Risks and struggle; Fentanyl and trade; FTZ blues; Local governments short of cash; Pork price rationing starts in Nanning

Xi Jinping gave a tough speech at the opening ceremony of a training program for young and middle-aged officials at the Party School of CPC Central Committee (National Academy of Governance). He talked about the risks to the Party and China and the need for struggle and for cadres who know how to struggle. The themes are similar to the ones we know about from the extraordinary multi-day meeting on risks Xi convened in January.

China is under a lot of pressure, the Party and Xi know this and the continue to harden the system. Will it be enough to withstand the internal and external challenges? I think it will, but not before things get much uglier.

At the same time, we should not ignore the opportunities Xi and the Party see for China. The oft-repeated phrase "当今世界正处于百年未有之大变局 the world today is undergoing major changes unseen in a century", used again in this speech, is worth paying attention to.

Another day, another series of China-related tweets from President Trump.

The President’s comments make it look like the trade discussions are still not going well, and there is as yet no date for the mooted September visit to DC by Liu He and team.

Thanks for reading.


1. Xi on risks, struggle and opportunity

In his speech he highlighted the importance of “ideological tempering”思想淬炼 and “combat spirit”斗争精神 for the young officials, so they will stay loyal and be daring in addressing all kinds of problems at their works. Xi said the China’s great rejuvenation can never be achieved easily and the party must engage in “great struggle” to achieve its “great dream” 实现伟大梦想必须进行伟大斗争. He asked the officials to resolutely combat against any challenges endangering the CCP regime, endangering China’s sovereignty, security, its rights to develop, ant its great rejuvenation. 

Xi Focus: Xi emphasizes "struggles" to achieve national rejuvenation - Xinhua

Xi reminded the officials of both a hard-won historic opportunity and a series of major risks and tests the country faces, adding that maintaining a fighting spirit and strengthening the ability to struggle is a must in meeting the targets set by the Party.

He warned of growing complexity of risks and tests which can be "unthinkably challenging," stressed the long-term nature of various struggles, and called for the courage to fight and the mettle to win.

Xi said a general direction in carrying out various struggles is that the leadership of the CPC and the country's socialist system must be unwaveringly upheld.

He called for absolute determination to fight and overcome any risk or challenge that endangers the CPC leadership and the socialist system, harms China's sovereignty, security, and development interests, jeopardizes the core and fundamental interests of the country and the people, or hinders the realization of the two centenary goals and the Chinese Dream of national rejuvenation.

Tuesday CCTV Evening News on Xi's comments - 习近平在中央党校(国家行政学院)中青年干部培训班开班式上发表重要讲话强调 发扬斗争精神增强斗争本领 为实现“两个一百年”奋斗目标而顽强奋斗_CCTV

Xi pointed out that the emergence and development of marxism and the birth and development of a socialist country are full of struggles. The founding of the communist party of China, the founding of the People's Republic of China, the implementation of reform and opening up, and the promotion of socialism with Chinese characteristics for a new era were all born, developed, and strengthened through struggle. The world today is undergoing major changes unseen in a century. The great struggle, great project, great cause and great dream led by the CPC are in full swing. To successfully achieve the goals and tasks set by our party, we must develop a fighting spirit and enhance our fighting ability.

习近平指出,马克思主义产生和发展、社会主义国家诞生和发展的历程充满着斗争的艰辛。建立中国共产党、成立中华人民共和国、实行改革开放、推进新时代中国特色社会主义事业,都是在斗争中诞生、在斗争中发展、在斗争中壮大的。当今世界正处于百年未有之大变局,我们党领导的伟大斗争、伟大工程、伟大事业、伟大梦想正在如火如荼进行,改革发展稳定任务艰巨繁重,我们面临着难得的历史机遇,也面临着一系列重大风险考验。胜利实现我们党确定的目标任务,必须发扬斗争精神,增强斗争本领。

Xi stressed that the struggle of communists has a direction, position and principle, and the general direction is to uphold the leadership of the communist party of China and the socialist system in China. All the risk and challenges that endanger the CCP leadership and the socialist system of our country, all the risk and challenges that endanger our country’s sovereignty, security and rights to develop, all the risks and challenges that endanger our country’s core interests and major principles, all the risks and challenges that endanger our people’s fundamental interests, all the risks and challenges that endanger our realization of the ‘two one-hundred-year’ goals and endanger our realization of the great rejuvenation of the China nation, as long as they come our way, we must resolutely fight on, and we must win the battles.

习近平强调,共产党人的斗争是有方向、有立场、有原则的,大方向就是坚持中国共产党领导和我国社会主义制度不动摇. 凡是危害中国共产党领导和我国社会主义制度的各种风险挑战,凡是危害我国主权、安全、发展利益的各种风险挑战,凡是危害我国核心利益和重大原则的各种风险挑战,凡是危害我国人民根本利益的各种风险挑战,凡是危害我国实现“两个一百年”奋斗目标、实现中华民族伟大复兴的各种风险挑战,只要来了,我们就必须进行坚决斗争,而且必须取得斗争胜利

Xi Jinping pointed out that the struggle of our communists has always been driven by contradictions, risks and challenges. Current and future a period, the development of our country has entered various risk challenge to accumulate even focus show period, facing a major struggle will not less, economic, political, cultural, social, and ecological civilization construction and national defense and army building, Hong Kong, Macao and Taiwan, diplomatic work, the party's construction, etc, and more and more complex.

习近平指出,我们共产党人的斗争,从来都是奔着矛盾问题、风险挑战去的。当前和今后一个时期,我国发展进入各种风险挑战不断积累甚至集中显露的时期,面临的重大斗争不会少,经济、政治、文化、社会、生态文明建设和国防和军队建设、港澳台工作、外交工作、党的建设等方面都有,而且越来越复杂。

China’s Xi Urges Party to Prepare for ‘Long-Term’ Struggle - Bloomberg

Xi’s speech included numerous war-like metaphors, including exhorting party officials to “be both commanders and combatants, and cultivate and maintain a strong fighting spirit, have tenacious will and superb fighting skills.”

State media have stepped up their propaganda efforts around Xi recently, especially since his return from the annual summer retreat at Beidaihe.

