No US midterm relief for China tariffs; Economic Iron Curtain and Hank Paulson's US-China cri de cœur; Xi inspects Shanghai; Wuzhen Internet conference; China has a new anti-ship missile
The Chinese side may once have had a fantasy that the midterm elections would force President Trump to back down but Xi Jinping and his team will be disappointed by the outcome of those elections. There is little to nothing in the results that would lead President Trump to change his approach to prosecuting his trade war with China, and in fact he may see reasons to redouble his efforts.
Xi Jinping included an inspection tour of Shanghai on his visit to open the import expo. The propaganda rollout of his tour began in earnest Wednesday evening and serves as a reminder of the primacy of the Party, in case anyone had gotten confused amidst all the promises about reform and reassurances to private businesses.
Today I want to highlight Hank Paulson’s speech at the Bloomberg New Economy Forum. It is an excellent speech, and a cri de cœur from one of America’s most experienced and connected practitioners of US-China relations. Yes I know some of you may think he is part of the problem but his speech is important regardless.
Paulson’s frustration with Beijing and his obvious fear that the US and China are nearing the edge of the abyss are striking. He does not offer real concrete solutions, probably because there are no obvious, palatable ones until both sides fully grasp the risks from decoupling, or what Paulson calls the “Economic Iron Curtain”?
Some of the highlights from Remarks by Henry M. Paulson, Jr., on the United States and China at a Crossroads:
The messages from Beijing over the last five years sound this way to American ears:
First, the Communist Party commands all.
That is why, for example, Party Committees, not corporate boards, are being strengthened within both public and private firms as a tool of external supervision.
Second, private businesses must support the strategic goals of the state, not necessarily market or commercial goals.
That is why the emphasis in China’s state-owned enterprise “reforms” has been on mixed ownership — pooling private with state capital to buttress and strengthen the state-owned firms.
Third, foreign firms are “not needed” in many areas and must act in ways that bolster China’s indigenization of technology, knowledge, and business processes.
And this third apparent message is absolutely central to the current intensification of US-China tensions.
It is not just that foreign technologies are being transferred and digested.
It is that they are being reworked so that foreign technologies become Chinese technologies through an indigenization process that many of the multinational CEOs I talk to believe is grossly unfair to the innovators and dreamers at the heart of their companies…
If all this persists—across all four baskets of goods, capital, technology, and people—I fear that big parts of the global economy will ultimately be closed off to the free flow of investment and trade.
And that is why I now see the prospect of an Economic Iron Curtain—one that throws up new walls on each side and unmakes the global economy, as we have known it…
But here’s the problem for those in my country who advocate a US-China “divorce”:
“Decoupling” is easier when you’re actually a couple.
But the United States and China are not, in fact, a couple. There are more than two players here. And the rest of Asia, in particular, gets a vote.
So the US can try to divorce China by restricting flows of goods, capital, technology, and people. But what if others, especially in Asia don’t want to follow suit?
Read the whole speech here.
Two things I am hearing may have some bearing on any chance, however remote, for a near-term, significant improvement in China’s reform trajectory and implementation. These two things are not confirmed but I have now heard them from several sources who are usually reliable. First, the 4th Plenum will be held at the end of November, before the G20 Trump-Xi meeting. Second, Xi is planning a big speech in December to commemorate the 40th anniversary of Reform & Opening. Another speech from Xi though is probably not what China or the world needs…
I am increasingly worried about US-China relations and what may happen inside China. The pressures and grumbling in the PRC seem to be at a level we have not seen in a long time, and one reasonably high probability response to that is an even sharper turn towards repression and nationalism. The alternative, Xi backing off or being forced internally to back off, is possible, and certainly something many are hoping for, but seems mechanically quite difficult given how Xi has control of the sources of hard power in the security services and the PLA and has neutered all the elders who may have once served as a check on a General Secretary.
But maybe the December speech will bring a quick end to winter and an early start to a new spring. Bets anyone?
Thanks for reading.
The Essential Eight
1. Xi inspects Shanghai
Xi's first stop was in Lujiazui at the Shanghai Tower--the world's second tallest building. The CCTV Evening News report began with Xi's comments about the importance of Communist Party construction and grassroots Party work to Party members at the Lujiazui Financial City Party Construction Service Center on the 22nd floor of the building...Party and politics are in command, ahead of everything else Xi wanted to highlight during the tour, including innovation and support for private enterprise.
Xi stresses furthering reform and opening-up, elevating city core competitiveness during Shanghai inspection - Xinhua:
On Tuesday morning, Xi arrived at a Party service center on the 22nd floor of the tower, where he talked with Party members working at the Lujiazui Finance and Trade Zone.
