New official spin for Xinjiang camps; Fang Fenghui sent to prosecutors; No Party in afterlife for Zhang Yang, Risky share-backed loans; Hidden debt; Google CEO's China googly eyes; Core technologies; Misunderstood SOEs

Happy Tuesday. Some of the top things I am watching today include:

  • China has launched a propaganda offensive about the Xinjiang camps with a long interview with the chairman of Xinjiang's government and a segment on the Tuesday episode of the CCTV News show "Focus Interview" with lots of happy footage from inside a camp;

  • Former senior PLA general Fang Fenghui has lost his Party membership and will now face prosecutors and the Party decided to strip Zhang Yang, another senior general who was detained at the same time but killed himself rather than face charges, of his Party membership, posthumously;

  • The pressing need to develop core technologies is the message from the recent meeting of Central Commission for Integrated Military and Civilian Development;

  • S&P is out with a report saying China has nearly $6 Trillion in hidden debt. Isn't the leadership already operating under the assumption that there is at least this much hidden debt?;

  • Shenzhen and at least one other cities are rounding up volunteers among local enterprises to help prop up the stock prices of local firms whose shares are at risk of panic selling due to share-backed loans;

  • Foreign criticism of SOEs has struck a nerve as the propaganda for "competitive neutrality" kicks up;

  • Google CEO wants to re-launch in China, no matter what the critics say.

Thanks for reading.

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The Essential Eight

1. Beijing mounts new propaganda offensive around Xinjiang camps

China Breaks Silence on Muslim Detention Camps, Calling Them ‘Humane’ - The New York Times:

the chairman of Xinjiang’s government, Shohrat Zakir, himself an ethnic Uighur, called the camps a “humane” and lawful shield against terrorism in an interview published by China’s official Xinhua news agency. He said the facilities gave Uighurs and other Muslims courses in the Chinese language and taught them to be law-abiding citizens. They also receive training in job skills such as making clothes, e-commerce, hairdressing and cosmetology, Mr. Zakir said.

Mr. Zakir said that “students” in the facilities were provided with free meals, air-conditioned dormitories, movie screenings and access to computer rooms...

Mr. Zakir’s comments appeared to be part of China’s preparations for an international meeting that could put the camps under further scrutiny. At a meeting of the United Nations Human Rights Council in early November, foreign governments will have a chance to question officials from Beijing about the detention program and other intrusive security measures affecting Muslim minorities.

Full transcript: Interview with Xinjiang government chief on counterterrorism, vocational education and training in Xinjiang - Xinhua:

Through vocational training, most trainees have been able to reflect on their mistakes and see clearly the essence and harm of terrorism and religious extremism. They have notably enhanced national consciousness, civil awareness, awareness of the rule of law and the sense of community of the Chinese nation. They have also been able to better tell right from wrong and resist the infiltration of extremist thought. They have become more proactive in shaking off poverty, and becoming better off. It has been a common practice among them to expect and pursue a modern life. They are confident about the future. "I didn't understand the country's common language, nor did I know about the laws. I wouldn't even have known that I had made mistakes. But the government didn't give me up. It has actively saved and assisted me, giving me free food, accommodation and education. Now I have made great progress in many aspects. I will cherish this opportunity and become a person useful to the country and society," a trainee said...

Next, Xinjiang will further implement the strategies and policies on the region, set by the CPC Central Committee with Comrade Xi Jinping at the core, adhere to the people-centered philosophy of development, properly handle the relations between stability and development, and concentrate on the three major tasks: construction of the core zone of the Silk Road Economic Belt, the implementation of the rural vitalization strategy and the development of the tourism industry. It will also take the four prefectures in southern Xinjiang as the main battlefield to fight against poverty with targeted measures to ensure that by 2020, all rural residents living below the poverty line are lifted out of poverty. Xinjiang will also work to see that people of all ethnic groups have a stronger sense of fulfillment, happiness and security, and that the gains of development benefit people of all ethnic groups in a fair way.

The interview in Chinese - 新疆维吾尔自治区主席雪克来提·扎克尔就新疆反恐维稳情况及开展职业技能教育培训工作答记者问 

October 16 2018 CCTV News primetime show "Focus Interview" reports on the Xinjiang camps in Hotan, praises them, lots of video from inside--《焦点访谈》 20181016 筑牢根基 源头治理_CCTV 

One thing I have heard but not confirmed so take it as a rumor for now is that Beijing is preparing to turn these camps into long-term residential camps where people work and live for potentially will be born in and grow up in them, to be released only when they are adults and have had no exposure to Islam.

Nikki Haley blasts China, calls government 'straight out of George Orwell' | Fox News:

"It is the largest internment of civilians in the world today," Haley said in keynote remarks at the Chiefs of Defense Conference Dinner in Washington. "It may be the largest since World War II."

The former South Carolina governor was particularly critical of Beijing's crackdown on Uighur and other Muslim minorities in China's northwest, which she described as being "straight out of George Orwell."

When will the Muslim world start speaking up against the Xinjiang camps?

