Facebook-Huawei frenzy; ZTE may have a deal; Tech firms keep insulting heroes and martyrs; Big funds await tech CDRs; Loan troubles for private firms

There is speculation out there that around President Trump will meet Xi sometime around his visit to Singapore to meet with Kim Jong Un on June 12. If true then things on the US-China trade front will probably remain quiet until then.

Some housekeeping: The newsletter will be on vacation next week as I will be single-parenting my twins to Arizona to see their grandfather.The newsletter will also be off June 26-27 as I take our twins to camp, and July 19 when I go pick them up. My August schedule is not set but there will likely be some vacation in there as well.

Thanks for reading.


The Essential Eight

1. China's trade offer to the US was not enough

China Offers to Buy Nearly $70 Billion of U.S. Products to Fend Off Trade Tariffs - WSJ $$:

U.S. officials are skeptical of the Chinese offer for several reasons, said people involved with the talks. They argue that Chinese energy purchases would largely divert U.S. sales to other nations and have no overall impact on the U.S. trade deficit. They also aren’t sure that the U.S. could ramp up agriculture production that quickly...

During the discussions, Chinese negotiators also raised the question of whether the U.S. was moving ahead with Mr. Trump’s pledge early last month to save China’s ZTE Corp. from crippling U.S. sanctions, the people briefed on the talks said. That pledge has been opposed by some U.S. lawmakers...

But the offers didn’t include a signed deal. “Nothing has firmed up yet,” one of the people said, referring to the Chinese offer. “It would require additional rounds of discussions between the two sides.”

It does not sound like it was a great deal for the US.

U.S. and China Haggle Over Trade Gap, ZTE - Bloomberg:

Ahead of a mid-June deadline for imposing tariffs on Chinese imports, China has offered to boost purchases of U.S. goods by about $25 billion this year, according to two people familiar with the matter, who spoke on condition of anonymity because the negotiations aren’t public. Crude oil, coal and farm products are among the goods that the Chinese are willing to buy more of, according to the people briefed on the talks.

America's Wells, Mines and Farms Targeted by China Trade Offer - Bloomberg

Mnuchin Favors Less Sweeping Investment Limits for China, Sources Say - Bloomberg:

The Treasury Department wants President Donald Trump to rely on legislation to tighten scrutiny of Chinese investments in the U.S. instead of an executive move imposing sweeping new limits, according to three people familiar with the matter.

Treasury Secretary Steven Mnuchin has until the end of June to present to the president his department’s final recommendations on Chinese investment curbs. Trump directed Mnuchin to draw up the restrictions as part of a probe into China’s alleged theft of intellectual property that also allows the imposition of tariffs.

Foxconn chief: US-China dispute over tech, not trade - AP:

The CEO of Taiwan’s Foxconn, which assembles Apple iPhones and other products for tech companies, said Wednesday that Washington’s dispute with China is over technology rather than trade.

Terry Gou’s comments at an event celebrating the anniversary of Foxconn’s first investment in mainland China follow Beijing’s threat to scrap trade deals with Washington if President Trump’s tariff hike on Chinese technology products goes ahead.

“This is not a trade conflict but rather a competition and comparison of technology,” said Gou in a video shown in the event.

China Gets Hands on Chip Technology in SoftBank Deal - WSJ $$:

“China wants to have an indigenous and controllable local supply base,” Arm Holdings Executive Vice President Rene Haas said in an interview. “Doing a joint venture of this nature would best position us to be able to capitalize on that growth.” 

China accounted for roughly a fifth of Arm Holdings’ $1.83 billion in revenue for its latest fiscal year, with local sales expected to grow further under China’s “Made in China 2025” strategy to develop self-driving vehicles, smart appliances and other next-generation technology. Arm Holdings has the right to technology developed by the Chinese joint venture, Mr. Haas said. 

He said the deal doesn’t require approval from the Committee on Foreign Investment in the U.S. and is expected to be completed by the end of June.

China Inc. Arms Up in Tech With Latest SoftBank Deal - WSJ $$

SoftBank may have had little choice but to sell: China is a huge market for Arm and other companies the Japanese conglomerate owns, so keeping Beijing happy is imperative. SoftBank already has strong links to China: It owns around a quarter of e-commerce giant Alibaba and has a piece ride-hailing firm Didi Chuxing

This seems like a big deal that has slipped through regulators’ purview.


2. Looks like ZTE has a deal to stay alive

And all that China appears to have conceded was to agree to keep talking to the US. Congress is huffing and puffing about blocking a settlement but I think it is unlikely as most GOP members will not dare defy President Trump over this. Then again Trump may change his mind next week if the talks with Kim do not go well, so the Chinese better hope the US signs the deal before June 12.

