NPC work report; Period of historic opportunities; Huawei

The National People’s Congress is now in session. The annual work report from the Premier dominated day 1.

Watching Premier Li Keqiang give that annual work report to the NPC, and the official coverage of the day, is another reminder that in the Xi Era the Premier is a diminished official, almost more like a report reader now than an influential policymaker.

Some of the highlights of the report, with much more in the Essential Eight:

  • 2019 GDP target is 6-6.5%. A range gives some flexibility but it is still too bad there is even a target. Remember when people were hoping the target would go away in a sign of seriousness about reform?;

  • The targeted budget deficit is slightly larger than 2018’s at 2.8%, though Andrew Batson of Gavekal wrote on Twitter the actual cash budget deficit will be 4.3%:

  • 2 Trillion RMB in tax cuts are coming;

  • The report stressed employment, which will mean tough times for any firms trying to lay people off this year. But the emphasis on employment is now new, remember Wen Jiabao and “Bao Ba 保八”?

  • There were more encouraging words for private businesses and promises of better financing;

  • Another reiteration that no massive stimulus is forthcoming;

  • The defense budget will officially increase 7.5%.

Xi and his officials are clearly expecting a difficult year, but at first glance the work report seems like it reflects like a leadership that understands the challenges it faces and is trying to muddle through while avoiding the damaging stimulus free-for-all policies of years past.

I still don’t think Xi looks weakened, and in fact the four day conclave Xi convened in January to focus top cadres on the risks the Party faces likely had the useful effect of reminding all the participants that either they hang together or they will hang separately.

As I wrote last Wednesday:

All of you have no doubt seen some of the debate about whether or not the government has decided to stimulate the economy, especially in the wake of the January credit numbers. I do not think we will see anything like what we saw in 2008, but given the state of the economy, the risks the Party itself has articulated, and the especially sensitive year given the big anniversaries, I am more than comfortable betting that the Party will do whatever it needs to do to keep the economic risks this year minimized. That point may seem obvious but I am always surprised by how many economic analyses of China leave out the politics.

The politics are in command, and will be even more so this year.

Thanks for reading.

The Essential Eight

1. Premier's work report

The full work report - 2019年国务院政府工作报告(全文)|政府工作报告|国务院|改革开放_新浪新闻 

An official English summary, if you click through to the article each heading has its own brief description. It is a long list but it is useful to see what the propaganda organs want to highlight - Highlights of Chinese Premier's government work report - ECNS 

  • China to intensify efforts to tackle pollution, boost green development;

  • China to cut energy consumption per unit of GDP by 3 pct;

  • Stronger emphasis on green measures unveiled;

  • China to increase 2019 allocation on preventing, controlling air pollution by 25 pct;

  • China to cut SO2, nitrogen oxide emissions by 3 pct;

  • China aims for six to 6.5 percent GDP growth in 2019;

  • Review of China’s economy in 2018: Progress toward decisive victory;

  • China to promote steady growth in consumption;

  • Premier admits severe challenges in China's economy;

  • China to lower defense budget growth to 7.5 percent;

  • China to continue proactive fiscal policy and prudent monetary policy;

  • China continue battle against potential financial risks in 2019;

  • China to do more to attract foreign investment in 2019;

  • China to hold second Belt and Road Forum in 2019: Premier Li;

  • China continues to push its anti-corruption campaign;

  • China to further cut spending on official overseas visits, vehicles, hospitality;

  • China targets over 11 million new urban jobs in 2019 ;

  • Premier Li: China to cut VAT by three percentage points;

  • China to increase small business loans by over 30 pct in 2019 ;

  • China to cut corporate burden by nearly 2 trln yuan in 2019;

  • China to issue 2.15 trln yuan of special local govt bonds in 2019;

  • China to expand Intelligent+ initiative to transform traditional industries;

  • Premier Li: Significant success has been made in the 'three tough battles';

  • Li Keqiang: China to forge ahead with fight against poverty;

  • China to reduce rural poor population by over 10 mln in 2019;

  • Elderly care sector to get further boost;

  • China to comprehensively strengthen intellectual property protection

2. Other NPC News

Xi stresses strategic resolve in enhancing building of ecological civilization - Xinhua:

President Xi Jinping on Tuesday stressed efforts to maintain strategic resolve in enhancing the building of an ecological civilization, and protect the beautiful scenery in the country's northern bordering areas.

