The 2018 GDP data are in focus today. There were no big surprises, as expected, but we can see clearly from the data and the official reactions that the economy is struggling.
Today marks the official start of the 40 day migration for Spring Festival. The Year of Pig starts February 5, it is worth remembering that given the massive disruptions from the holiday the economic data for January and February will be especially squirrelly.
The foreign media focus today may be on the GDP data release but I think something more important happened Monday. Xi chaired a study session of provincial and ministerial-level officials on “preventing and defusing major risks to ensure sustained and healthy economic development and social stability”.
So this was the big meeting many have been speculating about, but it was not the 4th Plenum but another meeting of provincial and ministerial level officials, as I suggested Friday it might be. The last seminar like this was at the end July 2017.
Monday’s seminar was all about schooling cadres on risks, and in proper Marxist fashion, the growing and increasingly acute contradictions. Xi and the leadership are concerned heading into 2019 and are preparing the cadres for lots of struggles.
The Year of the Pig looks like it will be an especially nasty, brutish year.
I do not know when the 4th Plenum will be held, but in my view Xi convening and chairing this meeting is a sign of his strength in the party, not weakness.
Last week’s issue with John Garnaut’s speech was widely read. One comment in particular stood out for me. Tim Clissold, author of the classic book Mr.China, disagrees with John’s views and explains why in a thoughtful comment here. I would love to hear what more of you think, so please weigh in.
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The Essential Eight
1. GDP
China’s Annual Economic Growth Rate Is Slowest Since 1990 - WSJ $$:
Some economists and investors have said China’s economy is far more anemic than the government’s 6.6% rate of expansion for 2018. They note the government’s move on Friday, just ahead of Monday’s data release, to cut the 2017 growth rate to 6.8% from 6.9%, which they said provides a slightly lower base, giving a slight boost to the fresh 2018 data.
“The economy faces downward pressure,” said Ning Jizhe, head of the National Bureau of Statistics, at a news conference Monday. In particular, Mr. Ning pointed to “complicated and severe external environment” and acknowledged the pressure from the Beijing-Washington trade conflict. He sought to dampen those concerns, saying “the economy overall is driven by domestic demand.”
Monday’s data show consumption, including purchases by individuals, households and government, made up more than three-quarters of last year’s growth.
China’s Economic Growth Dips to 28-Year Low - Caixin:
China’s gross domestic product (GDP) grew 6.4% year-on-year in the fourth quarter of 2018, down from a 6.5% rise in the previous quarter and marking the third straight quarterly drop, according to data released by the National Bureau of Statistics (NBS). The latest reading was last seen in the first quarter of 2009, when the country was mired in the global financial crisis...
China's iron ore hits over 10-1/2-month peak on strong demand | Reuters:
China’s iron ore futures rose on Monday to their highest since March 2018, extending gains on expectations of increased demand as the country’s steel inventories fell, and hopes that Beijing will roll out more economic stimulus measures.
So MoF and PBoC still not on the same page? not a great sign.-QE Speculation Dismissed by Source Close to Central Bank - Caixin
China will strengthen targeted funding support for the economy but will shun across-the-board quantitative easing (QE) to keep its debt problems in check, a source close to the central bank told Caixin, downplaying expectations for aggressive monetary loosening sparked by remarks from a finance ministry official.
A senior official at the Ministry of Finance recently called for the use of treasury bonds as a quasi-currency, drawing speculation that China might be planning to use large-scale bond purchases to inject liquidity into the world’s second-biggest economy as growth slows. But a source close to China’s central bank has downplayed the idea.
2. Xi chairs study session
Xi urges major risk prevention to ensure healthy economy, social stability - Xinhua:
President Xi Jinping on Monday told senior officials to strengthen their ability in preventing and defusing major risks to ensure sustained and healthy economic development and social stability.
Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, made the remarks when addressing the opening ceremony of a study session at the Party School of the CPC Central Committee attended by senior provincial and ministerial officials.
The opening session was presided over by Li Keqiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee. Standing Committee members Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji and Han Zheng also attended.
In his speech, Xi analyzed and raised specific requirements on the prevention and defusion of major risks in areas including politics, ideology, economy, science and technology, society, the external environment and Party building.
This entry is long but the original words are worth reading. Here is the official release, with some highlights and rough translations via Google - 习近平：提高防控能力着力防范化解重大风险 保持经济持续健康发展社会大局稳定:
习近平在讲话中就防范化解政治、意识形态、经济、科技、社会、外部环境、党的建设等领域重大风险作出深刻分析、提出明确要求。他强调，面对波谲云诡的国际形势、复杂敏感的周边环境、艰巨繁重的改革发展稳定任务，我们必须始终保持高度警惕，既要高度警惕“黑天鹅”事件，也要防范“灰犀牛”事件；既要有防范风险的先手，也要有应对和化解风险挑战的高招；既要打好防范和抵御风险的有准备之战，也要打好化险为夷、转危为机的战略主动战。
Google translate: In his speech, Xi Jinping made a profound analysis and made clear requirements for preventing major risks in the fields of politics, ideology, economy, science and technology, society, external environment, and party building. He stressed that in the face of the turbulent international situation, the complex and sensitive surrounding environment, and the arduous and arduous reform, development and stability tasks, we must always be highly vigilant. We must be highly vigilant against the "black swan" incident and the "grey rhinoceros". "Events; not only must have the first hand to prevent risks, but also have the courage to cope with and resolve the risk challenges; not only to prepare for the war to prevent and resist risks, but also to fight the strategic and active warfare [Note:Not literal “warfare”] .
习近平指出，各级党委和政府要坚决贯彻总体国家安全观，落实党中央关于维护政治安全的各项要求，确保我国政治安全。要持续巩固壮大主流舆论强势，加大舆论引导力度，加快建立网络综合治理体系，推进依法治网。要高度重视对青年一代的思想政治工作，完善思想政治工作体系，不断创新思想政治工作内容和形式，教育引导广大青年形成正确的世界观、人生观、价值观，增强中国特色社会主义道路、理论、制度、文化自信，确保青年一代成为社会主义建设者和接班人...