The headline in the People’s Daily newspaper reporting Xi’s trip to Gansu on August 25 was “The People’s Leader Loves The People,” and the title of ‘The People’s Leader’ has been used repeatedly by major news outlets in August, including in a Central Television-produced documentary and special online presentation.


2. US-China

China, U.S. Struggle to Set Meeting as Tariffs Erode Trust - Bloomberg

The date for a visit of Chinese officials to the U.S. capital hasn’t been set, though that’s not necessarily a sign it still won’t happen, said the people, who asked not to be identified because the discussions are private. U.S. equity futures fell on the news, touching their lows for the day.

In conversations over the past week, the two sides have failed to agree on at least two requests -- an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs, two of the people said. Trump went ahead anyway with tariffs on Sunday, doubling down on a strategy that seems to be having the opposite of the desired effect.

China in new growth push to fight prolonged US trade war, top policy body indicates | South China Morning Post

Financial Stability and Development Commission, chaired by Vice-Premier Liu He, says Beijing is ready to step up help for the growth amid escalated trade tensions

But there is no indication that it will engage in all-out stimulus to support the economy despite latest round of tariffs from US President Donald Trump

Chinese vice premier Liu He meets U.S. senators - Xinhua

Speaking of the great importance of U.S.-China relations, Daines, also co-chair of the U.S. House of Senate U.S.-China Working Group, and Perdue, said they are not willing to see economic and trade conflicts between the two sides, adding that they will continue to play positive roles in deepening mutual understanding and promoting the development of bilateral relations.

China concessions to US would be ‘grave error’ in any trade deal | South China Morning Post

A commentary in the Communist Party mouthpiece People’s Daily on Monday said Beijing needed to stand up to the US and not give in to pressure.

“If China appears weak and gives concessions under hegemony, it will have committed a subversive historical error,” said the commentary, attributed to Renmin University international relations professor Jin Canrong and Sun Xihui, a researcher at the Chinese Academy of Social Sciences.

“Facing extreme pressure and bullying behaviour, being weak and taking a step back will not get sympathy. We can only protect the core interest of the nation and the people by upholding rational and favourable struggle at the right pace.”

My summary of the piece in yesterday's newsletter:

人民日报人民要论:理性看待和应对中美经贸摩擦---人民网 - 金灿荣 孙西辉

Jin Canrong and Sun Xihui write on page 8 of Monday's People's Daily on "rationally viewing and responding to US-China trade fictions", say that weakly conceding will get noting for China (软弱退让换不来同情) , reminds readers that just after the PRC was established, when china was poor and weak, it still took the fight to the American imperialists when they attacked at China's door (North Korea) and through the fight created the "38th Parallel", so how could today's China allow anyone to bully it? They go on to criticize those they say are "afraid of America and worship America", and that conceding to America's hegemonic pressure would be a historical mistake. The conclude with the point we keep hearing that China is the protector of the global system,, and that ultimately will emerge the victor, and stronger in the world for it

Commentary: High time for concerted global actions against U.S. trade bullyism - Xinhua

China on Monday announced that it had filed a case at the WTO against the United States following the latter's implementation of the additional 15-percent tariffs on 300 billion dollars worth of Chinese imports on Sept. 1.

China's fight against Washington's assault on the existing global trade order bears global significance. It is high time for the entire international community to come together and make concerted efforts against Washington's bullying before it is too late.

What does resorting to the WTO imply amid rising trade tensions? - CGTN

he U.S. can frustrate the case that might be won during the panel process simply by lodging an appellate review request. The Appellate Body's failure to function would then render the case pending for good.

It is therefore understandable that China is not expecting a final verdict by the Appellate Body. It is very likely that China is expecting to showcase the noncompliance and unlawfulness of the unilateral tariff imposition by the United States.

Kong Qingjiang is the dean of the School of International Law under China University of Political Science and Law.

The myth of forced transfer of technology - China Daily

It is clear that Washington's accusation is baseless. But what is the real motive behind the US' accusation? One wonders if the US' accusation is a smokescreen, and its real motive is to force open the Chinese market by extracting more concessions from China than it would otherwise agree to give. The author is deputy permanent representative of China's Mission to the UN Office in Geneva.

US fentanyl seizures show China is not the main supplier, Beijing drugs official says | South China Morning Post

In Beijing on Tuesday, Liu Yuejin, vice-commissioner of the Ministry of Public Security’s drugs control commission, said China had made efforts to curb the supply of fentanyl, including widening restrictions on the substance and cooperation with US law enforcers. It added all fentanyl-related substances to a controlled list from May, a measure intended to stop drug makers altering the chemical structure to get around existing regulations...

Citing statistics from the US government, Liu said that of 229 cases of trafficking in which 537kg (1,184lbs) of fentanyl-related substances were seized between last October and March, only 17 of them, involving 6kg of the substances, were found to have originated from China.

“Since the ban on May 1, the Chinese side has not found any criminal cases of trafficking fentanyl-related substances,” Liu said.

No fentanyl producing, trafficking case reported in China since May: authority - Xinhua

The drug enforcement agencies of China and the United States have maintained sound cooperation over the years, which seldom involved fentanyl-related case investigations, said Liu Yuejin, deputy director of the commission and an official with the Ministry of Public Security, at a press conference.

The Chinese side has reported 383 pieces of information of fentanyl-related parcels to U.S. drug enforcement agencies since 2012, while the U.S. side reported only six clues related to fentanyl trafficking to China during the period, he said.

公安部揭露:美白宫如何散播假消息,用脏水泼中国_凤凰网资讯_凤凰网

Global Times reports that Liu Yuejin explained how the White House is spreading fake news to smear China about Fentanyl

U.S. blame on China for fentanyl influx misleading - China Daily

China's senior narcotics control official has said blaming China for the influx of fentanyl in the United States based on the limited number of postal packages seized by U.S. authorities lacks evidence. It's also inconsistent with the actual situation, the official said on Tuesday.


3. Hong Kong

Beijing Asserts Power to Declare Emergency to Quell Hong Kong Unrest - WSJ

China’s top office for Hong Kong affairs said it had legal power to unilaterally declare a state of emergency in the city if unrest continues unabated, while laying out specific measures for the city’s leader to address protests...

