Long trade war; Calibrated nationalist propaganda; Conference on Dialogue of Asian Civilizations
The Chinese side is signaling its position in the trade war with the US through a series of calibrated statements and propaganda pieces. President Trump is on his second day of tweet storms about the relationship.
The PRC propaganda has definitely shifted towards a more nationalist tone but it is still relatively restrained and leaving the door open for a resolution.
But, given the PRC’s stated bottom lines, and how they appear to conflict with the US bottom lines, it is hard to see how either side could compromise, at least until there is much more pain, without a domestic backlash. The Chinese prefer to keep the terms of any trade deal with the US secret, and even if the US side were to agree good luck stopping it from leaking in DC, so again it is hard to see a mutually face-saving compromise in the near-term.
One thing that seems certain is that the damage to the US-China relationship is significant and probably permanent, even if there is a miraculous deal around the June G20. This time is different than previous patches of tensions in the US-China relationship since 1979. We are in a New Era.
Amidst the trade issues it is important not to miss another big meeting in Beijing this week, the Conference on Dialogue of Asian Civilizations. It looks to be another piece of Beijing’s strategy of moving Asia to “Asia for Asians”.
Thanks for reading.
The Essential Eight
A senior administration official said the differences between the two sides are so profound that, based on his read of the situation, he can't see the fight getting resolved before the end of the year...
Jonathan Swan has asked several current and former administration officials whether Trump actually believes that China pays the tariffs — rather than the reality that U.S. consumers do.
The consensus is "yes": That's what he actually believes.
And as one former aide said: There’s little point trying to persuade Trump otherwise, because his belief in tariffs is "like theology."
President Donald Trump insisted Tuesday morning that the U.S. is in a "fantastic position" in trade negotiations with China, defending his administration's escalating trade war with Beijing for the second straight morning with a flurry of posts to Twitter....
Though he asserted a deal to end yearlong impasse would happen “much faster than people think,” the president also sought to reassure farmers who will likely bear the brunt of China’s retaliatory tariffs announced Monday, and urged manufacturers to move their production to the U.S.
Pillsbury said it was telling that Vice Premier Liu He lost his status as “special envoy” for Xi and that China told the American side not to use the title anymore in press guidance. That could mean the internal struggle in China is intensifying over a possible deal that hardliners had thought gave too much ground to the U.S.
“That suggested to me it’s not Xi Jinping personally in charge of this,” Pillsbury said. “He must have some kind of working group or task force and therefore it’s not Xi Jinping who sits alone.”
Comment: I am not seeing or hearing any evidence of this.
The exemption will be valid within one year after the release of the exemption list, according to the Customs Tariff Commission of the State Council.
Based on facts and data, the applications must be able to reveal the difficulties in seeking substitute products, the severe economic damages suffered by applicants, the major negative structural impact on relevant industries including that on industrial development, technical advancement, employment and environmental protection, or serious social consequences, the commission said.
“We’re going to take the highest year, the biggest purchase that China has ever made with our farmers, which is about $15 billion, and do something reciprocal to our farmers so our farmers can do well,” Trump told reporters at the White House.
Senate Republicans acknowledge that the president’s latest tariff increase on Chinese imports are harming farm state economies, their own constituents and some of Trump’s most reliable voters. But there’s no plan to stop, or even threaten, the president’s tariff regime
Sen. Josh Hawley (R-Mo.) this morning announced a bill, seen first by Axios, that would make it harder for American companies to export major emerging technologies to China
China may loom larger than usual, and the rhetoric may be nastier than usual, in the next US election cycle - The “China” Deficit – Mike Pilger – Medium:
There is enough evidence to say Democrats are falling down on China policy, and that this is a terrible mistake. Correcting that mistake will take deep thinking about a positive vision of China policy and trade policy in general that displaces Trump’s policies and the neoliberal status quo ante.
Below I begin with polling data, continue with social media analysis, and conclude with thoughts on the race to beat Trump on China.
China said on Monday that US policies are threatening the existence of the World Trade Organisation, setting out a string of grievances in a WTO “reform proposal” published by the WTO on its website...