He said the goal of setting up Party organizations in various kinds of enterprises is to provide Party members with services while uniting them to abide by the law as well as company regulations...
Afterwards, Xi visited a community center in Shanghai's Hongkou district and inspected the center's service counters, a nursery for the elderly and a workstation for Party building...
When visiting Yangshan Port, Xi said the construction and operation of the port have both created better conditions for Shanghai to open wider to the outside world and accelerate the construction of an international shipping center and a pilot free trade zone.
Xi also visited the Zhangjiang science city, where he stressed that the impact of science and technology on a country's future and the people's wellbeing has never been as profound as today.
Xi urged efforts to strengthen basic research and application, pay attention to the role played by enterprises, enhance intellectual property protection, value innovative talent, and foster and strengthen new industries and innovation-driven enterprises...
Xi stressed that China is still in a period of historic opportunity, with a bright future but tough challenges ahead. As long as China maintains its strategic resolve and focuses its attention on its own things, the country is set to meet its targets, he said.
Shanghai should develop itself while serving the whole country as it occupies an important position in the overall work of the Party and the state, Xi said...
Party building was also highlighted by Xi, who called for imposing strict governance over the CPC, prioritizing political performance, enhancing the study of the Thought on Socialism with Chinese Characteristics for a New Era, nurturing and inviting competent professionals, strengthening primary-level party organizations and emphasizing ideological work.
The top 21 minutes of the Wednesday CCTV Evening News was on the inspection tour - 习近平在上海考察时强调 坚定改革开放再出发信心和决心 加快提升城市能级和核心竞争力
US-China trade war set to make big winners out of Asean countries | South China Morning Post:
Asean’s trade outlook is the most bullish in the world because its member states will be the big winners in the US-China trade war, according to top HSBC bankers at an economic forum in Singapore.
Attendees at the Bloomberg New Economy Forum in Singapore heard that the relocation of production out of China to lower-cost countries in the Association of Southeast Asian Nations had been taking place for a number years.
But the US-China trade war had prompted a sharp acceleration of that trend to avoid US import tariffs on Chinese goods.
Yu Yongding: Trump’s Trade War May End Up Helping China Rebalance Economy - Caixin Global:
China needs to stop accumulating foreign-exchange reserves. If it is to amass foreign assets, they should be more profitable than U.S. Treasury bills. In any case, China should also reduce costly foreign liabilities. To that end, it must balance its imports and exports while leveling the playing field for foreign corporations operating within its market by eliminating the incentives for local governments to compete for FDI regardless of cost, or to engage in other forms of undue intervention.
Last but not least, China certainly will make a bigger effort in indigenous innovation and creation to reduce its dependence on foreign technology, which has never been easy to obtain and will be increasingly difficult to secure.
These objectives are not new to the Chinese authorities. But, thanks to Trump’s trade war, policymakers are now pursuing them with a new sense of urgency. In that sense, the trade war may end up being a blessing in disguise for China...
Trump claims that the “trade war” with China “was lost many years ago by the foolish, or incompetent, people who represented the U.S.” But it is he who most likely will be remembered as the fool — a bungling, capricious leader whose attacks on China only made that economy stronger, at least partly at America’s expense.
An interview with Paulson - Once an Optimist on U.S.-China Relations, Henry Paulson Delivers a Sobering Message - WSJ $$:
“Jiang Zemin talked about the party being a big tent,” Mr. Paulson said in an interview last week. “His view was, ’We need to bring the elites into the party’: business leaders, academics, and others. Xi Jinping views the party itself as the elite, and the party, not the bureaucracy, would be the organization through which he governed.”..
“There’s this revisionist myth that some of us who worked to engage China thought it would become a Jeffersonian democracy, or espouse a liberal Western order,” Mr. Paulson said in his interview. “We never thought that. We always knew the Communist Party would play an important, dominant role.“
The problem now, he says, is that some in the U.S. believe that a clash is inevitable unless China liberalizes politically: “If we make this about their political system, we are really going to be bumping up against a hard place because we are not the ones who are going to change their political system.”
Ex-diplomat: U.S. must ‘figure out a way to work with China’：The Asahi Shimbun:
Susan Thornton was acting assistant secretary of state for East Asian and Pacific Affairs when she resigned in July in the face of pressure from the Trump administration, which considered her too accommodating on China...
Referring to pressure from the Trump administration, Thornton said: "They have a political reason for bashing China. I'm not a politician."..
