Entrepreneurship With CCP Characteristics; New 20 Year Plan For Beijing; Speculators Love Supply-side Structural Reform-Sinocism-09.27.17
Happy Wednesday…A bit under the weather here in DC, pardon any typos. If you are in Beijing have fun with the evening rush hour over the next few days. The city is warning that they will be epic…
The Essential Eight
1. Entrepreneurship With CCP Characteristics
Comment: This new guideline on encouraging entrepreneurial spirit and creating a favorable environment for entrepreneurship seems quite significant, though I am wary of getting too excited that this somehow will mark the start of a capitalist blossoming. The last two sections of the circular emphasize the importance of Party leadership over SOEs and Party construction and Party education in private enterprises. Remember, all reforms under Xi Jinping are in the service of strengthening Communist Party control to help it lead China to its Great Rejuvenation.
China Says Entrepreneurs Must Put Patriotism Over Profit - Bloomberg:
China said patriotism must be the highest priority in entrepreneurship, officially defining for the first time what the concept should mean for the world’s second-biggest economy.
Patriotism and professionalism are the first “core” components of entrepreneurship, followed by “innovation and the pursuit of greatness” and “social responsibility,” the Communist Party’s Central Committee and the State Council said in a joint statement late Monday. They called for stronger party leadership over entrepreneurs and guiding them to endorse party leaders.
Beijing tries to win over entrepreneurs with praise and promises | South China Morning Post:
The Communist Party on Monday said it will support and protect entrepreneurs in the first such directive to safeguard China’s private business owners since it took power in 1949.
China moves to encourage entrepreneurial spirit - Xinhua:
The guideline, the first of its kind focused on entrepreneurial spirit, was released by the Communist Party of China Central Committee and the State Council in a move to spur market vitality.
中共中央 国务院 关于营造企业家健康成长环境弘扬优秀企业家精神更好发挥企业家作用的意见
2. Beijing's New 20 Year Plan Another Step In Xi’s Vision Of Remolding Beijing
Comment: The new 20 year plan for Beijing reflects Xi’s desire to clean up Beijing, implement the integrated development of Beijing, Tianjin and Hebei (aka JingJinJi or the Three Js), and create a “sub-Capital” in Xiongan. It is another reminder that Beijing is special, Beijing is for Beijingers, and Xi’s vision may have some overlap with imperial capitals in dynasties past.
By 2020, the size of resident population in Beijing should be controlled to within 23 million and kept at this level thereafter, according to a city planning document for Beijing issued by China's central authorities.** **
Moreover, construction land in the city should be reduced to about 2,860 square km by 2020 and to 2,760 square km by 2035, the document said.
The Communist Party of China (CPC) Central Committee and the State Council has approved the general city plan for Beijing during the period between 2016 and 2035, submitted by the CPC Beijing Municipal Committee and Beijing municipal government.
3. Beijing Going Into Lockdown For The Party Congress
Comment: No surprise, especially since Xi helicoptered longtime ally Cai Qi into the Beijing Party Secretary job. If you are an expat in Beijing during this period do not screw around, the official sense of humor will be even less present than it is currently…
Speaking at a preparation meeting on Tuesday, Beijing’s party secretary Cai Qi called on local officials to ensure security and stability in the capital, where the party congress will open on October 18.
“We need to strengthen social controls, eliminating all kinds of unstable elements,” the official Beijing Daily quoted him as saying.
“We need to strengthen cyber security defence, firmly cracking down on various political rumours and harmful information.”
4. Preparations For Trump’s Beijing Visit
Comment: Commerce Secretary Wilbur Ross has finished his trip to Beijing to negotiate trade deals ahead of the November visit. Secretary of State Tillerson is going to Beijing September 28. North Korea will be at the top of Tillerson’s agenda. Normally the US would send the National Security Advisor to Beijing ahead of a presidential visit. Will McMaster go between now and the visit?
