Hong Kong; Xi going to North Korea; US-China trade and more propaganda attacks

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The Hong Kong protestors succeeded in scuttling the proposed extradition law, at least for the foreseeable future. We still do not know if the central government pushed Carrie Lam to move forward with the legislation or if she did it on her own initiative, but clearly it is convenient for the Party center to have people think she did it on her own. Regardless, the rebuke of the mainland and its political system by millions of Hong Kongers could not be clearer, and the damage to Xi and the Party’s reunification project that is core to the Great Rejuvenation is real.

We should expect retribution for those who may be blamed as part of the small group of black hands doing the bidding of hostile foreign forces, and for Party work in Hong Kong to intensify and patriotic education to increase in tempo and fervor.

General Secretary Xi Jinping, having just returned from Central Asia, will visit North Korea later this week.

Xi is doing a lot of traveling overseas in June for a leader who some think is under pressure—Russia, Kyrgyzstan and Tajikistan so far, North Korea this week, Japan next week.

Speculation is building about a possible President Trump-Xi meeting around the G20 late next week. Vice Foreign Minister Zheng Zeguang was in DC last week. He also came to DC before the Argentina meeting last year so his visit may be a sign that preparations for a Trump-Xi meeting are underway.

However, the anti-American propaganda campaign continues and may be painting China into a corner that reduces the likelihood of any deal unless the US makes major concessions, including around Huawei. That seems unlikely in the near term, so at this point I think the best outcome of a Trump-Xi meeting for those hoping for a cease fire in the trade war is an agreement to restart formal talks and to delay any plans for the next round of tariffs. But even that may be out of reach, and people should be preparing, as the PRC is telling its people seemingly on a daily basis now, to prepare for protracted conflict.

Thanks for reading.

The Essential Eight

1. Hong Kong

China stands by Hong Kong leader after days of street protests - Reuters

China redoubled its support for Hong Kong leader Carrie Lam on Monday after days of protests against a planned extradition bill, and a source close to Lam said Beijing was unlikely to let her go even if she tried to resign.

People's Daily commentary expresses firm support for HKSAR chief executive, gov't - Xinhua

The commentary says the central authorities firmly support the HKSAR government in safeguarding the rule of law and legitimate rights of its residents, firmly oppose external forces in interfering with Hong Kong's affairs and China's internal affairs and support the HKSAR's decision to suspend amending ordinances concerning the transfer of fugitive offenders in order to solicit more opinions. 坚定支持行政长官和特区政府依法施政 - 本报评论员 《 人民日报 》

HKSAR chief executive announces suspension of fugitive law amendments, promises to continue explanation - Xinhua

Geng Shuang, spokesperson for the Chinese Ministry of Foreign Affairs, said that since Hong Kong's return to the motherland, the policies of "one country, two systems," "Hong Kong people governing Hong Kong," and a high degree of autonomy have been faithfully implemented, and the rights and freedoms of Hong Kong people have been fully guaranteed in accordance with the law, which has been widely recognized.

"I want to reiterate that Hong Kong is China's special administrative region and its affairs are purely China's internal affairs that brook no interference by any country, organization or individual," Geng said, adding that China is firmly determined to safeguard its national sovereignty, security and development interests and maintain Hong Kong's prosperity and stability.

Chinese ambassador to Britain rejects claims of central government hand in Hong Kong extradition bill | South China Morning Post

“[The media] portrayed the story as the Hong Kong government made this amendment [as a result of the] instruction of the Beijing government,” Liu said.

“As a matter of fact, [the] Beijing central government gave no instruction, no order about making [the] amendment. This amendment was initiated by the Hong Kong government, it was prompted by a murder case in Taiwan.”

Brusque to bruised: Hong Kong's Lam caves to pressure on extradition bill - Reuters

According to Hong Kong’s Sing Tao newspaper, Lam had a clandestine emergency meeting with Han, a member of the Politburo’s seven-person Standing Committee, China’s top decision-making body, across the border in Shenzhen on Thursday.

The content of the meeting is unknown. Lam on Saturday refused to confirm or deny that it had taken place, despite repeated questions.

What China struggles more than ever to get from Hong Kong: Loyalty and love - The Washington Post

The setback suffered this week by Hong Kong's pro-Beijing camp is reverberating in Taiwan, where President Tsai Ing-wen has jumped on the opportunity to warn about the dangers of engaging with Beijing. Taiwan's voters are currently mulling a choice between Tsai, who is bitterly opposed by China and leans toward declaring formal independence, and candidates who advocate rapprochement with their giant neighbor — and favor enjoying the expected economic fruits.

Hong Kong’s Retreat Chips Away at Xi Jinping’s Iron Image - The New York Times

In the end, Beijing and Hong Kong decided that they already faced enough challenges with the economic headwinds and trade tensions with the United States heading into the Group of 20 summit meeting in Japan this month, according to a person in Hong Kong with a detailed knowledge of local policymaking, speaking on the condition of anonymity because of the political sensitivities inflamed by the protests.

'One country, two systems' in Taiwan 'over my dead body': Han Kuo-yu - CNA

"'One country, two systems' can never be implemented in Taiwan. Taiwanese people can never accept it, unless, unless, unless it's over my dead body," Han told tens of thousands of supporters at a rally in Douliu in Yunlin County, saying "over my dead body" in English.

