Economic data; Xi courts foreign CEOs; US warning to CEOs lobbying for Beijing; US may ban CCP members and TikTok
|Bill Bishop||Jul 16, 2020|| 4||2|
I put commentary in some of the sections below.
Today’s Essential Eight:
Regulators taking away the stock market’s shot glass?
Xi courts global CEOs
US Attorney General Barr’s China speech
US may ban visas for CCP members and their family members
Tesla and PRC technological self-reliance
Thanks for reading.
The Essential Eight
1. Economic data
The second-quarter GDP growth rate was higher than the median estimate of 2.9% growth in a Caixin survey of economists. In the first half of the year, China’s GDP declined 1.6% year-on-year...
Value-added industrial output, which measures production at factories, mines, and utilities, rose 4.8% year-on-year in June after growing 4.4% in May. By comparison, retail sales, which includes spending by governments, businesses, and households, dropped 1.8% year-on-year in June, easing from a 2.8% decline in May. That is partly because social distancing measures restricted some consumption activities, Liu Aihua, an NBS spokesperson, said (link in Chinese) at a Thursday press conference.
A bit of digging into Thursday’s data release reveals investment by state-owned enterprises in the first half of the year rose by 2.1 per cent, while investment by private companies fell by 7.3 per cent...
This important data point was conveniently absent from the English press release provided to most international investors. But it is in keeping with a three-year plan recently approved by Mr Xi to enhance the role of state enterprises in the economy at the expense of private and foreign-invested businesses.
the economic rebound also reflects the government’s continued reliance on spending on the building of highways and rail lines and other infrastructure projects to juice the economy, rather than on domestic consumption...
The Shanghai and Shenzhen stock markets in China fell 4.8 percent on Thursday as investors concluded that economic growth had become too dependent on government stimulus.
“It’s all investment,” said Hong Hao, the chief strategist at Bank of Communications International. “Consumption, which is the most sustainable part of growth, is doing much less, so therefore the market sees it as a weakness in economic health.”
The official surveyed unemployment rate in urban areas dropped to 5.7 per cent at the end of June, from a reading of 5.9 per cent at the end of May and a peak of 6.2 per cent at the end of February, according to data released by the National Bureau of Statistics on Thursday.
While the unemployment rate among those aged between 25 and 59 fell to 5.2 per cent last month, from 5.4 per cent in May, the rate for people aged between 20 and 24 with a college degree or above – many of whom are fresh graduates – rose to 19.3 per cent. That was 2.1 percentage points up on May and 3.9 percentage points higher than the same period last year.
One of the key indicators monitored by the government on job creation – newly employed people – dropped to 5.64 million in the first half of the year, which was 1.73 million less than a year ago, the statistics bureau said.
"Unlike risk-averse private firms, SOEs tend to rush to the forefront during difficult periods by increasing investment, cementing their main business and providing more jobs," Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Thursday.
According to the SASAC, domestic centrally administered SOEs' fixed-asset investment reached 1 trillion yuan in the first half of the year, up 7.2 percent year-on-year. During the period, their investment in sectors including electricity generation, vehicles and telecommunications soared more than 15 percent year-on-year.
Meanwhile, centrally administered SOEs launched special campaigns to stabilize employment, providing more than 1 million jobs by mid-June, China Business Journal reported, citing SASAC data. For example, China National Petroleum Corp plans to recruit 8,000 fresh graduates this year, an increase of 3,000 year-on-year, it said.
China’s steelmakers pushed daily output to a record in June, putting the world’s top producer on track for a billion tons of output this year amid booming demand from construction and infrastructure.
Crude-steel production in June reached a daily average of more 3 million tons for the first time, according to China’s statistics bureau. Output for all of June was 91.58 million tons, up 4.5% year-on-year, putting six-month production at 499 million tons
2. Regulators taking away the stock market’s shot glass?
The CSI 300 Index closed 4.8% lower, its biggest loss since markets reopened in February following the Lunar New Year break. Crowd favorite Kweichow Moutai Co. slumped 7.9%, wiping out a record $25 billion in value and dragging down an index of consumer shares by the most since 2018. The ChiNext Index, which had earlier this week turned hotter than any benchmark in the world, fell as much as 6.2%.
This month’s frenzy in Chinese stocks had pushed the value of the country’s equity market to almost $10 trillion, a level that marked the top of the bubble five years ago. Policy makers have since taken steps to rein in speculation in equities, including effectively withdrawing liquidity from the financial system.
Comment: The regulators I hope learned the lessons of 2014-15, and are more proactively cracking down on loans meant for the real economy from flowing into the stock market, leverage and margin financing. Their conundrum is that they want a “rational bull market” but there has never been anything rational about the stock market in the PRC.
About $25bn was wiped off the market value of Kweichow Moutai, the high-flying Chinese spirit maker, after a state media unit devoted to promoting information on President Xi Jinping accused the company of reaping the benefits of corruption.
The article quoted Moutai’s former chairman Yuan Renguo as saying in private that sales linked to corruption are “a normal part of business” and that the Central Commission for Discipline Inspection, which led the clampdown on corruption starting in 2012, would not reach far enough to meddle in the company’s business.
Mr Yuan was removed as chairman in May 2018 and arrested on corruption charges about a year later. A number of Moutai officials have been detained over the past year, the most recent being two senior executives who were investigated for “suspected serious violations of discipline and law” last week, according to state media
The article on Moutai, a litany of the Moutai executives and their corrupt ways, includes this picture of a 5 Kilogram gold "ding" inscribed with “酒冠黔仁国” that was gifted to the now fallen head of the company
This ding is a reminder of all the creativity and mal-innovation that goes into working the system.