China's ZTE signed preliminary agreement to lift U.S. ban: sources | Reuters:

The preliminary deal includes a $1 billion fine against ZTE plus $400 million in escrow to cover any future violations, sources said, adding that the terms were in line with Reuters reporting on the U.S. demands on Friday.

The sources requested anonymity because they were not authorized to publicly discuss the matter.

The Commerce Department plans to amend its 2017 settlement agreement and count the $361 million ZTE paid as a part of that, allowing the United States to claim a total penalty of as much as $1.7 billion, the sources said.

Over the weekend, ZTE signed the agreement drawn up by the United States, the sources said, but the amended settlement has not been signed.

ZTE claws back bonuses, reprimands 35 staff over Iran sanctions breach to meet US pledge | South China Morning Post

ZTE, the Chinese telecommunications company trying to resolve a seven-year US export ban, has sent out reprimand letters to 35 current and former employees involved in illegal sales to Iran and is seeking to claw back bonuses from those who have left the company, according to people familiar with the matter.

The reprimand and forfeiture of bonuses were part of the original settlement that ZTE had reached with the US government.


3. Frenzy over Facebook data deal with Huawei

It sure sounds and looks bad, but perhaps a tad overblown, more a media and political frenzy than a substantively significant issue? Regardless, this latest mess for Facebook highlights the political and reputation risk to any American firm doing business with Huawei. Every US company with a Huawei deal needs to weigh whether the upside is worth the inevitable backlash in this New Era of US-China Relations...

Facebook Gave Data Access to Chinese Firm Flagged by U.S. Intelligence - The New York Times:

Facebook officials said the agreements with the Chinese companies allowed them access similar to what was offered to BlackBerry, which could retrieve detailed information on both device users and all of their friends — including religious and political leanings, work and education history and relationship status.

Huawei used its private access to feed a “social phone” app that let users view messages and social media accounts in one place, according to the officials.

Facebook Confirms Data-Sharing Deals With Chinese Tech Firms - WSJ $$:

The social-media company said it plans to wind down its data-sharing partnership with Huawei by the end of the week. It isn’t clear when Facebook will end partnerships with the three other companies: Lenovo Group Ltd., the world’s largest personal-computer maker; Oppo Electronics Corp., a smartphone maker; and Chinese electronics conglomerate TCL .

Facebook officials defended the decision to work with Huawei and said that no data belonging to Facebook users was saved on Huawei servers. Facebook had a manager and an engineer review the apps before they were deployed to ensure the data wasn’t saved on company servers, the Facebook spokeswoman said.

China's Huawei says it hasn't collected Facebook user data - AP:

Huawei said its cooperation with Facebook was aimed at improving services for its users.

“Like all leading smartphone providers, Huawei worked with Facebook to make Facebook’s services more convenient for users,” Huawei spokesman Joe Kelly said in a text message Wednesday, adding that Huawei “has never collected or stored any Facebook user data.”

These trade groups do not seem to have gotten the memo yet...

Broadband Leaders Push Back on Proposed Ban on ZTE, Huawei Gear - Bloomberg:

Trade groups representing the leading American broadband and wireless providers told the the Federal Communications Commission to go slow as it weighs banning the use of federal subsidies to purchase gear from Huawei Technologies Co. and ZTE Corp.

The FCC shouldn’t act before the Department of Homeland Security identifies equipment that might pose a threat to networks, one of the trade groups, USTelecom, which represents broadband giants AT&T Inc. and Verizon Communications Inc., said in a filing.


4. Taiwan in US-China relations

White House presses US airlines to resist Beijing over Taiwan - FT $$:

US officials have asked United, American Airlines and Delta not to comply with a Chinese demand to write “Taiwan, China” instead of Taiwan on their websites and maps, according to five people familiar with the issue...

One of the two people said the US airlines were willing to comply with the Chinese order after a period of time. But he said the Trump administration seemed intent on fighting China over the issue regardless of the views of the US carriers who are eyeing future growth opportunities in the Chinese market

Comment: I believe the US has told China that if they penalize US airlines over this then landing rights in the us for air china will be affected

To avoid Bejing’s ire, Donald Trump won’t send high-level officials to opening of de facto embassy in Taiwan | South China Morning Post:

When the American Institute in Taiwan – the unofficial US embassy in Taipei – opens its new offices on June 12, the Trump administration will refrain from sending any cabinet-level officials to the ceremony, three sources have told the South China Morning Post.

That message was conveyed by US Treasury Secretary Steven Mnuchin to his Chinese counterparts – including Vice-Premier Liu He – during trade negotiations in Beijing in May, one of the sources said.