At the rally, Han of the opposition Kuomintang (KMT) led the crowd in chanting "reject 'one country, two systems'" and asked his supporters to have faith in him.

How Hong Kong’s Leader Made the Biggest Political Retreat by China Under Xi - The New York Times

Hong Kong’s leaders increasingly echo top Beijing officials in perceiving malevolent foreign forces in stirring up protests. That foreign influence appears to consist of meetings that Hong Kong democracy advocates have arranged with American officials and politicians when they fly to Washington.

But Mrs. Lam and her senior advisers have nonetheless distrusted the sincerity of the protesters.

“The riots I believe were instigated by foreign forces and it is sad that the young people of Hong Kong have been manipulated into taking part,” said Joseph Yam, a member of Mrs. Lam’s Executive Council, the territory’s top advisory body.

2. Xi to visit North Korea this week

Xi to pay state visit to DPRK - Xinhua

Xi Jinping, general secretary of the Central Committee of the Communist Party of China (CPC) and Chinese president, will pay a state visit to the Democratic People's Republic of Korea (DPRK) from June 20 to 21, at the invitation of Kim Jong Un, chairman of the Workers' Party of Korea and chairman of the State Affairs Commission of the DPRK.


International Liaison Department Head Song Tao...says it is the 70th anniversary year of PRC-DPRK relations

Chinese President Xi Jinping to visit DPRK from June 20 to 21 | CGTN Africa

The last time a Chinese president visited DPRK was in 2005 when President Hu Jintao traveled to Pyongyang to meet his counterpart, Kim Jong Il.

China’s Xi to visit North Korea as both countries lock horns with United States - The Washington Post

Xi and Kim will visit the Sino-North Korean Friendship Tower in Pyongyang, Song [Tao] said. That monument commemorates Chinese fighters who fought alongside North Koreans against Americans during the Korean War.

China says suspected blast caused minor quake near N. Korea - AP

China Earthquake Networks Center said Monday the magnitude 1.3 earthquake occurred in the evening in Hunchun. The city is in northeastern Jilin province’s Yanbian prefecture, known for its large ethnic Korean population, and borders North Korea and Russia.

The Chinese agency said an explosion was suspected but gave no further details about the type.

Chinese raids hit North Korean defectors' 'Underground Railroad' - Reuters

At least 30 North Korean escapees have been rounded up in a string of raids across China since mid-April, according to family members and activist groups.

It is not clear whether this is part of a larger crackdown by China, but activists say the raids have disrupted parts of the informal network of brokers, charities, and middlemen who have been dubbed the North Korean “Underground Railroad”.

3. US-China

Wilbur Ross Tempers Expectations of U.S.-China Trade Deal at G-20 - WSJ $$

“I think the most that will come out of the G-20 might be an agreement to actively resume talks,” Mr. Ross said in a phone interview Sunday. “At the presidential level they’re not going to talk about the details of how do you enforce a trade agreement.”

“The most that might come is new ground rules for discussion and some sort of schedule for when detailed technical talks might resume,” said Mr. Ross.

Trump Pushed Pence Tiananmen Speech to Try for China Meeting - Bloomberg

Vice President Mike Pence was set to deliver a speech criticizing China’s human rights record on June 4, the anniversary of the Tiananmen Square massacre -- until Donald Trump stepped in.

The president delayed the speech to avoid upsetting Beijing ahead of a potential meeting with Chinese President Xi Jinping at the Group of 20 meeting in Japan at the end of this month, according to several people familiar with the matter. Trump also put off U.S. sanctions on Chinese surveillance companies that Pence planned to preview in his remarks...

The delay for Pence’s speech also came after China earlier this month tried to use Pence as an interlocutor to reset the trade talks by scheduling a phone call between the American vice president and his Chinese counterpart, Wang Qishan, according to three people familiar with the matter. The U.S. government declined the request for a call, the people said.

Companies in furious bid to prevent new China tariffs as summit looms - The Washington Post

Starting on Monday, hundreds of companies are scheduled to testify before the Office of the U.S. Trade Representative (USTR) over seven days of hearings on the president’s proposal to expand tariffs to an additional $300 billion in Chinese imports. After a year-long trade war, those are the only Chinese imports that remain duty-free.

USTR has received more than 1,600 written comments on the plan, with the overwhelming majority warning that additional tariffs would raise prices for consumers, cost American jobs and disrupt production at companies across the nation.

US-China trade: Beijing wants world to think Washington will back down - CNBC

“China’s position has been very clear and explicit. It is the U.S. who initiated the trade friction,” said Liang Ming, director of the Institute of International Trade, a research unit under the Ministry of Commerce. He was speaking in Mandarin via an official translator at a press briefing on Thursday.

“Now I think China has greater confidence than the U.S. At the G-20 we could have talks, but the precondition is that the U.S. shows good faith,” Liang said. “If it continues to go backtracking on its own commitments, then we’d rather not have the talks.”

China’s top economic planner refuses to rule out playing rare earths card against US | South China Morning Post

Meng Wei, a spokeswoman for the National Development and Reform Commission, said on Monday that China, which makes up 90 per cent of the global supply of rare earths, was “promptly studying” measures to utilise the “special value of rare earths as a strategic resource”....

