Hong Kong protests; Protracted tech war 持久科技战;Xi goes to Central Asia

The Hong Kong protests against the proposed extradition law erupted again today and it looks like the city may be dealing with massive protests for the foreseeable future, just as in 2014 during Occupy Hong Kong. Carrie Lam is showing no sign of backing down, Beijing continues to publicly support her, but the protestors do not look to be going anywhere.

The explanation for the Hong Kong unrest Xi will probably believe is that a combination of insufficient patriotic education among Hong Kong youth and hostile foreign forces intent upon fomenting a color revolution is the underlying cause, rather than anything Beijing and the CCP have done.

The Hong Kong protests are a huge embarrassment for Beijing, coming just months before what is supposed to be a rapturous celebration of the 70th anniversary of the founding of the PRC. The response from Beijing may also weigh on the upcoming Taiwan election, and if it is hardline then it may help Tsai Ing-wen and the DPP, exactly what Beijing does not want.

Xi Jinping has left China again, this time for the Council of Heads of State of the Shanghai Cooperation Organization in Kyrgyzstan and the fifth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Tajikistan. He should be back in Beijing June 16.

Thanks for reading, and if you are in Hong Kong please be safe.


The Essential Eight

1. Hong Kong protests

Tearful leader Carrie Lam says she 'sacrificed' for Hong Kong, as police use tear gas, rubber bullets to clear protests | Hong Kong Free Press HKFP

In a televised address later in the evening, Lam described Wednesday’s protest as an organised “riot.”

“This is not an act out of love of Hong Kong,” she said. She added that the occupation of roads had severely affected the city and said protesters used lethal methods to attack police by setting fires, using metal bars, throwing bricks and damaging public facilities.

“We must strongly condemn this,” she said.

Lam stood by the controversial extradition bill: “Since the Handover, some people will use matters involving the central and Hong Kong governments, mainland and Hong Kong to incite confrontation… Radical confrontation is not the solution.”

More tear gas fired as Hong Kong police and extradition bill protesters renew clashes | South China Morning Post

Live updates

Hong Kong: Police must end excessive force against largely peaceful protest | Amnesty International

“This excessive response from police is fuelling tensions and is likely to contribute to worsening violence, rather than end it. We urge the Hong Kong police not to repeat such abuses against peaceful protesters, and instead ensure people can legitimately exercise their rights. We also remind police that using force against protesters already brought under control is unlawful.”

One example:

Hong Kong police use rubber bullets, bean bags, tear gas to clear protests; curfew and PLA deployment ruled out | Hong Kong Free Press HKFP

Hong Kong police chief Stephen Lo has confirmed that police are using tear gas, rubber bullets and bean bags to clear protesters around Admiralty on Wednesday.

Addressing the media, he called the anti-extradition law protests a “riot” though ruled out asking the People’s Liberation Army for assistance or imposing a curfew.

On the ground at the Hong Kong protests | Financial Times - Free video

After a day of protests about a proposed extradition law, police in Hong Kong fired pepper spray, tear gas and rubber bullets at demonstrators. The FT's Asia editor Jamil Anderlini reports

Hong Kong Risks Occupy 2.0 as Tear Gas Envelops Heart of City - Bloomberg

“This time some people say peaceful protest is useless,” said Suki Fung, 24, catching her breath after inhaling tear gas. “People think there has to be more of a fight -- otherwise it’s useless with this government.”

For the protesters, the extradition law represents a line in the sand: a dramatic undercutting of local autonomy that will end Hong Kong’s status as a safe haven for dissidents fleeing the mainland. They have drawn the support of U.S. lawmakers like House Speaker Nancy Pelosi, who called on Congress to reassess Hong Kong’s special trading status -- a move that risks damaging the city’s reputation and pushing more multinationals to locations like Singapore.

Question: Should the Trump Administration, not just members of Congress, explicitly tell Lam that if the extradition law passes it will work with Congress to revoke Hong Kong’s special trading status?

Hong Kong's extradition law: Not just “Hong Kong people” have reason to fear Chinese “justice”! — Jerome A. Cohen | 孔傑榮(柯恩)

It’s not only “Hong Kong people” whose fate is at stake here. Anyone passing through Hong Kong airport could be detained and sent to China (compare the Huawei Vancouver extradition case). Even people who have been extradited by a third jurisdiction to Hong Kong could be subject to re-extradition to  China unless some provision is made in the extradition treaty between Hong Kong and the third jurisdiction to prevent that! This bill would undoubtedly lead those democratic countries that have extradition treaties with Hong Kong to either renegotiate them successfully or terminate them.

Global Times editorial by "Shan Renping", assumed to be editor in chief Hu Xijin - 单仁平:内地社会比任何外部势力更盼香港好_评论_环球网

[Google translate] Hong Kong people must form a basic judgment on the above principles. They must not be fooled by Western political elites, nor can they be kidnapped by Hong Kong's inevitable political game logic under the Western system. "One country, two systems" is a new thing. When encountering various problems, we must follow the Basic Law and negotiate. We must not be impulsive and cannot be led to the extreme.

