I went to bed just after news of a call between Liu He, Lighthizer and Mnuchin, so woke up thinking that the Huawei CFO Meng Wanzhou's case really could be ring-fenced.
President Trump also sounded optimistic in a tweet this morning:
Then the news hit that China has detained Michael Kovrig, a former Canadian diplomat who now works as a senior advisor for North East Asia for the International Crisis Group. So far neither government has confirmed his detention, but the fact that it became public so quickly will make it harder to find a quiet solution.
Kovrig is not a relatively unknown private citizen; he is a former Canadian government employee with many friends in the media and throughout many governments who works for a highly respected NGO. His detention will likely blow up very quickly, and I certainly would not expect the Canadians to agree to a prisoner exchange for the Huawei CFO, whose bail hearing continues today.
So far Beijing is trying hard to avoid directing too much ire at the US. Canada looks like a much easier target, though this detention will probably be self-defeating. Remember all the propaganda about how China welcomes foreigners, is open for business and governs according to the law? That falls flat when you freak out large swathes of expats.
December was supposed to be a triumphant month for Beijing as the 40th anniversary of the Reform and Opening Third Plenum is just a week away and the propaganda organs are especially engorged with praise for the Party and its policies.
Mr Kovrig is a great guy (and a very loyal Sinocism subscriber) and I hope there is a positive resolution for him soon.
Thanks for reading.
The Essential Eight
1. US-China trade talks
The U.S. and China started the latest round of trade talks with a phone call involving Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He.
The three senior officials discussed Chinese purchases of agricultural products and changes to fundamental Chinese economic policies during the phone call, said people familiar with the conversation. They didn’t provide further details.
As part of the trade truce reached between Mr. Xi and Mr. Trump, Chinese officials are also considering making changes to the Made in China 2025 plan, a state-led industrial policy aimed at enabling Chinese companies to dominate a number of industries such as artificial intelligence and robotics, said people familiar with the matter..
Wu Handong, an adviser to China’s Supreme People’s Court, told The Wall Street Journal on Tuesday that China is speeding up approving a revised patent law in part to address U.S. concerns.
China is moving toward cutting its trade-war tariffs on imported U.S.-made cars, a step already claimed by President Donald Trump as a concession won during trade talks in Argentina.
A proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent has been submitted to China’s Cabinet to be reviewed in the coming days, according to people familiar with the matter.
Chinese Vice-Premier Liu He spoke by phone on Tuesday with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, exchanging views on pushing forward the next stage of trade talks, China's Commerce Ministry said.
The two sides exchanged views on implementing the consensus that top leaders reached in the latest meeting and advancing the timetable and roadmap about the next round of trade negotiations, the Commerce Ministry said in a statement.
2. Former Canadian diplomat detained in China
The International Crisis Group think-tank said on Tuesday it was aware of reports that its North East Asia senior adviser, Michael Kovrig, had been detained in China.
“We are doing everything possible to secure additional information on Michael’s whereabouts as well as his prompt and safe release,” the group said in a statement. Kovrig is a former Canadian diplomat who worked in China.
He is a former Canadian diplomat, per his ICG bio:
Michael Kovrig joined Crisis Group in February 2017. As Senior Adviser for North East Asia he conducts research and provides analysis on foreign affairs and global security issues in North East Asia, particularly on China, Japan and the Korean peninsula.
Michael Kovrig has previously worked as a Canadian diplomat in Beijing, Hong Kong and at the UN in New York, as a communication specialist at UNDP and a China analyst at Rhodium Group. A Mandarin Chinese speaker, Michael has a master’s degree in international affairs from Columbia University
His Twitter feed was last updated 12.9.
Beijing has a blueprint for detaining Canadians when the US requests extradition of PRC citizens--Garratts recount dark odyssey through China’s security apparatus - The Globe and Mail 2016:
The surprise arrest launched a dark odyssey through the Chinese state security apparatus: Mr. Garratt was imprisoned for two years on espionage charges, Ms. Garratt was detained, then placed under surveillance, and the family was traumatized, immiserated and finally reunited, with troubling questions to spare. The episode would also become a flashpoint in Sino-Canadian relations as the countries negotiated the launch of talks on an extradition treaty...
