Ren Zhengfei quotes Mao in Huawei's PR offensive; Political deviancy and policy implementation

Liu He arrives in DC today in advance of the principal-level trade negotiations that reconvene on Thursday. DC is expecting a nasty bought of winter weather Wednesday (snow, sleet, ice, rain) so it is good he won’t have to worry about all the coming flight cancellations.

Liu is once again called “Chairman Xi Jinping’s special envoy 习近平主席特使” in official Chinese statements about this round of the talks, so perhaps he has more to offer this visit. I believe the last time he had this designation was May 2018 when he and Treasury Secretary Mnuchin thought they had a deal, until President Trump blew it up after much criticism that it was too weak.

Huawei has launched a coordinated (with Beijing?) communications counter-offensive to combat the US pressure on European countries to block the firm from 5G networks. Huawei founder Ren Zhengfei gave more western media interviews, including to BBC, in what was clearly not a coincidence since the UK seems to be wavering in the face of US demands to de-Huawei its networks. Do any readers know which communications and government relations firms are helping Huawei in the US and Europe? If you do please let me know, someone is doing a good job.

President Trump meets Kim Jong-un in Vietnam next week. Will Xi Jinping make his first trip to North Korea to meet with Kim before the summit, will he summon Kim back to China?

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The Essential Eight 

1. US-China trade

Statement from the Press Secretary | The White House:

Principal-level meetings will begin on February 21, 2019.  For the United States, these meetings will be led by United States Trade Representative Robert Lighthizer and will include Secretary of the Treasury Steven Mnuchin, Secretary of Commerce Wilbur Ross, Assistant to the President for Economic Policy Larry Kudlow, and Assistant to the President for Trade and Manufacturing Policy Peter Navarro.  These meetings will be preceded by deputy-level meetings that will begin on February 19, 2019, led by Deputy United States Trade Representative Jeffrey Gerrish.

刘鹤应邀赴美磋商 罕见使用"习近平主席特使"身份_新浪财经_新浪网:

值得注意的是,刘鹤同志这次出访,罕见地使用了“习近平主席特使”这个身份。

上次使用这个头衔,还是去年5月中旬那次赴美磋商。

特使,肩负特殊的使命,往往也有特殊的受权。

China’s slow reforms stack odds against multinationals | Financial Times $$:

China’s moves over the past year to liberalise its financial sector, by raising or eliminating foreign-investment caps for insurance companies and brokerages, is a classic example. Ten or 15 years ago, such market access reforms could have given overseas finance companies a real opportunity to establish themselves in China. Instead, the delay gave their domestic competitors time to consolidate dominant market positions.

As one senior western finance executive told the Financial Times: “I must be really bad at my job because I’ve been coming to China for almost 30 years and if our operations here disappeared tomorrow, it wouldn’t make a bit of difference to our global business.”

This Caixin article has a very nice infographic timeline of the US-China trade dispute - China’s Vice Premier to Head to Washington: Ministry 


2. America's campaign against Huawei faltering in Europe

The US cannot crush us, says Huawei founder - BBC News:

Mr Ren spoke to the BBC's Karishma Vaswani in his first international broadcast interview since Ms Meng was arrested - and dismissed the pressure from the US.

"There's no way the US can crush us," he said. "The world cannot leave us because we are more advanced. Even if they persuade more countries not to use us temporarily, we can always scale things down a bit."..

Mr Ren said that allowing spying was a risk he wouldn't take.

"The Chinese government has already clearly said that it won't install any backdoors. And we won't install backdoors either.

"We're not going to risk the disgust of our country and of our customers all over the world, because of something like this.

"Our company will never undertake any spying activities. If we have any such actions, then I'll shut the company down."

Ren quoted from Mao Zedong's Collected Works when he said "If the lights go out in the West, the East will still shine 西方不亮东方亮,黑了北方还有南方。”... This phrase is from 中国革命战争的战略问题 Problems of Strategy in China's Revolutionary War" - 引《毛选》名句答BBC 任正非就是这么自信|任正非|毛选|华为_新浪新闻 

Mao's works are popular and may be even more so again in official circles if rumors are true that Xi told the entire Central Committee last year to read Mao's writings on how to deal with the US...

In Rebuke to U.S., Germany Considers Letting Huawei In - WSJ $$:

The German government is leaning toward letting Huawei Technologies Co. participate in building the nation’s high-speed internet infrastructure despite U.S. warnings about the risks posed by the Chinese tech giant, according to senior German officials.

Washington had asked it to restrict Huawei from bidding for so-called 5G infrastructure contracts in Germany, but Berlin is unwilling to do so, according to officials.