It is not difficult to imagine that once Hong Kong loses its order and social chaos, those who engage in radical politics can realize their own gains in an opportunistic way. Western politicians are watching the hustle and bustle. The biggest loss in that situation will be the people of Hong Kong who will lose their lives. The most distressed and most helpless will be the community of interests of the Chinese nation. Our conclusion is: We must never let such a nightmare have a chance to become a reality in Hong Kong. (The author is a commentator on the Global Times)

香港人一定要对上述道理形成基本判断,切不可被西方的政治精英们忽悠了,也不可被香港在西式体制下无可避免的政治游戏逻辑绑架了。“一国两制”是新事物,遇到各种问题时,都要按照基本法来,协商着来,千万不可冲动,不能被人带向极端。

不难设想,一旦香港失去秩序,社会大乱,以搞激进政治为职业的人可以用机会主义的方式变现自己的收益。西方的政客们则都是看热闹的,幸灾乐祸的。那种情况下损失最大的将是香港市民们,他们将输掉自己的人生。而最心疼也最无奈的将是中华民族的这个利益共同体。我们的结论是:决不能让那样的噩梦有机会在香港成为现实。(作者是环球时报评论员)

2019年6月12日国台办新闻发布会--人民网

Spokesman for the State Council Taiwan Affairs Office said the “one country two system” model has achieved great success in HongKong

一圖|示威者圍堵立法會阻修例 堵塞交通挑釁警察密謀行動

Takungpao described the protesters as rioters who provoked the police

China firmly opposes U.S. remarks on ordinance amendments: spokesperson - Xinhua

"Hong Kong affairs are purely China's internal affairs. No country, organization or individual has the right to interfere."

Geng said that China is strongly dissatisfied with and firmly opposes the U.S. side making irresponsible remarks on the Hong Kong SAR government's amending the ordinances and making groundless accusations about Hong Kong affairs.

Hong Kong LegCo suspends discussion on amendments to fugitive offenders ordinance - Xinhua

Cheung Kin-chung, Chief Secretary for Administration of the HKSAR government, in a video, urging people blocking the roads to return to the pavements and allow the traffic to resume. He called for the public to stay calm, restrained and leave the site as soon as possible, and not to commit any crimes.

Hong Kong Markets Roiled by Interbank Rate Squeeze Amid Protests - Bloomberg

While some analysts attributed the tighter liquidity to seasonal demand for cash such as dividend payments, others said the protests -- aimed at preventing the passage of a bill allowing Hong Kong to extradite its citizens to mainland China -- could be spurring concern about potential capital outflows. The squeeze has driven up the cost of shorting the Hong Kong dollar, which also contributed to the one-day jump.

Hong Kong braces for new mass protests against planned extraditions to China - Reuters

Beijing-based consultancy Gavecal said some bankers in Hong Kong were reporting that many mainland clients were shifting their accounts to Singapore, fearing they could come under scrutiny in the financial hub.


2. US-China trade

Expectations low for Trump-Xi talks, preparations limited - Reuters

Sources familiar with the matter, including officials and diplomats in Washington and Beijing, say there has been a lack of preparatory work for the meeting, due largely to the increasing acrimony. The trade negotiating teams have not met since talks ended in stalemate on May 10.

Trump presses China to reverse stance on structural reform if it wants trade deal - Reuters

“We had a deal with China and then they went back on the deal. They said we don’t want to have four major points, five major points. ... But we had a deal with China and unless they go back to that deal, I have no interest,” Trump said on Tuesday.

China Moves to Close Gap in Trade Expertise as Clash With Trump Intensifies - The New York Times

The negotiator, Yu Jianhua, a 28-year veteran of trade talks with American officials and at the World Trade Organization, returned to Beijing in mid-April from his position as China’s ambassador to the United Nations’ offices in Geneva. With his appointment, the Chinese government began to address an experience gap that could be holding it back as it tries to resolve a potentially devastating trade war with the Trump administration.

Comment: If the trade talks reconvene there is a good chance Liu He is no longer running them for the Chinese side.

With China Absent, U.S. Farmers Pitch Soy to Other Asian Buyers - Caixin

Paul Burke, the senior director of soy marketing for the U.S. Soybean Export Council, has said that America may never regain the lucrative Chinese market that accounts for roughly two-thirds of global exports.

“Literally, we need 100% share in every non-China market if we want to move the market and deplete stocks,” Burke said by phone.

Trump to sign executive order to streamline biotech regulations - CNBC

The order would pressure international trading partners — including China — to lift barriers in the biotech industry, which creates products such as pesticides and genetically engineered plants bred to resist diseases, three sources told CNBC.

The order was viewed as a way to bolster the bottom line of farmers caught in the crosshairs of Trump’s trade war with China, the sources said.

Nintendo Moves Some Switch Production Out of China, Adapting to Tariff Threat - WSJ $$

Videogame platform owners tend to sell hardware at a thin profit in hopes of earning revenue from more-lucrative software sales. If Nintendo had to pay a 25% tariff to import its consoles into the U.S., it might be forced to sell them at a loss—something the company has said it wants to avoid.

American cars lose shine in China as trade tensions simmer - BNN Bloomberg

The market share of U.S. brands fell to 9.6 per cent in the first five months of 2019 from 10.9 per cent a year earlier, the state-backed China Association of Automobile Manufacturers said Wednesday. German and Japanese brands, meanwhile, gained share in the world’s largest car market.

Foxconn ready to move production out of China if necessary | Financial Times $$

The company said 25 per cent of its total capacity is now outside of China, and Liu Young-way, a member of the company’s newly formed top management committee, said it could help Apple, for example, move iPhone production out of China if necessary. But he noted that Apple had not yet asked for a shift.

