Founding Cyber Czar Under Investigation; China Energy Indictments; Jiang Tianyong Sentenced--Sinocism 11.21.17
Lu Wei 鲁炜, Deputy Minister of Propaganda and former head of the Cyberspace Administration of China (CAC) and the General Office of the Central Leading Group for Internet Security and Informatization, is under investigation. His personal "404 not found" fate has been rumored for months, and he did not make the 19th Party Congress Central Committee, something this newsletter noted at the time.
The official announcement states that he is under investigation for seriously violating discipline-中共中央宣传部原副部长鲁炜涉嫌严重违纪接受组织审查.
Caixin reports in China’s Former Internet Tsar Caught in Anti-Graft Net that:
Several of Lu’s associates and officials in charge of regulating online services have also been taken into custody by CCDI investigators for questioning, people briefed about the probe told Caixin.
Lu, 57, was last seen in public on October 24, when he visited Yan’an University in Yan’an, a city in Shaanxi province baptized as “the birthplace of the revolution” by Chinese communists.
He was shown on Shaanxi-TV’s prime-time news bulletin on that day, advising university officials to “abide by party chief Xi Jinping’s vision,” and increase the number of specialties taught “while holding onto its red DNA and make use of the (revolutionary) Yan’an Spirit in its teaching.”
Lu used to run Xinhua and CCDI inspection teams found problems at both Xinhua and the CAC.
Lu was known as a gluttonous jerk so few tears will be shed, though it is quite embarrassing for the Party to have the man overseeing censorship and the purification of the Internet turn out to be dirty.
If his troubles stem from his time overseeing the Internet some of the big Internet companies may be nervous. The timing of his downfall is interesting, just after the 19th Party Congress and less than two weeks before China's World Internet Conference at Wuzhen.
I will leave you with Lu and Facebook CEO Facebook Mark Zuckerberg, who did his best to position himself to see the world through Lu's eyes, in happier times in 2014 at Facebook headquarters.
The Essential Eight
1. Leading Group for Deepening Overall Reform Holds First Meeting After 19th Party Congress
Xi, also general secretary of the CPC Central Committee and chairman of the Central Military Commission, made the remarks at the first meeting of the Leading Group for Deepening Overall Reform of the 19th CPC Central Committee, which he heads.
"In studying and implementing the spirit of the Party congress, we should focus on its essence, arrangements and requirements on reform," said Xi.
Senior officials Li Keqiang, Zhang Gaoli, Wang Yang and Wang Huning attended the meeting.
Comment: Interesting that Han Zheng not there but Wang Yang was? Zhang Gaoli is still a vice premier so makes sense he attends until the NPC in March 2018. Who on the PBSC will replace him?
The reform priorities identified by the elite group touch on areas that have widened inequality in China including education and health care.
The group gave its seal of approval to several documents including recommendations to reform the judicial system for the better protection of intellectual property rights (IPR) and a three-year action plan to improve public sanitation and the rural environment.
On Monday, the Leading Group for Deepening Overall Reform of the 19th Communist Party of China (CPC) Central Committee adopted a reform project that pushes the State Council to report management of state-owned assets to the National People's Congress (NPC) Standing Committee.
In addition to introducing more transparent management of state assets, the reform measure is an example of enhanced supervision by the legislature.
"Lake chiefs" will be appointed in China to continue tackling water pollution, drawing on the successful experience of "river chiefs" introduced last year.
The meeting was the lead item in the 11.21 CCTV Evening News.The report was 10 minutes of a billboard listing what the meeting discussed, with no video from inside-[视频]习近平主持召开十九届中央全面深化改革领导小组第一次会议强调 全面贯彻党的十九大精神 坚定不移将改革推向深入_CCTV
2. Dirty China Energy Leads To US Bribery And Money Laundering Charges
After he stepped down as the city’s secretary for home affairs in 2007, he joined the China Energy Fund Committee (CEFC) think tank, as secretary general of its Hong Kong Non-Governmental Fund Committee, starting what he called a life of “civil diplomacy” and focusing on energy strategies and Sino-US dialogues...
