Thanks for your patience last week. The PRC is on holiday today and tomorrow for the Mid-Autumn Festival. The newsletter will be off tomorrow unless there is something interesting going on. Evergrande executives and its regulators are unlikely to be enjoying this holiday.
Evergrande the grande grey rhino stampeded over global markets. It is interesting how a mess people paying attention knew was coming for weeks if not longer suddenly explodes across markets.
I do not think it is China’s “Lehman moment”, but it is ugly and going to get uglier. There will be workouts (just don’t call it a bailout) but the lack of guidance from regulators seems to be spooking investors. As this newsletter has discussed several times, I would not be confident that the regulators have a full understanding of all the Evergrande liabilities and interconnections with other firms. Xu Jiayin has been masterful, at least until now, at obfuscating the full extent of Evergrande’s debts.
Xi set out three tough battles for the government- poverty, pollution and financial risks. Significant progress has been made on the first two, but the battle against financial risks has lagged. Perhaps Evergrande will mark a turning point in that battle, or perhaps the problems run so deep that they will have to back off from the most stringent efforts to rein in real estate, as they have had to do after previous attempts to lance the festering economic and political boil that is PRC real estate.
The “advantage” of the PRC system in dealing with messes such as Evergrande is that regulators have significant powers to “persuade” other companies to help out, and a robust stability maintenance system to ensure that creditors, employees and apartment buyers will accept the best haircut on offer and not cause too much of a fuss. Yes there have been small protests, but if things play out as they have in other similar cases, protests will be allowed for a bit, as people need to vent, then organizers will be warned if not arrested, then the rest of the unhappy people will take what they are offered and “like it”, with no recourse. Equity owners and foreign creditors don’t really fit into that equation, they will likely get nothing.
So we have a big mess with a lot of people losing money but not one that is going to cause a systemic financial crisis inside the PRC. But as many analysts have been saying over the last few days, we should expect a bigger than expected slowdown in GDP growth. It is going to be an interesting year between now and the 20th Party Congress.
Today’s Essential Eight items:
Mixed signals on regulatory crackdown
US government discord over tech sanctions
More talks of a deal for Meng Wanzhou
Xi’s space comments in Shaanxi
Taxing the rich celebrities
Thanks for reading.
The Essential Eight
“Even though most people don’t expect Evergrande to collapse all of a sudden, the silence and a lack of major actions from policy makers is making everyone panic,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc in Hong Kong. “I expect China to at least offer some verbal support soon to stabilize sentiment.”..
Chinese authorities, who recently hired advisers to look into Evergrande, have provided no public assurances that there’s a state-led plan to resolve the crisis. Official media commentary has largely avoided the subject, apart from a tabloid that said Evergrande was an “isolated case” and called out Western outlets for bashing the Chinese economy.
Comment: This silence looks like they are still working through the magnitude of the problem and so are not willing to make any significant statements until they have a fuller grasp of the extent of the mess and a plan to resolve it. Not comforting if that guess is correct
One crowdfunding product issued to executives was called “Chaoshoubao,” which means “super return treasure.” In 2017, Evergrande tried to obtain project financing from state-owned China Citic Bank in Shenzhen, which required personal investment from Evergrande’s executives. The company then issued Chaoshoubao to employees, promising 25% annual interest and redemption of principal and interest within two years. The minimum investment was 3 million yuan. China Citic Bank eventually agreed to provide 40 billion yuan of acquisition funds to Evergrande.
In 2020, Chen Xuying, former vice president of China Citic Bank and head of the bank’s Shenzhen branch from 2012 to 2018, was sentenced to 12 years in prison for accepting bribes after issuing loans...
When the Chaoshoubao was due for redemption in 2019, the company asked employees who bought the product to agree to a one-year extension for repayment. Then in 2020, the company asked for another one-year extension. One investor said buyers received an annualized return of 4% to 5% in the last four years, far below the 25% promised return.
When Evergrande’s cash flow crisis was exposed, the company chose to repay principal only to current executives. From late August to early September, the company repaid current executives and employees about 2 billion yuan but still owed 200 million yuan to former employees, including Ren Zeping, former chief economist of Evergrande who joined Soochow Securities Co. in March.
Caixin English goes w Lehman comparison, though chinese hed doesn't "恒大何以至此"
At the headquarters, police herded protesters toward a cafeteria on the fifth floor of a nearby building. There, Evergrande staff sat scattered at orange plastic tables labeled with the name of each province. Suppliers were encouraged to register their complaints with the staff, then promised that they could receive Evergrande properties — unsold apartments, commercial storefronts or parking spaces — at a discount to offset what the company owed them.
Chen Xiaowang, the owner of a lighting company and electronics company in Wenzhou, sat at the Shaanxi province table. Evergrande’s Xi’an branch owed him more than $200,000, he said. He’d already had to lay off half his workers. The other day the staff here told him he could get parking spots in Xi’an, but when he called the office there, workers there told him they had not received instructions on that from their superiors.
A few hours later, he’d received a call from the local police in Wenzhou, he said, showing The Times the call records. They told him to go home and stop “making trouble” in Shenzhen.
Comment: A classic example of how the stability maintenance system is used to help workout these financial messes.
A People's Bank of China sensitivity test released earlier this month indicated that if the bad loan ratio for property-development loans were to rise by 15 percentage points, and that for mortgages by 10 points, the average capital adequacy ratio of the 4,015 banks assessed would only drop from 14.4% to 12.3% -- still above the regulatory minimum of 10.5% to 11.5%.
" the police informed that the "Notice on the Periodic Compensation of Evergrande Financial Services", which was previously posted online, was also false information, and the police had already arrested five people suspected of committing fraud through it."
2. Mixed signals on regulatory crackdown
Didi Global Inc (DIDI.N) co-founder and President Jean Liu has told some close associates that she intends to step down, two sources familiar with the matter said, as the Chinese ride-hailing giant faces intense regulatory scrutiny following its New York listing earlier this year.
Liu, 43, has in recent weeks told some associates that she expected the government to eventually take control of Didi and appoint new management, said the two sources.
China Securities Regulatory Commission Vice Chairman Fang Xinghai said recent actions were to strengthen regulations for companies with consumer-facing platforms, and improve data privacy and national security, according to a person familiar with the talks, who asked to not be identified because the meeting was private. Fang defended the moves such as those aimed at the education and gaming industries as meant to reduce social anxiety.
