Hong Kong; Ding Xuexiang on central, unified leadership; Trump threatens more tariffs; Another research scandal
Amidst all the protests and increasing concerns about the breakdown of rule of law in Hong Kong, Alibaba’s $13 Billion Hong Kong listing looks to be successfully completed. Can the city continue to thrive as a global financial center, and is Beijing betting that it can in spite of increasing efforts to make it just another PRC city?
The US-China trade discussions seem to be on an endless loop of hope, promise, disappointment and threats. We are back in the threat stage today, as President Trump said earlier today that “If we don’t make a deal with China, I’ll just raise the tariffs even higher.”
Thanks for reading.
The Essential Eight
1. Hong Kong
About 100 protesters remained on campus on Tuesday after politicians and educators helped negotiate the release of hundreds of others, many of whom are minors, according to Hong Kong Chief Executive Carrie Lam. As of 3 p.m., police said about 1,100 people in or near PolyU had either been arrested, or, if they were under 18 years old, identified and released.
Minors could still be liable for future legal action under a deal brokered late Monday that those 18 and under could walk out without being immediately arrested. Late Monday, a group of 60 high-school principals, 15 teachers and 10 social workers were allowed inside, according to the police.
More than 1,000 protesters who had spent the previous day clashing with the police were detained after heavily armed officers surrounded the school on Sunday and gave the protesters few options but to surrender and face arrest.
"The ruling of the Court of First Instance of the High Court of the HKSAR has seriously undermined the legitimate power of the Chief Executive and the Government of the HKSAR to govern in accordance with laws, and is inconsistent with the Basic Law of the HKSAR and the relevant decisions of the NPC Standing Committee," the spokesperson said.
"We are studying relevant opinions and suggestions from some NPC deputies," the spokesperson said.
According to the Article 67(4) of the Constitution of the People's Republic of China on the NPC Standing Committee's power to interpret laws and the Article 158(1) of the Basic Law of the HKSAR that states "the power of interpretation of this Law shall be vested in the Standing Committee of the National People's Congress," the NPC Standing Committee reserves the right of final judgement as to whether Hong Kong's local laws contravene the Basic Law, the principal official said.
Were the NPCSC to interpret Article 160 (and its 1997 decision) to have the sort of preclusive effect as claimed by the Commission in its statement, it would bring countless laws—those not included in and thus not declare invalid by that decision—outside the purview of constitutional review by the courts of Hong Kong. This would be an outcome no less troubling than a wholesale abrogation of Hong Kong courts’ power of constitutional review.
the declaration sets in motion the obscure technical process that could lead to a unilateral intervention by the central government in Hong Kong, such as the suspension of civil liberties or other emergency measures. Chinese officials have been reminding outside observers for several months that there are two routes under the Hong Kong Basic Law to a Beijing intervention: a request by Mrs. Lam, or a vote by the Chinese congress’s Standing Committee.
CCTV says certain Hong Kong High Court judges should not take the side of the evildoers
This is really quite an impressive opinion by the Justices, Godfrey Lam and Anderson Chow, who deserve to be singled out by name for their careful, learned, and dispassionate analysis. I imagine it will be completely misunderstood by Chinese officials, who care only about the substance of the decision and can’t believe that anything other than pre-existing political inclination could drive the result.
Ironically, the decision protects the prerogatives of the National People’s Congress and the constitutional scheme it established with the Basic Law.
China's State Council on Tuesday appointed Tang Ping-keung as Commissioner of Police of the Hong Kong Special Administrative Region (HKSAR), replacing Lo Wai-chung, as experts and retired senior police officers noted that Tang will likely be more decisive and tougher in helping stop the violence and chaos that has engulfed the city.
The decision was made in accordance with the HKSAR Basic Law, and based on the nomination and suggestion of HKSAR Chief Executive Carrie Lam, the Xinhua News Agency reported on Tuesday.
“No one follows the rules and guidelines any more,” says a frontline police officer aged in his twenties who asks not to be identified. “When my colleagues break the law, they never admit it and our superiors provide cover for them.”..
