Pence China speech; Wang Qishan getting involved in US talks?; Xi's Russia trip; June 4

June 4.

The Chinese Communist Party is afraid of ghosts and incorrect memories. It has done a good job of reshaping the history for most people born after 1989, and yet every year around June 4 the security services and censors go into overdrive to prevent any discussion of what really happened in early June 1989.

30 years ago China was barely a decade past the end of the Cultural Revolution and the death of Mao, poor, backward and teeming with frustration, respect for America, hope, and intellectual ferment.

30 years on, China is rich, powerful, ambitious and led by the Communist Party that responded to the aftermath of the crackdown with decades of nationalist education, hardening of its security services and the pursuit of politically correct intellectual homogeneity. The failures of other pro-democracy uprisings, the resulting chaos in many countries where they succeeded as well as the crises in established democracies have been a gift to the CCP and its propaganda efforts and further reduce the likelihood we will in the foreseeable future again see anything like what we saw 30 years ago.

A re-evaluation of the June 4 verdict while the CCP is in power is unlikely given it would question not just the Party itself but also the legacies of both Deng Xiaoping and Jiang Zemin, perhaps the biggest political beneficiary of the events of the Spring of 1989.

Never forget, and never underestimate what the CCP may do.

Thanks for reading.

The Essential Eight

1. US-China

So far the US has rebuffed Beijing’s offer to engage with Wang Qishan as a way to try to restart the trade talks. Wang’s counterpart would be Vice President Pence. Pence’s second China speech has been pushed back, so it is worth asking if the delay is at least in part due to concerns it might be an inopportune time to give another tough China speech, and especially on June 4, and that it might risk a hoped-for Trump-Xi meeting at the G20? If the shifting date is a sign of restraint from the White House then perhaps it is a sign of a slight glimmer of hope for restarting trade talks, though the two sides seem even further apart now and more dug in that they were at the start of May.

Pence to give China policy speech in late June - POLITICO

PENCE TO GIVE CHINA POLICY SPEECH IN LATE JUNE: Vice President Mike Pence will give a speech on U.S. policy toward China at the end of June, a White House official said Monday. While there’s no date for the speech, the vice president’s remarks could set the tone for a possible meeting between Trump and Chinese President Xi Jinping at the G20 leaders meeting in Osaka, Japan, on June 28-29.

Some China hawks had hoped Pence would give his speech today to mark the 30th anniversary of the Chinese government’s bloody crackdown on pro-democracy protesters in Tiananmen Square. Instead, Secretary of State Mike Pompeo issued a statement saying U.S. hopes have been “dashed” that China would develop into a “more open, tolerant society.”

U.S. Trade Representative and the U.S. Department of Treasury today released the following statement in response to the “White Paper” issued by China on June 2, 2019 | United States Trade Representative

The United States is disappointed that the Chinese have chosen in the “White Paper” issued yesterday and recent public statements to pursue a blame game misrepresenting the nature and history of trade negotiations between the two countries. ..

Following months of hard work and candid and constructive discussions, the parties had reached agreement on a number of important matters. In wrapping up the final important issues, however, the Chinese moved away from previously agreed-upon provisions. In response to this Chinese backtracking, the United States moved forward with the previously-announced rate increase on Chinese imports and announced tariffs on additional Chinese imports. 

It is important to note that the impetus for the discussions was China’s long history of unfair trade practices. Our negotiating positions have been consistent throughout these talks, and China back-pedaled on important elements of what the parties had agreed to. One such position was the need for enforceability, a position necessitated by China’s history of making commitments that it fails to keep.

U.S. statement on China's white paper is calling white black: spokesperson - Xinhua

Geng said it was right to resolve trade friction through dialogue and negotiation, adding reaching a mutually beneficial and win-win agreement based on mutual respect, equality, good faith and credibility would not only benefit the two sides, but also meet the general expectation of the international community.

China is determined and capable of defending its legitimate rights and interests, Geng said, urging the U.S. side to grasp the situation as soon as possible, return to the right track and meet China half way.

MOC spokesperson comments on U.S. statement on China's white paper - Xinhua

Neglecting multilateral trade rules, the United States has taken unilateralist and protectionist actions frequently in the name of trade deficit to trigger the China-U.S. economic and trade frictions, said the spokesperson, adding that in the meantime, the United States tried to coerce China into accepting its demands in the economic and trade consultations.

"This was typical trade bullyism," said the spokesperson.