The preliminary decision made by a small group of relevant ministries two weeks ago is set to be discussed by leaders of Chancellor Angela Merkel’s conservative bloc at a meeting Tuesday night. Even if confirmed, it could still face opposition in her cabinet or in parliament, according to a small group of senior civil servants, diplomats and legislators who would prefer to ban Huawei on strategic and security grounds.

Chinese government doesn't get involved in Huawei's business: German boss | Reuters:

“The state does not have a stake in Huawei and it keeps out of our business,” Dennis Zuo, the head of Huawei’s German business told Handelsblatt newspaper.

Trump's Huawei Threats Dismissed in Italian Pivot Toward China - Bloomberg

A senior Italian government member has pushed back against U.S. pressure in the global tussle over Huawei Technologies Co., saying the Chinese networking giant is not a specific concern for the populist coalition.

“People always say Huawei yes or no, the real question should be about foreign equipment manufacturers being allowed to access your network,” Michele Geraci, undersecretary at the Ministry for Economic Development, said in an interview at his Rome office.

Would the US campaign against Huawei be more successful if the Europeans liked the American President?

Chinese analysts say the UK can set an example for European countries to deal with concerns over Huawei through technical measures - Global Times:

Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, told the Global Times on Monday that it was not in European countries' interests to blindly follow the US, which was confusing security with the market to crack down on Huawei.

The UK made a proper move by introducing ways to deal with 5G cooperation, Cui said.

Cui noted that because of warnings from the US, there appeared to be a trend toward a new Cold War in Europe.

"Because China does not share the same ideology as the US, Chinese products are unsafe, according to US logic," Cui said. He warned that conditions for a new Cold War would develop if ideology becomes the main issue.

Huawei CEO: "We will never" provide Chinese government with any information - CBS News

China urges comprehensive, accurate interpretation of its intelligence law - Xinhua:

Some Western media have voiced concerns over Article 7 of the law and suggested their countries adopt restrictive measures on Huawei's technologies and devices.

Chinese Foreign Ministry Spokesperson Geng Shuang dismissed such concerns at a routine press briefing.

He said Article 7 stipulated the obligations of organizations and individuals to lawfully support, assist and cooperate with the country's intelligence service, but Article 8 clearly stipulated the national intelligence service should carry out its work according to law, respect and protect human rights, and safeguard the legal rights and interests of individuals and organizations.

"I'm wondering whether those who accused the law have carefully read its articles. I hope they can look at it comprehensively and understand it accurately, instead of making one-sided interpretation that is out of context," Geng said.


3. Hacking and cyber theft

Comment: This is entirely expected. In the last year Xi has repeatedly stressed the need to control key technologies and become increasingly self-reliant, and there is no way China can do that on its own in the near-term, so acquiring those capabilities by any means possible is the obvious path. Do you want to be the military or civilian official who has to tell Xi "sorry boss but we just cant figure out how to make XX and since cyber theft upsets America other countries we didn't think it was a viable option"?

Chinese and Iranian Hackers Renew Their Attacks on U.S. Companies - The New York Times:

A summary of an intelligence briefing read to The New York Times said that Boeing, General Electric Aviation and T-Mobile were among the recent targets of Chinese industrial-espionage efforts. The companies all declined to discuss the threats, and it is not clear if any of the hacks were successful..

“Some of the recent intelligence collection has been for military purposes or preparing for some future cyber conflict, but a lot of the recent theft is driven by the demands of the five-year plan and other technology strategies,” said Adam Segal, the director of the cyberspace program at the Council on Foreign Relations. “They always intended on coming back.”

Chinese hackers increase attacks on telecoms companies | Financial Times $$:

Dmitri Alperovitch, co-founder and chief technology officer of CrowdStrike, said Chinese cyber espionage was now back to the same levels seen prior to a US-China agreement to limit economic spying signed by the two countries in 2015.

“In terms of volume, China is by far the most active [in 2018],” said Mr Alperovitch. “They are fully back and engaging in economic espionage across numerous industries of strategic interest to China.”

China the world's biggest hacking victim, Chinese report says - Sydney Morning Herald:

Beijing security firm Knownsec Information Technology reported on Monday that Chinese organisations suffered an average of 800 million cyber attacks daily in 2018, hitting a peak of 4.9 billion a day in August.

Most (97 per cent) were by domestic hackers, but a growing percentage came from overseas, the report said.


4. Political deviancy and policy implementation

Perhaps this will improve policy implementation, but it is not like the CCDI has not been pushing this for years.

China's top disciplinary authorities to tighten political inspection - Xinhua:

The inspections will target the fulfillment of duties of Party organizations to uncover political deviation, said a post on the website of the Communist Party of China (CPC) Central Commission for Discipline Inspection (CCDI) and the National Supervisory Commission.

Special efforts will be made to find problems in implementing the Party's policies and major decisions of the CPC Central Committee, such as corruption and undesirable work styles.