He says he and his colleagues have been assured by commanders that they would be protected even if they fired live rounds at protesters. “There are absolutely no checks and balances any more,” he adds.
Page 1 People's Daily commentary Tuesday - Attempts by outside forces to interfere in Hong Kong's affairs are doomed to failure
Former Democratic Party chairman Albert Ho says he was ambushed and beaten by two masked men on his way back home from the office on Tuesday night, suffering multiple injuries to his back and arms – including a possible bone fracture.
Order books will now close on Tuesday at 12 p.m. in New York (1700 GMT), half a day earlier than initially planned by the Chinese e-commerce giant and its investment banking advisers.
The decision was made by the company on Monday, the sources said. The final price that institutional investors will pay will still be set by Wednesday evening Hong Kong time, based on Tuesday’s closing price in New York, they added.
Some passenger trains between mainland China and Hong Kong have been temporarily suspended on Tuesday and Wednesday, China’s Global Times reported.
2. Ding Xuexiang on centralized and unified leadership
Ding Xuexiang, director of the General Office of the Communist Party of China, on page 6 of the Monday People's Daily - "Improve the systems for firmly upholding the authority of the CPC Central Committee and for centralized and unified leadership"
This is one of the post 4th Plenum explainers, very interesting and important given that its author is effectively Xi Jinping’s chief of staff. Ding lays out the history of why the Party needs centralized and unified leadership, with Xi as the core of course.
Some may see this as a reaction to pressures on Xi. It may be, it may also be the beginnings of the more public campaign to prepare everyone for the expected third term for Xi?
The centralization of so much decision-making in the Party Center, as Ding again calls for, would seem to increase the risk of sclerotic and flawed decision-making. Then again, maybe AI, big-data and modernized governance will overcame human limitations?
3. US Senate report on PRC talent programs
Federal agencies have failed to adequately respond to the threat of Chinese government-funded programs that systematically exploit U.S. research to strengthen China’s own economy and military, a new Senate report concludes.
With what are known as “talent programs,” the Chinese government provides compensation and resources to researchers who at times illicitly transfer intellectual property to China, in some cases setting up shadow labs overseas mirroring their U.S. research, according to the report released Monday by the Senate Permanent Subcommittee on Investigations. Participants are routinely told to conceal their participation from U.S. authorities, the report said...
The report also recommended the U.S. consider whether to revise a Reagan-era directive, known as “NSDD-189” that called for unrestricted access to fundamental research despite the threat such knowledge could fall into the hands of the Soviet Union.
“The strength of American science requires a research environment conducive to creativity, an environment in which the free exchange of ideas is a vital component,” the directive says, in a line that has been championed by scientists ever since.
In its report, the panel suggested that approach may no longer work in the face of the China threat
4. US-China trade
The comments came during a meeting with the president’s Cabinet on Tuesday...
“If we don’t make a deal with China, I’ll just raise the tariffs even higher,” Trump said in the meeting.
The two sides, who are locked in tough -- perhaps final -- negotiations on a phase-one pact, are discussing linking the size of tariff rollbacks to the preliminary terms set in that failed May deal, according to the people, two of whom said the White House is still debating the precise percentage internally. The Chinese have demanded that all tariffs imposed after May be removed immediately and then tariffs imposed before that be lifted gradually, according to one of the people...
The duties under discussion for a potential rollback include the initial tariffs on some $250 billion in Chinese goods that President Donald Trump imposed last year, according to two people. Some of his advisers had been pushing to keep those in place longer term, to ensure China lives up to its end of the bargain, but now are open to a partial relief in order to get the phase one deal signed.
5. Cleaning up grey rhinos’ messes
Who gets the proceeds from the assets sales of these fallen moguls?
Two investment funds of the Heilongjiang provincial government raised their combined stake in Harbin Bank – a city-level lender based in north-eastern China and listed on the Hong Kong stock market – to 48.18 per cent, from 19.69 per cent, according to a stock exchange filing on Friday. Six private investors, three of whom are linked to financier Xiao Jianhua, transferred 15 billion yuan (US$2.1 billion) of their shares to the two investment funds, according to Chinese media.