Original Chinese of Geng's comments - 外交部:美方关于中方白皮书的声明完全是颠倒黑白、强词夺理-新华网


Comment: 强词夺理 Qiang3ci2duo2li3 is one of my favorite Chinese sayings, as it so well describes many arguments and statements in and from China-"sophistry; loud rhetoric making up for fallacious arguments; shoving false arguments down people's throats"

China urges dialogue, negotiation to solve trade row with U.S. - Reuters

It is common to make revisions, suggestions and adjustments in trade negotiations, it said in a statement in response to U.S. government comments that China was pursuing a “blame game”.

Why Beijing isn’t playing blame game with its white paper on trade war | South China Morning Post

Chinese analysts who talked to the South China Morning Post before the release of the US statement said Beijing was not allocating blame, it was telling the US it would not “give ground on matters of principle” but at the same time it was willing to commit to “credible suggestions”.

Ding Shuang, chief China economist at Standard Chartered Bank, said China’s plan for a watch list of “unreliable” foreign entities deemed to have damaged the interests of Chinese firms and its threat to limit exports of rare earths minerals critical to the manufacture of semiconductors, were aimed at strengthening Beijing’s hand for negotiations.

News of China’s ‘unreliables list’ spooks foreign business | Financial Times $$

“This language is very subjective and could result in overreaching by the government,” he added. “What recourse, judicially or administratively, would someone or a company have if they are found to be a potential threat? This just creates uncertainty.” 

In particular, the vague reference to “China’s national security and interests” have reminded foreign executives of the two Canadians, Michael Kovrig and Michael Spavor, who have been held incommunicado since December for unspecified violations of Chinese national security. 

Stan Druckenmiller bought Treasurys after Trump's May China tweet - CNBC

Trump “wants to run on tariffs. He thinks they are a winning formula in the swing states and the belligerent, sort of verbose pressure he’s putting — and the braggadocio toward China — he’s giving Xi Jinping no off ramp to make a deal,” the hedge fund manager added.

Adam Segal | China Leadersip Monitor - Seizing Core Technologies: China Responds to U.S. Technology Competition

Chinese analysts and policy makers have interpreted U.S. efforts to prevent the flow critical technologies through limits on investment, blocks on the operations of Huawei and other Chinese telecom companies in the U.S. and other markets, and new export control laws, as part of a strategy of containment designed to slow China’s rise as a science and technology power. In response, a newly emerging strategy consists of: a doubling down on indigenous innovation and developing “core technologies”; protection of supply chains; diversification of access to foreign technology; diplomatic efforts that stress the shared benefits of Chinese technology development; and continued cyber-enabled theft of intellectual property. Even though both sides are likely to lose the efficiencies that came from the globalization of innovation, such a strategy may also energize American and Chinese policy makers to mobilize even greater resources for scientific competition.

2. Propaganda not moderating


People’s Daily’s wechat accounts such as 学习小组 and 侠客岛 posted this recent interview of a veteran Chinese soldier who fought Americans in Korea in the bloody battle of Triangle Hill (Shangganling). The article praises the soldiers’ heroic “Shangganling spirit” and how they made Americans paid a heavy price.



Xinhua: … while on the other hand, China, who proposes the idea of “a community of shared destiny” is such a contrast to the US and is wining support around the world



People’s Daily accuses the US as “enemy of the world” for trade bullying, bypassing the multilateral system, and reviving the Darwin rule in the world



More from People's Daily's Zhong Sheng: Adam Smith must be crying in his grave as the Americans no longer accept his explanation of trade, that trade is mutually beneficial. Zhong Sheng again cited Jeffery Sachs. Sachs seems to have become one of the CCP's favorite foreign economists.

Question: Does the Chinese side think they can use increasingly vitriolic propaganda for domestic purposes without also angering the Trump Administration and even further reducing the prospects for a near-term return to negotiations?

3. Travel alerts

Is China using these as a way to reduce tourist and educational spending in the US, as some sort of attempt to increase leverage?

China issues U.S. travel alert - Xinhua

China's Ministry of Culture and Tourism on Tuesday issued a travel alert for Chinese tourists traveling to the United States.

Noting the frequent occurrence of shootings, robberies and theft in the United States recently, the ministry warned Chinese tourists to fully assess the risks of traveling there.

Chinese tourists are urged to learn about the information about the public security situation and related laws and regulations of tourist destinations, to raise safety awareness and step up precautions to stay safe.

The travel alert is valid until Dec. 31, 2019.