Mnuchin assured the Chinese side that no cabinet-level official would attend the ceremony, this source said, adding that the Taiwan issue was discussed separately from recent trade talks.

Beijing must really like Mnuchin.


5. Tech firms keep insulting heroes and martyrs

Sogou and two Bytedance properties--Jinri Toutiao and Douyin--are in trouble for placing ads that violated the new heroes and martyrs law. You would think these folks would have learned by now, and especially Bytedance given their previous troubles and the CEO's groveling apology about a month ago.

Jinri Toutiao apologizes for search engine ads ‘disrespectful to heroes’ · TechNode:

News and content aggregator Jinri Toutiao has issued another apology involving heroes and martyrs, this time for advertising appearing in search results that was “disrespectful to heroes”, according to Tencent News (in Chinese). The apology to the public and heroes (英烈) and their families stated that this was a grave error and all such placements have been stopped and the advertising placements team and leader have been suspended...

“We are full of respect and gratitude for contributions heroes made to the nation. Any acts of ridiculing or disrespecting the heroes cannot be tolerated and strongly violates the values we uphold. We are launching a company-wide education [campaign] on martyrs and gratitude. From the depths of our hearts, we will put a stop to the recurrence of any such issues.”

Jinri Toutiao’s apology- 今日头条:就搜索引擎广告出现对英烈不敬的内容致歉

On Sogou and Douyin being called in for a chat about Douyin ads run on Sogou by the Beijing CAC and ordered to rectify their problems-网信办工商局约谈查处抖音搜狗 并责令整改_网易新闻


6. Tech CDRs may soar on tsunami of capital and speculation

I am still trying to figure out how the expected valuation gap between the overseas listed shares and the CDRs will play out. Will the overseas-listed shares see multiple expansion to match what could be crazy onshore valuations?

The massive amounts of capital available to PRC tech entrepreneurs along with increasingly viable paths to liquidity inside China should help the country overcome much of the “innovation tax” that stems from the political controls.

Money Managers Flex Muscles for Unicorn Funds Targeting CDRs - Caixin Global:

The six fund managers are Shenzhen-based China Southern Asset Management Co., Beijing-based China Asset Management Co., Guangzhou-based E Fund Management Co., Beijing-based Harvest Fund Management, Shanghai-based Huitianfu Fund Management Ltd., and China Merchants Fund Management Co., a subsidiary of China Merchants Bank.

Each filed an application to launch a “three-year, closed-end strategic flexible mixed-allocation equity investment fund,” according to information on the China Securities Regulatory Commission’s (CSRC) website.

Several fund managers said the funds will mainly invest in CDRs as well as the initial public offerings of new tech companies that fit the government’s call to encourage listing of high-tech companies and innovative startups.


7. More on PRC recruitment of foreign scientists

With generous funding and top-tier jobs, China seeks to lure science talent from abroad | Science | AAAS

The Chinese government, eager to sustain the country’s rapid emergence as a scientific superpower, is opening the door wider for people like him. On 22 May, the Ministry of Science and Technology issued guidelines that encourage science ministries and commissions to consult foreign experts and attract non-Chinese to full-time positions within China. In a striking change, foreign scientists are now allowed to lead public research projects.

In the past decade, China has aimed to build up its scientific capacity by luring back some of the tens of thousands of Chinese scientists working abroad. The latest measures emphasize that non-Chinese talent is also welcome. Drafted in December 2017 but not previously made public, they are “a confirmation of things that have been going on for a while,” says Denis Simon, an expert on China’s science policy at Duke Kunshan University in China, a branch campus of the Durham, North Carolina–based Duke University.

China's quiet hunt to hire top U.S. researchers - NPR:

Chinese talent recruitment is not a threat to the United States for now. The U.S. still takes in more talent from China than it exports to China. Some 85 percent of Chinese nationals who pursue a doctorate in the United States, for example, are still here 10 years later (though the Trump administration may shorten visas for Chinese students in certain science fields).

Even so, some observers say the United States should take notice of Chinese efforts to draw in talent. One of them is Xiao-Fan Wang, professor of cancer biology at Duke. He also advises the Chinese government on how to make China more hospitable to foreign talent.

“I also worry about our country’s policy right now,” he said.

National Institutes of Health funding for biomedical research hasn't increased enough during the 36 years he's been in the United States, Wang said. And it’s difficult for researchers just starting out to get funded. The U.S. National Science Board reported in February that China will probably pass the United States in research and development investments by the end of this year.

Pharma groups fall foul of China data transfer rules - FT $$:

Foreign groups in China are being restricted from transferring their research data abroad, hampering international scientific collaboration and hitting pharmaceutical companies the hardest, according to China-based lawyers.