The CEFC think tank has special consultative status with the UN’s Economic and Social Council, giving it access to influential decision makers in UN bodies, among other things.
Chi Ping Patrick Ho aka Patrick C.P. Ho, 68, of Hong Kong, China, and Cheikh Gadio, 61, of Senegal, are each charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering. Gadio was arrested in New York on Friday afternoon and presented on Saturday before U.S. Magistrate Judge Kevin Nathaniel Fox. Ho was arrested on Saturday afternoon and was presented today before U.S. Magistrate Judge Andrew J. Peck and ordered detained.
Comment: Yet another reason why China hates the US control of the plumbing of the global financial system. The bribes cleared through US banks and so the US has jurisdiction...the full indictment is illuminating (PDF)
Mr Ho is listed as the deputy chairman and secretary general of China Energy Fund Committee, a Hong Kong-based charitable NGO described on its website as having special consultative status from the UN Economic and Social Council and being funded entirely by CEFC China Energy. The official website of Shanghai-based energy group CEFC China Energy, which this year bought a 14.2 per cent stake in Russia’s state-owned oil group Rosneft for $9.1bn, describes the Hong Kong-based committee as an “advanced global think-tank fully sponsored by CEFC China and committed to the research of international energy security issues and the promotion of public diplomacy”.
UPDATE APRIL 2016: The following odyssey through the business and ideological world of CEFC, an apparent platform of the Liaison Department of the PLA General Political Department (GPD-LD), was co-written with John Garnaut.
Comment: Lots of United Front and Belt and Road ties with this one
3. North Korea Developments
Comment: President Trump added North Korea back to the US list of sate sponsors of terrorism and promised new sanctions would be announced today. At publishing time they have not yet been announced.
Song Tao, head of the Communist Party’s international department, wrapped up his four-day trip to North Korea on Monday, the first visit by a senior Chinese official since 2015...
Although Song met Choe Ryong-hae, a vice-chairman of the Workers’ Party of Korea and Kim’s right-hand man, and Ri Su-yong, Pyongyang’s top diplomat, analysts said his failure to meet Kim – if confirmed – was a deliberate snub to Xi and again showed Beijing’s limited influence over the unruly regime.
Comment: I am also hearing that US Secretary of State Tillerson offered to go to North Korea and meet with Kim but was rebuffed. If true, and a big if, it looks like Kim has no interest in negotiations until he has confidence he has a missile with a nuclear payload than can hit the US east coast...
The pledge was made during a visit to the DPRK by Song Tao, special envoy of the Communist Party of China (CPC) General Secretary Xi Jinping, on Nov. 17-20.
Analysts said they doubted that new sanctions would make any real difference on the already heavily penalized country. If anything, they said, the designation will make diplomacy more difficult without increasing Washington’s leverage, warning that North Korea will probably take the naming and shaming as another reason to stick to its hard-line policy of developing and testing nuclear weapons and intercontinental ballistic missiles.
Therefore, both Washington and Pyongyang, two primary parties to the nuclear impasse, need to stop exchanging hostilities and fueling hatred, and start building up their mutual trust, a fundamental element to underpin all other subsequent moves. Otherwise, the cause for a denuclearized Korean peninsula could be even more formidable to achieve.
To help soothe the situation, China has proposed a dual-track approach, seeking to advance denuclearization and establish a peace mechanism in parallel. Beijing, in its "suspension for suspension" initiative, calls for Pyongyang to pause its missile and nuclear activities while Washington to put its joint military drills with South Korea on hold.
According to the announcement, South Korean Foreign Minister Kang Kyung-wha will leave for China on November 21 for her first visit to the country since taking up the post. She will meet with Chinese Foreign Minister Wang Yi on November 22.
The announcement revealed that both foreign ministers will review the full range of bilateral issues ahead of South Korean President Moon Jae-in’s first trip to China in December 2017. In addition, both sides are expected to have an “in depth” discussion on the North Korean nuclear issue as well as the situation on the Korean Peninsula, the announcement said.
Comment: Any chance President Moon is wavering and leaning towards wanting to accept China's "freeze for freeze" proposal?