Trump's Next Trade War Target: Chinese Students at Elite Schools - Bloomberg

“Those in the U.S. who are blocking Chinese students and scholars have another agenda in mind: They are afraid that the Chinese will master advanced technology and that China will walk to the front,” the Communist Party’s flagship newspaper, the People’s Daily, said in a Tuesday commentary. “A precipitous drop in the number of Chinese students studying in the U.S. would certainly send shock waves through the American education industry.”

US universities brace for decline in Chinese students after Beijing warning | South China Morning Post

“This is the next iteration of where this is going as it moves from the economy and security to people-to-people,” said Jude Blanchette, a senior adviser with US-based consultancy Crumpton Group, and author of the book China’s New Red Guard. “Both the US and China are going to weaponise talent. China is not wrong to issue this warning.”

Comment: Will the US reciprocate with an updated travel advisory?

4. Xi’s Russia trip

China-Russia relations embrace golden era - People's Daily Online - Li Hui

This year is a historic milestone for China-Russia relations as it marks the 70th anniversary of the establishment of diplomatic relations between the two countries. 2019 is also the tenth year since I assumed position as Chinese Ambassador to Russia...

At present, China-Russia comprehensive strategic partnership of cooperation is at the best time of history. Over the past years, the two countries have seen frequent high-level exchanges, deepening political mutual trust, increasing bilateral trade volume and various people-to-people and cultural exchanges...

I believe that at a new staring point of the 70th anniversary of the establishment of diplomatic relations between China and Russia, this golden era will be more shining under the guidance of the two heads of state.


Xi's visit to open new prospects for China-Russia ties - Xinhua

Xi and Putin will review the achievements and experience in the development of the bilateral relationship over the past seven decades, chart the course for its future development, and further elevate the China-Russia partnership, said Chinese Vice Foreign Minister Zhang Hanhui at a press briefing.

The two leaders, according to Zhang, will also sign or witness the signing of important cooperation documents, and attend a gathering celebrating the 70 anniversary of bilateral diplomatic ties.

Thanks to the strategic guidance by the two heads of state and joint efforts of both sides, recent decades have seen the China-Russia partnership upgraded multiple times.

Xi's visit, said Zhang, will "consolidate the political foundation of Sino-Russian relations, reaffirm their mutual support to each other on issues involving respective core and major concerns, and ensure the ties will not be affected by any change in the international situation."

Military ties linchpin of China-Russia relations - Global Times - Wang Haiyun

Military ties play a prominent role in 70 years of Sino-Russian relations. I have been studying Sino-Russian military relations most of my life. As the representative of China's military forces in the USSR and Russia for nearly 10 years, I had participated in the promotion of Sino-Russian defense ties and cooperation. The past 70 years have seen military relations pass through cooperation in the 1950s to confrontation in the 1960s and 70s, and then to deepening cooperation after 1980s....

Given the significant role of military ties in China-Russia relations, in the wake of close bilateral military relations, it's suggested the two countries develop the two armies into "special friendly forces."

外交部:大熊猫“如意”和“丁丁”落户莫斯科动物园 - 国内 - 新京报网

China agrees to loan two pandas to Moscow zoo


People’s Daily lists things that shows Xi’s love for Russia and Russian people

筑牢关系倡导开放 推动中俄务实合作提质升级--时政--人民网


5. US-Europe split on China?

Why Won't the U.S. Admit It Needs Europe Against China? - The Atlantic

One senior administration official likened discussions of China policy to the period after the 9/11 attacks. Inevitably, this person said, there will be an “overreaction” from Washington, with “collateral damage” for other countries, before U.S. policy settles down. In Brussels, senior officials are comparing the Trump administration’s China policy to Brexit. Both, they say, are based on the deluded notion that a fading great power can reverse the course of history and return to its glorious past.

The irony is that senior U.S. administration officials acknowledge in private that American success in its competition with China might ultimately hinge on what happens in Europe. Yet many U.S. officials have no patience, at least in the highest ranks of the Trump administration, when it comes to working with European allies.

Pompeo warns Switzerland about China ties - SWI

In the interviewexternal link published online on Monday following a visit to Switzerland, Pompeo said that Switzerland was exposing itself to privacy breaches if it lets Chinese companies help build its infrastructure. Pompeo told the newspaper, “the Swiss attach great importance to the protection of their privacy and have for a long time. But if you operate with Chinese technology, you supply your information to the Chinese Communist Party. There is no privacy.”

6. June 4

US Secretary of State Pompeo does not hold back in his statement about June 4, and Beijing is not amused.

