Economy; Fourth Plenum; NBA’s China problem may get worse

Q3 GDP was officially 6%, the lowest level since 1992. Officials are not publicly panicking and there are as yet no signs of any massive stimulus.

A phased trade deal with the US may help take off some of the economic pressure but the issues for China’s economy are much deeper and more structural.

NBA Commissioner Silver set back the NBA’s efforts to find a resolution with China with his comment that he was asked to fire Houston Rockets GM Daryl Morey. I am all for transparency but if Silver’s goal is to quietly work out a way to continue growing in China then this was not something to be said so directly.

There is still no date for the Fourth Plenum other than “October” as announced in early September. Given the calendar for the rest of the month it is likely the Plenum will convene as early as this coming weekend. The agenda for the meeting, as announced last month:

the CPC Central Committee will hear a report from the Political Bureau on its work, and discuss important issues concerning how to uphold and improve the system of socialism with Chinese characteristics and make progress in modernizing China's system and capacity for governance.

We will be seeing lots of headlines and claims that this Plenum was “delayed”. Was it really?

I am not seeing any public evidence that is the case. The Party is required to hold a plenum once every calendar year, and with the Fourth scheduled for this Fall the schedule is back on track. Since the Third Plenum Xi has convened two extraordinary meetings of all the top Party, State and Military leaders. That convening ability, along with the early the Third Plenum last year, sure look like signs of the power and authority of the “People’s Leader”.

Thanks for reading.

The Essential Eight

1. The economy

China Braces for Sub-6% Economic Growth in Key Policy Meetings - Bloomberg

Data released Friday showed an economy expanding at just 6.0%, the slowest in almost three decades, and with broad investment growth too tepid to rely on an upturn down the road...

People’s Bank of China Governor Yi Gang responded to the data not by hinting at much greater stimulus in the pipeline, but by reminding investors that China’s focus remains on keeping its heavy debt load under control.

Yi’s comments may set the scene for a meeting of the Politburo, the Communist Party’s top leaders, and the ensuing Fourth Plenum of the Party’s Central Committee...

In his statement to the IMF’s steering committee at the meetings, Yi said that growth had been stable this year and the “main economic indicators kept within an appropriate range.” While keeping credit growing, the bank should also pay attention to “maintaining a stabilized leverage ratio,” he said.

Official rebuffs ‘groundless’ foreign media reports of economic hard landing - Global Times

An official from a Chinese economic planner has said that foreign media's reporting of a  Chinese economy hard landing is "groundless," citing robust travelling data from the National Day holidays, and data on power consumption and cargo transport from the first three quarters of 2019.

向松祚质疑3季度GDP生编硬造 专家:习近平遇最难经济僵局 中共已无法控制了 - ☀阿波罗新闻网

Renmin U professor Xiang Songzuo says Q3 data is overstated, faked

China doubles value of infrastructure project approvals to stave off economic slowdown amid trade war | South China Morning Post

The National Development and Reform Commission (NDRC) has approved 21 projects, worth at least 764.3 billion yuan (US$107.8 billion), according to South China Morning Post calculations based on the state planner’s approval statements released between January and October this year...

Three of the infrastructure projects approved by the NDRC have price tags over 100 billion yuan (US$14 billion), including the most expensive on the list – a new high-speed railway network linking Chongqing and Kunming in southwest China, worth a total of 141.6 billion yuan (US$19.9 billion)

China more than doubles Sept approval for fixed-asset investment projects - Reuters

The National Development and Reform Commission approved 177.8 billion yuan ($25.15 billion) of investment in 14 fixed-asset projects in September, a commission spokesman Yuan Da told reporters in a briefing on Monday, adding that the investments were mainly in the transportation sector.

Central bank head says yuan rate 'broadly stable' - China Daily

"The yuan exchange rate has remained broadly stable at an adaptive and equilibrium level, based on market supply and demand and with reference to a basket of currencies," Yi Gang, governor of the People's Bank of China, the central bank, said at the annual meetings of the International Monetary Fund and the World Bank in Washington.

China's home prices remain stable in September - Xinhua

NBS senior statistician Kong Peng said the real estate market continued its steady trend in September as the central government has reiterated that "house is for living in, not for speculation," calling for the implementation of a long-term management mechanism for the real estate market.

China Online Retail Sales Growth Slows but Stays in Double-Digits - Caixin Global

China’s online retail sales in the first nine months of the year rose 16.8% year-on-year to 7.3 trillion yuan ($1.03 trillion), according to data published Friday by the National Bureau of Statistics (NBS).

Though that growth was lower than the 27.7% recorded for the same period last year, online sales — excluding services — as a percentage of total retail sales rose 2 percentage points to 19.5%.

Sinology by Andy Rothman - Stepping Back From the Brink?

In my view, the impact of the tariff dispute on the Chinese economy has been modest. A bigger contributor to slower growth has been the Chinese government's ongoing campaign to reduce risks in the financial system, which has led to a sharp crackdown in off-balance sheet, or shadow credit, which declined 7.9% YoY in September. This has reduced systemic risks, but it has also meant that the firms that relied on non-standard credit sources, especially small private companies, have struggled (even more than usual) to get access to credit.

It is a positive sign that Beijing has not responded to slower growth by allowing a resurgence of shadow credit.