She added that if the United States "can't figure out a way to work with China and deal with them, we're in for a very difficult future.”
Beyond the midterms: after the smoke clears, China hawks will remain the rule in Washington | South China Morning Post:
The anti-China sentiment has been fuelled in part by Trump's rhetoric against the Obama administration, said [Chris] Johnson, the China specialist with CSIS and a former intelligence liaison to then-Secretary of State Hillary Clinton.
Recalling the China policies of previous administrations, he said that he and some other former officials shared “a sense ... that they sort of fell asleep at the switch”.
As a result, he said, some Democrats felt they had to become publicly hawkish on US-China dealings.
“There are many Democrats now in foreign policy, national security and economics who have become concerned that their reputation has become that of a schlub or a chump.”
“So the only way to respond to that is to double down and look a little fiercer,” Johnson added. “When you interact with these individuals, they sound a lot more like they are the Trump administration doppelgängers.”
Even Lobsters Can’t Escape Trump’s Trade War - Bloomberg:
Since the 1990s, Barlow has built his company, Island Seafood, into a $50 million-a-year business by shipping live lobsters around the world. He exported one out of every five to China until recently. A lobster plucked from a trap in Maine’s frigid waters—home to North America’s richest fishery—could surface on a dinner plate in Beijing two days later...
“This guy [Trump] has handed Canada the lobster industry—a $1.5 billion industry,” Barlow says. “He’s just handed it to Trudeau: ‘Here you go, boys.’ ”..
Barlow and others in Maine see a more worrying trend at work, one that echoes the sort of rapacious acquisitions and disruptions that have come in other resource-driven industries that China has targeted elsewhere. “They’re going to wrap up the logistics [and] grab pricing power,” Barlow says. While he credits Trump for calling attention to China’s economic practices, he doesn’t like the president’s tactics and worries that he’s actually helping to accelerate Chinese control of his industry. “He’s not hurting [China],” Barlow says. “They’re laughing at him.”
3. Zhuhai Air Show
CASIC unveils new anti-ship ballistic missile, providing greater deterrence against aircraft carrier attacks - Global Times:
Codenamed CM-401, the weapon system is a new type of hypersonic ballistic anti-ship missile that can reach as fast as Mach 6, according to a description the company released at the air show.
It can be launched into a near-space trajectory and is capable of hypersonic maneuverable flight throughout the course, the description said.
Upon reaching above its target, the CM-401 can conduct a terminal diving attack at extremely high velocity, it said.
The missile can deliver rapid and precise strikes on medium to large vessels, vessel formations and port targets, the description said.
China Reveals Short-Range Anti-Ship Ballistic Missile Designed To Dodge Enemy Defenses - The Drive:
This maneuvering capability is also what allows the warhead to engage large, relatively slow-moving targets, such as aircraft carriers and other major surface combatant and logistics ships. A cutaway of the mockup CM-401 missile that CASIC showed off at Zhuhai shows what appears to be a phased array radar in the nose so that the warhead can actively home in on those types of targets during its terminal phase.
China’s new J-20 stealth fighter engine a no-show at Zhuhai air show after it fails reliability tests | South China Morning Post:
It was widely expected that the performance of the WS-15 Emei engine for the J-20 fighter, known as the Powerful Dragon, would be one of the highlights of the six-day air show in Zhuhai in the southern province of Guangdong, but there was no sign of it when the show opened on Tuesday.
“The performance of the engine is still very unstable, and engineers have failed to find the key reason for the problems, even though its vector power is good enough now,” a military insider said.
Insiders said the WS-15 engine, which has been in development for several years, failed to meet overall reliability targets in long-standing trial runs over the course of hundreds of hours.
J-20, J10-B jets dazzle spectators at China Airshow - People's Daily Online:
Following the J-20s demonstration flight, the fighter's chief designer, Yang Wei, said the jet's superior "flight performance is quite obvious." He made the remarks at a press conference sponsored by his employer, the Aviation Industry Corporation of China (AVIC), the manufacturer of the J-20.
Yang said the full capability of the stealth fighters will only be known after they engage in actual combat.
4. Wuzhen Internet Conference losing its allure
China's Xi calls for global cooperation to create 'fairer' internet | Reuters:
China’s President Xi Jinping called on Wednesday for greater global cooperation in developing the internet and make it more “fair and equitable”, as Beijing seeks to bolster its global role in shaping the web.
The speech was read out on Xi’s behalf at China’s main internet conference in the northern city of Wuzhen, a tightly-controlled event organized by the cyber ministry that oversees the domestic internet and censors online content.