On the 30th Anniversary of Tiananmen Square - United States Department of State

Over the decades that followed, the United States hoped that China’s integration into the international system would lead to a more open, tolerant society. Those hopes have been dashed. China’s one-party state tolerates no dissent and abuses human rights whenever it serves its interests. Today, Chinese citizens have been subjected to a new wave of abuses, especially in Xinjiang, where the Communist Party leadership is methodically attempting to strangle Uighur culture and stamp out the Islamic faith, including through the detention of more than one million members of Muslim minority groups. Even as the party builds a powerful surveillance state, ordinary Chinese citizens continue to seek to exercise their human rights, organize independent unions, pursue justice through the legal system, and simply express their views, for which many are punished, jailed, and even tortured.

We salute the heroes of the Chinese people who bravely stood up thirty years ago in Tiananmen Square to demand their rights. Their exemplary courage has served as an inspiration to future generations calling for freedom and democracy around the world, beginning with the fall of the Berlin Wall and the end of communism in Eastern Europe in the months that followed.

Remarks by Spokesperson of the Chinese Embassy on Secretary of State Mike Pompeo's Statement — Embassy of the People's Republic of China in the United States of America

On June 3, 2019, the US side issued a statement on China in the name of Secretary of State Mike Pompeo out of prejudice and arrogance. Under the pretext of human rights, the statement grossly intervenes in China's internal affairs, attacks its system, and smears its domestic and foreign policies. This is an affront to the Chinese people and a serious violation of international law and basic norms governing international relations. The Chinese side expresses its strong dissatisfaction and firm opposition to it.

The Chinese government and people reached the verdict on the political incident of the late 1980s long ago.

Statement by High Representative/Vice-President Mogherini on the 30th Anniversary of Tiananmen Square event - European External Action Service

Today marks the 30th anniversary of the violent suppression of the peaceful Tiananmen Square democracy protests of 1989. At that time the European Council, meeting in Madrid on 26-27 June 1989, strongly condemned the brutal repression that ensued. Thirty years later, the European Union continues to mourn the victims and offers its condolences to their families...

The European Union also expects the immediate release of the human rights defenders and lawyers detained and convicted in connection with these events or with their activities protecting the rule of law and democracy, including Huang Qi, Gao Zhisheng, Ge Jueping, pastor Wang Yi, Xu Lin, and Chen Jiahong.

Hong Kong activists hold Tiananmen candlelight vigil - AP

Estimates of the number of vigil participants varied widely, with police putting the figure at 37,000 and organizers at 180,000.

As World Remembers Tiananmen Deaths, China Says It's Victim - Bloomberg

China’s embassy to the U.S. said Pompeo’s statement “grossly intervenes in China’s internal affairs, attacks its system, and smears its domestic and foreign policies.”..

“Whoever attempt to patronize and bully the Chinese people in any name, or preach a ‘clash of civilizations’ to resist the trend of times will never succeed,” the embassy said. “They will only end up in the ash heap of history.”

Tiananmen Square 30th anniversary: Chinese-Australian artist Badiucao reveals his identity - China power - ABC News (Australian Broadcasting Corporation)

In an hour-long documentary broadcast on the ABC titled China's Artful Dissident, Australian filmmaker Danny Ben-Moshe offered viewers an exclusive peak into Badiucao's life under the mask and a look at the face behind the satirical political cartoons.

"They actually found my family in China and threatened me through them," Badiucao told the ABC explaining his main reason for unmasking...

And while Badiucao took off his mask on Tuesday night, he still is refusing to give up his real name fearing unintended consequences for himself or his family.

ChinaFile Presents: Erasing History — Why Remember Tiananmen - YouTube

Nicholas Kristof, Zha Jianying, and Orville Schell reflect on how the events of June 4th, 1989 have been remembered and forgotten in the years since.

Security tight in Tiananmen 30 years after students 'died for nothing' - Reuters

[Foreign Ministry] Ministry spokesman Geng Shuang told a daily news briefing in Beijing that Pompeo had “maliciously attacked China’s political system”...

“The Chinese people have seen their hypocrisy and evil motives,” Geng said. “These lunatic ravings and babblings are destined for the garbage heap of history.”

How Tiananmen crackdown left a deep scar on China’s military psyche | South China Morning Post

“No matter whether it is one or 10,000 people killed, it’s still wrong to shoot at unarmed civilians,” said a retired PLA officer who served in the army’s political department and also declined to be named. “But [the troops] had to do this dirty job because the party’s rule was in danger.”