Xi, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, made the remarks when attending a panel discussion with his fellow deputies from Inner Mongolia Autonomous Region

Tuesday CCTV evening news on Xi's comments - 习近平在参加内蒙古代表团审议时强调 保持加强生态文明建设的战略定力 守护好祖国北疆这道亮丽风景线 

Interesting Xi's first panel chat at CPPCC was culture, first at NPC is the environment

China to Cut Taxes, Fees by 2 Trillion Yuan as Growth Slows - Caixin:

The package exceeds market expectations. Analysts had broadly expected tax and fee cuts for 2019 to reduce business costs by between 1.3 trillion yuan and 1.5 trillion yuan...

China will cut the rate of value-added tax (VAT) for manufacturers from 16% to 13% in 2019, and slash the VAT rate for the transportation and construction sectors to 9% from 10%, Li announced at the opening of the annual legislative session.

The tax cuts for manufacturers in particular are larger than expected, and signal the central government is focusing on developing the high-end manufacturing sector, Cheng Shi, chief economist at ICBC International Holdings Ltd., said in a note.

China businesses offer mixed reaction to VAT cut as exporters still call for more help amid slowdown | South China Morning Post:

Tang Dajie, secretary general of the Beijing-based China Enterprise Institute, said the VAT burden on Chinese manufacturers would to be lowered by 713.2 billion yuan, an increase from last year’s 260 billion yuan savings based on a 1 percentage point cut in May.

Still, the cut in the VAT rate “remains small [compared to corporate expectations],” Tang said.

Compared to an average 10 per cent VAT rate in other Asian economies including Vietnam, Laos, South Korea, and Indonesia, the 13 per cent VAT rate for Chinese manufacturers is still high, according to a research report from Xingye Securities

China to cut corporate burden by nearly 2 trln yuan in 2019 - Xinhua:

The country will lower the share borne by employers for urban workers' basic aged-care insurance, and localities may cut contributions down to 16 percent, he said.

China must reduce burdens on enterprises, but also ensure that employees' social security benefits remain unchanged and aged-care pensions increase as appropriate and are paid on time and in full, so that social security funds are sustainable and both enterprises and employees benefit.

Whither M2? Money Supply Target Falls Out of Favor - Caixin :

The closely watched indicator was left out of Premier Li Keqiang’s annual work report to the National People’s Congress (NPC) for the second year running, a move that may reflect the central bank’s efforts to downplay the importance of M2 as an indicator. It also helps ensure that monetary policy doesn’t become hostage to a target, giving the authorities more flexibility to respond to changes in economic conditions...

The premier also reiterated that monetary policy will not lead to the release of a flood of liquidity into the economy to shore up economic growth.

“We will ensure the valve on aggregate money supply is well controlled and refrain from using a deluge of stimulus policies,” Li said in the report. 

New Supply-Side Reform to Focus on Private Firms: Banking Regulator Guo Shuqing - Caixin:

the term “financial supply-side reform” was only put forward officially at a Feb. 22 meeting of the Politburo, a committee of the 25 most senior Communist Party members. The reform includes offering more diversified and differentiated financial products and services, smoothening channels by which credit and monetary policy changes feed through to the real economy, and improving the efficiency in the allocation of financial resources

China Drops a Policy the U.S. Dislikes, at Least in Name - WSJ $$:

In remarks to reporters Tuesday, Minister of Industry and Information Technology Miao Wei said that China’s industrial policy would in future adhere to the concept of “competitive neutrality,” a principle pushed by the Trump administration when it renegotiated the North American Free Trade Agreement. Under that concept, governments are prohibited from favoring state-owned companies over privately owned ones.

“The discriminatory problems we had in the past will be eliminated,” Mr. Miao said.

So far, there are few signs that the new policy will significantly reduce subsidies to preferred companies or sectors. A separate report issued Tuesday by the National Development and Reform Commission, the country’s top economic-planning agency, which is leading the effort to draft the new industrial plan, said the government would help develop “a number of clusters of strategic, emerging industries.”

The indispensable NPC Observer has posted the official agenda as well as the schedule for the NPC.  - 2019 NPC Session: Agenda and Daily Schedule – NPC Observer

The agenda contains the following eight items:

Deliberate the Government Work Report;
Review the report on the execution of the 2018 National Economic and Social Development Plan and on the draft 2019 National Economic and Social Development Plan (together “Development Plans”);
Review the report on the execution of the 2018 Central and Local Budgets and on the draft 2019 Central and Local Budgets (together “Budgets”);
Deliberate the draft Foreign Investment Law [外商投资法].
Deliberate the work report of the NPC Standing Committee (NPCSC);
Deliberate the work report of the Supreme People’s Court (SPC);
Deliberate the work report of the Supreme People’s Procuratorate (SPP);
Confirm the NPCSC’s acceptance of Zhang Rongshun’s resignation as an NPCSC member.