Commentary: Chinese economy resilient enough to withstand external headwinds - People's Daily Online

Also, in the first three quarters, more than 100 foreign enterprises were born in China every day, and about 2.5 billion yuan (354 million U.S. dollars) of foreign investment flowed into China daily. Amid the downturn in global transnational investment, foreign investors have cast a vote of confidence in the Chinese market.

2. As China tries harder to woo foreign firms

Xi sends congratulatory letter to first Qingdao Multinationals Summit - Xinhua

As important participants, witnesses and beneficiaries, multinationals have played positive roles in China's 40-plus years of reform and opening-up, Xi said.

Xi stressed that the door of China's opening-up will only open wider and wider, the business environment will only get better and better, and opportunities for global multinationals will only be more and more.

Premier: China welcomes advanced manufacturing -

Heads from multinational corporations, including BMW, Emerson, Sanofi and other enterprises, exchanged views with Premier Li on issues such as the high-quality development of China’s manufacturing industry, digital transformation of industries, medical and health reform, as well as intelligent property rights protection...

Developing advanced manufacturing requires open cooperation, and the country welcomes manufacturing enterprises around the world to seize the opportunity in the process of its further opening-up to conduct active cooperation with China, expand the market and achieve mutual benefits and win-win results, the Premier added.

Vice-premier stresses deepened cooperation with multinationals - China Daily

Vice-Premier Han Zheng Saturday underscored efforts to improve the business environment to deepen mutually beneficial cooperation with multinationals.

Han made the remarks when addressing the opening ceremony of the first Qingdao Multinationals Summit that opened in Qingdao in east China's Shandong Province...

China will foster a better business environment for multinational companies by further lowering tariffs and scrapping all kinds of non-tariff barriers, Han said

EU Chamber: China's foreign investment law is 'surprisingly accommodating'

Joerg Wuttke, president of the European Union Chamber of Commerce in China, told reporters Friday that based on a preliminary look at the country’s new foreign investment law, “It is surprisingly accommodating to all concerns ... we have.”...

The EU Chamber received a review copy on Oct. 10 and has 20 days to respond, according to Wuttke. He noted Friday that there is no penalty clause included so far in the implementation, which could indicate the law is incomplete.

China’s SOE executives defend Beijing’s economic model from ‘targeted attacks’ by US, EU | South China Morning Post

Chen Zhong, the general manager of the overseas department of the China Communication Construction Company, urged delegates at a government-sponsored event to woo foreign investment in Shandong over the weekend to “collect more samples and conduct more analysis” to obtain “fair conclusions” about the firms China’s sees as the backbone of the national economy.

Will the promises be kept this time?

3. US-China

US and China made 'substantial progress' at trade talks: Vice Premier Liu He - CNBC

Chinese Vice Premier Liu He said on Saturday that will work with the to address each other’s core concerns on the basis of equality and mutual respect, and that stopping the trade war would be good for both sides and the world.

“The two sides have made substantial progress in many fields, laying an important foundation for the signing of a phased agreement,” Liu, also the chief negotiator in the trade talks, told a virtual reality conference in Nanchang, the capital of southeastern Jiangxi province.

陶然笔记:妥善解决双方核心关切 实现共同目标|中美|中国经济_新浪新闻

Taoran Notes - "China and the United States should properly address their core concerns and achieve common goals", on Liu He's Saturday comments. Some snippets:

""It is in the interest of China, the us and the whole world to stop the escalation of the trade war. China-US economic and trade cooperation concerns world peace, stability and prosperity. China is ready to work with the us side to properly address each other's core concerns on the basis of equality and mutual respect and work hard to create a favorable environment for the realization of our common goals."...

China and the United States are moving closer to a phased agreement.

Secondly, the significance of china-us economic and trade cooperation was clearly defined in the speech...

China-us economic and trade cooperation bears on world peace, stability and prosperity."

Notice those two words -- "peace."

The economic and trade negotiations between China and the United States involve too many interests, and every change concerns the whole world.”

Top Economic Advisers Warned Trump on Tariffs Before China Truce - WSJ $$

The Oct. 8 briefing, which came two days before trade talks between senior U.S. and Chinese officials, was arranged by Larry Kudlow, the director of the White House National Economic Council. The meeting included Stephen Moore, an economic commentator and a former candidate for the Federal Reserve Board, and Republican economist Lawrence Lindsey, the people said.

“There was a general consensus that the economy was really strong, the best economy we’ve had in 30 years, and that what’s going to get him re-elected is the economy,” said Mr. Moore, who advised Mr. Trump during his 2016 campaign.

But “we all agreed that the uncertainty about the trade situation with China is a negative,” Mr. Moore said.

U.S. not out to 'decouple' from China, defense official says in Beijing - Reuters

U.S. Deputy Assistant Secretary of Defense Chad Sbragia sought to place relations in a more positive light.

“One area that I would comment and challenge on is - I’ve heard this on this panel and other panels - the idea that the United States approach is fundamentally based on decoupling,” Sbragia said at a panel on the sidelines of the Xiangshan Forum.

“I’ll tell you from personal experience that’s not only not official U.S. policy, that’s not even a policy discussion that I hear in my day-to-day business. That’s not even how we think about that,” he said.