On the same day, the Chinese stocks regulator revoked the license of CEFC Shanghai Securities, a unit of the CEFC conglomerate controlled by Ye Jianming, who ran China’s largest private oil-producing business before he was detained by Chinese authorities in March 2018 on unspecified charges.
6. New manufacturing fund
The Thursday filing to the Shanghai Stock Exchange does not specify how much capital the fund intends to raise. However, it reveals that the fund’s registration capital is 147.2 billion yuan ($21 billion), making it larger than that of the state-owned China Integrated Circuit Industry Investment Fund (CICF) set up in 2014 to revolutionize the country’s chip industry.
Apart from CRRC, other shareholders in the fund include the Ministry of Finance, a major investment arm of China Development Bank, China Tobacco, several regional investment companies, and manufacturing companies including carmaker FAW and debt-ridden display-panel producer Tunghsu Optoelectronic Technology. Some investors have previously plowed capital into CICF, the filing showed.
The fund’s priority investment targets include new materials, new information technologies, and electrical equipment, according to the filing
7. EU making it tough for Huawei?
The European Union is poised to say potential 5G suppliers will be evaluated based on their home country’s laws, a stance that could exclude Chinese businesses from some lucrative contracts for the advanced telecommunications networks.
“Factors, such as the legal and policy framework to which suppliers may be subject to in third countries, should be considered,” according to a draft of a joint statement obtained by Bloomberg and planned for release next month...
U.S. Secretary of State Mike Pompeo tweeted on Tuesday that the EU’s risk assessment report highlights how nations should install 5G equipment and software only from companies that won’t threaten their security, privacy, intellectual property, or human rights.
8. Nankai University President embroiled in research scandal
the head of the official Research Integrity initiative there, Xuetao Cao, a former head of the Chinese Academy of Medical Sciences and current president of Nankai University, is now thoroughly involved in a faked-research scandal of his own...
He has clearly been built up as a paragon of Chinese research and of service to the Chinese state – for example, at one point he was the youngest General in the Chinese armed forces on top of his academic achievements. (I should note that he’s a recent member of the American Academy of Arts and Sciences, over on the other side of Cambridge, and several other such societies as well). And as recently as last week, he gave an address to a crowd of thousands in the Great Hall of the People in Beijing on (yes) research integrity. The speech was live-streamed to universities across the country
And now it comes out, Cao’s research works contain elaborately falsified research data. The discovery was made by data integrity sleuth Elisabeth Bik, assisted by Smut Clyde and others.
Chairman Cao’s PubPeer record stood at 54 papers when this article went online. It seems, not everyone in China believes the Party version of Cao’s scientific genius. The hints to scrutinise his works, and even direct evidence, reached Bik..
Cao’s career, kicked off by Traditional Chinese Medicine woo and boosted by the massive use of Photoshop, soared towards all records: youngest General, youngest rector, youngest Academy member. And now Chairman Cao is in charge of research integrity in all China.
Are you excited about the massive research integrity hypocrisy around China's first immunologist Xuetao Cao? Smut Clyde will explain to you the Flaw Cytometry and other naughtiness they uncovered, led by Elisabeth Bik.
Business, Economy and Trade
China central bank governor says will step up credit support to economy - Reuters Authorities will promote capital replenishment and boost banks’ ability to increase lending, Yi told a meeting with representatives from commercial banks, adding that lenders should reference the Loan Prime Rate (LPR) when it comes to setting lending rates. The People’s Bank of China (PBOC) is likely to lower the LPR on Wednesday for the third time since it introduced the benchmark in August, according to a survey of traders and analysts.
China’s Overstretched LGFVs Guarantee $842 Billion of Credit - Bloomberg Around 2,000 of these funding platforms have offered a total of 5.9 trillion yuan ($842 billion) worth of credit guarantees to domestic firms, representing nearly a quarter of their combined net assets, said Liu Yu, an analyst from Guosheng Securities Co. It also amounts to around 70% of the LGFVs’ total onshore bonds outstanding.