As Trade War With U.S. Grinds On, Chinese Tourists Stay Away - The New York Times

a Bank of America Merrill Lynch report last week in estimating a “worst-case scenario” of as much as a 50 percent decline in Chinese travel to the United States. Its analysts said that could mean a $18 billion hit to the American travel industry.

The decline in Chinese tourism may be tied, in part, to a slowdown in the Chinese economy, which has left consumers with less money for discretionary spending. But travel industry professionals, international trade experts and economists say the bigger factor is the trade war and the inflammatory rhetoric associated with it. They say Beijing may see its sizable population of global travelers as a cudgel in its battle with the United States.

Google Speeds Up Shift of Hardware Production Away from China - Bloomberg

Google has already shifted much of its production of U.S.-bound motherboards to Taiwan, averting a 25% tariff, said the people, asking not to be identified discussing internal matters. While U.S. officials have pinpointed Chinese-made motherboards as a security risk, Google didn’t bring that up during discussions with its suppliers, they said. Tariffs have also pushed American-bound production of its Nest devices to Taiwan and Malaysia, the people said.

Chinese attendees give US investment conference their collective snub as year-long trade war escalates, spills over to tech | South China Morning Post

A total of 76 company representatives and government officials from China attended the annual Select USA Investment Summit, down from last year’s 101 delegates and 155 in 2017, according to organisers of the Monday event in Washington, D.C.

Hosted by the US Department of Commerce, the three-day conference is the highest-profile event to attract foreign direct investment into the country.

Chinese Cash That Powered Silicon Valley Is Suddenly Toxic - WSJ $$

Since late last year, amid rising U.S.-China tensions, venture firms with China ties have been dialing back their U.S. investments, structuring deals in novel ways to avoid regulators or shutting their U.S. offices. Some American venture firms are dumping their Chinese limited partners or walling them off with special structures. And some U.S. startups that have taken significant Chinese money are keeping the investments quiet or trying to push their Chinese investors out to avoid scrutiny.

So much for the old joke that if you want to meet a Chinese venture capitalist over the summer you have to go to the San Francisco Bay Area?


3. Today in propaganda

US exposes double-dealer essence by adopting double standards on contract spirit - People's Daily Zhong Sheng

By wantonly withdrawing from agreements and trampling on international rules, the US is actually damaging its own credibility while sabotaging international order.

The international community believes that it’s hardly possible for the US to win the trust of other trade partners that it is under negotiation with, as the country has reneged on its own promises during the bilateral trade talks with China.

US forsakes good for the sake of gold - People's Daily Zhong Sheng

the current administration of the country is maxing out Washington’s morality that has already been widely questioned...

These US politicians have shifted domestic development contradictions and deceived the general public, and withdrawn from global treaties such as the Paris Agreement while making fancy speeches to take international responsibilities.

The US poses as an important force to safeguard the world peace, but is arbitrarily interfering with the internal affairs of other countries. It groundlessly accused other countries of violating human rights, but has quit the United Nations Human Rights Council itself.

国际规则不是提线木偶(钟声)--国际--人民网

Wednesday Zhong Sheng says international rules are not string puppets, in another of its continuing series of attacks on America

Another "International Sharp Commentary" on the Wednesday CCTV Evening News - "US National Security" is a basket into which anything can be put - 国际锐评:“美国国家安全”是个筐 什么都往里装_CCTV:

锐评指出,美国频繁祭出“国家安全”旗号,无非是为了维护其霸权。而这种无所不用其极的荒唐做法,已经越来越为国际社会所嗤笑。

The sharp commentary pointed out that the United States frequently sacrificed the "national security" banner, only to maintain its hegemony. This ridiculous practice of doing everything is increasingly ridiculed by the international community.

Question: What is not related to political security and national security in China?

人民日报:加征关税的“游戏”必将付出代价|关税|美方|代价_新浪新闻

The ""The adding tariffs game will result in paying a price"" signed People's Daily article previewed on the Tuesday CCTV Evening News is signed by the increasingly prolific Wu Yue He 五月荷

US going against trend of time won’t be supported - People's Daily - Wu Yue He

At the recent G20 Finance Ministers and Central Bank Governors Meeting held in Japan, US Treasury Secretary Steven Mnuchin said that if China wants to come back to the table and negotiate on the basis that the two countries were negotiating, they can get a great historic deal. If they don't, the US will proceed with tariffs, he added.

Such remarks expressed nothing but the US failure in understanding what sincerity is. Washington just doesn’t know how to be fair and respectful. It is trapped in a vicious circle which is isolated from the trend of time, and its practices, hurting both the others and itself, will not receive any support. 

The original, from June 10 逆大势不可能得民心

Any attempts to interfere with China's internal affairs doomed to failure: spokesperson - Xinhua

"Pompeo appeared to lack the most basic knowledge and understanding of China's Xinjiang, but this is not the point. The point is that he does not want to see a true Xinjiang," Geng said. "It is a matter of different nature if one ignores facts and truth, is addicted to fabricating lies and fallacies, and attempts to use human rights and religion as an excuse, to interfere with China's internal affairs."

"I need to remind Pompeo that his public performance fully exposes his true colors," Geng said, noting "any attempts to interfere with China's internal affairs are destined to fail."