Newt Gingrich talks with Michael Caster and Teng Biao - Newt's World Ep 39: China's Authoritarian Rule - Gingrich 360

Gingrich and his collaborator Claire Christensen are out this week with a book on the China- Trump vs. China: Facing America's Greatest Threat. From the blurb:

Newt Gingrich's Trump vs. China: Facing America's Greatest Threat will serve as a rallying cry for the American people and a plan of action for our leaders in government and the private sector. Written in a language that every American can understand but still rich in detail and accurate in fact, Trump vs. China will expose the Chinese Communist Party's multi-pronged threat against the United States and what we must do as a country to survive.

Gingrich and Christensen are subscribers and they sent me a free copy last week. I have not yet read it, but I can guarantee you it will make waves between now and the 2020 US Presidential election given Gingrich's media presence, and it is another reminder of just how much harsher the US rhetoric and views towards the PRC will become between now and next year's election.

Terry Branstad, ambassador to China, says Beijing has obstructed U.S. diplomats' work for decades - The Washington Post

There have been hundreds, perhaps thousands, of instances in which Chinese officials thwarted American diplomats’ efforts to meet with students, local officials and the public in China, the U.S. ambassador said Monday as he defended rules introduced by the Trump administration to track Chinese officials in the United States.

The unusually pointed remarks from the ambassador to Beijing, Terry Branstad, turned on a catchphrase — reciprocity — that U.S. officials have invoked to justify a tougher approach toward China on issues ranging from commerce to diplomacy.

US diplomat David Stilwell says Washington must shed its myths about China to check Beijing’s growing influence | South China Morning Post

Rising competition between Beijing and Washington has largely focused on economics and defence, but the US must step up the battle of ideas and recognise past flaws in its own logic to help put relations with China on a more even footing, said David Stilwell, assistant secretary of state for the Bureau of East Asian and Pacific Affairs.

In particular, he cited the “myth” that engagement will lead to a more open, liberal China; that the Communist Party does not have expansionary ambitions; and that communist ideology no longer matters.

Remarks by U.S. Senator Chris Coons: The Nixon Forum on U.S.-China Relations | Wilson Center

The goal of this strategy is fairly simple – that the United States should retake its position as the leader of free and open societies around the world while making the necessary investments to secure our competitive edge.  We must strive to co-exist, compete, and cooperate with China – and all three are possible.  This strategy requires meaningful engagement from every aspect of American society – from government, to our private sector and Silicon Valley, to academia, think tanks, and other critical institutions...

Pence to deliver China policy speech next Thursday: White House official - Reuters

Pence, who has often struck a hawkish tone on China, will deliver the remarks for the Wilson Center at the Conrad Hotel in Washington, the person said, about a year after he harshly criticized Beijing in an address at the Hudson Institute think tank.

The address will “reflect on the U.S.-China relationship over the past year and look at the future of our relationship,” the official said without offering further details.

Comment: His second China speech was originally scheduled for June 4, then delayed by President Trump. This speech is on the schedule for this Thursday but could move again, depending on President Trump

Remember, the trade issues may actually be the easiest part of the US-China relationship to resolve…

4. Hong Kong

Antony Dapiran has started a newsletter, highly recommend it, including today's that describes what he saw in the Sunday Hong Kong protests- A Further Procrastination - Antony Dapiran

Events took their usual turn towards violent clashes by mid-afternoon (tear gas at 3:30pm, water cannon at 4pm). Yesterday was notable for the variety of projectiles with which I was almost hit, with tear gas shells, sponge grenades, beanbag rounds and the water cannon all coming a bit too close for comfort, although thankfully no poorly-aimed Molotovs this week.

Protesters targeted Beijing-affiliated businesses for vandalism, including branches of the state-owned banks Bank of China, ICBC and China Construction Bank, the state-owned Chung Hwa Books and Beijing Tong Ren Tang traditional Chinese medicine shop all trashed. The Xiao Mi mobile phone store in Mong Kok was set ablaze. Similar vandalism occurred at the protests in Wan Chai and Causeway Bay two weeks ago. Are we heading towards a point where certain districts of Hong Kong become “no-go areas” for Mainland businesses?

Rioters firebomb police station, vandalize facilities in renewed violence in HK - Xinhua

Mobsters firebombed the Tsim Sha Tsui police station, trashed multiple metro stations, committed arson and vandalized public and private facilities in Hong Kong's Kowloon, soon after a large number of masked people, mostly dressed in black, ignored police objection and staged an unauthorized demonstration at 1:30 p.m. local time.

Rampaging mobs stage an arson spree in Hong Kong setting mainland Chinese-linked shops and metro stations ablaze and hurling petrol bombs at police | South China Morning Post

The arson attacks began from around 3pm and lasted for more than eight hours as they set off fires inside mainland-linked businesses and police and metro stations, before gutting a Xiaomi shop and Chinese medicine store Tong Ren Tang in Mong Kok.

As the city marked the 20th weekend of violent protests, demonstrators kicked off an illegal march in Tsim Sha Tsui peacefully but the initial calm dissipated in less than two hours as marauding protesters began blocking roads and throwing bricks and petrol bombs.

Politico's reprint of the above SCMP story - Rampaging mobs stage an arson spree in Hong Kong - POLITICO

Chinese Communist Party newspaper attacks Hong Kong schools 'liberal studies' - Reuters

Published late on Sunday night as the former British colony suffered the latest protest in five months of political unrest, the newspaper returned to a well worn theme. State media has repeatedly blamed textbooks in “liberal studies”, a mandatory high school subject in Hong Kong, for influencing students, who have been at the forefront of protests.