Google translate: Xi Jinping pointed out that party committees and governments at all levels must resolutely implement the overall national security concept, implement the requirements of the party Central Committee on maintaining political security, and ensure China's political security. We must continue to consolidate and strengthen the mainstream public opinion, increase public opinion guidance, accelerate the establishment of a comprehensive network governance system, and promote the rule of law. We must attach great importance to the ideological and political work of the younger generation, improve the ideological and political work system, continuously innovate the content and form of ideological and political work, and educate and guide the broad masses of young people to form a correct world outlook, outlook on life, values, and strengthen the socialist road, theory, and system with Chinese characteristics. Cultural self-confidence, ensuring that the younger generation becomes a socialist builder and successor
习近平指出，维护社会大局稳定，要切实落实保安全、护稳定各项措施，下大气力解决好人民群众切身利益问题，全面做好就业、教育、社会保障、医药卫生、食品安全、安全生产、社会治安、住房市场调控等各方面工作，不断增加人民群众获得感、幸福感、安全感。要坚持保障合法权益和打击违法犯罪两手都要硬、都要快。对涉众型经济案件受损群体，要坚持把防范打击犯罪同化解风险、维护稳定统筹起来，做好控赃控人、资产返还、教育疏导等工作。要继续推进扫黑除恶专项斗争，紧盯涉黑涉恶重大案件、黑恶势力经济基础、背后“关系网”、“保护伞”不放，在打防并举、标本兼治上下功夫。要创新完善立体化、信息化社会治安防控体系，保持对刑事犯罪的高压震慑态势，增强人民群众安全感。要推进社会治理现代化，坚持和发展“枫桥经验”，健全平安建设社会协同机制，从源头上提升维护社会稳定能力和水平
Google translate: Xi Jinping pointed out that in order to maintain the stability of the overall situation of the society, we must earnestly implement various measures to ensure security and safeguard stability, and work hard to solve the problems of the people's vital interests, and comprehensively do a good job in employment, education, social security, medical and health care, food safety, and safe production. Social security, housing market regulation and other aspects of work, and constantly increase the people's sense of acquisition, happiness, security. It is necessary to insist on safeguarding legitimate rights and interests and cracking down on illegal crimes. For those who are victims of economic-related economic cases, we must persist in preventing and combating crimes, defusing risks, maintaining stability and coordinating, and doing a good job in controlling and controlling people, returning assets, and educating and facilitating. We must continue to advance the special fight against evil, and focus on the major cases involving black and evil, the economic foundation of the black and evil forces, the "relationship network" behind it, and the "protective umbrella", and work hard to prevent and treat both the symptoms and the root causes. It is necessary to innovate and improve the three-dimensional and information-based social security prevention and control system, maintain a high-pressure shock situation against criminal offences, and enhance the sense of security of the people. It is necessary to promote the modernization of social governance, adhere to and develop the "Fengqiao experience", improve the social coordination mechanism for safe construction, and enhance the ability and level of social stability from the source.
习近平强调，当前，世界大变局加速深刻演变，全球动荡源和风险点增多，我国外部环境复杂严峻。我们要统筹国内国际两个大局、发展安全两件大事，既聚焦重点、又统揽全局，有效防范各类风险连锁联动。要加强海外利益保护，确保海外重大项目和人员机构安全。要完善共建“一带一路”安全保障体系，坚决维护主权、安全、发展利益，为我国改革发展稳定营造良好外部环境。
Google translate: Xi Jinping emphasized that at present, the world's major changes have accelerated and profound evolution, and the global sources of turmoil and risk points have increased. China's external environment is complex and grim. We must coordinate two major domestic and international affairs and develop two major security issues, focusing on the key points and taking the overall situation into consideration, effectively preventing all kinds of risk chain linkages. It is necessary to strengthen the protection of overseas interests and ensure the safety of major overseas projects and personnel. We must improve the "One Belt, One Road" security system, and resolutely safeguard sovereignty, security, and development interests, and create a favorable external environment for China's reform, development, and stability.
And lots of emphasis on struggle:
习近平强调，防范化解重大风险，需要有充沛顽强的斗争精神。领导干部要敢于担当、敢于斗争，保持斗争精神、增强斗争本领，年轻干部要到重大斗争中去真刀真枪干。各级领导班子和领导干部要加强斗争历练，增强斗争本领，永葆斗争精神，以“踏平坎坷成大道，斗罢艰险又出发”的顽强意志，应对好每一场重大风险挑战，切实把改革发展稳定各项工作做实做好。
Google translate: Xi Jinping stressed that to prevent and resolve major risks, it is necessary to have a strong and tenacious spirit of struggle. Leading cadres must dare to take responsibility and dare to struggle, maintain the spirit of struggle, and strengthen the spirit of struggle. Young cadres must go to the major struggles to get the guns [Note: Google misses idioms 真刀真枪 is used to mean “very much for real”. Xi is not actually saying “get the guns” here]. Leading bodies and leading cadres at all levels must strengthen their struggles, strengthen their struggles, and maintain the spirit of struggle. With the tenacious will of "stepping into the road, fighting hard and starting", we must respond to every major risk challenge and effectively Reform, development, and stability are all done well.
If someone finds a professional translation of this release please let me know. I give Google Translate about a C-, useful only for general ideas but with plenty of pitfalls
Xi keeps China on high alert for 'black swan' events: Xinhua | Reuters:
Local governments and state organizations should find a balance between stabilizing growth and fending off risks, controlling the pace and intensity of such policies, Xi said in remarks during a meeting with provincial and department officials...
China would implement long-term mechanisms that support the stable and healthy development of the property market, while making thorough evaluation of the potential impact on financial markets when drafting policies, according to Xi, who did not elaborate.