Unbeknownst to them, another drama was playing out, as the United States sought the deportation from Canada of Su Bin, a Chinese man accused of masterminding a plan to steal U.S. military secrets. Diplomatic discussions suggested very strongly the Garratts had been seized in retribution.
"The Su Bin thing was front and centre," said James Zimmerman, a prominent U.S. lawyer in Beijing hired by the family. "In my view that was pretty much the reason for all this happening."
AFTER THEIR DETENTION, the Garratts found themselves caught in China’s Kafkaesque justice system, interrogated regularly but with nothing to confess. Their family retained James Zimmerman, an American lawyer with the firm Perkins Coie, who had spent nearly two decades working in Beijing. He began to piece together the case against the couple.
The Chinese government, he realized, was leveling charges against Kevin Garratt that were almost a mirror image of the US charges against Su Bin. The Chinese Foreign Ministry told The New York Times that the Garratts were being investigated for stealing intelligence “about Chinese military targets and important national defense research projects, and engaging in activities threatening to Chinese national security.” As if that weren’t menacing enough, on February 19, 2016, China amended the indictment against Kevin to include more serious charges.
"For any bullying behavior that infringes on the legitimate rights and interests of Chinese citizens, China will never sit idly by and will spare no effort to safeguard the legitimate rights of Chinese citizens and the justice of the world," Wang added.
Wang made the remarks at the 2018 Symposium on International Development and China's Diplomacy in Beijing.
3. Huawei CFO
During Monday’s hearing, her team outlined a security plan that would have Meng reside at one of her two multimillion-
dollar Vancouver homes under the watch of her husband, offer millions in cash and real estate as collateral, wear a tracking device and be watched around the clock by a private security firm that would monitor her movements, all at her own expense.
But the judge, Justice William Ehrcke, questioned whether her husband, who is not a permanent resident of Canada, was fit to supervise her release. The prosecutor argued that Meng was a flight risk who should not be released.
All websites: Regarding the detention of Huawei CFO Meng Wanzhou, other than authoritative reports from CCTV, People’s Daily, Xinhua, the Foreign Ministry, etc, do not republish, independently gather news, use self media, or publicize via screen pop-ups. Strictly manage comments.
The detention of Huawei’s Meng Wanzhou last week has affected Canadian companies, causing Canada Goose’s share price to slump, the official Weibo account of a website backed by state-run Global Times said Tuesday. Calls have gone out on the Weibo social-media platform to boycott Canadian brands, including Canada Goose.
In a statement published by Menpad, a Shenzhen-based smart products provider, on Monday, the company said it will prioritize to use Huawei's chips and give its employees a 15 percent subsidy on the market price of Huawei cell phones to support Huawei.
The company vowed to punish its employees if they are found to purchase Apple's iPhones, Huawei's major competitor. The penalty equals the iPhone's market price. It also added that the company will stop purchasing US-branded computers and cars and also offer a double bonus to employees who obtain export orders to the US...
Meng’s arrest may spill over into to areas such as trade, said Ruan Zongze, a senior fellow of the China Institute for International Studies in Beijing, depending on Canada’s response to Beijing’s demands for her release.
“The ball is in Canada’s court,” said Ruan. “China has already been very clear, so there should be no illusions.” Ruan added that “I hope this is an isolated incident, but in my opinion, it is hard to guarantee that it will not influence other aspects of the China-Canada relationship.”
Canada’s Department of Justice told the Post in the early hours of Tuesday that Chinese consular officials had been informed about the case on December 1, but Beijing has accused Ottawa of violating a bilateral agreement by failing to offer timely notice.
“According to the China-Canada consular agreement, the Canadian government should have notified the Chinese consulate without delay,” Lu said on Tuesday at a press conference. “The Chinese authorities did not receive any first notice but were instead informed by other channels.