China did not name the United States in the document, but referred to the block on the appointment of WTO appeals judges and “national security” tariffs on aluminium, steel and cars, policies uniquely associated with Washington...
“The abuse of national security exception, unilateral measures inconsistent with the WTO rules, as well as misuse or abuse of existing trade remedy measures have severely damaged the rules-based, free and open international trade order,” China’s document said.
2. PRC propaganda coverage on the trade war
So far, China’s state media have sought to tamp down the kind of patriotic passions that fueled a backlash against Japanese interests when a territorial dispute flared in 2012. Even now, state media commentaries focused the blame on the U.S. government, rather than the country as a whole.
Without mentioning Trump by name, which should be seen as positive sign of restraint, People's Daily "Zhong Sheng" commentator goes after the claim that America is getting ripped off by China - 人民日报：谁在为赋新词强说愁 美国吃亏论可以休矣|逆差_新浪财经_新浪网
State-news outlets started referring to the “trade war” more frequently, reviving a label that officials had largely suppressed over recent months in favor of the term “trade frictions.” The Communist Party’s flagship newspaper, People’s Daily, mentioned “trade war” in four articles over the past five days, after a six-week hiatus.
speaking in Russia on Monday, in comments relayed by China's foreign ministry on Tuesday, the Chinese government's top diplomat, State Councillor Wang Yi, struck a more upbeat tone
More on the theme of talking if the US wants to talk, fighting if the US wants to fight, but that fighting will cause harm to everyone, while cooperation is the correct choice. This one is in the "Qiushi" Journal, is getting a ton of play, and is signed by "Qing Yuan 青 原" which is likely a pseudonym. In 2010 there were a series of commentaries by the pseudonymous "Zheng Qingyuan 郑青原", that according a piece translated by the China Media Project was probably a pen name representing the "public opinion guidance (舆论导向) [emerging from] the level of the politburo" This “Qing Yuan 青 原" is not that same person/group but is clearly someone/thing quite senior. - 打打谈谈两由之 - 《求是》2019/10 作者：青 原
Some slightly edited highlights from a Google translation of the article:
China uses action to prove its sincerity. Starting from the overall situation of developing healthy and stable Sino-US relations, starting from the need to promote China's economic and social development, expanding imports and reducing tariffs on some products, this reflects sincerity. The Chinese side began to expand imports of US soybeans, which is also a show of sincerity. At a crucial moment when the outside world has speculated that the Sino-US consultation may have broken down, the Chinese delegation went to the United States to participate in the consultations. This shows the greatest sincerity. The Chinese side did not go because of "fear", but because of "sincerity."
What about the performance of the United States? For more than a year, the United States has engaged in trade protectionism, discriminating against Chinese products, abusing the "national security review", hindering the normal investment activities of Chinese companies in the United States, using a large number of non-tariff barriers, abusing trade remedy measures, and so on. In particular, the willingness to lift the tariff bar and force China to accept a "treaty under duress" has artificially set a huge obstacle to the negotiation process. China has the principle of China and China has the dignity of China. The Chinese side responded to the concerns of the United States with the utmost sincerity and considered the interests of the United States. However, the United States did not show a reciprocal attitude or due sincerity, and instead just accused and pressured China...
China sincerely hopes that the two sides can reach an agreement through consultation to solve the problem. However, this does not mean that China is afraid of the United States or will will "soften" and "recognize" under its "extreme pressure" and will accept the US barbaric requirements without principle and dignity. The attitude of China that "does not want to fight, is not afraid to fight, and has to fight when necessary" has not changed. The strength, tenacity, and room for maneuver of the Chinese economy, presumably the "smart Chinese school" in the United States understands. Instead, I hope that the "I don't know the Chinese faction" will re-examine China's actual situations, and not "look at the Chinese economy" from the cracks in the door.
A fiery dispatch on state broadcaster CCTV’s evening news programme went viral on Weibo, China’s largest social media platform, on Monday night and a hashtag for the clip had been viewed more than 3bn times by Tuesday...
“This section gave me goosebumps,” one user said. “That’s the demeanour of a great nation,” wrote another.
“Talks, OK! Fight, to the finish! Try to cheat us, that’s deluded!”, a trending post from the Communist Party’s official People’s Daily newspaper read.