“We firmly oppose anyone who wants to use products made from China’s rare earth resources to curb China’s development,” Meng said, repeating an ambiguous warning the agency used late last month when asked whether the metals would become part of the months-long trade war.

China opposes other countries using products made with its rare earths to curb Chinese development: official - Global Times

"We have been promptly studying policies and measures to give full play to the special value of rare earths, which is our strategic resource," Meng Wei, spokesperson of the National Development and Reform Commission (NDRC), China's top economic planner, said on Monday.

"China has been actively upholding the multilateral system of free trade. However, mutually beneficial relationships need to be maintained by all parties involved. We are firmly opposed to certain countries disregarding world trade rules and undermining global industrial trade links," Meng said.

Meanwhile, more scenes from the propaganda campaign against the US:

Communist Party journal lays out China’s trade war stance ahead of possible Xi-Trump talks | South China Morning Post

The Communist Party’s top journal set out the leadership’s position on the trade war in a series of essays published on Sunday, suggesting a “win-win” deal to end the dispute was still possible but vowing to “struggle to the end” if necessary.

Bimonthly journal Qiushi, or “Seeking Truth”, is required reading for all cadres and forms the basis for the rank and file of the party to understand the leadership’s position on key issues.

In the essays, the journal sought to clarify the party’s position on the trade war with the United States, laying out arguments that portray China as occupying the moral high ground in the conflict, while repeatedly questioning Washington’s logic for starting the dispute.

认清本质 洞明大势 斗争到底--时政--人民网

The Qiushi piece by "青原 Qing Yuan", People's Daily also ran this piece in the front page of the Monday edition, continued to the entirety of page 6...Qing Yuan is clearly a pen name, last had a piece in the May 15 issue of Qiushi - 打打谈谈两由, also on the trade war

Chinese state media warns retaliation against US tariffs could ‘become routine’ | South China Morning Post

Chinese state media has warned the countermeasures Beijing is taking against Washington’s increased tariffs and technology containment strategy could “become routine”.

In a commentary on Friday, Taoran Notes – a social media account affiliated with official newspaper Economic Daily – also sought to play down expectations that an anticipated meeting between the Chinese and US leaders later this month could get trade negotiations back on track.

It listed areas where China could strike back against the duties and other moves such as a ban on US companies supplying technology to Huawei. Those areas included exports of rare earths, which are used in nearly all hi-tech products, and its “unreliable” entities list.

The Taoran Notes piece - 威胁越升级 反制越坚决 - 陶然笔记

This one reiterates China's willingness to engage in talks with the US if on a sincere and equitable basis, otherwise is ready to fight the trade war and has been preparing many countermeasures, and tempers expectations about any sort of breakthrough at the G-20. Taoran Notes has turned out to have excellent information on the thinking of top PRC officials about the trade war, as I wrote last month. I believe it is written by a senior report at the official Economic Daily newspaper. 

This piece also again brings up the Korean War, this time quoting from a 1950 Beijing Party Committee report on preparations for launching the "Resist the US, Aid North Korea 抗美援朝运动" campaign. It is hard to not see the suggestion that Beijing could be getting ready for a Resist America 2.0 campaign...

These propaganda pieces still do not attack Trump by name but the inferences--referring to US "politicians" , quoting things Trump said, quoting US media reports with critical comments about Trump--make it clear he is the target.

世界潮流浩浩荡荡不可阻挡—评美国一些人战略迷误的危险(上) 国纪平

Friday's People's Day had a front piece piece by “Guo Jiping” (国纪平), a pen name for “important international affairs commentary”, on “Majestic global trends can not be stopped: the dangers of strategic confusion by some Americans.”. This looks to be the first article in a two part series. The commentary continues with the theme of the US being the aggressor in the trade conflict while on the wrong side of globalization, multilateralism and history


People’s Daily defended China’s propaganda machine, saying Beijing’s high-profile propaganda over the past years depicting China as a super power had nothing to do with triggering the hostile policy in the US. Another effort to silence domestic criticism against Xi?

《美国陷阱》揭露了一个骇人听闻的霸凌主义案例 - 求是网

Frederic Pierucci's book "The American Trap", chronicling his experiences with the US legal system, is the subject of a piece in the latest Qiushi - "The American Trap" exposes a shocking case of bullying-ism...Huawei'd Ren Zhengfei had this book on his desk a few weeks ago, and Bloomberg wrote about it in January - ‘American Trap’: A French Executive’s View From a U.S. Prison Cell

《求是》2019年第12期 - 求是网

Table of contents of the latest issue of Qiushi, several pieces on the trade war and bad America

4. Xi in Central Asia

Xi urges joint efforts to open up new prospects for Asian security, development - Xinhua

Addressing the fifth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) held in Tajikistan, Xi called on CICA members to build an Asia featuring mutual respect and trust, security and stability, development and prosperity, openness and inclusiveness, as well as cooperation and innovation.

China will steadfastly pursue a peaceful development path, stick to opening up and all-win approaches, uphold multilateralism, and work together with all sides to create a better future for Asia and the world, said the Chinese president...

To properly address various traditional and non-traditional security problems, we should stand firm in cracking down on terrorism of all forms, take all kinds of effective precaution measures and extinguish extremism from its roots, the president said, urging CICA members to explore a regional security structure with Asian features to realize collective security and common security for Asia.

Chinese president calls for closer SCO community with shared future - Xinhua

Xi called for a show of international responsibility by SCO members in the face of mounting global challenges.