Much more detail here 

3. 2019 defense spending

China’s 2019 Defense Spending to Rise 7.5% to 1.19 Trillion Yuan (~177.61 Billion U.S. Dollars) | Andrew S. Erickson:

It’s official! In 2019 China will raise defense spending by 7.5% to 1.19 trillion yuan (about 177.61 billion U.S. dollars). That’s a large increase off an enormous baseline...

Don’t get distracted by Beijing’s state media hype designed to downplay and justify: The big story about China’s defense budget for 2019 isn’t that the percentage growth rate is slightly lower than last year’s (0.6% less), it’s that it’s still huge at 7.5%! As for a potential expression of national priorities, this exceeds China’s 2019 economic growth rate target of 6-6.5%...

Bottom line: 7.5% growth is rapid. It’s only a slowdown if measured against previous PRC defense budget growth. Indeed, the big picture dynamics have long been clear: China’s defense budget is the world’s second-largest by any measure. In recent years, it’s been growing at rate sustained by no other major power. And it’s powered by what is at very least the world’s second-largest economy, allowing for significant future funding increases even if China’s economic engine continues to slow down (as it almost certainly will).

China to lower defense budget growth to 7.5 percent - Xinhua:

Describing China's defense budget increase as reasonable and appropriate, Zhang Yesui, spokesperson for the legislative session, said the rise aimed to "meet the country's demand in safeguarding national security and military reform with Chinese characteristics."

"China's limited defense spending, which is for safeguarding its national sovereignty, security and territorial integrity, poses no threat to any other country," Zhang said at a press conference Monday.

China defense budget: Slowing growth in 2019 military spending - CNBC:

But slower growth in defense spending doesn't mean tensions with Washington have ceased, warned Timothy Heath, senior international defense researcher at U.S. think tank Rand Corporation. 

In fact, the stated amount is less important than what it's used for, Heath told CNBC's "Squawk Box" on Tuesday... 

"So what this will mean in practice is, you're going to have a (Chinese military) with more lethal weaponry, greater ability to operate as a joint force and greater reach," Heath said. "And what that will probably do is exacerbate the tensions in the security domain."

4. US-China

Pompeo Interview With Scott Thuman of Sinclair Broadcast Group:

QUESTION: We’re seeing Chapter 12 bankruptcies as high as we’ve seen in more than a decade – in the circuit that oversees your state Kansas, some 59 percent over the last 10 years. What’s your message to the farmers who are feeling this crunch because of this fight between the administration and China?

SECRETARY POMPEO: Yeah, that’s not the reason. Remember there’s a long history of China not treating our farmers well – frankly, many countries in the world, Europe, too, who put in place barriers that made no sense, right?...Sometimes you got to go break a little glass to get to the right outcome, and that’s what President Trump intends to do...

QUESTION: Will the President walk away from a China deal if it’s not a perfect deal?

SECRETARY POMPEO: Yes. You saw us this past weekend in Hanoi. The President’s determined to make sure that he protects his first client, his first obligation to the American people – in this case, the American farmer. This has to work for America. If it doesn’t work, we’ll keep banging away at it. We’re going to get to the right outcome. I’m confident that we will. And I’ve been around these trade talks with China, things are looking good. I think things are in a good place, but it’s got to be right, and we may have to make sure it truly provides a lasting benefit to American farmers.

Comment: Is threat of walking out of a summit meeting an approach that resonates with Xi? I think a deal is likely at some point but do not think markets should be pricing a trade deal this month anywhere near 100%…

Easier for China to face tariffs than bend to U.S. pressure | Reuters:

Some in U.S. diplomatic and business communities, concerned that Trump could rush into accepting weak Chinese commitments, have been for weeks referring, with mock grandiosity, to a possible deal as the “Mar-a-Lago Accord”...

Xi, who fundamentally believes in a strong role for the state and the ruling Communist Party in the economy, does not want to, and cannot, quickly dismantle decades of state planning, political analysts say.

But he still has room to give the United States more market access in the service industry and for agricultural products.