One of the participants said last week's comments by Fang, who is also the president of the CUFR, were well-received by his Wall Street audience.
"They listened very intently to what Fang had to say and most of us were very satisfied," said the person, referring to the Wall Street executives.
Mr. Xi is fully in charge of the campaign, instead of delegating details to Vice Premier Liu He, his chief economic adviser, as in the past. A central party office reporting directly to Mr. Xi has been sending out directives instructing ministries to take actions and coordinate policies...
Mr. Liu, who faces retirement next year, had to offer a Mao-style self-criticism for not having stopped Didi from launching a $4.4 billion New York initial public offering in late June, according to people with knowledge of the matter.
Wang Yang attends commemoration event for 100th anniversary of the birth of patriotic entrepreneur turned politician Sun Fuling. United Front Work Department Head You Quan gave a speech
Sun was deeply influenced by his paternal uncle, the famous entrepreneur Sun Yueqi [zh], who believed in saving China through industry. In December 1948, during the Chinese Civil War, he was appointed general manager of Fuxing Flour Mill (福兴面粉厂), then one of the largest Chinese-owned factories in Beijing, just before the city was taken by the Communist Party's People's Liberation Army. He made major donations to the People's Volunteer Army during the Korean War, and cooperated with the new Communist government in its campaign to nationalize China's private businesses. When 11 private-owned flour mills were partially nationalized and reorganized into the Beijing General Flour Mill, Sun was appointed its first director and general manager.
From 1958 to 1983, Sun served as director of the Beijing Municipal Bureau of Service Management, deputy director of the Municipal Foreign Trade Bureau, chairman of the Beijing Federation of Industry and Commerce, deputy chairman of Minjian Beijing Committee, and deputy chairman of the Beijing CPPCC.
From 1983 to 1993, he served as deputy mayor of Beijing, and vice chairman and executive vice chairman of All China Federation of Industry and Commerce. In March 1993, he was elected Vice Chairman of the Eighth National Committee of the Chinese People's Political Consultative Conference (CPPCC). In March 1998, he was re-elected as the vice chairman of the Ninth CPPCC National Committee, serving until 2003. He was also a member of the 2nd to 5th CPPCC National Committee and the 6th and 7th CPPCC Standing Committee.
3. Hong Kong
The results of the elections were unveiled on Monday morning as 364 of 412 candidates were elected as members in 13 subsectors of the Election Committee.
Out of the 1,500 seats of the Election Committee, 325 people were determined to be validly registered as ex-officio members, 156 people were validly nominated to be members of the Election Committee and 603 candidates were uncontested, while 412 candidates competed for 364 seats.
The actual number of members of the Election Committee will be fewer than 1,500 due to the LegCo election yet to be held and the overlapping status of some ex-officio members.
The first key election after the enforcement of the Law on Safeguarding National Security in the HKSAR in 2020, and improvements to the HKSAR's electoral system earlier this year, Sunday's elections are of great importance and have far-reaching impacts, a spokesperson with the Hong Kong and Macao Affairs Office of the State Council said in a statement.
Calling the election a vivid example of fully implementing the principle of "patriots administering Hong Kong," the spokesperson said it opens new prospects and brings new hope for Hong Kong to resume stability and advance prosperity.
Chinese Vice Premier Han Zheng on Saturday called on Hong Kong to ensure the upcoming three major elections are organized well and to uphold the principle of "patriots governing Hong Kong" while meeting with Hong Kong SAR Chief Executive in Shenzhen.
The Hong Kong Election Committee subsector election, which will kick off on Sunday and is the first to be held since electoral reform was implemented, will see how the city's political air is purified and political life turns to focus on development discussions orderly rather than political warfare and even terror, which manifests the principle of "patriots governing Hong Kong."
Vice Premier Han Zheng met with Lam in Shenzhen in South China's Guangdong Province on Saturday
Tax authorities at the grass-roots level will also face stricter supervision. For instance, tax officers who take advantage of their power to practice favoritism and commit fraud will be seriously punished according to the law.
Tax authorities at all levels are banned from pulling their punches by illegally setting up tax incentives or applying tax incentives in flexible ways. A relevant overhaul will be conducted to prevent the abuse of tax incentives and at the same time ensure that relevant firms and individuals can fully enjoy legal tax incentives.
National security police on Monday arrested three people linked to the localist group Student Politicism on suspicion of conspiracy to incite subversion, with officers seizing boxes of M&M's, hand cream and other products as evidence.
"We tried our best, but we just can't see any more room for us to stand anymore," Joe Wong Nai-yuen, chairman of the Hong Kong Confederation of Trade Unions, told reporters on Sunday.
Wong said that the union and those involved with it had received threatening messages which made them feel their personal security was at risk, but he declined to give details.
Vice Chairman Leo Tang King-wah, though, rejected suggestions from pro-Beijing media that the group had acted as a "foreign agent" or "colluded with foreign forces," actions that could constitute crimes under the security law.
As Beijing seeks to tighten its grip over Hong Kong, it has a new mandate for the city's powerful property tycoons: pour resources and influence into backing Beijing's interests, and help solve a potentially destabilising housing shortage.
Chinese officials delivered the message in closed meetings this year amid broader efforts to bring the city to heel under a sweeping national security law and make it more "patriotic," according to three major developers and a Hong Kong government adviser familiar with the talks.
"The rules of the game have changed," they were told, according to a source close to mainland officials, who declined to be named because of the sensitivity of the matter.
Question: Will those tycoons and their family members who have foreign passports be considered "patriotic"?
Breaking silence, a Hong Kong judge calls the city’s first national security case “unfair” in an exclusive interview with VICE World News
Comment: PRC reaction has been fairly muted so far as it came right before the holiday, expect the condemnations to ramp up later this week. And expect there to be some sort of more aggressive outreach from the PRC to France and Macron specifically; PRC policymakers must be overjoyed by the rift between the US and France over this.
Through AUKUS, our governments will strengthen the ability of each to support our security and defense interests, building on our longstanding and ongoing bilateral ties. We will promote deeper information and technology sharing. We will foster deeper integration of security and defense-related science, technology, industrial bases, and supply chains. And in particular, we will significantly deepen cooperation on a range of security and defense capabilities....
Recognizing our deep defense ties, built over decades, today we also embark on further trilateral collaboration under AUKUS to enhance our joint capabilities and interoperability. These initial efforts will focus on cyber capabilities, artificial intelligence, quantum technologies, and additional undersea capabilities.