社评:蓬佩奥身为国务卿,却扮演反外交角色_评论_环球网

Global Times gets personal, described Pompeo as a mafia and former CIA director who dares to use dirty tricks and abandons the rule-based old school diplomacy

垄断设施、监视全球,网络公共空间竟成美国私有领地--国际--人民网

People's Daily article on America's "digital hegemony" with its control of the Internet, spying on everyone and boycotting innocent PRC tech firms. This is the second commentary on the newspaper this week by the author 史往生, which I believe is a pseudonym.


4. How to deal with China’s rise

China’s Rise and the Future of Global Politics - Foreign Affairs - Jessica Chen Weiss

China’s actions abroad have offered alternatives to U.S.-led international institutions, made the world safer for other authoritarian governments, and undermined liberal values. But those developments reflect less a grand strategic effort to undermine democracy and spread autocracy than the Chinese leadership’s desire to secure its position at home and abroad. Its efforts to revise and work around international institutions are the result of pragmatic decisions about Chinese interests rather than a wholesale rejection of the U.S.-led international order. Beijing’s behavior suggests that China is a disgruntled and increasingly ambitious stakeholder in that order, not an implacable enemy of it. In seeking to make the world safer for the CCP, Beijing has rejected universal values and made it easier for authoritarian states to coexist alongside democracies...

At home and abroad, the CCP is fighting a defensive ideological battle against liberal norms of democracy and human rights, but so far at least, it is not engaged in a determined effort to spread autocracy.

Comment: Is this underestimating Beijing's ambitions? I worry it may be, especially if China and Russia are deepening their relationship.

I originally posted this next entry in January. I find Mr. Garnaut’s views about what really drives Xi and the CCP, and what their ambitions are, more convincing than Ms. Chen Weiss’. Regardless of what I think, I know that Garnaut’s speech got a wide reading inside the US government (one senior Trump official recently told me it was required reading in their bureaucracy), and that his view has helped inform US thinking about Xi and the CCP - Engineers of the Soul: Ideology in Xi Jinping's China by John Garnaut:

The key point about Communist Party ideology - the unbroken thread that runs from Lenin through Stalin, Mao and Xi - is that the party is and always has defined itself as being in perpetual struggle with the “hostile” forces of Western liberalism...

Mr Xi did not invent this ideological project but he has hugely reinvigorated it. For the first time since Mao we have a leader who talks and acts like he really means it. ..

The challenge for us is that Xi’s project of total ideological control does not stop at China’s borders. It is packaged to travel with Chinese students, tourists, migrants and especially money. It flows through the channels of the Chinese language internet, pushes into all the world’s major media and cultural spaces and generally keeps pace with and even anticipates China’s increasingly global interests.

Americans Aren’t Ready for Cold War II - WSJ - Walter Russell Mead

Americans should start by deepening our understanding of how Beijing’s policy makers see themselves and the world. Since the fall of the Soviet Union, most American policy makers have seen the Chinese Communist Party’s continuing embrace of Marxism as purely pro forma. But it’s not that simple. Chinese political thought has evolved still since the fall of the Soviet Union. It now offers an analysis of Chinese development and perceived American decline that profoundly influences both elite and mass Chinese opinion. One question is whether Beijing needs an external enemy today to justify its crackdowns on a restive middle class. Marxist dogmas about the struggle between capitalist and socialist regimes may serve Beijing’s purposes today as much as they helped Stalin justify his rule 70 years ago.

Biden changes tone on China: "They are a serious challenge to us" - Axios

"While Trump is tweeting, China is making massive investments in technologies of the future. While Trump is name-calling, China is building roads, bridges, and high-speed rail. While Trump is pursuing a damaging and erratic trade war, without any real strategy, China is positioning itself to lead the world in renewable energy. While Trump is attacking our friends, China is pressing its advantage all over the world. ... But the reason I’m optimistic, and the point I've been making for years is— IF we do what we need to do here at home, IF we stand up for American interests, IF we invest in our people, live our values, and work with our partners — We can out-compete anyone."

新华国际时评:美国政客,请理性看待中国崛起-新华网

Xinhua International Commentary urges the US to accept China’s rise and said containment will not work


5. Protracted tech war 持久科技战

This last year in the US-China relationship has been China's Sputnik moment, there is no turning back in the intensifying and what will surely be protracted technology conflict.

为建设世界科技强国汇聚磅礴力量

Page 1 People's Daily commentary on the circular on building the scientist spirit in the new era, calling on scientists to do more for innovation, the great rejuvenation, and helping China get control of core technologies...

China to promote scientist spirit of new era - Xinhua

The document, jointly issued by the General Offices of the Communist Party of China Central Committee and the State Council, called on Chinese scientists to live up to the scientist spirit of the new era, which requires them to be patriotic, innovative, dedicated and cooperative, keep pursuing the scientific truth and stay ready to help younger generations.

Scientists were urged to focus on globally advanced technologies and those that have impact on the national economy, serve major strategic needs of the country and shoulder the responsibilities in solving major bottlenecks facing the country.

In pushing forward the campaign, it called for adherence to the principle of the Party’s leadership over science and technology work, reform and innovation in the system and joint efforts from various agencies and society to cultivate a favorable atmosphere of science.

The document - 中共中央办公厅 国务院办公厅印发《关于进一步弘扬科学家精神加强作风和学风建设的意见》 Interestingly the document specifically prohibits developed regions from poaching talent from western and northeastern regions…

张国宝:中国的芯片产业为什么不尽人意?_周刊厨房_经济网_国家一类新闻网站

In an article this week, Zhang Guobao, former deputy director of NDRC, discusses the lessons China learned in developing semiconductor. He mentioned how the Chinese government failed to raise more private capital and failed to support some excellent private entrepreneurs.