Haqqani slams top Chinese diplomat in Pakistan for “undignified” trolling - The Hindu:

Pakistan’s former top diplomat to the U.S. Husain Haqqani has slammed China’s Deputy ambassador in Islamabad Lijian Zhao for his “undignified” trolling after the ex-envoy shared a story about the Chinese government’s treatment of minority Uyghur Muslims.

Over the past few days, Mr. Haqqani has been involved in a public spat with Mr. Lijian which started over a tweet.

Mr. Haqqani (62), tweeted a London Times article which said that “China demands the Uighur Muslims eat pork”.

Mr. Lijian, instead of responding to the shared article, criticised Mr. Haqqani for the tweet.

“Joke of the day. A person without soul and nationality is joining a groundless attack against China. What a pity!” he said.

2. US-China

Trump's China Battles Give Taiwan Supporters New Influence - Bloomberg:

After a precedent-shattering phone call with Trump when he was president-elect, Taiwanese President Tsai Ing-wen has found a more receptive audience in the U.S. during the recent disputes. She’s been aided in that by the presence of long-standing allies in the White House, the State Department and the Pentagon, including National Security Adviser John Bolton.

“The Republic of China has more high-level friends in this administration than it’s had for many, many years,” said Nicholas Eberstadt, who focuses on Asian security issues at the American Enterprise Institute, referring to Taiwan by its official name. “It’s also apparent that the administration has an approach that is going to contest China on many different fronts.”

While it’s not clear how far the Trump administration is willing to boost Taiwan, it is seen as an increasingly valuable point of leverage over Beijing, which considers the island’s fate a “core interest” -- more important than nearly any other issue. A faction in Bolton’s National Security Council is seeking a more aggressive posture, including by sending more warships through the Taiwan Strait, while Trump and Vice President Mike Pence have advocated proceeding with caution, according to one current and one former administration official.

Question: Who comprises this NSC "faction"?

The U.S. ‘Obviously’ Doesn’t Want to Contain China, Mattis Says - Bloomberg:

Secretary of Defense James Mattis played down tensions with Beijing, saying the U.S. was “not out to contain China” and was cooperating whenever possible, but that there would be times they would “step on each other’s toes.”

“Obviously, we’re not out to contain China. We’d have taken an altogether different stance had that been considered. It has not been considered,” he told reporters Monday on a plane en route to Vietnam.

“We seek a relationship with China that’s grounded in fairness, reciprocity and respect for sovereignty,” he said.

Comment: The US may not actually have a fully formed containment strategy but Xi and his team believe it does

Economic Daily “Zhongjingwen” commentary on the Chinese economy’s resilience and ability to handle the trade war-钟经文:为什么说中国经济有韧性有底气有后劲_中国经济网: 


Zhongjingwen is the pseudonym for the writing team representing Economic Daily.

Commentary: Washington's accusing China of "forced technology transfer" not grounded in facts - Xinhua:

In its recent round of mud-slinging against China, the United States has once again resorted to such hackneyed charges as "forced technology transfer" and "intellectual property theft."

Those allegations are detached from the facts, insulting to China's technological achievements, and nothing but a pretext for the global hegemon to stymie the ascent of the world's largest developing country.

China's remarkable scientific and technological development allows no belittlement. It stems from the hard work of generation after generation of Chinese researchers, and benefits from international cooperation under the country's long-standing opening-up policy.

China has indeed learnt a great deal from developed countries, but that is just like what the United States did from the 19th century to World War II, when it attracted talents from across the world and acquired advanced technologies from Europe.

新华社评论员:“强制技术转让说”站不住脚 – 新华社 

House members ask Trump for exclusions from China trade tariffs - CNBC:

The 169 members who signed a letter to U.S. Trade Representative Robert Lighthizer include numerous House Republicans running in competitive races.

One person far more politically savvy than I am suggested that the charges of interference by Trump and Pence are actually brilliant because they will freeze any Chinese efforts into the mid-terms next month, even though plenty of other countries also try to influence local constituencies...

Two Ships With U.S. Soybeans Head to China With Trade War Lingering - Bloomberg:

Two more vessels loaded with U.S. soybeans have departed for China, signaling that buyers may be getting more desperate for supplies amid the prolonged trade war between the nations.

Star Laura and Golden Empress were loaded during the week ended Oct. 11. ..

South American supplies from the 2018 harvest are now starting to dwindle, and farmers won’t begin collecting the next crop until early next year. That could force some Chinese buying of U.S. shipments.

Another Victim of the Trade Spat: U.S. Oil to China - WSJ $$:

China was the biggest buyer of U.S. crude oil in the first half of this year. But in August, U.S. crude exports to China, the world’s largest oil importer, fell to zero, according to tanker tracking data surveyed by The Wall Street Journal. In September, only 30,000 barrels a day of U.S. oil went to China, down from an average of over 350,000 barrels in the year up till July.

As China turns American oil down, U.S. producers have found new markets and overall oil exports haven’t fallen significantly.

But the changes have scrambled the global oil trade, with Russia and Saudi Arabia moving in to replace U.S. oil in China

Growing impact: a third of Japan Inc hurt by U.S.-China trade war - Reuters poll | Reuters:

The number of Japanese companies affected by the U.S.-Sino trade war has jumped to a third, soaring from just 3 percent in May with firms fretting about prospects for their exports from China as well as slower Chinese demand, a Reuters poll found.

