GDP; WHO chief keeps lab leak hypothesis alive; New plan for Pudong; PRC Booster shots

Today’s Essential Eight items:

  1. GDP data

  2. WHO chief keeps lab leak hypothesis alive

  3. BioNTech booster shot coming for China

  4. New reform plan for Pudong, Shanghai to become the Leading Zone of Socialist Modernization Construction

  5. US-China - PRC not on Deputy Secretary of State Sherman’s Asia itinerary

  6. Another US military aircraft lands in Taiwan

  7. Grassroots governance and control

  8. Huawei going after the cloud

Thanks for reading, and hope to see many of you in tomorrow’s weekly discussion.

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The Essential Eight

1. GDP data

China's semi-annual data points to solid recovery, shared growth - Xinhua

China's gross domestic product (GDP) expanded 12.7 percent year on year in the first half of 2021 as recovery continues to consolidate, powering global economic expansion amid the raging pandemic.

The figure puts average H1 growth for the past two years at 5.3 percent, 0.3 percentage points faster than the two-year average of Q1 growth from the 2019 level, according to the National Bureau of Statistics (NBS).

In the second quarter, the country's GDP grew 7.9 percent year on year, following an 18.3 percent Q1 growth, when strong domestic and foreign demand powered recovery from a low base in early 2020 due to the COVID-19 blow...

Other major economic indicators showed continued improvements across the board, with industrial output rising 15.9 percent and retail sales up 23 percent year on year in the first half.

The country's surveyed urban unemployment rate stood at 5 percent in June, 0.7 percentage points lower than the same period last year. A total of 6.98 million new urban jobs, or 63.5 percent of the annual target, were created in the first half.

In the six-month period, China's per capita disposable income increased 12.6 percent year on year in nominal terms, basically keeping pace with the GDP increase.

Comment: One of my favorite research firms on China is Plenum.ai. In a note earlier today on the GDP numbers Plenum's Chen Long wrote:

The GDP numbers are uninteresting. It was hardly a surprise that headline yoy growth slowed significantly to 7.9% in Q2 on the base effect. It was equally expected that the two-year annualized growth improved to 5.5% in Q2 from Q1’s 5% since China imposed restrictive covid policies during the Chinese New Year holidays and lifted most of them after March.

Further GDP growth cooling is on the cards, and it is partly due to arithmetic, because the base effect will shift from a tailwind to a headwind. If the two-year annualized growth of 5.5% represents the new trend and the output remains unchanged in the next few months, yoy GDP growth could fall to 6% in Q3 and below 5% in Q4. This will add to pressure on Beijing to ease policies because people are not used to GDP growth figures starting with five, let alone four...

Domestic consumption grew slightly faster but still underperformed. Nominal retail sales growth inched up in two-year annualized terms to 4.9% in June from 4.5% in May. However, it remains far from the pre-covid rate of 7-8%. The real growth rate excluding price factors was just 3.2%. Household consumption based on the household survey shows higher two-year annualized growth than retail sales in the first half (5.4% vs.4.4%). However, it also remained below the pre-covid level...

we hypothesize that a sizable group of the population has structurally changed their behavior. They have become much more reluctant about traveling or dining out, despite the absence of nearby covid clusters or restrictions on inter-province travel. It is unclear how large the group is, but even if it comprises just 5-10% of the total, it could impact growth trends. The actual share could be much larger as cross-country traffic volume remains only half of pre-covid levels.

If this hypothesis is right, then domestic consumption recovery will remain sluggish, and we will not see a return to pre-covid numbers any time soon. This means that once cyclical drivers such as real estate and exports lose momentum, the economy will face greater downside risks, and policymakers will be forced to ease policies much further.

Opinion: China’s Worrying Economic Signs That Only the Government Has Noticed - Caixin

Last week, the Chinese government suddenly announced a comprehensive cut to the reserve requirement ratio (RRR), something that the market was not expecting...

The government’s action may be correlated with an economic slowdown in some provinces and cities. Currently, China is challenged by the perhaps most serious economic divergence of the past few decades, leading to a second dip in consumption in some cities and regions.

China’s Second-Quarter GDP Grows 7.9%, Falling Short of Expectations - Caixin

“In the first half of this year, the economy continued to recover steadily. The cycle of supply and demand was smooth. The fundamentals laid a relatively good foundation for economic operation in the second half of this year,” NBS spokesperson Liu Aihua said at a Thursday press conference (link in Chinese ). “Overall, the factors that support further economic recovery and improvement are gradually accumulating and increasing.”

“However, it should also be noted that the pandemic continues to evolve globally, and there are many external uncertainties. The recovery of the domestic economy is uneven, and we still need efforts to consolidate the foundation for recovery and development,” she said.

China warns of economic uncertainty despite moderate recovery in Q2 —FT$$

Issuance of special purpose bonds, used by local governments to fund infrastructure investments, was 50 per cent lower over the first five months of the year, compared with the same period in 2020.

Wang Jun, economist at the China Center for International Economic Exchanges, said the trend was worrying. “Fiscal policy needs to be loosened,” he said. “Local government debt issuance and infrastructure investment are closely related.”

China’s Youth Unemployment Rate Rose in June as Record Number of Graduates Enter Job Market —Yicai

The jobless rate among young people in China’s cities increased 1.6 percentage point in June from May, as a record number of college graduates joined the ranks of job seekers, but the overall employment situation remains stable, according to the latest data.

There were 9.09 million college graduates this year, the most ever, putting pressure on the labor market, NBS spokesperson Liu Aihua said. The government will continue to implement measures to increase employment opportunities.


2. WHO chief keeps lab leak hypothesis alive

WHO chief says it was 'premature' to rule out COVID lab leak - AP

In a rare departure from his usual deference to powerful member countries, WHO Director-General Tedros Adhanom Ghebreyesus said getting access to raw data had been a challenge for the international team that traveled to China earlier this year to investigate the source of COVID-19. The first human cases were identified in the Chinese city of Wuhan.

Tedros told reporters that the U.N. health agency based in Geneva is “asking actually China to be transparent, open and cooperate, especially on the information, raw data that we asked for at the early days of the pandemic.”

He said there had been a “premature push” to rule out the theory that the virus might have escaped from a Chinese government lab in Wuhan - undermining WHO’s own March report, which concluded that a laboratory leak was “extremely unlikely.”

“I was a lab technician myself, I’m an immunologist, and I have worked in the lab, and lab accidents happen,” Tedros said. “It’s common.”

This comment from Tedros is going to cause quite the reaction in the reaction in the PRC. He sounds extremely frustrated.

WHO clarifies details of early coronavirus patients in Wuhan - The Washington Post

In response to questions from The Washington Post, the WHO is changing the virus sequence IDs associated with three of the 13 early patients listed in a chart in the report and will clarify that the first family cluster was not linked to the Huanan seafood market in Wuhan, a spokesman said.

The WHO did not explain why a map in the annexes of the WHO-China joint report appears to show the first case on one side of the Yangtze River, while the Wuhan government had announced last year that the first patient, who fell ill Dec. 8, 2019, lived on the other side of the river, in Wuchang district.