China’s flagship tech event marked by Silicon Valley absences | Financial Times $$:
Steve Mollenkopf, chief executive of Qualcomm, the US chipmaker that relies heavily on the Chinese market, was the only foreign executive to speak at the opening ceremony, where he praised his hosts for carrying “an important message” and echoed President Xi Jinping’s idea of a “shared future in cyber space”...
In a change from previous years, the attendee list for the two-day event was only published at the start of the conference, with civil servants suggesting that some high-profile attendees had not confirmed their attendance.
China reasserts its right to manage the internet its own way | South China Morning Post:
This year’s internet conference, which also showcases China’s use of the internet to serve economic growth and life improvement, was the first not to be attended by any of the Communist Party’s supreme Politburo Standing Committee – an apparent downgrading of the event...
Since 2014’s first internet conference, a member of the seven-member committee had always been present to give the keynote speech in a symbolic show of support for the event and its importance.
Premier Li Keqiang attended in 2014, followed by Xi a year later. In 2016, the then ideology tsar Liu Yunshan was there, with Xi sending a video message. And last year, Liu’s successor as ideology guru, Wang Huning, read out a letter from Xi.
China's Grand Internet Vision Is Starting to Ring Hollow - Bloomberg:
Amid a trade war between the U.S. and China, American technology giants -- no longer courted with the assiduousness of Lu’s era and struggling with issues of their own -- were largely absent. While Google sent its CEO last year, the search giant was represented by regional head Karim Temsamani and the company said he wouldn’t be speaking...
The highest-profile government figure on display Wednesday was former Pakistani Prime Minister Shaukat Aziz. Staff outnumbered delegates and media.
5. North Korean propaganda love for Xi
What Do North Korean Gymnastics Say About Kim Jong-un’s Politics? - The New York Times:
This year represented the first time that a rendering of President Xi Jinping of China was featured at the games. His portrait appeared on the human pixel board at the show’s finale on Sunday, when a delegation of well-known Chinese singers, actors and other artists were in the audience, according to NK News, an independent news site covering North Korea.
Notably, Mr. Xi was depicted inside a gold-framed circle surrounded by red — the same style previously used to depict Mr. Kim’s father, Kim Jong-il, and grandfather, Kim Il-sung.
“Given how inimitably serious the North Koreans are about their two prior leaders, framing Xi Jinping that way can only be read as a signal of extreme respect,” Mr. Abrahamian said in an email. “It is nearly reverent.”
Mr. Abrahamian said he read the gesture as a dramatic step in North Korea’s “assiduous fence-mending campaign” toward China — five years after relations between the neighboring countries were strained because of North Korea’s 2013 nuclear test and its purge of Jang Song-thaek, Kim Jong-un’s uncle, who had wielded significant influence over North Korean coal exports to China.
This will make this week's US-China Diplomatic and Security Dialogue more interesting--Pompeo’s Nuclear Talks With North Korean Officials Are Canceled - WSJ $$:
North Korea and the U.S. had locked horns in recent weeks over the pace of the North’s progress on nuclear disarmament and Pyongyang’s demands for the easing of U.S.-led sanctions, a step Washington has refused to take. While neither side has appeared ready to abandon dialogue, their negotiating positions have hardened in recent weeks, dimming hopes of compromise.
Is North Korea heading into the first winter of "maximum pressure" sanctions? No wonder Kim seems so eager to get the sanctions loosened, otherwise could be a very brutal few months.
6. Pakistan says China has bailed it out
Pakistan's immediate balance of payments crisis is over: finance minister - DAWN.COM:
"The long-term solution to the balance of payments crisis is to increase our exports, and to do that we should have enough income so that we do not need to borrow," Umar, who was a part of the Prime Minister Imran Khan-led delegation that visited China recently, explained during a press conference today. "In this regard, we have received a commitment from the highest level.
"Regarding the doubling of our exports, we are not talking long-term. We have [this target] for the ongoing year. We have also discussed short-term reliefs. A decision in principle has been taken, but to discuss its modalities our contingent is going to Beijing on November 9.
Pakistan Finance Crisis Over With Chinese Backing, Finance Minister Says-Caixin:
Lijin Zhao, China’s deputy chief of mission to Pakistan, appeared to confirm the finance minister’s words with a tweet on Wednesday, following the departure of Imran Khan, Pakistan’s recently elected cricket star prime minister.