The central authorities will take tough actions against the practice of formalities for formalities' sake and bureaucratism, extend inspection to cover all fronts, and consolidate and develop a sweeping victory in the fight against corruption.

中央巡视将重点关注哪些问题? 中央巡视工作领导小组办公室副主任 王瑛 

中央巡视工作领导小组办公室副主任 王瑛:2019年,中央巡视工作将深化政治巡视,紧扣被巡视党组织职能责任,深入查找政治偏差,着力发现在落实党的路线方针政策和党中央重大决策部署方面存在的责任问题、腐败问题、作风问题,违反党的“六项纪律”、搞“七个有之”等问题,坚决整治形式主义、官僚主义,高质量推进巡视全覆盖,更好发挥巡视在全面从严治党中的战略作用,巩固发展反腐败斗争压倒性胜利。

From a recent speech by a PBoC official - Xu Zhong: Why China’s Reform Documents Are Often Ambiguous - Caixin:

 Most policy documents are drafted by commissioners from different departments. When they come together to exchange ideas on the draft and to sign the papers, they often discover that different departments have different opinions. The varied views might be a result of different ideas and experience, or due to a conflict of interest. Whatever the reason, it is hard to coordinate and reach agreement in a limited time, especially when the commissioners are not empowered to adjust their positions or make any compromise for their own department.

Therefore controversial issues, which attract differences of opinion, are usually taken out of final policy documents. So in fact, what appear to be unified positions are actually the result of disagreements being removed. The problem is that the points where agreement is difficult are exactly the key issues which reform needs to resolve…

Lastly, from an implementation perspective, administrative bureaus have too much discretion, which is not in line with the spirit of marketization and legalization. The legislature has empowered administrative departments to write laws, but because controversial views are left out of the laws for reasons mentioned previously, laws made collectively by different departments tend to wind up using general and ambiguous language.

As a result, implementing laws, regulations and systems often requires administrative departments to then come up with detailed regulations in order to lay out standards and procedures. This gives excessive discretion to administrative forces, which leads to what some have described as “high-standard legislation, common breach of the law, and selective law enforcement.”


5. PLA dipping its toe in Afghan quagmire?

China in Central Asia: A military foothold takes root on Afghanistan's doorstep - The Washington Post:

Two miles above sea level in the inhospitable highlands of Central Asia, there’s a new power watching over an old passage into Afghanistan: China.

For at least three years, Chinese troops have quietly monitored this choke point in Tajikistan just beyond China’s western frontier, according to interviews, analysis of satellite images and photographs, and firsthand observations by a Washington Post journalist.

While veiled in secrecy, the outpost of about two dozen buildings and lookout towers illustrates how the footprint of Chinese hard power has been expanding alongside the country’s swelling economic reach...

In late 2017, the Development Research Center, an influential think tank under China’s cabinet, invited a handful of Russian researchers to its central Beijing offices. In what was billed as a private seminar, the Chinese explained why China had a security presence in Tajikistan that extended into the Afghans’ Wakhan Corridor, according to Alexander Gabuev of the Carnegie Moscow Center, a Russian participant.

The Chinese researchers took pains to describe the outpost as built for training and logistical purposes — not a military occupation. They also sought to gauge Russia’s reaction with questions: How would Moscow view China’s move into its traditional sphere of influence? Would it be more palatable if China deployed private mercenaries instead of uniformed men?


6. Rural revitalization and 2019 Document #1 (again)

China Focus: No. 1 central document prioritizes agricultural, rural development - Xinhua:

Agriculture, rural areas and farmer's issues remain China's top priorities for the 16th consecutive year as its "No. 1 central document" prioritizes development of agriculture and rural areas.

The document, the first policy statement released by central authorities each year and seen as an indicator of policy priorities, was made public Tuesday by the Communist Party of China (CPC) Central Committee and the State Council.

"This year and the next will mark a decisive period for completing the building of a moderately prosperous society in all respects, and quite a few tough tasks must be fulfilled in the fields relating to agriculture, rural areas and rural people," the document said...

Efforts will be stepped up to build a new policy system for agricultural subsidies, according to the document, which said the country would formulate and improve agriculture support and protection policies following principles that comply with World Trade Organization rules, protect farmers' interests and support agricultural development.

The document also covered policies to improve the rural governance mechanism to maintain rural harmony and stability, strengthen rural primary-level Party organizations, and enhance Party leadership on agricultural and rural affairs.

China to help domestic soybean, corn growers, raise farm imports - Global Times:

China will take measures to help domestic soybean and corn farmers, while also seeking to expand imports of certain agricultural products that are considered in shortage through diversified channels, according to a central government guideline released on Tuesday.