“This, is China’s attitude!” the People’s Daily said in the headline of a post on its official WeChat account...
“Bully us, wishful thinking!”
3. Whither the RMB
So far the PBoC seems to be holding the line around 6.9 RMB/USD, but if the tariffs increase and expand allowing the RMB to weaken against the USD and is high probability response.
letting the yuan weaken has always been, in my view, the logical “asymmetric” Chinese response to a trade war.
The market would certainly test China’s resolve—so if China didn’t want the yuan to weaken, it would need to take action—intervene, manage the fix, tighten controls—to signal that China wanted stability in its currency amid tariff instability.
And if China let the yuan depreciate, China would also—at some point—need to decide when to step in to set a new floor under the yuan (e.g. signal this far but no further).
That’s all China’s choice. In my view, China has the firepower it needs to continue to manage its currency (concerns about China’s foreign currency debts are overstated in aggregate, though there are a few indebted real estate companies—and China has no shortage of dollars either at the central bank or in the banking system*).
4. Conference on Dialogue of Asian Civilizations
Highlighting this event again because I think it is very important.
Respect for the diversity of civilizations is an important precondition for world peace and harmony. Dialogue between civilizations is an essential guarantee for the peaceful co-existence of countries. We believe every country has the right to choose a development path that suits its national conditions. Countries should champion the principles of equality, mutual learning, dialogue and inclusiveness between civilizations and reject the misguided and wrong belief of "clash of civilizations" or the superiority of one civilization over others. The Conference on Dialogue of Asian Civilizations offers a platform to showcase the charms of Asian civilizations, promote exchange and mutual learning among civilizations and enhance friendship and cooperation between countries.
Xi has long been a believer in, advocate of, model for and contributor to communications across civilizations. Whether during living in a cave house in a remote countryside village decades ago, or now standing at the helm of the world's most populous country, he maintains that exchanges and mutual learning among civilizations have empowered human progress as well as world peace and development.
That conviction matters even more today. In a world beleagured by alarming anti-globalization sentiment, rising protectionism and unilateralism, mutating security threats, and resurging assertions of a "clash of civilizations," cross-civilizational communication is of vital significance and in dire need of fresh vitality.
New short propaganda video for the Conference - 穿越时空！《和合之声》带你聆听亚洲文明之声_国内新闻_环球网
5. “Staying true to the Party's founding mission”
A few more details to what was announced Monday.
The Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting Monday, deciding that an education campaign on the theme of "staying true to the Party's founding mission" will start in June.
Xi Jinping, general secretary of the CPC Central Committee, presided over the meeting.
The top-down campaign among all Party members will be conducted in two separate batches, especially targeting officials at and above the county level, according to a statement issued after the meeting.
The statement stressed the importance of the campaign, saying it is a major arrangement by the CPC Central Committee with Xi at the core to "command the great struggle, great project, great cause, and great dream."
The fundamental task of the campaign is to conduct in-depth studies on and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, forge the political character of loyalty, integrity and a keen sense of responsibility, and unite the Chinese people of all ethnic groups and lead them to strive together for the realization of the great dream.
6. African Swine Flue
Hog prices in the world’s top producer rose sharply in early March as losses from an epidemic of incurable African swine fever started to impact supplies.
The prices leveled off in mid-March, however, and in many areas have declined in May, confounding anticipation of a rapid rise in pork prices after widespread culling..
That’s because Beijing has rolled out new rules requiring slaughterhouses and processing plants to test for the African swine fever virus, slowing down business at many facilities and denting demand.
“The government is checking slaughterhouses, cold storage warehouses and processing firms so nobody dares to buy pigs, kill pigs or sell meat. Live hog demand is fairly poor,” said Feng Yonghui, chief analyst with Soozhu.com.
To prevent the disease from spreading further, China has killed at least one million pigs on infected farms, and is expected to kill millions more. The culling has helped decimate the world’s pork supply and is estimated to push up pork prices in China by 70%.
The current outbreak was first reported in mainland China in August. Since then, the virus has spread to pig herds in every mainland Chinese province, as well as to Vietnam, Cambodia and Mongolia...
