Self-reliance; Apple's sad China story; Dark side of the moon

Happy New Year! I hope all of you had a wonderful holiday.

It is always hard to restart after time off as I will inevitably miss some important things. Everything should be back to normal by Monday.

Apple spooked investors and global markets with a downward revision of its Q1 guidance due to disappointing sales in China. The Apple shortfall looks to be more evidence that China’s economy may be slowing markedly. The Central Economic Work Conference in December made clear the government is aware of the pressure and while no massive stimulus was announced, or is expected, the Party is not going to let things go off the rails without a fight so if Apple really is a bellwether of a precipitous drop in consumer confidence then expect stronger measures soon. But I am not convinced Apple’s problems don’t have at least as much to do with local competitors and a disappointing product portfolio given its premium pricing.

The data for the next two next months will be skewed, as they always are around Chinese New Year, which this year falls on February 5.

January 1 was the 40th anniversary of the establishment of diplomatic relations between the US and China, and no one was in a celebratory mood. A US trade delegation will be in Beijing next week and while there is still a chance for a deal in the 58 days left before the March 1 deadline any such agreement will not change the broader, deteriorating relationship. That is probably the main reason Xi Jinping twice mentioned self-reliance 自力更生 in his New Year’s speech, something he had not done in any previous ones.

The US State Department today issued an upgraded warning to American citizens traveling to China “due to arbitrary enforcement of local laws as well as special restrictions on dual U.S.-Chinese nationals”.

Beijing is still holding the Canadian hostages (sorry, that is what they are) grabbed days after the detention of the Huawei CFO Meng Wanzhou, and now a convicted Canadian drug dealer may be re-sentenced to death. I want to exude positive energy going into 2019 but I am having a hard time finding any right now.

Let’s hope the next 362 days of the year are better…

Thanks for reading.


The Essential Eight

1. Xi's New Year speech

Self-reliance 自力更生 appears twice in this speech, matching one of the key themes of 2018. Xi did not use this term in any of his previous New Year's greetings

Full text: 2019 New Year Speech by President Xi Jinping - CGTN:

In 2019, we will celebrate the 70th anniversary of the founding of the People's Republic of China. Our country has braved thorny paths and confronted stormy weather over the past seventy years. Our people are the country's solid foundation and our main source of confidence to govern. Through the years, the Chinese people have been self-reliant and worked diligently to create Chinese miracles that the world has marveled at. And now, looking forward, despite the complexities and difficulties we may face on the road ahead, we shall always closely rely on the people and stick to self-reliance and hard work. With rock-solid confidence, and racing against time with unwavering determination, we will carry forward our unprecedented great cause one resolute step after another, and leave enduring footprints behind us.

The video and full text in Chinese - 国家主席习近平发表二〇一九年新年贺词:

2019年,我们将隆重庆祝中华人民共和国70周年华诞。70年披荆斩棘,70年风雨兼程。人民是共和国的坚实根基,人民是我们执政的最大底气。一路走来,中国人民自力更生、艰苦奋斗,创造了举世瞩目的中国奇迹。新征程上,不管乱云飞渡、风吹浪打,我们都要紧紧依靠人民,坚持自力更生、艰苦奋斗,以坚如磐石的信心、只争朝夕的劲头、坚韧不拔的毅力,一步一个脚印把前无古人的伟大事业推向前进。

Xi opened his speech with “岁月不居,时节如流 Time stops for no one, and the seasons keep changing.” The next two lines of that Kong Rong poem are "海內知識, 零落殆盡" -Language Log » More literary troubles for Xi Jinping:

This article (in Chinese) describes how China's netizens (wǎngyǒu 网友) are ridiculing President Xi for inappropriately quoting a poem by Kong Rong 孔融 (153-208), a 20th generation descendant of Confucius, in his New Year's address to the nation...

By "zhīshì 知識", Kong Rong in all likelihood was referring to his "acquaintances" (his friends), but Xi's critics emphasize that it can also mean "knowledge" and "intellectuals". Thus they interpret these lines to mean that knowledge "within the seas" (i.e., in China) is desolate and nearly depleted. This, they imply, is the direct result of Xi's repressive policies exerting draconian control over the internet and harsh restrictions on intellectual discourse.

It would be interesting Xi’s speechwriter is frustrated and so becoming a bit subversive by inserting classical references he knows Xi won’t fully grasp. But doing this intentionally would be suicidal and there is no indication this was anything other than a sloppy use of a classical reference.


2. Xi's Taiwan speech

There did not seem to be much new in it, either in terms of threats or ideas. The suffocation of Hong Kong is not a good marketing pitch to Taiwan for one country two systems

Unification Plan From China Finds Few Takers in Taiwan - The New York Times:

Mr. Xi did not lay down a timetable for absorbing Taiwan, which is something more hawkish voices in Beijing have urged. But as he nears his seventh year as president, he indicated that his patience had limits and that he wanted to bring Taiwan into ever-closer political, economic and cultural orbit around China.

“That the two sides of the strait are still not fully unified is a wound to the Chinese nation left by history,” Mr. Xi said in his direction-setting speech in the Great Hall of the People. The political divisions between China and Taiwan, he added “cannot be passed on from generation to generation.”

Video and full text of Xi's speech《告台湾同胞书》发表40周年纪念会在京隆重举行 习近平出席纪念会并发表重要讲话 

President Tsai issues statement on China's President Xi's "Message to Compatriots in Taiwan":

The development of cross-strait relations, as I said very clearly in my new year's talk yesterday, requires that: China must face the reality of the existence of the Republic of China (Taiwan), and not deny the democratic system that the people of Taiwan have established together; second, must respect the commitment of the 23 million people of Taiwan to freedom and democracy, and not foster divisions and offer inducements to interfere with the choices made by the people of Taiwan; third, must handle cross-strait differences peacefully, on the basis of equality, instead of using suppression and intimidation to get Taiwanese to submit; fourth, it must be governments or government-authorized agencies that engage in negotiations. Any political consultations that are not authorized and monitored by the people cannot be called "democratic consultations." This is Taiwan's position, a democratic position.