An FT investigation into groups and people singled out for sanctions by the US Treasury’s Office of Foreign Assets Control reveals they have maintained at least 16 registered companies in the semi-autonomous Chinese territory.
4. Lawyer Jiang Tianyong Sentenced
Comment: More mockery of "governance according to law"…
A Chinese human rights lawyer who has supported the families of other lawyers and activists detained in a sweeping crackdown since 2015 was declared guilty on Tuesday of inciting subversion by a court in southern China and sentenced to two years in prison.
The defendant, Jiang Tianyong, told the court in Changsha, capital of Hunan Province, that he would not appeal. But his family, human rights groups and other supporters have condemned his trial in August as a carefully staged sham, and rights advocates called the verdict a vendetta after Mr. Jiang helped bring to light another lawyer’s allegations that he had been brutalized in custody.
Jiang's wife, Jin Bianling, said none of the lawyers she had hired were allowed to see him and she only learned in August that the court had appointed one.
"I contacted him continuously, but as soon as he heard I was Jiang Tianyong's wife, he would immediately hang up the phone," Jin, who fled to the US in 2013, told AFP by telephone.
She said the court had tried to pit Jiang's parents against her, telling them she had been "brainwashed by the West" and to cut off contact.
Comment: Calling Daniel Bell, that does not sound very Confucian…
5. Financial Stability and Development Committee To Take Away The Punch Bowl?
Although details of the crackdown have yet to be officially released, the latest quarterly monetary policy report from the People’s Bank of China (PBOC) provides an insight into the controls likely to be imposed on these companies. Financial holding companies include both private players such as Ping An Insurance and Anbang Insurance Group and state-owned groups such as China Citic Group and China Everbright Group.
Sweeping new rules will cover areas such as market access, sources of funding, corporate governance, capital adequacy and related party transactions, according to the report which was published late on Friday. Equity investments by non-financial companies in financial holding companies will be restricted and standardized, the PBOC said. On a more general level, the central bank pledged to speed up the introduction of the rules for financial holding companies and to continue improving its macro-prudential framework to cover an increasing array of financial activities, markets, institutions and infrastructure.
6. New Tool To Track PRC Investment in the US
With the launch of FDI Gateway, a free and accessible knowledge hub, we aim to offer something to both U.S. communities and companies and would-be Chinese investors. The product has two components because investment requires personal interactions between companies and local-level stakeholders.
First, the China-facing component aims to provide Chinese investors with a better understanding of the local conditions and communities in which they might invest. Second, and more important, as a nonprofit American institution serving the public interest, we have an obligation to help U.S. states and other interested parties scope out potential Chinese investors they probably have never heard of or even considered as possible partners.
7. China's Credit-Efficiency Not As Bad As Some Say?
Comment: So argues Brad Setser
Arguing China’s credit growth is too high in effect is arguing that the post-crisis fall in China’s external surplus isn’t sustainable...
And I don’t doubt for a second that the rise in banks and shadow bank credit to Chinese firms continues to generate hidden losses. Rapid rises in credit are a reliable indicator of future banking trouble. It would take a brave man or woman to argue that China’s financial system has successfully intermediated roughly 200 percent of GDP in credit to firms and households.
But the standard calculation that China’s credit growth has lost efficiency relative to 2007 still bothers me for one reason: it leaves out net exports.
8. Chinese Communist Party Branch at University of California Davis
“It is because we have later learned that this [establishing a party branch] does not comply with the local laws,” Mu said. “Of course we should respect the local laws when we’re here.”
The US Foreign Agents Registration Act (FARA) requires all individuals and groups acting under the direction or control of a foreign government or political party to register with the Department of Justice in advance and regularly report their activities.
Comment: Is the FBI investigating?
Business, Economy, Finance And Trade
Beijing Land Supply Surges, but With Strings Attached - Caixin Global The central government has ordered big cities like Beijing to provide more affordable housing as surging prices have put owning a home out of the reach of millions of ordinary people. In response, the capital city’s government has imposed conditions on most of the land auctioned. Successful developers will be required to build less expensive housing that is subject to sales price caps set by the government, or apartments whose ownership is shared between the purchaser and the local authority — a program rolled out in the city at the end of September aimed at lowering the cost of owning a home.
