Economic terrorism; More on rare earths and don’t say I didn’t warn you; Shangri-La Dialogue

A quick note on the historically loaded term “don’t say I didn’t warn you 勿谓言之不预也 (wu4 wei4 yan2 zhi1 bu4 yu4 ye3)” used in the Wednesday People’s Daily piece that got so much attention about rare earths. Thanks to several readers for their comments and prompts to dig deeper.

The phrase has actually appeared 30 times in People’s Daily since 1946 including yesterday, according to Zhihu (人民日报纸媒“勿谓言之不预”出现次数最完整统计(截止2018年4月9日). The times it was used before the attacks on India and Vietnam it was labeled a 社论 (She4 Lun4 editorial), the most authoritative statement you will see in the People’s Daily.

Wednesday’s piece was not labeled a 社论 (editorial) but rather signed by 五月荷 (Wu3 Yue4 He2), which is clearly a pseudonym. There appear to be only three 五月荷 People’s Daily articles, all since May 20 and all about the trade war. I have so far been unable to get a good answer on who, or what writing group, that pseudonym represents.

In yesterday’s issue I said it was also used before the Zhenbao Island Incident with the USSR in 1969, based on a Chinese Wikipedia entry (勿謂言之不預也 - 维基百科,自由的百科全书), but that turns out to be wrong; there is no record of that usage in the People’s Daily searchable archives. There is a record of it being used by Xinhua in July 1967 - 中国3次与外国开战信号:每次都说过一句相同的话 to warn the USSR.

It was also used by an official Xinhua Weibo account in an April 6, 2018 in a post about the US-China trade war - 中国官媒就贸易战强硬发声:勿谓言之不预.

Clearly 五月荷 is an important author, that phrase would not be used lightly, and savvy PRC readers of the People’s Daily see it is significant, but it certainly does not seem to be nearly as dire a threat as what we saw on the eve of the Sino-Indian and Sino-Vietnamese conflicts.

The point is not to drag you down the rabbit hole of People’s Daily, just to say that there may be some nuance that should go into the interpretation. Regardless, if the CCP wants people, inside and outside China, to avoid misunderstandings it may behoove them to make things a little less opaque. And I am expecting unicorns for my next birthday…

We are testing some new features for the Sinocism discussion and comment system. Tomorrow at 12 PM EST I will be hosting an open thread, like an AMA (Ask me anything). I will send out a note right before it starts, please join if you are interested.

And RIP Professor Nicholas Clifford, with whom I took classes at Middlebury - In Memoriam: Nicholas Clifford.

Thanks for reading, it is another long newsletter, may keep you busy through the weekend.


The Essential Eight

1. Rare earths

Pentagon seeks funds to reduce U.S. reliance on China's rare earth metals - Reuters

The Pentagon’s request was outlined in a report that has been sent to the White House and briefed to Congress, said Air Force Lieutenant Colonel Mike Andrews, a Pentagon spokesman...

The Pentagon has repeatedly flagged its concerns about American reliance on China for rare earth minerals, including in a 2018 report on vulnerabilities in the U.S. defense industrial base.

We All Need to Calm Down About Rare Earths - Bloomberg

Back in 2010, China cut off exports of the minerals to Japan when the two governments were in dispute over ownership of some islands east of Taiwan. Now, state-owned Chinese media have been clamoring to do the same again in the trade war with the U.S. “If anyone wants to use products made of China’s rare-earth exports to contain China’s development,” the Global Times quoted an unnamed official as saying, the Chinese people “will not be happy with that.” 

The truth, however, is that rare earths are a paper tiger. As we wrote last week, the 2010 case backfired spectacularly for China. Fearful of being caught short again, Japan Oil, Gas and Metals National Corp. – a government agency – went in with trading house Sojitz Corp. to provide a series of development loans to Lynas Corp., an Australian company looking to build a rare-earths supply chain outside China...

China’s share of rare-earths production has fallen from 97% of the world’s supply in 2010 to around 71% in 2018. Lynas is now the second-biggest producer globally of neodymium-praseodymium, two rare earths crucial for making high-strength magnets, with about a quarter of the global market. Its sales agreement to Sojitz alone represents about 30% of Japan’s rare-earths demand.

Or not? - China set to control rare earth supply for years due to processing dominance - Reuters

At least three U.S.-based companies have rare earth processing plants under construction or in the planning stages.

One is set to open next year at Mountain Pass mine, California, when it will become the sole operating rare earth processor in the United States. It is set to produce about 5,000 tonnes of two popular types of rare earth annually, according to a source familiar with the matter.

The other two are not expected to open until 2022 at the earliest.


2. US-China

Trump says U.S. doing well in trade talks with China - Reuters

“China would love to make a deal with us. We had a deal and they broke the deal. I think if they had it to do again they wouldn’t have done what they did,” Trump told reporters as he left the White House to deliver a commencement speech at the U.S. Air Force Academy in Colorado.

US ‘wholly responsible’ for lack of new trade war talks with China due to ‘contradictory’ statements | South China Morning Post

“The US messages lately have been contradictory,” said ministry spokesman Gao Feng during a regular press briefing in response to a question on whether China was ready to make a deal.

“For a while, it was close to reaching a deal with China, and for a while, it wasn’t ready to reach a deal with China. As such, it raises doubt over its sincerity.

“The US has been escalating the trade dispute, with it spilling over other areas. These wrong actions have damaged the foundation for negotiations. The responsibility is wholly on the US side.”