Canton Fair: How China's Exporters Are Handling Trade War - Bloomberg:

China’s exporters are gathered in their thousands in Guangzhou for the latest edition of the Canton Fair. We’re asking for their insights into how the escalating trade war with the U.S. is affecting their businesses and their outlook on the economy.

3. Fang Fenghui sent to prosecutors and Zhang Yang posthumously loses his Party membership

Two senior Chinese generals stripped of rank and party membership over corruption claims | South China Morning Post:

“The violations are very serious and the amount of corruption is huge. It caused a serious damage,” a statement released through the state news agency Xinhua.

A source close to the Chinese military said more than 300 military personnel were implicated in the case against Fang Fenghui, the former chief of the joint staff, who is under investigation in a over 100 million-yuan (US$1.4 million) corruption case.

The statement by the Central Military Commission said Fang was not loyal to the Communist Party, and had done serious damage to the party and the army...

In another statement, the commission also said General Zhang Yang, a former head of the commission’s political work department, had been stripped of his general’s rank and party membership.

Zhang, 66, hanged himself at his home in Beijing in November 2017, after he was placed under investigation.






Former Chinese military chief of staff expelled from CPC - China Military:

He was suspected of offering and taking bribes and possessing a large amount of property from unidentified sources, which are "extremely serious violations involving a huge amount of assets and had caused an extremely bad influence," the CMC said.

Neither loyal nor honest to the CPC, Fang was found to "have been duplicitous, disintegrated politically and grown greedy economically, severely damaging the Party's cause and the image of the military," according to the statement.

The statement said that the investigation into Fang's case has concluded, and the case will be transferred to a judiciary committee for prosecution.

Former senior military officer expelled from CPC - China Military:

The property involved in Zhang's case will be confiscated in accordance with laws and disciplines, said a military statement released Tuesday.

The CMC had previously decided to expel Zhang from the military and strip him of his rank of general, it said.

Zhang committed suicide at his home in Beijing on Nov. 23, 2017, after authorities launched an investigation into his links to two corrupt former senior military figures Guo Boxiong and Xu Caihou.

I guess Party membership is eternal, until the Party decides it is not.

4. More on core technologies

Self-reliance sought in science, defense - China Daily:

Participants in a top-level meeting requested on Monday that important research and engineering programs adopt more domestically developed technologies and equipment to boost the nation’s capability in science and technology.

The meeting of the Central Commission for Integrated Military and Civilian Development of the Communist Party of China Central Committee stressed that research and engineering programs with strategic significance can effectively cultivate innovation in science and technology.

Top leaders at the meeting asked researchers to make all-out efforts to develop key technologies and concentrate their strength to make breakthroughs.

These programs should be based on domestically developed equipment, which can be continuously upgraded, according to a statement published after the meeting, which was presided over by Xi Jinping, general secretary of the CPC Central Committee, president, and chairman of the Central Military Commission.

President Xi urges deeper military-civilian integration |

Chinese President Xi Jinping on Monday called for a stronger sense of mission for deeper military-civilian integration.

Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, made the remarks while presiding over the second session of the Central Commission for Integrated Military and Civilian Development, which he also heads.

He asked for a stronger hold on the implementation of the integration, strengthened role of rule of law, deeper reform of system, and further coordinated innovation in science and technology.

"政武经 Zheng Wujing" on page 7 of the 10.16 People's Daily on the need for innovation so China can build core technologies. "Zheng Wujing" sounds like a pseudonym, any ideas what it is?--人民要论:以创新驱动核心技术能力提升--理论-人民网: 


BeiDou-3 continues journey to homegrown satellite system - China Daily:

China is independently producing key parts of BeiDou-3 satellites and user devices, exploring a way to bring significant projects under control, Ma Jiaqing, deputy director of the China Satellite Navigation Office, said on Monday.

Chinese engineers have enhanced application verification measures to test the reliability of the satellite's board, components and devices, as well as its usability in space, Ma said.

This is concurrent with the use of domestic-made components in the satellites to build an independent satellite navigation system operated wholly within the country, he said.

5. Trillions in hidden debt

The S&P report is getting a lot of attention, but are the numbers unknown to Beijing? Or is the leadership already operating under the assumption that there is at least this much hidden debt?

China local governments' hidden debt could total $5.8 trillion: S&P | Reuters:

Off-balance-sheet borrowings by Chinese local governments could be as high as 40 trillion yuan ($5.78 trillion) and amount to “a debt iceberg with titanic credit risks”, S&P Global Ratings said in a report on Tuesday.

When including so-called “hidden” local government debt, the ratio of government debt to gross domestic product (GDP) could have reached an “alarming” level of 60 percent in 2017, according to S&P.