Communist Party mouthpiece slams Hong Kong university chief’s call for police abuse probe | South China Morning Post

Remarks like those by university vice chancellor Rocky Tuan Sung-chi risked ruining the future of the school’s students, according to an article published on the People’s Daily news app on Saturday.

“If teachers and even well-respected university chiefs drift with the waves and go with the flow, and tolerate and condone radical views, even violence, it would not represent true caring for the young,” it said.

Former Hong Kong leader Leung Chun-ying slams Chinese University chief for ‘U-turn’ on alleged police brutality after student pressure | South China Morning Post

Vice chancellor Rocky Tuan Sung-chi, under intense student pressure, made the commitment in an open letter on Friday, the first such move by a university chief over the anti-government protests that have rocked Hong Kong for more than four months.

Hong Kong leader apologises over police striking Kowloon mosque with water cannon blue dye | Hong Kong Free Press HKFP

Chief Executive Carrie Lam and Police Commissioner Stephen Lo arrived to meet with community leaders at the mosque at around 11:15am on Monday. They did not speak to the media afterwards.

Fears Are Growing Among Mainland Chinese Living in Hong Kong - Bloomberg

Min, who moved to Hong Kong from the mainland in 1995 and now runs his own hedge fund, said the startling escalation in mayhem prompted him to tell his children not to speak Mandarin in public for fear they’ll get beaten up in the Cantonese-speaking city.

Comment: Interesting propaganda play, trying to blame the "West" for all these protests, both to further discredit the West inside China by hyping its role as well as an attempt to win sympathy from other countries for what it is dealing with in Hong Kong....may work. - Expanding violence shows dangers of copying HK - People's Daily Online

Western media, which still has major influence in public discourse, has been playing a negative role of reporting Hong Kong social unrest, and their own bias inspired more radicals in Barcelona and Santiago, who consider peaceful protests useless, and they would reach their goals by ignoring rule of law, he said. "The West will swallow such bitterness," Zhang said.

Commentary: Western double standards exposed as Catalonia becomes new Hong Kong - People's Daily Online

From London to Catalonia, protests have led a counter charge to certain Western countries which preach democracy and freedom. Such irony is a slap in the face of certain countries that are biased against China and Hong Kong.

We could interpret such a scenario with the political decay theory proposed by US scholar Samuel P. Huntington. If the governments of Western countries fail to run their countries effectively in the context of the information revolution and if their incompetence is not properly improved, we may see the world experience a great change at accelerated speeds unseen in a century.

Foreign Ministry Spokesperson Hua Chunying's Regular Press Conference on October 21, 2019

We have taken note of the developments in Catalonia, Spain and London, the United Kingdom, as well as the Western countries' attitude on these cases. Relevant media reports and comments have drawn much attention from the Chinese people, but we believe these are internal affairs of Spain and the UK that should be properly handled according to law.

However, as you said and the Chinese people have noticed, some Western politicians and media have apparently adopted different attitudes towards illegal, violent offenses that took place in different places

US is instigating colour revolutions, China’s Defence Minister Wei Fenghe says | South China Morning Post

Speaking in Beijing at Monday’s opening ceremony of the Xiangshan Forum, China’s annual conference on security and defence issues, Wei told an audience of foreign military officers that nations should handle their differences through dialogue and mutual respect, and that China would never give in to foreign pressure.

“Wanton interference in other countries’ affairs will never win,” Wei said. “Interfering in other countries’ domestic affairs, instigating a colour revolution or even attempts to subvert the legitimate governments of other countries are the real causes of wars and unrest in different regions [around the world].”

5. NBA’s China problem may get worse

Chinese State Television Vows ‘Retribution’ Against N.B.A.’s Adam Silver - The New York Times

China Central Television, the state-run Chinese television network, said N.B.A. Commissioner Adam Silver would face “retribution” for saying that the Chinese government asked him to fire a league executive who supported the pro-democracy protests in Hong Kong this month.

The public threat was broadcast Saturday evening in a commentary, in which CCTV also said that “it is ugly for the president of an internationally influential sports league to openly make up a lie to discredit China.”

Comment: Silver's comment not constructive if Silver was hoping he had made progress in calming things down and letting the NBA go back to something approaching business as usual. NBA PR could have leaked this “anonymously” if they wanted to get it out, while he continued to try to thread the needle. I thought Silver was doing a good job of threading the needle, with this direct comment he just stuck the needle in Beijing’s eye.

NBA Adam Silver: China Crisis Has Triggered "Substantial" Losses - Bloomberg

“The financial consequences may go on and be fairly dramatic,” Commissioner Adam Silver said Thursday at the Time 100 Health Summit in New York. But the league is willing to take on the costs to support free expression, he said...

He added that Chinese interests asked for Morey to be fired for the tweet.

“We said there’s no chance that’s happening -- there’s no chance we’ll even discipline him,” said Silver, a longtime NBA executive who became commissioner in 2014...

“I felt that we had made enormous progress in terms of building cultural exchanges with the Chinese people,” Silver said. “I have regret that much of that was lost, and I’m not even sure where we’ll go from here.”

NBA Arenas Prepare for Hong Kong Protests - WSJ $$

The National Basketball Association’s showdown with China over free speech has created an unanticipated opening-week problem for the league: the arrival of Hong Kong protesters that plan to use the league’s arenas and broadcasts as a platform for their message.