Gao Feng's comments - 商务部:中美贸易谈判能否取得进展很大程度上取决于美方态度和诚意-新华网

US-China Trade War: China Looks for Path to Trade Talks - Bloomberg

“You can see that every step of action, every word of media protests, as well as official statements are always well-designed and under strict control,” said Wang Peng, an associate research fellow of the Chongyang Institute for Financial Studies at the Renmin University of China. Beijing’s goal, he said, is to show that “China will never surrender but that the door to further negotiations will never close.”..

In the U.S. capital, officials suspect Beijing is bluffing, according to people familiar with administration’s thinking. One person dismissed the Chinese threat to leverage rare earths as mere talk, adding that Beijing is struggling to punish the U.S. and gain leverage. Another said that the U.S. had expected Beijing to make this threat for some time and has been gaming out potential consequences.

Taking aim at U.S., China says provoking trade disputes is 'naked economic terrorism' - Reuters

Speaking to reporters in Beijing, Chinese Vice Foreign Minister Zhang Hanhui said China opposed the use of “big sticks” like trade sanctions, tariffs and protectionism.

“We oppose a trade war but are not afraid of a trade war. This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying,” Zhang said, when asked about the trade war with the United States.

China Puts US Soy Purchases on Hold as Trade War Escalates - Bloomberg

State-grain buyers haven’t received any further orders to continue with the so-called goodwill buying and don’t expect that to happen given the lack of agreement in trade negotiations, said the people, who asked not to be named because the information is private. Still, China currently has no plans to cancel previous purchases of American soybeans, the people said.

The new Long March -- Xi's 15-year battle plan with the US - Nikkei Asian Review

One Chinese policy researcher offered an eerie analysis. "It would be wrong to simply think Xi has shifted to a hard-line stance against the U.S. The real goal is to ultimately win a '15-year war' with the U.S. that would continue until 2035."

This war would come with an option of temporarily retreating, thus avoiding a head-on war with Trump, the researcher said.

China to audit US, Australian business groups in the country - Global Times

China's Ministry of Civil Affairs (MCA) announced on Tuesday that it would audit the American Chamber of Commerce in China (AmCham China), the Australian China Chamber of Commerce (Austcham China) and over 200 other groups as part of an effort to check on social organizations in the country.

A total of 250 organizations, most of which are Chinese associations, were randomly selected for the audit, which is expected to last through August 2019, the MCA said in a statement on its website.

Former Sinopec Chairman Fu Chengyu said China should prepare for the worst scenario in which its oil supply could be cut off-中石化原董事长:我们要做好短期石油断供准备|中石化|石油|中国_新浪军事_新浪网

中方会限制苹果报复美国?商务部:中国保护所有在华外资企业合法权益_国际新闻_环球网

When asked if China would target Apple as a countermeasure in the trade war, Ministry of Commerce spokesman Gao Feng said that China would guarantee the legal rights and interests of all foreign enterprises in China "中国保护所有在华外资企业合法权益". I am not sure I would take that as a "No", given the definition of "legal rights and interests" is set by the government

US State Department Press Briefing - May 29, 2019 - United States Department of State

The Chinese Communist Party has exhibited extreme hostility to all religious faiths since its founding, but even so the repression of Chinese Muslims stands out as particularly cruel and inhumane during the Holy Month.

The human rights abuses in Xinjiang must end, and they must end now. We call on the Chinese Government to release all Uighurs and other Muslim minorities arbitrarily detained throughout Xinjiang so that they may return home to celebrate the Eid Holiday with their loved ones.

Comment: A signal sanctions may be forthcoming? Not sure, would be more clear if came from White House or VP Pence. But sanctions on CCP officials for the Xinjiang abuses have long been mooted, may have a better chance of happening of trade talks are really dead, if they are implemented then expect it to be even harder to reach a trade deal

Unirule's Sheng Hong: Replacing General Tariff Confrontation with Principle of Reciprocity in Structure – Words of Rights

the real cause of the high trade deficit in the United States is mainly China’s private enterprises and foreign-funded enterprises. According to the Ministry of Commerce, according to March 2019 data, state-owned enterprises account for only 10% of the total export volume, and the remaining 90% of the export volume is created by private enterprises and foreign-funded enterprises. As a result, the bulk of Trump’s tariffs are imposed on private enterprises and foreign-funded enterprises without government subsidies. This is not to correct market distortions, but to punish companies that follow market rules, and make the market more distorted.

Beyond the China-U.S. Trade War | LinkedIn - Ray Dalio

Building independence will happen regardless of what is negotiated because both sides have learned that they need to be protected against being squeezed in the years of increasing tensions ahead That is a big deal because it is a major, multi-year undertaking that will take resources away from other development. Uncertainties over tariffs and future developments are causing many businesses who produce in China to export to the U.S. (or who might be affected by the fight between the U.S. and China) to rethink whether they would be better off producing in another country. These forces will be major disruptors to the specific people, companies, and governments affected by them.

Doug Paal The US and China take their rivalry into more dangerous waters after collapse of trade talks | South China Morning Post

Finally, this dicey situation is further dramatised by an upcoming presidential election in Taiwan where cross-strait relations are an important issue and the various candidates are struggling to win public support with policy nostrums that do not entirely inspire confidence in their ability to manage cross-strait ties.

The end of the trade talks seems likely to be the beginning of something much worse.