China Ditches Deleveraging, Posing Yuan Hit, Citigroup Says - Bloomberg:

“Going by its latest policy moves, China has likely halted or even abandoned its financial-deleveraging program” amid the trade war with the U.S., Liu Li-Gang, chief China economist at Citigroup in Hong Kong, wrote in a note. The People’s Bank of China has pumped 3.4 trillion yuan ($492 billion) into the banking system so far this year through regular open-market operations and cuts in lenders’ required reserve ratios, Citigroup estimates.

CogitAsia Podcast: China’s Credit & Credibility | cogitASIA CSIS Asia Policy Blog:

In this episode, we discuss the current state of China’s financial system. China’s credit sector has expanded dramatically over the course of China’s unparalleled economic rise, yet now faces key problems that may impact overall economic stability. The authors of a new report from CSIS and the Rhodium Group, Logan Wright and Daniel Rosen, join the podcast to talk about their fresh analysis of China’s financial situation and explain the methodology behind their research. They also touch on the challenges to Beijing in moving forward with financial reforms while attempting to maintain stability in China’s credit system and explain what this potential area of weakness in China’s economy means for U.S. policy.

6. Bailouts for shares pledged as collateral

Shenzhen Has Billion-Dollar Bailout Plan For Local Companies - Caixin:

Shenzhen’s government is preparing to inject at least 15 billion of yuan into nearly 30 local listed companies to defuse the risk of share dumping as the country’s stock markets continue to fall, Caixin has learned.

The rescue plan, which is led by a special team formed by 10 Shenzhen city government departments, comes as companies are increasingly dumping their shares to repay share-backed loans, or margin calls...

The special team, which includes members of the city’s Economic, Trade and Information Commission, State-Owned Assets Supervision and Administration Commission and Financial Office, is headed by Shenzhen’s vice mayor, a source close to the team told Caixin...

As of Monday, 112 of the over 280 Shenzhen-based listed companies had more than 20% of their shares pledged as collateral for loans, according to financial data provider Hithink RoyalFlush Info.

“RoyalFlush Info”? A perfect name for a firm that collects data about the casinos that are China’s stock markets…

China’s Stock Rout Puts $613 Billion of Share Pledges at Risk - Bloomberg:

Loans extended to company founders and other major investors who pledged their shareholdings as collateral emerged as a popular financing channel in recent years. But given the losses in equities -- Shenzhen’s stock benchmark is down 34 percent in 2018 -- there’s a growing risk that brokerages will be forced to sell the shares, accelerating the downturn.

At least 35 companies have seen pledged shares liquidated by brokerages since the start of June, more than triple the 10 in the first five months of the year, according to company filings. At least two firms announced after Monday’s close that their shares were at risk of forced selling, including Jilin Zixin Pharmaceutical Industrial Co., which plunged by the 10 percent daily limit.

Not just Shenzhen, Guangdong's Shunde is also looking at a plan to help its local enterprises with the collateral risk--独家丨不止深圳 广东顺德酝酿支持本地上市公司方案_金融频道_财新网 Caixin 

7. Ignore everything else we say, SOEs are really no different than private firms...

I still have a Beijing bridge for sale if you buy this...

Beijing vows to stick to neutrality in dealing with State-owned enterprises - China Daily:

China will maintain its neutral stance for market competition and offer companies of all categories of ownership a level playing ground, the regulator of China’s State-owned assets and enterprises said on Monday.

Peng Huagang, spokesman for the State-owned Assets Supervision and Administration Commission, said the target of the country’s State-owned enterprises reform and reshuffling is to turn SOEs into independent entities that are truly self-managed, self-disciplined and able to assume full responsibility for their own profits and losses.

Peng was responding to recent media speculation that some giant SOEs are taking advantage of difficulties experienced by some listed private companies by acquiring or merging with them at bargain prices.

SOEs face unfair ‘bias, roadblocks’ overseas - Global Times:

Peng Huagang, deputy secretary-general and spokesperson of the State-owned Assets Supervision and Administration Commission (SASAC), said the report to the G20 neglected the fact that SOEs, after reforms, have blended into the market and are competing on a level playing field with companies under other ownerships.

"We oppose setting up different sets of international rules based on a company's ownership type or that discriminate against State-owned companies. We urge respective parties to take a neutral stance when it comes to a company's ownership type," Peng said at a press briefing on Monday.

Chinese experts say it's an important issue to China as the country's SOEs, especially centrally administered SOEs, are large and increasingly active in the global arena.



The reality - State Rail Operator Battles With Private Capital - Caixin:

China Railway Corp. (CRC) is fighting with private companies for control over construction of China’s second privately funded high-speed railway line, despite the central government’s vow to expand private players’ presence in the tightly held railway sector.

The national railway operator, a minority shareholder of the proposed high-speed rail line in eastern Zhejiang province, is throwing its weight around to seize control of the project, several sources close to the provincial government told Caixin.

If successful, it would be CRC’s second victory after last year winning the overwhelming construction rights for China’s first privately-controlled high-speed railway linking Hangzhou and Taizhou in Zhejiang. The project, majority-owned by eight private companies led by Fosun Group, was seen as a landmark railroad-building deal formed through a public-private partnership in a bid to lighten the government’s debt burden for infrastructure projects.