He emphasized that technology safety was an important part of national security and the country will accelerate legislation in artificial intelligence, gene editing, autonomous vehicles and drones.
The top 15 minutes of the Monday CCTV Evening News was on the seminar, looks more comfortable for the cadres than the July 2017 meeting - 习近平在省部级主要领导干部坚持底线思维着力防范化解重大风险专题研讨班开班式上发表重要讲话强调 提高防控能力着力防范化解重大风险 保持经济持续健康发展社会大局稳定_CCTV
3. Party tightening control over politics and law system
Ling Li gives a great overview of the new directive- Analysis Of the Chinese Communist Party’s Political-Legal Work Directive - First impression
It declares the absolute leadership of the Party over the work of all zhengfa institutions, including courts and procuratorates. The assertiveness of this declaration indicates a complete and unambivalent severance from the judicial independence framework…
It officially brings back the concepts of two contradictions/conflicts: (external) contradiction/conflicts between the enemy and us (the people) and internal contradiction/conflicts among us (the people), as well as the concept of people’s democratic dictatorship as one of the guiding principles of political-legal work. (Article 6.6). We can expect to see two tracks of legal practices, one for external conflicts and one for internal conflicts, and both would be legal…
It introduces the concept of political security (appeared 9 times in the document) and commands that the party-groups of all legal institutions shall take the preservation of political security as a major task
Chapter 6 has demarcated, in the most concrete terms so far, the mandates of the Party Center and the Central Political-Legal Committee (CPLC) respectively in overseeing political-legal affairs and the activities of of zhengfa institutions (courts, procuratorates, police, national security ministry, ministry of justice). In particular, Article 17 requires the CPLC to report to not only the Party Center but also the General-Secretary (GS). It may look totally expected/predictable given the fact that Xi's status as the core has been written into various Party policy documents. But in fact, it is very rare that the individual office of the GS or any other individual offices are mentioned or given a mandate in a party regulation that is publicly circulated and carries universal (cross-sector, region and rank) application power. Instead, the GS, or any other members of the Politburo or Politburo Standing Committee (PSC) exercise their power behind the shield of "Party Center" most of time. After all, according to the communist doctrine, the Party is supposed to operate under the principle of the collective leadership and thereby the GS is given NO specific mandate in the Party Charter.
Original Chinese of the directive - 中共中央印发《中国共产党政法工作条例》:
Translation by China Law Translate: Regulation on the Communist Party of China's Political-Legal Work
China's top court says no to West's model of judicial independence | Reuters:
China’s top court has urged officials from the ruling Communist Party to shun Western-style judicial independence and reject “erroneous Western thought”, state media said on Thursday, as controls over the media, dissent and the Internet are tightened.
The comments by China’s Supreme Court, Beijing’s latest attack on Western ideology, are also another sign of President Xi Jinping’s conservative political agenda.
Chinese police must guard against 'color revolutions', says top official | Reuters:
China’s police must “stress the prevention and resistance of ‘color revolutions’ and firmly fight to protect China’s political security”, Public Security Minister Zhao Kezhi said on Thursday, according to a post on the ministry’s website.
4. Detained Marxist student activists "confess"
"Confessions" by Yue Xin, Shen Mengyu, Gu Jiayue and Zheng Yongming
China Using Taped Confessions to Intimidate Young Communists, Students Say - The New York Times
For months, a group of outspoken young communists has put China’s leaders on edge, organizing a fiery campaign for workers’ rights that has evaded the government’s tight political control.
Now the authorities appear to be deploying a new weapon in their efforts to crush the movement: forcing students to watch videotaped confessions in which detained activists say they spread false information and violated the law.
Student activists, who asked not to be identified for fear of being punished, detailed the existence of the videos in interviews and online posts on Monday. They said that more than 20 students at elite Chinese universities had been forced to watch the videos in recent weeks as a way to pressure them to abandon their activism.
The criticism of the videos on was posted Github一评“认罪视频”：演技拙劣无能，可笑自导自演 – 佳士工人声援团官网 – 同战斗，共进退！ Is Github still unblocked by the GFW? If so, for now much longer? Microsoft bought Github last year, will Beijing pressure the company to censor this?
At a top Chinese university, activist 'confessions' strike fear into students | Reuters:
Yue Xin, a Beida graduate who first made headlines in April 2018 for her vocal #MeToo activism, said that the Shenzhen protests had been “politically motivated” and created a “negative impact on society”.
Yue also renounced her earlier efforts, inspired by the global #MeToo movement, to force Beida to divulge information about a decades-old rape case.
“At the time people placed too much importance on public disclosure,” she says in the video, according to students who have seen the clip, adding that “foreign forces fixated with China’s bad side” had exploited this desire to “provoke troubles”.
Remember this from the October 26 Sinocism, it is very much related - "Peking University gets a new leader":
Qiu Shuiping is the new Party Secretary of Peking University...
Qiu is a long time Beijing official with deep experience in the politics and law system, including a stint as the Party secretary of the Beijing bureau of the Ministry of State Security...
It certainly looks like this move may be part of the broader ideological hardening underway at Peking University and at educational institutions in general.
5. Xi inspects Beijing-Tianjin-Hebei coordinated development progress
In case anyone thought he was dropping the Xiong'an project or the 3Js (Jing-Jin-Ji 京津冀) plan....
Xi urges new, greater progress in Beijing-Tianjin-Hebei coordinated development - Xinhua:
Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, made the remarks during an inspection tour of the region from Wednesday to Friday.
During the tour, Xi chaired a symposium on the region's coordinated development and made an important speech.
Vice Premier Han Zheng, also a member of the Standing Committee of the Political Bureau of the CPC Central Committee, accompanied Xi on the tour of the Xiongan New Area in Hebei Province and Beijing and attended the symposium..
Visiting the campus of Nankai University in Tianjin Thursday morning, Xi said it is a priority to nurture patriotism among students for them to become a new generation of capable young people well-prepared to join the socialist cause.