U.S.-China Tensions: 'We Are in This for the Long Haul,' Celico Says – Bloomberg

Amy Celico, principal of Albright Stonebridge Group and previously senior director for China affairs at the Office of the U.S. Trade Representative, talks about the disputes between the two nations


3. More propaganda reactions

5.29 Zhong Sheng - US faces severe credibility crisis as it frequently breaks promises - People's Daily Online

“Honesty is the best policy.” This famous remark of Benjamin Franklin, one of the Founding Fathers of the U.S., has probably slipped the minds of some politicians in Washington, as the U.S. side has failed to keep their promises and changed their minds constantly during the China-U.S. economic and trade consultations.

The 5.30 Zhong Sheng on US-China, still in the "US failure is inevitable" - "Is it necessary to hit the south wall before turning back?" - 难道非要撞了南墙才回头——意孤行必将失败(钟声)--人民网

Another "International sharp commentary" from CCTV-"certain American politicians subjective ideas are really imaginary fears" -【国际锐评】某些美国政客的臆想,实属庸人自扰_CCTV:

中国只想专心致志地做好自己的事,无意也没有精力去取代美国,更不想和其它国家展开消耗性的恶性竞争。因为,中国没有“国强必霸”的霸权思维,一个奉行和平发展理念的强大中国,只会给各国带来更广阔的发展机遇。

China only wants to concentrate on doing its own thing, has no intention and no energy to replace the United States, and does not want to engage in conspiring vicious competition with other countries. Because China does not have the hegemonic thinking of "a strong country must be hegemonic", a strong China that pursues the concept of peaceful development will only bring greater development opportunities to all countries.

在当下,一旦中美贸易摩擦无法得到合理解决,不仅两国利益受损,全球利益也将面临重大伤害。究竟是美方的霸权之路利于世界,还是中方的合作共赢之路为全球所需,国际社会早已看清。

At the moment, if Sino-US trade frictions cannot be resolved reasonably, not only will the interests of the two countries be damaged, but global interests will also face major harm. Whether the US’s hegemonic path is beneficial to the world, or whether China’s cooperation and win-win path is what the world needs, the international community already sees clearly.

Xinhua interviews CCG think tank head Wang Huiyao on the groundless "China threat to the international order" - 炒作“国际秩序中国威胁论”站不住脚——访全球化智库(CCG)理事长王辉耀-新华网 

FOX Business’ Trish Regan talks with CGTN’s Liu Xin on trade and intellectual property - YouTube:

Thursday CCTV Evening News 3 minute report on the Regan-Liu discussion - CGTN女主播刘欣与FOX女主播翠西电视对话_CCTV

US-China TV debate’s lack of flash panned on Chinese social media | South China Morning Post

Disappointed commenters flooded China’s social media on Thursday with complaints that the on-air debate between an American and a Chinese news anchor on the trade war was too “mild” and too “short” – and that the “rude” Fox Business host Trish Regan kept interrupting CGTN’s Liu Xin.

Must Xi TV: Popular Chinese and American Anchors Square Off on Trade - WSJ $$

“To have someone representing Chinese government views speak to Fox is a golden opportunity for the government,” said Li Xigen, a professor at the department of media and communication at City University of Hong Kong. “Even if the government is willing to pay for such a time slot, it might not be possible to get such audience attention.”


4. Shangri-La Dialogue 2019

IISS Shangri-La Dialogue 2019 - Asia's premier defence summit - official site, can watch the event online here

US Acting Defence Secretary Shanahan Announcement Shangri-La 2019

IISS–Asia Executive Director, Dr Tim Huxley, said:

“We are delighted to welcome Acting Secretary Shanahan to the IISS Shangri-La Dialogue. His address in the first plenary session should provide an insight into the US administration’s current thinking about the challenges from China and North Korea, as well as other regional security problems. Importantly, he is expected to spell out in more detail how the US Department of Defence will play a part in operationalising the administration’s Free and Open Indo-Pacific strategy.”

China Defence Minister Wei Fenghe Shangri-La Dialogue 2019

Dr John Chipman, IISS Director-General, said:

“We are especially pleased this year to welcome General Wei Fenghe, the State Councillor and Defence Minister of the People’s Republic of China, who will be leading the People’s Liberation Army (PLA) delegation at the Shangri-La Dialogue. In a highly anticipated speech, General Wei Fenghe will speak on China’s role in the Asia-Pacific at a pivotal time for the region. His presence at the Dialogue provides a unique opportunity for those in attendance to engage with a leading figure within the PLA.”

Is the United States about to ramp up its Indo-Pacific strategy to contain China? | South China Morning Post

The strategy is mainly aimed at curbing Beijing’s growing clout in the South China Sea and the Indian Ocean, and a change in the approach was signalled last month when a senior US defence official said Shanahan would explain the Indo-Pacific’s role as a “priority theatre”.

Shanahan’s speech to the Shangri-La Dialogue in Singapore on Friday will be on America’s new Free and Open Indo-Pacific strategy and “should provide an insight into the US administration’s current thinking about the challenges from China and North Korea, as well as other regional security problems”, according to Tim Huxley, executive director of the event’s organiser, IISS – Asia.


5. Huawei

Huawei a key beneficiary of China subsidies that US wants ended | AFP.com

Huawei's annual reports and public records show that it has received hundreds of millions of dollars in grants, heavily subsidised land to build facilities and apartments for loyal employees, bonuses to top engineers, and massive state loans to international customers to fund purchases of Huawei products.