7. Censoring news to please Beijing

Refinitiv blocks Reuters stories on Tiananmen from its Eikon platform - Reuters

Refinitiv took the action to block the stories last week after the Cyberspace Administration of China (CAC), which controls online speech, threatened to suspend the company’s service in China if it did not comply, three people with knowledge of the decision said.

Refinitiv’s intention was to block the distribution of the stories only in China, two people familiar with the matter said. However, many users outside of China said they could not see the stories. It was not clear why.

Earlier versions of this story were removed from Eikon’s scrolling news feeds in China soon after publication early on Tuesday morning...

Refinitiv was formed last year when Reuters News’ parent company Thomson Reuters Corp sold a 55% stake in its Financial & Risk (F&R) unit to a group led by private equity firm Blackstone Group LP.

Refinitiv bows to China censors on Tiananmen Square anniversary | Financial Times

The Blackstone-backed data provider said that under the terms of its Chinese licence, customers in the country would be unable to access stories related to the pro-democracy protests crushed by China’s military on June 4 1989. The company, by far the largest customer of Reuters News, said international customers could still access the reports...

However, some bankers in Hong Kong said they were also unable to access the articles on Tuesday morning. Their feed was restored by the afternoon.

Some of the blocked stories relating to the anniversary were republished on Tuesday after Reuters reported on the outage.

Bloomberg Code Keeps Articles From Chinese Eyes - The New York Times 2013

In early 2011, during a period of heightened tension between the Chinese government and foreign journalists, Bloomberg News created coding to give editors the ability to categorize stories under a new class, called 204. Such stories would not show up on Bloomberg terminals in mainland China. Managers did this after Chinese officials stressed to top editors in Hong Kong that the license granted to Bloomberg by the State Council allowed the company to publish only financial data and news on its terminals, not political news, employees said.

Question: Does Bloomberg still do this? Bloomberg’s return to Beijing’s graces is worthy of an HBS case study

8. A good time to buy a car in China

China’s Auto Dealers Need to Sell $72 Billion Worth of Cars This Month - Caixin

China’s auto dealerships still have millions of cars to sell this month if they want to clear inventories before a tough new emissions standard for new vehicles takes effect in July.

As many as 3 million cars that do not comply with China’s State VI vehicle emissions standard are sitting on dealer lots across the country, according to China Automobile Dealers Association (CADA).

That amounts to an estimated 500 billion ($72 billion) yuan in inventory value that dealerships must unload before the new standard takes effect and makes it illegal to sell them, according to a report the industry group released last week...

To make matters worse, many dealerships are locked in long-term contracts with automakers that force them to continue to buy vehicles that do not meet the updated standard.

China Drafts Measures to Curb $18 Billion Electric-Car EV Bubble - Bloomberg

The country is considering rules to raise the barrier to entry for electric-vehicle makers and nurture fewer but more competitive players, according to people familiar with the matter. Particularly, China plans to clamp down on EV startups who farm out their manufacturing, the people said, asking not to be named as the rules are still being drafted...

After hundreds of startups rushed into the electric-car business in the past decade, the government wants to prevent a crash akin to that of dot-com companies two decades ago. China’s electric-car makers have raised $18 billion since 2011, BloombergNEF estimates, but the market is in its infancy and foreign competition from the likes of Tesla Inc. is intensifying.

Tesla’s new discount policy in Beijing draws concerns over legality on Chinese social media - Global Times

Tesla announced on Tuesday that it has launched a three-year interest-free financing service for car purchasers in Beijing, while also allowing consumers in the capital to rent license plates for free for up to three years.

However, the new measures have sparked controversy on social media over whether Tesla has the legal authority to conduct a license plate rental business in China. Some netizens suggest that China's transport authorities could investigate this offer in retaliation for the US crackdown on China's technology rise. 

Comment: Renting license plates is not allowed.

Business, Economy and Trade

June market liquidity reassured as central bank gears up manoeuvre - Xinhua The market liquidity is expected to remain stable in June as China's central bank is well prepared with targeted measures to tide over the month known for mid-year liquidity tension..."We have conducted a comprehensive evaluation of and are fully prepared for all factors influencing June's market liquidity," the central bank said in a statement Sunday.

人民日报评论员观察:更深拓展中国经济发展新空间--观点--人民网 People’s Daily discusses how better “macro-controlling” could promote domestic growth, coinciding with a document approved by the Party central last week to “innovate and perfect macro-controlling”. This may be another sign that the government would intervene the economy as growth slows and trade war prolongs.

