Stormy "New Vistas" In US-Sino Relations; North Korea Sanctions; Micro-lender Smackdown Expanding; Zhou Xiaochuan On Financial Risk; "Marriage Material" - Sinocism 11.22.17
|Bill Bishop||Nov 22, 2017|
Happy Wednesday…just a reminder that Thursday is Thanksgiving so there will be no newsletter tomorrow.
I mistakenly wrote yesterday that Lu Wei “used to run” Xinhua. In fact he only rose to Deputy Party Secretary of Xinhua before moving on. Thanks to a reader who had very unpleasant dealings him during his Xinhua time for noting the error.
The CCDI is out with an "explainer" of Lu's detention, says it is a result of the CCDI inspection of the CAC that found political and economic problems. There are some foreign firms that may need to be doing compliance checks, and I do wonder if Wen Jiabao has been sleeping well lately.
The Essential Eight
1. Lu Wei's Detention Will Not Change China's Cyber Policies
It is worth noting that as the “spirit” has recently been conveyed in study meetings on information and cybersecurity in Sichuan and Chongqing, the hardline term “public opinion struggle,” or yulun douzheng (舆论斗争) has cropped up again. In an analysis in September 2013, following Xi Jinping’s August speech that year on ideology, CMP Director Qian Gang noted that this term, harking back to the Cultural Revolution, was “a dangerous sign.”
On November 16, a team from the Cyberspace Administration of China arrived in Sichuan province to host an “explanation lecture for the study and implementation of the spirit of the Party’s 19th Congress.” Think of it as a propaganda roadshow. One of the key speakers at the event, attended by journalists and press officials, was Ruan Zongze (阮宗泽), acting vice-president of the China Institute for International Studies, a research institution attached to the Ministry of Foreign Affairs.
“Along with six other people, either his colleagues or family members, Lu Wei has been taken away for investigation a few days ago,” a well-placed source in Beijing told the South China Morning Post. Lu’s secretary, driver and two medium ranking officials also had been questioned, according to the source.
Per a CCDI article on why Lu Wei was detained it sounds like Lu's detention was related to the CCDI inspection of the CAC, which noted political and corruption problems 中纪委刊文：十九大后“首虎”，为什么是鲁炜:
2. Xi Sees "New Vistas" In US-China Ties As Storm Clouds Darken
President Xi Jinping wrote in a congratulatory letter to the National Committee on U.S.-China Relations that the two nations' relationship "enjoys whole new vistas".
The organization held its annual gala at The Plaza hotel in New York on Monday, and Cui Tiankai, China's ambassador to the U.S., read Xi's letter.
In it, he offered "heartfelt appreciation" for the relations committee's efforts to promote China-U.S. ties. He also congratulated the U.S. corporations honored at the event.
China is no doubt a force to be reckoned with, but Trump has the wherewithal to play hardball on trade, Taiwan, or the South China Sea should he choose. Donald Trump, of course, is the ultimate wildcard, and predicting the future of US foreign policy under his watch is risky business. Nonetheless, all signs are now pointing toward a harder US line against China, regardless of either the royal treatment Trump received in Beijing or his 'great chemistry' and 'very good relationship' with Xi.
U.S.-China relations have reached a turning point. A broad U.S. coalition in favor of “comprehensive engagement” with China—the mantra of the Clinton presidency—has crumbled as China’s WTO membership, far from encouraging greater economic and political liberalization in China as many hoped, does the opposite. A Hillary Clinton administration would have been under similar pressure to get tough...
If there is a complaint against Mr. Lighthizer in the U.S. mainstream it isn’t that he is too hawkish but rather that he is moving too slowly; his critics are impatient for action to begin.
3. New North Korea Sanctions
The United States on Tuesday imposed sanctions on 13 Chinese and North Korean organizations Washington accused of helping evade nuclear restrictions against Pyongyang and supporting the country through trade of commodities like coal. // The official announcement
"In principle, we oppose unilateral sanctions and long-arm jurisdiction," said Lu at a regular news briefing. "The United States is always clear about China's position."
The US is a powerful country and its foreign policy can be highly flexible. But it has been fundamentally difficult for it to change its North Korea policy. The political flexibility of North Korea is far less, and it lacks strength to support such flexibility. Therefore, it is even harder for North Korea to unilaterally change its US policy. It would be fairy-tale thinking to believe Pyongyang will change its stance on the nuclear issue after the US' re-listing it as a "state sponsor of terrorism."