What trade war? Chinese companies wow with third-quarter report card - Reuters The top 200 Chinese companies spanning consumer, technology, industrial, property and financial industries reported September quarter earnings well ahead of market expectations, setting them up for a strong showing next year, analysts said.
China-UAE Police Bust $256 Million Fake Luxury Goods Ring | Sixth Tone Police in China and the United Arab Emirates have detained dozens of suspects for their alleged involvement in an international criminal gang that made and sold an enormous volume of counterfeit luxury goods in the Middle East, Sixth Tone’s sister publication The Paper reported Sunday
Yicai Global - Cash-Rich Tungshu Optoelectronics Defaults on USD286.2 Million Debt Repayment Tungshu Optoelectronic Technology has failed to pay CNY2.01 billion (USD286.2 million) in principal and interest on two medium-term notes due to purported liquidity issues despite having more than CNY18 billion (USD2.56 billion) on the books.
Shares in Office-Software Maker Hold Steady After Impressive Tech Board Debut - Caixin Kingsoft Office raised 4.6 billion yuan ($655 million) on Monday by offering 21.91% of the company, or 101 million shares at 45.86 yuan apiece. Shares opened at 140 yuan before dropping to 126.35 at close. They closed up 7.65% to 136.01 yuan on Tuesday.
China Scrutinizes U.S. Bid for China Chipmaker Control - Bloomberg China’s antitrust regulator is closely monitoring Diodes Inc.’s proposed $428 million takeover of Taiwan’s Lite-On Semiconductor Corp., responding to complaints a deal will deliver the Taiwanese company’s Shanghai-based affiliate On-Bright Electronics Inc. into American hands, according to a person familiar with the matter. The State Administration for Market Regulation is heeding warnings from multiple industry organizations about the acquisition and could consider asking the Chinese assets to be excluded from the deal, said the person, asking not to be identified talking about sensitive matters.
Chinese State Media Says Most ‘Blockchain’ Firms in China Are All Hype, No Code On Nov. 18, the predominant state television broadcaster in Mainland China, CCTV, aired an episode by Focus Report, titled “Blockchain is not a Cashchain.” The episode takes a closer look at companies who reportedly misuse the concept of blockchain technology to create business momentum and financial gains.
China has nearly 7,000 PPP projects underway: official - People's Daily Online As of the beginning of November, China has nearly 7,000 public-private partnership (PPP) projects underway with a total investment of about 9 trillion yuan (about 1.28 trillion U.S. dollars), an official with the country's top economic planner said Saturday.
Chinese safety regulators blame ‘reckless greed’ after 15 die in coal mine blast | South China Morning Post A coal mine explosion that killed 15 people in northern China should be blamed on “reckless greed” and neglect, the state safety regulator said on Tuesday. The blast happened at the Ermugou mine in Pingyao county, Shanxi province, at around 1.50pm, according to state news agency Xinhua.
In Need of Direction: The Case for Moving Supply Chains Out of China - War on the Rocks - Derek Scissors Is it a good idea for governments to interfere with supply chains? Multiple parts of the U.S. government certainly believe so and are seeking to expand the current trade dispute with China. While it’s wise to be skeptical of government intervention, there are sound reasons why some supply chains that include America should not include China. And even if ongoing bilateral talks achieve limited success, Washington is likely to continue in some form to try to displace certain supply chains
Politics and Law
涉黑案被告人当庭举报公诉人是保护伞 重庆官方开展调查_政经频道_财新网 awkward moment for a prosecutor, man in Chongqing on trial for organized crime activities tells the court that the prosecutor was one of his protectors
Foreign and Defense Affairs
Secretary of Defense Mark Esper explains why the U.S. doesn’t want confrontation with China - The Washington Post He places much of the blame directly on Chinese President Xi Jinping, who, Esper said, took China in an ominous direction after he assumed office in 2013. “We’re not the ones looking for a Cold War. All we are asking is for China to follow the rules, live by the international norms, live up to your commitments and obligations,” he said. “If China wants to do it, China can do it. But China is either choosing not to or ignoring it.”