Tarik Jasarevic, a WHO spokesman, said in an email that the agency cannot comment on what the Wuhan government announced last year, but the question of where the first-known patient lived relative to the river was not relevant to competing hypotheses about the origin of the virus. The issue is not important, he wrote, because “the current first known patient is most probably not the first case.”..

“We need more explanation about what the source of the error and the information was,” said Lawrence Gostin, a professor of global health law at Georgetown University who also provides technical assistance to the WHO.

“Who made the errors? Was it China, was it the team, was it WHO itself?” he asked. “There’s no clarity, and this does feed into public distrust of the integrity and rigor of the origins investigation.”


3. BioNTech booster shot coming for China

China Plans to Use BioNTech Vaccine as Booster Shot, Sources Say - Caixin

Chinese drug regulators completed an expert panel review of a Covid-19 mRNA vaccine co-developed by Fosun Pharma with Germany’s BioNTech SE, and now the shot is in the administration review stage, according to Fosun.

The Shanghai pharmaceutical company is sticking with its previously announced plan to start domestic trial production by the end of August, Fosun Chairman Wu Yifang said Wednesday at a shareholders’ meeting.

Chinese authorities plan to use the vaccine, with the brand name Comirnaty, as a booster shot for people who have received inactivated-virus forms of vaccines, people close to regulators told Caixin. The booster shot is likely offered free, the person said...

The University of Hong Kong is studying the effect of mixing shots of BioNTech’s Comirnaty and one made by Sinovac Life Sciences Co. Ltd. Fosun and the Chinese government are also conducting vaccine-mixing research. The currently available data suggest optimistic results, Wu said.

Question: Will the PRC follow up w boosters to countries that received its vaccine aid? Per the Caixin article the FosunBioNTech venture is targeted to hit annual production of 1 billion doses, appears unlikely it could both satisfy PRC demand and provide boosters to previous recipients.

January 2021 - China pushes conspiracy theories to discredit Western vaccines, muddy coronavirus origins - The Washington Post

The drumbeat of Chinese skepticism toward Western vaccines — one a joint production between U.S. pharmaceutical giant Pfizer and German biotech firm BioNTech, another from U.S. biotech company Moderna — ramped up in recent weeks as clinical data showed vaccines from Chinese pharmaceutical firms potentially lagging U.S. rivals...

George Gao, the head of China’s Center for Disease Control and Prevention, recently pondered publicly whether the Pfizer-BioNTech and Moderna vaccines posed safety issues because mRNA vaccines of this type were used to treat cancer and had never been given to healthy people before.

Zhong Nanshan, who is considered a ­national hero for his work on the SARS and covid-19 outbreaks and sometimes speaks on behalf of the government, dismissed Pfizer-BioNTech’s and Moderna’s clinical trials as “very insufficient” in November. China’s vaccines, Zhong added, “are developed with rigor.”


4. New reform plan for Pudong, Shanghai to become the Leading Zone of Socialist Modernization Construction

China grants tax breaks, policy leeway to turn Shanghai into powerhouse for AI, chips, planes and pharmaceuticals | South China Morning Post

The document is being viewed by city officials and the business community as a blueprint for Shanghai’s development until 2050. China has been prioritising technological innovation to strengthen its economic muscle amid escalating tensions with Washington since 2019. In November last year, Chinese President Xi Jinping proposed that an operating guideline be mapped out for the development of Pudong as “vanguard” zone. The guideline would also help Beijing set the tone for further economic opening up and reforms.

“The guideline will boost the morale of local businesspeople and foreign investors who hope to tap the country’s vast market,” said Yan Jinglan, a professor of foreign studies at the East China University of Science and Technology in Shanghai. “As the gateway city, market liberalisations and reform measures in Shanghai are the clearest message to the world that China will continue to be a bright spot in the world economy.”..

Key companies in semiconductors, artificial intelligence, biotechnology and civil aviation will enjoy a cut in corporate income tax rates, as Beijing views these industries as vitally important to the country’s growth prospects. These firms will enjoy a corporate income tax of 15 per cent – nearly halved from a universal rate of 25 per cent – in the first five years after business registration, according to the guideline issued on Thursday...

Pudong will also be the pilot zone for exploring the possibility of making the yuan fully convertibility, the document added.

China issues guideline on high-level reform, opening-up of Shanghai's Pudong - Xinhua

The guideline was jointly released by the Communist Party of China Central Committee and the State Council, and listed measures to build Pudong into a pioneer area for socialist modernization.

By 2035, Pudong will see its modernized economy comprehensively established, modern urban districts built, and modernized governance fully realized. Its urban development level and international competitiveness will be at the forefront globally, said the guideline.

By 2050, Pudong is expected to become an important urban area which is highly attractive, creative, competitive and influential globally, a global model of urban governance and a "shining pearl" of a great modern socialist country, it said

Comment: This looks to great news for Shanghai and its development and real estate, less so for Hong Kong as this document, if implemented, would seem to go a long way to Shanghai replacing Hong Kong as a key financial gateway to the rest of the PRC.

Last month the Communist Party of China Central Committee and the State Council jointly released a guideline (English summary) to build Zhejiang into demonstration zone for 共同富裕 common prosperity 中共中央、国务院:支持浙江高质量发展建设共同富裕示范区. Interestingly, there is no mention of 共同富裕 common prosperity in today’s document about Shanghai. Perhaps we can discuss why that might be in tomorrow’s weekly thread, I don’t have good answer right now. It may also be interesting that there is no nod in the Shanghai document to any of Xi’s predecessors who were responsible for the Pudong miracle.

Shanghai’s Pudong sets lofty goal - Global Times

Tian Yun, a Beijing-based economist, told the Global Times on Thursday that Pudong will became a pioneer with its focus on the dual circulation paradigm.

"By 2035, China will be the world's largest economy with the world's largest manufacturing industry and Shanghai's Pudong will become a modern hub for the country," Tian said. "Behind it, lie the advanced high-tech industries of the Yangtze River Delta as well as national-level innovation bases - the embodiment of national strategic interests."

The outline of the new role for Shanghai's Pudong new area follows state designations for other competitive localities.

In June, Chinese central authorities issued a guideline designating East China's Zhejiang Province as a demonstration zone for common prosperity.

Another guideline was issued in 2019 for Shenzhen, South China's Guangdong Province, to build the city into a demonstration area of socialism with Chinese characteristics. A more detailed plan was released last year. 

Tian said Pudong's role is different from that of Shenzhen, which is focused on boosting its integration with Hong Kong and the Greater Bay Area. "Pudong's role will be pioneering in nature."

The Opinion - 中共中央 国务院关于支持浦东新区高水平改革开放打造社会主义现代化建设引领区的意见_中央有关文件_中国政府网

Opinion of the CPC Central Committee and the State Council on Supporting the High-level Reform and Opening-up of Pudong New Area and Building the Leading Zone of Socialist Modernization Construction

Shanghai plays a very important role in the overall work of the Party and the state, and Pudong's development and opening-up has opened a new chapter in the deepening of China's reform and opening-up. Since the 18th National Congress of the Communist Party of China, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping as the core, Pudong has achieved remarkable development achievements, providing the most vivid practical proof for the institutional advantages of socialism with Chinese characteristics, and providing the most vivid practical portrayal for reform, opening up and socialist modernization. On the new journey of building a socialist modernized country in an all-round way, in order to support the high-level reform and opening up in Pudong New Area, build a leading area for socialist modernization, lead and drive the construction of Shanghai's "five centers", better serve the overall situation of the whole country and drive the implementation of the integrated development strategy of the Yangtze River Delta, the following Opinion is put forward.