The Biden administration launched a force posture review in February to determine what changes are needed to the US military’s presence, resources and strategies around the globe. Experts believe the initiatives agreed under Aukus may be the first results of that process.
“This may be the start of the rollout of the implications of that review. I suspect that is likely to be the context,” said Euan Graham, a senior fellow for Asia-Pacific security at the Institute for International Strategic Studies, a think-tank in Singapore...
“Australia is not just a political ally, it is in a convenient location, outside the envelope of all but China’s longest-range missiles,” Graham said.
“The US could potentially base strike assets there and do what it did in the early 1940s,” he added, in a reference to the US and Australia fighting Japan together during the second world war.
there is what this says about American diplomacy. The French were bound to be upset, but the handling of them was graceless. That comes on top of the Biden administration’s poor handling of the withdrawal from Afghanistan. One example of foreign-policy incompetence looks unfortunate; two in quick succession look like a pattern. That is not a good omen for the management of the relationship with China, which involves elements of military competition, economic laissez-faire and collaboration over, say, climate change and arms control.
The US cold war gambit is a trap that will deprive its allies that are naïve enough to fall for the illusion of receiving economic dividends from the US, while also hoping to retrain the benefit that come from China's development when it comes to economic and trade cooperation. There is no way for China to develop economic ties with a country that treats it as an enemy. There is no path to future prosperity for an Australia which chooses to isolate itself from the region's largest economy.
Victor Gao says in an interview that Australia may now be a target for nuclear weapons by "other countries"... not sure that threatening Australia with nuclear strikes is a winning approach to convincing Australia that AUKUS and the nuclear-powered, not nuclear-armed, subs are a bad idea - Victor Gao on Australia’s nuclear submarines deal - ABC News
“I want to emphasize that China is a staunch advocate for trade liberalization and facilitation, and an important participant in cooperation and economic integration in the Asia-Pacific,” Chinese Foreign Affairs Ministry Spokesperson Zhao Lijian said at a Friday press conference, saying the move had “no connection with” the AUKUS pact.
“You just tried to build a connection between the two issues,” Zhao said in response to questions. “People can tell that what China works for is economic cooperation and regional integration. What the U.S. and Australia push for is wars and destruction,” he said.
"As the role of the state becomes all the more prevalent in the Chinese economy, Beijing seems to moving even further away from the market-based, high-standard CPTPP rules," former Acting Deputy U.S. Trade Representative Wendy Cutler told Nikkei...
"The onus is on the candidate to demonstrate its readiness to adhere to the existing high-standard CPTPP rules, as well as to be prepared to make comprehensive market access commitments," Cutler said. "China's application to join the CPTPP is one more data point on why Washington needs to step up its economic engagement in the Indo-Pacific, including on trade."
Take rules on state-owned enterprises for example. China's use of SOEs in pursuit of industrial policies and strategic goals has been a long-standing and fundamental concern of the international community. Such concern has intensified under China's current round of SOE reforms commenced in 2013, which have led to a remarkable resurrection of state capitalism.
When it joined the WTO in 2001, China already agreed to a range of obligations that extend far beyond the standard WTO rules. These WTO-plus obligations include broad and rigorous rules to discipline the market-distortive behaviors and conduct of SOEs and, more generally, government intervention in commercial activities.
While the CPTPP has advanced the general WTO rules in some significant ways, it is likely to remain less rigorous than the WTO-plus obligations tailored to China.
Notably, extensive CPTPP exceptions for SOE rules are already available to some existing members, including Mexico and Vietnam, who maintain a significant state sector. Such exceptions are not available to China under the WTO
Leaders from the U.S., Japan, India and Australia will agree to work toward creating a safe supply chain for semiconductors when they meet for the Quad summit in Washington next week, a signal that the four-way alliance meant to counter China in the Indo-Pacific is broadening its scope.
The four nations are expected to confirm that "resilient, diverse and secure technology supply chains for hardware, software, and services" are vital to their shared national interests, according to the draft of a joint statement obtained by Nikkei...
The draft of the joint statement does not specifically mention China, a nod to India's intention to keep its nonaligned status and avoid moving forward on cooperation with specific countries.
5. US government discord over tech sanctions
Last week, career personnel at four agencies responsible for making such decisions split on whether to put the smartphone-maker, Honor, on the Commerce Department’s entity list, which bars exports of U.S. technology to the sanctioned firm without a department license.
They couldn’t agree on whether a business that Huawei sold last year posed a significant threat to U.S. national security.
Staff members at the Pentagon and Energy Department supported placing the company on the blacklist, while their counterparts at the Commerce Department and State Department opposed it, according to several people familiar with the matter, who spoke on the condition of anonymity to discuss the confidential process...
The debate comes as a Senate committee plans on Tuesday to take up the nomination of a former Pentagon official, Alan Estevez, to head the Commerce Department’s Bureau of Industry and Security — the agency that administers the entity list...
Soon after Huawei sold Honor, several U.S. companies began striking deals to sell chips to the new company. Qualcomm, based in California, is selling Honor a high-tech chip that the Chinese company is using in its newly launched 5G smartphones. Qualcomm overall is supplying technology for three new Honor phones, Qualcomm’s chief executive said during a July conference call with investors.
Comment: I am also hearing that Treasury declined to add several PRC surveillance tech companies to the SDN list
6. More talks of a deal for Meng Wanzhou
The United States has resumed discussions with Huawei Technologies Co. Ltd. and lawyers for Meng Wanzhou about a possible deferred prosecution agreement for the Chinese executive that could allow her to return to China, according to Canadian sources...
Two sources told The Globe and Mail the U.S. Department of Justice has been in talks for weeks with Huawei and lawyers for Ms. Meng, daughter of Ren Zhengfei, founder of the Chinese telecommunications giant. Those talks do not involve the fate of the two Canadians jailed in China...
The U.S. is prepared to end the extradition request and criminal proceedings against Ms. Meng if she pleads guilty and pays a hefty fine, the sources said. Huawei accepting corporate responsibility for violating sanctions is not part of the discussions, the sources said.
The reported talks show that the parties hold an open attitude toward reaching a certain agreement or finding a solution, Li Haidong, a professor at the Institute of International Relations of China Foreign Affairs University, told the Global Times on Sunday.