Beijing made the comments—in which officials referred to the protest movement becoming more like the “color revolutions” that unseated governments in the Middle East and Eastern Europe—after a weekend of clashes that disrupted the city’s airport. A workers’ strike and a class boycott by thousands of students have extended demonstrations into the workweek...

Patriotic education must be introduced into Hong Kong schools, said Xu Luying, a spokeswoman for the Hong Kong and Macau Affairs Office. An effort to introduce patriotic education in 2012 triggered mass street protests that galvanized a new generation of young political activists who are prominent in this summer’s uprising.

国务院港澳办:一旦出动驻港部队绝不意味着“一国两制”终结

The HKMAO spokesperson Xu Luying again warned that deploying troops to quell HK protests is not the end of one country two system.

As it happened: All branches of government, including judiciary, must help stop violence and restore order, says Beijing's top Hong Kong office | South China Morning Post

Yang says western diplomats who criticised Hong Kong police remind him of "flies that moan and cry after hitting the wall", quoting a poem by Chinese leader Mao Zedong from 1962, amid bitter confrontation between Moscow and Beijing...

Yang says the protesters' goal is to separate Hong Kong from China and destroy “one country, two systems”, the policy under which the city is governed.

Tuesday CCTV Evening News on the HKMAO press conference 港澳办:香港止暴制乱不容动摇_CCTV

The spokesman said that participating in the peaceful demonstrations and rallies was quite different in nature from those criminal Acts that unscrupulously challenged the bottom line of "one country, two systems", attacked the central authorities in Hong Kong, defaced and insulted the national flag and emblem, violently attacked the police and innocent citizens, seriously damaged public and private property and endangered public security. For the latter, we must and must severely crack down on them according to law, and there is no room for tolerance.

发言人表示,参与和平游行集会活动,与那些肆无忌惮挑战“一国两制”底线、冲击中央驻港机构、污损和侮辱国旗国徽、暴力袭击警察和无辜市民、严重损坏公私财物、危及公共安全的犯罪行为,在性质上是截然不同的。对于后者,必须且只能依法严厉打击,没有宽容的余地。

HK Chief Executive Carrie Lam rebuts Reuters report, claims she never submitted resignation to central government - Global Times

This news followed another Reuters "exclusive" report released on Friday, which claimed that Lam had submitted a proposal to Beijing earlier this summer, asking for five key demands from the Hong Kong protesters to be taken seriously, and the proposal was subsequently rejected. 

The Global Times has since learned the Reuters "exclusive" story is fake.

Question: Learned from whom?

Hong Kong’s Chief Executive Is Disheartened, but No Successor Is in Sight - The New York Times

Lau Siu-kai, vice chairman of the Chinese Association of Hong Kong and Macau Studies, a semiofficial advisory body set up by Beijing, said: “After things settle down, there may be a reshuffle of the leadership team. But to do it now is seen by Beijing as a sign of weakness that would cause more riots to occur.”..

Beijing’s favorite choice and heir apparent until early summer was the city’s financial secretary and third-ranking official, Paul Chan, said people familiar with the selection process.

香港乱局如何收场?梁振英最新表态值得琢磨

The People’s Daily overseas edition WeChat account “Xiakedao” reposted a Facebook post by former HK CEO CY Leung, in which he said the protests are essentially seeking independence and in the next step to overthrow the CCP regime in mainland China. Leung argued that the government should use “all kinds of forces that have not been used by now”, and that history suggests the city can very soon restore order after crisis.

Joshua Wong asks people of Taiwan to show their support for Hong Kong protests | South China Morning Post

Joshua Wong Chi-fung has urged the Taiwanese people and politicians to stage a mass protest ahead of mainland China’s National Day to step up the pressure on Beijing over Hong Kong.

Young traitors to ruin themselves - Global Times

Rioters like Wong are the new generation of traitors. They are frenziedly staking Hong Kong's future on a final bet for the interests of their small group. But be it street violence, blocking the airport, vandalizing the Hong Kong Legislative Council building or insulting the Chinese national flag and emblem, the framework of the "one country, two systems" principle has not been shaken at all. Therefore, like all traitors in history, they are clinging tightly to external forces and treat the latter as their way out.

辛识平:美化暴徒包藏乱港祸心

Xinhua commentary bombards the US congressmen and senators for supporting HK protests, saying the US is the “black hand” behind the protests, with the goal of containing China’s development.

Hong Kong protester site says Baidu was a vector in cyber attack — Quartz

The forum identified two Chinese websites as being  among those involved in the attack, including Baidu Tieba, an online forum under Baidu, the largest search engine in China, and qihucdn.com, which some LIHKG users believe belongs to Qihoo360, a Chinese internet security firm. Baidu declined to comment, while Qihoo360 did not reply to a request for a comment.

Western media's dubious role in Hong Kong stands exposed: China Daily editorial

The latest trick of the Western media is a "revelation" by Reuters that the special administrative region's chief executive, Carrie Lam Cheng Yuet-ngor, tendered her resignation to the central government but it was rejected.

Video: Student tackled in playground by Hong Kong police, as class boycott enters second day | Hong Kong Free Press HKFP

Spokesperson of the Commissioner's Office Urges the New York Times to Stop Backing Anti-China Forces Who Attempt to Mess up Hong Kong

The New York Times has published false reports and absurd remarks on the Hong Kong situation in recent months, whitewashing Jimmy Lai, a leading anti-China activist who attempts to mess up Hong Kong, endorsing Joshua Wong and Alex Chow, radical activists calling for so-called "Hong Kong independence", and venomously attacking the Central Government, the SAR Government and the Hong Kong police. In reply, the spokesperson of the Commissioner's Office lodged stern representations with the newspaper, expressing strong disapproval of and firm opposition against its distortion of the truth.

HSBC should not play more underhand tricks against China after Huawei case: experts - Global Times

HSBC is unlikely to find an easy growth path in the Chinese market compared with the past because what the bank did to Huawei has affected its reputation and also affected evaluations by its Chinese clients, experts noted.