3. Official discourse in 2018

Long but very interesting look at Party media key discourse phrases throughout 2018.

China Discourse Report 2018 | China Media Project 

For 2018, we could say that the most important testing point (测试点) in China’s political discourse arena was the contraction of President Xi Jinping’s political “banner term,” or qizhiyu (旗帜语), “Xi Jinping Thought of Socialism With Chinese Characteristics for a New Era” (习近平中国特色社会主义思想), which was formally introduced at the 19th National Congress of the Chinese Communist Party in November 2017...

The pace of this contraction process is a reflection of the degree of power wielded by Xi Jinping and the core of top Party leaders at his side. At CMP, we predicted previously, as Xi Jinping’s banner term became clear, that the contracted “Xi Jinping Thought” would emerge within the year following the 19th National Congress. In fact, we could see the process unfolding in the Party-state media, with the emergence of a number of transitional phrases (过渡性提法), but this process was ultimately slower than we anticipated, impacted by the broader domestic and international environment...

In the almost six years from the time Xi Jinping came to power in November 2012 to December 28, 2018, there have been a total of 482 front pages of the People’s Daily without headlines or subheads including “Xi Jinping,” “General Secretary” or “Chairman Xi.” There were 111 such pages in 2013, 74 in 2014, 97 in 2015, 88 in 2016, and 20 in 2018.

What we should notice is that in 2018 front pages of this kind were far fewer than in previous years. In other words, 2018 has been a year during which Xi JInping is in the headlines on the front page of the People’s Daily with much greater frequency than in previous years...

The formula “442” is a fixed combination of various Xi Jinping catchphrases that we should observe. This formula first appeared in September 2018, a shortened reference to “strengthening the ‘Four Consciousnesses,’ adhering to the ‘Four Confidences,’ achieving the ‘Two Protections.'”..

We can see that the political buzzwords and related formulas referring to China’s top leader have been in a state of flux, with many readjustments through the year. And in the midst of these fluctuations, the recent rise of the “442” formula is one of the most obvious signs that the process continues.


4. Xi really likes dialectical materialism

I will keep saying it until I am sweating and red in the face, like a cadre in a good democratic life meeting, but it sure looks to me that Xi is not just a Leninist but is also a true believer in Marxism...

Xi's article on dialectical materialism to be published - Xinhua:

An article by Xi Jinping on dialectical materialism will be published on Qiushi Journal, a flagship magazine of the Communist Party of China (CPC) Central Committee.

The article will appear in the first issue of the new version of the journal in 2019.

The Party should be constantly nourished by the wisdom of Marxism philosophy and apply dialectical materialism and methodology in order to realize the Chinese Dream of national rejuvenation, said the article by Xi, general secretary of the CPC Central Committee, Chinese president and chairman of the Central Military Commission.

He stressed adherence to formulating policies based on reality, proactively facing and resolving conflicts, enhancing skills to cope with complex situations and problems, and unceasingly promoting theoretical innovations.

Note: It is from a speech he gave to a Politburo study session in January 2015 - (这是习近平总书记2015年1月23日在十八届中央政治局第二十次集体学习时的讲话。)

辩证唯物主义是中国共产党人的世界观和方法论: 

辩证唯物主义是中国共产党人的世界观和方法论。毛泽东同志曾经说过,马克思主义有几门学问,但基础的东西是马克思主义哲学。他在革命战争年代写下的《反对本本主义》、《实践论》、《矛盾论》等著作,在社会主义建设时期写下的《论十大关系》、《关于正确处理人民内部矛盾的问题》等著作,灵活运用了辩证唯物主义世界观和方法论,形成了具有鲜明中国特色的马克思主义哲学思想,为我们党掌握和运用辩证唯物主义树立了光辉典范。

邓小平同志非常善于运用辩证唯物主义解决实际问题。他强调,必须抓住社会主义初级阶段的主要矛盾,坚持以经济建设为中心;必须用实践来检验我们的工作,坚持“三个有利于”标准;必须坚持“两手抓、两手都要硬”、“摸着石头过河”,处理好计划和市场、先富和共富等关系。江泽民同志指出:“如果头脑里没有辩证唯物主义、历史唯物主义的世界观,就不可能以正确的立场和科学的态度来认识纷繁复杂的客观事物,把握事物发展的规律”。胡锦涛同志也说过,“辩证唯物主义和历史唯物主义的世界观和方法论,是马克思主义最根本的理论特征”,要学习掌握马克思主义哲学,努力提高探索解决新时期基本问题的本领。

今天,我们党要团结带领人民实现“两个一百年”奋斗目标、实现中华民族伟大复兴的中国梦,必须不断接受马克思主义哲学智慧的滋养,更加自觉地坚持和运用辩证唯物主义世界观和方法论,更好在实际工作中把握现象和本质、形式和内容、原因和结果、偶然和必然、可能和现实、内因和外因、共性和个性的关系,增强辩证思维、战略思维能力,把各项工作做得更好。


5. Apple's China disappointment

Company specific? Industry specific? The US-China trade war? Tough Chinese competition? A sign of a broader consumption drop? My guess is a mixture of all of the above? Will Apple and Tim Cook feel the wrath of Beijing for delivering such negative energy to investors and global markets?

Letter from Tim Cook to Apple Investors | Business Wire:

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.

China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.

Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world. Our products enjoy a strong following among customers, with a very high level of engagement and satisfaction. Our results in China include a new record for Services revenue, and our installed base of devices grew over the last year. We are proud to participate in the Chinese marketplace.

Why is Apple struggling in China? | Financial Times $$:

analysts say that in addition to beating Apple on price, Chinese companies have been quicker to innovate.

For example, Huawei has offered dual-Sim card support for more than a decade, while Apple only added the function to its newer models in September.

The Chinese company’s latest phones also offer multiple cameras, on-screen fingerprint ID and even reverse wireless charging, whereby your device can be used to charge other mobiles.