However, Li believed that any agreement is based on the conditions accepted by both sides, and if the Justice Department includes both the guilty plea and a hefty fine as conditions of the agreement, the agreement may not be acceptable to Meng's team nor the Chinese side...
During an official visit to China by US Deputy Secretary of State Wendy Sherman in July, China delivered two lists of major concerns to the US, which include demanding the US to revoke Meng's extradition.
During his inspection tour of Shenzhen, Vice Premier Han Zheng visits Huawei and Mindray - [视频]韩正在广东调研_CCTV
"Han Zheng came to Shenzhen Huawei Technologies Co., Ltd. and Mindray Biomedical Electronics Co., Ltd. to inspect the independent innovation, production and operation, market development, etc. He pointed out that since the reform and opening up, China's private enterprises have flourished and become an important subject of scientific and technological innovation. Innovation is the first driving force to lead development. To enter a new stage of development and promote high-quality development, we must implement the innovation-driven development strategy in depth and achieve high-level science and technology self-reliance. The state firmly supports the innovation and development of private enterprises and encourages them to continuously enhance their international competitiveness through scientific and technological innovation. Private enterprises should closely focus on the national strategy, adhere to the orientation of industrialization and application, make good use of market-oriented mechanism to promote independent innovation, and make greater contributions to accelerating the construction of a powerful country in science and technology."
7. Xi’s space comments in Shaanxi
On behalf of the CPC Central Committee and the CMC, Xi extended sincere greetings to officers and soldiers and encouraged them to make more contributions to building world-class military forces and China's strength in aerospace...
Xi affirmed the base's important role in China's space industry and called for innovations in technology and means to ensure accurate, reliable and successful measurement and control work to serve more frequent space launches of higher demands.
Noting that space assets are important strategic assets of the country, Xi urged efforts to comprehensively strengthen the protection of these assets.
Xi also called for strengthening space traffic management and carrying out international cooperation on space security to improve effectiveness in managing space crises.
“The universe is so vast, beautiful and fascinating. I was fortunate and happy to have the chance to fly up into the sky again and take a spacewalk on our own space station,” Liu Boming said in a post-landing interview. Nie told media that, “I believe with the continuous development of China’s comprehensive strength and national science and technology level, there will be more astronauts setting new records and pushing China’s space work to a new height.”
According to the CMSA, Tianzhou-3 will dock with the combination of the space station core module Tianhe and Tianzhou-2 cargo craft later.
The cargo ship carries nearly 6 tonnes of goods and materials, preparing for the upcoming launch of the Shenzhou-13 crewed mission.
The CMSA said Tianzhou-3 is loaded with living supplies for the astronauts, one extravehicular space suit for back-up, supplies for extravehicular activities, space station platform materials, payloads and propellants...
Following the Tianzhou-3 mission, the Shenzhou-13 manned spaceship will be launched to dock with the core module Tianhe, and three astronauts will then begin their six-month stay in orbit.
8. Taxing the rich celebrities
China is set to conduct regular tax investigations into top entertainers including online influencers, promising serious punishment for offenders amid a deepening crackdown on the entertainment industry and lucrative culture of fandom.
High-income celebrities who self-report offences by the end of the year, however, may receive reduced penalties or exemptions, the country’s taxation authorities said in announcing the plans for greater scrutiny.
The planned inspections will be “double-random [双随机]” – with both the subjects of the investigation and the inspectors assigned to be randomly selected and matched with each other, a State Taxation Administration (STA) notice announced on Saturday.
Tax authorities at the grass-roots level will also face stricter supervision. For instance, tax officers who take advantage of their power to practice favoritism and commit fraud will be seriously punished according to the law.
Tax authorities at all levels are banned from pulling their punches by illegally setting up tax incentives or applying tax incentives in flexible ways. A relevant overhaul will be conducted to prevent the abuse of tax incentives and at the same time ensure that relevant firms and individuals can fully enjoy legal tax incentives.
Business, Economy and Trade
For 16M Vocational High School Students, Hope Is Hard to Come By - SixthTone Roughly 40% of China’s high school-age population attends vocational school. They represent the future of the country’s workforce, so why can't they get any respect?
Chinese financial authorities mull expanding business scope to domestic banks' overseas yuan loans - Global Times China's central bank and the State Administration of Foreign Exchange on Saturday jointly published draft guidelines, broadening the scope of businesses accessible to domestic banks' overseas yuan loans.
Tesla records best sales in China in August - Global Times US electric vehicle maker Tesla said it recorded its best performance in terms of sales in China and exports from the country last month, according to Shanghai Securities News on Saturday, citing company data. In August, Tesla achieved its best monthly sales with 44,264 units in China - the first time it surpassed 40,000 in a single month. Its exports of China-made cars hit a record high of 31,379 in the same month.
发改委：完善能耗双控制度 到2030年能耗强度继续大幅下降 _ 经济参考网 _ 新华社《经济参考报》官方网站 Certain major infrastructure projects during the new five-year planning period may be exempt from strict emissions curbs in what China calls a “flexible management” of pollution from high energy intensity projects. The National Development and Reform Commission, in an action plan released last week, reaffirmed Beijing’s commitment to curb high energy-intensity projects. But it also calls for more flexibility in managing emissions reduction goals from projects approved by the State Council, though how it will be implemented is not known. 在增强能源消费总量管理弹性方面，《方案》提出，对国家重大项目实行能耗统筹。由党中央、国务院批准建设且在五年规划当期投产达产的有关重大项目，经综合考虑全国能耗双控目标，并报国务院备案后，在年度和五年规划当期能耗双控考核中对项目能耗量实行减免。
报告指190万外卖骑手或被注册为个体户 劳动权益难获保障_政经频道_财新网 report by a Beijing NGO says that 1.9m delivery drivers have registered as "individual businesses" so the platforms they work for can reduce costs
No Financial Activity Should Be Free of Financial Regulators’ Scrutiny, PBOC Chief Says - Caixin According to a transcript of the speech released by the People’s Bank of China, Yi mentioned specifically that financial service providers should have the proper licenses, and payment services should get back to their roots — severing the inappropriate links between payment services and other financial products.