In a square on campus, enthusiastic students welcomed Xi, shouting greetings such as "Welcome, General Secretary" and singing a patriotic song. Xi shook hands with students and waved to others in the crowd.
At a community in Heping District in Tianjin, Xi pointed out that community work should be people-centered with an accurate grasp of people's needs and provide targeted and elaborate services for the residents in a timely manner.
He then visited a service and administration station for veterans in the community and stressed that setting up institutions for veteran affairs is to enhance the management of veterans and better protect their welfare in order to make military service a publicly respected occupation.
Interesting that the 24:30 minute report on the Friday CCTV Evening news about Xi’s inspection tour includes a visit to a Tianjin community “party-masses service center” office 党群服务中心综合办事大厅 and learned about its grid management 了解社区网格化管理 efforts-习近平在京津冀三省市考察并主持召开京津冀协同发展座谈会时强调 稳扎稳打勇于担当敢于创新善作善成 推动京津冀协同发展取得新的更大进展CCTV节目官网-CCTV-1央视网(cctv.com)
Some background on Grid Management-China Under the Grid | China Media Project:
Earlier this month, in a piece called “A Rock Star’s Fengqiao Experience,” we looked at the recent arrest of celebrity Chen Yufan (陈羽凡) and how this affair, apparently unlinked to the politics of Xi Jinping’s so-called “New Era,” is in fact disturbingly reflective of it. We can link the Mao-era “mass line” notion of the “Fengqiao experience,” which Xi Jinping has revived over the past five years, to new and intrusive forms of social management. But these trends in social management also pre-date the Xi era.
One of the key terms relevant to this “social management system,” or shehui guanli zhidu (社会管理制度), is the notion of a “gridded community management system,” or wanggehua guanli tixi (网格化管理体系). But where does this idea of “grid management,” wanggehua guanli (网格化管理), come from?
In fact, “grid management” first appeared in Shanghai in 2004.
6. Canada-China
Have China's reactions to the Meng Wanzhou arrest led to a turning point into Canada-China relations?
Chinese authorities mistreating Canadian detainees, ambassador says - The Globe and Mail:
Ambassador John McCallum told members of the House of Commons foreign relations committee that Michael Kovrig – a Canadian diplomat on leave – and businessman Michael Spavor are being kept in prison cells where the lights are on 24 hours a day, said sources at the hearing who were not allowed to publicly discuss what the envoy said. Authorities are also subjecting them to interrogation, the sources said.
Beijing warns Ottawa not to seek allies in disputes - China Daily:
Chinese Ambassador to Canada Lu Shaye has warned Ottawa not resort to "microphone diplomacy", given that rallying support from other countries won't help resolve problems between the two countries.
Speaking at a news conference in Ottawa on Thursday, Lu said it would be a bad idea for Canadian Foreign Minister Chrystia Freeland to use next week's World Economic Forum meeting in Davos, Switzerland, to seek support against China.
Beijing hopes Ottawa will agree to dialogue to resolve problems bilaterally and help their relations return to the right track, Lu added.
China's envoy to Canada says Huawei 5G ban would have repercussions | Reuters:
Ambassador Lu Shaye, speaking at a news conference, did not give details. Canada is currently studying the security implications of 5G networks, but unlike some allies has not announced Huawei equipment will be excluded.
“If the Canadian government does ban Huawei from participating in the 5G network, then as for what kind of repercussion there will be, I’m not sure, but I believe there will be repercussions,” Lu said through an interpreter, urging Ottawa to “make a wise decision on this issue”.
The Chinese government appears to be distancing itself from remarks made by its ambassador to Canada, saying Beijing has no plans to retaliate against Ottawa if it blocks the installation of fifth-generation cellular technology made by Huawei.
It is not true that “China wants to interfere with relevant decisions made by the Canadian government,” foreign ministry spokeswoman Hua Chunying said Monday.
Americans face deadline to file paperwork for Huawei executive’s extradition | The Star:
Friday, a spokesman for Canada’s Justice Department said the U.S. had yet to file the required paperwork in the Meng case and stated the Americans have until Jan. 30 to do so. If the U.S. misses the deadline, lawyers with expertise in extradition cases say the door could open for Meng’s eventual release.
Huawei ties with Canadian universities risk ‘weaponization’ of tech patents, say experts | The Star:
Recent months have seen Huawei — which is working with schools across the country to develop its 5G infrastructure and other products — face ongoing scrutiny from Canada’s international intelligence partners for its connection to the Chinese government. Relations between Ottawa and Beijing, meanwhile, grow increasingly tense.
But Canadian universities said Friday they stand by their research agreements and donor ties with the company
For the security of Canadians, Huawei should be banned from our 5G networks - The Globe and Mail
Richard Fadden is former national security adviser to the Prime Minister. He is a member of the Macdonald-Laurier Institute’s advisory council on national security.
If the current brouhaha between Canada and China holds a lesson for Canadians, it is that China is willing to take extreme measures to guard its national interests...
If China would resort to putting Canadians to death to defend its corporate national champion, what might it do if the Chinese Communist Party had unfettered access to Canada’s vital communications networks? The ambassador and the Chinese government have implicitly acknowledged the strategic importance of Huawei, and they have revealed how quickly the Chinese charm offensive in Canada can switch to aggression and bullying.
7. US-China
U.S.-China Trade Talks Falling Short on Make-Or-Break IP Issues - Bloomberg:
According to people close to the discussions, the two sides have so far made little progress on the issue any deal Trump strikes with China may ultimately be judged on: ending what the U.S. has dubbed as decades of state-coordinated Chinese theft of American intellectual property.
That stands in contrast to movement on other fronts that has lifted stocks in recent sessions, including a Bloomberg report on Friday that China offered a path to reducing its trade surplus to zero by 2024.