“As Chinese consumers’ demands increase, they get more sophisticated about noticing price-quality ratios,” said Guan Yiting, smartphone analyst at market research firm Canalys. 

Huawei on track for record smartphone shipments in 2018, defying outlook worries amid CFO arrest | South China Morning Post:

Huawei’s shipments of 200 million for 2018 represent at least 30 per cent year on year growth, as the Shenzhen-based company shipped 153.1 million units last year, IDC said in a report earlier. It also corresponds with an estimation from the company in July when it broke the 100 million benchmark – the fastest pace of shipments Huawei has seen in years – when it had forecast the 200 million target for the full year.

China's consumption market to maintain stable growth in 2019 - Xinhua:

Wang Bin, deputy director of the Department of Market Operation and Consumption Promotion at the MOC, said at a recent meeting that consumption is expected to contribute to 65 percent of economic growth in 2019, with an expected 9-percent increase in total retail sales of consumer goods.

China's consumer market will continue its steady development and maintain a stable and positive outlook regardless of the negative factors and pressure, Wang added.


6. US-China

As China Talks Begin, Trump’s Trade Negotiator Tries to Keep President From Wavering - The New York Times:

First, however, Mr. Lighthizer will need to keep a mercurial president from wavering in the face of queasy financial markets, which have suffered their steepest annual decline since 2008. Despite his declaration that trade wars are “easy to win” and his recent boast that he is a “Tariff Man,” Mr. Trump is increasingly eager to reach a deal that will help calm the markets, which he views as a political electrocardiogram of his presidency...

When Mr. Lighthizer senses that anyone — even Mr. Trump — might be going a little soft on China, he opens a paper-clipped manila folder he totes around and brandishes a single-page, easy-reading chart that lists decades of failed trade negotiations with Beijing, according to administration officials.

“Bob’s attitude toward China is very simple. He wants them to surrender,” said William A. Reinsch, a former federal trade official who met him three decades ago when Mr. Lighthizer was a young aide for former Senator Bob Dole of Kansas. “His negotiating strategy is simple too. He basically gives them a list of things he wants them to do and says, ‘Fix it now.’”

The Atlantic also recently profiled Lighthizer - Robert Lighthizer's Bid to Cut China's Trade Influence :

more than two decades of his writing, speeches, and interviews give a sense of how he has come to view the global economy, and the perils he believes America faces as China grows more dominant...

Lighthizer believes that the shrinking of the American steel industry isn’t a mere by-product of technological shifts, but the result of a war China has been waging for decades. He and his allies think the growing superpower will now take the fight to other U.S. interests, threatening the nation’s economic hegemony. Now he’s preparing his own battle plan, refined over a career of lobbying. He plans to bend the rules of the global economy in America’s favor—even if that means breaking the system America itself created...

in office, lighthizer’s goal is simple to state, if somewhat more complicated to achieve. He wants to roll back China’s advances on the global economy. His zeal for that mission comes directly from his years working on behalf of American steel interests. According to Dan DiMicco, the former CEO of Nucor Corporation and a trade adviser to President Trump, steel jobs were the first casualties of a quiet war China has been waging on the American worker. “We’ve been in a trade war for 25 years. We haven’t engaged; it’s been waged on us. They’ve done it by sleight of hand, by lying, by using short-term greed to undermine long-term success. And Trump knows all of that, and he’s put Bob in charge,” DiMicco told me.

Gerrish, Lighthizer’s Skadden protégé, to set tone for China talks - POLITICO:

Next week, Gerrish will lead a delegation that includes Treasury Undersecretary for International Affairs David Malpass and other officials to China for the first round of face-to-face talks since President Donald Trump and Chinese President Xi Jinping agreed on Dec. 1 to a ceasefire in a trade war that has led to tariffs on hundreds of billions of dollars worth of U.S. and Chinese goods....

A successful meeting could lead to higher-level talks between Lighthizer and Chinese Vice Premier Liu He in Washington the following week. In addition, Chinese Vice President Wang Qishan is expected to lead a delegation to the World Economic Forum in Davos, Switzerland in late January, when Trump, Lighthizer and other top U.S. officials are scheduled to be there.

For Shanahan, a very public debut in Trump's cabinet | Reuters:

In one of his first meetings of the day, Shanahan told civilian leaders of the U.S. military to focus on “China, China, China,” even as America fights militants in Syria and Afghanistan, a U.S. defense official said.

The U.S. official, who spoke on condition of anonymity, did not elaborate on Shanahan’s views on China or other guidance he gave.

Other officials have described Shanahan as an advocate of the Pentagon's toughening stance toward Beijing. The 2018 National Defense Strategy here, which Shanahan helped develop, branded China as a strategic competitor.

“While we’re focused on ongoing operations, acting Secretary Shanahan told the team to remember China, China, China,” the official said.

'Incompatible political values' at the core of tense Sino-US relations, expert Wang Jisi says | South China Morning Post:

The remarks by Wang Jisi, president of the Institute of International and Strategic Studies at Peking University, came at a tense time in relations between Beijing and Washington, and on the eve of an important milestone.

Tuesday marks the 40th anniversary of the establishment of diplomatic ties between the two former cold war adversaries...

n an article just published in World Affairs, a journal controlled by the Chinese foreign ministry, Wang wrote that a clash of civilisations was at the heart of the bitter geostrategic competition between the world’s top two economies.

Compared to trade frictions and the shifting of the power balance in favour of China, he argued that incompatible political values had become the biggest contributing factor to the tough challenges facing Sino-US relations.

A US Perspective | The Asan Forum:

Why has Washington come to a new consensus on China, and where will this consensus lead? To answer these questions, we examine how US policymakers’ views are changing on three issues concerning China: security activities, economic impact, and human rights record. In each area, we find that experts on both sides of the aisle (and across other divides) are increasingly in agreement that the Communist Party of China’s (CPC) behavior is deeply problematic and requires a more forceful response.