"Below market price land sales, massive targeted R&D grants, and export financing on terms that are more favourable than what Huawei could get from the private sector collectively appear to provide significant subsidies that other countries could challenge at the WTO if they are harming domestic companies," said Claire Reade, a former assistant US trade representative.

Huawei founder Ren Zhengfei had denied that the company received subsidies in a BBC interview in February, but a Huawei spokeswoman later said Ren meant the firm did not receive any special government aid.

北京高層力挺 王岐山為巴基斯坦華為中心揭牌 | 各大廠封殺華為 | 數位 | 聯合新聞網

During his recent trip to Pakistan Wang Qishan attended the opening of a Huawei technical center in the country

Malaysia’s Mahathir backs Huawei, snubbing US blacklist of Chinese telecoms giant | South China Morning Post

Malaysia’s Prime Minister Mahathir Mohamad on Thursday offered a forceful defence of embattled Chinese tech giant Huawei, suggesting Western nations bent on shutting it down were being hypocritical in their concerns over the company’s ties to Chinese cyber espionage.

In back-to-back public appearances in Tokyo, the 93-year-old premier dismissed the prospect of his country joining the likes of the United States and its allies – including Japan – in banning government purchases of the Shenzhen-based company’s telecommunications products.

China calls for proper mindset towards developing nations' progress - Xinhua

Malaysian Prime Minister Mahathir Mohamad recently said his country will use Huawei technology "as much as possible." He also reportedly said the United States must accept that its strong research and development capability could also now be found in the East.

In response, spokesperson Lu Kang said developing countries, like China and Malaysia, have the right to advance their technological abilities, and it was in the interests of all countries to achieve common development and progress through mutually beneficial cooperation.

He said certain countries should listen carefully to the "true and fair" words of Prime Minister Mahathir, and see the development of developing nations as opportunities.

IEEE, a major science publisher, bans Huawei scientists from reviewing papers | Science | AAAS

The New York City–based Institute of Electrical and Electronics Engineers (IEEE) told editors of its roughly 200 journals yesterday that it feared “severe legal implications” from continuing to use Huawei scientists as reviewers in vetting technical papers. They can continue to serve on IEEE editorial boards, according to the memo, but “cannot handle any papers” until the sanctions are lifted.

Chinese computer research body to cut ties with division of U.S.-based IEEE - Reuters

Beijing-based technology research group The China Computer Federation (CCF) is suspending communications with a U.S. based engineers’ association in the latest example of fallout from the U.S. embargo on phone maker Huawei Technologies..

The CCF said it would suspend collaboration with ComSoc and called on CCF members to cease contributing to ComSoc events or research reports, and to refrain from reviewing its papers.

Academics defend Huawei - Global Times

The ban on China's Huawei has put US-based international organizations and standards bodies in danger, as they have traded their principle of being unbiased and non-discriminatory for being more politically correct, Chinese analysts said on the decision of the Institute of Electrical and Electronics Engineers (IEEE) to ban Huawei employees from reviewing papers, which has also outraged Chinese academics.

The latest incident set an alarm in Chinese academic circles, which has been urged to strengthen their influence on the global stage while looking for more cooperation in non-US regions, analysts noted.


6. June 4 anniversary

Upgrades limit access to Chinese live-streaming, video sites over Tiananmen anniversary | South China Morning Post

China’s main live-streaming and video sites have begun system upgrades that will limit their functions over a period that coincides with the 30th anniversary of the Tiananmen Square crackdown on June 4...

According to notices from the platforms, users will be restricted in what they can do on the sites during the upgrades, including being unable to change their profile photos, register new accounts or post danmu – real-time comments that flash up on a live stream or video.

China military says shouldn't say Tiananmen protests were 'suppressed' - Reuters

Asked at a regular monthly news briefing if China’s military would be marking the anniversary at all, Defence Ministry spokesman Wu Qian took exception to the use of the word “suppression” in the question.

Chinese activists detained ahead of 30th anniversary of Tiananmen crackdown | South China Morning Post

Among the string of activists detained or “disappeared” are six artists who had put up a painting and performing art exhibition titled “A Conscience Movement” in the eastern city of Nanjing.

June 4, 1989: A personal recollection - Jeff Bader

June 4 did not interrupt China’s rise to great-power status. In that trajectory, what happened in Tiananmen Square turned out to be no more than a hiccup. But the damage it has done to China has been substantial. It effectively ended a decade of intellectual ferment about the future of China’s governance, with the idea of political reform taken off the agenda. A veil of silence has descended over June 4, with no public discussion tolerated and websites rigorously scrubbed to prevent its mention.

Video: Canadian journalist shares newly restored footage of Tiananmen Massacre horror | Hong Kong Free Press HKFP

Canadian journalist Arthur Kent has recounted the horror of the 1989 Tiananmen Massacre using newly restored video footage he shot during the crackdown.

The 13-minute film Black Night In June documents firsthand the bloody crackdown as student protesters fell back into the square after the People’s Liberation Army opened fire.

The film on Youtube, some very disturbing scenes:

Four Is Forbidden | ChinaFile: 

Seven years later and 7,000 miles away, I finally understood the full meaning of the ominous phrase. Now, another decade has gone by since I moved to the U.S. Every time I see a mass demonstration take place, my mind rushes to that fateful night in Tiananmen Square, when the Chinese government sent three hundred thousand regular troops with tanks and machine guns to crush a student-led pro-democracy protest. Born after the tragedy with no family members involved, I am nevertheless a child of Tiananmen, its aftermath shaping my life and education from the moment they began. 