Since June, HSBC has been lobbying the Chinese government not to blame it for the arrest of Meng, saying it had no choice but to cooperate with the probe and provide information that US authorities needed to build a case against Huawei, said media reports.

What do events in Hong Kong reveal about the Chinese Communist party? | Financial Times - Charles Parton

The CCP sees an almost existential battle between the socialist and capitalist systems. Hong Kong is where this has come to a head. If this seems an exaggeration, consider Mr Xi’s first, tone-setting, speech to the politburo after becoming party general secretary (interestingly and emphasising its continued relevance, the text was published in April this year): he talked of a “long-term struggle between the two social systems”.

“[The party should] . . . ceaselessly build a socialism superior to capitalism, constantly win the initiative [over capitalism], win a superior position,” he said...

Another highly revealing passage in Mr Xi’s 2013 speech reads: “Hostile foreign forces’ fundamental purpose is . . . to incite the overthrow of the leadership of the CCP.” From the politburo member in charge of foreign affairs Yang Jiechi downwards, we have heard plenty about foreign forces being the cause of the unrest in Hong Kong.


4. Huawei

Huawei Accuses U.S. of Harassing Workers, Attacking its Systems - Bloomberg

“It has been using every tool at its disposal – including both judicial and administrative powers, as well as a host of other unscrupulous means – to disrupt the normal business operations of Huawei and its partners,” the company said. Other measures included “instructing law enforcement to threaten, menace, coerce, entice, and incite both current and former Huawei employees to turn against the company and work for them.”..

“We strongly condemn the malign, concerted effort by the U.S. government to discredit Huawei and curb its leadership position in the industry,” the company said. “No company becomes a global leader in their field through theft.”

US and Poland sign 5G security agreement as part of effort to block Chinese telecoms giant Huawei from European networks | South China Morning Post

It stipulates that suppliers should be given a “rigorous evaluation”, including whether they are controlled by a foreign government, and be subject to “independent judicial review”.

They would also be vetted on whether they have a transparent ownership structure, a “record of ethical corporate behaviour” and if they’re “subject to a legal regime that enforces transparent corporate practices”.

Interesting Twitter thread on Huawei in Russia by the Chair of Russia in Asia-Pacific Program at the Carnegie Endowment:

Huawei Was Prepared for Anything—Except Losing Google — The Information $$ - Juro Osawa

Over the years, people inside Huawei at times worried the Chinese technology powerhouse, now the world’s second largest smartphone company, was too dependent on some U.S. technologies. To reduce its reliance on American-made chips inside its phones, for example, Huawei switched to alternatives that it made in-house. 

But when it came to one of its most critical American business partners—Google, the creator of the Android mobile operating system that powered all of Huawei’s smartphones—the Chinese company had trouble imagining a parting of ways. In 2016, a top Huawei executive passed on an opportunity to partner with the maker of an Android alternative called Sailfish, seeing little need for a Plan B, according to people familiar with the matter. To the contrary, Huawei explored ways to become more intertwined with Google: A few years ago, the two companies discussed whether Huawei could help the U.S. company bring Google Photos to China, where most Google internet services are blocked by the country’s regime, a person with knowledge of the talks said.

Huawei offers to make source code available to Japanese government: Kyodo - Reuters

The move is to alleviate security concerns, Kyodo said without adding any details

Huawei says to spend more than $300 million a year in funding for universities - Reuters

William Xu, president of the telecommunications equipment maker’s institute of strategic research, made the comments at a company event in the southwestern Chinese city of Chengdu.


5. Pork price controls in Nanning

City Puts Price Controls on Pork in Wake of Swine Fever Outbreak - Caixin

The city of Nanning has issued an administrative order to vendors to set a cap on pork prices starting from Sunday, as well as subsidies to help them do so, according to the government-run Nanning Daily. Every morning before 9 a.m., vendors in 10 major farm produce markets scattered across the city’s eight districts will sell pork at an at least 10% discount to the average price of the previous 10 days. Each consumer is limited to buying up to 1 kilogram of the discounted pork. The amount of discounted pork will be limited to one pig’s worth per vendor per day...

The measures have left local residents waiting in line for a shot at the discounted meat. Because the supply of discounted pork is limited, some markets note down purchaser’s name and phone number and others distribute tickets to ensure each buys no more than the individual limit...

Besides capping pork prices, Nanning is also taking urgent measures to help revive hog breeding

In July, the latest data from the National Bureau of Statistics showed that pork prices surged 27% from the previous month, while the CPI rose 2.8% year-on-year.

胡春华强调着力提升销区生猪稳产保供水平

Vice premier Hu Chunhua visits Sichuan, urging provinces to ensure pork supply and control the price by releasing more stockpiled pork.

Yicai Global - China's Pork Imports Are Set to Triple This Year; Brazil Is Likely to Benefit Most

China's pork imports are expected to almost triple this year as the nation remains in the grip of African swine fever. Brazil has some of the lowest pig breeding costs in the world and is expected to step in to fill the breach.

Last year, China imported 1.2 million tons of frozen pork, mainly from Germany, Spain, Canada, Brazil and the US. This figure is likely to rise to 3.3 million tons this year and 4.2 million tons next year, according to financial services firm INTL Fcstone.


6. Local governments under financial pressure

China’s Local Governments Sell Assets to Make Up for Revenue Loss - Caixin

China’s sweeping measures to cut taxes and fees and slowing economic growth have started to put pressure on local government budgets, forcing some provinces to scramble for new revenue sources.

The governments of Guangdong, southwestern Sichuan and northeastern Liaoning provinces are seeking to sell state-owned assets to “support the implementing of tax cuts,” according to local media...

In the first seven months of 2019, China’s revenue rose by 3.1% year-on-year to 12.56 trillion yuan ($1.75 trillion), of which tax revenue increased by only 0.3% while revenue from nontax sources surged by 24.8% to 1.76 trillion yuan, according to data released by the Ministry of Finance.