The plan, came before a new round of trade negotiations between Chinese and US officials set for Thursday and Friday, shows Chinese policymakers' determination to be less dependent on US agricultural imports such as soybeans even if a deal is likely to be reached, industry analysts said.

Under the guideline, released by the Central Committee of the Communist Party of China and the State Council, China's cabinet, Chinese authorities will consolidate the production capacity of such products as edible-oil crops and cotton through improving quality and efficiency.

中共中央 国务院关于坚持农业农村优先发展做好“三农”工作的若干意见_中央有关文件_中国政府网:

今明两年是全面 小康社会的决胜期,“三农”领域有不少必须完成的硬任务。党中央认为,在经济下行压力加大、外部环境发生深刻变化的复杂形势下,做好“三农”工作具有特殊重要性。必须坚持把解决好“三农”问题作为全党工作重中之重不动摇,进一步统一思想、坚定信心、落实工作,巩固发展农业农村好形势,发挥“三农”压舱石作用,为有效应对各种风险挑战赢得主动,为确保经济持续健康发展和社会大局稳定、如期实现第一个百年奋斗目标奠定基础。

Top Internet firms like Alibaba and JD are investing a lot in rural efforts, in part because of the political need to support Xi’s war on poverty but also because rural revitalization will be the next big growth area for Chinese consumption and growth


7. PLA lacking confidence in its abilities?

The Chinese Military Speaks to Itself, Revealing Doubts - Dennis Blasko:

A large body of evidence in China’s official military and party media indicates the nation’s senior civilian and uniformed leaders recognize significant shortcomings in the warfighting and command capabilities of the People’s Liberation Army (PLA). However, most of this evidence is not translated into English for public consumption and is not considered in much of the foreign analysis of China’s growing military capabilities. This situation is not new, but goes back for decades.

Yet, the increasing scope and frequency of these self-critiques during the tenure of Xi Jinping as chairman of the Central Military Commission casts doubt over the senior party and military leadership’s confidence in the PLA’s ability to prevail in battle against a modern enemy. Furthermore, the limitations illustrated by these internal assessments will likely moderate China’s near- and mid-term national security objectives and the manner in which they are pursued. This lack of confidence in PLA capabilities contributes to Beijing’s preference to achieve China’s national objectives through deterrence and actions short of war...

If the entire range of shortcomings in existing PLA capabilities identified by the Chinese media is incorporated into analysis of Chinese intentions, it is extremely difficult to support the U.S. National Defense Strategy’s assertion that China is conducting a “a military modernization program that seeks Indo-Pacific regional hegemony in the near-term” [emphasis added]. The scope and timeframe of that purported objective suggest a level of confidence not revealed by the Chinese leadership’s own public assessments of PLA capabilities.

Meanwhile, the propaganda organs have launched a commentary series on Xi Jinping "strong military thought" - 强军思想引领新征程.


8. Little respite for online game developers and operators

5,000 Online Games Await Government Approval After Freeze - Caixin:

new games submitted early this year are unlikely to reach the public until 2020, market sources said.

The revelations come after the regulator, the National Radio and Television Administration (formerly known as the State Administration of Press Publication, Radio, Film and Television) approved 91 games for release last week in its sixth batch of approvals since an eight-month freeze ended in December...

One game company executive told Caixin the approvals were issued based on their submission dates, however, only applications through April last year had yet been cleared. Around 5,000 more games have been shelved and the staggering backlog may not be cleared until the third quarter of this year, said the person, who asked not to be identified.

As regulators continue to squeeze - Tencent’s Live Streaming Notice – Niko:

Tencent Games announced a plan to standardise the behaviour of anchors on live streaming platforms. The move comes after regulators have intensified supervision of the live streaming industry in the past year. As an online games operator, Tencent is assuming responsibility for the game content and responsibility for the anchors’ compliance in promoting the game on live streaming platforms. Tencent is calling on the entire industry to abide by national laws, regulations and policies to promote healthy game content.


Business, Economy, Finance And Trade

Growing Economic Uncertainties Dim Confidence - Caixin The report, released by the China Entrepreneurs Forum, showed that an index tracking business confidence declined 4 percentage points to 52.69 in the second half last year, the biggest drop since the report started in 2010. The index also moved closer to 50, the point signaling contraction. According to Wang Yong, an economics professor at Tsinghua University, about 60% of entrepreneurs surveyed by the report said they believe the business outlook will turn harsher in the next three to five years because of weakening prospects for China and the global economy.

China Backslides in Campaign Against Air Pollution - Caixin n January, Beijing’s average PM2.5 concentration increased 52.9% year-on-year to 52 micrograms per cubic meter, up from 35 in January 2018. Last year, Beijing’s average matched China’s official air quality standard — though still fell far short of the World Health Organization’s recommendation of a PM2.5 concentration of 10 micrograms per cubic meter. The Fenwei plain, which encompasses major coal-producing provinces Shanxi and Shaanxi, saw pollution increase 16.4% from January 2018 levels, with an average concentration of 128.