Opinion: ‘Competitive Neutrality’ for SOEs Can Help China At Home and Abroad - Caixin Global:

China’s current trade tensions with the U.S. are driven in part by perceptions of its unfair support for state-owned enterprises (SOEs). Yi Gang, the governor of the People’s Bank of China, told a meeting of the Group of 30 on Sunday that China is considering adopting the principle of competitive neutrality to create a level playing field between state-owned enterprises and private companies. On Monday, Peng Huagang, deputy head of the State-owned Assets Supervision and Administration Commission, also raised the principle of competitive neutrality when he spoke out against what he described as discrimination restrictions imposed on Chinese SOEs abroad.

8. Google CEO still wants to re-launch in China

Google’s CEO Says Tests of Censored Chinese Search Engine Turned Out Great | WIRED:

“It turns out we'll be able to serve well over 99 percent of the queries,” that users request. What’s more, “There are many, many areas where we would provide information better than what's available,” such as searching for cancer treatments, Pichai said. "Today people either get fake cancer treatments or they actually get useful information.”

THAT is a fair criticism of Baidu...

This is a reversal of a decision from about eight years, when Google pulled its search engine, which was also censored, from the Chinese market. Pichai said the time had come to reevaluate that choice. “It's a wonderful, innovative market. We wanted to learn what it would look like if we were in China, so that's what we built internally,” Pichai said. “Given how important the market is and how many users there are,” he added, “we feel obliged to think hard about this problem and take a longer-term view.”

Business, Economy, Finance And Trade

China’s P2P lenders say regulation will cause industry collapse | Financial Times $$ China’s peer-to-peer lenders expect their numbers to collapse from more than 1,500 to as few as 50 over the next 12 months, as regulators push through tough reforms while also barring company executives from fleeing the country. Peer-to-peer lending, the business of connecting private lenders with borrowers online, is a $120bn industry in China and traditionally has been lightly regulated with a high risk and return profile.

Goldman cautions Apple investors about 'rapidly slowing consumer demand' in China (AAPL) | Markets Insider Apple's earnings could be impacted this year if the weak demand in China continues, according to Goldman Sachs. "There are multiple signs of rapidly slowing consumer demand in China which we believe could easily affect Apple’s demand there this Fall," according to a recent note from Goldman Sachs analyst Rod Hall. Apple shares were down 1.5 % on Monday.

Trade war cost: China's third quarter GDP growth seen hitting lowest since 2009 - Reuters poll | Reuters A poll of 68 economists showed gross domestic product likely grew 6.6 percent in July-September from a year earlier, slowing from the previous quarter’s 6.7 percent and hitting the weakest pace since the first quarter of 2009. The predicted third-quarter growth would still be higher than the government’s full-year target of around 6.5 percent.

There's at Least One Chinese City Getting Busy Banning Pre-Sales - Bloomberg All 11 land plots sold, or scheduled for auction, in Zhongshan since mid-September were subject to a pre-sales ban, according to buying-requirement clauses on the website of the city’s land authority. Pre-sales are one of developers’ biggest and most-important financing channels, allowing companies to get money in the door quickly that they can then use to fund further land purchases.

Shareholders of Embattled HNA Shoot Down Beijing Office Sale - Caixin Disgruntled shareholders of HNA Group have vetoed the embattled conglomerate’s deal to sell a building block in downtown Beijing to pare down its debts, saying the 1.3 billion yuan ($190 million) price is too low. That followed a killed deal in September, when subsidiary HNA Technology Co. Ltd. said it would not pursue a 7.5 billion yuan deal to acquire e-commerce site Dangdang Inc.

Blame the U.S. for the Weaker Chinese Currency - WSJ $$ Why would China want to keep its currency stronger? In the long run because it has been trying to encourage more consumption, which is helped by having a stronger currency. Lots of exports are nice to have, but workers want cheap imports and foreign travel, too. In the short run the incentive is to avoid panic.

Lost in transmission: China's small firms get more loans on paper but not in reality | Reuters Beijing is keen to show results after four rounds of policy easing, so China’s big banks are playing along, highlighting their efforts to boost lending to cash-starved small firms, offering collateral waivers and setting loan targets. But in reality, banks’ loan eligibility requirements for small and medium-sized enterprises (SMEs) remain stringent, making it too difficult or too expensive for them to borrow, according to bankers and company executives.

An Ugly Price Equation for China - WSJ $$ Chinese core consumer inflation—excluding food and energy—is actually trending down, so if oil prices come off and China’s food supply stabilizes soon, then it’s likely headline inflation will too. Nonetheless accelerating consumer inflation and slowing producer prices in China bear watching. The latter usually means weakening growth and more easing. The former makes easing riskier, particularly with the yuan already in dangerous territory. If this divergence persists, China’s so-far well-lit pathway toward a soft landing could start darkening in quick order.

China inflation: reports on September PPI, CPI amid trade war with US - CNBC China's consumer inflation in September rose 2.5 percent compared to a year ago and 0.7 percent higher than August, government data on Tuesday showed. Producer price inflation, however, cooled for the third straight month in September — an indication of slowing economic momentum amid escalating trade tensions with the U.S.