September 28 – October 1 to meet with senior Chinese leaders. Secretary Tillerson will discuss a range of issues, including the President’s planned travel to the region, the denuclearization of the Korean Peninsula, and trade and investment. Secretary Tillerson’s visit to China reaffirms the Administration’s commitment to further broaden and enhance U.S. economic and security interests in the Asia-Pacific region
“We can understand that they would desire self-sufficiency and if the way they get there is through a free and open level playing field, and it’s a fair match, we’re fine with that,” Mr. Ross said on Wednesday. But, he added, the Trump administration would object to American companies’ being forced to transfer technological know-how in exchange for market access...
He also struck a cautious note in ending his meeting with reporters on Wednesday. “I don’t want to give the impression that we made any concessions on the trip,” he said. “We did not, nor did the Chinese side.”
Ross met Chinese Premier Li Keqiang, Vice Premier Wang Yang and Liu He, a key financial and economic adviser to President Xi Jinping, during his visit.
5. US Imposes More Sanctions On North Korea As China’s “Freeze-For-Freeze” Proposal Is Going Nowhere
Comment: As The US ratchets up the pressure is there an offramp for North Korea? Does Kim even want one, before he has demonstrated he has the nuclear-tipped ICBMs that can hot major US cities?
Watch For: Another nuclear test or missile launch around China’s October 1 National Day. Kim seems to like using important PRC occasions to tell Xi he is unhappy with Beijing’s lack of support….
But others familiar with the talks said the North Koreans completely ruled out the “freeze-for-freeze” idea being promoted by China and Russia, in which Pyongyang would freeze its nuclear and missile activities if the United States stopped conducting military exercises in South Korea. The United States, Japan and South Korea also outright reject the idea.
“We are targeting North Korean banks and financial facilitators acting as representatives for North Korean banks across the globe,” said Treasury Secretary Steven T. Mnuchin. “This further advances our strategy to fully isolate North Korea in order to achieve our broader objectives of a peaceful and denuclearized Korean peninsula. This action is also consistent with UN Security Council Resolutions.”
China’s Food Exports to North Korea Surge - WSJ United Nations sanctions on North Korea have expanded significantly in recent weeks and now include banning Pyongyang from exporting iron, lead and seafood. However, there are no restrictions on food imports to the country.
The latest coal shipments preceded a Sept. 5 deadline for U.N. members to implement the August sanctions. Beijing said on Aug. 14 it would comply with those sanctions while continuing to process imports of banned goods until the deadline if those shipments had already reached Chinese territory.
In discussions between the U.S. and China about reining in North Korea, one topic remains taboo: What would happen if Kim Jong Un’s regime collapses?
Gen. Dunford: China to be US' 'greatest threat' by 2025 - CNN "I think China probably poses the greatest threat to our nation by about 2025," Dunford told the Senate Armed Services Committee during a hearing on his re-appointment as Chairman of the Joint Chiefs of Staff.
6. Speculators Seem To Love Supply-side Structural Reform
Comment: You have to feel a bit for Beijing. Speculators always seem a step ahead, and short of banning buying and selling the government always seems to be engaging in a mostly futile game of whack-a-mole. What sector/commodity/fad is next?
“The current market boom is not being caused by (changes in) the relationship between supply and demand,” Wang Qiang, an industry insider close to policymakers, told Caixin. “It’s being caused by speculation funded by borrowed money.”
The trigger for the rally appears to have been media reports in early August that China Hongqiao Group, the world’s biggest aluminum producer, had shuttered five unauthorized plants with combined capacity of 2.68 million tons on the orders of the Shandong provincial government...
“This year has been different — we have had to follow the (government’s) orders to shut down (unauthorized plants),” an executive with Xinfa Group told Caixin. “There is no room for bargaining and we must carry out the instructions 100%. Both the municipal and the provincial governments have imposed tough requirements.”
Over 1,000 mining rights will be eliminated under China’s campaign against pollution, Lei Pingxi, chief engineer at the Metallurgical Mines’ Association of China, told an industry conference.
“Some small miners who didn’t pay attention to environmental issues simply closed down temporarily to cope with inspections,” said Lei.
At a meeting on Tuesday, Handan city authorities told local steel mills to cut blast furnace production by 50 per cent from October 1 until March, industry consultancy Mysteel reported without citing sources.
Companies in the downstream sector fabricating steel will also face restrictions, the report said, although no details were given.