Comment: The Wall Street Journal reported Thursday that:
"Next week, Beijing is planning to dispatch to Washington two midlevel officials long involved in the talks, Commerce Vice Minister Wang Shouwen and Finance Vice Minister Liao Min to prepare for the talks between Mr. Liu and Messrs. Lighthizer and Mnuchin."
But now they will just do phone talks, according to Bob Davis of the WSJ:
Comment: We keep hearing about the possibility of this kind of EO, I think the first report was a few months ago...clearly something has been in the works, but will the President really pull the trigger while trying to close the trade deal? - U.S. Said to Prepare Trump Order to Restrict Chinese Telecoms - Bloomberg:
The Trump administration is preparing an executive order that could significantly restrict Chinese state-owned telecom companies from operating in the U.S. over national security concerns, according to people familiar with the matter.
The order, which hasn’t yet been presented to the president, would not mention companies such as Huawei Technologies Co. or ZTE Corp. by name and would not outright ban U.S. sales by the firms. But it would give greater authority to the Commerce Department to review products and purchases by companies connected to adversarial countries, including China, one of the people said.
China grants Ivanka Trump 5 trademarks amid trade talks - AP:
The Chinese government has granted Ivanka Trump's company preliminary approval for another five trademarks this month, as her father's administration pushes ahead on trade negotiations with China.
Four trademarks, including child care centers, sunglasses and wedding dresses, were approved on Sunday. A fifth, covering brokerage, charitable fundraising and art valuation services, was approved on Jan.6, according to online trademark office records. The applications were filed in 2016 and 2017. If no one objects, they will be finalized after 90 days.
Ronnie Chan unloads on his DC “friends” - How China misread the US on trade during Donald Trump's early days, according to Ronnie Chan | South China Morning Post:
“The bigger issue is technology, which leads to military and defence. That’s first and foremost, that’s the root of the problem of the trade war … Even secondary, perhaps, is the currency. So trade is really a tertiary issue.”..
“In the last two years, it [China-US relations] fell into an abyss. We know that, all these guys are friends of mine, these think tank people, the university people, Washington DC people – a lot of them are my friends. These guys are, as far as I am concerned, are – sorry to use the word – brain-dead,” he said.
“I asked [my friends], what did you find out today about China, that you didn’t know a year ago? What changed your mind? What did you find out? Anything more?
“Number two, did China become worse in the last year … What has changed? The only thing that has changed is Trump tweeting.
“The only thing that changed your mind is the tweets. So all the friends I talked to … whom I thought were thoughtful people, I realised they are not as thoughtful. They do not have independent thought. They were all influenced greatly by the tweets of Trump.”
8. Red Empire?
Thought-provoking as usual from Geremie R. Barmé.
China's Red Empire — To Be or Not To Be? - China Heritage
China Heritage Annual 2019 takes as its theme Translatio Imperii Sinici — the transfiguration of China’s imperial power, politics, mindset and culture throughout the modern era....
Real existential terror is not about concerns involving the militarisation of the South China Sea, or the global expansion of the Belt-Road Initiative or, for that matter, from ‘Made in China 2025’ and the spectre of a new colonial power. Of course, all of these things present challenges of one sort or another, but in their disparate ways they are also understandable when considered in the context of the growth of a major new power that is trying to plan a future on the basis of a rational calculus and national interest.
Rather, the real concern is that the world must now contemplate the continued rise of a polity that is fundamentally totalitarian in ambition and one that is rapidly re-invigorating its internal governance to serve its particular ends. This is something that should unsettle the whole world; it is a reality that makes people ‘Worry About China’ both at home and abroad.
Comment: And this bit on the idea of China as peace-loving and non-expansionist is quite something:
Gullible members of the international media, some foreign governments and many business people and fellow-traveller academics, play the role of unpaid propagandists when they promote the risible ideas expressed by Xi Jinping, that is the fallacy that throughout its history ‘China’ was basically peace-loving and non-expansionist. These conceits reflect a carefully honed official line developed by the Communists from their first attempts to manage, and massage for its purposes, Chinese history in the 1930s.
Controlling the narrative, creating shorthand verbal formulations that encapsulate Party policy, imposing Party ideas on ‘influencers’, getting the message out via the apparat, manipulating the media as well as a full spectrum of foreign friends — these are all aspects of what under Xi Jinping is called The China Story 中國的故事. It has been an effectively strategy employed by the Communists since the Yan’an era (1935-1948). Today, as they promote an ahistorical view about dynastic China, empire and their own party-state, they also rely on sympathetic freelance supporters.
Business, Economy, Finance And Trade
Modern China's birth rate falls to lowest ever | Reuters China’s birth rate last year fell to its lowest since the founding of the People’s Republic of China 70 years ago, official data showed on Monday, with looser population controls failing to encourage couples to have more babies. The birth rate stood at 10.94 per thousand, the lowest since 1949 and down from 12.43 per thousand in 2017, data from the statistics bureau showed. The number of babies born in 2018 fell by two million to 15.23 million.
China Rolls Back Restrictions on Pledged Shares to Give Businesses Another Break - Caixin In the latest effort to counter the pledged-share crisis, the Shanghai and Shenzhen stock exchanges have allowed shareholders to extend the repurchase period for pledged shares to more than three years, according to their notices. Previously, the exchanges required them to buy back the shares that they had pledged within three years, according to regulations which took effect in March. The new rule, which took effect on Friday, aims to ease repayment pressure on borrowers, the bourses said.
Chinese pro-market economist Wu Jinglian warns of ‘state capitalism’ dangers | South China Morning Post Wu Jinglian, who turns 89 this month, made the remarks in a video message delivered at a seminar in Beijing last week, hosted by liberal private think tank the Hongfan Institute of Legal and Economic Studies. He said pursuing state control of the economy could easily lead to “crony capitalism” and bring back memories of the 1950s, when private assets were forced or coerced into state hands – a process that would eventually lead to a failed Soviet-style command economy. // Comment: The same seminar where Hu Deping recently gave his critical remarks..I believe the audience at this forum in the dozens, maybe I am too jaded but I am just not sure how much influence Hu Deping or Wu Jinglian have these days. All the previous era’s “reformers” seem to be getting marginalized, or dying off...sorry to be cynical, but even if they are right who is going to follow them, and who has the courage to stand up to Xi (to paraphrase Xi "who is man enough"?) I see these statements as last gasps of desperation... Chinese intellectuals, cadres and officers are nothing if not pragmatic and no one else seems to have a better shot at winning than Xi right now, while opposing him looks suicidal...