In a city hall interview on Monday, the mayor said he and other dignitaries — including Canada’s defence minister — were attending an event hosted by the 122-year-old Chinese Benevolent Association (CBA) of Vancouver when Chinese consul-general Tong Xiaoling tore into the arrest and U.S. extradition proceedings.
Maybe Huawei needs to hire Mercury Public Affairs - Targets of U.S. Sanctions Hire Lobbyists With Trump Ties to Seek Relief - The New York Times:
Among the leaders of the lobbying efforts for both ZTE and Mr. Deripaska’s companies was Bryan Lanza, a former Trump campaign aide who maintains close ties to administration officials.
His firm, Mercury Public Affairs, has signed other clients facing punitive measures from the United States government, including the United States subsidiary of Hikvision, a company owned by the Chinese government.
The company, according to lobbying filings, paid a Mercury team including Mr. Lanza a fee that started at $70,000 a month to lobby on the carrying out of a military-spending bill. The bill bars the United States government from purchasing video surveillance products made by a handful of Chinese companies, including Hikvision, ZTE and Huawei, whose chief financial officer was arrested in Canada at the request of the United States government, apparently on suspicion of violating sanctions against Iran.
4. The end of the US-China straddle for PRC elite?
The United States, on the other hand, risks losing important potential allies in its tug of war with China’s authoritarian government. China’s tech elite are comfortable with the American system and open to many Western values. It would not be in Washington’s interest to push them closer to the Communist Party.
Many in the Chinese tech scene were already growing increasingly alienated from the party. President Xi Jinping’s order to enhance party building in the private sector has eroded the independence of private enterprises. The party has grown tougher in enforcing rules requiring companies to set up local party cells and to make executives answer to party secretaries...
If the United States isn’t careful, it could alienate a group of people who may be instrumental if China is going to loosen up and give its people more freedom. Many admire the American political, judiciary and economic systems. If the United States puts more pressure on them, they may be forced to choose sides — and the Chinese government may seem like the only choice to make.
Comment: Lots of discomfort because the tensions making it harder to have it both ways- i.e. send family to US, have US assets, while making money in the PRC and building tech, including in some cases for the surveillance industrial complex, that ends up strengthening CCP rule? This straddle looks like it will become increasingly unsustainable given the current trends in both countries and so people may have to make a choice.
Can anyone send me examples of what these folks are doing to push for loosening up and greater freedom?
We have already seen some signs of adjustments in the policy realm. For instance, the Chinese media today does not talk about trade war anymore. In media reporting, the term “trade war” has been replaced by “trade friction.” The tone of confrontation has decreased.
Xi has also given a series of talks in the past few weeks that he has used to repeatedly emphasize the importance of augmenting China’s private sector. Given both external and domestic pressures, China’s current administration has already started making adjustments, and more are expected to come in the near future.
Si Wu is the president of Unirule Institute of Economics, China's top independent think tank since 2016. He was editor-in-chief of the Chinese reformist journal Yanhuang Chunqiu, which is known for its ability to publish highly sensitive and influential analysis of Chinese politics.
5. Reform & Opening Anniversary propaganda blitz
CCTV has launched a series on "Xi Jinping's reform footprints". This one looks at his time in Zhending--习近平的改革足迹——正定_中国经济网——国家经济门户
Episode 1 - A Date With History - of "The Only Way", an 8-part documentary on reform and opening and the leadership of the CCP - [新闻直播间]八集大型政论专题片《必由之路》 今天播出第一集《历史之约》_CCTV
Theme song "Dreaming of Sunshine" for "The Only Way", not as catchy as the 2008 Olympics’ “Beijing Welcomes You”:
6. Beijing's population shift
According to official statistics, Beijing’s permanent resident population, which includes native Beijingers who hold “hukou” or household registration and non-native Beijingers who have legally lived in Beijing for six months or more, fell for the first time in 2017. The 2017 population was 21.7 million people, down 22,000 from 2016.