Evidence Grows That Trump's Trade Wars Are Hitting U.S. Economy - Bloomberg:

In two separate papers published over the weekend, some of the world’s leading trade economists declared Trump’s tariffs to be the most consequential trade experiment seen since the 1930 Smoot-Hawley tariffs blamed for worsening the Great Depression. They also found the initial cost of Trump’s duties to the U.S. economy was in the billions and being borne largely by American consumers.

The China debate is here to stay - Brookings- Ryan Haas:

The lack of public support for a confrontational approach toward China will continue to constrain risk-taking vis-à-vis China. In the absence of public coalition-building for a more aggressive approach toward China, it will be difficult for policymakers to sustain a purely confrontational approach. As the Trump administration’s efforts to use tariffs to compel Chinese capitulation on trade frictions has made clear, the bilateral relationship is a two-player game, and China has ample tools to retaliate against American actions. Unless the American public is persuaded of the need to make material sacrifices to blunt China’s rise, they will grow weary of accepting direct economic pain now for the uncertain prospect of long-term gain. This is a point the Chinese know well and use to their advantage.

Why is China refusing to stop the flow of fentanyl? - The Washington Post:

A few days after the United States and China announced on Dec. 1 that Chinese President Xi Jinping had vowed that his country would stem the supply of the powerful opioid fentanyl flowing into the United States, President Trump tweeted that “if China cracks down on this ‘horror drug,’ using the Death Penalty for distributors and pushers, the results will be incredible!”

Well, so far the results have been far from incredible.

In fact, all indications are that there have been no results. “Nothing has changed since Dec. 1,” said a senior administration official who was involved in talks and spoke on the condition of anonymity because he was not authorized to discuss the subject. Fentanyl and its many analogues continue to flood the United States.

5. Period of historic opportunities

By Cui Liru a year ago, thought worth reposting as there is some confusion about “period of strategic opportunities” and “period of historic opportunities”. The change is not any kind of a diminishing of how Xi and the CCP view China's opportunities but rather a shift to seeing even more opportunity but in a more complex environment. I see it as a sign of greater ambition - China’s 'Period of Historic Opportunities' - CHINA US Focus:

The US strategic pivot to the Asia-Pacific was a sign Washington viewed China as a major strategic rival. Given the profound changes in the world, it became apparent that the concept of “period of strategic opportunities” has become outdated, failing to capture the changes in historical evolution. It is also inconsistent with such new assessments that Chinese diplomacy now “stands at a new historical starting point” and that the present-day world is undergoing “major developments, major changes, and major adjustments”. The concept is also in sharp contrast with the increasingly prominent state of China-US strategic competition and western vigilance against China.

The CPC 19th National Congress report followed previous practice and used the concept of a “period of strategic opportunities” in its opening. Yet the entire report was based on a grand narrative about the New Era for China and the country’s new historical starting point. To keep the phrase of a “period of strategic opportunities” presented a lack of strategic insight into the recent and ongoing historical changes. In the New Era, the development of major-country competition is a matter of fact, and China will inevitably face more complicated challenges under new conditions. The harsh judgment on China in the new US National Security Strategy is another reminder that the idea of “period of strategic opportunities” has become an outdated notion...

Nevertheless, the concept “period of opportunities” remains valid in both domestic and foreign policies, only that it needs an adjective that embodies more profound strategic insight and works better together with the new concepts of “New Era of socialism with Chinese characteristics” and the “major developments, major changes, major adjustments” in international conditions. Finally, Xi has put forward the phrase “period of historic opportunities” based on his approach to history and his proposal to integrate domestic policy and China’s foreign relations. That effectively ended the shelf life of the concept of a “period of strategic opportunities.”

6. Huawei

Is Huawei compelled by Chinese law to help with espionage? | Financial Times $$:

To try to dispel concerns, Huawei commissioned a 37-page legal opinion from Zhong Lun, a Chinese law firm, which it submitted to the US Federal Communications Commission last May. In a letter to the UK parliament in January, it said this advice had been reviewed by Clifford Chance, the London-based law firm.

Comment: The key claims:

Huawei has no duty to implant backdoors in its networks, because there is no law that empowers government authorities to demand this;

There are “safeguards” built into Chinese law that defend businesses’ “legitimate interests”.;

“Huawei’s subsidiaries and employees outside of China are not subject to the territorial jurisdiction of the National Intelligence Law”. ;

The “scope” of anti-terrorism work is “direct and explicit” under Chinese law, as is counter-espionage work.