校外英语培训机构退费纠纷频现：提前收的高额学费去哪儿了？_凤凰网 In a development unsurprising to no one who pays attention, or reads Sinocism, disputes are common between parents and tutoring firms that charged for courses in advance and now won't/can't refund the fees since their businesses were destroyed by the government
World Bank Cancels Flagship ‘Doing Business’ Report After Investigation - WSJ $$ The World Bank canceled a prominent report rating the business environment of the world’s countries after an investigation concluded that senior bank management pressured staff to alter data affecting the ranking of China and other nations. The leaders implicated include then World Bank Chief Executive Kristalina Georgieva, now managing director of the International Monetary Fund, and then World Bank President Jim Yong Kim...Chinese officials in 2017 and 2018 were eager to see their ranking improve, and so Mr. Kim and Ms. Georgieva and their staff held a series of meetings to discuss ways that the report’s methodology could be altered to improve China’s rankings, according to the investigative report by the law firm WilmerHale.
Package Deal - The Wire China For years, Amazon recruited Chinese sellers aggressively. But many Chinese sellers' bad practices now have the e-commerce giant on the defensive.
Amazon Kicks Out 600 Chinese Brands for Fake Reviews - Caixin Most of the sellers were involved in paid or fake customer reviews, while other violations included identity falsification, bribery and sale of counterfeits, said Cindy Tai, vice president of Asia Global Selling at Amazon. The platform’s decision was not affected by geopolitics and U.S.-China tensions, Tai said Friday in an interview.
U.S.-China tensions knock 96% off of bilateral tech investment - Nikkei Asia Between 2016 and 2020, overall direct investment between the two countries fell 75% from $62 billion to $16 billion, with the tech sector alone plunging 96% over the period, according to Bain and Co.'s latest annual technology report released on Monday. Investments from China to the U.S. fell much more steeply than those in the opposite direction due to Washington's crackdown on Chinese companies creating geopolitical uncertainties for businesses, Anne Hoecker, the partner with Bain & Co. who led the research, told Nikkei Asia.
Iron Ore’s Rout Keeps Rolling as China Imposes More Steel Curbs - Bloomberg Prices have collapsed about 60% since a record in May, and are below three figures for the first time in more than a year, as Chinese demand wanes. The world’s biggest steelmaker is intensifying production curbs to meet a target for lower volumes this year as it works toward a target of reaching carbon neutrality by 2060. More recently, restrictions have focused on improving air quality for the Winter Olympics next year.
EXCLUSIVE-Didi co-founder Liu told associates she plans to leave- sources | Reuters Didi Global Inc co-founder and President Jean Liu has told some close associates that she intends to step down, two sources familiar with the matter said, as the Chinese ride-hailing giant faces intense regulatory scrutiny following its New York listing earlier this year. Liu, 43, has in recent weeks told some associates that she expected the government to eventually take control of Didi and appoint new management, said the two sources.
Chinese premier stresses cultivating market entities, improving people's livelihood - Xinhua Chinese Premier Li Keqiang has urged efforts to advance reform and opening-up, keep the economy operating within a proper range, cultivate market entities, improve people's livelihood and promote high-quality development...made the remarks during an inspection tour in south China's Guangxi Zhuang Autonomous Region from Thursday to Saturday.
China Risks Winter Energy Crunch With Struggle to Get Supplies - Bloomberg China is at risk of the same energy-crunch chaos seen in Europe, with a state-run newspaper warning that coal-fired power plants will struggle to keep the lights on this winter. The nation’s coal-based power producers, which account for more than 70% of the country’s electricity generation, are unable to buy enough fuel after prices surged, state-run China Energy News said in a report dated Sept. 18. // Comment: There is a rumor going around that during his inspection tour in Shaanxi last week Xi told the local officials to ramp up coal mining to ensure supplies for winter
Politics and Law
[视频]赵乐际在内蒙古调研_CCTV Zhao Leji goes to Inner Mongolia for an inspection tour, among the areas of work by the CCDI he emphasized was the implementation of the spirit of the recent work conference on ethnic affairs // 他强调，纪检监察机关要监督落实习近平生态文明思想，发挥农牧民主体作用，共同建设美丽乡村；监督落实中央民族工作会议精神，促进各族干部群众铸牢中华民族共同体意识，凝心聚力奋进新时代新征程；持续整治群众身边腐败和不正之风，坚持从实际出发，什么问题突出就重点解决什么问题
Implementation rules for China's supervision law takes effect - Xinhua The implementation of the regulation for China's supervision law was published by the National Supervisory Commission (NSC) and took effect on Monday. The regulation clarifies the duties of supervisory commissions, their jurisdiction, supervisory power and working procedure, and introduces rules concerning international cooperation and supervision on supervisors, the NSC said in a press release. Through the regulation, the NSC aims to introduce strict regulation on supervisors and promote the law-based exercise of supervisory duties, the statement said. // 国家监委制定第一部监察法规 《中华人民共和国监察法实施条例》公布施行
The Chinese Communist Party’s model emperor | The Economist The exhibit in Chengde is a puzzle. Important enough to draw Mr Xi, it rests on easily debunked history. The solution lies in another wall sign, which praises Chengde as a monument to the Qing dynasty’s “historic feats” of “pacification and consolidation of the border regions”. Two intensely political ideas lurk in that scholarly statement. First, the term “consolidation” reflects the party’s claim that Tibet and Xinjiang have always been Chinese and so were reclaimed, not conquered, by the Qing. Second, to the security-obsessed hard men who run China, pacifying restive regions is a supremely patriotic act. That makes Qianlong a model worker.
国机研究院党委书记刘庆宾接受审查调查————要闻——中央纪委国家监委网站 Liu Qingbin, Party Secretary/Chairman/CEO of China National Machinery Industry Corporation, is under investigation
Foreign and Defense Affairs
Xi calls for steady transition of Afghan situation, dialogues with Afghanistan - Xinhua In a three-point proposal, Xi urged respecting Afghanistan's sovereignty, independence and territorial integrity, supporting the implementation of the "Afghan-led, Afghan-owned" principle, and letting the Afghan people independently decide the future of their own country. He stressed supporting all parties in Afghanistan to reach inclusive political arrangements at an early date through dialogue and consultation. Relevant parties in Afghanistan should be urged to resolutely crack down on and eradicate terrorist organizations in the Afghan territory and prevent terrorist forces in Afghanistan from wreaking havoc, said Xi.