国务院督查组赴16个省(区、市)开展实地督查_新闻频道_央视网(cctv.com)

State Council is sending out inspection teams to 16 provinces and cities to ensure policies to reduce taxes and fees and improve the business and investment environment are being implemented

为推动党中央、国务院重大决策部署落地见效,近日,国务院部署开展第六次大督查,派出督查组对16个省(区、市)贯彻落实减税降费、稳定和扩大就业、深化“放管服”改革优化营商环境、推进创新驱动发展、合理扩大有效投资等情况进行实地督查。

Clean Heating Subsidies to Eat Up More of Northern Budgets - Caixin

The report looked at the 12 cities which from 2017 on were the first to pilot central government plans to clean up heating — which is a significant source of seasonal air pollution, especially in the nation’s north. It found that the cost of the subsidies would, on average, take up an extra percentage point of fiscal budgets by the time they are rolled out to all households, compared with now.

The 12 cities looked at by the report, which was funded by the China Energy Conservation Association and the National Resources Defense Council’s China Coal Consumption Cap Project, include Beijing, Tianjin, several cities in Hebei and Henan provinces, and the capitals of Shandong and Shanxi provinces.


7. Disappointing Free Trade Zones

Bankers' exits and zombie accounts: China's Shanghai free trade zone sputters - Reuters

Back in Shanghai, in the first FTZ area, chairs lie overturned and desks sit empty behind padlocked glass office doors. Food courts that once overflowed with business diners have seen small eateries steadily shut up shop this year, leaving used chopsticks and plastic packaging scattered on the ground.

While the Shanghai FTZ, opened in September 2013, has long struggled to live up to its initial promise of free-flowing currency and easier international trade, more businesses are increasingly deserting the 28.78 square kilometer Waigaoqiao zone...

The idea in 2013 was that an onshore yuan account opened in a free trade zone bank branch could be used as if it were already offshore, meaning it could be exchanged, or used in payment free of domestic restrictions.

But bankers found the reality far from the hype and as concerns over capital flight led regulators to clamp down on yuan leaving the country from 2015, usability deteriorated further.

Editorial: China’s Free Trade Zones Must Adapt to Local Conditions - Caixin Editorial 

China’s free trade zones had their origin in the U.S.-China Bilateral Investment Treaty and the external pressure of the Trans-Pacific Partnership Agreement. Today, the former has been put on hold while the latter has changed beyond recognition, and the U.S.-China trade war continues to rage. Times have changed in a regrettable way. However, China does indeed have 18 free trade zones. They shoulder the mission of “competitive opening up” and try to continue the new chapter of “leading reforms with openness.” They will soldier on no matter how hard the road ahead is.

Yicai Global - High-Tech Firms Set Up in Shanghai FTZ's New Add-on, Home to Tesla

Lingang, a new addition to the China (Shanghai) Pilot Free Trade Zone that lies in the city's far southeastern coastal corner, will concentrate on developing core sectors to build itself into a wellspring of technological innovation, Chen Jiong, Lingang Science and Technology City 's president said at the just-concluded World Artificial Intelligence Conference 2019.


8. New report on Twitter disinformation efforts

Tweeting through the Great Firewall | Australian Strategic Policy Institute | ASPI

Researchers from the International Cyber Policy Centre (ICPC) at the Australian Strategic Policy Institute have conducted a preliminary analysis of the dataset. Our research indicates that the information operation targeted at the protests appears to have been a relatively small and hastily assembled operation rather than a sophisticated information campaign planned well in advance.

However, our research has also found that the accounts included in the information operation identified by Twitter were active in earlier information operations targeting political opponents of the Chinese government, including an exiled billionaire, a human rights lawyer, a bookseller and protestors in mainland China. The earliest of these operations date back to April 2017.

China’s Twitter Disinformation Ops Have Been Going on for Years - Bloomberg

“This is significant because -- if the attribution to state-backed actors made by Twitter is correct -- it indicates the actors linked to the Chinese government may have been running covert information operations on Western social media platforms for at least two years,” according to researchers at the Canberra-based think tank, which analyzed a sample of nearly 1,000 accounts disclosed by Twitter.


Business, Economy and Trade

Former Securities Czar Calls Asset Management Cleanup Deadline ‘Unrealistic’ - Caixin China’s former securities czar, Xiao Gang, added his voice to the chorus of financial industry insiders that have criticized the deadline for compliance with new asset management rules, describing it as “unrealistic and unfeasible.” Speaking at a financial industry event in Beijing earlier this month, the former chairman of the China Securities Regulatory Commission (CSRC) said (link in Chinese) that it was “unrealistic and infeasible” to clean up banks’ “overlarge” off-balance-sheet wealth management products before Dec. 31, 2020.

Former Lenovo Executive Mary Ma Dies at 66 - Caixin Global Ma Xuezheng, also known as Mary Ma, co-founder and partner at China’s well-known investment fund Boyu Capital, died Monday at the age of 66, multiple sources close to the matter told Caixin. The cause of death provided was pancreatic cancer.

46 out of 50 Apple products made in China could face tariffs by year's end Reuters compared the tariff codes that Apple says it uses to import its products as of Aug. 28, 2019 against the lists of tariff items published by U.S. officials. While many of Apple’s products could face levies by year’s end, the company could still avoid tariffs by changing which codes it uses to import products or sourcing them from a different country.

Zara denies supporting Hong Kong protests after claim by Chinese state media over citywide Monday’s strike | South China Morning Post Spanish fashion retail chain accused by ‘Global Times’ after it closed some of its stores in the city during Monday’s strike

China gives full onshore debt access to Deutsche Bank and BNP | Financial Times $$ China’s National Association of Financial Market Institutional Investors, which regulates the interbank bond market, said in an announcement dated Monday that the two banks had been granted type-A licences, allowing them to underwrite all varieties of renminbi-denominated debt for both local and foreign companies

China's top steelmaking city Tangshan implements anti-pollution curbs: media - Reuters More than 30 steel mills in Tangshan have been asked to cut operations throughout the month. From Sept. 1 to 27, sintering operations at mills will be cut between 20% and 50% and blast furnaces by 30%, the state-backed China Metallurgical News cited a notice issued by Tangshan government

Blue Skies for Beijing Parade May Drag on Growth, Nomura Says - Bloomberg China’s efforts to create blue skies for the celebration of its Oct. 1 national day could temporarily reduce industrial activities and cut output by as much as 0.5 percentage point this month, according to Nomura International Ltd. The government is likely to take some strong action in Beijing and the surrounding regions to ensure an “azure sky” for the ceremony, Nomura Economist Lu Ting wrote in a note dated Sept. 2.