China's Ping An Is No. 2 to Berkshire Hathaway and Rising - Bloomberg Shares of the Chinese insurer, which more than doubled this year to boost the company’s market valuation to about $210 billion, jumped on Tuesday to a new record after Chief Financial Officer Jason Yao told reporters that the firm’s technological prowess was under-rated. Ping An’s valuation has much room to increase as the company gradually spins off Internet technology units for their own listings, Yao said on Monday in Shenzhen, where the company held its investor day.
China Is Stepping Up the Fight Against Its Mountain of Debt - Bloomberg Data compiled by Bloomberg Economics tracking all three forms show shadow banking has held its own amid the debt crackdown, reaching a fresh record 26.8 trillion yuan ($4 trillion) at the end of August, the latest data available.
China property rules to tighten up against bubble risk - CNBC The authorities said they would stop funds being illegally funneled into property and that capital flow would be more forcibly balanced between real estate and other industries. CCTV also reported that there would be greater scrutiny of the land market to prevent the underlying cost from pushing up property prices
Troubled Qudian being accused of user info leakage - TechNode The personal information of nearly 1 million students was on sale on black market at a price of RMB 100k. The package was also being sold separately by province with files for each province consisting of tens of thousands of entries. For example, the file for Jiangsu Province includes 51,289 entries. “Data from Beijing, Shanghai and Jiangsu was priced at RMB8,000,” the report citing people familiar with the matter.
In China, Unsecured Short-Term Lending Now a Trillion-Yuan Industry - Caixin Global These loans have already surpassed the 1 trillion yuan ($151 billion) mark, according to statistics compiled by research firm Wangdai Zhijia — Chinese for “Online Lending House.” It projected that the total amount of unsecured short-term loans in 2017 is set to be six times more than in 2016.
China Says Brokerage Too Bullish in Campaign Against Top Stock - Bloomberg Essence Securities Co. failed to conduct “prudent analysis” on Moutai and fully disclose related risks when the brokerage raised its price target on the liquor maker last week, news portal Sina reported late Monday, citing a notice from the bourse. A commentary in the state-run Xinhua News Agency on Thursday said the stock should rise at a slower pace, while the company itself issued a statement saying analysts’ share price targets and valuations in the market are “overly high.”
Home Sales Centers in the South Close to Shun Inspectors - Caixin Global In Guangzhou, while the government is probing misconduct among property developers, many developers have temporarily closed their sales centers — although none will admit that they are seeking to avoid regulators. “All sales center staff members have gone for outdoor sports training,” said a security guard in the car park of a residential project in Guangzhou’s Huangpu district.
Securities Regulator Creates Committee to Oversee Powerful Panel - Caixin Global China’s securities regulator is creating a new committee to oversee a powerful panel that reviews stock-issuance applications. This new arrangement comes at a time when many of the 66 panelists are new to the role, and several previous panelists are being probed over bribery allegations.
互金专项整治办：立即暂停批设网络小贷 多地金融办收到通知_互联网金融_金融频道首页_财经网 The internet finance dedicated risk work leading small group has issued a notice temporarily halting approval of new internet "small loan" firms // 11月21日晚间，互联网金融风险专项整治工作领导小组办公室下发《关于立即暂停批设网络小额贷款公司的通知》（下称“通知”），通知要求各省整治办速将此文件精神传达到小贷公司监管部门，计划单列市由所在省整治办传达。
“明天系”减持开始了？中天金融拟接盘华夏人寿_金融频道_财新网 Xiao Jianhua's "Tomorrow Group" starting to sell off holdings in financial firms?