A Third of China’s Bankers Won’t Get Bonuses This Year - Bloomberg The sector, adjusting to a slowing economy, tightening credit and plunging stocks, last year saw its first annual headcount cut since 2014, the earliest official data available. A drop in stock sales meant the majority of securities firms didn’t win a single mandate last year, and a third of them won’t pay bonuses for 2018, according to Eric Zhu, a Shanghai-based manager at global recruiter Morgan McKinley.
China’s globetrotting labourers face dangers and debt | Financial Times $$ Those eager to work abroad usually turn to an informal network of subcontractors who charge rates as high as Rmb30,000 to match workers with construction projects abroad. Dozens of intermediaries operate in Ren Zhiji’s home town in Hebei province, just outside Beijing. Lured by the promise of earning Rmb12,000 a month, almost three times as much as he would at home, Mr Ren, a life-long construction worker, paid one of them to help him get a job overseas.
95% of Chinese Businesses to Benefit from 600B Yuan Inclusive Tax Cut - China Banking News State media says new inclusive tax cuts launched by the central government that target small and micro-enterprises will reduce the tax burden for 95% of the country’s businesses. On 18 January the Ministry of Finance (MOF) and the State Administration of Taxation issued the “Notice Concerning the Implementation of a Small and Micro-Enterprise Inclusive Tax Reduction and Exemption Policy” (关于实施小微企业普惠性税收减免政策的通知) for execution during the period from 1 January 2019 and 31 December 2021.
29% of Chinese Fiscal Revenues Derived from Land Sales - China Banking News A new report claims that nearly a third of China’s fiscal revenues were derived from sales of land in 2017 as commercial housing growth continues to exceed that of the broader economy. According to a report from Securities Times the Chinese economy has become increasingly dependent upon land-related business activity following disproportionate growth of the property sector. Its analysis calculates that for every 100 yuan of GDP in China around 16 yuan was generated by real estate in 2017, while for every 100 yuan of GDP 13 yuan was driven by real estate investment.
Dominant Dollar Bests Challengers - WSJ $$ China, meanwhile, has spent years trying to boost the international use of its currency, including by encouraging offshore yuan trading and by recently introducing yuan oil contracts...The data isn’t encouraging for Beijing. The offshore yuan bond market has shriveled in size, FTSE data shows, and the yuan’s share of global payments has receded, according to figures from the Swift banking network. Currency swap lines, which China extended across South America, Africa, Europe and Asia, have largely gone unused.
Tax deduction app makes landlords' personal information optional - China Daily The tax deduction app, officially launched on Dec 31 last year, offers an additional deduction declaration platform for children's education, continuing education, treatment for serious diseases, mortgage interest, rent and eldercare. The required information on the previous app version worried landlords as it required their names, ID numbers, addresses of their rental houses. They thought the disclosure of identity information may force them to pay more taxes or fines and late fees for rentals.
Fund Managers Who Called China Stock Bottom See More Gains Ahead At the end of October, when Chinese shares were in freefall, the chief investment officers at Deutsche Bank Wealth Management made a bold call: the worst was over for the world’s second-largest equity market. Since the start of November, the MSCI China Index of the nation’s shares has rebounded more than 7 percent. For Christian Nolting, global chief investment officer, and Tuan Huynh, chief investment officer for Asia-Pacific, those gains are just the start. China’s A shares will lead an advance among Asia ex-Japan equities this year, the two money managers say
Politics, Law And Ideology
In All Things, the Chairman Rules | China Media Project For its part, the People’s Liberation Army Daily has been the most enthusiastic in its promotion of both the “Three Alls” and the “Three Resolutes.” What is more difficult to understand, however, is why the whole stretch of enthusiasm for these phrases lasted just 16 months, beginning on November 28, 2016, and continuing through to March 18, 2018.
Uyghur refugee tells of death and fear inside China's Xinjiang camps - CNN The children's eyes light up when their mother pulls out a photo of her triplets taken shortly after their birth in 2015. "Moez!" three-year old Moez says, pointing at the infant version of himself. "Elina!" says his sister Elina. But when it comes to the third baby in the photograph, the siblings become confused. When they grow older, their mother Mihrigul Tursun says, she will tell her children about their missing brother Mohaned. "I will tell them everything," Tursun says. "I will tell them the Chinese government killed their brother."
Exclusive: China will retaliate 'in proportion' to any U.S. sanction over Muslim Uighurs – ambassador | Reuters Chinese Ambassador to Washington Cui Tiankai told Reuters in an interview that China’s efforts to combat international terrorism are held to a double standard, comparing Chinese actions in Xinjiang to U.S. troops battling Islamic State in Iraq and Syria. “Can you imagine (if) some American officials in charge of the fight against ISIS would be sanctioned?” Cui said, adding “if such actions are taken, we have to retaliate.”