US FedEx sent controlled knives to Hong Kong: report - Global Times Chinese mainland branch of FedEx allegedly accepted mail parcels that contain controlled knives destined for Hong Kong, the Xinhua report said, noting that the items are being withheld by the Chinese authorities and a probe is underway.

【国际锐评】联邦快递顶风作案自毁招牌 CCTV “international sharp commentary” said FedEx is destroying its own reputation in China as this incident comes after the company secretly rerouted several of Huawei’s packages

Caixin PMI for August increases to five-month high - China Daily The Caixin/Markit manufacturing purchasing managers index for August was 50.4, up from 49.9 for July, marking the quickest expansion of the sector since March, according to a report released on Monday by media group Caixin and information provider IHS Markit.

Coffee chain Luckin makes tea drinks independent brand in expansion push - Xinhua The niche brand Luckin Tea will open specific outlets focusing on a variety of tea drinks, the company said in a statement, adding that the coffee and tea drinks outlets will complement each other in terms of targeted consumers.

USCBC 2019 Member Survey | US-China Business Council First, US-China trade friction is negatively impacting US companies operating in China. Second, an unlevel playing field favoring domestic companies over foreign ones is making it increasingly difficult for US companies to compete. Third, while China continues to be a priority market for most of the companies surveyed, market optimism is moderating. All three of these trends are forcing companies to reevaluate company strategies and supply chains. American companies also remain concerned about recent developments in intellectual property rights (IPR), technology transfer, and data flow and cybersecurity policy.

China’s Central Bank to Tokenize RMB by Introducing a Crypto Version- PingWest The state-backed CBDC adopts a centralized management model and two-tier operation system, which is different from average decentralized cryptocurrencies. Commercial banks and financial institutions will be the issuer of CBDC, but the central bank will be the upper-tier operator for facilitating the trade across banks and institutions.

Troubled Bank of Jinzhou Reveals All in Long-Delayed Report - Caixin Given the depth of its financial problems and the breach of regulatory CAR requirements, Bank of Jinzhou announced a proposal on Sunday to cancel dividend payments on its offshore preference shares from October 2018 to October 2019. The lender, which is based in the northeastern province of Liaoning, issued $15 billion of preference shares in 2017 with a coupon rate of 5.5% to bolster its core Tier-1 capital...The deterioration in the bank’s performance in 2018 was a result of a surge in impairment losses partly stemming from tighter regulations on classifying and recognizing non-performing loans which started to be implemented last year.

Caixin New Economy Index Rebounds in August as Capital Inputs Rise - Caixin Global The Mastercard Caixin BBD New Economy Index (NEI) came in at 29.4 in August, indicating that new economy industries accounted for 29.4% of China’s overall economic input activities. The reading rebounded from 28.7 in the previous month. The NEI measures labor, capital and technology inputs in 10 emerging industries relative to those in all industries.

Stars, luxury brands and China’s perilous patriotic tightrope | South China Morning Post On one Tuesday alone, five brands apologised on Chinese social media and stated support for “one China” in what some internet users jokingly referring to as “Apology Day”.

German Chancellor Angela Merkel expected to use China visit to push EU trade deal | South China Morning Post Merkel will arrive in Beijing on Thursday for talks with business and political leaders before she travels to the city of Wuhan in Hebei province, the German foreign ministry said...Mikko Huotari, deputy director of the Mercator Institute for China Studies, said Merkel’s trip came as the view of China in German political circles was becoming more critical, with issues over Chinese telecoms giant Huawei Technologies, the treatment of Uygurs in Xinjiang and the anti-government protests in Hong Kong.

With a $2 Billion Factory From China, a German City Lets Others Worry - The New York Times The project, by Contemporary Amperex Technology Ltd., better known as CATL, is believed to be the biggest example yet of a Chinese company’s choosing to build a factory from the ground up in the European Union, rather than buy an existing business...Perhaps no place better illuminates Europe’s ambivalence toward Chinese investment, which could be summed up as: Fear the power, love the money.

Accounting Shenanigans Derail Network Security Firm’s Tech Board IPO - Caixin The CSRC took issue with how Eversec’s accounted for some of its revenue — specifically that it was booking unrealized operating revenues as if it already had the cash in hand.

Founder of P2P Lender Confesses to Illegal Fundraising, Police Say - Caixin Shanghai police have taken “criminal coercive measures” against Dai Zhikang, for his role in “illegally taking deposits from the public,”..Dai is founder and chairman of Shanghai Zendai Creative and Cultural Development Co. Ltd., also known as Zendai Group.

CNOOC Head Moves to SinoChem to Smooth State-Owned Energy Merger - Caixin The news comes as ChemChina reportedly prepares to list Swiss pesticide-maker Syngenta AG, which it bought in 2017 for $43 billion — in the largest overseas acquisition by a Chinese company to date. Yang Hua, who has worked in the industry for decades and has strong experience in overseas mergers, has taken the helm of SinoChem Group Co. Ltd., which is currently merging with China National Chemical Corp. (ChemChina).

Politics and Law

王浩同志任陕西省委常委、西安市委书记 Wang Hao, former party boss of Tangshan, Hebei, is named as the new party boss of Xi’an, Xi Jinpnig’s home town, after a six months vacancy of the post.  

让抓落实成为党员干部的鲜明特质 Jiangxi province governor Yi Lianhong takes to page 8 of the People’s Daily discussing the importance of local officials actually implementing Xi Jinping’s policies, rather than just talking the talk or procrastinating on the problems. 

“拿出硬举措持续整治” ---- 中央第十六指导组主题教育经验成果交流会侧记 People’s Daily said the recent party study campaign has achieved great results in pushing officials to get more serious and dedicated in their daily works, and some of those who failed to do so have been sacked. Interesting that it mentions here one of the many inspection teams sent out by the party central is led by Geng Huichang, former minister of state security.