The bloody crackdown wiped out hundreds, possibly thousands of lives, a date in the official record, the hope of a generation. My journey in finding out what happened in the spring of 1989 is a lesson in remembrance, both personal and political.

ChinaFile Presents: Erasing History — Why Remember Tiananmen | Asia Society 

June 3 in New York


7. Ethnic Chinese scientists in America

My Science Has No Nationality: Chinese scientists in the age of Trump - Yangyang Cheng

I returned to the U.S. for graduate school in 2009, nearly 10 years to the date of my last departure. The place whose name I once refused to sing was now where I would lead my life and develop my career. I wanted to study physics, and to live in a free country. I had convinced myself of the promise of America, where the feeling of national belonging can be a matter of choice.

In my 10th year living and working in the U.S. as a particle physicist, such promise appears further away. As the Chinese government tightens its techno-authoritarian grip, the U.S. is becoming increasingly hostile to immigrants, and views scientists of Chinese origin with heightened suspicion. For Chinese scientists who crossed oceans, where do our hearts and bodies belong? In the shifting tide of geopolitics, who should we work for, and who might claim ownership of our minds?..

Some of the targeted measures are necessary to punish wrongful behavior and prevent future violations. The Chinese government sees science as a tool for national greatness, and claims to represent an entire people regardless of their citizenship or country of residency. However, when the U.S. government paints every scientist of Chinese ethnicity as a de facto agent of the Chinese state, guilty until proven innocent, such racist paranoia inadvertently gives credence to the Chinese government’s own authoritarian fantasy, and aids the latter in its talent recruitment and political influence beyond its borders.

The Man Who Took China to Space – Foreign Policy:

Hsue-Shen Tsien [Qian Xuesen 钱学森] was driven out of the United States by political paranoia. Will the same happen to a new generation of Chinese talent?


8. Cindy Yang case

Feds demand Cindy Yang records from Mar-a-Lago, Trump Victory | Miami Herald

Federal prosecutors in Washington, D.C., this week sent subpoenas to Mar-a-Lago, President Donald Trump’s private club in Palm Beach, and Trump Victory, a political fundraising committee, demanding they turn over all records relating to Republican Party donor Li “Cindy” Yang and several of her associates and companies, the Miami Herald has learned.

Yang, a South Florida massage-parlor entrepreneur, is the target of a public corruption investigation seeking to determine if she funneled money from China to the president’s re-election campaign or otherwise violated campaign-finance laws. She became a GOP donor in the 2016 election cycle and opened a consulting company that promised Chinese businesspeople the chance to attend events at Mar-a-Lago and gain access to Trump and his inner circle. Some of those events were campaign fundraisers that required guests to buy tickets for entry, payments that are considered political contributions. Foreign nationals are prohibited from donating to U.S. political campaigns.


Business, Economy and Trade

PBOC Sets Up Deposit Insurance Fund Management Company - Caixin China’s central bank has set up a company to manage a 100 billion-yuan ($14.5 billion) fund to protect depositors’ savings at financial institutions. Business registration information showed that the Deposit Insurance Fund Management Co. Ltd., with registered capital of 10 billion yuan, was established on Friday, the day regulators took a rare move to seize Inner Mongolia-based Baoshang Bank. Huang Xiaolong, deputy head of the financial stability bureau of the People’s Bank of China, acts as the legal representative and executive director of the company.

Provincial Snapshot—Liaoning: The Smothering Effects of Local Protectionism - MacroPolo When the Liaoning provincial government nationalized Brilliance Auto in 2002, the local private car maker was thought to be one of the most advanced and promising among China’s domestic brands. However, the government takeover proved to be the turning point in the company’s fortunes, as a once thriving company turned into another struggling and debt-laden state-owned firm. The experience of Brilliance Auto is emblematic of a deeper problem that afflicts local governments throughout China: local protectionism.

U.S. imposes new anti-dumping duties on Chinese mattresses, beer kegs - Reuters The U.S. Commerce Department said on Wednesday it had determined that Chinese-made mattresses and stainless steel beer kegs were being dumped in the U.S. market at less than fair value, and that it would impose preliminary anti-dumping duties. German and Mexican-made stainless steel kegs are also being hit with new duties, the Commerce Department said.

Portugal first euro zone country to issue bonds in China's currency - CNBC Known as “Panda” bonds, that’s yuan-denominated debt issued by a foreign sovereign issuer, the sale will take place Wednesday and Thursday. The southern European country announced last week its intention to sell 2 billion yuan ($289 million) worth of bonds with a maturity of three years.

Pfizer Tries to Outrun China Drug Policy With Rural Sales Push - Bloomberg The New York-based drugmaker is trying to outrun the price-cutting initiative, hiring 600 additional people this year to drive growth outside the 11 Chinese cities that are involved, Michael Goettler, who heads Pfizer’s Upjohn division that sells older drugs, said in an interview.

Young entrepreneurs study CPC revolution spirit, sense of home and nation - Global Times China Business Times reported that 117 young entrepreneurs have gathered since Wednesday in Xibaipo township to attend a three-day study session organized by the All-China Federation of Industry and Commerce (ACFIC), a chamber of commerce led by the Communist Party of China (CPC) that links the Party and the government with people in non-public economic sector. Xibaipo is the most recent place where the ACFIC set an education base for non-public economic personnel after Jiangxi Province's Jinggangshan, which was home to the CPC's first rural revolutionary base in 1927, and former revolutionary base of the CPC in Yan'an, Shaanxi Province.