Foreign and Military Affairs
Jimmy Carter, Chinese ambassador mark 40 years of China-U.S. diplomacy - CGTN Forty years after the United States and China formally established diplomatic relations, China's ambassador to the United States Cui Tiankai reiterated the importance of the two countries working together, at an event celebrating the anniversary on Friday. Speaking at the Carter Center in Atlanta marking 40 years since China and the U.S. established diplomatic relations, the ambassador called for efforts to avoid misunderstanding and misinterpretation and to build mutual trust and enhance cooperation. "As Confucius famously said, 'At 40 I had no doubts.' However, while we are commemorating the 40th anniversary, we cannot but notice some irrational doubts and myths about our relations," Cui said while dismissing the misunderstanding. // Comment: List of papers presented
If the U.S. Doesn't Get China Right, Nothing Else Will Matter - Cipher Brief Interview with Chris Johnson The second area I’d be advising on is focusing our energies on the areas with China where the challenge is the greatest. For me, that is not influence operations. It is the competition for the commanding heights of the knowledge-based 21st-century economy. That’s the game. And the difference is that we have to straightforwardly acknowledge that our economic relationship has transitioned from highly-complementary to competitive. In other words, they need to go exactly where we need to go for their future growth and prosperity, which is new. In the past, they were doing the low-end stuff, but to break through the middle income trap, they’re going to have to move up the global value and supply chain. And that’s where we dominate.
Horns of a Dilemma: The Changing Nature of the U.S.-China Relationship - War on the Rocks This episode of Horns of a Dilemma is part of a special series of live episodes bringing you into the room at the fifth annual Texas National Security Forum. In this final installment, Josh Eisenman, faculty fellow at the Clements Center for National Security and Distinguished Scholar at the Robert Strauss Center for International Security and Law, moderated a discussion on China. He was joined by Christopher Johnson, former Central Intelligence Agency analyst, Kelly Magsamen, former principal deputy assistant secretary of defense for Asian and Pacific affairs, and Jim Steinberg, former deputy secretary of state. The event was sponsored by the Clements Center, the Strauss Center, and the Clements-Strauss Intelligence Studies Project.
A Relationship Under Extreme Duress: U.S.-China Relations at a Crossroads - Carnegie Endowment for International Peace - Michael Swaine While a serious crisis management dialogue and frank, constructive efforts to identify the possible middle ground on specific policy areas of contention can go a long way to placing the U.S.-China relationship on less volatile and more productive footing, a more fundamental course correction is necessary for the long term. The U.S.-China relationship needs to develop a new strategic narrative, one based on a realistic and feasible set of facts and assumptions about the changing capabilities, actions, and intentions on both sides. This is particularly needed in the Asia-Pacific, where the sources of serious conflict are most present.
The Avoidable War: Reflections on U.S.-China Relations and the End of Strategic Engagement | Asia Society Collection of Speeches by the Hon. Kevin Rudd
The Asia Group | Evan Medeiros Pt. 2 - Podcast Evan Medeiros, the former senior director for Asia at the National Security Council, returns to the studio to commemorate the 40th anniversary of the bilateral relationship between the United States and the People’s Republic of China. In the second episode of this two-part series, Medeiros discusses Vice President Mike Pence’s speech last fall on China, questions elements of the Thucydides’ Trap debate, and talks about current debates in Beijing about the United States. Together, Kurt, Rich, and Evan examine the risk of conflict and ponder the future of the U.S.-China relationship.
Israeli official says U.S. security warnings on China "a joke" - Xinhua According to reports, U.S. officials have raised concerns about the Chinese investment in Israel, particularly in Haifa Port, out of espionage fears and cybersecurity. However, an Israeli government source who spoke on condition of anonymity discounted the concerns, saying "the security warnings about the Chinese are a joke." The official also said: "If China wants to gather intelligence, they can simply rent an apartment in Haifa instead of investing in ownership of a port."
Stealth Shocker: China Claims It Can Track Air Force F-22 Raptors | The National Interest . State-run Chinese media is claiming that the People’s Liberation Army has been able to track the U.S. Air Force’s Lockheed Martin F-22 Raptor stealth fighters over the East China Sea. While the Chinese report might be easily dismissed as propaganda—it is not beyond the realm of possibility. In fact—it’s very possible that China can track the Raptor. Stealth is not a cloak of invisibility, after all. Stealth technology simply delays detection and tracking.
Xi calls for building of China-Cambodia community of shared future - Xinhua President Xi Jinping met here Monday with visiting Cambodian Prime Minister Samdech Techo Hun Sen at the Diaoyutai State Guesthouse, calling for joint efforts to build a community of shared future of strategic significance between China and Cambodia.
Taiwan
Faced With Tough Words From China, Taiwan Rallies Around Its Leader - The New York Times:
In a speech this month to the people of Taiwan, a self-ruled democracy that Beijing considers Chinese territory, President Xi Jinping said the island “must be and will be” united with China and warned that independence efforts could be met by armed force. Mr. Xi’s speech raised anxieties in Taiwan that Ms. Tsai was able to tap into by delivering a rebuke of Mr. Xi’s proposal, in a rare departure from her usual cautious ambiguity...
Results and Ramifications of Taiwan’s Elections | ChinaPower Project Podcast: Our guest, Dr. Shelley Rigger, explains the current economic and political climate in Taiwan and provides insights into the economic drivers that helped KMT candidates win 15 of Taiwan’s 22 mayoral and county magistrate seats. She also examines Beijing’s response to the election results and how it may use the DPP’s loss to its advantage.
McDonald's China expresses regret over ad incident in Taiwan | CNA McDonald's in China expressed Saturday regret over an advertisement posted on Youtube by Taiwan McDonald's that sparked an outcry among Chinese netizens, who claimed the ad supports Taiwan independence. On its official Weibo page, a popular Chinese social media site, McDonald's China expressed regret over the ad, which labelled the nationality of a female student in the ad as Taiwan.
Taiwan's Ministry of Foreign Affairs has some Twitter game:
Focus Taiwan @Focus_Taiwan
McDonald's China expresses regret over ad incident in Taiwan https://t.co/3u7TFsyfmJ https://t.co/jQy4Trtm2GTaiwan export orders hit by steepest drop in 32 months as China-US trade war takes its toll across Asia | South China Morning Post Taiwan export orders posted the steepest decline in 32 months in December, foreshadowing a steep slowdown in manufacturing economies around Asia through the first half of the year as they face the spillover from the Sino-US trade dispute and shifts in demand for consumer electronics.