About 700 million hogs were slaughtered in China last year, far more than in any other country. Analysts at Rabobank, a Dutch lender, predicted last month that China’s total would fall by about 150 million to 200 million this year because of deaths from infection or culling.
China’s tendency to hush up disease outbreaks has engendered widespread public distrust, and many farmers and livestock analysts say they assume the disease has infected more pigs, in more places, than officials have publicly acknowledged.
7. Hiccups for Hikvision
Despite being the world’s largest maker of equipment used to follow others, Hangzhou Hikvision Digital Technology Co. Ltd. is itself coming under growing scrutiny that could severely crimp its future.
One set of pressures on the Shenzhen-listed company, valued at nearly 300 billion yuan ($44 billion), is coming from U.S. regulators who worry about Hikvision’s government ties. At home, meanwhile, the company is also fending off competition from new entrants including the powerful Huawei and Alibaba...
Huawei founder Ren Zhengfei said previously his company will move aggressively into the public surveillance industry, in a bid to replicate its success in the telecommunication sector.
That effort has already begun to bear fruit. Subsidiaries of the world’s top telecom gear maker already supply chips for China’s surveillance cameras, and Huawei itself supplies surveillance cameras, servers and cloud services to clients at home and abroad...
“In the past, government institutions accumulated a vast amount of data produced by hardware infrastructure including cameras that they deployed. This is the area we can cash in,” said Yan Lida, one of Huawei’s executives overseeing company’s data-related services.
8. Censorship outside China
How an Academic Journal [China and Asia: A Journal in Historical Studies] Censored My Review on Xinjiang – China Channel:
Amidst the uproar, the chief publishing officer of Brill reached out to me on the Twitter thread seeking a “better understanding” of the situation. Brill’s publishing director for Asian studies later contacted me by email, claiming that “an honest mistake was made by soliciting a review of a book that lies outside the scope of the relevant journal” (which is supposedly about China’s historical relations with other Asian countries), and that “this was then exacerbated by mistakenly citing the wrong reasons for the editor-in-chief’s reluctance to publish the review.”
On digging deeper, I came to believe that this was not an “honest mistake” (they chased up the review several times, after all) but that the journal would not allow my review to criticize the Chinese Communist Party’s (CCP) policies in Xinjiang. I discovered that the editor-in-chief, a professor at the Hong Kong Polytechnic University, conducts formal research on Xinjiang and Tibet, and claims state-minority relations as one of his specializations. In 2013, he wrote an op-ed in Ta Kung Pao, Hong Kong’s pro-CCP paper, in which he identifies “outside influences, especially from the western world and the Muslim world” as one of six sources of the region’s unrest
But just as the organization was about to sign a lease last week, the building’s owner said that its new parent company, a giant shipping conglomerate owned by the Chinese government, decided to veto the offer.
The company, Cosco Shipping, did not want the United States chapter of Amnesty International, which has produced scathing reports highlighting human rights abuses in China, as a tenant, according to the group.
Amnesty International U.S.A. said it was told the organization was “not the best tenant” for a building owned by a Chinese state-owned enterprise
Business, Economy and Trade
`Buy the Dip' Is Back as $1 Trillion Goldman Manager Pounces - Bloomberg To his team, the place to be is emerging markets, where he sees growth accelerating again amid China’s policy support. The yuan’s weakness will also help Asia’s largest economy cope with the higher tariffs, he said. The asset manager estimates the hikes will affect less than 1 percent of gross domestic product, for both the U.S. and China.
China's Kunlun Tech agrees to U.S. demand to sell Grindr gay dating app - Reuters Chinese gaming company Beijing Kunlun Tech Co Ltd said on Monday it had agreed to a request by the Committee on Foreign Investment in the United States (CFIUS) to sell popular gay dating app Grindr, setting a June 2020 deadline to do so.
MSCI Indexes to Include ChiNext Stocks for First Time - Caixin Global index provider MSCI Inc. is adding companies listed on Shenzhen’s ChiNext board to its indexes for the first time and taking step one in its three-phase plan to more than quadruple the weighting of Chinese mainland-listed shares in its benchmark Emerging Markets Indexes.