7. Xi Likes Socialist Art And Literature, Wants More Of It To Help Espouse Core Socialist Values
Comment: The Communist Party has spent most of Xi’s first term trying to clean and purify the Party ranks, an intense effort whose longevity and efficacy have far exceeded the expectations of most observers. How seriously should we take the Party’s efforts to purify society with Core Socialist Values?
Xi, also general secretary of the Communist Party of China (CPC) Central Committee, made the remarks in an instruction on cultural and ideological progress.
Those working in literary and art fields should record the work of the people and spread the power of positivity in their works, Xi said.
The works should also promote the Chinese spirits, strengthen the people's faith, and provide strong spiritual power for reaching China's two centenary goals and realizing the Chinese dream of national rejuvenation, according to Xi.
Wednesday CCTV Evening News on XI's instructions, made to a commendation symposium on cultural and ideological progress.-习近平就精神文明建设“五个一工程”作出重要指示强调 坚持以人民为中心创作导向 坚定人民信心振奋人民精神
8. Taiwan’s New Premier Says Taiwan Is An Independent Country
Comment: How will Beijing punish Taiwan this time? And has Trump, in pursuit of deals with Xi, truly given up playing the Taiwan card?
He is the first Taiwanese premier to openly acknowledge his pro-independence status.
Speaking in parliament on Tuesday, newly appointed Taiwan Premier William Lai said he was a “political worker who advocates Taiwan independence”, but that it already was an independent country called the Republic of China and so had no need to declare independence.
Ma Xiaoguang, the spokesperson for the State Council's Taiwan Affairs Office, made the remarks in response to comments by the island's executive head Lai Ching-te, who said that Taiwan is "an independent sovereign country."
"People who split China will suffer by their own hand," said Ma.
Business, Economy And Trade
U.S. asks China not to enforce cyber security law-Reuters The United States has asked China not to implement its new cyber security law over concerns it could damage global trade in services, a U.S. document published by the World Trade Organisation showed on Tuesday.
Beijing cuts red tape for foreign firms as it vies for investors | South China Morning Post The Ministry of Commerce on Tuesday said it had done away with a regulation from 1995 that required foreign companies to set up a representative office before they could operate in China, a process that involved months of complicated paperwork and formalities. At a symposium the same day, Vice-Premier Wang Yang warned of new challenges ahead to make better use of foreign direct investment as the economy entered a “new normal” period, with its traditional low-cost advantage disappearing and slower domestic growth.
As China’s Economy Slows, ‘Business Cults’ Prey on Young Job Seekers - The New York Times Some look like high-tech firms, promising young college graduates a fast track to riches. Others pose as charitable groups on a membership drive, or companies building a sales network for a new product. Tens of millions across China are signing up — and learning that all is not as advertised. Behind these groups is a looming challenge for the ruling Communist Party: A proliferation of pyramid schemes that have attracted enormous followings and huge sums of money, exploiting — and exacerbating — widespread anxiety over a slowing economy.
After spate of suicides, China targets predatory student lending - Reuters A second-year university student, he had racked up debt of nearly 590,000 yuan ($85,700) after taking personal loans from a dozen online finance companies to pay for his gambling habit. Such tales of indebted students being driven to suicide have become commonplace in Chinese media and social networks in recent years, sparking public outrage.
Chinese bitcoin exchange BTCChina stops accepting deposits - Reuters The company said in a statement on its website that the halt on deposits would take effect at 0400 GMT. It also repeated that it would shut down its exchange businesses on Sept. 30, an announcement that it first made two weeks ago, and will also halt yuan and digital asset withdrawals at 0400 GMT on Oct. 31.
Chinese toilet seats take the Western market by storm - People's Daily Online Creative made-in-China toilet seats have been a chic in the European market, with annual sales of over two million sets. Those exported to Germany and Switzerland account for 80 percent of the total export volume.
Early China Data Hint at Slowing Momentum Amid Factory Clampdown - Bloomberg A gauge of activity at small companies edged down and an index of sales-manager sentiment weakened. The outlook was brighter elsewhere as a private steel-industry gauge jumped to a 12-month high amid price gains spurred by government curbs on output, and satellite images of manufacturing facilities showed activity was the strongest in six months. International investor confidence in the Chinese outlook improved in September.