I. General requirements

(a) the guiding ideology. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implement the spirit of the 19 th National Congress of the Communist Party of China and the 2 nd, 3 rd, 4 th and 5 th Plenary Sessions of the 19th Central Committee, adhere to the general tone of steady progress, scientifically grasp the new development stage, and unswervingly implement the new development concept, serve and integrate into the new development pattern, support Pudong to bravely pick the heaviest burden and lick the hardest bones, and strive to become the pioneer of reform and opening up at a higher level and the vanguard of building a socialist modern country in an all-round way

(2) Strategic positioning. Promote Pudong's high-level reform and opening up, provide an important channel for better utilization of domestic and international markets and resources, build the central node of domestic big circulation and the strategic link of domestic and international double circulation, give better play to the leading role in the integrated development of the Yangtze River Delta, and create a window for building a socialist modernized country in an all-round way.

-Pioneers of reform and opening up at a higher level. Adhere to the system concept, strengthen the organic convergence and mastery of reform measures, and push all reforms closer to a more perfect system. We will expand from factor opening to system opening in an all-round way, and take the lead in establishing a new open economic system that connects with international prevailing rules. Create a special economic functional zone in Pudong, and increase the risk and stress test of open economy.

—— The benchmark of independent innovation and development. Give full play to the institutional advantages and super-large-scale market advantages of the new national system, identify the key points of the government and the market in promoting scientific and technological innovation and upgrading the industrial chain level, build the core area of the international scientific and technological innovation center, enhance the independent innovation capability, strengthen the leading function of high-end industries, drive the upgrading of the national industrial chain and enhance the global influence.

-The functional highland of global resource allocation. Taking serving to build a "the belt and road initiative" as an entry point and breakthrough, we will actively allocate global capital, information, technology, talents and other essential resources, build the core areas of Shanghai's international financial center, trade center and shipping center, strengthen the ability to serve the real economy, take the lead in building a high-standard international economic and trade rules system, and build a functional highland for China's deep integration into global economic development and governance.

—— Leading by the example of expanding domestic demand. Focus on creating the supply of high-quality products and services, continuously improve the level of specialization, branding and internationalization, foster new consumption models and new formats, lead the demand for upgrading domestic consumption, create a new starting place for the global market, lead the vane of consumption trends, and build an international consumption center.

-A model of modern urban governance. Build a systematic, scientific, standardized and effective urban governance system, improve the scientific, refined and intelligent level of governance, improve the ability to respond to major emergencies, improve the development pattern of people's livelihood, continue the urban characteristic culture, and create a model of urban governance that is livable and suitable for industry.

(3) Development goals. By 2035, Pudong's modern economic system will be fully constructed, modern urban areas will be fully built, and modern governance will be fully realized. The urban development level and international competitiveness will leap to the forefront of the world. By 2050, Pudong will become an important urban carrying area with strong attraction, creativity, competitiveness and influence in the world, a global model of urban governance capacity and effectiveness, and a bright pearl of a socialist modernization power.

上海在党和国家工作全局中具有十分重要的地位,浦东开发开放掀开了我国改革开放向纵深推进的崭新篇章。党的十八大以来,在以习近平同志为核心的党中央坚强领导下,浦东取得了举世瞩目的发展成就,为中国特色社会主义制度优势提供了最鲜活的现实明证,为改革开放和社会主义现代化建设提供了最生动的实践写照。在全面建设社会主义现代化国家新征程上,为支持浦东新区高水平改革开放、打造社会主义现代化建设引领区,引领带动上海“五个中心”建设,更好服务全国大局和带动长三角一体化发展战略实施,现提出如下意见。

一、总体要求

(一)指导思想。以习近平新时代中国特色社会主义思想为指导,深入贯彻党的十九大和十九届二中、三中、四中、五中全会精神,坚持稳中求进工作总基调,科学把握新发展阶段,坚定不移贯彻新发展理念,服务和融入新发展格局,支持浦东勇于挑最重的担子、啃最硬的骨头,努力成为更高水平改革开放的开路先锋、全面建设社会主义现代化国家的排头兵、彰显“四个自信”的实践范例,更好向世界展示中国理念、中国精神、中国道路。

(二)战略定位。推动浦东高水平改革开放,为更好利用国内国际两个市场两种资源提供重要通道,构建国内大循环的中心节点和国内国际双循环的战略链接,在长三角一体化发展中更好发挥龙头辐射作用,打造全面建设社会主义现代化国家窗口。

——更高水平改革开放的开路先锋。坚持系统观念,加强改革举措的有机衔接和融会贯通,推动各项改革向更加完善的制度靠拢。从要素开放向制度开放全面拓展,率先建立与国际通行规则相互衔接的开放型经济新体制。在浦东全域打造特殊经济功能区,加大开放型经济的风险压力测试。

——自主创新发展的时代标杆。充分发挥新型举国体制的制度优势和超大规模市场优势,找准政府和市场在推动科技创新、提升产业链水平中的着力点,建设国际科技创新中心核心区,增强自主创新能力,强化高端产业引领功能,带动全国产业链升级,提升全球影响力。

——全球资源配置的功能高地。以服务共建“一带一路”为切入点和突破口,积极配置全球资金、信息、技术、人才等要素资源,打造上海国际金融中心、贸易中心、航运中心核心区,强化服务实体经济能力,率先构建高标准国际化经贸规则体系,打造我国深度融入全球经济发展和治理的功能高地。

——扩大国内需求的典范引领。着力创造高品质产品和服务供给,不断提升专业化、品牌化、国际化水平,培育消费新模式新业态,引领带动国内消费升级需求,打造面向全球市场的新品首发地、引领消费潮流的风向标,建设国际消费中心。

——现代城市治理的示范样板。构建系统完备、科学规范、运行有效的城市治理体系,提升治理科学化、精细化、智能化水平,提高应对重大突发事件能力,完善民生发展格局,延续城市特色文化,打造宜居宜业的城市治理样板。

(三)发展目标。到2035年,浦东现代化经济体系全面构建,现代化城区全面建成,现代化治理全面实现,城市发展能级和国际竞争力跃居世界前列。到2050年,浦东建设成为在全球具有强大吸引力、创造力、竞争力、影响力的城市重要承载区,城市治理能力和治理成效的全球典范,社会主义现代化强国的璀璨明珠。

SHANGHAI, CHINA - JULY 13: Crimson clouds are seen in the sky over Pudong New Area on July 13, 2021 in Shanghai, China. (Photo by Zhao Xinghua/VCG via Getty Images)

5. US-China

Deputy Secretary Sherman’s Travel to Japan, the Republic of Korea, and Mongolia - United States Department of State

Deputy Secretary of State Wendy R. Sherman will travel to Japan, the Republic of Korea (ROK), and Mongolia from July 18 to July 25.