“All rumors were put to rest after PM Imran Khan visited China,” Zhao wrote. He added that China had “agreed to help Pakistan,” and that a package was under discussion. He said Pakistan had agreed to further support two of China’s key initiatives in the country — a China-Pakistan Economic Corridor (CPEC) involving billions of dollars in infrastructure investment, and the upgrading of a free trade agreement between the two sides.
Begging in Beijing? Pakistan sacks state TV chief after broadcast gaffe - Reuters:
Pakistan has removed the acting chief of state-run television after a caption read "Begging"instead of "Beijing" during a broadcast of Prime Minister Imran Khan's visit to China, which has promised economic aid to the impoverished South Asian country.
Khan was in Beijing seeking financial aid to help end a spiralling balance of payments crisis after securing US$6 billion in support from Saudi Arabia and before Pakistan sat down to talks with the International Monetary Fund.
Is one benefit of bailing out Pakistan, beyond protecting China's own investments and loans, that Pakistan will not dare criticize China about what is going on in Xinjiang?
7. United Nations Universal Periodic Review
At U.N., China Defends Mass Detention of Uighur Muslims - The New York Times:
“China is here to seek cooperation,” said its vice foreign minister, Le Yucheng, at the opening of a review by the United Nations Human Rights Council. He pointed to China’s achievements in lifting millions of people from poverty, largely skirting its treatment of ethnic minorities...
Criticism of China on Tuesday came almost exclusively from Western governments, while those from Africa and the Middle East praised China’s economic progress — a split that some analysts said would give China some satisfaction.
“China is trying to develop a response that can at least keep allies at the U.N. comfortable or deflect international criticism,” James Leibold, a China expert at La Trobe University in Australia. “What they probably fear the most is if this was to become one which Muslim countries start to think this is unacceptable. That would be far more damaging.”
China hails human rights progress amid calls to close detention camps | UN News:
On the issue of religious and personal expression in Tibet, Member States heard that the autonomous region and its 46,000 nuns and monks experienced no restrictions, while the autonomous region also had television and radio in Tibetan and Mandarin.
Rejecting what it described as attempts to politicize human rights and question its territorial integrity, Mr. Le insisted that China’s achievements showed there is “more than just one path towards modernization and every country may choose its own path of development and model of human rights protection in the context of its national circumstances and its people’s needs”.
Missing NGO Documents at China U.N. Human Rights Review Raise Eyebrows - RFA:
Human rights experts at the United Nations began examining the ruling Chinese Communist Party's rights record on Tuesday, amid protests over "disappeared" submissions from civic groups that the U.N. body later restored with an apology.
The 31st session of the United Nations Universal Periodic Review (UPR) in Geneva began its assessment of China's human rights record amid a global outcry over the mass incarceration of an estimated one million Uyghurs and other minority ethnic Muslims in "re-education camps" in its Xinjiang Uyghur Autonomous Region
Australia has called on China to end arbitrary detention of Uighurs, human rights groups say - The Australian:
Australia is “alarmed” by China’s policies in Xinjiang and has called on China to end the arbitrary detention of Uighurs in the region the night before Foreign Minister Marise Payne’s visit to Beijing.
The comments are the strongest yet from the government and were delivered by Australia’s UN representatives at the Universal Periodic Review of China’s human rights record in Geneva overnight.
Senator Payne is visiting China this week after a major diplomatic brawl between the two countries and the UN intervention will be noticed in Beijing.
Xinjiang to relocate 160,000 farmers, herders in effort to tackle poverty - Global Times:
About 160,000 farmers and herders in the poverty-stricken areas of northwest China's Xinjiang Uygur Autonomous Region will be relocated to ensure they live better lives in urban and tourist areas by 2019, the local government said.
A harsh ecological environment and frequent geological disasters have been hindering the development of the local economy. Relocation has thus been an important measure in Xinjiang's fight against poverty.
8. Maldives' China debt mess
Any idea how much in bribes the previous President took? Corruption and influence peddling go hand and hand with the BRI in many countries...
How an island nation’s new leaders are trying to unravel a web of secret deals with China - Los Angeles Times:
Fresh off his surprise election victory in the Maldives, President-elect Ibrahim Mohamed Solih had a warning for his economic team. The island nation had racked up huge debts to China during an unchecked, five-year building spree by the autocrat he had just defeated.
“Be prepared for it to be worse than we think,” one advisor recalled Solih saying.
He was right. Soon after the Sept. 23 election, Solih met the Chinese ambassador and learned that the Maldives owed the Chinese government not $1.5 billion, as had been widely estimated, but nearly $3 billion.
That’s more revenue than the Maldivian government raises in two years — a staggering figure that makes the diffuse island chain a prime example of how Chinese loans have swamped smaller economies.