The report found that 132,000 registered migrant residents left the city between 2016 and 2017. The proportion of non-native Beijingers living in the city was 36.6% in 2017, down from 37.2% the year prior.
The average education level of those who remain in the city is on the rise. Between 2010 and 2017, the proportion of those registered to live in Beijing who have a college degree or higher increased to 37% from 33%, with 1 in 20 now holding a postgraduate degree...
However, the report suggests that, like the rest of China, Beijing faces an aging crisis. The proportion of people over the age of 65 rose to 10.5% in 2017 from 8.7% in 2010, it said. The proportion of people of “working age” — between 15 and 64 — has fallen from 82.7% in 2010 to 78.6% last year.
7. University of Michigan says goodbye to its Confucius Institute
“This transition is driven by a desire to more broadly include the work of exploring and studying Chinese visual and performing arts within U-M’s regular academic and cultural units,” said James Holloway, vice provost for global engagement and interdisciplinary academic affairs.
Meanwhile, U-M is in communication with Hanban, exploring alternative ways to support the greater U-M community to continuously engage with Chinese artistic culture.
U-M remains dedicated to engagement with China. The university’s enduring history of friendship with China dates back to the 1850s.
Tian Xuejun, Vice Minister of Education, attended the closing ceremony and delivered a speech. He awarded 30 outstanding Confucius Institutes (Classrooms), 41 outstanding individuals and 10 outstanding Chinese cooperative institutions. At the closing ceremony, over 20 well-known Chinese enterprises jointly launched “Confucius Institute Partnership Project” to support the development of the Confucius Institute.
I wonder what the takeaways were from the "Effective branding of Confucius Institutes" were:
8. A zombie apocalypse with a China twist
A shopping mall also features prominently in “Severance” (Farrar, Straus & Giroux), Ling Ma’s zombie apocalypse of a début, which was published in August, won the Kirkus Prize for fiction in October, and has begun to pop up, as the year nears its end, on various best-of-2018 lists...
This blowhard, a former I.T. guy named Bob, “who has played every iteration of Warcraft with near a religious fervor,” is not the hero of the book. No one is, really, but the protagonist is Candace Chen, a quiet, dispassionate twentysomething who, in the years leading up to the apocalypse, lives in Brooklyn and works in Manhattan, at a publishing company, where she oversees the manufacture of Bibles, mostly in China. (“Of any book,” Candace notes, “the Bible embodies the purest form of product packaging, the same content repackaged a million times over, in new combinations ad infinitum.”) “Severance” is set not in the near-future typical of dystopian fantasies but in a reimagined version of the recent past—specifically, autumn, 2011, around the time of the Occupy Wall Street protests in Zuccotti Park. The epidemic that has befallen the globe is called Shen Fever—it is believed to have originated in Shenzhen, China, the world capital of electronics manufacturing—and it is contracted through the inhalation of “microscopic fungal spores.” Before it kills its victims, it sends them into a zombie-like cycle of repetition, endlessly performing familiar tasks unto death.
The book on Amazon
Business, Economy, Finance And Trade
Add an Apartment to Your Online Shopping Basket? In China, Sure - Bloomberg Distressed property listings on Alibaba Group Holding Ltd.’s Taobao auction site, the country’s largest, rose 88 percent in October from a year earlier as the company expanded its offerings by working with courts and asset managers. Across all auction sites in China, distressed real estate listings surged to a record 1.3 trillion yuan ($190 billion) this year, data compiled by realtor Seatune show.
China November loans top forecasts but other credit gauges at record lows | Reuters But several other key credit gauges remained stuck at record lows or fell to new lows, suggesting China’s policymakers will need to step up support efforts soon to stabilise the slowing economy. “Generally speaking, the situation is not satisfactory, and monetary policy should maintain the current tone,” said Wang Yang, an economist at the Development Research Center, a government think tank.