In Tokyo, the Deputy Secretary will meet with Japanese officials to discuss a broad range of issues, including combating the climate crisis and enhancing global health security. Deputy Secretary Sherman, Japanese Vice Foreign Minister Mori Takeo, and ROK First Vice Foreign Minister Choi Jong Kun will hold a joint meeting to discuss trilateral cooperation on pressing shared challenges, including regional security issues such as the DPRK, as well as climate change and global health. The Deputy Secretary will then travel to Seoul for meetings with ROK officials and a strategic dialogue with ROK First Vice Foreign Minister Choi to discuss bilateral and multilateral cooperation on shared priorities, including the climate crisis, pandemic relief, and post-COVID-19 economic recovery.

From Seoul, the Deputy Secretary will travel to Ulaanbaatar to meet with Mongolian officials to reinforce our Strategic Partnership and discuss our shared values of democracy and human rights, including freedom of religion or belief and respect for traditional cultural identity and practice.

Comment: No mention of the PRC visit that was reported yesterday by the South China Morning Post. As I wrote in yesterday's newsletter, I had heard the US had been trying to get her to China for a while but the PRC side would not agree. Have they actually agreed to her visit, and for whatever reason State is not publicizing it? Or is still not a done deal? Or was it a done deal and then the news broke about more actions from the US over Xinjiang and Hong Kong, kind of a rude thing to do right before an official visit? Readers who know are always welcome to contact me on Signal at +13012460858...

China says U.S. and Beijing should try to implement Phase 1 trade deal - ministry | Reuters

China and the United States should work together to create the atmosphere and conditions to push for the implementation of the Phase 1 trade deal, Gao Feng, spokesman for China’s commerce ministry, said on Thursday.

Gao was speaking at news conference, answering a question about whether China was implementing the Phase 1 trade deal.

U.S. Senate passes bill to ban all products from China's Xinjiang | Reuters

The Uyghur Forced Labor Prevention Act would create a "rebuttable presumption" assuming goods manufactured in Xinjiang are made with forced labor and therefore banned under the 1930 Tariff Act, unless otherwise certified by U.S. authorities.

Passed by unanimous consent, the bipartisan measure would shift the burden of proof to importers. The current rule bans goods if there is reasonable evidence of forced labor.

Biden's escalation of economic decoupling over Xinjiang and Hong Kong a repeat of Trump tactics, US companies to be hurt - Global Times

"After Biden took office, his political performance has been mediocre… and lacking results. That's when he eagerly picked up the anti-China card in order to rally some popularity and respond to the criticism of the pro-Trump camp," Tian Feilong, an associate professor at Beihang University's law faculty, told the Global Times on Wednesday...

Chinese industry insiders and experts said the Biden administration will harm the interests of US companies by forcing them to draw a line, and this will open the stage for Chinese countermoves including the first use of China's entity list to punish unreliable supply chain partners...

A US action covering Hong Kong will harm the investments and transaction relationships of US companies in the city, and a strong boycott to some US companies is to be expected, Tian warned.

TSMC Expects Auto-Chip Shortage to Abate This Quarter - WSJ

The company said revenue from customers in North America made up 64% of its second-quarter revenue, down from 67% in the first quarter, while revenue from China accounted for 11% of the total, up from 6% in the previous quarter, with high-performance computing as the major driver.

“China remains a very strong and growing market. We expect our business from China will increase in all market sectors,” Mr. Wei said.

Question: How much of the increase from China came from Phytium?


6. Another US military aircraft lands in Taiwan

US Air Force cargo plane makes brief stop in Taipei | Taiwan News

A U.S. military C-146A Wolfhound arrived in Taipei on Thursday morning (July 15) to deliver a package to the new American Institute in Taiwan (AIT) director, Sandra Oudkirk, TVBS reported.

The aircraft departed from Kadena Air Force base in Okinawa, Japan, early Thursday morning and landed at Taipei’s Songshan Airport at 9:32 a.m. There were no passengers aboard, according to TVBS. After the package was successfully handed over to AIT officials, the plane took off at 10:06 a.m. despite being scheduled to stay for an hour.

Question: What was in the package?

Beijing angered by US Air Force plane’s short stop in Taiwan as de facto ambassadors change over | South China Morning Post

Both AIT and Taiwan’s foreign ministry declined to comment on the arrival of the US transport plane. Taiwan’s air force said it had not handled the arrival of the US plane and had only learned of the flight after it landed at Taipei airport.

Local news media said the plane, which took off from the US Kadena Air Base in Japan’s Okinawa, made a delivery to AIT to help Oudkirk assume the post at the de facto embassy...

Oudkirk, who arrived in Taiwan on Monday, will report for duty after completing 14 days of quarantine and seven days of self-health management in line with the island’s Covid-19 prevention measures, AIT said in a statement on Thursday.

It was the second US military plane to land in Taiwan in just over a month. On June 6, a US C-17 military transport plane flew three US senators to Taiwan and landed at Songshan airport for a brief stopover during which they announced the US would donate Covid-19 vaccine doses for the island.

PLA will defeat any attempt toward "Taiwan independence":Defense Spokesperson - China Military

"Any foreign military aircraft are forbidden to land on China's territory without the approval of the government of the People's Republic of China (PRC), and any unauthorized entry into China's territorial air space by foreign military vessels and aircraft will lead to serious consequences", said Senior Colonel Wu Qian, a spokesperson for China's Ministry of National Defense, in a written statement released Thursday on the official website of the ministry...

In addition, Wu warned the Democratic Progressive Party (DPP) authorities of not misjudging the current situation and taking risks to invite the wolf into the house, adding that any provocations of seeking "Taiwan independence" through collusion with external powers can only bring Taiwan in danger.

美军机降落台湾,国台办:民进党当局谋“独”拒统图谋必遭失败_港台来信_澎湃新闻-The Paper

答:我们注意到有关报道。我们坚决反对台美之间任何形式的军事勾连,坚决维护主权安全。我们敦促美方在台湾问题上恪守中美三个联合公报规定,停止任何挑衅。民进党当局勾结外部势力谋“独”拒统是把台湾老百姓引向灾难,其图谋必遭失败。

US, DPP warned as military aircraft lands in Taipei - Global Times

The Chinese People's Liberation Army (PLA) can expel, fire warning shots or even shoot down foreign military aircraft that trespass upon China's airspace, Chinese military observers warned Thursday, after a second US air force plane landed on the island of Taiwan in less than two months, which also triggered stern responses from the Chinese Defense Ministry and the Taiwan Affairs Office of the State Council.


7. Grassroots governance and control

To Improve Governance, China Ups Control Over Its Grassroots - Sixth Tone

A new document released Sunday by the Communist Party’s Central Committee as well as the State Council, China’s Cabinet, vows to strengthen the authority of rural townships and urban subdistricts and place them under more direct leadership of the party...

“Fragmented authority (at the lower level) has resulted in weak governance,” said Shen Duanfeng, a professor of village self-governance and rural reconstruction at the School of Marxism at Jiangnan University, in eastern China’s Jiangsu province. “The issue has proved abundant during the time of pandemic prevention and control.”