An ‘atheist’ empire? Trump aides rally evangelicals in China fight - POLITICO: 

Pence’s remarks, which also addressed the repression of Chinese Buddhists and Muslims, illustrated how religious freedom is a growing theme of President Donald Trump’s confrontation with Beijing, which some foreign policy insiders warn could develop into a new Cold War. 

It is a subject that resonates in the U.S. heartland, some Christian leaders say — parts of which, including rural areas, are disproportionately at risk of fallout from Trump’s trade fight with the Asian giant... 

While China’s religious persecution draws less media attention than issues like soybean tariffs and cyber espionage, it is closely tracked by conservative Christian activists and outlets like CBN, where a typical headline recently reported: “Chinese Government Destroys Christian Church, Bills Pastor for Demolition.” 

In September, Providence Magazine, which covers U.S. foreign policy from a Christian perspective, wrote that in 2018 China’s religious repression has reached “a sustained intensity not seen since the Cultural Revolution.”

Many Chinese Think Americans Lack Resolve to Prevail in Battle, Expert Says | Military.com:

"A far larger number of Chinese believe it than I think is healthy," said Brad Glosserman, a China expert and visiting professor at Tokyo's Tama University.

Glosserman was responding to comments by Chinese Rear Adm. Lou Yuan, who told an audience in Shenzhen last month that sinking a pair of U.S. aircraft carriers would settle issues of sovereignty in the South China Sea, according to the News Corp Australia network.


7. How worried should Westerners be about travel to China now?

The US upgrades its warning to American citizens

US State Department Travel Advisory - China - Level 2: Exercise Increased Caution:

Exercise increased caution in China due to arbitrary enforcement of local laws as well as special restrictions on dual U.S.-Chinese nationals.

Chinese authorities have asserted broad authority to prohibit U.S. citizens from leaving China by using ‘exit bans,’ sometimes keeping U.S. citizens in China for years. China uses exit bans coercively:

to compel U.S. citizens to participate in Chinese government investigations,

to lure individuals back to China from abroad, and

to aid Chinese authorities in resolving civil disputes in favor of Chinese parties.

In most cases, U.S. citizens only become aware of the exit ban when they attempt to depart China, and there is no method to find out how long the ban may continue. U.S. citizens under exit bans have been harassed and threatened.

Canada has not put an official warning yet but clearly the Huawei CFO detention has increased the risk for Canadians in the PRC

Thirteen Canadians have been detained in China since Huawei executive’s arrest, says Ottawa - The Globe and Mail:

Thirteen Canadians have been detained in China since the high-profile arrest of Huawei executive Meng Wanzhou in Vancouver on Dec. 1, according to a Canadian government official.

A Global Affairs Canada spokesperson, Guillaume Bérubé, confirmed the detentions in a statement to The Globe and Mail. Until Thursday, only three Canadians – Michael Kovrig, Michael Spavor and Sarah McIver – were publicly known to have been detained in China since Canada’s arrest of Ms. Meng, Huawei Technologies Co. Ltd.’s chief financial officer. They were picked up after China promised retaliation for Ms. Meng’s arrest.

“Global Affairs Canada is aware of 13 Canadian citizens having been detained in China, excluding Hong Kong, since December 1, 2018. Of those, we can confirm that at least eight have been released,” Mr. Bérubé said in an e-mail.

Canada, China’s Schellenberg’s retrial and Beijing’s calculating maneuvers — Jerome A. Cohen | 孔傑榮(柯恩:

This is a clever move on the part of the PRC Government. Ostensibly the case has no relation to the Canadian extradition arrest of the chief financial officer,Meng Wanzhou, of the major Chinese technology company Huawei. Yet the court’s action adds significantly to the already great pressure on Canada brought to bear by the PRC’s recent arrest, detention and investigation of two other Canadian nationals for unnamed supposed national security crimes, leaving it open to the PRC to impose the death penalty or the death penalty with a two-year suspension or life imprisonment on Schellenberg at any time that might suit Beijing over the next few months or even years. Absent strong international protest against this obvious further PRC effort to distort its own justice system for political ends, I think there will be no final sentence in the Schellenberg case until the extradition case is resolved.

Global anxiety reflected in Australian outcry over Canadians detained in China | The Star:

Australia’s statement of concern issued Sunday over the detention of two Canadians in China points to growing global anxiety over Beijing’s seeming willingness to detain foreign nationals as a political tactic, experts say.

Foreign Affairs Minister Marise Payne’s first official comments on the issue followed an open letter signed by dozens of Australian scholars and analysts requesting Canberra’s support in Canadian-led calls for the release of the detainees.


8. China goes to the dark side of the moon

‘New Chapter’ in Space Exploration as China Reaches Far Side of the Moon - The New York Times:

The probe sent back to the earth the first close-up image of the moon’s far side using a relay satellite China calls “Queqiao,” or “Magpie Bridge,” the space agency said in a notice that included images it said were taken by the probe.

Although a latecomer by decades to space exploration, China is quickly catching up, experts say, and could challenge the United States for supremacy in artificial intelligence, quantum computing and other fields.

“This space mission shows that China has reached the advanced world-class level in deep space exploration,” said Zhu Menghua, a professor at the Macau University of Science and Technology who has worked closely with the Chinese space agency. “We Chinese people have done something that the Americans have not dared try.”

Some of the pictures, on the China National Space Administration site - 嫦娥四号探测器成功着陆月球背面 传回世界第一张近距离拍摄月背影像图-国家航天局 

China's Chang'e-4 probe makes historic landing on moon's far side - Xinhua: 

"It's an important milestone for China's space exploration," said Wu Weiren, chief designer of China's lunar exploration program. 

"It is a perfect display of human intelligence," said Jia Yang, deputy chief designer of the Chang'e-4 probe, from the China Academy of Space Technology (CAST).