Here is a blast from the past- Xi Jiu, A Baijiu Bet on Xi Jinping | Sinocism China Newsletter 2012
I first heard about Xi Jiu 习酒 last December, when a friend told a few of us that he knew the main Beijing distributor for Xi Jiu and that the company was planning a 400 Million RMB marketing blitz, including ads at the start of the CCTV Evening News, to capitalize on the ascension of Xi Jinping. Part of the marketing pitch was that Chinese gift-givers and their official recipients would be clamoring for Xi Jiu by the 18th Party Congress in late 2012.
So I bought a case of 1988 Xi Jiu for a few thousand RMB and have all but one bottle, which already went out as a gift, sitting in my study, just waiting for the hoarding to start and the Xi Jiu bubble to blow, as this article 十八大后喝习酒 习酒被囤积炒高 suggests. Worst case? I have five bottles of decent Baijiu I can share with friends and/or readers of Sinocism who are in Beijing.
The bet didn't pan out, now I only have one bottle left, not sure anyone in DC wants to drink it.
3. Xi courts global CEOs
He needs their capital, their employment-generating businesses, and their help in guiding their respective governments to have a correct view of the PRC.
The fundamentals of China's long-term sound economic growth have not changed and will not change, Chinese President Xi Jinping said Wednesday in a reply letter to global CEOs.
He also pledged that China will keep deepening reform and expanding opening-up, and provide a better business environment for the investment and development of Chinese and foreign enterprises.
Writing back to representatives of Global CEO Council members, Xi said he appreciates their firm confidence in China's peaceful and open development, their commitment to staying rooted in China, and their constructive suggestions on China's economic development...
The CEOs spoke highly of the fact that China, under Xi's strong leadership, has rapidly contained the coronavirus epidemic, taken the lead in resuming work and production, and played a positive role in supporting the global COVID-19 fight and maintaining world economic stability.
They added that Xi's proposition on creating new opportunities out of crises and opening up new prospects in changing circumstances, as well as his resolve to unswervingly promote economic globalization in a manner that will be more open, inclusive, balanced and beneficial to all, have further consolidated their confidence in China and commitment to staying rooted in and serving China.
U.S. business delegates at the Global CEO Council round-table summit on Thursday included David Abney of UPS, Pfizer’s Albert Bourla, Arnold Donald from Carnival, Cargill’s David MacLennan, Hamid Moghadam of Prologis, Thomas Pritzker of Hyatt and David Solomon from Goldman Sachs, the photographs showed.
Official media did not provide a full list of foreign executives at the summit, which was held at the Diaoyutai State Guest House.
The CEO council was set up in 2013 by the Chinese People’s Association for Friendship with Foreign Countries, one of Beijing’s diplomatic arms, to improve the government’s ties with multinationals.
Comment: "Diplomatic arm" is another way of saying United Front organ
4. US Attorney General Barr’s China speech
Today’s speech is one on a series of speeches about China that senior officials are giving.
Several weeks ago, National Security Advisor Robert O’Brien spoke about the CCP’s ideology and global ambitions. He declared, and I agree, that “[t]he days of American passivity and naivety regarding the People’s Republic of China are over.” Last week, FBI Director Chris Wray described how the CCP pursues its ambitions through nefarious and even illegal conduct, including industrial espionage, theft, extortion, cyberattacks, and malign influence activities. In the coming days, you will hear from Secretary of State Mike Pompeo, who will sum up what is at stake for the United States and the free world. I hope these speeches will inspire the American people to reevaluate their relationship with China, so long as it continues to be ruled by the Communist Party...
The People’s Republic of China is now engaged in an economic blitzkrieg—an aggressive, orchestrated, whole-of-government (indeed, whole-of-society) campaign to seize the commanding heights of the global economy and to surpass the United States as the world’s preeminent superpower. A centerpiece of this effort is the Communist Party’s “Made in China 2025” initiative, a plan for PRC domination of high-tech industries like robotics, advanced information technology, aviation, and electric vehicles...
As all of these examples should make clear, the ultimate ambition of China’s rulers isn’t to trade with the United States. It is to raid the United States. If you are an American business leader, appeasing the PRC may bring short-term rewards. But in the end, the PRC’s goal is to replace you...
Although Americans hoped that trade and investment would liberalize China’s political system, the fundamental character of the regime has never changed. As its ruthless crackdown of Hong Kong demonstrates once again, China is no closer to democracy today than it was in 1989 when tanks confronted pro-democracy protesters in Tiananmen Square. ..
As China’s government loses credibility around the world, the Department of Justice has seen more and more PRC officials and their proxies reaching out to corporate leaders and inveighing them to favor policies and actions favored by the Chinese Communist Party. Their objective varies, but their pitch is generally the same: the businessperson has economic interests in China, and there is a suggestion that things will go better (or worse) for them depending on their response to the PRC’s request. Privately pressuring or courting American corporate leaders to promote policies (or politicians) presents a significant threat, because hiding behind American voices allows the Chinese government to elevate its influence and put a “friendly face” on pro-regime policies. The legislator or policymaker who hears from a fellow American is properly more sympathetic to that constituent than to a foreigner. And by masking its participation in our political process, the PRC avoids accountability for its influence efforts and the public outcry that might result, if its lobbying were exposed.
America’s corporate leaders might not think of themselves as lobbyists. You might think, for example, that cultivating a mutually beneficial relationship is just part of the “guanxi” — or system of influential social networks—necessary to do business with the PRC. But you should be alert to how you might be used, and how your efforts on behalf of a foreign company or government could implicate the Foreign Agents Registration Act.