Chinese province pledges billions to drive tech, innovation | Reuters Xinhua said Zhejiang’s provincial, municipal and county-level governments would spend 120 billion yuan ($17.5 billion) in the next five years to “boost up high-tech and internet companies as well as medical research and development”. “We will also guide social capital and financial institutions to invest around 290 billion yuan,” the news agency quoted Gao Yingzhong, head of the provincial Science and Technology Department, as saying.
Why Vehicle Sales Have Dipped for the First Time in 28 Years - Caixin There are now revived calls for the government to offer subsidies to salvage a looming decline. But not everyone agrees. Subsidies are not a panacea. They do not increase demand, but pull the demand to happen earlier,” said Chen Shihua, an assistant secretary-general at the China Association of Automobile Manufacturers...
Foreign institutions pile into Chinese government bonds | Financial Times $$ Non-residents poured a net $79bn into Chinese sovereign debt in the first 10 months of the year, a tally set to reach $100bn by the end of the year, according to figures from Morgan Stanley. This would be only a little less than the $115bn foreign investors hold in Brazilian government debt, the biggest overseas position in the EM world, and ahead of their exposure to Mexico and South Korea, the next largest holdings.
Troubled Vaccine Producer Booted From Shenzhen Stock Exchange - Caixin Global In a separate announcement, the company said the China Securities Regulatory Commission fined 17 related personnel for market violations, banned four from entering China’s stock markets for life, and three from entering the market for five years.
Dezheng Founder Gets 23 Years in Prison Over Port Forgery Scandal - Caixin A court in East China has sentenced the founder of Dezheng Resources Holding Co. Ltd. to 23 years in prison and fined the aluminum company 3.012 billion yuan ($436.57 million) over a case of fraud that lost banks billions, shook international commodity markets and deeply damaged confidence in China’s warehouses four years ago.
Yicai Global - Sea Changes in China Market Shred Record 621 Mutual Funds This Year A mass of liquidations has erupted among Chinese mutual funds amid profound changes in the country's A-share market precipitating a sustained downturn in domestic stocks this year. The funds liquidated have been a record-breaking 621 this year as of today, while only 176 dissolved last year. The tally this year is nearly twice that of the past three years combined, per statistics of state media the Beijing News.
Politics, Law And Ideology
[视频]【在习近平新时代中国特色社会主义思想指引下——新时代 新作为 新篇章】北京“吹哨报到”：高效治理大城市病_CCTV innovations in Beijing governance getting a ton of propaganda love this week. over the weekend there pieces in People's Daily, today there is a CCTV evening news piece on "blow a whistle and report for duty"--how grassroots beijing officials are working together to solve all sorts of issues for Beijing residents...looks like something that fits well with grid management and "Fengqiao Experience", given the propaganda surge would not be surprised if this is rolled out to cities nationwide..the CCP is trying to be more responsive, efficient and accountable, within reason.
Chinese Arabic school to close as areas with Muslim populations are urged to study the Xinjiang way | South China Morning Post The imminent closure of a 34-year-old Arabic language school in China’s northwestern province of Gansu has raised fears that draconian religion policies adopted in the Xinjiang Uygur autonomous region are applied to other Muslim-populated areas.
Minitrue: No Coverage of China’s 5G Development – China Digital Times (CDT) All websites: Regarding China’s 5G development, it is currently inappropriate to publicize construction of the world’s first 5G commercial network, or publish material—such as seizing speaking rights on international standards—that could easily fan international resistance.