Moutai Tells Subsidiaries: Everything in Moderation - Caixin Global In an attempt to limit the “abuse” of its renowned brand by subsidiaries, China’s top liquor maker is slimming down its total number of brands, to 59 from 214. The company hopes that this reduction will prevent its franchisees and subsidiaries from passing off substandard quality liquor under its brand name, and from overusing the Moutai label in promotional activities.
Faraday Future Returns Incentive Money to Nevada for Scrapped Las Vegas Plant - Caixin Global Faraday Future has written the state of Nevada a check for $16,200, as well as forfeited about $620,000 in tax incentives, the Nevada governor’s Office of Economic Development told Caixin. Staff at the governor’s office said the Faraday plant was no longer a “qualified project” and thus no longer eligible for the tax and land incentive package it received from Nevada. Faraday still owns the land it purchased for the plant.
After Fall of Chief Regulator, What’s Next for Chinese Insurers? - Caixin Global Now that Xiang is gone and the regulator has tightened its grip on the industry, some industry watchers believe the clean-up is far from over. “Was Xiang Junbo the only one who was bought off at the CIRC?” one of them asked.
China Industrial Profits Jump 24% in Biggest Gain Since 2013 - Bloomberg Industrial profits increased 24 percent in August from a year earlier, the most in four years, compared with the 16.5 percent pace a month earlier, the statistics bureau said Wednesday. Profits in the first eight months of the year climbed 21.6 percent from a year earlier, with statistics officials attributing the jump to faster producer-price inflation and lower costs.
China Is Mastering the Economic 'Difficult Dive': Bridgewater - Bloomberg China so far has deftly navigated the challenge of maintaining economic growth while cleaning up its financial sector, according to Bob Prince, co-chief investment officer of the world’s largest hedge fund firm Bridgewater Associates.
Chinese bid for mapping company falls at US hurdle - FT $$ The Committee on Foreign Investment in the US weighed in on the deal, which received the green light from German regulators in January, due to Here’s assets in Chicago. Cfius made NavInfo and its fellow investors go through multiple hoops, but did not ultimately approve the deal.
Politics And Law
[视频]王岐山会见柬埔寨副首相_CCTV节目官网-CCTV-1_央视网(cctv.com) Tuesday CCTV Evening News on Wang Qishan meeting Cambodia vice prime minister. Wang taking a lot of meetings...
CPC discipline chief meets Cambodian deputy PM - Xinhua Men Sam An, also member of the Standing Committee of Cambodian People's Party, appreciated the achievements China has made in the socialist cause and in party building. She expects to cement cooperation with China in discipline inspection and supervision, and develop Cambodia-China friendship.
孙政才被点名：政治问题和经济问题交织的腐败分子 第十展区“全面从严治党 确保党始终成为伟大事业的坚强领导核心”的一则图说提及，中央严肃查处周永康、薄熙来、郭伯雄、徐才厚、孙政才、令计划严重违纪案件，惩治政治问题和经济问题交织的腐败分子，消除重大政治隐患。
Foreign And Defense Affairs
U.S.-China Social and Cultural Dialogue Secretary of State Rex Tillerson has invited Secretary of Transportation Elaine Chao and Secretary of Education Betsy DeVos to join Chinese Vice Premier Liu Yandong, along with members of the U.S. and Chinese delegations, to participate in the SCD. The SCD’s public diplomacy event, which highlights people-to-people youth exchanges between the United States and China, will be held at The George Washington University.
China powers up new radar tech to unmask stealth fighters | South China Morning Post China North Industries Group Corporation tested a device capable of generating terahertz radiation with unprecedented power at a military research facility in Chengdu, Sichuan province, last week, Science and Technology Daily reported on Monday.
海军高层再调整 “政事儿News”(微信ID：zsenews)注意到，这是刘训言首次以海军副政委身份在公开报道中亮相。 // Comment: Liu Xunyan is the new vice-commissar of the PLAN
Tech And Media
China Says WhatsApp Should Stop Spread of ‘Illegal Information’ - Bloomberg WhatsApp should take proactive measures to intercept information to do with violence and terror, the Cyberspace Administration of China said in a statement in response to questions from Bloomberg News. China has the authority to tell institutions to take these measures, said the agency, without specifying details of content it considered illegal.