中国芯酸往事-虎嗅网

This article from last year also went viral this week. It provides an inside look into how China developed semiconductors in the 1990s. Zhang Guobao also mentioned this article in his essay.

“中国芯”突围要发挥综合优势--科技--人民网

People’s Daily overseas edition interviewed Ni Guangnan, member of Chinese academy of engineering, on what China should do to develop its own chips. Ni suggests the government should support with industrial policies and be patient, because it could take a decade or two to see the results.

China set to produce first locally designed DRAM chip - Nikkei Asian Review: 

Changxin Memory Technologies, previously known as Innotron Memory, has redesigned its dynamic random access memory chips to minimize the use of U.S. technology, in a bid to avoid infringing patents and potentially falling victim to the U.S. crackdown on China's rising tech industry, according to two sources with knowledge of the matter.


6. Economy

China bank loans rebound, more policy easing may be needed - Reuters

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 10.6% in May from a year earlier from 10.4% in April...

Broad M2 money supply in May grew 8.5% from a year earlier, below estimates of 8.6% by analysts polled by Reuters, and unchanged from April’s pace.

China’s Credit Growth Edges Up in May - Caixin Global

China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, grew by a net 1.4 trillion yuan ($202 billion) in May, slightly higher than a net increase of 1.36 trillion yuan the month before, central bank data showed Wednesday...

“Credit growth remained broadly stable in May,” Franziska Palmas, an economist at research firm Capital Economics, said in a note. “Policy easing has not yet been effective in generating a sustained pick-up in credit growth and is one of the reasons why we don’t expect a strong recovery in economic growth in the coming months.

China inflation: May PPI, CPI as US tariffs hit, food prices spike - CNBC

China’s consumer price index (CPI) in May rose 2.7% from a year ago, the highest since February 2018.

China’s producer price inflation (PPI) rose 0.6% in May from a year ago, in line with economists’ expectations.

Food prices rose 7.7% in May from a year ago, while non-food prices rose 1.7% on-year.

Consumer Inflation Hits 15-Month High on Soaring Fruit Prices - Caixin Global

The average price of fresh fruit soared 26.7% year-on-year in May, up significantly from 11.9% growth in the previous month and marking the fastest increase in more than eight years, NBS data showed. Amid a nationwide outbreak of African swine fever, the average price of pork rose 18.2% year-on-year last month, the highest growth in nearly three years.

Surging fruit prices were chiefly due to low stocks caused by cuts to apple and pear production last year, as well as short supply amid frequently overcast and rainy weather in southern China, NBS official Dong Yaxiu

Li pledges to improve business climate - China Daily

Premier Li Keqiang reaffirmed China's commitment to improving its business environment by deepening reforms to streamline administration and carrying out large-scale tax cuts and fee reductions.

Li said in a meeting on Tuesday with World Bank President David Malpass that the country will bring its business environment more in line with market principles, international standards and the rule of law as part of efforts to promote high-quality development.

China encourages businesses to diversify foreign trade markets - Xinhua

Exploring diversified international markets will help boost steady growth in foreign trade and keep the country's economy running smoothly, according to an executive meeting of the State Council chaired by Premier Li Keqiang. 

Li urged efforts to sign high-standard free trade agreements and regional trade agreements with more countries, and expand comprehensive cross-border e-commerce pilot zones.

China’s Car Slump Extends to a Year Without Signs of Reprieve - Caixin

Shoppers have stayed away from showrooms as economic woes and sputtering stock prices weighed on their purchasing power. Meanwhile, the rising popularity and availability of car-sharing and ride-hailing services is reducing the need for individuals to buy vehicles.

The market that global carmakers have relied on for growth since the 1990s now risks an extended decline, raising questions about the companies’ expansion plans in China.

China car sales fall in May - Xinhua

Car sales in China continued to drop in May, with about 1.913 million vehicles sold last month, down by 16.4 percent year on year, industrial data showed Wednesday...

Excluding minivans, passenger car sales rose 4.8 percent from April, the largest month-on-month growth in May, CPCA data showed. Analysts attributed the monthly boost to car dealers' rush to clear inventories before new emission standards take effect in July in some regions.

Sales of new energy vehicles (NEVs) kept growing last month, edging up 1.8 percent year on year, CPCA data showed


7. Xi goes to Central Asia

Chinese president leaves for Kyrgyzstan, Tajikistan - Xinhua

At the invitation of Kyrgyz President Sooronbay Jeenbekov, Xi will pay a state visit to Kyrgyzstan and attend the 19th meeting of the Council of Heads of State of the Shanghai Cooperation Organization (SCO) in Bishkek, capital of Kyrgyzstan.

At the invitation of Tajik President Emomali Rahmon, Xi will attend the fifth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Dushanbe, capital of Tajikistan, and pay a state visit to the country.

Xi's entourage includes Ding Xuexiang, Yang Jiechi, Wang Yi and He Lifeng

Full text of Xi's signed article on Tajik media - Xinhua

Tajikistan is one of China's closest partners in Belt and Road cooperation. It was the first to sign a cooperation MOU with China on the Silk Road Economic Belt. A dedicated committee has since been established and a number of signature projects already completed...