China to boost community-based elderly care, childcare, household services - Xinhua The Wednesday meeting decided on measures to boost community-based elderly care. Efforts will be made to increase the supply of community facilities for such services, and reduce costs. Elderly care facilities installed as required in new residential communities will be offered to the local residents for free or with low-cost. The government will make up for the shortage of such facilities in old residential areas through repurchasing or renting.

“吾将上下而求索”——从万华改革之路看中国国有企业改革伟大实践 Long Xinhua feature on the Wanhua Group as a symbol of successful SOE reform

Trade war sparks fall in China-linked fund launches | Financial Times $$ InterTrust Funds started to see the impact of the trade war on China-focused funds and China-based funds investing abroad in December. The number of private equity and venture capital fund launches handled by the group has halved every month since then, from an average of about 10 per month last year to about two or three now, said James Donnan, managing director of InterTrust’s Hong Kong office.

Financial Aid to China Has Spillover Benefits, Development Bank Chief Says - Caixin The Asian Development Bank (ADB) has no intention of immediately cutting off China from its financial aid programs because there are still benefits to engaging with the world’s second-largest economy, ADB President Takehiko Nakao said.

ZY Bank Accused of Using "Yin-Yang Documents" to Conceal Bad Debt - China Banking News A leading regional bank in China stands accused of concealing non-performing assets by means of “yin-yang documents” in the wake of a lawsuit over meagre dividends payments. Zhonghui Shiye Group Co., Ltd. (中汇实业集团有限公司) has sued Henan province’s ZY Bank (中原银行) at the Zhengzhou People’s Intermediate Court over the inadequacy of its dividend payments.

China central bank chief moves to reassure on small banks | Financial Times $$ Mr Yi on Thursday noted that the government would make sure that small and medium-sized businesses had access to credit, saying that big banks would increase lending to SMEs by 30 per cent this year and the average cost of financing would come down by 1 percentage point.

China Authorities Probe Alleged Illegal Bitcoin Mining Sites at Hydro Plants - CoinDesk Government authorities in China’s Sichuan province are reportedly probing into local bitcoin mining farms that have allegedly been constructed without official approval. A state-owned newspaper in Sichuan published a front-page article on Thursday saying the land-resource bureau in Sichuan’s Garze county has found bitcoin mining farms with no prior approval built at the sites of hydropower stations.

Private Loan Disputes Clogging Up Beijing Courts - Caixin From the first day of 2011 to the last of 2018, the intermediate court heard 2,997 private lending disputes, while the five courts underneath it heard 65,605, involving a total sum of more than 50 billion yuan. The number of cases before the six courts increased from 1,738 in 2011 to 10,822 in 2016 and then doubled to 22,659 in 2018. China has seen a proliferation of informal and private lending channels in recent years, such as online and through “peer to peer” (P2P) platforms. Many individuals, private small and midsize enterprises with poor credit have begun to turn to private lenders to seek funds

Why stock investors in China need to prepare for a cold war | Financial Times $$ China and the US are “embracing while fighting”, to use a Chinese phrase. The concealed aggression may serve some purpose for the combatants, but for investors it makes it hard to know where the next punches may land.

Politics and Law

Former senior food, drug administration official stands trial for bribery, abuse of power - Xinhua Wu Zhen, former deputy head of the now-defunct China food and drug administration, on Thursday stood trial for taking bribes and abuse of power at the Intermediate People's Court of Chengdu, southwest China's Sichuan Province. According to the indictment, Wu was accused of taking advantage of his various positions between 1996 and 2018 to provide assistance to units and individuals in getting approval for drugs or finding employment. In return, he illegally accepted money and goods worth more than 21.71 million yuan (about 3.14 million U.S. dollars) directly or through his relatives.

China to promote rule of law via cartoon, short videos - Xinhua China has launched an event to collect cartoons and short videos on the country's rule of law, according to a circular released by the Publicity Department of the Communist Party of China Central Committee and three other authorities. As the 16th event of its kind, the collection will go from late May to Oct. 20 this year.

近期三省份迎来新省级党委秘书长--组织人事-人民网 Zhang Jianfei, the new secretary-general of CCP’s Hunan provincial committee has a PhD degree from UC Berkeley

Chinese communists disciplined for letting statue of Chairman Mao topple over in strong winds | South China Morning Post Cadres in Hebei village ordered to undergo self-criticism after photo of statue lying face down in the shrubbery was widely circulated online

Foreign and Defense Affairs

China's Foreign Ministry briefs media on President Xi's upcoming visit to Russia - CGTN This year, which celebrates the 70th anniversary of China-Russia diplomatic ties, is indeed the important year for the bilateral relations, Zhang [Hanhui, Vice MInister of Foreign Affairs] said, adding that "President Xi's coming visit will be another milestone in the bilateral relations." The international landscape is now facing changes unseen in the past centuries, which is posing a severe challenge to the basic norms governing international relations, hotspot issues flare up in different parts of the world, the human society is facing increasing challenges and threats, against this backdrop, China-Russia relationship has enjoyed a sound momentum, Zhang noted.