Question: So is Barr saying he expects some of the US corporate leaders Beijing regularly use to deliver messages to Trump and other members of his administration to now register under FARA?
The CCP has launched an orchestrated campaign, across all of its many tentacles in Chinese government and society, to exploit the openness of our institutions in order to destroy them. To secure a world of freedom and prosperity for our children and grandchildren, the free world will need its own version of the whole-of-society approach, in which the public and private sectors maintain their essential separation but work together collaboratively to resist domination and to win the contest for the commanding heights of the global economy.
Barr suggested that Apple iPhones “wouldn’t be sold (in China) if they were impervious to penetration by Chinese authorities.” He suggested American tech companies were imposing a “double standard.”
5. US may ban visas for CCP members and their family members
The presidential proclamation, still in draft form, could also authorize the United States government to revoke the visas of party members and their families who are already in the country, leading to their expulsion. Some proposed language is also aimed at limiting travel to the United States by members of the People’s Liberation Army and executives at state-owned enterprises, though many of them are likely to also be party members.
Details of the plan, described by four people with knowledge of the discussions, have not yet been finalized, and President Trump might ultimately reject it...
Counting party members as well as their families, the ban could technically bar travel to the United States for as many as 270 million people, according to one internal administration estimate.
Discussions over the potential visa ban are in early stages, with no timeline for putting it into effect, the people said. Mr. Trump has yet to approve the plan, the people said.
The specifics are still being discussed, including whether it would apply only to members of the Chinese Communist Party and family members who are not yet in the U.S., or apply retroactively, a move that could lead to the removal of individuals already in the country...
One person familiar with the travel ban discussions is skeptical Mr. Trump would approve it, citing opposition from some of his economic advisers, who have warned the move could irreparably harm relations with China.
Question: Should we assume this was leaked by someone opposed to the proposal?
Senior officials discussing the matter have begun circulating a draft of a possible presidential order, but deliberations are at an early stage and the issue has not yet been brought to President Donald Trump, the source said, speaking on condition of anonymity.
Comment: I think a blanket US visa ban on CCP members is misguided, incendiary, self-defeating and counterproductive, but I have little patience for the argument that being a Party member is meaningless and most are always harmless non-believers. That is not how Xi's CCP works.
Remember these very popular comments from Dr. Zhang Wenhong in late January, soon after Wuhan was locked down? "You can join the Party for whatever reasons, but now you must act like true Party members"
It was a good reminder that when the going gets tough Party members at all levels are called upon, regardless of whether they are true believers, and the "Party flag flies on the front lines 党旗飘在一线" certainly worked in the covid-19 response.
The Party oath - 中国共产党各时期的入党誓词--网上党校--中国共产党新闻网
A probationary Party member must take an admission oath in front of the Party flag.
The oath reads: It is my will to join the Communist Party of China, uphold the Party's program, observe the provisions of the Party Constitution, fulfill a Party member's duties, carry out the Party's decisions, strictly observe Party discipline, guard Party secrets, be loyal to the Party, work hard, fight for communism throughout my life, be ready at all times to sacrifice my all for the Party and the people, and never betray the Party.
Comment: Yes I know they are just words. I first learned that in 1992 when I was working as a translator at the Chinese Literature Press. Party members had to have study sessions every couple of weeks, they just played cards, slept, read the paper. So you would look at that and say "no one believes, they are just going through the motions" And yet here we are 28 years later, in Xi's New Era. I'm not saying all Party members are bad, know plenty from my 13+ years in Beijing who I like a lot. My point is that behind the individual is a system that has been vastly strengthened under Xi, by design, and so we can't just dismiss it as like a normal foreign political Party.
even as Mr. Xi has brought back many Mao trappings, like study sessions and surveillance, people still join for the professional perks, not the stultifying ideology. Tempted by the prospects of better jobs, many students sign up in university, well before they have a fully developed political outlook. Admittance is often seen as a sign of excellence. In the southern tech hub of Shenzhen in 2018, a sign encouraged entrepreneurs with a slogan that would boggle the mind of the orthodox Marxist: “Follow our party, start your business.”
Ahead of the Party’s centenary, understanding its longevity requires an understanding of its members. While the Party is frustratingly opaque about internal operations, its human resources division, known as the Organization Department, does publish annual data on membership. After the 2019 numbers were released in June 2020, MacroPolo scoured open source databases to compile the most complete public dataset on CCP membership.
We use that dataset to reveal both new and continuing trends in Party membership, many of which intersect with Chinese leader Xi Jinping’s governance reform agenda. The key findings center on 1) membership growth; 2) selectivity; and 3) composition and representation
Global Times said the sweeping travel ban on communist members and their families would be “so far the craziest policy idea by Washington”. It said the Trump administration is “doing a criminal-level of damaging to the US-China relations and world peace … this has gone way beyond everyone’s imagination, and we can no longer use normal logic to understand the hysteria of these geopolitical mad men.” It added that “The Chinese people must accept the fact that the US attitude toward China has changed fundamentally and they should no longer have any illusion. We need to make firm and reasonable plan, keeping it steady, respond appropriately, and get ready for a big game against the US in the coming decades.”
Hu Xijin of Global Times wrote on his Weibo saying the US containment of China is unjust, and it is essentially denying Chinese people’s rights to live a better life.
General Secretary Xi has made a set of decisions that have been unilaterally aggressive, and what we’ve seen is now four decades of diplomatic engagement and dialogue-at-all-costs diplomacy failed to achieve the outcome that I think Dr. Kissinger hoped would be achieved when he went to China in the 1970s. We’ve watched unilateral aggression...