We live in a world of profound changes unseen in a century. Although peace and development remain the theme of the times, we are also witnessing rampant protectionism and unilateralism and rising uncertainty in various regions...

We need to refine our blueprint for Belt and Road cooperation. We need to expand our cooperation on the basis of equality and mutual benefit, focus on strategic projects, and give priority to cooperation in energy, transportation, agriculture and industry.

China seeks Indian and Russian backing for ‘new’ multilateral trading system in face of Donald Trump’s protectionism | South China Morning Post

Multiple Indian media reports suggest the country’s recently re-elected Prime Minister Narendra Modi will join forces with Chinese President Xi Jinping and Russian leader Vladimir Putin on the sidelines of the Shanghai Cooperation Organisation (SCO) summit in Kyrgyzstan this week to express their concerns about US President Donald Trump’s protectionist approach.


8. New report on Belt and Road

Navigating the Belt and Road Initiative | Asia Society

ASPI’s new report, Navigating the Belt and Road Initiative integrates international standards, Chinese domestic guidelines, and lessons learned from BRI’s first five years to conceptualize a blueprint for successful projects and to surmount the challenges that BRI projects have faced thus far. The report and a "BRI Matrix" within it offer guidance on the management of BRI projects to improve the likelihood that they yield beneficial and sustainable developmental, economic, environmental, civic, and social outcomes.

This project is headed by ASPI Vice President for International Security and Diplomacy Daniel Russel, with significant advisement from a global taskforce of experts in the infrastructure finance, labor, environmental, and other sectors. The report's findings and recommendations were socialized with officials in China and Southeast Asia ahead of China’s April 2019 Belt and Road Forum.


Business, Economy and Trade

Ling Huawei: Baoshang Bank Takeover Sets Precedent, Opens Door to U.S.-Style FDIC - Caixin This has been a difficult game of chess and it represents a milestone in the history of China’s financial system. First, it marks the beginning of a specialist clean-up of the complex underground financial empire of Tomorrow Holding. Second, against the backdrop of a crackdown on the shadow banking industry, the Baoshang takeover has for the first time broken the implicit guarantees that underpin the interbank market. Third, although this way of dealing with problematic small and midsized banks is common international practice, in China it has set a precedent and gives us the opportunity to test our version of the Federal Deposit Insurance Corp.

China's Debt-to-Equity Swap Agreements Reach 2.3 Trillion Yuan as NDRC Expands Private Market's Role - China Banking News Lian Weiliang (连维良), vice-chair of NDRC, said that the current round of market-based debt-for-equity swaps is distinct from previous policy-driven rounds, with market actors independently negotiating and determining target companies, swap prices and conditions, fund-raising amounts, as well as equity management and withdrawal. According to Lian the government is no longer drawing up lists or playing a “match-making role,” and its function is instead to provide a sound policy environment for market actors.

China’s cheap loans find few takers among small firms | Financial Times $$ These are admittedly small samples, but the results nonetheless suggest that government intervention can only go so far — companies are less willing to borrow to expand their businesses because of prevailing economic conditions. Nearly half of the companies surveyed reported that sales were down on last year, compared with fewer than one in 10 of those questioned in February. As a result, just 14 said they had borrowed from banks over the past six months, compared with nearly two-thirds of the 36 firms surveyed in February.

Luxembourg to be first nation outside Asia to host annual meeting of China-backed Asian Infrastructure Investment Bank | South China Morning Post Luxembourg, the first European country to apply to join the China-backed Asian Infrastructure Investment Bank, will host the AIIB’s annual meeting next month, the first time the gathering has taken place outside of Asia.

Chinese Court to Auction LeEco Founder Jia Yueting’s Real Estate Assets- PingWest A Chinese court will auction real estate in Ningbo owned by indebted billionaire Jia Yueting to help repay CNY534 million due to creditors, sources familiar with the matter told Cailian press

Yicai Global - Chinese Province to Take Majority Stake in HNA Unit GX Airlines The government of China's southwestern Guangxi Zhuang Autonomous Region plans to take a majority stake in Guangxi Beibu Gulf Airlines, a subsidiary of HNA Group, via equity restructuring, the parent announced yesterday.

Alibaba sees cheap way to bank credit with China | Financial Times $$ what may be good for Alibaba and pleasing to Beijing does not hide the fact that Hong Kong is far from replacing the US as a source of capital. The total market capitalisation on the Hong Kong stock exchange is roughly one-seventh that of New York and Nasdaq combined. Average daily turnover last year was just 14 per cent of the New York duo.

Chinese Brokerage’s $2 Billion Offering Kick-Starts Stock Link With London - WSJ $$ Chinese brokerage Huatai Securities Co plans to raise as much as $2 billion selling London-listed share-backed instruments this week, reviving a delayed financial link between China and the U.K.

Politics and Law

“金融反腐”又现新动作 今年该领域至少10余名干部落马--反腐倡廉-人民网 People’s Daily lists 17 officials in state banks or financial institutions who have been put under investigation since beginning of this year.

CPPCC launches training class for national political advisors of ethnic minority groups, religious circles - Xinhua Bater, vice chairman of the CPPCC National Committee, emphasized the responsibilities of the CPPCC National Committee members of ethnic minority groups and religious circles at the opening ceremony. He called on the national political advisors to participate in the building and practices of consultative democracy, improve their representativeness and influence among the people of ethnic minority groups and religious believers, and work hard to consolidate ethnic unity, and promote religious and social harmony.