China becomes largest recipient of FDI in H1 - Global Times China becomes the largest recipient of foreign direct investment (FDI) in the first half of 2018, attracting an estimated 70 billion U.S. dollars in inflows, according to the latest investment trends monitor published on Monday by the United Nations Conference on Trade and Development (UNCTAD). According to the UNCTAD, global FDI fell by 41 percent during the period, to an estimated 470 billion dollars, from 794 billion dollars in the same period in 2017, mainly due to large reparations by the United States parent companies of accumulated foreign earnings from their affiliates abroad following tax reforms

China fines company for illegal human rabies vaccine production - Xinhua Chinese authorities on Tuesday handed out penalties totaling more than 9.1 billion yuan (1.32 billion U.S. dollars) to a company for the illegal production of a human rabies vaccine.

The Changchun Changsheng Life Sciences Limited violated China's laws and regulations on drug management and production supervision in producing a human rabies vaccine, according to administrative penalty decision made by national and local drug authorities.

Violations included blending different batches of vaccine fluid, falsifying dates of production and using expired fluid to produce some of the batches, the document said.

Politics, Law And Ideology

China publishes plan for Hainan free trade zone - Xinhua In developing the Hainan FTZ, a major step that demonstrates China's resolution to further open up and promote economic globalization, the island will be granted more autonomy to reform, and speed up the fostering of a law-based, international, and convenient business environment as well as a fair, open, unified, and efficient market environment, according to the plan issued by the State Council. 国务院关于同意设立 中国(海南)自由贸易试验区的批复 

Translation: How I Made it to Renmin University’s Student Blacklist – China Digital Times (CDT) A WeChat essay posted early this month serves as another example of an apparent campaign to limit the influence and activism of left-wing student activists on Chinese university campuses. In a since deleted post that has been archived by CDT Chinese, Renmin University student Xiang Junwei detailed how his worker-advocacy and “care for the grassroots” won him a spot on a student “blacklist,” which came with intense surveillance from teachers and university staff, as well as the harassment of himself and his family. Yue Xin described similar treatment from Peking University after she filed a freedom of information request for information on a decades-old rape accusation on campus.  CDT has translated Xiang’s essay in full:

《重读〈论持久战〉》出版-新华网 2018 is the 80th anniversary year of Mao's "On Protracted War". People's Publishing House publishes and starts selling nationwide "Re-reading 'On Protracted War", //今年是毛泽东同志著名讲演《论持久战》发表80周年。在这篇讲演中,毛泽东同志运用马克思主义世界观方法论,科学分析中日战争所处的时代背景与中日战争双方的基本特点,深刻揭示了抗日战争的客观规律与必然趋势,准确预见了战争的发展过程与发展阶段,有力驳斥了“亡国论”和“速胜论”,极大地增强了中国共产党人和中国人民坚持抗战的信心,为动员全民族坚持抗日战争、夺取抗日战争胜利,发挥了极为重要的作用。//English translation of Mao's original essay is here on 

Fallen Chief of Bad-Asset Manager Had Tons of Cash — Literally  In several exclusive interviews with Caixin, sources close to Lai revealed a hidden side of this once powerful figure in Chinese financial sector and detailed his acts of corruption and cronyism over the years. Lai, according to people close to him, has a special love for cash. Authorities have discovered three tons of cash worth of 270 million yuan in different currencies at his properties in Beijing, Caixin has learned... People at Huarong told Caixin that during Lai’s tenure, there was an unspoken list of different prices that people could pay to get jobs at Huarong or its subsidiaries.//The original Chinese version 金融贪腐第一案赖小民 还有3亿存款在谁账上 

Child victims of lead poisoning to receive up to $13,000 in landmark settlement - Global Times The case first came to light across the nation due to a 2012 report on China Central Television. In December 2014, 53 accusers brought the case to a local people's court. After four years of struggle, in September, the final seven victims received compensation, from 40,000 yuan ($5,782) to 90,000 yuan, Procuratorial Daily, a newspaper under the Supreme People's Procuratorate, reported. The attorney of the case told the Procuratorial Daily that the process was very difficult. However, this case is the first one involving children being poisoned by lead that completed the whole legal process.

人民法院报 - 惩处“篡改国歌”恶行,也要警示打赏者 People's Court Newspaper says not only should those who sing the national anthem disrespectfully be punished, people who reward them should also be warned

Foreign and Military Affairs

Beijing warned to prepare for more US ‘provocations’ in South China Sea | South China Morning Post: China has been warned it must do more to lure neighbouring countries away from the US orbit, according to a report that predicted the US would continue “acts of provocation” in the South China Sea. The analysis, by a think tank affiliated to the State Council, the country’s cabinet, said the Trump administration would seek to demonstrate US power and resolve because every time China makes an economic, political or security advance in the disputed waters it would be seen as a challenge to the current US-led order.The research noted the US was expanding its cooperation with regional allies such as Australia and Japan and predicted a “long-term struggle” to win the support of Southeast Asian countries...// Comment: This is something Beijing is worried about, strengthening alliances may be the best leverage the US has with China in the region, though it is not clear President Trump gets that...