A regulation passed in March by the State Council, China’s cabinet, mandates that foreign scientists and foreign-invested institutions in China must seek government approval before scientific data can be transferred abroad or to foreign parties within its borders.

Comment: Shouldn't this rule be of concern to the foreign scientists attracted by the Communist Party's recruiting efforts to go work in China, as well as of concern to foreign governments? 


8. Private firms still struggling for loans

China’s debt-cutting efforts are sinking private companies, while debt-ridden state firms float on | South China Morning Post

Beijing should focus its debt-reduction efforts on state-owned firms and local governments, but the biggest loser to date of the deleveraging process has been the private sector, a Chinese ratings agency said on Tuesday.

In the first five months of the year, 13 companies defaulted on about 20 bonds worth a combined 14.8 billion yuan (US$2.3 billion). Both the number of defaults and their combined value were significantly higher then the corresponding figures for the same period of last year.

Of the seven companies that experienced their first (onshore) bond default in the period, six were privately owned, according to Zhou Hao, president of China Chengxin International Credit Rating Co, a joint venture with Moody’s.

Expansion of MLF Guarantee Scope Expected to Boost China's Financial Inclusion - China Banking News:

“An appropriate expansion in the MLF guarantee scope will help to resolve prevailing market risk,” said Shang Zhenyu (尚震宇), general manager of Zhongyou Securities, to Securities Daily.

According to Shang the move will make it easier for small and medium-sized businesses to obtain financing, which in turn will drive adjustments to China’s economic structure.

How many times have regulators tried to fix this problem?


Business, Economy, Finance And Trade

Margin Calls Loom as Prices of Pledged Shares Plunge - Caixin Global Pledging stock to borrow from brokerages was one of the most popular financing approaches used by major shareholders of Chinese listed companies. But the business has been contracting since the country’s regulators recently tightened requirements on financial institutions’ risk controls due to a spike in the number of margin calls sparked previously, a senior executive with an outlet of a securities firm told Caixin.

Chart: Property Plays Bigger Role in GDP Than Believed, Study Says - Caixin Global The previously released official figures from the National Bureau of Statistics (NBS) said that the value added of the real estate industry in China amounted to 4.82 trillion yuan ($751.6 billion) in 2016, accounting for 6.48% of the country’s GDP, which was 74.41 trillion yuan. However, the NBS used the cost-accounting method to calculate the value added of housing services, which accounted for the largest proportion of the value added of the real estate industry...Taking that into account, the adjusted value added of the real estate industry in China was 8.92 trillion yuan in 2016, accounting for 12% of its GDP, which was basically the same as the U.S. and Japan, according to the research.

How China’s Yuan Is Outperforming Major Currencies - WSJ investors who bought the yuan in the past six months still generated the best total returns—including interest payment—compared to investments in other major currencies including the euro and some emerging markets. The central parity rate of the yuan on Wednesday strengthened 0.2% to 6.4040 against the dollar, its biggest one-day boost since May 14.

China Ghost Cities Photos - J Capital Research Eye candy for pessimists

China is suddenly full of nice things to say about blockchain technology — Quartz “When talking about blockchain, many people are talking about ‘decentralization.’ I’d like to make a small change to the word. I think the essence of blockchain is ‘de-intermediarization.’ There is no way to get rid of the center.”

China pushes state banks into home rental market at their own risk | Reuters As property prices rocket across China, Beijing has appealed to the country’s banks and insurers to help accelerate the development of rental markets as a way of making homes more affordable – and rein in speculative sale markets.

A 9,500% Stock Surge Turns Janitors Into Millionaires in China - Bloomberg at China’s Sunny Optical Technology Group -- whose stock has climbed faster than any other in MSCI Inc.’s global indexes over the past decade -- the richest employees are just as likely to be factory workers, janitors and cafeteria chefs. The lens maker’s unusual decision to hand out stakes to early employees, regardless of their position, has turned hundreds of them into millionaires, according to data compiled by Bloomberg. The previously unreported value of their holdings has ballooned as Sunny Optical’s shares surged more than 9,500 percent since June 2008, trouncing even Netflix Inc.’s 7,500 percent gain.

Credit Suisse to pay $47m to end DoJ ‘princelings’ probe - FT $$ The scandal surrounding the hiring of the sons and daughters of powerful political families in China rocked several US and European banks starting in 2013, when the US Securities and Exchange Commission launched an official investigation into whether the practice violated the US Foreign Corrupt Practices Act.