The countries need to uphold a vision of global governance featuring extensive consultation, joint contributions and shared benefits, safeguard the international system with the UN at the core, promote multilateralism and free trade, and push for the development of a more just and equitable world order, he said.

The SCO needs to optimize its pattern of partnerships, play a more active role in regional and global affairs, and make joint efforts to promote lasting peace and common prosperity of the whole world, he added.

Spotlight: Xi's Central Asia trip cements neighborhood friendship, regional cooperation - Xinhua

Chinese President Xi Jinping's visits to Kyrgyzstan and Tajikistan opened a new chapter for building a new type of international relations and a community with a shared future for mankind, Chinese State Councilor and Foreign Minister Wang Yi said Sunday.

During the five-day trip, Xi also attended the 19th summit of the Shanghai Cooperation Organization (SCO) in Bishkek and the fifth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Dushanbe....

As the world is undergoing profound changes unseen in a century, China and Central Asian countries are confronting common development and security challenges, and need to build closer cooperative relations to better safeguard their respective and common interests, Wang added.

He noted that both in Kyrgyzstan and in Tajikistan, the heads of state signed a joint statement on further deepening their countries' comprehensive strategic partnership, drawing a new blueprint for the future development of bilateral ties.

At the SCO summit, Xi called for concerted efforts to build the regional organization into a model mechanism of regional cooperation against the backdrop of the complicated international situation.

Gaining support for Xinjiang policies is a big goal for Xi, and it is working.

A cake, a vase and... a BOX of ice cream: Putin’s birthday gifts that blew Xi Jinping away (PHOTOS) — RT World News

Putin congratulated Xi on his 66th birthday while in Dushanbe, Tajikistan, wishing him “best of luck,” warmly shaking his hand and saying: “I’m glad to have such a friend like you.” He then teased his Chinese counterpart with “something that you could use when celebrating your birthday with your loved-ones.”

The birthday cake came first, with Xi promptly noticing the Chinese inscription on it that read: “Great wellbeing.” 66 “is a lucky number,” Xi noted.

5. Attempts to calm concerns about smaller banks

Regulators Move to Restructure Troubled Baoshang Bank - Caixin

According to the official, 99.98% of Baoshang’s corporate creditors have had their claims fully guaranteed. The remainder — as well as some large interbank creditors — had an average of 90% of their claims guaranteed at the preliminary stage.

The official said the high guarantee ratios came from the fact that the fund management company purchased Baoshang’s assets and liabilities to fully take over the bank — instead of simply bankrupting and liquidating it. If it had done the latter, depositors of all kinds would only be guaranteed up to 500,000 yuan ($72,193.80) each.

Not all creditors were fully guaranteed because doing so would encourage financial institutions to invest in illegal high-interest products without conducting a solid risk assessment, the official said. This was a “moral hazard” that could lead to a “systemic crisis.”

China urges big lenders not to shun small non-banks after Baoshang's woes: sources - Reuters

During a meeting on Sunday, Li Chao, vice chairman of China Securities Regulatory Commission (CSRC), urged large non-bank institutions not to cut off smaller non-banks as counterparties in the interbank market.

Managers from seven major securities firms and two fund companies attended the meeting in Beijing, the four sources said.

According to the minutes, confirmed by the sources, Li also told them to increase their lending quota for short-term bonds and offer more financing tools to support small securities firms.

PBOC Expands Rediscount, SLF Quotas to Shore up Liquidity for Smaller Chinese Banks - China Banking News

The Chinese central bank is adopting a range of measures to ensure that smaller lenders have access to sufficient liquidity in the wake up of the government’s takeover of Inner Mongolia’s beleaguered Baoshang Bank.

On 14 June the People’s Bank of China (PBOC) announced an increase in the rediscount and standing lending facility (SLF) quotas of 300 billion yuan in total, in order to strengthen liquidity support for small and medium-sized Chinese banks.

PBOC will increase the rediscount quota by 200 billion yuan, and the standing lending facility quota by 100 billion yuan.


Liu He goes on an inspection tour of small and medium-sized banks in Hangzhou

Chinese regulators will restructure Baoshang Bank as soon as possible - Reuters

The article said that since the takeover, individual savings have been stable, and there has been no bank run, showing depositors are supportive of the takeover measures. In addition, 99.98% of Baoshang Bank’s institutional creditors were fully repaid.

Although a very small portion of the lender’s clients didn’t get 100% guarantee of their principals, it’s a lesson to those who have been aggressively buying high-yielding investment products with little risk control, according to the article.


6. Cultural confidence and censorship

Xi's article on cultural confidence to be published - Xinhua

stressed that the Chinese nation will not be able to rejuvenate itself without strong cultural confidence and a rich and prosperous culture.

The article called for efforts to develop a socialist culture with Chinese characteristics, inspire the cultural creativity of our whole nation, and develop a great socialist culture in China.

To develop socialist culture with Chinese characteristics means to develop a socialist culture for our nation -- a culture that is sound and people-oriented, that embraces modernization, the world, and the future, and that both promotes socialist material wellbeing and raises socialist cultural-ethical standards, according to the article.

"In developing this culture, we must follow the guidance of Marxism, base our efforts on Chinese culture, and take into account the realities of contemporary China and the conditions of the present era," the article said.