Local Governments Working Hard to Keep Sand From Slipping Through Their Fingers - Caixin Several local governments are going to great lengths to control their supplies of sand and gravel in the wake of a crackdown to curb the environmental damage from mining these essential building materials.
Politics and Law
胡海峰身着迷彩服，重走红色秘密交通线 Hu Jintao's son Hu Haifeng puts on military fatigues for a day of walking a famous Red Army trail on the 70th anniversary of the liberation of Lishui. Hu is still identified in this piece by "长安街知事" as the party Secretary of Lishui
王曦出任科技部副部长，系中科院院士 Alternate Central Committee member Wang Xi is appointed a Vice Minister of Science and Technology
Defense Education in Chinese Universities: Drilling Elite Youth: Journal of Contemporary China: Vol 28, No 117 This article examines the design, implementation and reception of defense education in Chinese universities. Delivered by the People’s Liberation Army since 1985, this program, which aims at cultivating students’ civic awareness through elementary military training, is still ongoing today. Official publications and interviews with students who attended the training suggest that defense education is successful in conveying the authority of the Party-state to China’s new elite youth. The physical component of the training is the added value that is well received by the new generations, by comparison with ideological indoctrination. The Chinese Communist Party’s use of the military to infuse discipline and compliance among a historically volatile section of society highlights the militarist nature of the People’s Republic of China.
海南省高院女副院长张家慧被调查：200亿商业帝国背后的举报风波 whistleblower claims that a senior Hainan judge, who is now under investigation, controlled a 20B RMB empire, are making waves
Foreign and Defense Affairs
China-Russia relations are unrivalled, Beijing warns before US’ Mike Pompeo meets Vladimir Putin | South China Morning Post Visiting Sochi on Monday for meetings with counterpart Sergei Lavrov and Russian President Vladimir Putin – a day before the Russian pair met US Secretary of State Mike Pompeo – Wang said China-Russia relations set an example “beyond compare”, while the world was “in chaos and disorder”. “Unilateralism runs rampant, conflicting the current international system and basic norms of international relations,” Wang said, according to a statement released by the Chinese foreign ministry on Tuesday.
TASS - Details of Xi Jinping’s visit to Russia in focus of meeting of Putin, Chinese top diplomat The Russian president warmly welcomed the Chinese delegation. He said he had been informed about Wang Yi’s talks with Russian Foreign Minister Sergey Lavrov. "First and foremost, I would like to convey my best wishes to my friend [Xi Jinping] for the warmness we were received in Beijing with during a large-scale international conference dedicated to the implementation of our One Belt One Road ideas," he noted, adding that he believes these interesting an efficient ideas fit well into the integration associations that are being created by Russia and its partners in the post-Soviet space.
Xi visit to Japan as state guest to be put off until next year: sources | The Japan Times Japan and China are making arrangements for President Xi Jinping to visit Tokyo as a state guest next year, rather than this year as initially planned, due to a tight schedule, according to sources familiar with the situation
【光明网专论】构建和谐东北亚既需“硬支撑”，也需“软助力” _光明网 Dong Weihua, deputy director of the research office of the International Liason Department on "Building a harmonious Northeast Asia requires both “hard support” and “soft support”.
Huawei mounts lobbying push for 5G approval, release of Meng Wanzhou - The Globe and Mail Huawei has hired a slew of public-relations and government-relations experts, including Hill+Knowlton Strategies Canada, to help in the campaign to win over Canadians and Ottawa. Some of the people it has brought on board have worked for former Liberal or Conservative governments and also come from a wide array of businesses.
A 'no-spy' deal would help any Huawei bid: Germany - Reuters A “no-spy” agreement with Beijing would be crucial to assessing whether to accept any bid by Huawei to build out a next-generation telephony network, a German interior ministry spokesman said on Tuesday, adding there was currently no sign such a deal was in the offing.
China further regulates military expenditure - Ministry of National Defense It also gave specific requirements on the review and approval of financial practice and asked for improved supervision and transparency of the process. The regulation can help strictly check military expenditure and reduce financial malpractices in the military, according to sources with the General Logistics Department of the CMC.