China's environmental protection inspection to benefit steel market - Platts Six inspection groups were sent out at the end of May to 10 major steelmaking provinces across China to supervise the remedial treatments for environmental protection, which may rein in the rising crude steel production and improve the market sentiment, market sources said. The ten provinces -- which include Hebei, Henan, Inner Mongolia, Ningxia, Heilongjiang, Jiangsu, Jiangxi, Guangdong, Guangxi and Yunnan -- had a combined crude steel production of 433.5 million mt last year, accounting for 52.1% of the country's total production, S&P Global Platts calculation based on the data from National Bureau of Statistics showed.

筑牢网络安全和金融安全防线有效防控互联网金融领域风险人民银行党委深入学习贯彻习近平总书记在全国网络安全和信息化工作会议上的重要讲话_领导活动_中国金融新闻网 PBoC Party Committee holds a study session on Xi's speech at the recent national cybersecurity and informatization work conference, has a focus on dealing with risks from Internet finance

 

Politics, Law And Ideology

中央反腐败协调小组国际追逃追赃工作办公室关于部分外逃人员有关线索的公告-中央纪委网站 CCDI issues a list of 50 fugitives who have fled overseas, some nearly 20 years ago. They seem to know the addresses of some. Does the CCDI or PSB contract with local private detectives to track down these people? It also published a handy chart of the wanted- 图解:50名涉嫌职务犯罪和经济犯罪的外逃人员有关线索一览表  23 are suspected of being in the US, 11 in Canada, 6 in Australia

 

Foreign and Military Affairs

Putin Reveals How He Celebrated Birthday With China's Xi Drinking Vodka - Sputnik International "President Xi Jinping might be the only world leader I happened to celebrate one of my birthdays with… Well, I am not concealing it, we drank a shot of vodka each," Putin told the broadcaster..."He is a very easygoing and soulful person. At the same time, he is a very reliable partner," Putin noted.

Interview with Putin: Xi a very reliable partner - People's Daily Online Putin notes that he and Xi Jinping shared the Russian leader's 61st birthday together in 2013 on the sideline of an Asia-Pacific Economic Cooperation forum in Indonesia. "On that day, after we finished our work, President Xi came to celebrate my birthday. He is easy going and sincere, a very reliable partner. Like leaders of many other countries, he is striving for the maximum outcome of his work to benefit the people of his country. He is excellent at analysis. It's really interesting to discuss with him about international and economic issues," said Putin.

Ex-CIA Officer’s Case Highlights Fears About Reach of Chinese Spying - WSJ $$ Former U.S. intelligence officer Kevin Mallory was months behind on his mortgage, $30,000 in debt, and getting financial help from his church, when Chinese agents approached him in 2017 to work for them, according to testimony at his espionage trial this past week... In an opening statement and through cross-examination, Mr. Mallory’s lawyers acknowledged his financial troubles. A CIA employee whom Mr. Mallory contacted about the Chinese agent testified against him last week, saying he knew of Mr. Mallory’s financial troubles because they attended the same Chinese congregation of the Church of Jesus Christ of Latter-day Saints. “I wrote the checks,” said the witness, Ralph Stephenson, referring to checks from the church to needy members that Mr. Mallory had received. He also said he found Mr. Mallory’s outreach extremely inappropriate and informed security.

Famous for its resistance to immigration, Japan opens its doors - FT $$ Led by an influx of workers from China, Vietnam and the Philippines, Japan is in the midst of a quiet revolution when it comes to immigrant workers. Though the total number of foreign workers in Japan is small compared with the more than 3m in the UK and Germany, it is catching up rapidly — a remarkable shift for a nation famous for resistance to immigration.  //  29% from China

How China Seizes Its Neighbors' Waters - Foreign Affairs - Bonnie Glaser & Gregory Poling Distracted by other crises and unused to confronting a challenger that employs coercion short of actual military force, Washington’s policy tools have so far proven grossly inadequate. During a Senate Foreign Relations Committee hearing on May 15, Deputy Assistant Secretary of State Alex Wong said that the Trump administration’s South China Sea policy consists of four things: freedom of navigation operations, legal diplomacy, maritime security assistance, and support for the Association of Southeast Asian Nation’s efforts to negotiate a code of conduct with China. But all of those have been central to U.S. South China Sea policy since the Obama administration, and while necessary, have proved far from sufficient to prevent China from restricting freedom of the seas.

China's isolation at the Shangri-La Dialogue - The Washington Post - John Lee almost all significant maritime countries have moved from a neutral or hedging posture to a countering or balancing one to the extent that they are able. This includes preparedness to host and support more U.S. military assets and closer naval and intelligence coordination with other countries in response to Chinese activity... Confused messages and noise emanating from the White House are unhelpful. However, China is still an incomplete maritime power, and resistance against Beijing is on the rise. The advantage remains with the United States.