February 9 - Lawfare by proxy: Huawei touts "independent" legal advice by a CCP member - Sinopsis:

In the Czech Republic, after trying a little intimidation by the local PRC embassy in Prague, and then some political pressure through their favorite interlocutors in the country, the latest weapon in the PR offensive is a recycled document, signed by a CCP member, presented as a “legal opinion” by a Western law firm, contradicting the firm’s own explicit disclaimer.

The “legal assurance” disputes the conclusion that PRC citizens are legally bound to assist in intelligence operations. It comes in the form of a legal document issued in the name of the British law firm Clifford Chance (not available online; in fact, marked as “confidential”, despite its rather wide distribution). Huawei has been touting this document as the final proof of its innocence. This past week, for instance, the director of Huawei Czech Republic, where the company faces increased scrutiny after a public warning by the country’s cyberintelligence authority NÚKIB, presented it in a TV interview. It has been similarly employed in other countries, e.g., in a letter to the UK parliament...

The document is in fact a recycled eight-month old piece of legal advice written by two Chinese lawyers. Although, as seen below, this material has already received some public discussion, its newest distribution is portrayed as endorsed by a review from Clifford Chance, a law firm member of the China Chamber of Commerce in the UK (CCCUK, 英国中国商会) with extensive operations in China (which, as the Clifford Chance website puts it, “is emerging as the champion of globalisation and trade”), notably advising state-owned companies and a Huawei supplier.

Comment: Focusing on the letter of the law obscures the real issue. In the Xi Jinping era especially Huawei will do whatever the Party and security services tell it to. That is the only conclusion responsible policymakers can make given how the PRC works, no matter how hard the PR folks and proxies try to spin otherwise.

How African continent has embraced Huawei - Global Times:

African governments have relied on Chinese companies including Huawei to develop their technology infrastructure. The Chinese firm is among the top three telecommunications companies operating across the continent...

Huawei has invested heavily in the backbone of Africa's technology infrastructure. So far, Huawei and ZTE Corporation have established at least 50 third-generation (3G) telecom networks in more than 36 African countries. The two Chinese firms have built e-government networks in at least 30 African countries.

Who is JW00237? The secret Canadian campaign to ban Huawei’s Chinese ‘spies’, and the anonymous official at its heart | South China Morning Post:

Hong Kong-based Canadian immigration lawyer Jean-Francois Harvey, who eventually represented all three applicants, once believed the stunning accusations were the work of JW00237 acting alone as a “rogue” agent.

But a different light is now being cast on JW00237’s efforts, as details emerge of a complex, years-long effort by the US to target Huawei – culminating in Canada’s arrest of chief financial officer Sabrina Meng Wanzhou on December 1 at US request.

China’s Huawei has big ambitions to weaken the US grip on AI leadership - MIT Technology Review:

In an exclusive interview with MIT Technology Review, Xu Wenwei, director of the Huawei board and the company’s chief strategy and marketing officer, touted the scope of its AI plans. He also defended the company’s record on security. And he promised that Huawei would seek to engage with the rest of the world to address emerging risks and threats posed by AI.

Xu (who uses the Western name William Xu) said that Huawei plans to increase its investments in AI and integrate it throughout the company to “build a full-stack AI portfolio.”

Huawei opens Brussels security lab in bid to reassure EU - AP:

The new lab in the Belgian capital gives Huawei a venue to reassure the EU’s policymakers about its cybersecurity credentials.

It opened a similar center in Bonn, Germany, in November and funds a government-run British testing site, the Huawei Cyber Security Evaluation Centre, that opened in 2010.

China blocks canola shipments from Canada's Richardson: customs document | Reuters:

It wasn’t immediately clear why Richardson’s exports into China, the world’s top importer of canola, had been halted. Officials at China’s General Administration of Customs didn’t respond to requests for comment.

7. Hackers target maritime secrets

Chinese Hackers Target Universities in Pursuit of Maritime Military Secrets - WSJ $$:

The majority of the universities targeted either house research hubs focused on undersea technology or have faculty on staff with extensive experience in a relevant field, and nearly all have links to a Massachusetts oceanographic institute that also was likely compromised in the cyber campaign, iDefense said...

Some of the targeted schools, including MIT, Penn State and the University of Washington, are affiliated with a unit at Woods Hole known as the Acoustic Communications Group, which works on undersea communications technology, according to the nonprofit’s website.