Xi and Putin pledge to co-operate on Afghanistan after Taliban takeover | Financial Times Speaking via video link at a joint regional security forum in Dushanbe, the Tajikistan capital, the two leaders announced plans to share intelligence and hold regular talks on Afghanistan following its takeover last month by the Taliban. Putin also signalled a softening of Moscow’s rhetoric on the Taliban, calling for regional leaders to align their positions on potentially recognising the Islamist regime in Kabul. The event marks the first ever joint meeting on Afghanistan of the China-led Shanghai Cooperation Organisation
China, Russia, Pakistan and Iran must exert positive influence to stabilize situation in Afghanistan - Global Times As important neighbors of Afghanistan and influential countries in the region, China, Russia, Pakistan and Iran need to strengthen communication and coordination, make unanimous voices, exert positive influence and play a constructive role in promoting the smooth transition of the situation in Afghanistan, Chinese State Councilor and Foreign Minister Wang Yi said with senior officials from Russia, Pakistan and Iran at an informal meeting on Afghanistan in the Tajik capital of Dushanbe on Thursday. Countries in the region expect the new Afghan government to be inclusive, anti-terrorist, and friendly to neighbors, Wang stressed.
The AP Interview: UN chief warns China, US to avoid Cold War - AP Warning of a potential new Cold War, the head of the United Nations implored China and the United States to repair their “completely dysfunctional” relationship before problems between the two large and deeply influential countries spill over even further into the rest of the planet. U.N. Secretary-General Antonio Guterres spoke to The Associated Press this weekend ahead of this week’s annual United Nations gathering of world leaders — a convening blemished by COVID, climate concerns and contentiousness across the planet.
President Xi Jinping delivers video speech to 6th CELAC Summit - CGTN At the invitation of Mexico, the rotating presidency of CELAC, Chinese President Xi Jinping delivered a video speech to the summit. Xi pointed out that 10 years ago, CELAC was born under the efforts of Latin American and Caribbean countries to pursue independence and seek strength in unity, which was a milestone in the process of regional integration. In the past 10 years, CELAC has played an important role in maintaining peace and stability and promoting common development in the region...The Chinese president added that China is willing to work with LAC countries to overcome difficulties together and jointly create opportunities to build a community of shared future between China and Latin America.
Xi's speech at CELAC summit inspiring for mutually-beneficial cooperation -- Latin American experts - Xinhua Chinese President Xi Jinping's virtual address at the 6th Summit of Heads of State and Government of the Community of Latin American and Caribbean States (CELAC), will help boost confidence for mutually-beneficial bilateral cooperation, regional experts have said. Xi said in his speech delivered on Saturday that over the past decade, CELAC has played an important role in maintaining peace and stability and promoting common development in the region, and that China attaches great importance to developing relations with CELAC, and supports CELAC in coordinating regional countries to carry out cooperation and cope with challenges.
Xi extends condolences over passing of former Algerian President Bouteflika - Xinhua In his message, Xi pointed out that Bouteflika was an outstanding statesman and leader of national liberation movements in Algeria, the Arab world and Africa, and made significant contributions to restoring the lawful seat of the People's Republic of China in the United Nations. During his presidency, Bouteflika made active efforts to develop China-Algeria relations, deepen bilateral friendly cooperation and enhance the friendship between the two nations, Xi said, adding that with his passing, the Chinese people has lost an old friend
Xi to attend General Debate of 76th session of UN General Assembly - Xinhua Chinese President Xi Jinping will attend the General Debate of the 76th session of the United Nations General Assembly and deliver important remarks via video link on Tuesday, Foreign Ministry spokesperson Hua Chunying announced Monday
UK's COP26 chief says ball in China's court on making it a success | Reuters The ball is in China's court when it comes to making the United Nations COP26 climate change conference in November a success, Britain's Alok Sharma, the summit's president, said on Sunday. Sharma, who said he had had "constructive and very frank discussions" during a visit to China earlier this month, said China's President Xi Jinping had not yet confirmed whether he would attend the summit.
China strongly condemns explosive attack at its Consulate General in Brazil, urges thorough probe - Global Times The Chinese Consulate General in Rio de Janeiro, Brazil, on Friday severely condemned the attack that happened on Thursday in which a man threw an explosive at the consulate general, causing damage to some buildings but no injuries.
China Competes With U.S. to Revamp Sudan’s State Shipping Firm - Bloomberg The proposal from state-owned China COSCO Shipping Corp. Ltd. comes as authorities talk with the Export-Import Bank of the U.S. and other potential foreign investors on ways to resurrect Sudan Shipping Line, Chairman Abdul-Azim Hasab Al-Rasol said in an interview in the capital, Khartoum. He didn’t give further details on the negotiations.
How did Indonesia respond to China's incursion into the Natuna Sea? - by Duan Dang - South China Sea Brief There are two possibilities. One is that Haiyang Dizhi 10 is conducting a seismic survey. If that is the case, it is a clear violation of Indonesia's sovereign rights. The second is that it is running scientific research. I don't know if it is legal or not. It is in the "grey zone", and perhaps it is necessary to have permission from the host country. However, one thing is certain: That operation is clearly designed to target Indonesia only. After all, why is scientific research bound by the borderline between countries?
What is happening in Indonesia's Natuna Sea? - by Duan Dang - South China Sea Brief It’s remarkable that on September 11 and 12, the USS Carl Vinson carrier turned on its AIS signal and broadcasted its position in the Natuna Sea. Its position was about 50 nautical miles from Haiyang Dizhi 10. It is rare for a U.S aircraft carrier to broadcast its AIS signal at sea, except straits transit or port calls. It is intentional! Later in the day, the official Twitter of the USS Carl Vinson carrier told us it was operating near PLAN ships, aircraft, and submarines. It was another move it rarely does.
How China Exports Authoritarianism | Foreign Affairs - Charles Edel and David Shullman Beijing’s illiberal efforts undercut democracy in the developed world, the developing world, and in international institutions amount to an assault on the norms, rules, and ethics by which the world is governed. They threaten to usher in an increasingly undemocratic world populated by regimes that are beholden to Beijing and unsympathetic to the interests of the United States and its allies. Such regimes would be less accountable to their populations, less committed to individual rights, less responsible to international institutions that uphold democratic norms and universal values, and more dedicated to controlling and suppressing information. In short, if Beijing isn’t trying to remake the world in its image, it is trying to make the world friendlier to its interests—and more welcoming to the rise of authoritarianism in general.