Opinion | America, Hold on to Your Allies. You’ll Need Them. - The New York Times If the Trump administration truly seeks to address the challenges posed by China that are outlined in the National Security Strategy and National Defense Strategy, it is essential to temper the president’s unilateralist and protectionist proclivities, rebuild relations with allies and restore American credibility and leadership. Alliances should be at the core of the United States’ strategy to effectively compete with a rising China. Until Washington heeds this advice, Beijing will continue to exploit the opportunities that are falling into its lap.

China India: China, India will never be apart: India's envoy Gautam Bambawale - Times of India India and China will work out their differences to ensure the two countries continue to progress and prosper together, India's envoy Gautam Bambawale said ahead of Prime Minister Narendra Modi's bilateral meet with Chinese President Xi Jinping on the sidelines of the Shanghai Cooperation Summit (SCO) this week. In an interview to the state-controlled China Central Television (CCTV), Bambawale said India and China will not "be apart" from each other on the path of development  //  Comment: Is India the wobbliest bit of the Quad?

Malaysia finance minister suggests China connection to 1MDB - FT $$ “We are strongly suspicious this is all part of the 1MDB scam,” Mr Lim said at a press conference. “The attorney-general’s chambers have also confirmed that these contracts were signed despite numerous unanswered questions and red flags raised,” he added in a statement

World Environment day: China Ghana bauxite mining plan threaten forest, rare species — Quartz At 232 square kilometers, the Atewa Forest Reserve in Ghana’s Eastern Region is home to rare flora and fauna including two butterfly species not found anywhere else in the world – Mylothris atewa and Anthene helpsi – and a rediscovered West African White-naped Managbey monkey classified as ‘endangered’ on the IUCN Red List of Threatened Species. The reserve is also the source of three major rivers that serve five million people including residents of Accra, the capital. Local residents and environmental campaigners fear the ecosystem would be irreversibly decimated if plans for a multi-billion dollar deal with the Chinese Development Bank to mine bauxite in the forest goes on.

Bangladesh balances between big brothers China and India | East Asia Forum ‘India should not be worried about Bangladesh’s close ties with China; the cooperation is meant only for development’, reassured Bangladesh’s Prime Minister Sheikh Hasina while speaking to a visiting delegation of Indian journalists recently. Statements of this kind from Bangladesh’s leader point to a new reality for the country, where balancing two of Asia’s rising powers is slowly becoming the diplomatic mainstay. As the strategic rivalry between India and China intensifies, Bangladesh increasingly finds itself embroiled in a great game along the Indian Ocean region.

Beijing Announces Inaugural China-Africa Defense Forum - Defense One China has announced it will host the inaugural China-Africa defense and security forum later this month, signaling its deepening engagement in Africa. Military officials say the summit will focus on regional security issues, financing and upgrading Africa’s security capacities, and improving defense cooperation.

Cyber Sovereignty and the PRC’s Vision for Global Internet Governance - Jamestown The PRC has also sought to build acceptance of its technical and cyber diplomacy through the technology-focused dimensions of the Belt and Road Initiative, increasingly described in official PRC statements as a “digital Silk Road” (Xinhua Silk Road News, May 17). The joint communique issued at the close of last year’s Belt and Road Forum in Beijing announced pledges by participating nations to cooperate on “telecommunications and information and communication technology”, so as to “put into place an international infrastructure network over time”. The communique also calls for “harmonizing rules and technological standards when necessary” to “maximize synergies in infrastructure planning and development”. e-commerce, digital economy, smart cities and science and technology parks” (Xinhua, May 15 2017).

China has dragged Male into debt trap: Mohamed Nasheed - Reuters China has dragged the Maldives into a debt trap and any future government formed by the Opposition will be unable to repay the loans unless a review cuts them to real value, exiled former President Mohamed Nasheed told Reuters on Monday. The Maldives, home to 400,000 people and best known as a tropical paradise for tourists, has experienced political unrest since Nasheed, its first democratically-elected leader, was forced to quit amid a mutiny by police in 2012.

Unmanned 'shark swarm' to be used in sea battles, military patrols - Global Times A Guangdong company has tested 56 unmanned boats and is working with the military to develop a "shark swarm" for sea battles and military patrols.  The unmanned drone-like vessels were tested in formation and demonstrated their potential for military use in the sea near Zhuhai, Guangdong Province, according to a statement the company sent to the Global Times on Tuesday.