Politics, Law And Ideology
中纪委副书记兼任秘书长 Yang Xiaodu, deputy secretary of the CCDI, also elected as Secretary General of the CCDI
营造风清气正的良好政治生态-新华网 Chen Min'er has a piece in the 11.21 People's Daily on building a clean and upright "political ecology"
重庆市委书记、纪委书记连续发文，重点是啥？_凤凰资讯 陈敏尔在文中强调：保持正风反腐的战略定力，“腐败的'病灶'不除，腐败的行为不绝，风清气正的良好政治生态就难以形成”；坚决抵制和反对庸俗腐朽的政治文化，“坚决抵制和反对关系学、厚黑学、官场术、'潜规则'等庸俗腐朽的政治文化，反对当面一套、背后一套的两面人做派，反对拉帮结派的圈子文化、码头文化，反对明哲保身的'官场哲学'，自觉抵制商品交换原则对党内生活的侵蚀，不断涤荡歪风邪气”。// 习近平回信勉励乌兰牧骑队员:永远做草原上的"红色文艺轻骑兵"--新闻报道-人民网
Xi writes to traveling troupe in N. China's Inner Mongolia - Xinhua Chinese President Xi Jinping wrote to an Ulan Muqir troupe (Red Bud Troupe) that travels around northern China's Inner Mongolia Autonomous Region, Tuesday, calling on them to promote literary and artistic innovation and continue producing excellent works. "In the new era, I hope you can carry forward the fine tradition of Ulan Muqir, put down roots, and serve the herdsmen," Xi, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, said in the letter.
CogitAsia Podcast: Xi Runs this Town | cogitASIA CSIS Asia Policy Blog Dr. Oriana Skylar Mastro, assistant professor of security studies at Georgetown University, and Christopher Johnson, chair of the CSIS Freeman Chair in China Studies, join us to help assess the takeaways across Chinese politics.
Implications of the 19th Party Congress: A Conversation with Peter Mattis by CSIS | Free Listening on SoundCloud In this episode, we examine what transpired at the Chinese Communist Party’s 19th Party Congress. We discuss the significance of the Party Congress’ outcomes and its implications for Chinese President Xi authority.
Foreign and Military Affairs
Artificial Intelligence Can Hunt Down Missile Sites in China Hundreds of Times Faster Than Humans | WIRED US researchers have trained deep learning algorithms to identify Chinese surface-to-air missile sites—hundreds of times faster than their human counterparts. The deep learning algorithms proved capable of helping people with no prior imagery analysis experience find surface-to-air missile sites scattered across nearly 90,000 square kilometers of southeastern China.
From rail and airports to its first overseas naval base, China zeroes in on tiny Djibouti | South China Morning Post Djibouti President Ismail Omar Guelleh will arrive in China on Wednesday for a three-day state visit that is expected to further boost ties with the African nation.
China urges Thailand to find Muslim Uighurs quickly after dramatic cell break - Reuters China said on Tuesday it has urged Thailand to “quickly bring to justice” 20 ethnic Uighur Muslims from China who broke out of a Thai detention center through a hole in the wall, using blankets to climb to the ground.
China says Shanghai security bloc could soon agree on free trade area - Reuters China hopes the Shanghai Cooperation Organisation (SCO) security bloc will soon be able to set up a long-mooted free trade area, a senior Chinese diplomat said on Tuesday ahead of a summit of the grouping in Russia late next week.
International news outlets in US deserve applause, not attacks - - China Daily News organizations receiving government funding is certainly not unique to China or Russia. It is actually a common practice in many European and some Asian countries. The NHK World of Japan, and France 24, both doing a good job in international reporting, are fully financed by their governments. // Comment: such a disingenuous article by Chen, How dumb does he think Americans are?
Xi calls on NGOs along Silk Road to enhance cooperation - Xinhua He made the remarks in a congratulatory letter to the 1st Silk Road NGO Cooperation Network Forum, which kicked off on Tuesday in Beijing.
Tech And Media
Skype Vanishes From App Stores in China, Including Apple’s - The New York Times “We have been notified by the Ministry of Public Security that a number of voice over internet protocol apps do not comply with local law. Therefore these apps have been removed from the app store in China,” an Apple spokeswoman said Tuesday in an emailed statement responding to questions about Skype’s disappearance from the app store. “These apps remain available in all other markets where they do business.” // Comment: Comment and Skype have shown they will do just about whatever Beijing asks, and yet…
China Challenges Nvidia's Hold on Artificial Intelligence Chips | WIRED China has struggled for years to make its chip industry more competitive with those from the US, Korea, and Japan. Attempts to foster alternatives to Intel and other US processors helped birth chips used in some of the country’s world-beating supercomputers, but not widely used alternatives for servers and PCs. Alibaba, China’s biggest cloud provider, relies on Intel and Nvidia chips, for example. “They may have aspirations, but when it comes to designing chips and building fabs to make them at scale the Chinese are still multiple generations behind,” says Paul Triolo, who tracks Chinese technology and related policy at Eurasia Group.