Property sales in major Chinese cities to decline in Q1: report - Xinhua The total floor space of commercial housing sold in 40 cities monitored by real estate research agency E-house China R&D Institute went down 31 percent month-on-month in January. On a yearly basis, the decline amounted to 14 percent with third- to fourth-tier cities seeing a 21-percent plunge in sales. Shen Xin, an E-house researcher, attributed the signs of cooling to the concerted efforts of central and local authorities in curbing housing speculation and keeping home prices stable

经济日报 - 稳就业的政策优先序和实施原则 - 蔡 昉 CASS vice chair Cai Fang argues that among all the “six stabilities” that we covered last year – stabilizing employment, finance, foreign trade, foreign investment, investment and expectation – stabilizing employment should be the top priority. He estimates the current economic growth is in line with people’s demand for job employment and there is no need to issue strong stimulus at the macro economy level.

China's JD.com to lay off 10 percent of senior executives this year: report | Reuters JD.com Inc, one of China’s largest e-commerce sites, will lay off 10 percent of its senior executives this year, Chinese online media outlet Sina Tech reported on Tuesday, citing unnamed sources. The cuts were announced at the company’s annual party last week, the report said, adding that JD.com, which has nearly 100 senior executives, had confirmed the planned layoffs.

16 Chinese cities surpass 1 trillion yuan GDP in 2018 - ECNS Ningbo and Zhengzhou became the latest cities in China to generate more than 1 trillion yuan by the end of 2018, bringing the total number of "1 trillion yuan club" cities in the country to 16

Alibaba Raises Stake in Top Chinese Investment Bank CICC - Bloomberg The e-commerce giant bought 117.1 million Hong Kong-listed shares at HK$15.50 apiece on Feb. 14, CICC said in a filing. That expanded its stake to about 11.7 percent of stock listed in the city from roughly 5 percent, almost matching Tencent Holdings Ltd.’s 12 percent.

Who is going to step up to help Bitmain? -Offthechain The latest filing reveals Bitmain’s financial performance for 2018 through Q3 (Q4 is not included) and claims the company booked $3 billion in revenue and $500 million in profits.
This suggests that the company suffered approximately $500 million in losses during Q3 2018 — not exactly the data points you want investors to see as you’re trying to go public. There are also unverified reports surfacing on Twitter that Bitmain’s crypto balance sheet is down almost 90% from a year ago.

As McKinsey Sells Advice, Its Hedge Fund May Have a Stake in the Outcome - The New York Times The McKinsey fund took stakes in two China-focused PAG funds. In a 2010 London exchange filing, PAG disclosed that MIO had a stake of more than 10 percent in one fund, worth about $20 million. At the end of 2015, MIO also owned more than a quarter of another China-focused PAG fund. In 2008, Pacific Alliance had made a big bet on a real estate mogul [Guo Wengui] who owned a colossal office and luxury apartment complex next to the site of that year’s Summer Olympics in Beijing. Court records show that it lent $30 million to a company controlled by the mogul, who had deep ties to China’s intelligence community and was already notorious for allegedly orchestrating the downfall of a Beijing vice mayor with a sex tape.

In Depth: Tesla Charges Into China - Caixin The 84-hectare Tesla factory complex going up 80 km southeast of downtown Shanghai signals a shock wave that’s about to hit the world’s largest auto market. The American electric carmaker is expected to bring a new level of competition to China’s chaotic, crowded and heavily subsidized new-energy vehicle market, also the world’s largest. Policymakers have long courted domestic competition from Tesla to help rationalize the industry and are doing all they can to advance the project.

China's Tech Giants Seek More From Hong Kong Despite IPO Changes - Bloomberg From allowing companies to hold super-voting rights to letting key shareholders buy stock in IPOs, tech companies are lobbying Hong Kong Exchanges & Clearing Ltd. for changes or waivers that would help their businesses, according to people familiar with the matter. With intense competition from exchanges in New York and elsewhere to win listings, and many multibillion-dollar Chinese companies poised to go public, pressure is building on Hong Kong to maintain its position as a financial center.

Financial Regulator Appointed Head of Mega Insurance Investment Fund - Caixin Ren Chunsheng, director of the insurance funds investment supervision department of the China Banking and Insurance Regulatory Commission (CBIRC), will become the party secretary of China Insurance Investment Fund (CIIF), the CBIRC’s organization department announced on Monday. He will also be the party chief of China Insurance Investment, the general partner of the CIIF. Ren’s name now tops the list of company leaders on the official website shared by CIIF and China Insurance Investment.