Several NBA policies state that signs bearing political messages are not tolerated at games. Most arenas also have security regulations that clearly state that any such signs brought in my fans will be confiscated and that disruptive fan behavior is cause for ejection.


CCTV Sports NBA front page has no updated content since October 8

Opinion | The Chinese Threat to American Speech - The New York Times

NBA issue is helping this concern go mainstream in the US. This is a very long editorial in the Sunday New York Times:

China’s assertive campaign to police discourse about its policies, even outside of its borders, and the acquiescence of American companies eager to make money in China, pose a dangerous and growing threat to one of this nation’s core values: the freedom of expression.

China's attacks on US businesses 'completely inappropriate': Mike Pompeo - CNBC

Pompeo said that “from a foreign policy perspective, we think it’s completely inappropriate for China to attack U.S. businesses whose employees or customers exercise their fundamental freedoms here in the United States.”

Not just business - NYU Shanghai 'self-censoring' on Hong Kong says faculty - New York Post

Everyone is under a bit of a cloud of fear,” one faculty member who teaches at NYU’s sprawling 600,000-square-foot Shanghai campus told The Post. “We don’t walk around trembling like rodents, but there is a general idea that there are certain topics you don’t discuss.

“Most of us are on guard about what we say even when we talk about the weather,” the faculty member continued, saying that student protests at the Shanghai campus would be unthinkable.

6. Sixth World Internet Conference

China Calls for Tech Collaboration While Criticizing U.S. Action - Bloomberg

“The foundation for an open and shared-by-all internet is unstable,” Huang Kunming, a member of the Politburo, which is comprised of China’s 25 most-senior officials, said at a technology forum on Sunday. “Some countries restrain and suppress companies from other countries using cyber security as an excuse. Such moves cast uncertainty and even antagonism over cyberspace,” he said, without naming the U.S...

“We need to respect each country’s approach to Internet development, governance, policy making and their rights to participate in international governance based on mutual trust,” said Huang, who’s also head of the Communist Party’s publicity department. “We need to pay attention to each others’ interests and concerns, effectively deal with disagreements and avoid strategic misjudgment. “

Comment: Once again, worth pointing out that China is the original technology decoupler, by walling off its Internet and blocking major US Internet firms for over a decade

China's propaganda chief Huang Kunming says Cold War mentality hindering mutual trust in cyberspace - Reuters

“The Cold War thinking and zero sum game, this has stopped and hindered exchanges in cyberspace. Also, bully behavior in cyberspace has had a negative impact on mutual trust,” he said...

“By using national security as an excuse, some countries have attacked some countries and enterprises. This has increased the uncertainty, opposition and negativity in cyberspace.”

Google, Facebook and Apple skip out on China's internet conference | Abacus

This year’s attendees include the regional presidents of US internet hardware makers Honeywell, Qualcomm, Intel, and Cisco Systems, as well as software and cloud services provider Microsoft. But US internet giants such as Google, Twitter, Facebook and Apple did not take part. Google, Twitter, and Facebook are blocked in China, while Apple must use a local partner to offer cloud services.

Last month, the Cyberspace Administration of China, the nation’s internet regulator, said Apple had confirmed it would attend, but no one from Apple took part in any of the panel sessions. Apple did register for the conference, but “the attendee was called away for other matters,” a source told the South China Morning Post.

Interesting that Cook is in China during Wuzhen but did not go this year- Apple CEO Tim Cook joins board at China's top university - People's Daily Online

Apple CEO Tim Cook has joined one of China's most prestigious universities and become a member of the advisory board at the Tsinghua University School of Economics and Management (SEM), according to the school's official WeChat account.

Cook chaired the board's meeting and said he will work with other members in the next three years in order to make the SEM one of the best of its kind in the world.

Meanwhile, Zuckerberg and Facebook have given up on entering China - Text of Zuckerberg’s Georgetown speech - The Washington Post

This raises a larger question about the future of the global internet. China is building its own internet focused on very different values, and is now exporting their vision of the internet to other countries. Until recently, the internet in almost every country outside China has been defined by American platforms with strong free expression values. There’s no guarantee these values will win out. A decade ago, almost all of the major internet platforms were American. Today, six of the top ten are Chinese.

We’re beginning to see this in social media. While our services, like WhatsApp, are used by protesters and activists everywhere due to strong encryption and privacy protections, on TikTok, the Chinese app growing quickly around the world, mentions of these protests are censored, even in the US.

Is that the internet we want?

It’s one of the reasons we don’t operate Facebook, Instagram or our other services in China. I wanted our services in China because I believe in connecting the whole world and I thought we might help create a more open society. I worked hard to make this happen. But we could never come to agreement on what it would take for us to operate there, and they never let us in. And now we have more freedom to speak out and stand up for the values we believe in and fight for free expression around the world.

Comment: Zuckerberg spinning a failure into a success...good thing Xi did not agree to give the Zuckerberg's child a Chinese name in 2015. Facebook is a good case study in how hard it is for Internet firms to get into China, no matter how hard they try and how abjectly they grovel. Zuckerberg is right that it is better for Facebook to not be so constrained by having a China operations, but what about the billions of dollars in advertising revenue Facebook earns from PRC firms advertising globally ex-China on the Facebook platforms? And it is interesting to hear his comments on TikTok given that Facebook has been instrumental in its rise outside China by taking hundreds of millions of dollars in advertising spend from TikTok. If TikTok censorship really disturbs him shouldn’t he stop taking their money to promote the app?