China sends female demining peacekeepers to Lebanon - China Military Zhang Cunning, demining supervisor from the 18th Chinese peacekeeping contingent to Lebanon, said: “This is the first time Chinese military has sent female demining operators to the international peacekeeping battlefield, which is in response to the UN’s appeal for more female participation in peacekeeping operations to achieve gender parity.”
Three journalists are under investigation over publishing news about the Dalai Lama - The Kathmandu Post In a phone interview with the Post, Baskota said the Tibet issue is sensitive for China and dissemination of a report regarding the Dalai Lama by the state-run news agency--particularly during President Bidya Devi Bhandari’s state visit to China--was against Nepal’s commitment to One-China policy.
The United Front Work Department Goes Global: The Worldwide Expansion of the Council for the Promotion of the Peaceful Reunification of China - Jamestown Promotional media surrounding international chapters of the CPPRC has revealed a number of striking factors about the organization. For one, PRC government officials maintain a close supervisory relationship with individual chapters, and are prominently featured as speakers at CPPRC events.  Additionally, CPPRC-affiliated websites and other media are primarily in Chinese, rather than the language(s) of the host country; and photos of group meetings indicate a membership that is overwhelmingly composed of ethnic Chinese persons, with (at least thus far) little apparent effort to recruit beyond the scope of Chinese immigrant communities. These factors suggest that a key purpose behind the proliferation of chapters of the CPPRC is the intent of the Chinese government—with the United Front Work Department acting as one of its key executive agents—to exert control over ethnic Chinese communities abroad.
Australian-Chinese community outraged over Scott Morrison referring to Beijing as a 'customer' - Australian Broadcasting Corporation) Chinese social media has lit up with outrage after Prime Minister Scott Morrison described the United States as a "friend" while referring to China as a "customer".
Chinese gang threatens chaos in Cambodian province as rift deepens between locals and new arrivals | South China Morning Post 8 The video was released soon after a Ministry of Interior report identifying Chinese nationals as the most criminally active foreigners in Cambodia. Photo: YouTube The Chinese embassy in Cambodia is investigating a video of a gang, supposedly from Chongqing, threatening to seize control of the city of Preah Sihanouk, the capital of Sihanoukville province.
Tech and Media
Yicai Global - Huawei, Samsung Settle Global Patent Infringement Lawsuits Huawei Technologies and Samsung China Investment have ended their legal battles over patent infringements that began in 2016 and reached a framework agreement on worldwide cross-licensing, Chinese state broadcaster CCTV reported today
Asian Edge: The role of Chinese IC designers in worldwide supply chain - DigiTimes According to IC Insights' figures, the global IC design industry had a scale of US$109.5 billion in 2018. Of the annual orders of US$57.73 billion for foundries, 18.5% came from China-based clients. Judging from the proportion, we can assume that China's IC design industry had a scale of US$20.2 billion in 2018, a level similar to that of Taiwan, but higher than those of Japan and South Korea.
Society, Arts, Sports, Culture and History
‘Forever Outsiders’: Housing Research Suggests Residency Restrictions Drive Inequality - Caixin Global Migrants from other cities without a Shanghai “hukou,” or household registration, have 90% lower odds of owning homes in the city compared with Shanghai natives, even though they’re more likely to be higher earners, according to a new study of city residents in their 30s published in the Journal of Ethnic and Migration Studies. Migrants from the countryside fare similarly, with 92% lower odds of owning a home than locals.
Energy, Environment, Science and Health
China establishes committee of experts on capacity of genetic counseling - Xinhua It aims at dealing with birth defects in a positive manner and setting up an authoritative, scientific and normative national professional standard for genetic counselors, which will be completed by the end of the year.The committee consists of 43 authoritative experts from 24 provincial-level regions across the country. According to the NHC, there is still a severe shortage of genetic counselors in China. Experts believe strengthening the country's capacity of genetic counseling meets the urgent demand of adjusting and improving birth policies and is a practical approach to further carry out the Healthy China initiative. // Comment: Does this seem non-innocuous?
Food and Travel
12,000 Chinese Descend on Switzerland in Record-Setting Tour - SixthTone Jeunesse Global, a U.S. multilevel-marketing company offering health and beauty products, organized the international expedition to reward employees who reached their annual sales targets, according to the outlet’s coverage of Swiss media reports from the past week