Across the country, village and neighborhood committees have played crucial roles controlling various COVID-19 outbreaks, both by enforcing lockdowns and by delivering public services while residents were forced to stay indoors. Their efforts were sometimes controversial, such as when, in Wuhan, committee workers transported meat using garbage trucks.

Sunday’s document says the Chinese state should learn from its experience during the pandemic to “repair shortcomings in (pandemic) prevention and control at the community level.”

The new directive also signals a shift for China’s grassroots governance away from encouraged — if often theoretical — autonomy toward greater direct management by the state.

“This document means the more than a decade spent exploring Chinese-style autonomy for village governance as well as urban owner committees and neighborhoods has been declared if not failed, then at least ended,” said Zhou Wang, associate professor at Nankai University's Zhou Enlai School of Government, in the northern municipality Tianjin. “In the next few years, the party will fully take over the governance systems of both the rural and urban grassroots.”

Comment: I wrote about this new plan on "modernizing primary-level governance" in the July 12 newsletter


8. Huawei going after the cloud

In Depth: Huawei’s Plan to Snatch Alibaba’s Cloud Crown - Caixin

Alibaba Group Holding Ltd. had a 40.6% share of China’s cloud computing market in the fourth quarter of 2020, trailed by Tencent Holdings Ltd. and Huawei Technologies Co. Ltd., both with 11%, according to data from IDC.

That represents a sharp rise for Huawei, which just a year earlier was the sector’s No. 5 player with a share of 5.2%...

Huawei actually started out focusing on enterprises back in the 1980s, selling network gear and other hardware to companies, before expanding into consumer-facing markets.

That long history has given the tech giant an extensive business contact network, laying the foundation for its rapid expansion in cloud computing and giving it an edge over rivals that could last for years.

The experience of a salesperson who works for a Chinese cloud company explained Huawei’s advantage. When a regional bank based in western China put out a tender for cloud services, Alibaba was seen as just one of several bidders. On the other hand, Huawei already had a procurement relationship with the bank, and its salespeople were already acquainted with management.

Comment: This next bit is quite interesting:

Another edge Huawei has is political, as government departments and state-owned firms — some of the top spenders on IT services — are keen to be seen supporting a homegrown tech champion widely perceived to be the target of unfair U.S. suppression.

Huawei executives are regularly invited to closed-door events organized by state-owned enterprises in various sectors, where they are asked to share Huawei’s own experience with replacing U.S. tech, according to a person who works at a Huawei partner company.



Business, Economy and Trade

Alibaba, Tencent, ByteDance and 30 other Big Tech firms sign voluntary antitrust ‘self-discipline’ pledge at event | South China Morning Post The group of tech companies, which also includes Huawei Technologies Co, Baidu, JD.com and artificial intelligence company iFlyTek, gathered at the China Internet Conference in Beijing on Tuesday and signed the convention on fair competition, consumer protection and strengthening innovation, according to a statement on the Internet Society of China, the conference organiser. The Internet Platform Operators Anti-Monopoly Self-discipline Convention bars tech companies from engaging in different types of monopolies, including “picking one out of two”, a practice in the e-commerce sector whereby merchants were forced to choose only one platform as their exclusive distribution channel, an issue at the centre of the Alibaba antitrust investigation.

国家发改委:准备投放超过1000万吨煤炭储备-中新经纬 The National Development and Reform Commission is set to release over 100 million tons of coal reserves to stabilize supplies.

高温预警四起,电煤供应紧张再现,河南省要求所有煤矿生产电煤一律不得外销 - 21财经 21CBH reports that Henan has prohibited provincial coal companies from selling thermal coal outside the province, to ensure supplies for provincial electricity production

稳实体防风险并重 银保监会定调下半年监管重点 —新华通讯社《经济参考报》官方网站Stabilizing the real economy while managing financial risks have become twin goals for China’s securities watchdog in the latter half of the year. The agency will direct banks to lend more to small businesses and green sectors. Meanwhile, it will continue to monitor non-performing loans and strengthen “liquidity management,” part of a broader move to stem the growth of debt.

六省清理虚拟货币挖矿项目 专家:最终会扩散到全国 —财经网So far, six Chinese provinces have banned mining of cryptocurrency, and analysts say the ban may become nationwide one day. 

Baowu Solidifies Global Steelmaking Crown With Major Acquisition $$ China Baowu Steel Group Corp. Ltd. has agreed to acquire cash-strapped Shandong Iron and Steel Co. Ltd., several related entities announced, in the latest move of a rapid consolidation that has created the world’s largest steelmaker over the last two years.

Medical Companies Must Weigh National Security When Planning IPOs, Lawyer Says - Caixin $$ Medical companies that want to list abroad should work closely with regulators to make sure they’re not crossing any national security lines, a lawyer specializing in the field told Caixin, amid a crackdown on cross-border data transfers. The suspended U.S. IPO of Alibaba-backed medical services provider LinkDoc Technology Ltd. gives a glimpse into the mounting regulatory pressures faced by a batch of data-rich Chinese medical technology firms

重庆出台新规严防互联网贷款业务“资金池” 整改完成前不得新增业务-证券日报网 Chongqing has unveiled a new rule directing banks to stop working with institutions without the right credentials in offering internet lending services. The rule aims to eliminate the so-called problem of 资金池, cash pool, in which the movement of money can become murky given the multiple layers of capital allocation. // 日前,重庆银保监局印发《关于进一步规范银行业金融机构互联网贷款业务的通知》(下称《通知》),从合作机构管理、合作业务管理以及消费者权益保护三方面对辖内银行业金融机构提出明确要求。 《通知》强调,互联网贷款业务严防“资金池”,严禁在支付和回收流程中嵌入不具备合法支付业务资质合作机构,细化了“客户归属地”标准。

June - Ant Group consumer finance unit in Chongqing wins operating approval | Reuters Ant Group's consumer finance unit has won approval to begin operating in Chongqing city, the local banking watchdog said on Thursday. The approval comes nearly two months after Chinese regulators imposed a sweeping restructuring on the Jack Ma's fintech conglomerate, underscoring a step forward for the revamp of group's outstanding lucrative consumer loan business.

China is keeping its borders closed, and turning inward | The Economist China wants foreign know-how and respect, not foreigners Chinese history has seen many cycles of opening and turning inward. Anecdote by anecdote, evidence is mounting that foreigners, whether suspected of bearing dangerous germs or ideas, are becoming less welcome. On a recent domestic flight, Chaguan’s neighbour pointedly asked to move seats. It is growing more common to face demands from members of the public to agree that China is strong and the West failing. Nationalism and impatience with foreign criticism were on the rise before covid-19. The pandemic has sped up those trends—as it has inspired at times nasty anti-Chinese racism abroad. Mutual distrust will be hard to overcome until China re-opens. That may take a while.

China top investment destination of Temasek - China Daily China remained the largest investment destination country of Singapore's investment company Temasek Holdings, accounting for 27 percent of the company's exposure to underlying assets, according to its 2021 annual report. Following China, Singapore, with 24 percent of the exposure, was the second-largest destination country of Temasek's investment, and the United States ranked the third with a share of 20 percent, the report said.