Defusing the South China Sea Disputes | Center for Strategic and International Studies: The CSIS Expert Working Group on the South China Sea brings together prominent experts on maritime law, international relations, and the marine environment from China, Southeast Asia, and beyond. The members seek consensus on realistic, actionable steps that claimants and interested parties could take to boost cooperation and manage tensions at sea. The group meets regularly to discuss issues that it considers necessary for the successful management of the South China Sea disputes and produces blueprints for a path forward on each.

China urges U.S. to stop stirring up troubles on South China Sea issue - Xinhua The remarks were made by Foreign Ministry spokesperson Lu Kang at a regular press briefing Tuesday, when responding to a query about the U.S. allegations that China is "militarizing" the South China Sea, and that a Chinese naval vessel carried out "reckless harassment" toward a U.S. vessel conducting the so-called "freedom of navigation operations" in the South China Sea recently.

China to unveil newest long-range strategic bomber during military parade in 2019 – Defence Blog  Chinese media has announced on 15 October that the newest long-range strategic bomber will unveil during a parade as part of the 70th anniversary celebrations of the People’s Liberation Army Air Force (PLAAF) in 2019. According to the news reports, China to unveil its new long-range strategic bomber at the large-scale air force military parade to mark the 70th anniversary of the founding of the PLAAF. However, there’s no official statement or confirmed from the Chinese government or military.

China honors five outstanding workers - Xinhua Hong Jiaguang is a technician with AECC Shenyang Liming Aero-Engine Co., Ltd. After more than five years of research and 1,500 tests, Hong and his team developed a precision grinding technique for aero-engine blades, which played a key role in China's development of aviation engines....Gao Fenglin, a senior technician with a rocket manufacturer under the China Aerospace Science and Technology Corporation, spent more than 30 years researching and developing welding techniques for rocket engine nozzles...For Pan Yuhua, a senior technician with China Electronics Technology Group, welding is like "embroidery." He can weld an electron plate as small as a coin over 1,000 times with an equal degree of precision, providing support for China satellite's research and development

Israeli Worries About Chinese Investment Spark Calls For Closer Scrutiny « Breaking Defense “Surprisingly, we don’t have a body that supervises operations of Chinese companies in Israel and that is very worrying. I hope that this will changed,” a senior member of the Israeli Knesset’s Committee for Foreign Affairs and Security told Breaking Defense on condition of anonymity. “This is a very sensitive issue and it was discussed recently in the committee.”...The issue of creating such a body for Israel may well be addressed when Chinese Vice President Wang Qishan begins a three-day visit here on Oct. 22.

China positions submarine and rescue vehicle in Indian Ocean - India Today This is the eighth such deployment of a PLAN (People's Liberation Army Navy) submarine in the Indian Ocean for what China calls anti-piracy patrols and the first since the 72-day standoff between Indian and Chinese troops in Doklam called off in August last year.

Kenyans Say Chinese Investment Brings Racism and Discrimination - The New York Times Humiliated and outraged, Mr. Ochieng’ decided to record one of his boss’s rants, catching him declaring that Kenyans were “like a monkey people.” After his cellphone video circulated widely last month, the Kenyan authorities swiftly deported the boss back to China. Instead of a tidy resolution, however, the episode has resonated with a growing anxiety in Kenya and set off a broader debate. As the country embraces China’s expanding presence in the region, many Kenyans wonder whether the nation has unwittingly welcomed an influx of powerful foreigners who are shaping the country’s future — while also bringing racist attitudes with them.

Racist attacks on Yongbei Tang disgusting, but criticism of Chinese connections stand - Mornings - ABC Radio Greens Leader Cassy O'Connor says racist attacks on Hobart [Australia] City Council candidate Yongbei Tang are "disgusting" and "regrettable", but she stands by her call that the candidate has connections with the Communist government in China. Ms O'Connor says the debate must be focussed on the Chinese government. Yongbei Tang has had her election posters in New Town defaced with racist slogans. The Greens Leader has also questioned whether Health Minister Michael Ferguson has too many portfolios, meaning he can't invest the time he should into health.

Chinese bishops at Vatican meeting invite pope to make landmark visit | Reuters Two Catholic bishops from China who for the first time were allowed by the Beijing government to attend a Vatican meeting have invited Pope Francis to visit their country, a Catholic newspaper said on Tuesday.

China says more projects planned under CPEC - Times of India China said on Tuesday there will be more projects planned under the $60 billion China-Pakistan Economic Corridor amid the concern over piling up of debt by Pakistan prompting it to approach the IMF for a bailout package.

Japan raises concerns over Pacific's debt to China - Sydney Morning Herald Japan's foreign minister has raised concerns  about the high levels of debt accrued by some Pacific Island nations and said his country wants to help resolve the problem. Foreign Minister Taro Kono made the comments on Monday while visiting New Zealand, where he met  his counterpart Winston Peters.