The article is a reprint of Xi’s old speeches that underscore the importance of being “firmly confident” in Chinese culture, and urged Chinese artists to produce works to boost this confidence

The original - 《求是》杂志发表习近平总书记重要文章《坚定文化自信,建设社会主义文化强国》-新华网

Beijing Culture’s Song Ge Urges Directors to Toe Government Line – Variety

The publicity-shy chief of Beijing Culture, which has backed such Chinese mega-hits as “Wolf Warrior II” and “The Wandering Earth,” openly urged film directors Monday to stick to material pleasing to the Chinese state, for the sake of their investors.

China Censorship Crackdown Forces Shanghai Film Festival to Cancel Opening Screening | Hollywood Reporter

The official explanation for the shocking last-minute change was "technical reasons," but industry insiders say the scheduled festival opener, Huayi Brothers' $80 million war epic 'The Eight Hundred,' received sudden censorship complaints from Beijing.

Withdrawn war movie on ‘wrong side of history’ - Global Times

According to a left-wing Chinese website, hswh.org.cn, the motivation for the film's creation was discussed by 17 left-wing commentators during a "red culture" seminar which took place a week before SIFF's opening night. Although left-wing commentators Sima Nan and Guo Songmin praised the patriotism and sacrifices of the KMT soldiers, they said that defeat in the Battle of Shanghai was caused by the KMT's corruption and failed military leadership, and the film did not tell the whole picture of the history, which should not be encouraged.

7. Huawei

Huawei Braces for a Steep Drop in Overseas Smartphone Sales - Bloomberg

Huawei sales and marketing managers are internally charting a drop in volumes of anywhere between 40 million to 60 million smartphones this year, the people said. That’s a big chunk of an international business that in 2018 accounted for almost half of the 206 million phones it moved.

Huawei smartphone sales fall as company cuts revenue forecasts | Financial Times $$

Mr Ren on Monday expressed surprise at the forcefulness of the US restrictions, saying: “We didn’t think that the US would attack Huawei with such great strategy and determination . . . not only attacking our suppliers; we also can’t take part in many international organisations, we can’t increase our co-operation with universities, we can’t use anything with US content”. 

He insisted, however, that “these things can’t halt our onward march”.

Huawei fully prepared for US government ban, will not be ‘beaten to death’ - Global Times

Some media reports suggested, on Monday, that Huawei is preparing for a 40 to 60 percent fall in overseas smartphone shipments following the strict ban imposed by the US government. "Our phone shipments to the international market are likely to drop by 40 percent, but we will see very robust growth in the Chinese home market," Ren said to the panel.

"Absolutely no backdoors" for Huawei equipment: Ren - People's Daily Online

Huawei founder and CEO Ren Zhengfei said Monday that there are "absolutely no backdoors" in Huawei's equipment and the company is willing to sign no-backdoor agreements with other countries.

U.S. chipmakers quietly lobby to ease Huawei ban - Reuters

Chip makers argue that Huawei units selling products such as smartphones and computer servers use commonly available parts and are unlikely to present the same security concerns as the Chinese technology firm’s 5G networking gear, according to three people.

“This isn’t about helping Huawei. It’s about preventing harm to American companies,” one of the people said...

“For technologies that do not relate to national security, it seems they shouldn’t fall within the scope of the order. And we have conveyed this perspective to government,” said Jimmy Goodrich, vice president of global policy at SIA.

Could U.S. Targeting of Two China Genomics Firms be Related to Huawei? - Caixin

BGI Group and WuXi NextCODE landed in the crosshairs of Marco Rubio and Chuck Grassley last week, when the pair of U.S. senators sent a letter to the Department of Health and Human Services asking for an investigation. The pair expressed concern that the Centers for Medicare and Medicaid Services (CMS), two major federally-funded medical insurance programs, “may be providing payments for genetic testing or analysis to U.S. entities that have domestic partnerships with WuXi, BGI, and other genomics companies with ties to the Chinese government.”

8. A big read - Jiayang Fan on Liu Cixin

Liu Cixin’s War of the Worlds | The New Yorker

As the standoff has intensified, Liu has become wary of touting the geopolitical underpinnings of his work. In November, when I accompanied him on a trip to Washington, D.C.—he was picking up the Arthur C. Clarke Foundation’s Award for Imagination in Service to Society—he briskly dismissed the idea that fiction could serve as commentary on history or on current affairs. “The whole point is to escape the real world!” he said. Still, the kind of reader he attracts suggests otherwise: Chinese tech entrepreneurs discuss the Hobbesian vision of the trilogy as a metaphor for cutthroat competition in the corporate world; other fans include Barack Obama, who met Liu in Beijing two years ago, and Mark Zuckerberg. Liu’s international career has become a source of national pride. In 2015, China’s then Vice-President, Li Yuanchao, invited Liu to Zhongnanhai—an off-limits complex of government accommodation sometimes compared to the Kremlin—to discuss the books and showed Liu his own copies, which were dense with highlights and annotations...