International Students' Plans for Fall Semester Complicated by Pandemic Fallout - Bloomberg In China, which accounts for a third of the roughly 1 million foreign students that flock to the U.S. in a typical academic year, the decline in available flights to American cities has been so severe that some students and their parents have resorted to lining up charter planes.

China Inc’s new inconspicuous expansion | The Economist All this looks like a treacherous climate for Chinese companies. Look closer, though, and a new generation of firms is not just adapting to it but thriving. Many have spent years expanding global operations and now make as much money outside China as they do within. Some are pursuing smaller investments under the radar. And, inverting a decades-old trend of copying Western intellectual property (ip), a few have become tech powerhouses in their own right, selling advanced products to the world.

US regulator under fire for delays to delisting Chinese stocks | Financial Times $$ Pressure is building on the US Securities and Exchange Commission to finalise regulations to de-list Chinese companies that fail to comply with American auditing rules, after lawmakers discovered the agency might not begin enforcement until 2025 at the earliest.

China’s share of bitcoin power usage drops as Kazakhstan surges | Financial Times $$ China’s global hashrate, the computational power required to mine new bitcoins, fell from over 75 per cent to 46 per cent of the global total between September 2019 and April 2021, according to data from the Cambridge Centre for Alternative Finance. The following month, Beijing stepped up its crackdown on the energy-intensive industry, which it has been trying to curtail for close to a decade.

As China Tires of Overtime, Siemens Is Fined for Long Work Hours - SixthTone Business outlet Jiemian reported Wednesday that the social security authorities in the city of Nanjing’s Jiangning District, in eastern China’s Jiangsu province, found that dozens of employees at Siemens Numerical Control Ltd. (SNC) had worked longer hours than China’s labor law allows, and fined the company 12,900 yuan ($2,000).

China to rectify problems discovered in central budget implementation audit - Xinhua China will fix problems discovered in audits on central budget implementation, and other financial revenues and expenditures, according to a State Council executive meeting held on Wednesday...Governments at all levels should continue to tighten their belts in the interests of the people. Efforts should not be relaxed on reducing spending on official overseas visits, government-procured vehicles, and official receptions. Violations that increase the costs of administrative operations will not be allowed, the meeting decided...The country will better connect urban markets and logistics firms with farms and farmers' cooperatives with the support of the "Internet Plus" approach. China will also develop specialized delivery services and cold-chain storage and processing facilities to promote the sales of agricultural products, the meeting said

Uniqlo says no forced Xinjiang labor used in making its products - Nikkei Asia Uniqlo owner Fast Retailing on Thursday stressed that the company does not use any materials linked to human rights violations in the supply chain amid rising concerns over forced labor in China's Xinjiang region.

China Brief: The business world is overlooking political risk in Beijing - Foreign Policy Dominick Donald, a United Kingdom-based geopolitical risk analyst and director at Autolycus Advisory, summed up the impact of the Didi news to me: “The canary has died. Get out of the f—ing mine shaft and tell your mates to leg it too.” Yet several other analysts from the United States, U.K., and France have spoken to me of the unwillingness of CEOs to hear bad news about China, with one saying they were told to play down the danger because even mentioning it might cause clients to take their business elsewhere. “The huge snag with risk analysis writ large is that China fees underpin the corporate market, one way or another—whether it’s the due diligence commissioned for IPOs, or the (indirect) effect of firms buying political risk analysis not wanting to hear bad things,” Donald said.

Chartbook Newsletter #26 - by Adam Tooze - Chartbook Between 1937 and the collapse of the nationalist regime in the spring of 1949 China experienced an inflationary surge that is amongst the worst ever recorded...In light of recent debates about inflation, this literature from the 1950s and 1960s would merit closer attention. It combines an interesting blend of macroeconomic, macrofinancial and supply-side stories. To my mind at least it adds up to a quite satisfactory synthesis.


Politics and Law

Man who killed COVID-19 control volunteer in NE China sentenced to death - Global Times A court in Harbin, Northeast China's Heilongjiang Province, announced on Thursday that the man who killed a COVID-19 control volunteer in February, which at the time caused much sensation and anger among the public in China, was sentenced to death for intentional homicide.

CPC school holds graduation ceremony - Xinhua Chen Xi, a member of the Political Bureau of the CPC Central Committee and president of the school and academy, presented certificates to graduates. Ten representatives shared what they had learned over this special semester, during which the Party celebrated its centenary.

Readout on the graduation - 中央党校(国家行政学院)举行2021年春季学期毕业典礼 陈希出席并为学员颁发毕业证书--新闻报道-中国共产党新闻网 中央党校(国家行政学院)本期毕业学员1279人。毕业典礼上,10位学员代表发言。学员普遍反映,这期学习欣逢党的百年华诞和盛大庆典,更感意义特殊、收获难忘。通过党校学习培训,深入学习习近平新时代中国特色社会主义思想,扎实开展党史学习教育,系统接受党的理论教育、党性教育和能力素养培训,进一步深化了对党的创新理论的理解和认识,更加坚定了对马克思主义的信仰、对中国特色社会主义的信念、对实现中华民族伟大复兴的信心,进一步增强了做到“两个维护”的自觉性主动性。大家一致表示,在新的征程上,一定要认真学习贯彻习近平总书记“七一”重要讲话精神,牢记初心使命,坚定理想信念,践行党的宗旨,以更加昂扬的精神状态担当作为,坚决把党中央决策部署落到实处,努力为实现中华民族伟大复兴做出更大贡献,为党和人民争取更大光荣。

Analysis: Xi's capital market crackdown has a 2022 timeline - Nikkei Asia "If people look only at Didi, they will misunderstand," one Chinese source said. While the moves may seem sudden, "they are political, comprehensive, profound and well-thought-out." Since autumn, the Chinese Communist Party has been advocating "the prevention of disorderly expansion of capital." The crux of the matter is this: President Xi Jinping has tightened his grip over every aspect of society, and the only field outside his control is populated by the private tech giants who hold huge amounts of corporate data and personal information.


Foreign and Defense Affairs

Xi Jinping to Attend APEC Informal Leaders' Retreat - MoFA At the invitation of New Zealand Prime Minister Jacinda Ardern, President Xi Jinping will attend via videoconference the APEC Informal Leaders’ Retreat on July 16 in Beijing. The retreat is held at the initiative of New Zealand, the host of APEC for this year. The theme is: Confronted by COVID-19, what are the opportunities for the Asia-Pacific region to collaborate to move through the health crisis, and to accelerate economic recovery in a manner that lays the foundations for a better future?

Wang Yi Meets with Afghan Foreign Minister Mohammed Haneef Atmar Wang Yi said, the hasty drawdown of the United States and the NATO escalated tensions and wars in Afghanistan, bringing the Afghan issue to crossroads. China, holding an "Afghan-led and Afghan-owned" principle, supports the building of an inclusive political structure in Afghanistan through dialogues and negotiations, supports Afghanistan to stand as an independent and neutral nation observing moderate Muslim policies, and supports Afghanistan to battle all forms of terrorism and co-exist with all its neighbors. The pressing task at present is to prevent civil wars and to resume negotiations within the Afghans, in order to work out solutions for political reconciliation and, in particular, prevent any terrorist forces from inflating and Afghanistan from becoming the home of terrorists.