China, Netherlands call for free trade against protectionism - People's Daily Online China and the Netherlands on Monday appealed for global efforts to promote free trade and safeguard multilateralism in order to tackle the common challenges confronting the world. In a joint press conference with Dutch Prime Minister Mark Rutte in The Hague, visiting Chinese Premier Li Keqiang said that the two countries will cement consensus and work together with all sides to boost free trade and further improve the multilateral trading system against the backdrop of growing uncertainties. "Free trade is not a rejection of fair trade," Li said. "Without free trade, there is no fair trade; while without fair trade, free trade will not gain sustainable development

Hong Kong, Macao

People’s Daily (Overseas) on Mallet Case | China Media Project Over the weekend we had another quasi-official Chinese voice commenting on the Victor Mallet visa case in Hong Kong, in the form of a page-four piece in the overseas edition of the People’s Daily. We say quasi-official because the overseas edition is more peripheral relative to such central Party media as Xinhua News Agency and the flagship People’s Daily newspaper, both of which might be considered more closely reflective of the leadership’s position...The following piece, published on Saturday, offers a brief “background” on the Mallet case, and then includes a series of comments from pro-Beijing Hong Kong politicians and media, mostly emphasizing issues of national sovereignty and national security.

Senior CPC official meets with HK media delegation - Xinhua Huang Kunming, head of the Publicity Department of the Communist Party of China (CPC) Central Committee, met with a Hong Kong media delegation on Tuesday...He also urged Hong Kong's press circles to better report on the opportunities brought by the nation's development and create a benign atmosphere for deepening communication and cooperation between the mainland and Hong Kong, and promoting Hong Kong's integration into the overall national development.

Tech And Media

Xiaomi Is Reportedly Trying to Shift Staff Out of Beijing | Yicai Global The for-now Beijing-based firm is prepared to offer the same salary to workers who move to Wuhan by the end of March, provide a CNY30,000 (USD4,330) relocation bonus and help staff buy a home in their new town without the burden of local purchase restrictions, according to an internal document which has been doing the rounds online.  //  Lei Jun is from Hubei, went to Wuhan University, lots of chip and other technical research institutes and companies in Wuhan, makes a lot of sense

Apple apologizes for hacked Apple IDs in China, says account details were phished - 9to5Mac Apple has apologized following a recent spate of account hacks in China. The company said ‘we are deeply apologetic about the inconvenience caused to our customers by these phishing scams’, which it said affected a ‘small number’ of user accounts.

Faraday Future employees in China say they did not receive salaries · TechNode  More than 60 Chinese employees of electric car maker Faraday Future say they have not received salaries this month and they are blaming their new boss Evergrande. Faraday Future (FF) staff in China had expected their salaries from August 20th to September 21st to be paid out on October 15th. According to an FF employee quoted by Tencent News, on the evening of the 15th, some workers inquired about their salaries in an online chat group of 500 Chinese FF workers. Evergrande Faraday executives did not reply. Half an hour later the company employee group was disbanded.

TikTok’s Growing Pains In The West: Attack of the Memes TikTok has been leveraging user-generated content from the platform to run programmatic ads across markets to drive installs. One thing they’ve done right: people remember them. They’ve made such an impression, internet users are creating all sorts of content that lampoons them now.

iFlytek Scales Down R&D Center Located in Endangered Alligator Reserve | Yicai Global iFlytek has pleaded ignorance after local authorities in China’s eastern Anhui province found that an affiliate research and development center of the artificial intelligence unicorn encroached on a nature reserve for the critically endangered Chinese alligator. The company did not realize that its affiliate Guantang Technologic Island R&D center was situated in the protected area, the Hefei-based firm said through its official WeChat account, adding that it had already shut down operations at the location.

Foxconn Partners Jinan Authorities to Set Up USD546 Million Chip Fund | Yicai Global Foxconn Technology Group, the world’s biggest contract electronics maker, has agreed to set up a CNY3.75 billion (USD546 million) investment fund with the municipal government of Jinan in order to bolster its development in the semiconductor sector. Most of the money will go toward Foxconn’s main chip project after the Taiwanese firm brings in one major semiconductor maker and five integrated circuit designers to Jinan, local news outlet Qilu Evening News reported on Sept. 28. It did not disclose how much each party will contribute to the fund.

Society, Art, Sports, Culture And History

Spy Camera Discovery Creates Outrage at Apartment Leasing Specialist - Caijing An unnamed couple in Beijing’s Chaoyang district discovered a suspicious-looking hole in a bedroom power socket across from their bed in September, according to a post published Sunday on Youyouluming, a blog reporting on social issues set up by a former reporter of China’s official Xinhua news agency. They called police, who disassembled the socket to find a hidden video camera. Police are still investigating the case, according to the post, which gave no indication on possible sources of the hidden camera.

Energy, Environment, Science And Health

More protection given to aquatic life in Yangtze River - China is to enhance the protection of aquatic life in the Yangtze River region, according to a guideline released by the State Council on Oct 15. The goal is to make fishing off-limits throughout the year, improve the construction and oversight of the conservation areas for aquatic life and curb the trend of a worsening ecological environment and decreasing diversity of aquatic life by 2020. By 2035, the ecological environment will be greatly improved, with its aquatic resources increased.国务院办公厅印发《关于加强长江水生生物保护工作的意见》