Another game of tit-for-tat seems to be being played out on the Korean Peninsula, and North Korea will suffer the most. The other sides have consumed resources and been saddled with geopolitical annoyance. China has suffered from trade losses, but can bear it. The worsening political climate in North Korea has strained all the parties.
China hopes the Republic of Korea (ROK) will continue to properly handle the Terminal High Altitude Area Defense (THAAD) missile defense system issue, Chinese Foreign Minister Wang Yi said Wednesday.
Comment: "Properly Handle" means remove the THAAD deployment...
4. Beijing Wakes Up To Risk From Micro-lenders
Comment: But only after several listed shares in US markets and raised hundreds of millions of dollars.
To hold back the sector, cooperation between banks and microlenders will be temporarily suspended, sources close to a central government body tasked with monitoring internet finance risk told Caixin.
On Tuesday, the same central government body released a formal document that called for a temporary halt in approving licenses for microloan companies, as well as cross-province lending.
Next, regulators will release unified regulations for the industry and set a higher barrier to entry for online microlending firms, sources close to the central government body told Caixin. Companies that do not meet the new standards will need to cease operations, the sources said.
CBN reports that the PBoC and CBRC are holding a "micro-lending rectification meeting" at 9AM Thursday 独家丨央行、银监会23日9点紧急召开网络小贷清理整顿工作会议_第一财经:
The regulatory crackdown is coming as foreign investors have started to pour money into the sector. Four Chinese fintech companies have raised more than $2 billion from initial public offerings in the past month. They are now all underwater, with PPDai, Jianpu and payday lender Qudian all about 20% below their IPO prices. Hong Kong-listed online auto loan provider Yixin has already fallen 4% since its IPO last week.
5. Zhou Xiaochuan On Preventing Financial Systemic Risk
The main points of PBoC chief Zhou Xiaochuan's essay on page 6 of the 11.22 People's Daily-守住不发生系统性金融风险的底线（认真学习宣传贯彻党的十九大精神）--人民网:
一、主动防控系统性金融风险要靠加快金融改革开放 Taking the initiative in preventing and controlling financial systemic risk depends on accelerating financial reform and opening;
二、防止发生系统性金融风险是金融工作的永恒主题 Preventing financial systemic risk is the eternal theme of financial work;
三、防控金融风险要立足于标本兼治、主动攻防和积极应对兼备 Preventing financial systemic risk relies on addressing the symptoms and the root causes as well as taking the initiative to attack and defend...
6. How Much Did Alibaba's Consumer Financing Juice Single's Day Sales?
One of most notable online lending players aptly named Huabei (花呗, Just Spend) comes from the company that invented Singles Day—Alibaba. The clever tactic helps Alibaba, or the Alipay platform to be more precise, finance the spending spree on its own e-commerce platform.
To help them give away money to uncle Jack Ma, as hand-choppers have joked, this year Huabei has raised its credit limit to almost 80 percent during the promotion activities before Singles Day, allowing users to spend an extra RMB 2200 on average. The service also made a cringe-worthy move that made many reevaluate their friend’s list: it introduced a function through which users can solicit their Alipay friends for contributions to help repay their shopping debt.
Huabei is the credit card of millennials, it targets the young and the unbanked. According to a report published recently, 86% of Huabei users belong to the generations born after the 80s and 90s (in Chinese)
And they sold a couple of 747s that day, likely with corporate debt -Courier Company Picks Up Jumbo Jets on Taobao - Caixin Global:
Chinese air freight company SF Airlines just bought a pair of Boeing 747 jumbo jets that had been seized by the Shenzhen Intermediate People’s Court through the site’s judicial auction arm. The price tag was over 320 million yuan ($48 million).
The Shenzhen court seized three Boeing 747 planes after Jade Cargo International filed for bankruptcy in 2013. It chose to sell them through the Alibaba-owned e-commerce platform after failing to sell the planes six times in offline private auctions
7. People's Armed Police Now Report Solely to The PLA Central Military Commission
Comment: PLA's Central Military Commission is taking control of the deployment and mobilization of the People's Armed Police (PAP), in another step in centralizing Xi's power, and stripping power from local officials. The draft decision says this move is in line with PAP reforms mooted at the Third Plenum of the 18th Party Congress.
Did Bo Xilai's 2012 attempt to use the PAP to get Wang Lijun from the US Consulate in Chengdu have anything to do with this?
8. The Business Of Marriage-Material Making
May we have the honor to introduce you Marriage-material Style 好嫁风, an emerging Chinese fashion and life style aims to educate, help and incubate young females to become - well guess what - marriage materials...