A Slower Economy. A Trade War. Now, China Faces Rising Food Prices. - The New York Times Apart from food, China does not appear to have a broader inflation problem. But rising food costs have become the talk of China. Government officials are reassuring the country that food supplies are plentiful, even as they take steps to stabilize prices.

WTO Should Tweak Rules to Avoid Shutdown of Appeals Body, Experts Say Multiple Chinese experts have suggested that the World Trade Organization’s (WTO) Appellate Body tweak how it makes decisions in order to address U.S. concerns and prevent itself from shutting due to insufficient members. The suggestion is among the results of a study by experts from the government-backed All-China Federation of Returned Overseas Chinese and research group the China Law Society. Li Bo, a vice chairman of the federation, presented the results last week at a closed-door workshop in Tokyo on WTO reforms. The workshop was hosted by the research institute of the Boao Forum for Asia and co-organized by Caixin.

New Apple products face backlash in China - Global Times "I want to say that Huawei had adopted similar volume toggle designs and photo albums months ago," a Weibo user named haowenjile posted. Netizens on Weibo joked that the side board of the Mac Pro looks like a vegetable shredder. "High-end vegetable shred cutter," a Weibo user named jianzhengshilu said. Adding fuel to the fire is the escalation of China-US trade tensions, which has hurt American companies' brand esteem among Chinese consumers and prompted a backlash.// Comment: Global Times likes to stir things up

China’s baby formula plan hits foreign producers | Financial Times $$ Sydney-based infant formula maker a2 Milk lost A$930m (US$650m) in market value on Tuesday following a pledge by Beijing to increase the proportion of domestically manufactured baby milk powder sold in China, a crucial market for global dairy companies.

Yuan Watchers Say 7 Is No Longer a Sticking Point for China - Bloomberg In the four days since ex-governor Zhou Xiaochuan dismissed the importance of 7, at least six analysts published reports laying out why the People’s Bank of China is likely to tolerate a weaker yuan. They say policy makers are more likely to prioritize supporting economic growth amid a worsening standoff with the U.S. over trade. The yuan was 0.1% weaker at 6.9075 per dollar Tuesday.

Pile drive - China expected to divert outstanding U.S. soybean cargoes into reserves - Reuters China will stockpile up to 7 million tonnes of soybeans bought from the United States during an earlier truce in the trade war between the nations, two traders familiar with the matter said, rather than crush them for immediate sale as a feed ingredient. The unusual move to store such large volumes of the U.S. oilseed comes as China faces the specter of a drawn out trade conflict with its second-largest supplier of the commodity after tensions between the two escalated abruptly last month.

SEC probes Siemens, GE, Philips in alleged China medical equipment scheme - Reuters The U.S. Securities and Exchange Commission is investigating Siemens AG, Philips NV and General Electric Co for allegedly using local middlemen to negotiate bribes with Chinese government and hospital officials to sell medical equipment, two U.S. sources with knowledge of the matter told Reuters.

China's Debt Hangover - MacroPolo Still, the low probability of a systemic crisis does not mean LGFVs’ performance has no impact on the broader economy. Servicing the debt from years of wasteful investment will take time and will have a long-term drag on provincial economies. In fact, LGFV debt’s drag on the real economy can be measured. This is why we at MacroPolo sifted through 10 years of financial reports from nearly 1,900 LGFVs and created the “Debt Drag Indicator.” The indicator measures the extent to which LGFV debt is affecting real economic output across all provinces/regions.

FedEx Misrouted Huawei Packages After Changes to Internal Protocols - WSJ The packages were shipped from Japan to Huawei addresses in China, but a sorting error redirected them to the FedEx global hub in Memphis instead, this person said. New U.S. restrictions on doing business with Huawei affected how FedEx handles Huawei’s packages, the person said.

Politics and Law

Wu Guoguang | China Leadersip Monitor - The King’s Men and Others: Emerging Political Elites under Xi Jinping Xi Jinping came to the position of CCP general secretary with a weak power base, but since then he has very effectively managed to promote his own people to significant political positions. Accordingly, new elites achieved upward mobility on a large scale under Xi Jinping’s leadership. Who are those persons who have newly attained significant career advancements? The answer is simple and straightforward: those who had close connections with Xi during the early periods of his life experiences. These people generally belong to one of seven groups, and they were all connected to Xi during various stages of his life experiences before he achieved national power. At the Nineteenth Party Congress, the most prominent figures in these groups entered the Politburo, giving Xi a majority in this powerful decision-making body. Meanwhile, many cadres in these groups also rapidly rose to various other key positions in the Chinese party-state system: 1) The “Second Red Generation”; 2) Shaanxi; 3) Tsinghua University; 4) Hebei; 5) Fujian; 6) Zhejiang; 7) Shanghai