It may feel like the sky of the US-China relationship is falling but somehow I doubt Xi is using You Tutu to channel Pink Floyd and send a message to Trump:

The sky is falling, intergalactic, intergalactical love
And I'll be waiting for you, for you, for you
On the dark side of the moon


Business, Economy, Finance And Trade

Audi sets new sales record in China in 2018 - Xinhua Audi delivered a total of 660,888 vehicles to Chinese customers last year, up 11 percent from the previous year, the company said, adding that China continues to be its largest single market around the globe.

China's central bank adjusts targeted RRR policies to support small firms - China Daily China's central bank decided Wednesday to ease evaluation rules for qualifying financial institutions to enjoy lower reserve requirement ratios (RRR) in a move to encourage inclusive financing. Financial institutions can deposit less in the central bank as reserve money if they lend a certain share of their loans to small and micro firms each borrowing less than ten million yuan ($1.46 million) from them, the People's Bank of China said in a statement.

Editorial: China Must Remove Hidden Barriers to Market Access - Caixin Global At the end of 2018, China finally introduced a major reform initiative. On Dec. 25, the National Development and Reform Commission and the Ministry of Commerce issued the “Market Access Negative List (2018 Edition),” marking China’s full implementation of the market entry “negative list” system. The system was tested out in four provinces and cities in 2016, and the following year the pilot program expanded to 15 provinces and cities. This instance of comprehensive opening signifies the fulfillment of the State Council’s 2015 pledge to implement the national market access negative-list system from 2018. This detailed list is a significant, hard-won achievement that represents a commitment to continued reform and to the spirit of the rule of law. However, it can be expected that the negative list will face serious difficulties as it is implemented...The biggest obstacle is the intricate entanglement of the interests of local protection and industry monopolies. Market access is the gateway to building an interest network. Equal entry for market entities will inevitably impact existing monopolistic interests, and vested interests will naturally not sit idly by. Over the past few years, with the help of extremely asymmetric power and capital advantages, those with vested interests have been cruel and fierce in exerting pressure on their competitors.

Deep Throat: January 2019 - China has US$50.1 Trillion of new Financial Assets! The purpose of the PBOC's Financial Stability Report, as far as I can tell, is to fully describe the financial condition of the Chinese economy and let the world know that "China" is on top its game and doing a great job ....at everything. All's well.....nothing to see here. As you also know if you've been a long time reader of this blog, I've been really concerned about China's meteoric "Questionable Financial Asset" growth and the impact that it might have on the global economy... In four short years the Chinese Government has "created" 380 Trillion RMB or US$ 50.1 Trillion (US$ equivalent) in Financial Assets out of thin air. The US$ (currency adjusted) value of these Financial Assets increased a whopping 22% in 2017 and forecast growth of 8% for 2018.

China Easing Expected as $625 Billion `Liquidity Hole' Looms - Bloomberg China will cut the reserve requirement ratio and improve funding conditions this month, as liquidity tightens toward the Spring Festival holidays, the country’s largest securities firm says. Fresh demand for funds will amount to nearly 4.3 trillion yuan ($625 billion) in January, according to Citic Securities Co. and Bloomberg calculations. Mainland residents will withdraw 1 trillion yuan of cash in preparation for the holiday, when money is gifted in red envelopes. Corporate tax payments and maturities of lenders’ interbank debt will also mop up liquidity, prompting authorities to step up cash injections.

China Gives Urban Rail Another $34 Billion Boost to Support Growth - Caixin Global Most of the investment, amounting to 218 billion yuan, will be in Jiangsu and pushes forward the province’s ambition to have rail links to all its cities with populations exceeding 200,000 by 2025, according to the statement, which was dated Dec. 26. Half of Jiangsu’s spending will be funded by fiscal revenue and other types of equity capital provided by the provincial and lower-level local governments. The remainder will be raised from bank loans and other types of debt, the statement said. The funding plan for Anhui is similar, but the NDRC did not specify the amount of equity capital to be supplied by local governments.

Intimate Business | China Media Project The idea behind the “new type of cadre-entrepreneur relationship” is that intimacy between the two sides might be  fostered in such a way that allows companies to thrive, producing the sought-after economic gains, while maintaining the integrity that keeps both sides clean. But this idea can be a hard sell under the very real pressures of the anti-corruption drive. In an interview with the People’s Daily, one official from the discipline supervision department in Guangdong province said that fear of running afoul of the anti-corruption campaign had led some government officials to opt against responding to reasonable requests for assistance from companies, avoiding contacts with entrepreneurs altogether simply to remain above all suspicion. “Before, some officials were intimate but not clean, now they are clean but not intimate,” said one recent article in the People’s Daily, summing up the challenge.

China's Rich Brace for Tax Raid on $24 Trillion Wealth Pile - Bloomberg In the past, the rich could avoid paying taxes on overseas earnings by acquiring a foreign passport or green card, while keeping their Chinese citizenship. But this won’t work starting in January as the government will tax global income from all holders of "hukou" household registrations -- the most encompassing way of identifying a Chinese national -- regardless of whether they have any additional nationalities.

Chinese stock market is the world's worst performer in 2018 - YUAN TALKS | 元傳媒 The Shenzhen Component Index posted a yearly loss to 34 per cent and the Chinext Index which tracks medium- and small-sized technology stocks listed on the Shenzhen Stock Exchanges fell 29 per cent this year, representing its second biggest one-year drop on record and ending lower for the third straight year. China’s Small and Medium Enterprises Board index plunged near 38 per cent in 2018, the worst performing index in the world, with other major Chinese stock indexes also among the worst performers compared to other stock markets.

China Is Said to Seek Talks With India to Push Asia Trade Pact - Bloomberg The 16-country Regional Comprehensive Economic Agreement has been in the works for a while and China is keen to conclude it by end of 2019, the people said, asking not to be identified as the matter is not public. India’s wariness about a possible flood of Chinese goods, and its demand for looser immigration rules for its tech professionals remain sticking points.