I think we are watching the world unite to come to understand the threat from the Chinese Communist Party. I think you see it in how American businesspeople like you that are on this telephone conference with me – I think we’re watching American businesses understand the political risk of operating in places like Hong Kong, and they’re seeing that their supply chains are potentially being poisoned by the human rights violations – literally the stain of the century in human rights violations is taking place in western China today...
This is all a response to the actions of the Chinese Communist Party, and I think so long as the Chinese Communist Party continues to engage in the activities that it’s been undertaking now for an awfully long time, you’ll see them confronted in ways that they have not been confronted before, not only by the United States but by freedom-loving democracies all across the world.
Economist and professor of Peking University Yao Yang said in a speech last month that Chinese leaders must not misjudge the situation and wrongly believe that it is now the time for China to challenge the US leadership. He warned that the US is still the most powerful country and it is still clinging to its leadership. He said Beijing must not mistaken the US retreat from international organizations as its retreat from the world politics. This is not a decline of the US, and China must not stick its head out to assume global leadership, “we are still way far away from that moment,” he said.
Before Trump decided against the move, his team had already created a list of officials including Vice Premier Han Zheng, a member of the Communist Party’s seven-member Politburo Standing Committee, the most powerful body in China headed by President Xi Jinping, said two of the people who spoke on condition of anonymity. Others included Hong Kong Chief Executive Carrie Lam and Chris Tang, the city’s police commissioner, they said.
Bloomberg News reported that Trump has ruled out additional sanctions on top Chinese officials for now so as not to further escalate tensions with Beijing...
“In no way has he taken anything off the table with respect to further sanctions of party officials for actions in Hong Kong or on other issues. Any suggestion otherwise by anonymous sources is flat out wrong,” Ullyot said.
Not to sound maudlin, but people like me built our lives around a premise: that the world was interconnected and that it was a worthwhile calling to devote one’s life to making other cultures a tiny bit more intelligible...
The main goal, however, has nothing to do with standing up to China; it’s about turning China into a tool to help President Trump get re-elected in the fall.
I could accept leaving if China really were 1930s Germany and the world were heading toward a necessary showdown. But China is not Nazi Germany, despite what some have claimed.
Are we approaching the view of Dr. Strangelove’s Gen. Jack Ripper?
“I can no longer sit back and allow Communist infiltration, Communist indoctrination, Communist subversion and the international Communist conspiracy to sap and impurify all of our precious bodily fluids.”
“There are a number of ... administration officials who are looking at the national security risk as it relates to TikTok, WeChat and other apps that have the potential for national security exposure, specifically as it relates to the gathering of information on American citizens by a foreign adversary,” White House Chief of Staff Mark Meadows told reporters en route to Washington from Georgia.
“I don’t know that there’s any self-imposed deadline in terms of action, but I would say that we’re looking at weeks, not months,” he added.
Comment: The talk of Wechat ban has a lot of people worried about how they will communicate between the US and China
White House economic adviser Larry Kudlow told reporters such a move would be a better option than a ban on the app, which was threatened by State Department Secretary Mike Pompeo against the company earlier this month.
“We haven’t made final decisions but...I think TikTok is going to pull out of the holding company which is China-run and operate as an independent American company,” Kudlow said.
A powerful U.S. panel has opened a national security review into Bytedance’s 2018 purchase of Musical.ly, an app that was merged to form TikTok. The Committee on Foreign Investment in the United States is examining whether the merged companies could give the Chinese government access to vast amounts of American data, including videos useful for training facial recognition software. And the Trump administration is weighing action against Chinese social media services like TikTok under the International Emergency Economic Powers Act, which allows the president to regulate international commerce in response to unusual and extraordinary threats, people familiar with the deliberations say.
Comment: Sinocism July 7:
Based on other conversations I've had recently I think a likely mechanism to ban TikTok would be the International Emergency Economic Powers Act (IEEPA), possibly in concert with the Committee on Foreign Investment in the United States (CFIUS), with the CFIUS angle being an attempt to unwind the acquisition of musical.ly, as Ben Thompson discussed last year.
To invoke IEEPA the President would have to designate an “unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States”, per the Act:
Any authority granted to the President by section 1702 of this title may be exercised to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.
If the US does succeed in shutting down TikTok it would destroy billions of dollars in value. Caixin reported last week that India’s banning of the app and two others owned by parent company ByteDance could cost the parent $6 billion in revenue. Perhaps the best route for TikTok is to find a buyer before even more value is destroyed. Such a buyer would have to be one that is palatable to the US government, big enough to buy the entire company and then make the investment to truly separate the entire company from any PRC entanglements, but also able to avoid possible antitrust issues. It is a short list.
Trump could target TikTok through a 2019 executive order aimed at Chinese companies. That order empowers the Commerce secretary to effectively ban any communications tool that is a national security threat to the United States by strictly applying the International Economic Emergency Powers Act. Once the government made a finding TikTok posed a national security threat under that law, Stewart Baker, who previously served as general counsel of the National Security Agency, Americans would effectively be banned from doing business with the company.
TikTok illegally collected 6,000 pieces of data of users younger than 14, while local user data were transferred to its servers in the United States and Singapore without prior notification, according to the KCC.
Instagram confirmed it’s preparing to soon launch its TikTok competitor, known as Reels, in the U.S. The company expects to bring the new video feature — which is designed specifically for short-form, creative content — to its platform in early August, according to a spokesperson. The U.S. launch comes shortly after Reels’ arrival in India this month, following a ban of TikTok in that market. Reels has also been tested in Brazil, France, and Germany.