China sides with Palestinians by snubbing showcase for Donald Trump’s Middle East peace plan | South China Morning Post China and Russia will join the Palestinian Authority in shunning a US-led conference designed to kick-start the Middle East peace process by unveiling the “deal of the century”. Last week the US announced that the “Peace to Prosperity” workshop, to be held in Bahrain on June 25 and 26, would explore “potential economic investments and initiatives that could be made possible by a peace agreement” between the Israelis and Palestinians.

Ministry calls for learning from 95-year-old war hero - Xinhua China's Ministry of Veterans Affairs has issued a circular calling on personnel of the veterans affairs system and veterans of the armed forces to carry out activities to better learn from 95-year-old war hero Zhang Fuqing. Veterans affairs agencies should publicize Zhang's great deeds among former service personnel, including inviting outstanding veterans to attend seminars and other exchange activities, according to the circular. The circular requires veterans affairs agencies at all levels to create a favorable atmosphere for learning from model veterans, and respecting and caring for heroes and other people with great contributions. Efforts should be made to explore such heroes like Zhang and encourage the veterans affairs system and veterans to contribute to the realization of the Chinese Dream of national rejuvenation, it said. // The new MVA needs a good propaganda campaign

Chinese vice president visits Netherlands, vows common development - Xinhua China welcomes the Netherlands to actively participate in the Belt and Road Initiative (BRI), said Wang, hoping the Dutch side to create a fair, non-discriminatory and transparent business environment for the Chinese investors. Stressing the historical trend of economic globalization, Wang said China has always insisted on mutual benefit and win-win cooperation based on consultations on equal footing in a bid to build a community with shared future for mankind

Security issues likely to be high on agenda as Chinese Vice-President Wang Qishan visits Germany | South China Morning Post Wang, a close confidant of President Xi Jinping with a key role in diplomacy, is expected to meet German Chancellor Angela Merkel during the trip, according to local media, after visits to Pakistan and the Netherlands. His trip coincides with a visit by US Secretary of State Mike Pompeo, and security issues – including US pressure on Iran – will likely be high on the agenda in Wang’s discussions with his German counterparts. It is unclear whether Wang and Pompeo will cross paths while they are in Berlin.

IBM, Huawei, And Hikvision Are Battling To Sell Facial Recognition Technology In Dubai As a backlash against facial recognition technology grows in the US, a host of Chinese and American firms are competing to supply Dubai’s police force with biometric surveillance and artificial intelligence products...But even as the technology comes under more scrutiny in the United States, tech giants such as IBM, and China’s Hikvision and Huawei, are marketing biometric surveillance systems in the UAE, where citizens have fewer options to push back.

China’s Multifaceted Arctic Strategy - War on the Rocks The Chinese are implementing a threefold strategy to meet these goals. One part has used investment and trade to gain economic leverage over vulnerable Arctic states and sub-state actors, at least when those projects bear some hope of economic returns. Second, the Chinese have advanced an Arctic governance narrative that includes China, playing on the multilateralism prominent in many of the Arctic nations’ regional strategies and targeted at economically vulnerable actors who are beholden to Chinese funding. A third component is to invest in Arctic oil and gas, as a Stimson Center report documents China has done with Russia’s Yamal natural gas fields. This article focuses on the first two initiatives.

China and Norway mark stronger ties - Global Times The ceremonial event of the Constitution Day of Norway took place on May 23, drawing the participation of several hundred guests to review friendship while tasting Norwegian seafood in the embassy's courtyard. The Norwegian Ambassador to China Signe Brudeset gave a speech, followed by a speech by Vice Foreign Minister Qin Gang.

Top US military official says Beijing achieving immediate South China Sea goals, but further moves should be challenged | South China Morning Post With China’s massive build-up on a “pile of rocks” in the South China Sea slowing as China increasingly achieves what it wants militarily, any future expansion by Beijing or others in the area should be checked with clear and coherent collective action, the chairman of the US Joint Chiefs of Staff said on Wednesday. General Joseph F Dunford Jnr, the nation’s highest military officer, didn’t elaborate during his presentation at the Brookings Institution think tank in Washington on what would trigger a potential collective response, what form it would take or what other “tools” might ideally be employed.

Xi Jinping broke promise on South China Sea, says top US general | ABS-CBN News General Joseph Dunford, chairman of the Pentagon's Joint Chiefs of Staff, said he was not calling for military action, but stressed that there was a need to enforce international laws. "The fall of 2016, President Xi Jinping promised President Obama that they would not militarize the islands. So what we see today are 10,000-foot runways, ammunition storage facilities, routine deployment of missile defense capabilities, aviation capabilities, and so forth," he said in a talk on US security and defense at the Brooking institution.

Hong Kong and Macao

汪洋冀香港各界支持修逃犯例 - 大公報 Wang Yang told a delegation from Hongkong to support the new rendition law, and be prepared for a prolonged US-China trade war

Hong Kong security chief John Lee announces further concessions to extradition bill after pressure from pro-Beijing camp | Hong Kong Free Press HKFP Lee said on Thursday evening that the threshold for extradition will be raised so that it only applies to those accused of crimes punishable by seven years or more in jail. The threshold was previously set at three years. Additionally, Lee said the city will only entertain rendition requests made by top authorities in a jurisdiction, which in China’s case will mean the Supreme People’s Court and Supreme People’s Procuratorate. Lee added that the Hong Kong government will be able to impose conditions as part of the fugitive transfer, such as requiring the presumption of innocence, open trial and legal representation [did he say this with a straight face?].