Business, Economy, Finance And Trade
China's reserves fall, suggesting Beijing propping up yuan - AP: The reserves, the world’s largest, declined by about $34 billion to just over $3 trillion, according to central bank data released Wednesday. The bank gave no indication how much of that was due to selling dollars to support the yuan. But Chinese authorities have promised to avoid a “competitive devaluation” to help exporters who face U.S. tariff hikes in a fight over Beijing’s technology policy... The central bank “appears to have intervened directly in the foreign exchange market again in October,” said Chang Liu of Capital Economics in a report. “But its intervention remains small in scale and seems calibrated to slow the renminbi’s fall rather than stop it.”
China's ties with Taiwan chip firms under scrutiny as U.S. trade war heats up | Reuters Among the most valuable cross-strait partnerships for China would be ones that strengthen its foundry services and memory chip production. Those two sectors require much-needed help from overseas firms due to the complexity of the manufacturing technologies and intense capital requirements, analysts have said...Taiwan’s government views the island’s chipmakers’ cooperation with China cautiously and has implemented policies to ensure Taiwan’s most advanced technology is not transferred.
China’s Expensive Gamble on New-Energy Vehicles | Center for Strategic and International Studies By our calculations, between 2009 and 2017 Chinese national and local authorities have invested over RMB 390 billion ($58.3 billion) on the industry. The lion’s share has gone toward buyer subsidies to the tune of RMB 245 billion ($36.6 billion), but they have also poured large amounts of funding into research and development, government procurement of vehicles, and the charging infrastructure. Moreover, China has cut sales taxes for NEV buyers... All of these problems—lack of profits and threatened supply chains—might be justified should the move to NEVs lead to cleaner air. But in China over 70 percent of electricity still comes from fossil fuels, including coal, meaning that NEV adoption is not reducing air pollution but relocating it. And should the world one day find that hydrogen fuel cells are more efficient and safer for powering transportation than lithium-ion batteries, China may rue being locked into an inferior technology.
Missing Link: Corporate Governance in China's State Sector | Asia Society On November 5, 2018, Asia Society Northern California and Rhodium Group will launch their latest report about state-owned enterprises in China. The new report “Missing Link: Corporate Governance in China’s State Sector (PDF)” applies original data and new sources to illuminate how China’s SOEs are governed. It examines state firms in the context of China’s economic and political system, summarizes the past and present of SOE corporate governance, and analyzes key players in China’s government and at the company level—boards of directors, Party committees, and top executives. The report outlines concrete steps forward to advance reform and identifies the obstacles that these efforts face.
China Seeks Foreign and Private Help in SOE Reform Xiao Yaqing, director of the government’s State-owned Asset Supervision and Administration Commission (SASAC), held out the olive branch at a forum on the sidelines of the China International Import Expo (CIIE) in Shanghai. SASAC directly oversees the country’s nearly 100 centrally administered state-owned enterprises (SOEs), which had combined assets of 76.2 trillion yuan ($11 trillion) at the end of 2017. China welcomes all types of Chinese and foreign companies to make equity investments and set up strategic partnerships with central SOEs to promote corporate restructuring, industrial consolidation, technological innovation and industrial transformation, Xiao said.
Economy at Risk of Long-Term ‘Downward Spiral,’ State Researcher Says - Caixin The head of an influential state-backed think tank has forecast that China’s economic expansion may be entering a long-term “downward spiral” as all three engines of growth — investment, exports and consumption — slow down. The comments by Li Yang, head of the National Institution for Finance & Development (NIFD) and the former deputy head of the Chinese Academy of Social Sciences, come against the backdrop of increasing concern among the country’s top policymakers about the outlook for the world’s second-largest economy and the impact of the trade war with the U.S.
China’s IPO Drought Features 35 Exhausted Regulators - Bloomberg A company going public in China must not only fulfill a variety of financial criteria, but also demonstrate to the CSRC that it’s a viable business in a promising industry. In the U.S., the world’s best listing venue, firms just need to meet disclosure requirements, then the Securities and Exchange Commission lets the invisible hand decide if they’re any good. Spotting solid companies in China isn’t easy. To weed out part-time members of its listing committee who are too busy to bother, the CSRC recently proposed reducing the body to 35 members from the current 66, of whom one-third are part-timers.
China's Car Market May Contract This Year, Official Warns - Bloomberg China’s vehicle sales will come in under 30 million units this year and may even fall below the number in 2017, Wu Wei, a divisional director under China’s top economic planning body, said Wednesday. Companies shouldn’t expand production capacity blindly, and instead should focus more of their investments on research and product development, according to Wu.