通过学习解决思想根子问题 Wang Yunchang of Zhejiang Normal University wrote in today’s Guangming Daily stressing the need for the party study campaign, which he says will ensure the cadres’ belief in Marxism remain firm. 

Court in China's Sichuan Jails Huang Xiaomin For Two Years, Six Months - RFA A court in the southwestern Chinese province of Sichuan has handed a two-and-a-half year jail term to a prominent political activist for supporting a call for direct elections to choose the head of the ruling Chinese Communist Party.

Su Shaozhi obituary | The Guardian The political scientist Su Shaozhi, who has died aged 96, was a campaigner for reform of the Chinese Communist party in the post-Mao years, until he was forced into exile after the Tiananmen Square massacre of 1989. Su was eventually allowed to return to China, but the news of his death has been ignored except on unofficial websites.

Chinese pianist Lang Lang talks about his confidence in Chinese culture - Global Times Born in 1982 in Northeast China's Liaoning Province, Lang became a household name before the age of 20. Since then he has been involved in numerous historical performances in China, such as the opening ceremony of the 2008 Beijing Summer Olympics and the EXPO 2010 in Shanghai. He remains busy today. In order to take part in celebration performances for the 70th anniversary of the founding of the People's Republic of China this year, he said he has decreased the number of international concerts he will attend in September and October.

新长征路上重整行装再出发 ——论“不忘初心、牢记使命”主题教育 任仲平

Selection of important documents since 19th CPC National Congress published - Xinhua The book was compiled by the Institute of Party History and Literature of the CPC Central Committee and published by the Central Party Literature Press. The book contains 26 articles by Xi Jinping, general secretary of the CPC Central Committee, 17 articles by other leaders, as well as 22 documents issued by the CPC Central Committee, the National People's Congress, the State Council and the Central Military Commission from October 2017 to March 2019. 《十九大以来重要文献选编》上册出版发行

Shanghai builds memorial hall for first CPC congress - Xinhua It is located close to the historic building where the first CPC national congress was convened in 1921. The memorial hall is scheduled to open to the public in 2021 and will exhibit historical materials about the founding of the CPC.

Foreign and Defense Affairs

China tells North Korea it wants ‘closer communication and cooperation on world stage’ | South China Morning Post Chinese Foreign Minister Wang Yi tells North Korean counterpart Ri Yong-ho the two countries ‘have always been in the same boat’ during Pyongyang visit

Japan promises $20 billion private sector investment in Africa — Quartz Africa The promises of cooperation were made at the seventh Tokyo International Conference for African Development (TICAD). It is one of several such gatherings that now occur across the globe, where countries make their vows to Africa and court African partners for aid, trade, investment. China’s deepening presence in Africa, however, looms large over them all and so it was at TICAD.

Poland has detected potential Chinese espionage - president - Reuters “Polish security services have conducted and are conducting activities in this regard and they detected actions which may be qualified as actions of an espionage character,” Duda said during a news conference with U.S. Vice President Michael Pence.

Chinese ambassador summoned in Lithuania over ‘deplorable behaviour’ by officials during Vilnius’ show of support for Hong Kong protesters | South China Morning Post Lithuania’s foreign minister has summoned the Chinese ambassador over the embassy’s alleged involvement in a counterprotest against supporters of Hong Kong’s pro-democracy movement. Linas Linkevicius said China’s officials in Vilnius had “crossed the line”, accusing them of directing pro-Beijing hecklers as they disrupted an expression of solidarity in the Lithuanian capital with the anti-government campaign in Hong Kong.

2019年9月3日外交部发言人耿爽主持例行记者会 China’s foreign ministry told Pompeo to abandon his “cold war mentality” and stop interfering with China’s internal affairs after the US secretary of state urged China to end oppression of Uyghur.

外交部:翟隽将担任中国政府中东问题特使 China appoints Zhai Jun, former ambo to France, Lybia and Morocco as the new special envoy for middle east.

China to enhance communication ability in Northeast Passage of Arctic - Global Times China's Ministry of Transport is organizing a test team to explore the nation's short-wave communication guarantee capability in the Northeast Passage (NEP) of the Arctic.  Experts on Tuesday noted that the test mirrors China's plan to normalize the route's commercial operation, both for strategic and economic reasons.

BeiDou-GLONASS synergies will offset dominance of US GPS - People's Daily Online China and Russia will soon put in place an agreement involving their respective satellite navigation systems, aiming to promote the compatibility and interoperability of the BeiDou and GLONASS systems.

UN envoys from 8 countries visit Xinjiang - Xinhua The diplomats from Yemen, Equatorial Guinea, Mozambique, Zambia, Cote d'Ivoire, South Africa, Ethiopia and Zimbabwe visited Xinjiang between Aug. 28 and Sept. 1 upon the invitation of China's foreign ministry.

Fleet of seven J-20 jets unveiled in Chinese airforce video - Xinhua "Me and My Motherland," a popular song in China, was played by Konghou, an ancient plucked stringed instrument, resounding throughout the blue sky during the video that is over four minutes long. The video 蓝天有我 感恩有您:

New Missile Silo And DF-41 Launchers Seen In Chinese Nuclear Missile Training Area – Federation Of American Scientists Newly acquired satellite photos acquired from Digital Globe (Maxar) show that the People’s Liberation Army Rocket Force (PLARF) is building what appears to be a new type of missile silo in the missile training area near Jilantai, possibly for use by a new ICBM. The photos also show that 18 road-mobile launchers of the long-awaited DF-41 ICBM were training in the area in April-May 2019 together with launchers for the DF-31AG ICBM, possibly the DF-5B ICBM, the DF-26 IRBM, and the DF-21 MRBM.

U.S. in No Hurry to Prosecute China’s Stolen Chip Secrets Case - Bloomberg Delays in complicated prosecutions, especially those involving foreign companies and individuals, are hardly uncommon. But repeated postponements in the case against Fujian Jinhua and Taiwan-based United Microelectronics Corp., or UMC, are notable because it was filed under the banner of the “China Initiative,” a new program aimed at prioritizing trade-theft cases and litigating them as quickly as possible.