7. Fake gold as loan collateral

In Depth: How $2.7 Billion of Fake Gold Tarnished Local Lending - Caixin

In the summer of 2015, a plainly dressed farmer claiming to be Yang Jun walked into the Rural Credit Cooperative of Tongguan County in Shaanxi province. He presented 26 shiny gold bars and applied to borrow 20 million yuan ($2.8 million) from the rural financial institution against the nearly 100 kilograms of precious metal.

The scene surprised no one at Tongguan Co-Op, which is supposed to serve rural financial needs in a county known for its rich gold reserves...

In April 2016 after failing to collect repayment from Yang, Tongguan Co-Op decided to melt his gold bars to sell the metal for cash. But as the shiny gold on the surface melted away, dark black tungsten plate appeared underneath. Tongguan Co-Op found that the bars pledged by Yang contained only 36.5% pure gold.

Tongguan Co-Op’s problem blew the lid off China’s largest gold-loan fraud case. A subsequent inspection by the top banking regulator found tons of adulterated gold in 19 lenders’ coffers in Shaanxi and neighboring Henan held as collateral for 19 billion yuan of loans including those at Tongguan Co-Op...

Caixin learned that local graft busters also launched investigations of officials in the Tongguan branches of ICBC and PSB involved in the case, but no information was made public.

Meanwhile, financial institutions are struggling to deal with the huge losses caused by the fraud. Caixin learned Tongguan Co-Op faced 3.4 billion yuan of losses from the loans and is now relying on funding from the parent institution to maintain operations.

8. One fun thing: Chinese words in pictures

Fire chickens and sea pigs: The artist bringing Chinese words to life - BBC News

What do you get when you cross a baby with a fish? It's not the start of a dad joke, but one of a series of pictures drawn by Shanghai-based illustrator Frankie Huang.

Chinese is already one of the most pictorial languages in the world, but she's taking it to the next level - by literally turning words into pictures. Her series, Putong Animals, re-imagines animals according to what they're called in Mandarin Chinese - or Putonghua - the official language of China.

One example from her Twitter feed:

More of her work - Frankie Huang (@putongwords) • Instagram

Business, Economy and Trade

Police probe nation’s largest online card platform - Global Times China's largest online credit card management platform, 51 Credit Card, is reportedly under police investigation at its headquarters in Hangzhou, capital of East China's Zhejiang Province...Industry insiders said the investigation may be related to the company's alleged illegal collection of personal information by using Web crawler technology and recovering personal loans.

China’s Crackdown on Risky Deposits Ignores Structural Problem - WSJ $$ The country’s banking regulator laid out tighter rules last Friday on regulating so-called structured deposits, which amounted to 10.8 trillion yuan ($1.5 trillion) as of September. Yields on such deposits are linked to the prices of other assets from foreign currencies to commodities so they could potentially offer higher returns than conventional deposits.

China’s Analyst Contest, Halted by Scandal, Prepares to Restart - Bloomberg New Fortune and seven other publishers of rankings signed a self-discipline agreement this month with the Securities Association of China, according to the trade group. Organizers pledged to ban vote-soliciting activities unrelated to research and permanently expel from the competition any analyst caught paying bribes in exchange for support, the association said in a notice posted on its website

China Banks Unexpectedly Keep Loan Prime Rate Steady - Bloomberg A static one-year rate shows China “may be trying to balance the shrinking margins of banks with support to the real economy,” said Zhou Hao, a senior emerging-markets economist at Commerzbank AG. “The PBOC remains restrained on policy easing.”

Everbright Securities’ Compliance Chief Quits as Dud Deal Fallout Spreads - Caixin The disastrous investment in MP & Silva Holding SA (MPS) was made by a subsidiary of Everbright Securities, Everbright Capital Investment Co. Ltd., in May 2016 when it joined a consortium that bought a 65% stake in the British company for 5.2 billion yuan. The deal took place at a time when Chinese companies were scrambling to snap up overseas businesses, many of which subsequently turned out to be duds.

In Depth: To Tea or Not to Tea — Investors Try to Make Sense of Milk Tea Craze - Caixin The sweet milky tea — sometimes laced with chewy tapioca pearls, or layers of fresh fruit and cream — has beat coffee to become the most popular drink among China’s hip and young consumers. Popular brands are becoming the new darlings for venture capitalists and high-tech investors like Alibaba Group Holding Ltd., Tencent Holdings Ltd., Meituan Dianping and Inc., mimicking an earlier wave that saw bike-sharing attract similar interest several years ago. According to the state-run Xinhua News Agency, total investment in China’s new generation of tea-drinking businesses exceeded 1.3 billion yuan ($184 million) as of the end of 2017.

Rich Chinese outnumber wealthy Americans for first time: Credit Suisse - Reuters The Swiss bank’s annual wealth survey released on Monday found 100 million Chinese ranked in the global top 10% as of the middle of this year versus 99 million in the United States.