PBOC's Last Monetary Policy Meeting for 2018 Signals Greater Support for Real Economy - China Banking News The meeting said that PBOC would push for the financial sector to “further strengthen” the vigour of support for the real economy,” and in particular  “form a positive triangular cycle comprised of a push for stable monetary policy, strengthening of the vigour of micro-economic actors and employing the role of capital markets, to drive an overall positive cycle in the national economy.”

China approves 2018-2035 master plan for Xiongan New Area - People's Daily Online China's central authorities have approved the 2018-2035 master plan for Xiongan New Area, stressing that its creation is significant to high-quality development and the building of the modern economic system. The plan was approved by the Central Committee of the Communist Party of China (CPC) and the State Council. The 2018-2035 master plan for Xiongan New Area is significant to build Xiongan into the national model of high-quality development and a new engine for the modern economic system, said the approval released on Wednesday

China births dip in 2018 - Global Times "Although the national data for the birth of newborns have not been publicized yet, data revealed by local health departments showed that the number of newborns in 2018 decreased by at least 15 percent from the previous year," He Yafu, a demographer and author of a book on the impact of China's population policy, told the Global Times on Tuesday. "The birth population in 2017 was 17.23 million. Based on current calculations, the number of newborns across the nation might drop by more than 2 million," He predicted. He said the birth population in 2018 may fall below 15 million people, citing a source close to the National Health Commission.


Politics, Law And Ideology

习近平同志《论坚持全面深化改革》主要篇目介绍-新华网 Xinhua takes a look at each chapter of the just published book "On persisting in comprehensively deepening reform, which looks at 72 important statements and documents by Xi Jinping on reform between December 2012 and December 2018. The book was put together by the CPC Central Committee Party History and Archives Research Institute//中共中央党史和文献研究院编辑的习近平同志《论坚持全面深化改革》一书,收入习近平同志2012年12月至2018年12月这段时间内关于坚持全面深化改革的重要文稿72篇。现将这部专题文集的主要篇目介绍如下。

Peking University students clash with campus guards over control of Marxist Society | South China Morning Post A dozen Peking University students clashed with guards on Friday as they protested over a change to the Marxist Society that was imposed after it organised an event to mark the 125th anniversary of Mao Zedong’s birth.

pku马会 - 北大马会致邱占萱等同学的一封信 Letter from the new head of the Peking U Marxist Society tohis classmates who have gotten in trouble, accuses them of among other things trying to bring back the cultural revolution...this man clearly has a future in sycophancy and politics  //  我是马克思主义学会会长马宁,我和学会理事长宁悦、团支书王昱博以及其他发起改组马会的同学们有些心里话想说给你们。我们都怀着学习、研究马克思主义的热情,怀着深入社会、深入实践的精神投身社团,看到今天马会的现状,看到一出出闹剧接二连三在我们深爱的校园里上演,作为北大的普通一份子,我们深感痛心,在此也提出几个问题供大家探讨

No let-up for corrupt ‘tigers’ in 2018 as China’s graft-busters claim more big scalps | South China Morning Post Six years into President Xi Jinping’s war on corruption, the Communist Party’s graft-busters detained another 23 “tigers” – or high-ranking officials – in 2018, five more than the previous year. Prosecutors also charged 32 provincial- and ministerial-level officials last year, which was 14 more than in 2017.

Xi: Upholding Socialism in the New Era is a ‘Great Social Revolution’ | The Diplomat After Mao’s death, the CCP still held the “democratic life meeting” periodically. One significant “democratic life meeting” was held in 1987. In this meeting, Hu Yaobang, former top leader of the CCP, was ousted from power under criticism on his reform program. But over the next few decades, such meetings seldom took place. It was not until Xi Jinping came into office in 2012 that the meetings were revived.

China’s top prosecutor ‘confident’ of finding out what happened to missing papers | South China Morning Post China’s top prosecutor said on Thursday that he was “confident” the supreme court would find out what happened to key documents from a business contract dispute that went missing from a judge’s office two years ago.

Internet watchdog launches crackdown on harmful information - China Daily China's top internet watchdog launched a six-month crackdown on harmful and illegal information in cyberspace at the start of the year, it announced on Thursday. The crackdown is targeting 12 kinds of problematic information, including rumors and that related to pornography, violence, terrorism or gambling, on websites, smartphone applications, messaging tools or livestreaming platforms, the Cyberspace Administration said.

Xi congratulates on CASS Chinese history institute's establishment - Xinhua President Xi Jinping congratulated on the establishment of the Chinese history research institute under the Chinese Academy of Social Sciences (CASS) Thursday. On behalf of the Communist Party of China (CPC) Central Committee, Xi, also general secretary of the CPC Central Committee and chairman of the Central Military Commission, extended congratulations to the institute and sincere greetings to history researchers nationwide in a letter. Noting that "history is like a mirror for people to draw wisdom for modern times," Xi called on researchers to "better learn from history, uncover the law of history and grasp the historical trend." He called for "accelerating the building of the disciplines, academic and discourse systems of history research with Chinese characteristics." // Nihilists need not apply 习近平致信祝贺中国社会科学院中国历史研究院成立 

New learning platform launched - Xinhua Senior Communist Party of China (CPC) official Wang Huning on Tuesday announced the launch of a new learning platform. It was considered a key measure to push for learning Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era...Users can log in to the platform through website xuexi.cnor the mobile phone app, where they have free access to a great number of journals, ancient archives, open courses, songs, operas, movies and books.

China's top procuratorate restructures - Xinhua Four departments were set up for criminal prosecution, with each focusing on regular crimes, serious crimes, duty crimes, and new-type crimes. The criminal prosecution proceedings of arrest approval and indictment have also been streamlined, a move that is expected to improve both the quality and efficiency of criminal prosecution, said Zhang Jun, procurator-general of the SPP. Six other departments were set up with responsibilities over civil, administrative, public interest and juvenile cases, complaints handling, and investigation into duty crimes committed by judicial personnel.