U.S. Increased Sea Patrols to Send Message to China, Defense Secretary Says - Bloomberg Esper said the U.S. has conducted “more freedom of navigation operations in the past year or so than we did have in the past 20-plus years.”
US Navy sends littoral combat ships to ‘bolster attack strength in South China Sea’ | South China Morning Post The US Navy is strengthening its presence in the South China Sea by deploying two Independence-class ships specialising in nearshore operations. This deployment of the littoral combat ships suggested that the US strategy had switched from reconnaissance and deterrence to increasing its attack capability, a Beijing-based think tank said.
解放军报评论员：坚持人民军队最高领导权和指挥权属于党中央 - 中国军网 PLA Daily Commentary - We must maintain that the supreme leadership and command of the people's army belong to the CPC Central Committee
“甜蜜必达”，火箭军适龄军官相亲联谊_七环视频_澎湃新闻-The Paper video of a matchmaking event for PLA rocket forces troops in Henan
Growth of Chinese Students Studying in U.S. Slows to 1.7% Amid Visa Worries - Caixin Chinese students in the U.S. rose by 1.7% to 369,548 in the latest full academic year, accounting for about a third of all foreign students in the country, according to the Institute of International Education’s “2019 Open Doors Report on International Educational Exchange” released on Monday in the U.S.
US-China Disaster Management Exchange 2019 kicks off in Hawaii - China Military More than 200 officers and soldiers from the ground forces under the Chinese PLA Eastern Theater Command and the US Army Pacific (USARPAC) participated in the event.
China Focus: New visions championed for global media development in all-media era - Xinhua Noting that the popularity of the internet has blurred the lines between fact and fiction, Cai [Mingzhao] said fake news posts challenges to journalism ethics, not only harming the audience but also undercutting the authority and credibility of mainstream media. Media organizations have their own practices of verifying facts and combating rumors, but there is still no effective mechanism to strengthen cooperation and jointly crack down on fake news, said Cai.
Investigation: Why is China on the move in the South Pacific? | 60 Minutes Australia - YouTube A special 60 Minutes investigation revealing China's soft invasion of Australia’s island neighbours
How China Influences Media in Central and Eastern Europe – The Diplomat It has been known to China scholars dealing with influence that to overcome the credibility gap, China has increasingly employed a strategy which can be literally translated as “borrow a boat to go to sea” (jian chuan chu hai). It aims at identifying outlets that can carry messages on behalf of China whether through outright acquisition, co-ownership (whether the share is above or below controlling level), and/or forming partnerships through content-sharing.
11th China-US Political Party Leaders Dialogue opens in Beijing- China.org.cn At the opening session, Song Tao, head of the International Department of the Communist Party of China (CPC) Central Committee, said the healthy development of China-U.S. relations serves the interests of not only the two countries and the two peoples but also all countries in the world...Former U.S. Secretary of Commerce Gary Locke, as the representative of the Democratic Party, and former U.S. Secretary of Housing and Urban Development Alphonso Jackson, as the representative of the Republican Party, stressed that the U.S.-China relationship is the most important bilateral ties in the world
How Cozy Is Russia and China’s Military Relationship? - Carnegie Moscow Center Russian and Chinese armed forces are interacting more, but integration is not yet happening. Moscow and Beijing officially deny that they are planning to form a military alliance. Russian Foreign Minister Sergey Lavrov reconfirmed this again recently. But the two militaries are becoming more familiar with each other. They are taking part in joint training; making their weapons systems more compatible; and syncing their communications, logistics, tactics, and military doctrines.
Are We Overstating the Importance of the “Hong Kong Factor?” – Taiwan Insight Thanks to the hard work of journalists at The News Lens and political scientist Nathan Batto, these two visualisations of public opinion polls show that Han’s decline and Tsai’s uptick in popularity did not spike—let alone start—with any event related to Hong Kong protests. Rather, these trends began months before the protests even began.