7.Tesla and PRC technological self-reliance
An interesting viewpoint. What about SpaceX?
Tesla may well be the biggest driver of China’s journey towards technological self-reliance, as the “Tech Cold War” between the U.S. and China deepens. This observation wasn’t obvious to me until I listened (three times) to Elon Musk’s Q&A session at the 2020 World Artificial Intelligence Conference in Shanghai earlier this month.
While most of the media coverage focused on Musk’s bold proclamation that Tesla is very close to achieving Level-5 autonomous driving capabilities, the entirety of what he said during the Q&A has far-reaching implications, technologically and geopolitically…
Tesla is flexing its muscle to attract and motivate the most talented engineers in China. When they do develop the self-driving technology needed for Tesla (and yes, I believe it is a “when” not “if”), chances are all that technology will be open sourced for anyone in China and the world to do the same. Open source technology, as the Linux Foundation clarified in its whitepaper earlier this month, is not subjected to the U.S. government’s various export control restrictions.
Of course, achieving self-driving is not just an algorithm and software engineering challenge, but also a hardware one.
8. Poverty alleviation
Caixin looks at the war on poverty in a remote area of Sichuan.
President Xi Jinping has made the anti-poverty campaign one of his signature policies since Beijing pledged to end poverty by 2020 in the 13th Five Year Plan, issued in 2016. The national poverty line is set at an annual income of 2,300 yuan a year at 2010 prices, which is about 4,200 yuan ($604) a year now. However different regions give different figures, and in practice the government also takes into account price variations in different areas, such as those for food, housing and health care…
On the walls of the now-quiet Sanhe village, the homes still occupied have pictures of President Xi hanging on the wall and “thanksgiving bags” stuffed with notebooks documenting the help that locals have received. When the last villagers registered as impoverished leave, a museum will be built to commemorate China’s victory in its war on poverty. There are plans for the village to become a destination for “red tourism,” where people can bask in the achievements of the Communist Party.
But the victory will likely not be celebrated so heartily by the families who just missed out on the largesse delivered to those classed as impoverished. Some say those whose income or assets placed them slightly above the threshold have been left behind.
When Caixin reporters visited a “non-poor” home in Riha township, which sits in the same county as Shachahe, they found a small girl wearing a mud-caked sweater. The home she shared with her family and a few roosters had no indoor toilet or windows and its cracked walls were covered with old newspapers.
“Sometimes, the difference between a household that was registered as poor and one that was not registered as poor was a single sheep or pig,” said Peng Qinghua, Sichuan’s party chief. “As soon as they were labeled, however, the difference between them became night and day because of the different levels of policy support they were afforded.”
Business, Economy and Trade
China’s Troubled Bank of Gansu Wins Bailout Approval - Caixin Four state-owned enterprises (SOEs) in Gansu, a province in northwestern China, will provide funds to recapitalize the bank as part of China’s efforts to support the banking sector and reduce financial risks amid slowing economic growth. The Hong Kong-listed bank has won approval to issue 3.75 billion new yuan-denominated shares, or “domestic shares,” and 1.25 billion Hong Kong dollar-denominated H-shares through a private placement, the Gansu provincial branch of the China Banking and Insurance Regulatory Commission said.
The IMF should turn to special drawing rights in its Covid-19 response | Financial Times - Yi Gang The IMF has taken many measures to help its member countries combat the economic impact of Covid-19. Yet, despite repeated discussion, one idea that remains untapped is a new issue of IMF special drawing rights. That is a mistake. A general allocation of SDRs, which are sometimes called “liquid gold” and can be created with the stroke of a pen, is the missing piece in IMF’s crisis response....Most IMF members already support the proposal for a general SDR allocation. To fight Covid-19 and promote global recovery, the international community now needs to reach a final consensus on this measure and implement it as soon as possible. // Comment: Is the US the problem, and is that who Yi Gang is criticizing?
The $52 Trillion Bubble: China Grapples with Epic Property Boom - WSJ $$The resulting asset bubble, many economists say, now eclipses the one in U.S. housing in the 2000s. At the peak of the U.S. property boom, about $900 billion a year was being invested in residential real estate. In the 12 months ending in June, about $1.4 trillion was invested in Chinese housing. More was invested last month in Chinese real estate than any other month on record.
Exclusive: Alibaba Revamps Corporate Culture by Ending '996', Banning PowerPoints- PingWest Alibaba, China's most prestigious internet conglomerate, has initiated the first steps towards revamping its controversial and exploitive corporate culture. PingWest has learned from senior executive level sources that the e-commerce giant is proposing internally to end the much criticized weekly report policy, which requires every employee on nearly all levels to submit a report to their direct reports, and threatens negative outcomes if one fails to do so.