Chinese Central Bank Highlights Limitations of Blockchain Technology for Financial Purposes - China Banking News The People’s Bank of China has just released a new working paper on the capabilities and limitations of blockchain technology for economic and financial purposes. The paper entitled “What Can Blockchain Do, What Can’t It Do?” (区块链能做什么、不能做什么) by Xu Zhong (徐忠) and Zou Chuanwei (邹传伟) seeks to “study block chain’s economic functions” as well as “categorise major blockchain applications according to how they use tokens and discuss relevant economic problems.” The paper concludes with a note of skepticism about the current potential of blockchain technology with respect to economic applications.
Regulator Takes Aim at Shady Share Suspensions - Caixin China wants to make it harder for its listed companies to take their shares off the market when the market turns against them. The China Securities Regulatory Commission (CSRC) announced late Tuesday that it will strengthen rules for share suspensions to curtail abuse of the practice.
Shanghai’s New Tech Board to Provide Clear Exit Channel for VCs, Insiders Say | Yicai Global China’s plans to establish a tech innovation board in Shanghai and bring in a differentiated listing policy for participants these firms will not only bring new economy players to the country’s A-share market but also provide a perfect exit channel for venture capital funds, insiders have said. The board for tech startups will bring a positive cycle for the primary market and a clear exit path for VCs and private equity, Cen Saiyin, vice-president of Cornerstone Capital, told Yicai Global.
Full Text: Joint Press Release of the Third "1+6" Roundtable - Xinhua 1. The global expansion remains strong, but growth plateaued and some downside risks have materialized. Overall, risks are increasingly skewed to the downside. We are concerned about a further escalation of trade tensions, and the spillover effects on vulnerable emerging markets from the gradual normalization of monetary policy in advanced economies. We are also closely monitoring possible impacts on employment from these economic developments. We call on countries to ensure strong macro policy frameworks, build policy buffers to absorb possible shocks, work together to de-escalate and resolve current trade tensions, and further pursue domestic reforms to strengthen economic fundamentals and financial resilience.
Xinhua-Yunnan (Pu'er) Coffee Price Index officially unveiled in Beijing The index aims to raise the brand influence as well as international visibility of the coffee produced in southwest China's Yunnan Province and provide the reference for government monitoring, scientific planting and trade decision.
Politics, Law And Ideology
王岐山出席2018年创新经济论坛开幕式并致辞_CCTV Wang Qishan's Bloomberg Forum speech gets 3 minutes on the Wednesday CCTV Evening News and made the front page of the Wednesday People's Daily
生前患忧郁症《人民日报》旗下杂志总编胡欣跳楼身亡 Hu Xin, former editor in chief of the "The Press 新闻战线" magazine under The People's Daily, jumped to her death from the People's Daily building. She was reportedly depressed. According to this report she was once the editor for the pseudonymous commentaries "Ren Lixuan" and "Ren Zhongping"// 官媒《人民日报》旗下的《新闻战线》杂志社原总编辑胡欣6日传出坠楼身亡，东方网记者求证报社相关人士，证实胡欣当天中午在报社36号楼跳楼自杀，其生前患有忧郁症。胡欣1952年出生，毕业于北京大学哲学系硕士， 1990年进入人民日报理论部工作，曾任《人民论坛》杂志社总编辑、理论部部务委员。2008年底，她调任人民日报旗下《新闻战线》杂志社总编辑，曾为官方笔名「任理轩」及任仲平的编辑。
China’s plenum riddle sheds light on Beijing’s polity | Financial Times - Charles Parton $$ It is difficult to explain the plenum silence. And that matters. Because if China is to become the world’s most powerful country, if what the party decides is going to affect you and me, let alone 1.4bn souls in China, then knowing what is going on is important, whether that is for investment decisions, markets, international relations, global values, or agricultural prices and the cost of your morning cornflakes. A superpower, whose politics are a black box even to its own people, is a destabilising power.
Disgraced Head of Major Financial Player Formally Arrested - Caixin An order has been issued for the arrest of Lai Xiaomin, the former boss of China Huarong Asset Management Co. Ltd., prosecutors announced Wednesday...That investigation has ended and the case has been transferred to prosecutors in China’s northern port city of Tianjin for review, the Supreme People’s Procuratorate said in a social media post on Wednesday. The No. 2 branch of the Tianjin People’s Procuratorate has issued an order to arrest Lai, a standard procedure before indictment, according to the statement.