Liu’s tomes—they tend to be tomes—have been translated into more than twenty languages, and the trilogy has sold some eight million copies worldwide. He has won China’s highest honor for science-fiction writing, the Galaxy Award, nine times, and in 2015 he became the first Asian writer to win the Hugo Award, the most prestigious international science-fiction prize. In China, one of his stories has been a set text in the gao kao—the notoriously competitive college-entrance exams that determine the fate of ten million pupils annually; another has appeared in the national seventh-grade-curriculum textbook

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Business, Economy and Trade

China pulls WTO suit over claim to be a market economy - Reuters One trade official close to the case said so much of the ruling had gone against Beijing that it had opted to pull the plug before the result became official. “They lost so much that they didn’t even want the world to see the panel’s reasoning,” the official said.

China asks state-owned ‘national champions’ to help ‘stabilise’ economy, boost profits by 9 per cent in 2019 | South China Morning Post According to The Economic Observer, 20 of those 97 state enterprises, which have monopoly positions in specific industries, including the China Aerospace Science and Technology Corporation, China National Petroleum Corporation and State Grid Corporation of China, are required to achieve a 12 per cent profit growth this year.

A Tale of Two Tariffs: China’s So Far Ineffective Tariffs on U.S. Manufacturing Exports | Council on Foreign Relations - Brad Setser In some other sectors, like oil, China’s tariffs reduced exports to China but not overall U.S. exports. And China’s tariffs on U.S. exports for manufactures—together with a modest reduction in China's tariffs on imports from others— haven’t had much of an apparent impact on total exports to China.*

In Depth: The State Wants Out of China’s Biggest Air-Conditioner Maker. Why Does Everyone Else Want In? - Caixin The State-owned Assets Supervision and Administration Commission (SASAC) of Zhuhai, the local branch of the state assets regulator that controls Gree Group, initiated the share sale because there isn’t much more it can do for Gree Electric, said Ye Dan, an official from Zhuhai SASAC. In an unusually blunt admission for a regulator, the local regulator acknowledged that it doesn’t have the know-how to introduce market solutions to increase Gree Electric’s competitiveness.

Alibaba Plans One-to-Eight Stock Split as It Preps Giant Listing - Bloomberg China’s largest company is proposing to increase the number of ordinary shares eight-fold to 32 billion, it said in a statement. The proposal will be discussed and put to a vote at its annual general meeting in Hong Kong on July 15. If approved, the split should take place no later than July 2020.

UBS Loses China Bond Deal After Economist's Pig Comment - Bloomberg One of China’s biggest state-owned infrastructure companies excluded UBS Group AG from a bond deal after the bank’s global chief economist sparked a furor with his use of the phrase “Chinese pig.” The decision by China Railway Construction Corp. marked the first known case of a corporate issuer distancing itself from UBS over last week’s comment by economist Paul Donovan.

Costco Business Model Could Be Lost in Translation, Analysts Say - Caixin The store in Shanghai’s Minhang district will open on Aug. 27, the U.S. supermarket giant said on its official WeChat account (link in Chinese) last week. It comes one year after Costco got an official license to run food-related businesses in the country through its China subsidiary Kaikeshi, which means “open the market to customers” in Chinese. Costco set up the subsidiary in Shanghai in 2017.

Richest Family in Thailand Gets Richer by Helping China - Bloomberg The so-called Eastern Economic Corridor is the flagship program of Thailand’s military regime, a bid to leverage Japanese investment and Chinese tech giants like Alibaba Group Holding Ltd. and Huawei Technologies Co. to revive an economy that grew 4.1 percent last year, the slowest rate in emerging Southeast Asia. But a messy March 24 general election means that projects could come under greater scrutiny as critics accuse authorities of dispossessing local farmers to make way for Chinese investors.

Commentary: Investigation into FedEx highlights rule of law in China - People's Daily Online By launching an investigation into FedEx in accordance with legal procedures, China has demonstrated its adherence to the principle of the rule of law. China on Friday delivered a notice of inquiry to FedEx China, starting the investigation procedure of a case concerning the company's failure to deliver express packages to designated addresses in China.

CPPCC Standing Committee holds meeting on high-quality development - Xinhua The three-day meeting will see members of the CPPCC Standing Committee hold discussions and make suggestions on promoting the high-quality development of China's manufacturing sector. Main topics are about ways to improve industry structure, enhance technological innovation capabilities, reduce costs and burdens, boost talent vitality, expand opening-up and create a better environment for the manufacturing industry.

Bribes and Backdoor Deals Help Foreign Firms Sell to China’s Hospitals - The New York Times A review of dozens of Chinese court cases and internal corporate documents as well as interviews with company insiders showed how foreign firms have become deeply enmeshed in the corruption pervading China’s health care industry. The New York Times reviewed more than a dozen cases in which employees of G.E., Philips and Siemens testified to bribing meagerly paid public hospital officials. In many other cases, Western companies signed off on deals involving third-party contractors who paid bribes and sought kickbacks. Sometimes, the companies continued to sign off on deals involving contractors who admitted to bribery in court // Comment: The companies know exactly what they are doing and take whatever fines they get for violating the US Foreign Corrupt Practices Act as just another cost of doing business in China. Jail time in the US or China for expat execs of these companies would have a bigger impact on changing behavior than slap on the wrist penalties.