China developers snap up distressed real estate debt | Financial Times $$ China Vanke, another big developer, has teamed up with Industrial and Commercial Bank of China to launch a fund focused on distressed property debt.

China to Combine Africa, Latin America Investment Funds - Caixin The China-Africa Fund for Industrial Cooperation (CAFIC) and the China-LAC Industrial Cooperation Investment Fund will continue to operate under separate names, but their project appraisal and investment decisions will be unified under the management of a single new company to be set up by the Investment Center of the State Administration of Foreign Exchange (SAFE), sources with knowledge of the matter told Caixin. Han Hongmei, CAFIC executive director and a former SAFE chief accountant, will become the new company’s chairwoman.

Tianqi Lithium’s $4.1 Billion Chilean Bet - Caixin The $4.1 billion deal, however, is seen by some as a risky move. Tianqi, which has around 12 billion yuan ($1.77 billion) in assets, relied on leverage to make the investment. With the deal, Tianqi is placing a huge bet that demand for lithium — a vital material in the production of batteries for electric vehicles — will see strong growth in coming years as the Chinese government has chosen electric vehicles as a key strategic industry.

Chinese State Media Add More Fuel to $882 Billion Equity Rally - Bloomberg A front-page story in the China Securities Journal noted a bullish trend in financial markets, while Shanghai Securities News said insurers are optimistic about the country’s equities. The articles come against the backdrop of the Shanghai Composite Index advancing 12 percent from Jan. 3 and the small-cap ChiNext Index adding 16 percent. A widely watched state television show also took the unusual step of airing a clip on stocks last week.

Pilot reform removes permit for corporate bank account - Xinhua Companies in Jiangsu and Zhejiang provinces in east China no longer have to ask for official approval when opening bank accounts starting Feb. 25, as China continues reforms to improve its business environment.

China’s Current Account Surplus Touches Record Low - Caixin China’s current account surplus in 2018 plunged 70% year-on-year to a record low of $49.1 billion, according to the country’s foreign exchange regulator. It was widely speculated that China might book its first full-year current account deficit in 25 years after the economy ran a deficit of $28.8 billion in the first quarter. Following small surpluses in the second and third quarters, robust surplus growth in the fourth quarter backed by strong exports resulted in the narrow surplus, according to the State Administration of Foreign Exchange (SAFE) on Frida

Could Rising Household Debt Undercut China’s Economy?   Liberty Street Economics Overall, the risks related to household debt in China are generally viewed as manageable by most observers. However, it is important to caution against being overly sanguine, especially since aggregate measures of debt and income may mask important differences among households. In fact, some household survey data already paint a more worrisome picture. For example, a recent working paper using micro-level data from 2015 suggests that a quite large proportion of Chinese households with debt outstanding to formal financial institutions—that is, excluding informal borrowing—already carry high debt service burdens.

Trade War Pain Spreads to Hong Kong and Singapore Ports - Bloomberg Hong Kong port activity was the third gauge of 10 on Bloomberg’s dashboard to move into negative territory, while Singapore throughput plunged closer to that line in January. These are two of the busiest ports in the world, whose downturn shows the weight of weak Chinese demand for goods. Sentiment data are threatening to move into the red zone, too. Global trade flows will “likely stagnate in a best-case scenario,” says Bloomberg Intelligence senior analyst Rahul Kapoor. If factory activity stays as quiet as the PMIs have suggested, there’s “real risk of significant downside, notwithstanding a U.S.-China trade truce,” he said.

BioCentury - Chinese Innovation: Threat or Opportunity? As a scientific arena in which the U.S. has long been recognized as the global leader, biotech offers a concrete example of how China’s drive for innovation can create an increasingly level playing field for U.S. and European firms, and simultaneously accelerate global development of new treatments targeting unmet medical needs.


Politics, Law And Ideology

I am Chinese, insists table tennis queen Deng Yaping as she posts photos of her and France-born son’s passports | South China Morning Post The former table tennis champion Deng Yaping has posted photographs of her and her son’s Chinese passports on social media to try to put a stop to years of questions about their nationality. In a post on Sunday on Weibo, China’s equivalent of Twitter, Deng said she wanted to dispel a long-standing rumour about their status. Deng Yuwen suggested in a tweet that Deng's post is a reaction to a broader investigation underway of the nationality of Chinese politicians.

Xinjiang Aksu Prefecture strengthens anti-poverty commitment - Global Times Some poor people who have been influenced by extremism have less motive and willingness to rid themselves of poverty.  Their daily life heavily depends on government subsidies and they are "proud" of reaping without sowing, according to Wang Xin, head of the working group stationed in Yusitunke Ayikule village in Awati. Wang said that aside from trying to eliminate the influence of extremism, they make a public rating form - to praise villagers who earn better through diligent work and offer them awards.  "The rating system has efficiently encouraged villagers to rid themselves of poverty," Wang said. To accomplish targeted poverty alleviation work in Aksu, officials at different levels are required to pair up with poor people as relatives and regularly visit them to help with problems and difficulties in their daily life.