Economic Information " Local financial supervision accelerates the construction of risk prevention safety net" 地方金融监管加速构筑防风险安全网 _ 经济参考网 _ 新华社《经济参考报》官方网站 "Recently, local financial supervision has been intensively launched to further build a risk prevention safety net. The reporter was informed that as an important starting point for local financial risk prevention, the process of financial supervision legislation in many places is accelerating. The "Regulations of Shanghai Municipality on Local Financial Supervision and Administration" have been formally implemented a few days ago. Chongqing has proposed "organizing the drafting of legislation to strive for submission before the end of the year." Regulations on financial supervision in Guangdong, Beijing, Shenzhen, Jilin and other places are also in the pipeline. In addition to this, local financial supervision laws at the national level are also on the way. At the same time, local governments are continuously strengthening coordination with the central regulatory authorities, jointly handling the risks of local small and medium-sized financial institutions, and conducting "precision bomb removal" in key risk areas." // 近来，地方金融监管密集出手，进一步构筑防范风险安全网。记者获悉，作为地方金融防风险的重要抓手，多地的金融监管立法进程正加速推进。《上海市地方金融监督管理条例》日前正式实施，重庆提出“组织起草立法草案，争取年底前送审”，广东、北京、深圳、吉林等地的金融监管条例也均在酝酿中。除此之外，国家层面上的地方金融监管上位法也在路上。与此同时，地方正不断强化和中央监管部门的协同配合，联合处置地方中小金融机构风险，针对重点风险领域进行“精准拆弹”。
SEC.gov | SEC Charges Novartis AG with FCPA Violations The order also finds that Novartis lacked sufficient internal accounting controls within its former Alcon business in China from 2013 to 2015, which used forged contracts as part of local financing arrangements that generated large losses and resulted in Novartis and Alcon writing off more than $50 million in bad debt.
SMIC, China's biggest chipmaker, surges 245% in Shanghai listing - CNBC SMIC issued issuing 1,685,620,000 shares at 27.46 yuan per share, raising 46.28 billion yuan ($6.62 billion). Shares were trading at 95 yuan at the open
Drug Rally, Costly Split Create Canada’s Third-Richest Woman - Bloomberg A few weeks ago, Yuan Liping received 24% of publicly traded Shenzhen Kangtai Biological Products Co. after divorcing Du Weimin, the company’s chairman. With shares of the Chinese vaccine maker surging more than 30% over the past month, the stake was worth $4.7 billion as of Wednesday, propelling Yuan into the ranks of the world’s 500 richest people, according to the Bloomberg Billionaires Index.
银保监会：储户利益受损在我国历史上没有先例，请储户放心 Liu Rong of Chinese Banking Regulation Commission told reporters that the public should not worry about a banking crisis since there has never been a banking crisis in the PRC history in which the dispositors’ interests are hurt. Liu said this after there were runs on some local banks in the past months.
澎湃新闻：因贷款资金违规流入房市等，北京银行平安银行被罚1477万 The Beijing financial regulators said they have fined the Beijing Bank and Ping’an Bank nearly 15 million RMB because some of their loans have gone into the real-estate market when they shouldn’t.
澎湃新闻：宝骏汽车、汉堡王、嗨学网等被央视315点名，排队回应 The CCTV annual “3/15” gala was held last night after a four-month delay. The gala, set to protect consumers, this time named a long list of companies that violate consumers interests. That includes a Burger King in Jiangxi, who the CCTV said used outdated materials. Regulators in Beijing and Shanghai said they have launched investigations into other Burger King stores that may have similar problem.
Politics and Law
全国人大常委会执法检查组在广西检查“一法一决定”实施情况 栗战书强调要严格依法保护野生动物 帮助养殖场户合法合规经营有序有效转产_CCTV Li Zhanshu leads inspection tour to Guangxi, this report says checking up on the new wildlife trafficking law.
教育整顿试点启动一周，释放三大信号！-中国长安网 Central Legal and Political Affairs Commission Wechat account on the first week of the rectification and education pilot, says 21 officials have fallen, 2 turned themselves in
Will China's secretive conclave be held this summer? - Nikkei Asian Review China's annual "Beidaihe meeting" will arrive in two weeks or so, kicking off the country's most heated political season. Although people call it a "meeting," it is nothing more than an informal gathering of political figures to exchange views...There is another reason for party elders to worry about China's increasingly tense relations with the U.S. Many of their children and relatives -- as well as those of high-ranking bureaucrats -- have spent time in the U.S. studying, working and investing. Many hold significant overseas assets, including land and buildings. Hundreds of millions of dollars may be at stake. // Comment: Yes, this kind of "personal decoupling" could be quite painful for some influential current and retired officials
独家|甘肃律协会长尚伦生被留置 涉多年前“马冰冰案”_政经频道_财新网 Shang Lunsheng, NPC delegate and head of the Gansu Lawyers Association, is under a form of investigation, Caixin says linked to a "mafia" case 18 years earlier// 财新记者获悉，尚伦生被留置，主要源于16年前甘肃轰动一时的“马冰冰黑社会组织案”。该案共有58人被两审法院认定犯罪，其中六人被处以极刑。尚伦生是该案第三被告人的辩护人。该被告人一审被判死刑，二审改判死缓，理由是有重大立功。
China’s Top Court Gives Guidelines on How to Handle Rising Tide of Bond Defaults - Caixin The document, which was drafted after a December meeting that included officials from the court, the central bank and the country’s securities regulator, is widely considered the country’s first legal document on how to systematically tackle bond disputes. Most cases center on bond defaults, fraudulent issuances, fraudulent statements and issuer bankruptcies, according to the document.
“大师”王林案中案 宜春接待处长喊冤15年_财新周刊频道_财新网 为领导服务四年，聂小洪断送了政治生命，并身陷囹圄。他认为，自己遭到曾主政宜春的江西省政协原副主席宋晨光和“气功大师”王林合谋构陷。喊冤15年后，江西省高院决定第二次再审 // After four years of service to the leadership, Nie Xiaohong lost his political life and was put behind bars. He believes that he was framed by Song Chenguang, former vice chairman of the CPPCC in Jiangxi province, who once ruled Yichun, and Wang Lin, a "qigong master", in a conspiracy. After 15 years of crying foul, the Jiangxi Provincial High Court decided to hold a second retrial.