Tech And Media
In-Depth: A Winter Storm Looms for China’s Tech Sector - Caixin Cover Story: Toward year end, news emerged of massive job cuts across the industry, although most companies declared they were only making normal business adjustments...While some analysts and consultants project slowing growth this year for the tech industry worldwide because of economic uncertainties, China’s previously white-hot tech sector faces its own peculiar challenges...The economic slowdown, along with China’s graying population, makes it harder for internet companies to maintain their main revenue growth from advertising while finding new users, analysts said. Moreover, raising capital is becoming increasingly challenging for startups as investors are more hesitant to pour their money into the cash-burning sector.//封面报道|互联网艰难时世 完美风暴来袭
Huawei Founder Forecasts ‘Bitter Days’ Ahead, Announces Layoffs - Caixin: The telecom network-gear supplier should brace for “bitter days” over the next few years as overall industry conditions may not be favorable, Ren said in an internal email to all employees on Friday. He didn’t elaborate. Ren didn’t say how many employees will get the ax, but said the layoffs will be on “a small scale.” He also said Huawei’s overall human resource evaluation process should also be overhauled to better retain talented workers.
Chinese Drone Giant DJI Unearths $150 Million Losses From Fraud - Bloomberg SZ DJI Technology Co., which discovered the corruption in an internal probe, said it’s fired multiple workers who inflated parts costs for personal gain, and contacted law enforcement. The drone maker is still looking into the situation, which is “extensive” and involves a major sum, it said in a statement. The company didn’t say how many employees were involved in the instances of graft.
Society, Art, Sports, Culture And History
Wu Xiubo Scandal Blows up on Chinese Social Media | What's on Weibo The current trend is all about the scandal involving Beijing-born actor and musician Wu Xiubo (吴秀波, 1968), who recently had his former mistress Chen Yulin arrested for blackmailing him. She could potentially face up to ten years in prison. Wu is famous for, among others, his performance in the popular TV series Angel Heart (心术, 2012) and his role in the hit movie Finding Mr. Right (北京遇上西雅图, 2013)...
‘Last Boat Out of Shanghai’ Review: Gone With the Wind - WSJ A glowing review of Helen Zia’s “Last Boat Out of Shanghai: The Epic Story of the Chinese Who Fled Mao’s Revolution
Deadbeat Map reveals people who are on a credit blacklist - TechInAsia Deadbeat Map pretty much does what it says: reveal the location of laolai – a word used by authorities to refer to people who fail to repay their debts and are put on a social credit blacklist. Open the mini program and you’ll see where these people are if they’re within 500 meters from your location – though for now it only works in Shijiazhuang, the capital of Hebei provinc
Football: China roars back from behind to reach Asian Cup quarters | ABS-CBN News China flirted with disaster before mounting a second-half revival as it fought back from behind to beat Thailand, 2-1, and reach the Asian Cup quarterfinals on Sunday
Mount Everest climber numbers face major cut as China starts cleanup - AP China is to cut the number of climbers attempting to scale Mount Everest from the north by one-third as part of plans for a major cleanup of the world’s highest peak, state media have reported. The total number of climbers seeking to reach the 8,850-metre (29,035ft) peak from the north will be limited to fewer than 300 and the climbing season restricted to spring, the reports said.
Energy, Environment, Science And Health
Scientist Who Edited Babies’ Genes Is Likely to Face Charges in China - The New York Times A Chinese scientist who claimed to have created the world’s first genetically edited babies “seriously violated” state regulations, according to the results of an initial government investigation reported on Monday by Chinese state media. The investigators’ findings indicate that the scientist, He Jiankui, and his collaborators are likely to face criminal charges...// 广东初步查明“基因编辑婴儿事件” .Good background in this Sinica Podcast with Christine Larson - Gene-edited babies, CRISPR, and China’s changing ethical landscape
中国减煤再推进：煤炭消费占比首次低于60% - 中国能源网 China's Ministry of Ecology and Environment says in 2018 coal accounted for less that 60% of China's energy mix for the first time
China’s Natural Gas Consumption Grew 16% Last Year - Caixin China’s natural gas consumption ballooned by 16.6% last year to 276.6 billion cubic meters (9.77 trillion cubic feet), a new report shows, with imported gas making up the lion’s share of growth as demand races ahead of domestic production. The increase comes as the government pushes ahead with its efforts to boost natural gas’s share of the country’s energy mix in order to reduce reliance on highly polluting coal, particularly for heating the country’s north during the winter months.
City Halts Coal Production After 21 Killed in Mining Incident - Caixin A city in China’s Northern Shanxi province will halt parts of its coal production that account for 4% of China’s total national steam coal supply, a local energy administration announced Tuesday. Steam coal is used for both power and heat – and the city of Yulin will halt production of an estimated 150 million tons of it by Chinese New Year.
A move by China puts U.S. small-town recycling programs in the dumps - The Washington Post “They didn’t just change the policies, they radically changed the entire world market in one fell swoop,” said Joe Greer, director of sales for Buffalo Recycling Enterprises, which accepts recyclables from a number of small towns along Lake Erie. Recyclers have stockpiled certain materials while they look for buyers. Some types of scraps have declined in value, while others have become worthless. Many large cities have just absorbed the losses, fearing that passing on the cost to residents would discourage recycling.
China Offers Iran $3 Billion Oil-Field Deal As Europe Halts Crude Purchases – Eurasia Review China’s state-run energy giant is making a new approach to strike a $3 billion Iranian oil field deal, seeking to take advantage of waivers allowed under US sanctions even as two European nations have ended crude purchases, according to people familiar with the matter.
China vows no leeway for underperformers in war on pollution | Reuters China will order detailed punishment measures for officials in regions that miss air quality targets this winter, refusing to accept unfavorable weather or mounting economic pressure as excuses, an environment ministry official said on Monday.
Jobs And Events
NüYear Drinks in DC – Welcome NüVoices to the US Capital! – NüVoices Date: Monday, Feb. 4, 2019.
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