China’s social credit system shows its teeth, banning millions from taking flights, trains | South China Morning Post Millions of Chinese individuals and businesses have been labelled as untrustworthy on an official blacklist banning them from any number of activities, including accessing financial markets or travelling by air or train, as the use of the government’s social credit system accelerates.
The annual blacklist is part of a broader effort to boost “trustworthiness” in Chinese society and is an extension of China’s social credit system, which is expected to give each of its 1.4 billion citizens a personal score.

树牢底线思维 弘扬斗争精神全力维护国家政治安全--法制网 On Guo Shengkun's speech at the "National Political and Legal Organs Upholding State Political Security Work Conference"

‘It’s Hopeless But You Persist’: An Interview with Jiang Xue | by Ian Johnson | NYR Daily | The New York Review of Books The forty-five-year-old investigative journalist Jiang Xue is one of the most influential members of a group of journalists who came of age in the early 2000s, taking advantage of new—if temporary—freedoms created by the Internet to investigate pressing social issues. She worked at Chinese Business View (Huashangbao) until 2014, when she quit as its opinion-page editor over censorship. Since then, she has kept writing to an ever-shrinking audience on social media, most notably about the wives of several high-profile civil rights lawyers who have been arrested...Jiang talked about how Mao’s Great Leap Forward famine shaped her family, the heyday of independent media in China, and her faith as a devout Buddhist, which sustains her in what she feels is a hopeless cause.


Foreign and Military Affairs

China's top legislator vows to enhance exchanges with National Diet of Japan - Xinhua China's top legislator Li Zhanshu on Monday met with a delegation consisting of several members of Japan's House of Councillors, pledging to enhance the exchanges and cooperation with the National Diet of Japan, so as to promote Sino-Japanese relationship. Li, chairman of the National People's Congress Standing Committee, said there are important opportunities facing the two countries this year for further improvement and development of bilateral ties, as China-Japan relations were led back to the right track of development after Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe met three times last year and reached important consensus.

China's 3rd generation monograph on war wounds published - China Military The monograph series systematically sums up the Chinese military’s accumulated experience and lessons in war wounds treatment, as well as advanced treatment experience and techniques from foreign armies. Its publication and circulation are conducive to improving China’s war wounds treatment capacities constantly and forging a war wound treatment system for the Chinese military.

Ahead of Saudi visit, China seeks 'deeper trust' with Iran | Reuters Meeting Iranian Foreign Minister Mohammad Javad Zarif at a state guest house in Beijing, Chinese State Councillor Wang Yi said he had watched Zarif’s Sunday speech at the Munich Security Conference, where he had accused Israel of looking for war. “I saw on television how you defended the rights of Iran loud and clear at the Munich Security Conference. I think an audience of hundreds of millions of Chinese also watched what you said and you are a famous person now,” Wang said, in brief remarks in front of reporters.

Chinese traders freeze Australian coal orders amid 40-day customs delays: sources | Reuters It was not clear why China had stepped up checks on Australian imports, but tension between Beijing and Canberra has grown in recent months over issues of cyber security and China’s influence in Pacific island nations.

Opinion | China’s strategic opportunities are Beijing’s to lose | South China Morning Post Looking around the world, Western liberal democracies are in glaring disorder, ranging from Brexit and France’s “yellow vest” protests to Donald Trump’s protectionist “America first” policy, to the extent that Google has developed the “Tell Me Something Good” feature for its voice assistant. If disorder reflects a loss of direction, then one of China’s greatest strengths is its sense of direction, that is, clearly mapped plans for the short, medium and long term, coupled with the concerted efforts of the entire Chinese population working in the same direction. So far, none of the plans have gone unfulfilled, with quite a few realised well in advance...As long as China does not make a strategic mistake, no external force can reverse its course. China’s strategic opportunities, now as in the past, are in its own hands. -Zhou Bo is an honorary fellow with the PLA Academy of Military Science in China

Sweden to send inspector in detained Swedish publisher case - AP weden will send an inspector to Beijing to “get a clearer picture of what happened” during meetings in Stockholm between the daughter of a Swedish publisher detained in China, the country’s ambassador there and two businessmen to discuss the possible release of her father. Foreign Ministry spokeswoman Lina Eidmark says they had no advance knowledge of the meetings arranged by Sweden’s ambassador to China, Anna Lindstedt, who eventually was summoned home for an investigation.