Year in Review: The NPC and the Observer in 2018 – NPC Observer In 2018, the NPC Standing Committee (NPCSC) held nine sessions—lasting 29 days in total—which included not one, but two rare special sessions: at the first one, it reviewed a draft constitutional amendment, and at the second, it adopted a resolution on ecological and environmental protection in support of the Communist Party’s ongoing “tough war” against pollution. The 13th NPC met for its first, 10½-day annual session in March. Altogether, the NPC and its Standing Committee enacted nine new laws, approved major changes to seven, and reviewed another nine legislative bills (see lists at the end of this section). In comparison, the new NPC has proved to be more productive than its predecessor (in office from Mar. 2013 to Mar. 2018) during the first year of their respective terms (see graph below).

China Signals End of Controversial Sex Work Detention Program - Caixin Global The “detention and re-education for those involved in prostitution” program, which has existed for 27 years, was recommended for abolition on Monday by the Legislative Affairs Commission of China’s National Peoples’ Congress Standing Committee (NPCSC). The news is seen as a victory for the scholars, legal practitioners and members of the public who have long lobbied for the change on the grounds such administrative detention is unjust, extrajudicial and particularly punitive.

Chinese Police Officers Raided Mosques In Yunnan Province - Buzzfeed The Chinese government expanded its crackdown on religion over the weekend, with hundreds of police officers storming three mosques and forcibly evicting hundreds of worshippers in the southwest province of Yunnan. Videos circulating on Twitter show uniformed police officers forcing their way into one mosque, where residents were reportedly praying for protection.


Foreign and Military Affairs

Chinese Vice-President Wang Qishan to lead Davos delegation | South China Morning Post China’s Vice-President Wang Qishan will lead the Chinese delegation at the World Economic Forum’s annual meeting from January 22-25 in Davos, Switzerland, according to two separate sources familiar with the arrangements. It is not known if Wang will have an official meeting with US President Donald Trump, who will be making his second appearance at the annual gathering of global elites.

Introducing our Global Edition - China Daily Combining our Chinese mainland edition with overseas dailies and weeklies published in the United States, Europe, Asia and Africa, China Daily Global Edition will have extensive and analytical coverage of what happens in every corner of the world with a Chinese perspective. The 16-page broadsheet will offer more news analysis, financial and economic news, in-depth features and opinion pieces.

Congress demands answers on AP’s relationship with Chinese state media - The Washington Post “In sharp contrast to the AP’s independent journalism, Xinhua’s core mission is to shape public opinion in ways sympathetic to the CCP’s legitimacy and behavior,” 14 U.S. lawmakers wrote to Pruitt on Dec. 19, in a letter I obtained. The letter was led by Reps. Mike Gallagher (R-Wis.) and Brad Sherman (D-Calif.) and signed by Sens. Tom Cotton (R-Ark.), Mark R. Warner (D-Va.) and Marco Rubio (R-Fla.). The lawmakers point out that the Justice Department this year required Xinhua to register as a foreign agent under the Foreign Agents Registration Act.

China showcases own version of ‘Mother of All Bombs’ - Global Times China's arms industry giant NORINCO for the first time showcased a new type of massive aerial bomb, which it dubbed the Chinese version of the "Mother of All Bombs" due to its huge destruction potential that is claimed to be only second to nuclear weapons. The bomb was airdropped by an H-6K bomber and caused a gigantic explosion, a promotional video China North Industries Group Corporation Limited (NORINCO) released on its website in December shows.

Pakistan secures further US$2b in funding from China to ‘avoid economic crisis’ | This Week In Asia | South China Morning Post China has pledged to lend an additional US$2 billion to Pakistan to increase the foreign exchange reserves of its South Asian ally, according to a government official in Islamabad.

Reds VS. Reds: CCP Political Warfare In Canada In 2018 While Canada has many good reasons to maintain a good relationship with such a large country and trade partner, we must keep in mind that Canada’s core democratic values and identity will always be incompatible with the political objectives of a one-party dictatorship with increasingly ambitious plans for regional hegemony. Specifically in 2018, the CCP did its work in Canada through use of defamation lawsuits, United Front meetings in British Columbia, a developing network of Beijing-controlled front organisations working in Canada, media manipulation and even direct interference in Canada’s municipal elections.

China’s Black Sea Ambitions - Foreign Policy Research Institute The People’s Republic of China is actively engaging Black Sea littoral states through various initiatives to open new markets for Chinese goods, facilitate the acquisition of valuable or strategic local industries, and offer loans for large development projects. These efforts go far beyond just building roads and bridges, with growing political influence operations intended to ultimately put the countries on a pro-Beijing axis. Although Chinese-funded projects often fail or come with strings attached, China has been able to present itself as a credible alternative when the European Union is unable or unwilling to provide financing.

China is making a Beijing-Tibet expressway and it has military implications for India In the 18 months since the Doklam stand-off with India, China has started or accelerated various road and rail projects in Tibet, especially near the Indian border. The latest example of this is a new high-speed expressway being constructed from Xining in Qinghai province to Lhasa, the capital of Tibet. As reported earlier by ThePrint, the People’s Liberation Army has modernised its theatre-level distribution with an automated system of supply management, and also carried out actual on-ground trials needed to verify timelines, validate concepts and operationalise plans.

The PLA Navy’s Growing Prowess | ChinaPower Project This episode explores the rapid modernization of the Chinese People’s Liberation Army Navy (PLAN) and its growing naval capacity. Our guest, Dr. Andrew Erickson, explains the motivations behind this effort as well as the most recent capabilities of the PLAN’s expanding naval fleet. He also discusses the synergies between commercial and military shipbuilding in China and revisits the current state of China’s aircraft carrier program, which he discussed with ChinaPower several years ago.

China plans the biggest garden show ever - Economist The China Pavilion, as the structure is called, is for an international flower festival in Yanqing, a satellite town of the capital. The show will open on April 29th and last for more than five months. It will be the biggest expo of any kind that China has staged under the aegis of the Paris-based Bureau International des Expositions since the Shanghai World Expo in 2010. It will be the biggest horticultural one ever held anywhere. And it will be the centrepiece of the largest political celebration in China in a decade: the 70th anniversary of the founding of the Communist state. The big day itself will be on October 1st, as the flower show enters its final week.