Rule of the rigid compromiser - Cheng Li & Diana Liang A clear-eyed view of Xi’s priorities and approach—and not a reductionist or caricatured image that fails by either over- or understatement—should help Washington formulate a smarter, more strategic approach to China in this new era. Analysts and policymakers must identify where U.S. priorities and strategic advantages lie, determine where and how the country is willing to expend energy pushing back on Xi’s agenda, and continue to reach for cooperation with Xi where it is not only possible but necessary.

Secretary to Fallen Ex-Vice Finance Minister Himself Goes Down - Caixin Global Liu Xiaohua, secretary to convicted ex-Vice Finance Minister Zhang Shaochun, took 600,000 ($87,000) in bribes, a Beijing intermediate court said recently...Interestingly, secretary Liu was actually detained by police before the investigation in Vice Minister Zhang began. And the court said last week it was lenient on Liu because he cooperated with investigators and offered of details not known to regulators — though it stopped short of saying Liu ratted out his boss.

Foreign and Defense Affairs

31st Chinese naval escort taskforce visits Australia - China Military The 31st Chinese naval escort taskforce, composed of the amphibious dock landing ship Kunlunshan (Hull 998), the guided-missile frigate Xuchang (Hull 536) and the comprehensive supply ship Luomahu (Hull 964), arrived in Sydney, Australia, on the morning of June 3, local time, for a five-day friendly visit to Australia.

Chinese military gives hints about the true nature of Sunday’s UFO sightings across China - Global Times The JL-3 is China's latest SLBM under development that is expected to be able to reach targets farther away with higher accuracy and capable of carrying more warheads than China's current SLBMs, Xu Guangyu, a senior consultant at the China Arms Control and Disarmament Association, told the Global Times on Tuesday. According to a Monday report by Russia's state TV channel RT, the JL-3 has a range of up to 14,000 kilometers and is equipped with 10 independent guided nuclear warheads.

Beijing offers preferential bank services for military personnel, veterans - Xinhua With relevant certificates, beneficiaries will be able to apply for exclusive bank cards to enjoy more services in banks. Honored military personnel in active service and veterans, disabled soldiers, and families of martyrs will receive more prioritized offers.

China withdraws bid for Greenland airport projects: Sermitsiaq newspaper - Reuters A Chinese state-owned company has withdrawn its bid to build two airport projects in Greenland, the Sermitsiaq newspaper reported on Tuesday citing a company official.

A Foot In Both Worlds: Students Under Suspicion In China And The U.S. : NPR As trade and other tensions mount between the United States and China, some Chinese students studying in America say they feel they're increasingly under suspicion.

US will sell 34 surveillance drones to allies in South China Sea region to keep closer eye on Beijing’s activities | Reuters ScanEagle drones, made by Boeing, will be sold to governments of Malaysia, Indonesia, the Philippines and Vietnam for a total of US$47 million

Doug Paal - U.S.-China Dialogue Podcast Doug Paal was a Special Assistant to President George H.W. Bush during the June 4, 1989 Tiananmen Square crackdown and from that position orchestrated the U.S. response. Senior Director Paal explains President Bush's unique personal history with many in the Chinese leadership and how shared anti-Soviet and nonproliferation goals provided a foundation for interacting with the Chinese Communist Party after Tiananmen. Then, in the George W. Bush Administration, he represented the United States on Taiwan and explains how the election of the opposition party there challenged U.S. policy in the region.

Tech and Media

Huawei Buys Up Russian Company Specialising in Facial Recognition Tech - Report - Sputnik International Chinese telecommunications titan Huawei has purchased Vocord, a Moscow-based tech company focused on facial recognition systems, in a $50 million deal, Russia's Vedomosti newspaper has reported, citing sources familiar with the agreement.

一小时4元 共享单车集体涨价贵过坐公交... 来自瞭望东方周刊 - 微博 CCTV reports that bike-sharing apps like Mobike and Bluegogo have increased prices since April, and now, at least in Beijing it is more expensive to ride these bikes than taking a bus.

Yicai Global - Tencent Quits Bidding for South Korean Game Firm Nexon The Chinese tech giant withdrew from the process after an evaluation, but two Tencent-invested South Korean internet and gaming companies, Kakao and Netmarble, submitted final offers, tech media 36Kr reported today. The two firms, MBK Partners, KKR and Bain Capital made final bids in an auction that closed on May 31.