Sounds like the Pakistan bus incident that killed PRC workers may have been a terrorist attack, per this tweet by the Federal Minister for information &Broadcasting Government of Pakistan:

Chinese FM condemns 'fabricated, malicious' report of US company accusing Chinese ships of dumping sewage in South China Sea - Global Times Simularity, a US satellite imagery analysis firm, published a report on Monday, claiming that raw sewage discharged from more than 200 Chinese fishing vessels around the contested Nansha Islands in the South China Sea is causing extensive damage to coral reefs.  Zhao Lijian, spokesperson of the Chinese Foreign Ministry, said on Thursday's routine press conference that this report is a "big joke," saying that the US company was fabricating facts, violating professional ethics, and maliciously spreading rumors against China.

Beijing’s ‘China Story’ Strategy Misses Its Global Targets, Think Tank Says - Caixin Efforts to tell China’s story to foreign audiences and raise the country’s global influence still face problems, the experts warned at the Wednesday event held by the Center for China and Globalization (CCG). They said it is difficult for narratives catering to domestic audiences and online sentiments to resonate with others. Chu Yin, a professor at the University of International Relations said the strategy of telling China’s story to the world should guard against being “internalized,” when messages from Chinese diplomats, experts and scholars appear to be delivered more to domestic rather than foreign publics, and have more influence at home than abroad. // CCG on the event - 如何破解国际传播话语困境?知名专家学者如是说

Mind the Gap: Priorities for Transatlantic China Policy - Munich Security Conference China is at the top of the transatlantic agenda. Throughout the first half of 2021, the Distinguished Reflection Group on Transatlantic China Policy, 21 individuals with a wealth of expertise on China and transatlantic relations, worked to advocate a more joined-up approach to China. Its report proposes a transatlantic agenda focused on achieving quick wins, with recommendations organized by seven issue areas, from economic issues to values and security.

Vice Foreign Minister Ma Zhaoxu Attends the Second Coordinators' Meeting for G20 Rome Summit via Video Link - MoFA Ma Zhaoxu said, the pandemic situation is still grim around the globe and the economic recovery is quite different in various areas of the world. As an important forum of international economic cooperation, the G20 should adhere to true multilateralism, enhance solidarity and cooperation, focus on the pandemic response and economic recovery, and take joint actions to build a community with a shared future for mankind.

Theoretical seminar hosted to celebrate 100th anniversary of CPC's founding - China Military The Chinese military hosted a theoretical seminar celebrating the 100th anniversary of the founding of the Communist Party of China (CPC) in Beijing on July 13. General Zhang Youxia, member of the Politburo of the CPC and vice chairman of the Central Military Commission (CMC), attended the seminar and delivered a speech. Admiral Miao Hua, member of the CMC and director of the CMC Political Work Department, presided over the seminar

CPC extends appreciation for congratulatory messages on Party's centenary - Xinhua The CPC received congratulatory messages and good wishes from many foreign countries' political parties, governments, parliaments, international organizations, civil groups, and their leaders, as well as foreign diplomatic envoys in China, friendly personages, overseas Chinese, and compatriots from China's Hong Kong and Macao special administrative regions and Taiwan. Entrusted by the CPC Central Committee and Xi Jinping, general secretary of the CPC Central Committee, the General Office of the CPC Central Committee and the International Department of the CPC Central Committee expressed sincere gratitude in a statement released on Thursday // 受中共中央和习近平总书记委托 中共中央办公厅 中共中央对外联络部发表公告_CCTV

U.S. freedom more rebellious with focus on individual desires: Chinese reporter - People's Daily Online Freedom in the United States is more rebellious, focuses on individual desires, and is based on human weaknesses, while China's freedom is more philosophical, focuses on social connections and is based on human decency, a Chinese reporter has said recently. "Both Chinese and Americans value freedom, but both have their own definition of what it means," noted Xu Ruyi from China.org.cn in an interview with PR Newswire, a distributor of press releases headquartered in New York City. "We cannot, in the guise of 'universal values,' judge something against our own standards, regardless of others' intrinsic features," she stressed.

王毅会见印度外长苏杰生 — 中华人民共和国外交部 王毅指出,去年中印边境事态是非曲直清楚,责任不在中方。

Wang Yi Meets with Indian External Affairs Minister Subrahmanyam Jaishankar China and India pose no threat but offer development opportunities to each other. The two countries are partners rather than rivals or enemies. The principles of China-India relations should still be mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, and mutual respect for each other's core interests. The interaction between the two countries should still be seeking mutual benefits and complementarity, pursuing healthy competition and avoiding confrontation, with cooperation as the main theme. Both China and India now shoulder greater responsibilities for their own regions as well as world peace and prosperity, and should pay more attention to the common strategic interests of both sides and bring more benefits to the two peoples. Wang Yi pointed out that the rights and wrongs of what happened in the China-India border area last year are very clear and the responsibility does not lie with the Chinese side. China is ready to find a solution acceptable to both sides on the issue that needs emergency response through negotiation and consultation. The two sides must place the border issue in an appropriate position in bilateral relations, expand the positive momentum of bilateral cooperation and create favorable conditions for resolving differences through negotiation.

Jaishankar meets China's Wang Yi, says unilateral change of status quo along LAC not acceptable to India "Discussions focused on the outstanding issues along the LAC in the Western Sector. Highlighted that unilateral change of status quo is not acceptable. Full restoration and maintenance of peace and tranquility in border areas is essential for development of our ties. Agreed on convening an early meeting of the Senior Military Commanders," the foreign minister said.

External Affairs Minister's meeting with State Councilor and Foreign Minister of China, H.E. Mr. Wang Yi on the sidelines of SCO Foreign Ministers' Meeting Recalling their last meeting in Moscow, in September 2020, the External Affairs Minister emphasized the need to follow through on the agreement reached then and complete the disengagement, resolving the remaining issues along the LAC in Eastern Ladakh at the earliest. EAM pointed out to State Councilor that the successful disengagement in the Pangong Lake Area earlier this year had created conditions for resolving the remaining issues. It was expected that the Chinese side would work with us towards this objective. EAM noted however that the situation in remaining areas is still unresolved. 3. EAM recalled that both sides had agreed that a prolongation of the existing situation was not in the interest of either side. It was visibly impacting the relationship in a negative manner. Assessing the overall relationship, EAM emphasized that maintenance of peace and tranquility in the border areas has been the foundation for the development of ties since 1988. The attempts to change status quo last year that also disregarded commitments under the 1993 and 1996 agreements have inevitably affected ties.

Secretary Blinken’s Meeting with French Foreign Minister Le Drian - United States Department of State Additionally, they agreed on the need for joint U.S.-European efforts to stand up to Russian aggression and to address the People’s Republic of China’s human rights abuses, coercive trade practices, and aggressive foreign policy.