How China tried to discredit London’s Uyghur Tribunal and harass its witnesses - Coda Story The pressure exerted on Otarbay to stop him from testifying is part of a wide-ranging campaign by the Chinese and — by proxy — the Kazakh governments to undermine the Uyghur Tribunal in London
刘晓明为清华大学“外事管理与国际化能力提升研修计划”作专题讲座-清华大学 Ambassador Liu Xiaoming's speech to Tsinghua "How to tell Chinese stories well and carry out public diplomacy effectively. Sounds like a primer for Xi Jinping Diplomat Thought Warriors aka wolf warriors…“:
Summing up many years' diplomatic practical experience, Liu Xiaoming summed up how to tell Chinese stories well and do a good job in public diplomacy into twelve words: "Listen, understand, listen and believe". He emphasized that efforts should be made in seven aspects to open up a new situation in international communication under the complicated and ever-changing international situation. First, it is necessary to improve the political position and deeply understand that international communication ability is an important part of the country's soft power and an important embodiment of the party's ruling ability, which is related to the two major tasks of "creating a favorable external environment for China's reform, development and stability" and "promoting the construction of Community of Shared Future for Mankind". Second, it is necessary to enhance the sense of ownership. In case of discrediting China, it is necessary to stand up without hesitation and expose lies and slander. It is the bounden duty of each of us to safeguard the dignity and national interests of our motherland, and there is no room for half a grain of sand in our eyes. Third, we should be aware of the overall situation, pay close attention to the development of domestic and international situations at all times, and be aware of both domestic and foreign overall situations. Fourth, strengthen the struggle spirit and improve the fighting ability. Fifth, we should be politically sensitive and time-sensitive. We should do a good job in judging the incident at the first time, dare to speak and be good at speaking. Sixth, we should do our homework, prepare enough ammunition, know ourselves and know ourselves, and have answers. Seventh, be good at dealing with the media and be willing to make friends with reporters. Actively "feed" and actively guide; also clearly state your position, promptly clarify misunderstandings, strongly refute fallacies, and resolutely fight back against slander.
China is becoming more assertive in international legal disputes | The Economist in the past year it has become increasingly clear that the party means to take a legal fight to the world. President Xi Jinping wants China’s legal apparatus to grow bolder when dealing with international matters, and to reshape international legal and regulatory norms. In areas such as patents, maritime rights, cyber-security, sanctions and extradition battles, the Communist Party is using its legal system to safeguard and advance China’s interests in ways it has not previously done...China is also advancing its conception of the rule of law—one that exists under the unquestioned leadership of the party—beyond its borders in other areas, such as intellectual property. At a Politburo meeting last November Mr Xi called for greater assertiveness in cross-border disputes, saying China should “promote the extraterritorial application” of its intellectual-property laws. Mr Xi was in effect “weaponising the judiciary” to defend China’s interests abroad, says Mark Cohen, a scholar of Chinese intellectual-property law at the University of California, Berkeley.
Top Chinese official makes rare appearance at Japan war vigil - Nikkei Asia the police informed that the "Notice on the Periodic Compensation of Evergrande Financial Services", which was previously posted online, was also false information, and the police had already arrested five people suspected of committing fraud through it.
勿忘九一八撞钟鸣警仪式在沈阳举行 赵乐际出席并讲话_CCTV CCTV report on Zhao's appearance and speech he gave.
Chinese mainland suspends sugar-apple, java apple imports from Taiwan - CGTN The Chinese mainland will suspend sugar-apple and java apple imports from the Taiwan region starting from September 20, according to a statement released by the General Administration of Customs (GAC) on Sunday. Since the beginning of this year, the mainland customs has repeatedly detected Planococcus minor – an insect pest – on sugar-apple and java apple imports from the region, the GAC said.
Taiwan: will dark horse pushing cross-strait union upend two-way race for KMT chair? | South China Morning Post Chang Ya-chung, 66, has won over ‘deep blue’ Kuomintang members with his hardline pro-unification stance and scorn for Taiwan-centric rivals As Chang also pulls ahead in opinion polls, the question remains whether he would make a viable presidential candidate were he to become KMT chief
Tech and Media
TikTok Maker Caps Screen Time for Youths in China - WSJ $$ ByteDance Ltd., the maker of the hit short-video mobile app TikTok, said that it would restrict access to Douyin, the Chinese version of the app, to 40 minutes a day for users under 14 years old. Douyin’s “youth mode,” which follows the imposition of new limits on younger Chinese users’ access to online videogames, will restrict under-14s to using the app between 6 a.m. and 10 p.m. The app will be inaccessible to all users in that age group outside of those hours.
ByteDance to Launch Music App Feile Later This Year - Pandaily hinese media outlet 36Kr reported on Thursday that TikTok’s parent company ByteDance plans to release a music streaming product for the domestic market later this year. The product is tentatively named Feile, and internally referred to as Luna. Currently, the app is managed by the TikTok team. ByteDance hasn’t yet offered an official response to the news.
China rolls out autonomous driving standards as carmakers work towards making self-driving a reality | South China Morning Post China has published its first national standards for grading autonomous driving, which will come into force in March, providing a benchmark for carmakers to develop the futuristic technology. China’s six-level standards, called “Taxonomy of Driving Automation for Vehicles”, provides official definitions for self-driving cars from level zero (L0), which relies largely on human drivers, to L5 that achieves “full driving automation”.
Error 20021: Crowdsourced Report on the Varied Methods of Weibo Censorship - China Digital Times (CDT) “20021” may look like a random string of numbers or a mangled date, but many Weibo users know it as a sign that they are being blocked from posting “sensitive” content. Telegram user @cybergraveyardcn (简中赛博坟场) recently sent CDT crowdsourced, categorized data documenting many years and varieties of Weibo censorship. The report, translated below, includes screenshots of error messages, notices, and other indications that a post has been censored on Weibo
China’s Metaverse gold rush is on but practitioners differ over how these virtual, digital worlds should operate | South China Morning Post Tencent Holdings, the country’s largest gaming company, has registered several trademarks around Yuan Yuzhou, the Chinese translation of Metaverse, for its QQ service and Honour of Kings, its most popular online game.
China advances industrial application of quantum technology - People's Daily Online China Telecom Quantum Technology Co Ltd has tried out the quantum encryption calls in 15 provinces since June and has garnered some 10,000 users, said Wang Jian, manager of the research and development department of the company. "The users can have secure calls and messages encrypted with quantum keys after inserting a SIM card and installing a related app, which can ensure information security," said Wang.