China launches meteorological satellite to benefit Belt and Road countries | english.scio.gov.cn Home > Belt and Road > News >  China launches meteorological satellite to benefit Belt and Road countries Belt & Road China on Tuesday launched the new Fengyun-2H meteorological satellite to improve the accuracy of weather forecasting. Xinhua丨Updated: June 6, 2018 China on Tuesday launched the new Fengyun-2H meteorological satellite to improve the accuracy of weather forecasting and provide better meteorological services to countries participating in the Belt and Road Initiative.

In Cambodia, stalled Chinese casino resort embodies Silk Road secrecy, risks | Reuters A five-hour drive from Cambodia’s capital, Phnom Penh, Dara Sakor was once touted by the Chinese company building it as a city-sized casino resort for “extravagant feasting and revelry”. Today, it is a sprawl of mostly empty hotel buildings, deserted beach bars and the unfinished shell of a casino on a remote part of the Cambodian coast. Beyond the resort, the dusty foundations of a planned investment zone stretch down to a container port - both unfinished and idle. Despite its troubles, the resort and surrounding development has been lauded as a champion of China’s Belt and Road initiative, as the new Silk Road is officially known.

 

Hong Kong, Macao

Macau Casinos Drop for Fourth Day on China Crackdown Speculation - Bloomberg Macau casino shares declined for a fourth straight day as speculation over a renewed clampdown on capital outflows by China added to concerns of a slowdown in gaming revenue growth. Investors are assessing the risks to Macau’s gaming industry after banks withdrew some cash-back machines from pawnshops and jewelry shops inside casinos in recent days. The government in the past has imposed restrictions on the use of such machines in an effort to control the flow of currency out of China. The machines are a popular source of cash for casual gamblers in Macau.

Tencent's Ma Unveils WeChat Travel Plan for China, H.K. Bay Area - Bloomberg Tencent Holdings Ltd. is working with the Chinese government to create an electronic pass system that smooths travel between Hong Kong, Macau and the southern province of Guangdong. The unusual proposal would see multiple travel documents linked to Tencent’s WeChat app to streamline border crossings, the Shenzhen, Guangdong-based company said in a statement. With the ‘E-card’ ID system, users some day might be able to check into hotels and set up bank accounts if regulators approve, the company said.

 

Taiwan

Top political advisor reiterates 1992 Consensus at cross-Strait forum - Xinhua Wang Yang, top political advisor and a senior Party official, stressed the 1992 Consensus at the opening ceremony of the 10th Straits Forum in Xiamen in east China's Fujian Province Wednesday..."Taiwan independence" separatist forces and their activities are the biggest threat to cross-Strait peace and stability, since they undermine the national sovereignty and territorial integrity and instigate hostility and confrontation among compatriots from across the strait, he said. Wednesday CCTV Evening News on Wang's comments 汪洋出席第十届海峡论坛并致辞 

 

Tech And Media

China Has Some Of The Best Hackers In The World. Its Government Wants To Keep Them There-Buzzfeed In May, DEF CON held the first ever China version of its long-running hacking conference....China, like the US and a number of other countries, does maintain a public database of software vulnerabilities that’s a vital resource for IT professionals everywhere. But China also often quietly falsifies the date when a vulnerability was discovered, which lets China’s elite government hackers continue to exploit a vulnerability until it is no longer useful. Moriuchi’s company, Recorded Future, recently released a study that showed that the Chinese government quietly and consistently obscures the real dates on which vulnerabilities were disclosed. That lets Chinese hackers hide when they were using an exploit.

People’s Liberation Army and corporate China draw ever closer - FT $$ There are numerous beneficiaries of this largesse. Some of them are well known; companies such as Baidu, which is working closely with the government on technologies involving artificial intelligence. Or take Shenzhen-based Da Jiang Innovations (or DJI) which today is a worldwide pioneer in civilian drones — but these drones also have military applications. Moreover, the (on and off again) US sanctions against telecoms firm ZTE came as a stark demonstration of the dependence of China on high-end semiconductor chips from elsewhere. That could lead to an influx of government funds to local chipmakers such as Shanghai-based Semiconductor Manufacturing International Corporation. Meanwhile, other companies that have one foot in the military sphere and the other in the civilian are far less well known. Take for example, Guangzhou Haige Communications, which is the beneficiary of orders for communications and navigation products from both the government and private sector.

Ofo responds to “smear campaign,” sends lawyers letters to media · TechNode Ofo has taken to its WeChat public account to counter rumors that it is struggling and laying off staff, our sister site is reporting (in Chinese). The company published a posting entitled “No company has ever failed because of rumors!” where it stated its findings of a media survey of slanderous articles and postings across the Chinese internet. The posting ends with ofo saying it had already sent lawyers’ letters to the media companies involved.