APT40: Examining a China-Nexus Espionage Actor « APT40: Examining a China-Nexus Espionage Actor | FireEye Inc:

FireEye is highlighting a cyber espionage operation targeting crucial technologies and traditional intelligence targets from a China-nexus state sponsored actor we call APT40. The actor has conducted operations since at least 2013 in support of China’s naval modernization effort. The group has specifically targeted engineering, transportation, and the defense industry, especially where these sectors overlap with maritime technologies. More recently, we have also observed specific targeting of countries strategically important to the Belt and Road Initiative including Cambodia, Belgium, Germany, Hong Kong, Philippines, Malaysia, Norway, Saudi Arabia, Switzerland, the United States, and the United Kingdom. This China-nexus cyber espionage group was previously reported as TEMP.Periscope and TEMP.Jumper.

Tech Tycoon Calls for ‘National Defense System’ in Cyberspace at China’s Congress - Caixin Global:

China should establish a “national defense system” in cyberspace, according to Zhou Hongyi, a CPPCC member and the founder and CEO of internet security company Qihoo 360.

Advising the CPPCC on Tuesday, the tech tycoon said global cybersecurity risks are becoming increasingly common as AI and the Internet of Things develop. Trillions of devices will be interconnected in the future, and each one could be the target of a cyber-attack, he said.

8. Big money in building propaganda tools

Propaganda 2.0 - Chinese Communist Party's message gets tech upgrade | Reuters:

Tidal Star is among a rising number of Chinese firms working for, or taking inspiration from, the country’s ruling Communist Party to develop high-tech propaganda tools aimed at spreading the party’s message among a tech-savvy younger generation...

“Since 2016, one central publicity purpose for the Party is to make ‘red millennials’,” said a Beijing-based manager at a major U.S.-listed Chinese news feed app...

One staff member at a university in southern China told Reuters they are required to complete at least 160 hours of official study online per year.

“It’s not too boring, but the Party used to be a part of my work,” said a 35-year old researcher surnamed Liu at a Beijing university, who declined to give her full name due to the sensitivity of the topic.

“Now it is part of my life at all hours of the day.”

Business, Economy, Finance And Trade

China paves way for Chubb to acquire majority of local venture | Financial Times $$ Chubb has had a minority stake in Huatai Insurance Group, a diversified insurer and asset manager with 11m customers, since 2005, which on Monday it increased from 20 to 26 per cent. Chinese regulators have now approved a change in the legal structure that will allow Chubb to take its stake above 50 per cent. This marks the first time an existing domestic insurer has converted to a so-called “Sino-foreign joint venture”.

Ex-PBOC Deputy Governor Calls for Major Changes to Total Social Financing - China Banking News A former senior official with the Chinese central bank has called for several key changes to be the total social financing metric, including the removal of undiscounted banker’s acceptances and the inclusion of offshore financing...In an article written for The Economic Observer Wang Yongli (王永利), former PBOC deputy governor and chief economist with Neptunus, highlighted prevailing inadequacies with TSF as a metric driest these changes. // 原中行副行长王永利:能否纠偏? “社融规模”辨析 

Tencent's WeChat created 22 million job opportunities in 2018 - report · TechNode Social media platform WeChat created more than 22 million job opportunities in 2018, 5.3 million of which drew the majority of income through the platform, according to a report published on Monday. Total job opportunities grew 10% compared with 2017, following steady average growth of more than 2 million positions per year since 2014. The report did not specify the proportion of jobs that were full-time, however, or average wages. The paper was co-released by Tencent’s WeChat, official think tank China Academy of Information and Communications Technology, and their jointly established Digital China Research Center

This Chinese car company could rival Tesla - CNBC One company, Nio Inc, has received a lot of attention as a possible "Tesla rival." Scott Kennedy, senior adviser and the Freeman Chair in China Studies at the Center for Strategic and International Studies, joins "Squawk Box" to explain the company and how it stacks up against Tesla and the rest of the auto industry.

China Plans to Invest $120 Billion in Rail This Year - Caixin China plans to invest 800 billion yuan ($119.38 billion) in railway projects this year, marginally less than the actual sum it spent last year but nearly 10% more than last year’s target.

China Buyers Return to $1.1 Trillion Local Unit Debt Party - Bloomberg Just a couple of years ago, local government borrowing units’ debt was on everyone’s top worry list as authorities vowed to cut state backing for those platforms. Now, policy makers have again turned to them to carry out infrastructure projects to resuscitate the sluggish economy. Their resurgence to national importance status has underpinned the big rush into LGFV bonds.