Politics and Law

开启法治中国新时代——以习近平同志为核心的党中央推进全面依法治国纪实--时政--人民网 As part of the runup to the 4th Plenum, Xinjhua publishes a long piece on the record of the Party Center with Xi as the core in comprehensively implementing Governing the Country According to the law. One of the achievements noted is the updating of the Mao-era "Fengqiao Experience" // 1963, 年“枫桥经验”从浙江诸暨干部群众的创新实践中诞生,半个多世纪来不断传承、历久弥新。..党的十八大以来,各地积极探索社会治理新思路新举措,推动“枫桥经验”扩展到经济、政治、文化、社会、生态等领域,我国社会治理体系和治理能力迈上新台阶。

Senior CPC official stresses Xi's thought on united front work - Xinhua Wang Yang, a Standing Committee member of the Political Bureau of the Communist Party of China (CPC) Central Committee, has stressed studying the important thought of Xi Jinping, general secretary of the CPC Central Committee, on strengthening and improving the united front work. Wang made the remarks Friday at a seminar on Xi's thought on the united front work, which was convened by the CPC Central Committee's leading group on the united front work. // 中央统一战线工作领导小组召开习近平总书记关于加强和改进统一战线工作的重要思想研讨会 汪洋出席并讲话

Guangxi Court Sentences Reluctant Hitmen - Sixthtone Six men in southern China’s Guangxi Zhuang Autonomous Region have been sentenced to up to five years in prison each for a hit mission that was botched after being outsourced multiple times, according to a verdict document released Thursday.

Ousted in Tiananmen Protests, a Late Chinese Leader Is Finally Given a Grave - The New York Times - Chris Buckley “That truly was an exciting time that caused people’s hearts to jump,” they said of Mr. Zhao’s rule in a letter published Monday by Ming Pao, a newspaper published in Hong Kong, beyond mainland Chinese censors. “The whole country was prospering, officialdom and the public, in power and out, worked in tandem.” “These days we’re confronted with ideological regression and doctrinal shortcomings,” they wrote. “There is a spiritual malaise the likes of which hasn’t been seen for a century.”

The curious corruption case of China’s former securities chief Liu Shiyu and his lenient treatment | South China Morning Post while most officials accused of corruption have faced criminal charges and been stripped of their membership of the Communist Party, Liu was let go with only a two-year probation within the party, allowing him to retain his membership. The handling of Liu’s case was also unusual in that the punishment was first approved by the policymaking Politburo, an arrangement that was not publicly disclosed in similar investigations of ministerial-level officials.

Supreme People’s Court President’s Zhou Qiang’s virtual mailbox | Supreme People's Court Monitor A  quick but unscientific survey of recently published responses follows. As to why people write, judging from my own experience and the content of published responses, it appears that it is one of the few ways to bring a problem (unrelated to a dispute) to the attention of the court authorities.

Foreign and Defense Affairs

‘No safe harbors’: China plots to block US military from key ports, Pentagon warns “Their single aspiration is to elevate their own status and capacity on a global scale,” said Chad Sbragia, the deputy assistant secretary of defense for China, during a Thursday House Transportation subcommittee hearing. “What it does mean is that they will have the global military where the U.S. essentially may have no safe harbors.”

Chinese National Sentenced to 40 Months in Prison for Conspiring to Illegally Export Military- and Space-Grade Technology from the United States to China | OPA | Department of Justice Between December 2016 and January 2018, Li worked with other individuals in China to purchase radiation-hardened power amplifiers and supervisory circuits and illegally export them from the United States to China.  The electronic components sought by Li are capable of withstanding significant levels of radiation and extreme heat, and as a result, are primarily used for military and space applications. 

New twist in federal case involving Navy lieutenant, Chinese nationals; New charges include violating federal law for smuggling U.S.-made vessels - News4Jax According to a criminal complaint obtained by News4Jax, another arrest was made in a separate investigation with ties to Jacksonville Lt. Fan Yang, a Chinese-born man who became an officer with the U.S. Navy.

Pakistan's stalled China-backed rail project prompts turn to Japan - Nikkei Asian Review On Tuesday, Skindar Sultan Raja, head of Pakistan's state-owned railway operator, told the Senate Standing Committee on Railways that the regional government of Sindh is willing to take a loan of $2.6 billion from the Japan International Cooperation Agency, JICA, to refurbish the Karachi Circular Railway, or KCR. Frustrated by a lack of support from China for the project, Sindh officials are looking to Japan.

Are the US and China in an Ideological Competition? | Center for Strategic and International Studies Excellent discussion, I am most persuaded by Tobin and Yoshihara. // The event will feature panelists Toshi Yoshihara, Senior Fellow at the Center for Strategic and Budgetary Assessments; Jessica Chen Weiss, Associate Professor of Government at Cornell University; Dan Tobin, China Studies Faculty at the National Intelligence University; and Andrew Mertha, George and Sadie Hyman Professor and Director of China Studies at Johns Hopkins University School of Advanced International Studies

David M. Lampton: US-China Relations: Reflections on a Gathering Storm - YouTube David M. Lampton, expert on Chinese politics and US-China relations, currently at Stanford University, will take a closer look at the growing rivalry and how we might evaluate the more than forty years of Sino-American engagement since Nixon went to Beijing in 1972. Why has engagement weakened so precipitously in the last several years? What may be the costs of this mounting friction; and, what steps could be taken by both Beijing and Washington to move in more productive directions?

Belt and Road and debt diplomacy in the Pacific | Lowy Institute China has not been the primary driver behind rising debt risks in the Pacific, although a continuation of business as usual would risk future debt problems in several countries.