Apple is now restricting Chinese language podcasts in China | TechCrunch This week, the U.S. tech giant has pulled a handful of Chinese-language podcasts from its Chinese Podcasts store, one of the few remaining channels for people in mainland China to find content immune from scrutiny by the country’s media regulators. The crackdown seems to be taking an incremental pace so far. Three podcasters, including hosts of NickTalk and Two I.T. Uncles (两个iT大叔), confirmed with TechCrunch on Tuesday that their shows disappeared from Apple’s Chinese Podcasts app this week.

5G Licenses Coming ‘Soon’ to China, but Carriers May Not Rush to Roll Out Networks The government originally planned to enter the full commercial licensing stage for 5G next year, but is likely to have been inspired to move faster due to increased attention the U.S. is devoting to the technology, industry insiders said. “Both China and the United States regard 5G as an important part of their national strategy,” one said. “American carriers have begun to use 5G commercially, and China is bound to exert its strengths.”..while mentioning China’s “competitive advantage” in the field, the MIIT statement played up the international character of its 5G network, referring to the involvement of “Nokia, Ericsson, Qualcomm, Intel and many other foreign enterprises (that) have participated substantially in the technology testing stage.”

VC Hotshot to Set Up Own Shop - Caixin Global Gan Jiaping, also widely known as J.P. Gan, plans to leave top firm Qiming Venture Partners later this month and set up his own business in early July, Caixin learned Tuesday. Gan has handed in his notice at Qiming, where he’s currently a managing partner, he told Caixin.

Investors say 'capital winter' will prune China's overheated tech sector · TechNode A startup report found that a growing number of entrepreneurs in China expect fundraising to be more difficult in 2019, due in part to government efforts to reduce financial risk. According to data from China VC Tracker, both deal value and deal volume dipped in April.

Energy, Environment, Science and Health

State Council lays out key tasks for healthcare reform in 2019 The circular mandates efforts to provide more accessible and cheaper healthcare services and to further reform the system of healthcare insurance, medical care and drug circulation.

Chinese Scientist’s Gene-Edited Twins at Risk of Premature Death - Sixth Tone Scientists from the University of California, Berkeley examined the genetic data of 409,693 people of British ancestry and found that the mortality rate in individuals with 32 missing base pairs on each of their CCR5 genes — a mutation called Delta 32 that has been linked to HIV resistance — increased by 21%, according to a study published Monday in the journal Nature Medicine. The subjects for the study had voluntarily submitted their DNA to the UK Biobank, a database for public health research.

Action Needed on Spiraling Student HIV Rates: Experts - Caixin “Recent surveys indicate that about half of college students received sex education, which is usually minimal (does not include precautions on HIV and sexually transmitted diseases (STDs)), conservative and heteronormative (which perpetuates a stigma associated with homosexuality and HIV infection),” said the researchers, two of whom are affiliated with Tsinghua University and one of whom works at the Chinese Center for Disease Control and Prevention (China CDC).


Chinese School Under Fire for Allegedly Admitting Children Based on Parents’ Qualifications - Caixin Global Parents in Sichuan province complained last week that one private school affiliated with Sichuan Normal University, Shengfei Primary School, was asking parents to bring their degree certificates to a first-grade admissions event. The requirement unfairly disadvantaged children whose parents had received less education, the parents complained.

State Council issues guideline on education finance duties Three aspects are divided in the reform: compulsory education, student subsidies, and other education sectors, including preschool education, high school education, vocational education and higher education. Central and local governments share fiscal duties in compulsory education. The burden ratio is formulated according to a national basic standard. Central finance shares 80 percent in the first level; 60 percent in the second level; and 50 percent in the third, fourth and fifth levels 国务院办公厅印发《教育领域中央与地方财政事权和支出责任划分改革方案》

Rural and Agricultural Issues

Yicai Global - China Promotes 25 Pesticides to Halt Fall Armyworm's Advance The ministry has also instructed local authorities to recommend use of the pesticides, which include Indoxacarb and Chlorantraniliprole, to farmers, it said in an emergency statement posted on its website today. The list of insecticides was drawn up on the advice of experts since conventional registered pesticides against the pest are not yet available in China, the ministry said. It also tentatively set a deadline for use of Dec. 31 next year, based on the growth cycle of the fall armyworm and the actual need for prevention and control.