Contest at Kasawari: Another Malaysian Gas Project Faces Pressure | Asia Maritime Transparency Initiative Since early June, China Coast Guard (CCG) vessels have been contesting new Malaysian oil and gas development off the coast of Sarawak. The activity coincides with a patrol by Chinese military planes near Malaysia, which prompted scrambles by Malaysian aircraft and recriminations from Kuala Lumpur.  This is at least the third time since last spring that the CCG has harassed Malaysian energy exploration. It demonstrates again Beijing’s persistence in challenging its neighbors’ oil and gas activities within their own exclusive economic zones. And the air patrol, which was likely not a coincidence, suggests Beijing’s willingness to engage in parallel escalation to pressure other claimants to back down.

Gigantic Hangar Near Secretive Chinese Test Facilities Points To Exotic Airship Development The hangar, which is one of the largest on earth, sits among remote missile defense and anti-satellite development installations.

Interview with - Maria Repnikova - Participants learn about China’s economic gains. - The Washington Post I think we should view these efforts as part of the larger soft-power campaign whereby the Chinese government attempts to legitimize its global economic projects by shaping a more positive sentiment about China. Out of other soft-power mechanisms I have examined in my research, including state-owned media outreach, Confucius Institutes and long-term educational exchanges, I find short-term trainings are relatively more successful in shifting overall perceptions about China. They leave visitors with sentiments of surprise, admiration and gratitude.

German FM: China using vaccine donations for political ends - AP Heiko Maas said both Russia and China had been good at publicly promoting the delivery of their vaccines to other countries, but also pursued other aims in doing so. “We note, in particular with China, that the supply of vaccines was also used to make very clear political demands of various countries,” he said. Speaking to reporters during a trip to Kalamazoo, Michigan, where Maas visited a Pfizer production facility, he added that such behavior should be rejected.


Hong Kong and Macao

Hong Kong working to share its digital IDs with mainland China • The Register Hong Kong’s Office of the Government Chief Information Officer (OGCIO) has revealed that the territory is investigating the use of its digital ID in mainland China. In a Q&A, Secretary for Innovation and Technology, Mr Alfred Sit, said “the OGCIO is exploring with relevant authorities in the Mainland and Macao the collaboration opportunities between their identity authentication systems and iAM Smart.”

Hong Kong Hot Pot Scandal Angers Democracy Activists for 'Double Standards' - Bloomberg The so-called hot pot scandal -- named for the communal soup dish served at the dinner -- erupted after local news outlets including Ming Pao and Stand News named the three officials earlier this month and disclosed they each paid a HK$5,000 ($645) fine for attending the March 2 event. Government attempts to explain why the “hot pot trio” weren’t fired fueled more outrage: Security Secretary Chris Tang argued Wednesday that such events required officials to “sacrifice” time with their families...Authorities learned about the dinner after a female attendee accused the executive of sexually assaulting her later that evening, HK01 said


Tech and Media

Chen Lifang – POLITICO The leader of Huawei’s public affairs and communications department operates outside of the public eye. Huawei’s founder Ren Zhengfei and three male rotating chairmen act as the company’s public faces. But behind the scenes it is Chen who calls the shots on how to convince governments to trust Huawei and its kit. Inside the company’s government affairs offices in Europe, she’s referred to as “Madame Chen” with a mix of admiration and fear...Her victories include heading off a two-year pressure campaign led by Washington to convince Europeans to cut Huawei out entirely. The company has avoided all-out bans in most of Europe, safeguarding a role for itself in the lucrative 5G “radio access networks” market.

Beijing pushes Chinese firms to report cybersecurity vulnerabilities early and often amid growing threats | South China Morning Post Companies providing online products and services must report the discovery of any weaknesses in their systems within two days to the Ministry of Industry and Information Technology (MIIT), according to a notice on Tuesday by the country’s cyberspace watchdog. This regulation, which sets out how to handle cybersecurity loopholes, was developed by the Cyberspace Administration of China (CAC), the MIIT and the Ministry of Public Security (MPS). It will take effect on September 1.

TSMC confirms it is in talks to build Japan chip plant - Nikkei Asia "We are in the due diligence process now to have a specialty technology fab in Japan," TSMC Chairman Mark Liu added, referring to a chip fabrication plant. "It is still early to disclose the decision, because it will be based on our customer needs, operating efficiency evaluation and cost economics." The potential fab in Japan is not included in TSMC's three-year $100 billion capital expenditure plan, he added.

Microsoft discovers threat actor targeting SolarWinds Serv-U software with 0-day exploit | Microsoft Security Blog MSTIC has observed DEV-0322 targeting entities in the U.S. Defense Industrial Base Sector and software companies. This activity group is based in China and has been observed using commercial VPN solutions and compromised consumer routers in their attacker infrastructure.

POLITICO Europe names Jamil Anderlini as top editor – POLITICO Anderlini, a U.S. and New Zealand dual national who speaks fluent Mandarin, has spent the past 14 years at the Financial Times, close to six of them as its Asia editor. Prior to that, he was the FT’s bureau chief in Beijing, and before that, the Beijing correspondent for the South China Morning Post and the chief editor of the China Economic Review.

Cannes Gives Slot to Hong Kong Protest Film Revolution of our Times' - Variety In a late move, the Cannes Film Festival has announced the addition of a new film to its official line-up. The documentary, “Revolution of Our Times,” depicts recent political and social events in Hong Kong, and will play on Friday in a special screening...It is likely that Cannes organizers have anticipated a negative reaction. They’ve chosen to play “Revolution of Our Times” at the end of the festival, when the trio of mainland Chinese films have already played and can’t be withdrawn in protest.


Society, Arts, Sports, Culture and History

Chinese web celebrity, 33, dies of serious infection after cosmetic surgery - Global Times The tragedy of Xiaoran, a web celebrity with more than 130,000 followers on China's Twitter-like Sina Weibo, began trending on the platform not long after her death, with related hashtag earning more than 600 million views as of Thursday afternoon. According to a report from Chinese magazine Economic Weekly on Thursday, the beauty clinic in Hangzhou, Zhejiang Province, where Xiaoran underwent liposuction twice, has admitted responsibility for her death, which it said stems from mistakes made during surgery and delayed treatment after the surgeries. The clinic has been closed by local authorities, the report added.


Energy, Environment, Science and Health

At Some Chinese Schools, Unvaccinated Students Are No Longer Welcome - SixthTone County governments in four other provinces — Jiangxi, Guangxi, Henan, and Shaanxi — have said only students whose family members are all vaccinated against COVID-19 will be allowed to attend the fall semester. In another variation of such measures, counties in a different set of provinces — Henan, Inner Mongolia, and Shaanxi — have said workers on government paychecks who won’t complete a full two-shot vaccination regimen as soon as possible will be held accountable along with their superiors. Some districts even included retired government workers among the people who will need to get inoculated or face consequences.

China's Sichuan reports human case of H5N6 bird flu - state media | Reuters The 55-year old male infected with the bird flu in Bazhong city had been sent to hospital and local authorities have culled poultry in the vicinity, said the state broadcaster CCTV. Experts believe that the infection was an occasional case and “the risk of an invisible epidemic is extremely low”, the media said.