China launches ecological protection facilities on Nansha Islands - People's Daily Online The facilities on Yongshu, Zhubi and Meiji reefs will be mainly used for the protection and restoration of coral reefs, which are key to the ecological security of the Nansha Islands and the whole South China Sea region, the ministry said.

China’s military priorities for 2019: boost training and prepare for war | South China Morning Post “Drilling soldiers and war preparations are the fundamental jobs and work focus of our military, and at no time should we allow any slack in these areas,” the PLA Daily said in its New Year’s Day editorial. “We should be well prepared for all directions of military struggle and comprehensively improve troops’ combat response in emergencies … to ensure we can meet the challenge and win when there is a situation.”

Tough South China Sea talks ahead as Vietnam seeks to curb China's actions | Reuters  Hanoi wants the pact to outlaw many of the actions China has carried out across the hotly disputed waterway in recent years, including artificial island building, blockades and offensive weaponry such as missile deployments, according to a negotiating draft of the ASEAN Code of Conduct (COC) seen by Reuters. The draft also shows Hanoi is pushing for a ban on any new Air Defence Identification Zone - something Beijing unilaterally announced over the East China Sea in 2013. Chinese officials have not ruled out a similar move, in which all aircraft are supposed to identify themselves to Chinese authorities, over the South China Sea.


Tech And Media

Censoring China’s Internet, for Stability and Profit - The New York Times Thousands of low-wage workers in “censorship factories” trawl the online world for forbidden content, where even a photo of an empty chair could cause big trouble.

请删帖员喝咖啡 | 博谈网 a December interview with online censors

LinkedIn reverses course after censoring Chinese profile page of US-based human rights activist Zhou Fengsuo | South China Morning Post The professional networking site informed the New York-based activist Zhou Fengsuo on Wednesday evening that, because of “specific content” in his profile, his page could no longer be viewed by users in China, according to correspondence that Zhou posted to Twitter.

Chinese tech firms lie low at CES after trade war curbs - Global Times Chinese companies formerly used the CES as a launch pad for entering the US and other overseas markets, but worries over the possibility of getting caught in the crosshairs of Washington's trade protectionism or ensnared in its technology crackdown have curbed their enthusiasm, according to Chinese industry insiders and analysts. Though there are still more than 1,200 Chinese technology companies that signed up for this year's CES, which is scheduled to kick off next week, the number is down from 1,551 in 2018 - the first drop in at least four years, according to official figures and media reports.

Society, Art, Sports, Culture And History

A Photographer’s Quest to Reverse China’s Historical Amnesia - The New York Times The photographer Li Zhensheng is on a mission to make his fellow Chinese remember one of the most turbulent chapters in modern Chinese history that the ruling Communist Party is increasingly determined to whitewash...Clad in a dark blue photographer’s vest, Mr. Li, 78, spoke in a recent interview in Hong Kong, where the first Chinese-language edition of his book “Red-Color News Soldier” was published in October by the Chinese University Press of Hong Kong.

China is Newly Obsessed With Running — And the Trend Could Change the Country In the last five or so years, events like Gaoligong have embodied the glitzier side of a massive Chinese running boom. Most Chinese race organizers mark the surge as having begun around 2011 with a deluge of marathons, followed by a second wave of trail-running events in 2015. In those early years, many races were organized haphazardly, with frequent disasters. At some events, volunteers wouldn’t show up because of bad weather, aid stations would be missing, and medevacs weren’t available. Since then, Pavel told me, race quality has dramatically increased. That’s partly because of experience, but also because of the movement's organic, grassroots oversight of races on social media. When I spoke with Shen Bo, a cofounder of Gudong, the closest Chinese equivalent to Strava, he estimated that China now had at least 200 million runners.


Energy, Environment, Science And Health

Trump’s Tech Battle With China Roils Bill Gates Nuclear Venture - WSJ $$ The tech tycoon and philanthropist said in an essay posted late last week that a nuclear-energy project in China by a company he co-founded called TerraPower LLC is now unlikely to proceed because of recent changes in U.S. policy toward China. That leaves TerraPower, which had been working on the China project for more than three years, scrambling for a new partner and uncertain where it might be able to run a pilot of the nuclear reactor it has been developing, according to company officials.


Agriculture And Rural Issues

Shaanxi Corn Scandal Spreads Farther Than First Thought - Caixin More than two years after a major crackdown on illegally planted genetically modified (GM) corn in Northwest China’s Shaanxi province, the full extent of the modified corn seeds’ spread is still being revealed, Caixin has learned.

More Than 200 Punished for Dereliction of Duty in Swine Fever Outbreak - Caixin Global The investigation into accountability for those who failed in their duties comes months after the first cases of the disease were discovered in early August near Liaoning’s provincial capital of Shenyang. In all, 223 people have received a range of punishments, from demerits and warnings to dismissals, according to a Dec. 30 report on a Communist Party website in the Inner Mongolia autonomous region’s city of Zalantun.


Education

Uniforms with GPS trackers keep kids under surveillance - China Daily Schools in Guizhou province and the Guangxi Zhuang autonomous region are using "smart uniforms" embedded with GPS trackers to make sure students do not skip class and to assure parents of their children's attendance and safety. Nine schools in Guizhou and two in Guangxi have introduced the uniforms, which were developed by Guiyang-based tech firm Guizhou Guanyu Technology.


Beijing

Beijing's sub-center plans for 1.3 million permanent residents - Xinhua Beijing's sub-center, which will sit in the east of the capital, aims to accommodate 1.3 million permanent residents by 2035, according to a detailed plan published Thursday. The city sub-center will cover 155 square kilometers and be extended to the whole area of the current Tongzhou District, which totals about 906 square kilometers, according to the plan for the sub-center's development for 2016 to 2035, approved by the Communist Party of China Central Committee and the State Council.