Rong Chen, et al. (Release No. LR-24417; Mar. 4, 2019) - SEC Enforcement According to the complaint, in 2013, when Chen was Vice President of Investments for Tsinghua Unigroup Limited, he learned of the impending acquisition of RDA Microelectronics Inc. The SEC's complaint alleges that, shortly before the deal was made public, Chen opened a brokerage account in his wife's name and used it to make a series of purchases of RDA securities, generating more than $75,000 in illicit profits. The complaint further alleges that, in 2015, when Chen was a Managing Director at a Hong Kong-based investment banking firm that was advising Inc. on its acquisition of rival, he again used his wife's brokerage account to buy out-of-the-money call options, which he sold after news of the acquisition became public, for illicit profits of more than $90,000.

China Mobile replaces chairman with China Telecom head - Nikkei Asian Review China Mobile Communications Group on Monday named China Telecom head Yang Jie as chairman in a move that will speed cooperation on 5G technology among the country's three major state-owned telecommunications companies.

Xiongan New Area to start full-scale construction phase - China Daily Xiongan New Area in Hebei province is about to reach full-scale construction stage after a series of plans were finalized in the past two years, a top Xiongan official said on Tuesday. "The blueprint for Xiongan's development has been made, and we need to implement the blueprint thoroughly, " Chen Gang, Xiongan's Party chief and a deputy to the 13th National People's Congress, said before the opening of the second session of the 13th National People's Congress on Tuesday morning.

China is Currently Holding 1,600 Teslas at Customs - Caixin Some of the vehicles had no Chinese labels on brake fluid tanks, while some demonstrated a real motor capacity that differed from the one on the label, according to the General Administration of Customs (GAC). As a result, GAC issued a notice forbidding companies from selling any Tesla Model 3 already in China, for the purpose of further inspection. Any additional Tesla models entering China will also be rigorously checked.

Politics, Law And Ideology

Rapping the China Monologue | China Media Project For years now, China has experimented with newer and more youthful approaches to of the hands-down favourites this year will certainly be this English-language rap video about the “two sessions” co-produced by Xinhuanet Co. Ltd. and Su Han Studio...In my view, what we are witnessing here is not a coordinated or well-considered strategy of external propaganda or attempts at foreign influence. What we are seeing is the inevitable outcome of a propaganda system that is cash-rich and culturally and intellectually bankrupt.

Xi urges more good works for people - People's Daily Online A country must have its own spirit, Xi said, adding that culture, art, and social sciences works are related to that spirit, which is of great significance in upholding and developing socialism with Chinese characteristics. Xi said socialism with Chinese characteristics has entered a new era, and writers, artists and theorists should accept the mission of recording the new era and reflecting the historic changes of the times. The president highlighted a people-centered philosophy, saying that all of the country’s achievements are created by the people and all of the glories belong to the people.

Foreign and Military Affairs

American faith groups unite to decry restrictions on religious freedom in China | South China Morning Post Seeking an end to “business as usual” with China until the government ceases faith-based persecution, the Coalition to Advance Religious Freedom in China (CARFC) is composed of more than a dozen religious advocacy groups, including those representing the largely Muslim Uygur ethnic minority, Catholics, Protestants, Tibetan Buddhists, and Falun Gong practitioners. “We demand that China abide by its own constitution – as well as its international legal obligations – and respect the rights of all its citizens,” CARFC coordinator Greg Mitchell said at a news conference in the US Capitol. Among the coalition’s first steps is a direct appeal to members of the Trump administration calling for sanctions against Beijing officials.

U.S. lawmakers complain Trump has taken 'no meaningful action' on abuse of China Muslims | Reuters “This issue is bigger than just China. It is about demonstrating to strongmen globally that the world will hold them accountable for their actions,” the lawmakers wrote in a letter to U.S. Secretary of State Mike Pompeo. The group is led by Eliot Engel, Democratic chairman of the House Committee on Foreign Affairs, and includes Republican ranking member Representative Ted Yoho. Pompeo wrote to the committee on Sept. 28 saying his department was looking into a request for sanctions on those responsible for abuses and for controls on exports of technology that facilitates mass detentions and surveillance of ethnic minorities in western China’s Xinjiang region, the letter said.

Jaw-Jaw: The Geo-Economic Challenge of China’s Belt and Road Initiative - War on the Rocks What exactly is China’s Belt and Road Initiative (BRI)? What is the place of BRI in Xi Jinping’s foreign policy? What countries are involved in this massive project, and what is the likelihood that the grandest ambitions of BRI will be realized? Is China actually not a maritime power, but, rather, an aspiring continental power? Nadège Rolland and Brad Carson discuss these issues and much more in the new episode of “Jaw-Jaw.”