China Urges State Firms to Punish Rule Violations In Overseas Operations - Caixin Each SOE should create a detailed punishment system for its employees, laying out clear categories of violations based on the scope of asset losses incurred through improper investment activities, accompanied by appropriate punishments, according to a notice published by the State-owned Assets Supervision and Administration Commission (SASAC). 关于做好中央企业违规经营投资责任追究工作体系建设有关事项的通知

Politics and Law

学习毛泽东同志《反对自由主义》 - 求是网 Qu Qingshan in the latest Qiushi on Mao's 1937 essay "Combat Liberalism" and its relevance for the Party today and the current "staying true to our founding mission" campaign. Qu is Chairman of Party History Research Center of CPC Central Committee

Translation of Mao's "Combat Liberalism"

Authorities Call for Incineration of Legal Journal | China Media Project The “accident” referenced in the notice is probably, in our estimation, the misplacement of the Xi-era qualifier “New Era,” or xin shidai (新时代), in the headline of the journal’s leading article, written by Li Lin (李林) [seen in the featured image above], a Member of the Chinese Academy of Social Sciences and former director of its Institute of Law.

Xi calls on newspaper to unite intellectuals around CPC - Xinhua Highlighting the contribution and important role of the Guangming Daily over the past 70 years, Xi called on the paper to adhere to the correct political direction and build an all-media communication pattern. Xi said he also hoped that the Guangming Daily could make constant efforts to convey the CPC Central Committee's earnest expectation and solicitude for the intellectuals and rally them closely around the CPC Central Committee to contribute to the realization of the two centenary goals and the Chinese Dream of national rejuvenation.

Xi sends congratulatory letter to Forum on Development of Tibet - Xinhua The year 2019 marks the 70th anniversary of the founding of the People's Republic of China and the 60th anniversary of the campaign of democratic reform in Tibet, Xi said. "Under the leadership of the Communist Party of China, Tibet has realized the most extensive and profound social transformation ever in its history in just a few decades, with about 1 million serfs emancipated and becoming masters of the country and society," the letter read.

守正创新  资政育人——新中国70年历史学的繁荣发展-人民网 - 张海鹏

Foreign and Defense Affairs

China says reached 'broad consensus' with U.N. after Xinjiang visit - Reuters Diplomats said that along with the United States several other countries, including Britain, complained about the trip of Vladimir Voronkov, a veteran Russian diplomat who heads the U.N. Counterterrorism Office. U.S. Deputy Secretary of State John Sullivan spoke with U.N. Secretary-General António Guterres on Friday “to convey deep concerns” about Voronkov’s trip because “Beijing continues to paint its repressive campaign against Uighurs and other Muslims as legitimate counterterrorism efforts when it is not”.

China’s anti-terrorism experience in Xinjiang useful to UN - Global Times Counter-terrorism is a global challenge. The situation in Xinjiang has fundamentally improved with a large amount of work but relatively small social cost…The US counter-terrorism tool is to go to war in Afghanistan and the Middle East at cost of a shocking number of innocent lives, which has not produced a solid effect. That's why the US and other Western countries should learn from Xinjiang's experience. Accusing counter-terrorism activities in Xinjiang of harming human rights is disrespecting the lives of people there. They humiliate the lofty concept of human rights. 

Chinese vice president calls for closer local cooperation with Russia - Global Times When addressing the opening ceremony of the second China-Russia local cooperation forum Saturday morning, Wang [Qishan] said the Exposition and the Forum are of important significance, as this year marks the 70th anniversary of the establishment of diplomatic ties between the two countries and the two heads of state recently agreed to develop the comprehensive strategic partnership of coordination for a new era.

Chinese vice president stresses development, opening-up of border areas - Xinhua During a tour in northeast China's Heilongjiang Province from Thursday to Friday, Wang said that the border areas should capitalize on their own characteristics, tap their potential, give full play to their advantages, and deepen the integration of their interests with those of neighboring countries and regions.

China ‘has overtaken Russia’ as a maritime power, boosted by joint naval drills | South China Morning Post Timothy Heath, a senior defence researcher at the Rand Corporation, said while Russia might lament its decline in power, it had accepted the reality that the country had become China’s “little brother”.  “Moscow defers to Beijing on a growing number of issues, such as increasing Chinese influence in Central Asia and Chinese leadership in international organisations such as the Shanghai Cooperation Organisation,” Heath said, referring to the regional economic and security bloc.

Sea militia attacks could trigger US obligations under defense treaty - Philstar oreign government-sanctioned attacks initiated by militia or armed civilians in the South China Sea may trigger the Mutual Defense Treaty (MDT) of the United States and the Philippines, US ambassador to Manila Sung Kim said.

Sinking of Filipino fishing boat in South China Sea was ‘just a collision’, Duterte says | South China Morning Post Warning against antagonising matters, Duterte said on Monday: “What happened there was a collision. That was a maritime incident. Don’t believe stupid politicians. They want the Navy to go there. “It’s just a collision, do not make it worse,” he said, reiterating the country was not ready to go to war against China.

China's J-20 Stealth Fighter: New Pictures Confirm Something Pretty Awful | The National Interest The new photos of the J-20 provide an up close and personal look at the fuselage of the new interceptor. But the photos also appear to show a sensor system that looks awfully similar to the Lockheed Martin Electro-Optical Targeting System (EOTS) on the front of the F-35 Lighting II.

Chinese-owned company makes parts for British F-35 fighter jets, MoD reveals A Chinese-owned company is making circuit boards for F-35 warplanes flown by Britain and the US, the Ministry of Defence has revealed. The parts, made by Exception PCB based in Gloucestershire, south west England, "control many of the F-35's core capabilities", according to publicity material produced by the MoD.