半岛都市报：山东胶州市民政局局长秦某峰不幸坠楼身亡 Local news reported that the head of the department for civilian affairs in Jiaozhou, Shandong province committed suicide. The reason is unknown.
Foreign and Defense Affairs
Germany’s Altmaier defends Berlin’s muted response to China’s crackdown in Hong Kong – POLITICO Altmaier, who previously served as Chancellor Angela Merkel’s chief of staff and remains a confidante, said this strategy — known in German as Wandel durch Handel (change through trade) — had worked with the former Soviet Union and remained at the core of Germany’s approach to difficult regimes across the Middle East, Africa and Asia. “I have always been convinced and I still believe that change can be achieved through trade,” Altmaier said, adding that it would be too risky to pursue a confrontational course that had no guarantee of success.
China opposes Britain's exclusion of Chinese 5G companies: spokesperson - Xinhua China firmly opposes the British government's latest decision to ban Chinese companies from the building of 5G networks, said a spokesperson for the Ministry of Commerce on Thursday. The discriminatory practice goes against the free trade principles that the British government has always advocated, the ministry's spokesperson Gao Feng told a press conference. It severely breaches World Trade Organization rules, undermines Chinese investors' confidence in Britain, affects the economic and trade cooperation between the two countries, damages Britain's credibility, and undermines its status in the international trade system, Gao added.
China, France ‘major stabilising forces’ in a changing world, says Foreign Minister Wang Yi | South China Morning Post Foreign Minister Wang Yi said China and France should be “the major stabilising forces” in a changing world, during a strategic dialogue on Wednesday with Emmanuel Bonne, the French president’s diplomatic adviser.
China hand Tarumi picked as next ambassador in Beijing : The Asahi Shimbun Hideo Tarumi, a Foreign Ministry official with close connections in Beijing, was picked as Japan’s next ambassador to China at a time of increasing uncertainty over the bilateral relationship, government sources said July 15.
人民日报：在疫情防控中更好传播中国声音（新知新觉） Lu Shaoyang of Peking Unviersity, who is also affiliated with the Beijing Study Center of the Xi Jinping Thought, wrote on page nine of People’s Daily today saying the government should do better in international propaganda to showcase China’s and CCP’s success in containing COV19. Lu argued that “we can totally use the open new media platform to broaden the reach of our propaganda … the key is to seize the opportunity, fully unitize the advantage of new media, use multiple channels, and properly tell the China story of combatting with the virus.” // 我国是国际互联网的重要参与者，在以互联网为主导的信息时代，我们完全可以利用开放的新媒体平台扩大我们的传播范围、传递我们的声音。要深刻认识到，信息技术的发展使我们能够在全媒体时代的传播竞争中打破长期以来由西方媒体垄断的格局。促使国外受众客观、准确地了解中国抗击疫情的实际情况，关键是抓住机遇，充分利用新媒体传播优势，多渠道、多平台讲好中国抗疫故事。
Australia firms in China say bilateral tensions now a bigger risk than weak economy: survey | South China Morning Post For Australian businesses with close China ties, tensions between the two countries pose a more worrisome threat than a slowdown in the Chinese economy, a new survey has found. Although Covid-19 continues to dent earnings for those Australian businesses working with or in China, they currently see Sino-Australian tensions as their biggest business risk, according to the Australia-China business chamber AustCham, which polled 87 businesses in Beijing, Southern China and Western China.
'Shameful': Turnbull rebukes Australian business for criticising China relations | The Guardian Malcolm Turnbull has rebuked Australian business chiefs and academics for criticising the Australian government over the state of the relationship with Beijing, saying such reactions would only “encourage more bullying from China”. The former prime minister said the response of some parts of the business community to China’s use of trade threats to influence policy was “pretty shameful” and said countries must “not be intimidated by confected outrage” from Beijing.
Rex Patrick further poisons China-Australia relations - Global Times Australian Senator Rex Patrick of the Centre Alliance party wants at least 100 Chinese diplomats and consular employees expelled from Australia. He claims there is "no question" that Chinese embassy and consular staff are involved in spying and political interference, according to Australian newspaper The Canberra Times. Patrick also reportedly said Canberra must reset its ties with Beijing and adopt a much firmer footing.
Beijing’s Self-Defeating Nationalism - Foreign Affairs - Jessica Chen Weiss Ultimately, the CCP seeks security, regional dominance, and a global order that makes room for and reflects Chinese values and interests. But as I have written previously in these pages, it has not embarked on a messianic effort to remake other countries in China’s image. The more the CCP leans on nationalism, the less worried the United States should be about China as a rival for global leadership
US to strengthen electronic-warfare abilities in South China Sea - Nikkei Asian Review Two special units will be deployed to the Indo-Pacific region by 2021, to operate over various domains from electronic and cyber warfare to precision missile targeting. At least one of them will be stationed around the South China Sea.
Chinese netizens mock US consulate’s ‘Black Lives Matter’ lecture in Guangzhou as ‘ill-intentioned, hypocritical’ - Global Times Many slammed the US consulate general for attempting to incite unrest among Africans in Guangzhou, and asked it to hold such events in the US, and especially the Oval Office. "What's wrong with you? African Americans died in your country, but now you come to China to promote Black Lives Matter? Have you apologized for slaughtering the indigenous people of America?" one Weibo user said.
China, five Central Asian countries launch FM meeting mechanism - Xinhua The agreement came when the first China + Central Asia (C+C5) foreign ministers meeting was held via video link. Chinese State Councilor and Foreign Minister Wang Yi hosted the meeting.