China will not surpass America any time soon | Financial Times - Joseph Nye OpEd $$ Mr Trump’s weakening of alliances is a self-inflicted wound that poses as much of a threat to American interests as the rise of China does. If the US were to maintain its alliances, the prospects are slight that China could drive it from the western Pacific, much less dominate the world.

Singapore defense minister: Cost of conflict in South China Sea ′too high′ | DW In an interview with DW, Singapore's Defense Minister Ng Eng Hen downplayed concerns over a major confrontation emerging in the region and said that calling China a regional hegemon was a matter of "opinion."


Hong Kong, Macao

Building greater bay area presents new opportunities: People's Daily - Xinhua The development plan of the Greater Bay Area in southern China has presented new opportunities for the deepening of cooperation within the region, said a commentary to be published Tuesday on People's Daily..The development of the Greater Bay Area will facilitate the implementation of the new concept of development, the further deepening of reform and opening up, the building of a new system of open economy in line with international standards, and the development of a new platform for high-level international cooperation, said the article.// The page 1 commentary - 人民日报评论员:抓住大机遇 建好大湾区 


Tech And Media

Chinese blockbusters make run at Hollywood - China Daily “On the heels of Operation Red Sea, Detective Chinatown 2, Wolf Warrior 2 and The Mermaid, The Wandering Earth continues to prove that China’s film industry has truly cracked the code with entertaining their own domestic market.  Hollywood, be warned,” said Chris Fenton, a California-based producer and a trustee of the US-Asia Institute...“Now its (China’s) consumers are losing interest in Hollywood content — a result of quality local-language competition and negative US sentiment caused by the ongoing ‘trade war,’” said Fenton, who produced or supervised 20 films, including Looper, Iron Man 3 and 47 Ronin.

Ai Weiwei’s segment was cut from ‘Berlin, I Love You’ to appease China, artist and producers say - Los Angeles Times Chinese dissident artist Ai Weiwei’s contribution to the film anthology “Berlin, I Love You” was cut from the final version released in the U.S. earlier this month. The artist and two producers say it’s because his participation was seen as a liability for securing future funding and access to China. “The reason we were given for the episode’s removal,” Ai said, “was that my political status had made it difficult for the production team.”


Society, Art, Sports, Culture And History

Viral ‘Cherry Freedom’ Meme Critiques China’s Cost of Living - Sixth Tone “Cherry freedom” — a new term about the ability to purchase pricey imported cherries without a second thought — has been widely discussed on the Chinese internet since the Lunar New Year earlier this month. The fruit has become a popular choice for festive gifting in recent years, but following a cost increase, netizens have advanced it as a new standard for wealth and a way to playfully lament their own poverty.


Energy, Environment, Science And Health

Government works out details of new domestic garbage rules - SHINE Shanghai is preparing to implement Shanghai's first domestic garbage regulation from July 1, the city’s legislative body said on Tuesday. The government is working on standards for green packaging in the parcel delivery industry, and a list of banned disposable items offered in restaurants and hotels, according to the legislation commission of the standing committee of Shanghai People’s Congress. The introduction of the above rules will be synchronized with the regulation on domestic garbage management.

Tanzanian court sentences Chinese 'Ivory Queen' to 15 years for smuggling | Reuters Yang Feng Glan had been charged in October 2015 along with two Tanzanian men with smuggling 860 pieces of ivory between 2000 and 2004 worth 13 billion shillings ($5.6 million). She denied the charges. Police sources said Yang, 69, had lived in Tanzania since the 1970s and was secretary-general of the Tanzania China-Africa Business Council. A Swahili-speaker, she also owns a popular Chinese restaurant in Dar es Salaam.


Education

Ministry to ban teachers from assigning homework via WeChat, QQ - ECNS China's Ministry of Education said on Friday that teachers in primary schools must not assign homework through the social media app WeChat or QQ messaging service, nor should they shift the duty of correcting homework to parents. The statement was a written reply to a proposal submitted at the first session of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body.

Actor’s Woes Continue After Plagiarism Ouster From Peking University - Caixin A well-known Chinese actor who was ousted from Peking University because of accusations of plagiarism has now had his degree revoked from a second prestigious school — the Beijing Film Academy (BFA). BFA announced on Tuesday via a Weibo statement that it would withdraw actor Zhai Tianlin’s PhD degree, responding to the school's interim investigation results regarding Zhai’s “academic irregularities.”


Food And Travel

Chinese tourist arrested in US for fighting in public accused of domestic violence | South China Morning Post The Chinese consulate in New York issued the alert on Saturday in an article on social media app WeChat reminding travellers from China that physical fighting in the US was not regarded as a small thing. The article said a woman, surnamed Zhang, had recently sought help from the consulate when her husband was arrested by American police after a fierce quarrel between the couple had turned into a tussle outside their New York hotel.