Australia’s 15 projects aim to break China rare earths dominance | Financial Times $$ A government report published on Tuesday detailed the projects, which have been proposed by more than a dozen mining and metals companies and would require A$5.7bn to develop. They cover critical minerals including rare earths, antimony, magnesium and tungsten — the global processing and supply chains for which are all controlled by China.

John Bolton accuses China of stealing F-35 technology to make a stealth fighter. Is this what he was talking about? | South China Morning Post The PLA’s only active stealth fighter the J-20 looks rather different to its US counterpart, but the FC-31 prototype may be closer to the mark

China's Loyal Wingman Drone Flies Alongside Manned Fighters - Popular Mechanics A mysterious Chinese company is showing off a concept model for a high speed “loyal wingman” drone at an airshow outside of Moscow. The LJ-1 is designed to function as a high speed target but also fly alongside manned fighter jets—and sacrifice itself if necessary. The drone is an endorsement of the loyal wingman concept, currently being pioneered by the U.S. and Australia.

China, Peru vow to advance cooperation - Global Times Chinese Vice President Wang Qishan met here Monday with Peruvian Vice President Mercedes Araoz, who is in Beijing to attend relevant activities of the Beijing Horticultural Expo.

Chinese schools, military prepare for better military training of students - Xinhua As the autumn semester started Sunday, Chinese education departments, schools and military authorities have geared up for military training programs for students. The Ministry of Education and three departments of the Central Military Commission jointly issued a directive earlier this week underlining adequate preparation of trainers, careful design of training programs and proper security management.

GUEST ROOM | Cornell Should Suspend Its China Projects | The Cornell Daily Sun Cornell and its new China center are observing a blanket silence on the unprecedented genocide in Xinjiang. The center has a Chinese advisory board with corporate types only — no cultural figures or anyone else that could offer critical perspectives. If we want the best Chinese advice on China, why didn’t we invite, say, Teng Biao, the brilliant exiled Chinese lawyer who recently lectured in our Law School?

9 ASU students from China detained by Customs and Border Patrol at LAX | Arizona News | azfamily.com US Customs and Border Protection has not gone into detail about what information it discovered leading to this.

52K Chinese Gun Parts Seized at California Seaport Officials report the seized gun parts from China included sights, stocks, muzzles, brakes, buffer kits, and grips. The estimated street value of the items is estimated at $378,225.

Taiwan

Asia Times | After F-16 sale, US navy ship stops in Taiwan | Asia Times The Sally Ride, the US’s newest research ship commissioned in 2014, is anchored off the Port of Keelung in northern Taiwan. The 3,043-tonne vessel with both the Stars and Stripes and the Taiwanese flags flying on its bow, set sail for the island from the Bay of Bengal last month and will return to Keelung for R&R at the end of this month, after a voyage to the international waters near Palau.

Solomon Islands eyes shift in diplomatic ties to China from Taiwan - Reuters “There’s a certain thinking with the current government and executive to switch,” Peter Kenilorea, an opposition lawmaker who chairs a foreign relations parliamentary committee, told Reuters. “The amount of money that has already been spent by the government on this is quite telling.”

Tech and Media

Podcast startup Himalaya may have never had $100 million in VC funding - Axios Himalaya CEO Yu Wang acknowledged to Axios that General Atlantic didn't invest directly in his company, and said he removed the press release because "some of the language... was a little bit confusing." He also said the $100 million was a three-year commitment mostly from Ximalaya FM, of which Himalaya so far has received only around $10 million.

Chinese deepfake app Zao sparks privacy row after going viral |The Guardian The company was forced to issue a statement on Sunday pledging changes after critics attacked the app’s privacy policy, which it had “free, irrevocable, permanent, transferable, and relicenseable” rights to all user-generated content.

Society, Arts, Sports, Culture and History

Outline released to build China into sports leader - Gov.cn According to the circular, people who often take exercise should account for over 45 percent of the population by 2035; China should become a modern leading sports socialist country by 2050, and its people’s physical fitness, comprehensive levels and global influence in sports should be ranked near the top globally.

UFC Shenzen: Zhang Weili becomes China’s first champion, reaction Zhang Weili thrilled a Chinese home crowd with an upset knockout of UFC strawweight champion Jessica Andrade that took just 41 seconds, making her China’s first champion in the world’s biggest mixed martial arts (MMA) promotion.

Eight children killed in knife attack at Chinese primary school | South China Morning Post The Xiaoxiang Morning Post reported that Yu had been given an early release from prison last year after serving a sentence for attempted murder. A man from the same village as Yu said the conviction had been for an incident in which Yu gouged out his former girlfriend’s eye.

Energy, Environment, Science and Health

China Focus: China issues white paper on nuclear safety, stressing int'l cooperation - Xinhua China stated its stance on developing nuclear energy as an established policy in its first white paper on nuclear safety released on Tuesday, vowing to strengthen international cooperation and build a community of shared future for nuclear safety. // Full text of Nuclear Safety in China

China condemns US blacklisting of nuclear firms | South China Morning Post Liu Hua, head of the National Nuclear Safety Administration, said US multilateralism and protectionism behind the move would harm the interests of companies in both countries, but could strengthen Chinese firms’ research and development and improve their creativity.

Too Costly, Too Late: Curable Liver Disease Ravages Rural China - SixthTone Dashuidong, in Fuqiushan County, has been haunted by the highly contagious hepatitis C virus (HCV) over the past decade. Along with two neighboring towns — Huangheqiao and Tanshanqian — the mountain villages are now notorious as hepatitis C villages, keeping people away.

Beijing sees record low PM2.5 density - Xinhua The average concentration of PM2.5, an air pollutant, in Beijing was 23 micrograms per cubic meter in August, which hit a record low compared with the same period in recorded history, the Beijing Municipal Ecological Environment Bureau announced Tuesday.

Rural and Agricultural Issues

China Drone Attack on Crop-Eating `Monster' Shows 98% Kill Rate - Bloomberg XAG, a Guangzhou-based drone maker, teamed up with Germany’s Bayer Crop Science in a drone swarm operation to kill the fall armyworm in China’s Guangxi region. The autonomous devices, loaded with low-toxicity insecticide, have also successfully managed the pests in a government-led operation in the southwest province of Yunnan, XAG said.