In order to objectify women into something measurable and comparable, Ayawawa invented two indicators, "M.V" standing for "Mate Value", and "P.U" for "Paternity Uncertainty" as the grounding stone for her theories. To find a good husband and nail a happy marriage, a girl needs to make sure she's high in M.V and low in P.U; M.V, in this case, is measured by eight indicators including "age, looks, height, bra cup size, weight, academic degrees, personality and family background". What about P.U? Well, it basically means how much a girl looks like she might have an affair. "Don't wear revealing clothes," Ayawawa advices her readers , "don't post bikini pictures with other guys, don't hug boys and don't linger in clubs. Be polite, be gentle, be girly, never rough."
Business, Economy, Finance And Trade
No relaxation in property curbs: authorities - Xinhua Officials must not think of "taking a breather," according to a statement issued after a meeting on real estate policies in central China's Hubei Province. The meeting was held by the Ministry of Housing and Urban-Rural Development, the Ministry of Land Resources and the People's Bank of China. 三部委部署房地产工作 调控目标不动摇力度不放松
Conglomerate Backed by Tycoon Xiao Jianhua to Cut Insurance Stakes - Caixin Global: Tomorrow Holding Group, the main investment vehicle of Xiao, controls Huaxia Life through a number of affiliated companies, although Tomorrow Group doesn’t appear on Huaxia Life’s shareholder list, according to an official at the China Insurance Regulatory Commission. // Comment: Dismemberment of Xiao Jianhua's Empire Has Begun
Missing Chinese billionaire's Huazi ditches plan for Huaxia Life stake - Reuters: Baotou Huazi, controlled by missing billionaire Xiao Jianhua’s Tomorrow Holding, said late Tuesday that the plan was off because of changes in China’s securities market, financing environment and regulatory policies. It did not elaborate.
What Bubble? Julius Baer Says China Tech Stocks Will Rally More - Bloomberg Mark Matthews, Singapore-based managing director and head of Asia research at Bank Julius Baer & Co. Ltd., said he doesn’t see one. “China is developing a very large information-technology sector, and, it’s just going to get bigger and bigger,” he said in a phone interview. China, which fund managers have long considered a “tactical” allocation, has now become too big and too important, he added. “It’s becoming core for many fund managers. And that will continue for the next five years.”
China cash injections to quell bond rout - CNBC Last week, the People's Bank of China injected cash totaling 810 billion Chinese yuan ($122.4 billion) in five straight days of daily liquidity management operations. Those actions, which represented the largest weekly net increase since January, were in part a Beijing response to its 10-year sovereign bond yields spiking to multiyear highs, experts said.
China's Bond Rout Deepens as Policy Bank Yield Tops 5 Percent - Bloomberg The selloff in China’s bond market worsened Wednesday, with the yield on a quasi-sovereign issuer exceeding 5 percent for the first time since 2014.
Wanda Group Eyes Potential Sale for Global Property Portfolio - Caixin Global “Following the recent changes in some directors of the company, the company is undertaking a strategic review of its property projects and will consider any business opportunities which can create value for shareholders,” Wanda Hotel said in the statement. The company’s shares fell 4.3% in Wednesday trade after the announcement was made.
Chinese foreign property investment at 4-year low amid clampdown - FT $$ Chinese outbound property investment was only $2.5bn in the third quarter this year, the lowest since the fourth quarter of 2013, according to a new report from Cushman & Wakefield, a global real estate group. Such investment totalled $18.2bn through the first nine months of the year, less than half of last year’s record full-year total of $38.3bn.
How the CCP embraces and co-opts China’s private sector - MERICs Blog Foreign investors are faced with difficult decisions. They do not need to fear expropriation of their assets as the Party leadership has pledged to respect “mixed” forms of ownership and private property. But the managerial autonomy of their China operations will be curtailed by Party directives. This could mean that they could be pressured into making economically questionable business decisions, for example for investing in government-preferred areas or projects. The CCP’s course is based on the pragmatic calculation that most foreign investors will cooperate because the Chinese market is irresistible and irreplaceable for global companies. Once all companies are under effective internal supervision – through implanted party cells – the Chinese government is less at risk of losing political control over businesses and can even afford to selectively open its economy further to foreign investors
Greying China Bolsters Support for Pension Fund - Caixin Global The State Council and provincial asset management firms that receive the SOE shares will be able to benefit from the corporate dividends, but will be barred from trading them for three years. They will also only be allowed to use the shares to make investments after receiving approval from the central government. However, hard-up provinces such as Heilongjiang might not be bound by the three-year lock-up period. Heilongjiang, in the belly of China’s northeastern rust belt, doesn’t have sufficient funds to cover its current pension payments, Dong said. “It has to cash out (the province’s state assets), because the provincial government coffers can’t handle the pension payments anymore,” he added.