Chinese-Backed Copper Exploration Plans in Myanmar Rekindle Fears - RFA The multinational firm with links to a Chinese state-owned resource exploration firm began initial operations early this year to explore 750 square kilometers (290 square miles) of land in the Sagaing region, home to Letpadaung — a name that symbolizes social unrest over Chinese copper mining after years of protest.
Major Airfield Expansion On Wake Island Seen By Satellite As U.S. Preps For Pacific Fight - The Drive merica's remote outpost deep in the Pacific, situated roughly between Japan and Hawaii, Wake Island serves as a reserve airfield should American airpower have to fallback from the far reaches of Western Pacific during a peer state conflict.
Indonesian students in Sulawesi continue protests against Chinese workers | South China Morning Post Indonesian students on the country’s eastern island of Sulawesi have kept up their protests against mainland Chinese workers, demonstrating late into Tuesday night against what they see as jobs being stolen from locals.
Team Biden’s Policies on China and Taiwan – The Diplomat China has passed the point of no return and will only be more assertive in challenging U.S. supremacy with its political, military, and economic power and worldwide influence. That said, it is still premature to declare a “paradigm shift” in the Democratic elites’ China policies. To restore the political and moral leadership of the United States, Team Biden needs to convince its domestic voters and international allies that it is ready to address the challenges China poses, which none of the previous administrations, Republican or Democrat, have dealt with. A future U.S. administration may not want a Cold War with China, but it is necessary to reevaluate the validity of the One China policy made during the Cold War. Yang Kuang-shun is a co-founder of U.S.-Taiwan Watch.
ChinaMil: China's marine satellites support coral reef protection in South China Sea China's domestically-developed marine observation satellites will be used to study the distribution of coral reefs in the South China Sea, and facilitate protection and restoration of coral reefs.
ChinaMil: Chinese military increases targeted procurement to help poverty alleviation Recently, relevant departments under China's Central Military Commission (CMC) have issued policies requiring military units to purchase agricultural and sideline products from poverty-stricken regions, in a bid to help poverty alleviation.
Taiwan Legislators Brawl Twice in 2 Weeks Over Government Watchdog Nomination – The Diplomat Lawmakers in Taiwan’s legislature scuffled Tuesday over the nomination of Chen Chu, a former Kaohsiung mayor and top advisor to President Tsai Ing-wen, to head the Control Yuan, an oversight board that the administration has long wished to eliminate.
Taipei warns of ‘hostage diplomacy’ under Beijing’s national security law in Hong Kong | South China Morning Post Chen Ming-tong, head of Taiwan’s Mainland Affairs Council, said the law would enable Beijing to carry out “hostage diplomacy”. “The national security law for Hong Kong has seriously invaded democracy and human rights to impact regional security and unnerve the international community,” Chen said.
Tech and Media
Washington's looming Huawei ban puts 800 Japanese companies on the spot - Nikkei Asian Review The change essentially forces companies to choose between doing business with Washington -- which spent roughly $580 billion on procurement in fiscal 2019 -- or with major suppliers, accelerating the decoupling of the American and Chinese economies as tensions continue to mount. The affected Japanese companies include U.S. subsidiaries that have direct federal contracts as well as Japan-based enterprises that deal with American forces stationed in the Asian country. U.S. government procurement from Japanese businesses totaled $1.5 billion in fiscal 2019.
Energy, Environment, Science and Health
为防控疫情，乌鲁木齐地铁1号线今晚10点起停运 Domestic Covid-19 case found in Urumqi, city closes the Subway's line 1, no word on when it will reopen
China firm uses workers to 'pre-test' vaccine in global race - AP In the global race to make a coronavirus vaccine, a state-owned Chinese company is boasting that its employees, including top executives, received experimental shots even before the government approved testing in people. “Giving a helping hand in forging the sword of victory,” reads an online post from SinoPharm with pictures of workers it says helped “pre-test” its vaccine...SinoPharm’s claim that 30 “special volunteers” rolled up their sleeves even before the company got permission for its initial human study raises ethical concerns among Western observers. The company’s post cites a “spirit of sacrifice” and shows seven men in suits and ties — a mix of scientists, businessmen and one Communist Party official with a background in military propaganda.
In Coronavirus Vaccine Race, China Strays From the Official Paths - The New York Times In a post on its official WeChat account, a government agency reported that the “vaccine pretest” on Sinopharm employees showed that antibody levels were high enough in subjects to combat the coronavirus, indicating that it was safe and effective. The agency did not make clear what vaccine the employees had taken. The Paper, a newspaper owned by the Shanghai government, separately said 180 employees had taken the vaccine.
New investigation into adolescents’ scientific research sparks controversy - Global Times The announcement came after a third-grade student and a fifth-grade student in Wuhan, Central China's Hubei Province won third prize in a national level contest with their co-research work on an anti-tumor experimental study involving polyphenol from tea. One photo featuring more than 20 mice in neat rows and another featuring mice tumors of different sizes were shown on the website. According to the contest website, the experimental results showed that "green tea extract EGCG has a certain anti-tumor effect."
Three Gorges power station runs at full capacity amid flooding - Xinhua The Three Gorges Hydroelectric Power Station on China's Yangtze River is running at full capacity with a combined generating capacity of 22.5 million kilowatts, as the reservoir saw its water level rising after several rounds of flooding, the China Three Gorges Corporation said Thursday. The situation along the Yangtze River has been grim since the Three Gorges Dam saw the river's first flood of the year on July 2. At 8 a.m. Thursday, the Three Gorges reservoir saw an inflow of 31,000 cubic meters per second, with the water level reaching 155.55 meters