Philippine Official, Fearing War With China, Seeks Review of U.S. Treaty - The New York Times: The Philippines’ top defense official said on Tuesday that the government should review a decades-old treaty with the United States, its longtime ally, to avoid provoking a potential armed conflict with China in the disputed South China Sea. The security environment in the region has become “much more complex” since the countries’ Mutual Defense Treaty was drawn up 68 years ago, said the Philippine defense secretary, Delfin Lorenzana... Mr. Lorenzana said that “the United States, with the increased and frequent passage of its naval vessels in the West Philippine Sea, is more likely to be involved in a shooting war,” using the Philippine name for the disputed sea region. Because of the treaty, he said, “the Philippines will be automatically involved” in any such conflict.

The US strategy is not the best way to deal with Huawei | Financial Times $$ Kishore Mahbubani pEd China is already well on its way towards becoming number one, so any unilateral US campaign against Beijing (and Chinese companies) will fail. However, a multilateral campaign that forges globally accepted rules for corporations such as Huawei could work. Sadly, multilateralism is anathema to the Trump administration, which means that the most viable strategy for managing China will be ignored. The result will be a China-centric world.

Chinese Considered 'Language of the Future' for Young Ugandans - VOA China is a major trade partner and investor in Africa, and many countries are encouraging their citizens to learn what is considered by many to be the language of the future. Last year, Uganda's Ministry of Education named 35 schools countrywide where the Chinese language would be taught. The decision was driven by ties between the countries, says Grace Baguma, director of the national Curriculum Development Center.

Is Cambodia’s Koh Kong project for Chinese tourists – or China’s military? | South China Morning Post A tourism development by the Chinese firm Union Development Group looks too good to be true Sceptics say it is – and that its suspiciously long airport runway and deep water port will give China a military foothold in the country

China's new huge solid rocket booster completes test - Xinhua With a diameter of 2.65 meters, the booster engine is expected to be used on the modified version of the Long March-11 rocket. The rocket is the only series in the Long March family that uses solid propellants, and it can be launched within 24 hours.

Tech And Media

China’s YY eyes overseas live streaming with $1.45B Bigo buyout | TechCrunch Bigo’s connection to YY is deep-rooted. Li Xueling, a veteran Chinese journalist who’s also known as David Li, founded YY in 2005 well before the heyday of mobile-based live streaming apps. With the intent to bring the China-tested business to overseas markets, Li started Bigo in 2016 to replicate YY’s lucrative revenue model where the platform operator takes a cut whenever viewers reward streamers with virtual gifts, which can be cashed out.

Google Is Still Working on China Search Engine, Employees Claim The employees identified about 500 changes to the code in December, and more than 400 changes to the code between January and February of this year, which they believe indicates continued development of aspects of Dragonfly. (Since August 2017, the number of code changes has varied between about 150 to 500 each month, one source said.) The employees say there are still some 100 workers allocated to the “cost center” associated with Dragonfly, meaning that the company is maintaining a budget for potential ongoing work on the plan. Google sources with knowledge of Dragonfly said that the code changes could possibly be attributed to employees who have continued this year to wrap up aspects of the work they were doing to develop the Chinese search platform.

Society, Art, Sports, Culture And History

An Oakland school upped spending after a $2.8M donation of Chinese paintings. Then came the appraisal - Appraisers valued one of the pieces, an ink and color on paper of a waterfall by 20th century Chinese artist Li Keran, at $2 million alone, and the other three combined at just over $800,000. //  All fakes

Energy, Environment, Science And Health

Damming the Upper Mekong – China Channel How new dams in southwest China are displacing upland peoples – Brian Eyler An excerpt fromLast Days of the Mighty Mekong

PROFILE: Brent Christensen in Taiwan to ‘make a difference’ - Taipei Times When US diplomat Brent Christensen arrived in China in 2007 for his new assignment, he noticed the color of the sky was not necessarily blue on the Chinese government’s self-declared “blue sky” days. So when some money became unexpectedly available to him, he purchased an air quality monitor and installed it on the roof of the US embassy in Beijing, just so he could get an accurate sense of how bad China’s air pollution really was.

Nation to complete new artificial sun device this year - Global Times 

科技部财政部等联手推进七项行动为科研人员减负--科技--人民网 Ministry of Science & Technology, Ministry of Education, Ministry of Finance and Chinese Academy of Sciences will jointly work to reduce the burdens on scientists and researchers

Chinese dam project in Guinea could kill up to 1,500 chimpanzees | World news | The Guardian