Egypt's parliament speaker to visit China - Xinhua Egypt's Parliament Speaker Ali Abdel-Aal will pay a visit to China from June 14 to 20 at the invitation of Li Zhanshu

北京市网信办原副主任陈华案披露:隐瞒在伦敦房产_监察 Chen Hua, former Beijing cyber administration official now in jail for corruption, had property in London, according to a new book

Foreign and Defense Affairs

Chinese vessel sinks Philippine boat in West PH Sea 'collision' - Rappler A Chinese vessel sank a Philippine vessel in a collision in the West Philippine Sea (South China Sea) and left the 22 Filipino fishermen on that boat "to the mercy of the elements," the Philippines' Department of National Defense (DND) announced on Wednesday, June 12.

China's moves off Pag-asa Island a test of 'sincerity,' says analyst | ABS-CBN News Ramon Tulfo, a broadcaster recently appointed as President Rodrigo Duterte's special envoy to Beijing, said last week that some 100 Chinese militia boats were "withdrawn" from waters off Pag-asa Island following backchannel talks.

The New Cyber Insecurity: Geopolitical and Supply Chain Risks From the Huawei Monoculture The reach and scope of Huawei is a perfect example of how security risks and threats multiply as the number of technologies used by a company and the “distance” each packet of information has to travel grows.

毛里求斯代总统沃亚普里、总理贾格纳特分别会见王晨--时政--人民网 Acting President and PM of Mauritius both met with Wang Chen, vice chairman of National People’s Congress in Beijing

China, UK to hold economic, financial dialogue for sound ties: FM spokesman - Xinhua Chinese Vice Premier Hu Chunhua will co-host the 10th China-UK Economic and Financial Dialogue with British Chancellor of the Exchequer Philip Hammond on June 17, as the two sides are eying cooperation on trade, investment and other issues, a Chinese Foreign Ministry spokesperson said Wednesday.

Chinese aircraft carriers' frequent passage through Miyako Strait to become standard practice: Party paper - Global Times China's aircraft carriers will more frequently cross through sea lanes, including the Miyako Strait, for deployment in the west Pacific and Indian oceans which will become standard practice, according to an article published by the social media account run by a Party newspaper. The main missions of Chinese aircraft carriers will be sea routes protection, conducting naval diplomacy, serving as a regional deterrent and humanitarian relief as well as disaster rescue, according to the Tuesday article by Xiakedao, the official WeChat account operated by the overseas edition of People's Daily. 中国航母编队再出第一岛链!别急,会成常态的

China rolls out rules for commercial space sector - People's Daily Online The guideline, the first of its kind since China's private companies were allowed to enter the space sector in 2014, said that only after obtaining permission from the State Administration of Science, Technology and Industry for National Defense, may commercial rocket companies conduct research and production, according to the authority's website on Monday.

Award recipient’s communist ties - The Australian A Perth businessman who ­belongs to at least 10 ­organisations linked to the Chinese Communist Party has been awarded an Order of Australia for his “service to the Chinese community of Western Australia”. Edward Zhang, 68, is honorary chairman of the WA branch of the Australian Council for the Promotion of the Peaceful Reunification of China, the most prominent CCP-linked body in Australia.

US 'gift' to China shows unenforced North Korea sanctions - AP The meeting between acting Defense Secretary Patrick Shanahan and his Chinese counterpart began with all the hallmarks of a routine staged and scripted session between two uneasy rivals...Shanahan presented Chinese Defense Minister Wei Fenghe with a gift. But what at first glance looked like a coffee table book was actually 32 pages of photographs and satellite images of North Korean ships getting and delivering shipments of oil. Many of the photos are stamped with dates, times, locations and descriptions, and, according to officials, represent proof that Pyongyang is violating punishing economic sanctions right off China's coast.

China increases construction rate of amphibious assault ships | Jane's 360 The eighth Type 071 (Yuzhao)-class amphibious assault ship on order for China's People's Liberation Army Navy (PLAN) was launched at the Hudong-Zhonghua shipyard in Shanghai on 6 June, making it the fourth of these 20,000 tonne landing platform dock (LPD) vessels to have entered the water since June 2017.

Top Chinese academic hits back at plagiarism claims over US-China trade war research | South China Morning Post In a statement published on social media platform WeChat on Monday, a user identified as Mu Feng accused Wu Baiyi, the head of the Institute of American Studies at the Chinese Academy of Social Sciences (CASS), of plagiarism. Mu accused Wu of not attributing his research in remarks made at a CASS event on the trade war last Wednesday.

Tech and Media

Huawei's New Laptop Becomes First Casualty of U.S. Sanctions — The Information $$ Huawei has indefinitely postponed the announcement of a new laptop computer that was originally scheduled for this week, as the U.S. government’s trade sanctions have blocked the Chinese tech giant’s access to Microsoft’s Windows operating system and Intel’s processors, Huawei employees with knowledge of the matter told The Information.  Huawei had previously planned to unveil the new Windows laptop at the CES Asia 2019 trade show in Shanghai this week. The company hasn’t set any new date for the product’s launch, the employees said.

Or not? - Huawei poised to release new laptop despite US sanctions - Global Times Huawei will release a new laptop product in July, with different models and configurations compared with previous series such as the MateBook and HonorBook, a source close to the matter confirmed to the Global Times, hours after CNBC reported that the Chinese company had scrapped the launch of a new laptop due to US export controls.