China's Weibo Looks to Reward Citizen Censors With iPhones, Tablets - The New York Times The platform posted a statement on Wednesday saying it was looking for an initial 1,000 "Weibo supervisors" as part of a programme overseen by the Beijing arm of the Cyberspace Administration of China (CAC), the country's top Internet watchdog.
Xiaomi Grabbed the Long Tail in Quest for Revival — The Information $$ “High profits and high fundraising drove a lot of aggressive competition. Once they rushed in, the economics got destroyed,” said Xiaomi CFO Shou Zi Chew at a discussion hosted by The Information in Beijing. That competition ended what had been explosive growth for Xiaomi, which in late 2014 helped it raise more than $1 billion from investors at a valuation of about $46 billion. That made Xiaomi the world’s most valuable startup at the time.
What is Shadowsocks? The underground VPN alternative that China’s developers use to jump the Great Firewall — Quartz In response to these difficulties, China’s tech-savvy programmers have been relying on another, lesser-known tool to access the open internet. It’s called Shadowsocks, and it’s an open-source proxy built for the specific purpose of jumping China’s Great Firewall. While the government has made efforts to curb its spread, it’s likely to remain difficult to suppress. // Comment: I was using it my last year in Beijing in 2015, via a Streisand server I hosted in the US, seemed to be blocked regularly
Struggling Startup Wants to Reassign Staff to Remote Xinjiang - Sixth Tone Once investor darling, battery rental company Hidian is running out of funds, employees say.
Bigger Still Better for Tech, Telecom, Media Companies - Caixin Global A total of 1,582 private equity and venture capital investment deals in TMT took place during the first six months of this year, 104 more than in the second half of 2016. The total was the highest since 2014, according to the PwC report, which was released on Tuesday. The investments totaled $30.75 billion, up 22.9% over the preceding half year.
Alipay Banks on Hong Kong Billionaire to Open Local Wallets - Caixin Global The joint venture, which will take over from Alipay’s existing Hong Kong presence, is expected to be set up by the end of 2017 and continue to use the “AlipayHK” brand, according to a joint statement. The deal still requires approval from the Ministry of Commerce.
Flexible-Display Maker Pockets $560 Million in New Funds From Big Banks - Caixin Global Most displays in laptop computers and other mobile devices currently use rigid liquid crystal display (LCD) and organic light-emitting diode (OLED) technology. By comparison, next-generation flexible displays being developed Royole and others can be bent, folded and rolled up, allowing for greater portability of larger devices like notebook and tablet computers.
China's Meituan Dianping Said To Raise $3 Billion From Tencent, IDG Capital – China Money Network The new round, which came 20 months after the company last raised a US$3.3 billion round at a post-money valuation of US$18 billion led by Tencent, DST Global and TBP Capital in January 2016, will see the Shanghai-based company be worth as much as US$30 billion. It would make the Chinese technology firm among the world’s highest valued start-ups and the fourth largest unicorn in China.
'Racist' and 'offensive' videogame 'Dirty Chinese Restaurant' harmful, should be banned: US congresswoman - People's Daily Online New York City Congresswoman Grace Meng took to Twitter on Monday to urge Google, Apple, Android, and any other platform to ban an upcoming racist and offensive videogame called "Dirty Chinese Restaurant."
Baidu’s Agents Hard-Sell In-Feed Ads by Tying Them With Search Ads | Yicai Global In-feed ads are those that appear on news clients or social media interfaces. Whenever a user starts a mobile app, the system inserts a precisely targeted ad after every few messages.
Society, Art, Sports, Culture And History
Beijing-Based Photographer Luo Yang Shoots to Smash Stereotypes of Chinese Girls | the Beijinger The first work that I saw by Luo Yang (pictured above) was a portion of her near decade-long and ongoing GIRLS series exhibited in Beijing as part of the Elimination of Violence Against Women Art Exhibition. In it, she documented Zhou Yan, the victim of an acid attack perpetrated by her former boyfriend....Below we speak to Yang about what inspires her photography as well as an in-depth look at some of the women she has met during her travels.