PLA Navy needs own 'STOVL stealth fighter' jets to protect territory - China Military Secessionist forces in Taiwan are still taking the chance that the mainland's amphibious combat capabilities could be insufficient to reunify Taiwan by force. But once the mainland has amphibious assault ships with STOVL warplanes, it may become a strong deterrent against Taiwan secessionists and help solve questions involved with Taiwan, analysts said.

PLA Air Force's pilot recruitment campaign in 2019 is in full swing - China Military What is different from previous years is that the female cadets who achieved outstanding results this year can enter Peking University or Tsinghua University for joint training with “double enrollment” just like their male counterparts.

China honors veteran war hero as "role model" - China Military China has honored 95-year-old war hero Zhang Fuqing as a "role model of our times." The Publicity Department of the Communist Party of China (CPC) Central Committee announced the decision on Monday.

Pakistani police target traffickers selling brides to China - AP police investigations have uncovered that many of the women are forced into prostitution in China. A picture of the extent of the trafficking networks has emerged from a series of arrests and raids in recent weeks by Pakistan’s Federal Investigation Agency, as well as testimony from victims, many of whom were previously too frightened to come forward.

Op-ed: BRI “eroding national sovereignty” is false argument - People's Daily - Jia Xiudong So far, no Belt and Road agreement has been forced or reached unequally. By fanning the “erosion of national sovereignty” and slandering the BRI, the US is trying to sabotage the relationship between China and Belt and Road countries with the so-called “great power competition” mentality.

Beijing says US legalization of marijuana is a 'threat to China' - CNN Beijing's leading drug enforcement body has blamed the legalization of marijuana in Canada and parts of the United States for a spike in the amount of drugs smuggled into the country, describing it as a "new threat to China." At a press conference in Beijing Monday, Liu Yuejin, deputy director of the China National Narcotics Control Commission, said that the number of cannabis users in China had grown by more than 25% in 2018, rising to about 24,000 people.

At SCO Summit, India holds off on endorsing China’s Belt and Road project | india news | Hindustan Times All other members of the SCO, especially the Central Asian states, have enthusiastically signed on for President Xi Jinping’s flagship project. However, India has protested about BRI because a key component – the China-Pakistan Economic Corridor (CPEC) – passes through Pakistan-occupied Kashmir.

Retired Air Force general assumes top US diplomatic seat in Asia - Stripes Retired Air Force Brig. Gen. David Stilwell was confirmed by the Senate Thursday as U.S. assistant secretary of state for Asian and Pacific affairs, the top diplomatic position in the region. The seat has had no permanent replacement since Daniel Russel left in early 2017 while Barack Obama was still president.

The future of the US-Australia alliance in an era of great power competition — United States Studies Centre - Charles Edel & John Lee For it to continue to succeed and remain relevant, the US-Australia alliance demands a realistic roadmap for the challenges ahead. Such a roadmap requires an analysis of Chinese objectives and the emerging American and Australian responses.

Tech and Media

Terence Chang’s ‘Wings Over Everest’ Is the Latest Chinese Rescue Film – Variety Shot in China, Canada and Nepal, the movie tells the story of a rescue team that must go after a crashed plane in the Himalayas to recover important CIA documents that could prevent a terrorist incident.

Appointment of Google’s new Greater China head reflects its interest in the Chinese market - Global Times US search engine giant Google has appointed Chen Junting (Stanley Chen) as its managing director of Greater China, in-charge of sales and operations…Chen, who has been general manger of Google's office in the Taiwan region for the last eight years, has experiences in global tech companies including Apple, Ericsson and Intel, according to his LinkedIn profile.

Forget '996,' Ant Financial employees say they are working '10-12-6' · TechNode The anonymous employee referenced “10-12-6,” a work schedule of 10 a.m. to 12 a.m., six days a week that is a play on the infamous 996 work schedule which sparked an online protest against China’s tech firms after the post on GitHub went viral in March.

Xiaomi’s New Offline Strategy Doesn’t Add Up, Experts Say - Caixin The source said a businessperson who operates four Mi Home stores in Central China’s Hunan province told him that all of them have reported losses so far this year, while only one was in the red in 2018. In the meantime, sales agents are less motivated to promote Xiaomi’s smartphones due to a lower-than-average commission of 5%, as its biggest rival Huawei offers a much higher 15% commission, he said.

This Cult Videogame Is Facing Down Copycats in China - Bloomberg In The Legend of Mir, warriors and sorcerers battle creatures from an ancient universe. Now, WeMade Co.’s long-time videogame hit is at the center of a string of legal battles that could serve as a rallying cry for foreign companies harboring grievances against Chinese rivals. Over the last three years, the South Korean studio’s chief executive officer, Henry Chang, has filed about 65 lawsuits in China, Singapore and South Korea against Chinese gaming studios, attempting to block what he alleges are unlicensed versions of his two-decade-old title.

Energy, Environment, Science and Health

Tu Youyou's team resolves artemisinin resistance in malaria treatment - Xinhua Nobel Laureate Tu Youyou announced Monday that her team has proposed solutions to the problem of artemisinin resistance, providing new evidence that artemisinin is still "the best weapon" against malaria, the world's No. 1 insect-borne infectious disease.

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