Taiwan president alleges Chinese electoral interference - AP Chinese attempts to interfere in Taiwan’s presidential election campaign are happening “every day,” the island’s leader, Tsai Ing-wen, said Tuesday. Tsai gave no details, but she said China was using “every means they can” to influence the Jan. 11 vote for president and lawmakers.
Tech and Media
TikTok Looking at Ways to Shake Off Its Ties to China - WSJ $$ One reason behind the concern: ByteDance’s investors, including Sequoia Capital and SoftBank Group Corp. , view growth in the U.S. as key to achieving their goal of an initial public offering late next year, people familiar with the matter said.
Former Elpida CEO joins China state-owned chipmaker - Digiimes Tsinghua Unigroup has announced the appointment of Yukio Sakamoto, the former CEO for Japan's Elpida Memory, as senior VP of Unigroup and head of the group's Japan-based unit
Zuckerberg’s Anti-China Rhetoric Roils Facebook Employees — The Information $$ Facebook CEO Mark Zuckerberg’s Georgetown address about free speech last month drew skeptical commentary from many quarters. But for one group of Facebook workers—its community of Chinese employees—his comments touched a particularly sensitive nerve. Zuckerberg’s criticism of Chinese video app TikTok and China’s censorship of the internet renewed long-standing complaints that Facebook’s management is biased against China, according to one employee who saw messages in Facebook’s internal discussion groups.
Xiaomi Appoints Controversial Chief Voice Scientist - Caixin Daniel Povey, the father of speech recognition toolkit Kaldi, will become Xiaomi’s chief voice scientist, the latter company’s founder Lei Jun announced Monday on microblogging site Weibo...In August, he was fired by Johns Hopkins University for allegedly being involved in a “violent and aggressive” activity at the campus, which the university said was motivated by “racially discriminatory animus.”
Successful satellite tests to allow ‘Hongyun speed’ by 2020 - Global Times The demonstration system for China's Hongyun Project, a low-orbit broadband communication satellite system, will become operational at the beginning of 2020, making substantial progress toward the eventual goal of providing internet connectivity to users around the world, developers told the Global Times on Tuesday.
Senior CPC official stresses high-quality development of Chinese movies - Xinhua Huang Kunming, a member of the Political Bureau of the CPC Central Committee and head of the Publicity Department of the CPC Central Committee, made the remarks Tuesday at the opening ceremony of the 28th China Golden Rooster and Hundred Flowers Film Festival. Noting that domestic movies are experiencing a "golden age," Huang required film practitioners to practice core socialist values and take a people-centered approach to produce more high-quality films.
Society, Arts, Sports, Culture and History
Beijing officials deny permit for show of Chinese-American artist amid political tensions | The Art Newspaper The Art Newspaper has obtained a letter sent by the UCCA director Philip Tinari to "colleagues, lenders and admirers of Hung Liu" dated 12 November that outlines the reasons for the cancellation. Tinari wrote: "It is with sadness that I write to inform you that the exhibition Hung Liu: Passer-by, scheduled to open at UCCA Center for Contemporary Art in Beijing on 6 December 2019 and run through 1 March 2020, has not been granted the necessary government approvals to import the work to China. For this reason, the exhibition will not happen."
Delegates from NOC, NPC praise Beijing's 2022 preparations - Xinhua On the first of the Open Day Event, delegates looked at the progress being made in all areas, and are also set to visit venues and villages in the Beijing, Yanqing and Zhangjiakou competition zones. Lynn Wentland, Director of Games Operations from the United States Olympic and Paralympic Committee, said that the Games appeared to be extremely well-organized and executed due to the preparation work of the organizing committee.
Energy, Environment, Science and Health
Yicai Global - Chinese Scientists Create Country's First Cultured Meat A team of scientists from Nanjing Agriculture University have grown five grams of meat in 20 days by cultivating stem cells from pigs.
Food and Travel
Chinese Roast Duck, but Make It Turkey - The New York Times With juicy meat and extra-crisp skin, Thanksgiving turkeys cooked in the manner of ducks are keeping Chinatown barbecue restaurants busy across the United States.