Dalian Wanda: Inside China's Endurance Sports Empire | Fortune.com Chinese conglomerate Dalian Wanda has gone on a shopping spree for sports-management businesses; it’s now the world’s largest organizer of long-distance races and has a big footprint in soccer as well
Report: With New Norms, Chinese Communists Seek ‘Total Religious Control’ As Breitbart News informed earlier this month, one report on China’s new regulations claimed that the norms are consciously intended to “annihilate underground communities” and “suffocate official communities,” rather than merely organize them.
Chinese rapper grows into mature civil servant - People's Daily Online Hao became a father in 2014. Last year, he planned to buy a house in a good school district, for which he had to sell his current estate and apply for another two million yuan (over $300,000) mortgage. The huge gap between his salary and the high monthly payment once again made him surrender to the real world. Gradually, he learned to keep his sorrows inside, and he does not even mention them to his wife. However, he is still a happy and outgoing man at the workplace who brings laughter to his colleagues. He has been a civil servant for 10 years, a fact that astonishes all of his friends. They cannot imagine that a once desiring rapper has now settled down for such a long time. “I was full of hope when I was young, feeling that I could change the world by rapping,” Hao said. But he later realized the complication of the world. Every change is made over time, not overnight, he said. // Comment: “Resistance is futile” seems to be the message?
Energy, Environment, Science And Health
Virginia Tech professor arrested, charged with defrauding government | Virginia Tech | roanoke.com Zhang, along with Tech graduate Zhiguang Zhu and postdoctoral researcher Chun You, are alleged to have defrauded the university, the National Science Foundation and the U.S. Department of Energy by withholding grant funds between January 2014 and May 2016, according to the complaint. Zhu and You currently work for the Tianjin Institute of Industrial Biotechnology in China, according to court documentation and their LinkedIn profiles.
On China’s Coast, Rare Bird Finds Little Room to Rest - Sixth Tone It was the kind of news experts only believe if they see it with their own eyes: A man in China claimed he had spotted 100 spoon-billed sandpipers foraging on the muddy coast of the Yellow Sea. The bird is so small that it would barely cover the hand of a grown woman. It is also so rare that a group of such a size would constitute a fifth of the worldwide population.
Chinese Academy of Sciences, Shanghai Government Officially Unveil Zhangjiang National Laboratory | Yicai Global The lab is located in the heart of Zhangjiang Science City in Shanghai. In its early days, it was used to conduct based research in photonic science, life sciences and information technology, as well as interdisciplinary research within these fields. It hopes to become a comprehensive research base with international influence in the future.
China to complete national technology transfer system by 2025 - Xinhua | Improving the system is key to domestic innovation, economic and social development, and to supporting China's efforts to become a leading power in science and technology.
Agriculture And Rural Issues
China’s Reforms Allowing Villagers to Rent Out Land Have Boosted Incomes - Bloomberg In November of last year, policymakers in Beijing approved a rollout of the land reform tested in Sihong to the rest of the country. The changes are part of a drive to boost China’s agricultural output and turn its farmers into consumers, objectives that dovetail with the larger goal of curbing the economy’s dependence on debt-fueled investment to support growth. “China’s unlocking the underlying wealth in these land assets,” says Liang Hong, chief economist at China International Capital Corp. in Beijing, who previously worked for the International Monetary Fund. “We’re looking at 300 to 400 million people with more purchasing power, and that’s the size of the European Union.”
Food And Travel
How China's Private Chateau Cuisine Landed in San Francisco - Eater If it succeeds, Eight Tables will be the first restaurant in America to usher in this new genre of Chinese fine dining on such a broad scale; it will be the first private-kitchen concept to make it mainstream. Chen has his sights aimed high. “We want the Michelin stars,” he says.
Beijing Rush Hour to Last 5 Hours in Days Leading up to National Holiday | the Beijinger Beginning on Wednesday, the city's roads will become more congested and result in an evening rush hour that is expected to begin at 2pm and last until 7pm. The evening rush hour will peak on Saturday (a non-workday) without any vehicle licensing restrictions to limit the number of cars on city streets. In addition, Saturday morning will see streets closed down around Tian'anmen Square for the Martyr Memorial March.