Foreign and Military Affairs
Scott Morrison splashes cash in the Pacific as China fears loom - Sydney Morning Herald Prime Minister Scott Morrison will pledge $3 billion towards much-needed infrastructure in Pacific nations as part of a frank admission Australia has sometimes taken its neighbours for granted and amid concerns that China is building its influence on Australia’s doorstep. In what he badges a "step-up to the Pacific", Mr Morrison will on Thursday also announce the establishment of an Australian Defence Force mobile training team that can travel to Pacific nations to help them with skills including infantry fighting, peacekeeping and disaster response.
Tech And Media
TikTok and Baidu at the center of first ever hearing at Beijing’s Internet Court Are short video clips – some of them no longer than 15 seconds – protected under copyright laws? That’s the question at the center of the first-ever court case being heard at Beijing’s Internet Court, one of three in China dedicated to all kinds of disputes originating online.
SoftBank in Talks to Invest in Alibaba-Backed Bike Sharing Startup Hellobike — The Information $$ The talks are ongoing and the companies haven’t reached an agreement yet, the people said. It is unclear how big an investment would be and at what valuation. Hellobike, one of the biggest players in the bike-sharing sector, has previously raised funds from investors including Alibaba’s financial services affiliate Ant Financial and GGV Capital, among others. In its last fundraising earlier this year, Hellobike was valued at more than $2 billion.
Who is Kris Wu and why are Ariana Grande fans so pissed at him? - Inkstone The Canadian-Chinese singer, who is huge in Asia but lesserknown in the west, has been accused of using bots to boost the performance of his new album – knocking American pop stars including Grande and Lady Gaga off the top spots. Now iTunes appears to have removed his music from the charts entirely.
Xi Jinping Calls for ‘Healthy Development’ of AI (Translation) - New America More than a year after the Chinese government released the New Generation Artificial Intelligence Development Plan (AIDP), General Secretary Xi Jinping led a Politburo study session that emphasized the continued importance of artificial intelligence (AI) in official Chinese development and governance goals.
China's Tencent builds self-driving car team in Silicon Valley - Reuters “We are building a research team for our Auto-drive Team based in Palo Alto, CA,” the company said in job advertisements on LinkedIn. There are at least nine postings on LinkedIn for engineering positions in areas including motion planning, sensor fusion, vehicle intelligence and machine learning.
Society, Art, Sports, Culture And History
Du Runsheng’s Work on Rural Reforms Underpinned Early Market Economy - Caixin The following is the third installment in a five-part series about the economists behind China’s reform.--Rural reforms, or agricultural reforms, are an area that can’t be ignored in China’s four decades of economic reform. Many economists made convincing theoretical arguments for the rationality and legitimacy of rural reforms, thus helping eliminate political resistance. One such key figure is the late rural policy expert Du Runsheng, who in 1953 was appointed secretary general of the rural work department under the ruling Communist Party. However, he was criticized by then Party leader Mao Zedong, who had radically different views on rural reform, and was dismissed from his post in 1955. Du suggested reforms that were far more “capitalist” than Mao would accept — for example, that farmers should be allowed to freely exchange commodities and rent out land. His views even earned him a stint in a forced labor camp during the Cultural Revolution.
Not Mandarin – China Channel Less obvious than racial genocides, the cultural destruction underneath campaigns to promote Mandarin is nonetheless appalling. They lacerate communities on the mainland today, just as they did in Singapore and Taiwan before. Even now, the governments in all three share a belief that other Chineses are inherently backwards, obstacles for the nation to overcome. The most horrific examples of such thinking in practice are among the Inner Asian peoples at China’s edge, where Uyghur, Mongolian and Tibetan are targeted for destruction. However, I cannot forget what I’ve seen among the supposedly protected Han Chinese core: dongbeihua drawling grandmothers who never see their grandchild, lest the child imprint on their speech; parents who sleep only five hours a night to work that extra shift to pay for daycare in “the” Chinese language.
Podcast - Ep. 8: Civil Society and Civic Engagement in China – Bin Xu | Center for the Study of Contemporary China In this episode, Emory University sociologist Bin Xu discusses with Neysun Mahboubi the general landscape of civil society and civic engagement in China, through the particular lens of his widely celebrated new book on the Sichuan earthquake, "The Politics of Compassion: the Sichuan Earthquake and Civic Engagement in China,” published by Stanford University Press. The episode was recorded on February 22, 2018.
My Student Reported on Me! translation of a WeChat essay about how students reported on a teacher for a discussion on the contributions made to society by both rich and poor people