Rocket-maker unveils new blueprint - People's Daily Online ChinaRocket, a commercial space wing of the China Academy of Launch Vehicle Technology, the country's leading rocket-maker, has unveiled its plans to develop a number of carrier rocket models to tap the space launch market. The company announced on Saturday that its researchers are designing two types of solid-propellant carrier rockets — Smart Dragon 2 and Smart Dragon 3 — and at least one liquid-propellant type, the Flying Dragon 1.

Professor at Hokkaido University detained in China:The Asahi Shimbun A Hokkaido University professor who visited China in September is being detained here by authorities, sources close to Japan-China relations said on Oct. 18. This is the first case of a Japanese national university professor, who is deemed a quasi-public servant, being detained in China.

China’s great game in the Middle East | European Council on Foreign Relations China has significantly increased its economic, political, and – to a lesser extent – security footprint in the Middle East in the past decade, becoming the biggest trade partner and external investor for many countries in the region.

Ep. 180: A Peculiar Alliance: The China-Pakistan Alliance — IVM Podcasts - Indian Podcasts for you to listen to Sweeter than honey and higher than the mountains-that’s how China and Pakistan describe their relationship. But what really drives it? Is it just about containing India or are there other factors involved? Manoj Kewalramani talks to Suyash Desai and Sankap Gurjar about the bonds that shape the China-Pakistan axis.

Hong Kong and Macao

Taiwan rejects murder suspect’s surrender offer, says Hong Kong must comply with ‘legal procedures’ | South China Morning Post Hong Kong police wrote to its counterpart in Taiwan on Friday to relay Chan’s decision to surrender, but the island’s Mainland Affairs Council officially turned down the offer on Sunday, saying Chan could only be allowed in if his entry complied with legal procedures.

Mother of 15-year-old Hong Kong girl found dead in sea says daughter took her own life, and calls for end to harassment of family and speculation over death | South China Morning Post Mother says girl had told her at least twice she was hearing voices in August, suspecting she could be suffering from psychosis


China's defence minister says resolving 'Taiwan question' is national priority - Reuters “China is the only major country in the world that is yet to be completely reunified,” Wei said. “Resolving the Taiwan question so as to realise China’s full reunification is the irresistible trend of the times, China’s greatest national interest, the righteous path to follow and the longing of all Chinese people.”

Tech and Media

Huawei spent $1.6M to hire Michael Esposito - POLITICO Huawei, the embattled Chinese telecommunications giant, paid the lobbying firm Federal Advocates more than $1.6 million to lobby the administration between July 24 and Sept. 30, according to a disclosure filing. Michael Esposito, Federal Advocates’ president and a fundraiser for President Donald Trump’s reelection campaign and the Republican National Committee, lobbied the White House, the Commerce Department and the Bureau of Industry and Security on Huawei’s behalf, according to the filing.

Huawei admits that US sanctions are hurting | Financial Times Joy Tan, vice-president of public affairs at Huawei US, said: “After the entity list, we were able to figure out some of the alternative solutions. The most challenging part is Google-managed services. We can continue to use the Android platform, since it is open-source, but we cannot use the services that help apps run on it.”

Huawei in early talks with U.S. firms to license 5G platform - Huawei executive - Reuters Vincent Pang, senior vice president and board director at the company said some firms had expressed interest in both a long-term deal or a one-off transfer, declining to name or quantify the companies. “There are some companies talking to us, but it would take a long journey to really finalize everything,” Pang explained on a visit to Washington this week.

The Future of Huawei in Europe | Interesting ChinaFile Conversation

YCW Podcast – Danit Gal: Researcher on Ethics in AI | YCW This month, Sam speaks with researcher, consultant, and former Yenching Scholar Danit Gal about the relationship between national culture and AI governance in China. She describes her current work on characterizing the Chinese approach to AI ethics.

Quentin Tarantino Won't Recut 'Once Upon a Time in Hollywood' for China | Hollywood Reporter Tarantino, who is known to be opposed to any kind of tinkering with his films and has final-cut rights included in his contract, has no plans to bring the movie back to the editing bay, especially given that China has offered no explanation for what is objectionable in the film

High Schools to TikTok: We’re Catching Feelings - The New York Times The embrace of the app at this school is mirrored on scattered campuses across the United States, where students are forming TikTok clubs to dance, sing and perform skits for the app — essentially drama clubs for the digital age, but with the potential to reach huge audiences.

Energy, Environment, Science and Health

Xi sends congratulatory letter to 83rd IEC General Meeting - Xinhua Chinese President Xi Jinping sent a congratulatory letter to the 83rd general meeting of the International Electrotechnical Commission (IEC) as an opening ceremony was held Monday in Shanghai. Founded in 1906, The IEC is the world's leading organization for the preparation and publication of international standards for all electrical, electronic and related technologies.

Converting the Converters | ChinaFile Like anyone, LGBT individuals in China seek legitimate mental health services. And as elsewhere in the world, LGBT people in China experience much higher rates of anxiety, depression, and suicidality than their straight cisgender peers.

Rural and Agricultural Issues

Xi encourages sci-tech experts to further serve rural vitalization - Xinhua A meeting was held in Beijing Monday to mark the 20th anniversary of China introducing the system of sending sci-tech experts to rural areas. Important instructions made by Xi were read out at the meeting. Vice Premier Liu He, also a member of the Political Bureau of the CPC Central Committee, said at the meeting that the important instructions made by Xi are the basic guidelines to carry forward the system in the new era, noting that the system and policy environment should evolve around innovation-driven development, rural vitalization and poverty alleviation.