'Hong Kong is a persecutor': Family who helped Edward Snowden asks Canada for asylum | Hong Kong Free Press HKFP “The fact that Germany has granted refugee status to these people shows that Hong Kong is a persecutor within the meaning of the Geneva Convention,” he said. Germany’s decision “adds a lot of weight and credibility” to the family’s amended refugee claim, he said.

Taiwan

Japan Considers a New Security Relationship Via “Networking” with Taiwan - Jamestown Japan’s latest Diplomatic Bluebook describes the policy as reinforcing the U.S.-Japan “alliance network by strengthening multilayered cooperative relationships with allies and partners, with the Japan-U.S. Alliance as the cornerstone,” and further notes that Japan has for several years also pursued such a relationship with Australia and India (Ministry of Foreign Affairs (Japan), October 1, 2018). This has been further underpinned by a reaffirmed U.S. partnership with Taiwan and unabated military tensions with the PRC. Japan appears to be explicitly improving bilateral ties with Taiwan in non-security capacities, while debating the potential role of the island state as a potential partner for “networking” in regional security.

The 30-Year Crusade behind Taiwan’s Same-Sex Marriage Law|Politics & Society|2019-05-22|web only The Legislature first debated same-sex marriage in 1986, and Taiwan’s first gender equality organization was formed in 1990. The arduous journey of more than 10,000 days since then finally resulted in a milestone that would not have been possible without the courage of LGBT rights leader Chi Chia-wei.

Tech and Media

China pushes self-made chips in response to US threats | Financial Times $$ “Now the US has made a full-on strike on Huawei with no concrete evidence . . . the chip industry has fully realised the importance [of self-sufficiency],” said Gu Wenjun, chief analyst at Shanghai-based semiconductor research company ICWise. But, Mr Gu added: “I think it will take another 30-40 years for China to be self-sufficient in the majority of key areas” including software for chip design and chip fabrication.

Beijing sets up $724 mln fund for 5G mobile tech efforts - Chins Daily The fund was established jointly by the Beijing Science and Technology Innovation Investment Management Co Ltd, Beijing Yizhuang International Investment and Development Co Ltd and State-owned China Jianyin Investment Ltd. It will focus on investing in leading high-tech firms across the entire 5G industrial chain.

Rising Chinese AI star Megvii gets caught in the US-China tech war | South China Morning Post “We’re not in it for the short term or to make money or to do a start-up, rather we really want to let AI change lives for the better,” Yin said in the interview. “Our intentions are pure.” Asked about Xinjiang, Yin said that “technology is definitely not to blame, definitely someone should be responsible”, without elaborating.

Alibaba Cloud Taps Global Partners for New 'Gateway to China' Offering | Alizila.com Alibaba Cloud has joined WeWork, the global operator of co-working spaces, and SoftBank group’s Chinese telecom unit to launch a new platform to support international businesses entering the China market, the companies announced on Thursday.

Beijing district to promote AI classes in elementary schools - Xinhua Dongcheng District, which lies at the heart of the capital, has picked six elementary schools for pilot AI classes this year, and will promote such classes in more schools starting September

Society, Arts, Sports, Culture and History

China strips South Korea of football trophy for 'indecent' celebrations - CNA South Korea's victorious under-18 team were stripped of the Panda Cup on Thursday (May 30) after they infuriated hosts China with their celebrations. The Koreans had already apologised to "all the people in China" after a picture emerged of a player with his foot on the trophy. //The apparently also pretended to urinate on it…classy

Li Ke to be the first naturalized player in Chinese national soccer team - Xinhua The former Arsenal and Brentford player Li, whose English name is Nicholas Yennaris, joined Beijing Guoan in January this year and has taken Chinese citizenship.

Alipay Reveals Trophy for Top Scorers at UEFA Nations League Finals | Alizila.com The design of the trophy (shown above) draws inspiration from the first character in the payment and lifestyle platform’s Chinese name, 支 (pronounced “zhi”), which means “support” as well as “payment.” When written in what Alipay calls “small seal” script, the character also resembles the posture of a striker poised to shoot.

成都地铁偷拍男常某某被中国经济信息社四川分公司解聘 man arrested for secretly filming women on Chengdu subway trains turns out to be a Xinhua reporter

The Past and Future of DC Chinatown (documentary film, 2018) - YouTube Once a vibrant Chinese immigrant neighborhood, Washington, DC’s Chinatown is today a bustling business and entertainment district with only about 300 remaining Chinese American residents.

Energy, Environment, Science and Health

More detailed rules coming for polluters - China Daily Xia Zuyi, deputy head of the ministry's Bureau of Ecological and Environmental Enforcement, said that before local officials had more freedom and power to decide what punishments should be given to polluting enterprises in particular situations, but in the future they will become more regulated.

China Denies Role in Increased Emissions of Banned Ozone-Depleting Gas - Caixin At a Wednesday press briefing, China’s Ministry of Ecology and Environment (MEE) called the findings in the article unsubstantiated by national inspection results and domestic data. MEE spokesperson Liu Youbin said some experts had found “relatively major uncertainty” in the article’s methodology, without providing further details.

Corrections

Yesterday’s newsletter wrote that Huawei’s Andy Purdy had said that IBM started helping Huawei with continuity planning a year ago. What he actually said was "we started our business continuity planning 20 years ago with the help of IBM".