are happening there is incredibly valuable for us as Google, potentially not just in China, but somewhere else entirely...While we are saying it’s going to be six and nine months [to launch], the world is a very dynamic place.


Energy, Environment, Science And Health

China's coal hub Shanxi to cut coking capacity, coke output: government document | Reuters The statement came after all 11 cities in Shanxi were identified this year by central government as “key battlefield” of the country’s steadfast anti-pollution campaign. It has vowed to cut sulfur dioxide and nitrogen oxide amount by more than 20 percent by 2020 from the level in 2015, according to a separate document issued by the provincial government in July.