Video Site YY Streams Into Southeast Asia With Bigo Deal - Caixin Global YY Inc., one of China’s biggest livestreaming platforms, announced a further $272 million investment in its Singaporean cousin, Bigo Inc., which enjoys an established presence in Southeast Asia and a foothold in South Asia and the Middle East.

Lenovo’s Comeback Plan? $94 Smartphone - Caixin Global Personal computer giant Lenovo Group Ltd. is aiming for a comeback on its home turf by launching a slew of smartphones priced as low as 600 yuan ($94). The once-prominent Lenovo has fallen behind its homegrown rivals. It sold 1.8 million handsets in China last year, ranking 10th among smartphone-makers, according to research firm GfK SE. Chinese manufacturers shipped 360 million phones in the country last year.

Tipping WeChat content creators returns to iOS and Android · TechNode Tips for original content creators on WeChat is back on both iOS and Android after the WeChat team reached an agreement with Apple. The tips will go directly to the author of the individual piece or article, not to the public account itself. Tencent blocked the function in the iOS version of WeChat in April 2017 after Apple found it was at odds with its in-app purchasing rules. Given the huge sums of money given to popular live streamers, this could prove highly lucrative to content creators. Tencent itself has recently been pushing content creation hard across its many divisions.

 

Society, Art, Sports, Culture And History

After meteorite crashes into Yunnan, China, treasure hunters are hoping to cash in — Quartz Jiang said at least a thousand people have participated in the hunt. “The price of the meteorite fragment has reached far beyond a reasonable price,” Jiang told (link in Chinese) Chinese newspaper Beijing Youth Daily. In October, a meteorite association put up a 10,000 yuan ($1,600) bounty for fresh fragments—as the information contained (link in Chinese) within the rocks fades with time—after a meteorite crashed into Yunnan, but no one was able to collect it.

Eastern Chinese City Issues 20 New Rules to ‘Civilize’ Residents - Sixth Tone Don’t play with your phone at family reunions. Don’t wear slippers and pajamas in public. Let people off an elevator before you rush to get on. These are just three of 20 updated etiquette guidelines issued by the government of Suqian, a city in eastern China’s Jiangsu province, Sixth Tone’s sister publication The Paper reported Tuesday.

 

Energy, Environment, Science And Health

Rebutting a rebuttal: Just how full is northern China’s water butt? | China Dialogue Charlie Parton responds to claims that water availability is not threatening north China’s development...We certainly have some points of agreement, but my reluctance to recant comes primarily from the article’s failure to take sufficiently into account the politics behind decision making in China and the way things actually work on the ground. The article’s argument is summed up by the view that, “Overall, north China does not need to get more water, it needs to better manage the water that it has.” I believe that the evidence goes against this first proposition, while the second is self-evident but cannot justify the first.

Conservationist Seeks Truth About Contaminated Soil in Henan - Caixin Global A district court in Beijing recently heard a case brought by Chen Yanyan, a manager with the environmental group Airman, seeking results of an official investigation into cadmium pollution in Central China’s Henan province. Chen is demanding that the Henan Department of Agriculture disclose its findings or divulge what other agencies might have relevant information, according to his lawyer, Zeng Xiangbin...Chen is also seeking a court order asking that China’s national-level Ministry of Agriculture withdraw its support for Henan in the case, Zeng said, calling the issue crucial to public health. In June 2017, after leading its own investigation into the matter, Airman found wheat samples in Henan that contained two to 18 times more cadmium than is allowed under national food-safety standards.

 

Education

China’s college entrance exam: national obsession and idealistic evolution - People's Daily Online 7 hours and 16 minutes. That is all. And six hours must be allocated for sleep. For the first time in her life, Zhang Lijuan grows such an extreme parsimony that she’d calculate every single second to make sure there is enough time for her hasty cramming. Tomorrow morning, Zhang, along with 9.75 million teenagers all over China, will face the challenge of the gaokao, a national examination that can decisively change their life direction. For the past three years, Zhang had been studying 14 hours a day, with only three days off every month. Her desk has been covered with countless textbooks and references, her teenage life filled only with study. Even on the final day before gaokao, she still reviews notes during her lunch break, memorizing as many facts and formulas as possible. “I’ve been focusing on one thing and one thing only: getting accepted into one of China's top universities. This is a battle I cannot afford to lose,” said Zhang.

Beijing bans bus honking during gaokao - Xinhua Beijing bus drivers have been advised to refrain from honking on 381 routes near the city's 91 gaokao exam venues to ensure a quiet environment for test takers.

 

Beijing

Beijing Breaks 50-Year Record as Summer Temperatures Soar to 39°C | the Beijinger Beijing set a new local record as temperatures soared to 39 degrees Celsius (102 F) on Monday, marking the highest recorded temperature in 50 years.