Society, Arts, Sports, Culture and History
‘Our Times’ focuses on young people’s difficult journey to success in the 1990s - Global Times A new TV series starring Wu Lei and Hou Minghao is taking audiences back to the 1990s, a time when millions of Chinese people were working hard to achieve a better life amid tremendous social and economic changes in China. Our Times, which debuted Tuesday on Chinese streaming giant Tencent Video, follows the careers of two talented young men who start as PC salesmen after graduating from a top Chinese university during the early stages of China's reform and opening-up.
Jonathan Mirsky: reporter who went from Mao fan to fierce Beijing critic | Peter Beaumont | The Guardian The career of the Observer’s former China correspondent who died last week, was marked by a willingness to review his convictions
10 dead, 5 missing in China as overloaded river ferry carrying students capsizes in bad weather | South China Morning Post Ten people died and five were reported missing after an overloaded river ferry in China’s southern Guizhou province capsized in bad weather on Saturday afternoon. The ferry was the main mode of transport across the Zangke river for students from the town of the same name in Liuzhi district. Most of the passengers were thought to be students, state broadcaster CCTV reported.
China Targets ‘Effeminate’ Men in Xi’s Mounting Push for Conformity - Bloomberg The National Radio and Television Administration used the word “niangpao,” which roughly translates to “sissy men,” in guidance to TV companies, telling them to “strictly control the selection of program actors and guests.” It’s the first time the government used the term, which is often used to insult or bully gay men, in official communication. Last week, the same body called for boycotting “fan culture” in general and gay male love stories in particular.
Energy, Environment, Science and Health
China’s Delta variant outbreak: Covid-19 cases rise again in Fujian province ahead of Mid-Autumn Festival | South China Morning Post Covid-19 cases climbed again in Fujian, China’s southeastern province battling the country’s latest outbreak of the pandemic, as local authorities stepped up travel restrictions and suspended mass activities ahead of the upcoming Mid-Autumn Festival. China as a whole recorded 66 new coronavirus cases on Saturday, with all 43 of the locally transmitted cases found in Fujian – 39 in Xiamen and the rest in Putian – bringing the number of total infections in the province since September 10 to 335.
Two Hospitals Suspend Services as East China Covid Flare-Up Goes On - Caixin Two hospitals in the cities of Xiamen and Putian in East China’s Fujian province have halted some services after staff tested positive for Covid-19.
Chinese vice premier urges strict implementation of epidemic control measures - Xinhua Chinese Vice Premier Sun Chunlan on Saturday urged all parties to take up due responsibilities to effectively curb the spread of COVID-19 virus in southeast China's Fujian Province. Sun, also a member of the Political Bureau of the Communist Party of China (CPC) Central Committee, made the remarks during an inspection tour to Fujian, which is experiencing a resurgence of the epidemic.
Yicai - China Stresses Aircraft Disinfection to Prevent COVID-19 Case Import China has rolled out a protocol on the disinfection of passenger aircraft arriving from outside the Chinese mainland to reduce the risk of COVID-19 case import.
Senior Chinese lawmaker stresses deepening anti-pollution law enforcement - Xinhua Senior Chinese lawmaker Wang Chen on Saturday stressed tightening law enforcement on handling solid waste as part of the country's efforts to curb pollution. Wang, a member of the Political Bureau of the Communist Party of China Central Committee and vice chairman of the National People's Congress Standing Committee, made the remarks at the second plenary meeting of the teams of lawmakers to inspect the enforcement of the Law on Prevention and Control of Environmental Pollution by Solid Waste.
China Bans TV Ads for Betel Nuts, a Carcinogenic Snack - SixthTone Advertisements for betel nuts, a popular snack which the World Health Organization lists as causing oral cancer, can no longer be shown during TV and online shows, China’s National Radio and Television Administration announced Friday. Betel nuts are consumed around China and are especially popular in the central Hunan province. They are a stimulant and are described as giving a “buzz” when chewed.
First birth in China after ovarian tissue transplantation - Xinhua The first baby conceived through natural pregnancy after the mother underwent frozen-thawed ovarian tissue transplantation in China is in good health after birth. The mother surnamed Li had a part of her ovarian tissue frozen before undergoing a bone marrow transplantation in 2016, said her doctor Ruan Xiangyan, director of the department of endocrinology at the Beijing Obstetrics and Gynecology Hospital.
Organizing, executive committees established for Zhongguancun Forum China’s State Council approved establishing an organizing committee and an executive committee for the Zhongguancun Forum, focused on scientific and technological innovation, according to a circular released by the General Office of the State Council on Sept 17...Vice-Premier Liu He will head the organizing committee, and Cai Qi, secretary of the Beijing Municipal Committee of the Communist Party of China, will serve as first deputy chairman of the organizing committee and director of the executive committee.
Officials including Minister of Science and Technology Wang Zhigang, and Hou Jianguo, president of the Chinese Academy of Sciences, are appointed as executive directors of the executive committee.
Bats in Laos Caves Harbor Closest Relatives to Covid-19 Virus - Bloomberg Researchers at France’s Pasteur Institute and the University of Laos looked for viruses similar to the one that causes Covid among hundreds of horseshoe bats. They found three with closely matched receptor binding domains -- the part of the coronavirus’s spike protein used to bind to human ACE-2, the enzyme it targets to cause an infection.
China’s Parents Face a ‘3:30 p.m. Dilemma’ - SixthTone policymakers have yet to resolve the “3:30 p.m. dilemma.” That is, if school gets out at 3:30 in the afternoon, but parents are working until five, six, or even later, who takes care of the kids in the interim? This dilemma dates back at least to the 1990 reforms. Although ostensibly an effort to reduce schoolwork and give kids more free time, in the context of that era’s pro-market policies, the reforms contributed to a shift of childcare burdens from the state back onto families. Families who could afford nannies or after-school tutoring thrived; those that could not watched their children fall behind.
Rural and Agricultural Issues
Yicai - China to Strengthen Agricultural Sci-tech Innovation The Chinese Academy of Agricultural Sciences (CAAS) has released a plan for promoting key subjects during the 14th Five-Year Plan period (2021-2025) to enhance the country's agricultural sci-tech innovation. The subjects involve food security, nutrition and health, cultivated-land conservation, disease prevention and control, green development, intelligent agricultural machinery, basic research, frontier and interdisciplinary research, data resources and regional development.