Huawei Will Provide 5G Services in Spain on June 15- PingWest Vodafone España, a mobile telecommunications operator, will bring 5G services to 15 Spanish cities on June 15, in cooperation with Huawei. Spain is the second European country to open commercial 5G services after the UK.

U.S. Will Favor Huawei Suppliers ‘Not Central’ to National Security, Commerce Secretary Says The U.S. government will “look favorably” on Huawei suppliers that sell parts that are “not central” to U.S. national security, Ross said Tuesday in response to a Caixin reporter’s question during a news conference at the SelectUSA Investment Summit in Washington D.C., which aims to promote investment in the country.

Huawei looks to self-driving cars in bid to broaden AI focus | Financial Times $$ Dang Wenshuan, Huawei’s chief strategy architect, told the Financial Times that Huawei is providing the AI backbone in several co-operative ventures including one with Audi, which is owned by Germany’s Volkswagen; GAC Toyota Motor, a joint venture between Japan’s Toyota and a Chinese company; and the Chinese manufacturers Beijing New Energy Automobile and Changan Automobile.

Yicai Global - Tencent Demands USD1.6 Million From ByteDance in Gaming Lawsuit Tencent demands ByteDance to pay CNY10.8 million (USD1.6 million) for damages, online news outlet Ifeng Technology reported. Tencent claims that six users of Toutiao and TikTok posted videos about Tencent's popular mobile game Kings of Glory without authorization, breaking copyright, according to the court of Nanshan district in Shenzhen where Tencent is headquartered.

上海市网信办、市市场监管局约谈百度上海分公司|界面新闻 · 快讯 Authorities in Shanghai investigating Baidu for illegal advertisements and pushing fake news and vulgar content.

China's AI market to hit $12 billion by 2030 - ECNS The artificial intelligence market in China reached $1.76 billion in 2018 and will rise to $11.9 billion by 2023, according to a report. The potential influence of artificial intelligence on technology, industry and social change has been widely recognized worldwide since 2018, according to the newly released "China's New Generation AI Development Report 2019."

Paying subscribers for online videos in China reach 347 mln in 2018 - ECNS he number of paid memberships on China's online video platforms reached 347 million in 2018 as the market continued to expand rapidly, according to a report released on Tuesday at Internet Film and Television Summit, part of the Shanghai International Film and TV Festival.

China blocks websites, internet accounts in new cleanup campaign - Reuters The joint effort was launched in May by the cyberspace administration, the information technology ministry, the public security bureau and the markets regulator and will run until the end of the year, the official Xinhua news agency. The “rectification” campaign will punish and expose websites for “illegal and criminal actions,” failing to “fulfil their obligation” to take safety measures or for the theft of personal information, it added.

Mary Meeker’s 2019 Internet Trends report highlights China’s short-form videos and super apps | TechCrunch This year’s edition of Mary Meeker’s Internet Trends report, released earlier today, once again included a section on China prepared by Hillhouse Capital

Society, Arts, Sports, Culture and History

Documenting mass grave relocation in China | Stanford News In what is considered to be the largest grave relocation in human history so far, more than 10 million corpses have been exhumed in China over the past two decades to make way for new development projects. Now, a new digital collaboration led by Stanford historian Tom Mullaney, titled The Chinese Deathscape: Grave Reform in Modern China, has documented the location of the affected gravesites throughout the country and explored what’s driving this journey of the dead. // And it is happening in Xinjiang too:

Energy, Environment, Science and Health

China to speed up legislation on biotech development - Xinhua Peng Gaojian, a senior official with the ministry [of Justice] revealed the information Wednesday at a press conference on a newly published regulation on the management of human genetic resources. The biotech safety regulations will focus on preventing bioterrorism and activities that seriously violate social ethics, as well as avoiding direct or indirect biosafety hazards, said Peng. The clinical application regulations, in the meantime, will strengthen the management on the use of new biomedical technologies in medical institutions to ensure safety. He said that the regulations in the above two categories, together with the newly published regulation on human genetic resources, will form a complete supervision chain on life science research and medical activities.

China's top legislature launches media activity to promote Yangtze River protection - Xinhua This year's activity will focus on the NPC Standing Committee's legislation and supervision in the areas of water pollution prevention and Yangtze River protection, said Yang Zhenwu, secretary-general of the NPC Standing Committee.

Shandong to Launch Real-Time Electricity ‘Spot Market’ - Caixin Shandong’s energy department has released a draft three-year plan for rolling out an electricity “spot market” that will allow generators, distributors and industrial consumers to trade power in real time, ahead of the market’s launch next month. The industrial province is one of eight regions that state planner the National Development and Reform Commission called on to trial market reforms last year in a bid to reduce costs for end users.

Rural and Agricultural Issues

China motivates universities to promote rural vitalization - Xinhua Thirty-nine universities have established more than 300 experimental stations, over 500 academicians and expert workstations, and 1,400 agricultural promotion demonstration zones and special industrial bases, providing services for over 1,700 enterprises related to agriculture, said Lei Chaozi, director of the Department of Science and Technology of MOE, at a press conference.

Let 100 Apps Blossom: WeChat, Pinduoduo Transform China’s Rural Life — The Information $$ More than 580 million of China’s 1.3 billion people live in rural areas. Of them, some 222 million regularly access the internet, up 25% over the past five years, according to a government report.