Tencent is Asia's first $500 billion company - Axios Facebook and Amazon both crossed the $500 billion threshold this past summer, with the former opening trading today with a market cap of $520 billion. In terms of tech, they all still trail market cap leaders Apple ($872 billion), Alphabet ($712 billion) and Microsoft ($636 billion)
Xinhuanet marks 20th anniversary in Beijing - Xinhua | Serving global users in more than 200 countries and regions, Xinhuanet has become the world's most important window for Internet users to know China, with average daily page views from the desktop browsers exceeding 120 million, and reaching more than 300 million people daily via mobile terminals.
China Has a New Super App — The Information $$ Meituan-Dianping, the world’s fourth-largest startup by valuation, is hardly known outside its native China. But Chinese consumers rely on it for everything from ordering lunch at the office to booking an overseas vacation. With 290 million monthly active users, it has reached a scale that sets it on a path to challenge larger rivals such as Alibaba, China’s e-commerce juggernaut.
科技部召开新一代人工智能发展规划暨重大科技项目启动会 Ministry if Science kickoff meeting for next generation AI plan
The State of Artifical Intelligence in China - Kai-Fu Lee - YouTube Recorded November 2nd, 2017
China's Top TV Dramas to Watch This Winter | What's on Weibo This is a top 10 of most popular new dramas according to Weibo’s charts and the Sohu hot charts at the time of writing.
Society, Art, Sports, Culture And History
China secures guardianship for 760,000 left-behind children - Xinhua From November 2016 to mid-November this year, 760,000 previously unsupervised "left-behind children" in China's rural areas were placed in the custody of guardians, the Ministry of Civil Affairs (MCA) said on the International Children's Day which falls on Nov. 20.
China defends soccer team’s walkout over Tibet separatist flags - Global Times "China resolutely opposes any country, organization or individual to use any form or reason to support the activity of 'Tibetan separatists,'" Foreign Ministry spokesperson Lu Kang said at a daily briefing on Monday. Lu's remarks came after the players of the Chinese under-20 team walked off the pitch and refused to play the match in Germany on Saturday when seeing spectators with flags suggesting "Tibetan independence." // Comment: Very lame of the Germans to not declare a forfeit
MAD Architects's Newest Residences Look Like a UNESCO World Heritage Site | Architectural Digest Huangshan Mountain Village is a series of buildings meant to house tourists while seamlessly blending into its natural environment
Energy, Environment, Science And Health
Seven officials sacked over tuberculosis outbreak in central China | South China Morning Post Some 29 high school and eight vocational school students in Taojiang county were recently confirmed to be infected with the deadly bacterial disease. They were still being treated in hospital, People’s Daily reported on Tuesday. A further 40 students were taking preventive medication because of their high exposure risk.
独家|环保部放宽空气质量数据弄虚作假处罚措施 邯郸等城市或得利_政经频道_财新网 Caixin reports that the ministry of Environmental Protection has reduced penalties for fudging air quality data, just as the winter heating season starts // 2017年供暖季来临之际，环保部对空气质量数据弄虚作假行为的处罚规则进行趋宽性调整，引起业内人士争议
Jobs And Events
The American Mandarin Society Next-Generation Scholars Program – American Mandarin Society This new AMS initiative will support four young professionals pursuing advanced research that benefits the study of U.S.-China relations through tailored writing mentorships with renowned experts in their field. Each scholar will commit to writing four analytical pieces (each ~1000-3000 words) over the course of a year. They will receive feedback from AMS-assigned mentors with the goal of publishing these pieces in respected policy publications or websites.