An Unusual Criticism of Xi Jinping Reflects Core Realities in the Sino-US Trade War Analyzing the Duowei article ‘Xi Jinping Should Take Responsibility for the Extreme Leftism That is Tearing Apart China’
Minitrue: No Reports on Chengdu Church Crackdown – China Digital Times (CDT) All websites: Regarding the prohibition of Chengdu Early Rain Covenant Church on the evening of December 9th and the arrest of more than 100 people, no reporting is allowed without exception. (December 10, 2018)
Survey shows Chinese youth have high degree of national identity - People's Daily Online A recent survey of Chinese young people indicates that Chinese youth possess a high degree of national identity, with 93.5 percent of the respondents answering that they “would still like to be Chinese if there is a life that follows this one,” China Youth Daily reported on Dec.11. The survey, jointly conducted in mid-November by China Youth Daily, a Chinese website for volunteer services with the URL zyz.org.cn, and the Communist Youth League of China WeChat public account, for which was adopted a set of five descriptions derived from a survey produced by the Institute of Sociology of Chinese Academy of Social Sciences to measure the national identity of China’s young people. As it turned out, the survey indicated that the degree of national identity of the respondent Chinese youth was equivalently 8.84 out of 10 points based on the scores of the five descriptions.
What does the Supreme People’s Court’s new judicial transparency policy mean? | Supreme People's Court Monitor The Judicial Transparency Opinion requires the lower courts to expanding the scope of information that they make public while keeping state and trial work secrets secret. Although most people who a basic idea about Chinese law have heard about its broad definitions of state secrecy, that same cannot be said about the concept of “trial secrets”. Although the general legislation on state secrecy has been updated in the past 10 years, it is unclear whether the same can be said of the specific regulations on state secrecy in the courts. “Trial secrets” is a related concept but the relevant regulations appear to be almost 30 years old and do not define the scope of the secrets clearly. They include accounts of discussions of judicial committees, and “views from relevant units.”
Foreign and Military Affairs
China’s vice-president vows to keep ‘strategic focus’ amid mounting challenges of trade war | South China Morning Post At last year’s event, the most senior government speaker was Li Xi, the Communist Party Secretary for Guangdong. The presence of such a senior official is indicative of the gravity of the current geopolitical situation. Wang told former heads of state, government officials and business leaders that China will follow its own path and open its doors wider to the outside world, according to a summary of his speech published by China's state-owned Xinhua News Agency.
China, Germany agree to further intensify bilateral ties - People's Daily Online Chinese President Xi Jinping and visiting German President Frank-Walter Steinmeier agreed Monday to further intensify the all-round strategic partnership between the two countries, to make bilateral cooperation yield more fruits that benefit both nations, both peoples, and the world peace and prosperity. Noting that the world is undergoing complicated and profound changes, Xi said China and Germany share the same or similar views on many issues.
严惩违法犯罪 捍卫法律尊严——广大干部群众坚决支持对平度严重暴力犯罪嫌疑人进行依法处理 Xinhua piece on harsh punishments for the Pingdu rioters during the veterans protests
How Asia Fell Out of Love With China’s Belt and Road Initiative - Bloomberg In the five years since Xi launched Belt and Road, “China has been on a learning curve,” said Pang Zhongying, an international relations professor from Macau University of Science and Technology. “It’s the right thing to do for China to reassess its BRI projects and put more emphasis on risk control.”
Tech And Media
China forms new body to review ethics risks of video games | South China Morning Post The recently formed Online Games Ethics Committee has so far evaluated an initial batch of 20 video game titles, according to a report on Friday from state broadcaster China Central Television (CCTV). This was the first time the committee’s existence was made public. Without elaborating, the CCTV report said the ethics committee rejected nine games for publication in the domestic market, while ruling that certain content be modified in the 11 other games that were reviewed.
Energy, Environment, Science And Health
High-tech mother ship to fortify deep-sea ambitions - China Daily The Deep Sea 1 will enter service in the first half of 2019 and along with China's manned submersible Jiaolong will make a global deep-sea scientific voyage, the first of its kind by China, starting in 2020, according to China Ocean Mineral Resources Research and Development Association, operator of the ship.
Men ‘detained for burning low-quality coal’ in northern China amid winter crackdown | South China Morning Post A Chinese county has detained two men for “burning low-quality coal” and issued warnings to another 32 people, as authorities in the north clamp down on heating fuel over winter as part of Beijing’s war on pollution.