Is the Listing Back Door Back Open? - Caixin Global the return of formerly U.S.-listed leading Chinese cybersecurity firm Qihoo 360 to the Shanghai bourse via a backdoor listing, announced Nov. 3, led some market participants wonder if the regulator has turned soft on reverse takeover. After the news broke, few companies that were deemed having “shell” qualities – small market capitalization, low profit growth – rose to their daily 10% limit.
Politics, Law And Ideology
中共中央办公厅转发《中央宣传部、中央组织部关于认真组织学习〈习近平谈治国理政〉第二卷的通知》--时政--人民网 CCP Central Official, Organization Department, Propaganda Department issue circular on studying the second volume of Xi's book on governance
Xinhua Insight: New book shows global audience China through Xi's eyes - Xinhua Although the two books are mostly collections of Xi's speeches and written instructions, they are organized by topic and include only the most important articles or the most essential excerpts, with footnotes helping foreign readers to understand the cultural context, according to editors. "The main reason why foreigners should read these books is that they are the first time that a Chinese leader has sought to capture his whole philosophy and communicate it to the international audience in so many languages," Ferguson said. "There is everything you need to know about where China is now and where China is trying to go."
1.399 bln entries in China's population database - People's Daily Online China has completed its national population information database, recording 1.399 billion entries, the Ministry of Public Security (MPS) said Tuesday. The database covers China's whole population, using citizens' ID card numbers as the only reference for access, according to the MPS.
National civil servant exam sees record candidates - China Daily This year's guokao has received 1.56 million applications, with 1.38 million of the candidates, a record high in the last seven years, approved to sit the exam. They will compete for 28,533 vacancies offered by central government agencies.
Legal scholars hail right to dignity in CPC congress report - Xinhua | English.news.cn Yang Lixin, professor of Renmin University of China, said inclusion of the notion in the report reflects the Party's fundamental purpose of wholeheartedly serving the people, in an interview with People's Daily. The interview, involving three professors, was published Wednesday. // Comment: What about Liu Xi and 709 lawyers' dignity? The original-保护人格权 彰显现代法治理念（对话·新征程 新作为③）-- 主持人：本报记者 徐 隽; 嘉 宾：中国人民大学法学院教授 杨立新; 北京大学法学院教授 刘凯湘; 复旦大学法学院教授 刘士国
High Court Accepts Appeal Against Family Planning Fine - Sixth Tone Earlier this month, a high court in eastern China accepted a couple’s appeal against a fine they received for having a second child, Sixth Tone’s sister publication The Paper reported Tuesday. The case will test whether the two-child policy can apply retroactively for those who have unpaid family planning fines.
China moves to fight abject poverty - Xinhua Eradicating abject poverty, which persists in places including Tibet autonomous region and parts of Xinjiang Uygur autonomous region as well as the provinces of Sichuan, Yunnan and Gansu, is crucial for the success of the country’s poverty elimination campaign, according to a guideline issued by the general offices of the Communist Party of China Central Committee and the State Council on Nov 21. 中办国办印发意见 支持深度贫困地区脱贫攻坚
Foreign and Military Affairs
China's Links With The Vatican Appear to Sour Amid Tourism Ban - RFA The ruling Chinese Communist Party has warned its state-controlled tourism industry not to send any tour groups to the Vatican, amid growing diplomatic tensions between Beijing and the Holy See.
China turns its back on Comrade Bob to embrace change in Zimbabwe | The Guardian “China respects Mr Mugabe’s decision to resign,” foreign ministry spokesman Lu Kang told reporters, praising his “historic contribution” to Zimbabwe’s liberation. “He remains a good friend of the Chinese people.” But experts believe China’s leaders will be both relieved and contented to see the back of “Comrade Bob” – a suspicion reinforced by the approving tone coverage of his demise has taken in the Communist party-controlled press
'Xi and his Era': China adopts a triumphant tone as US world leadership falters-Sydney Morning Herald An eight-page essay pumped through social media and Chinese state newspapers in recent days extolled the virtues of president Xi Jinping. Among his achievements, in the Chinese language version, was that he had turned the South China Sea Arbitration at The Hague – which found against China – into "waste paper". hymn, entitled "Xi and His Era", did not include in the English version for foreign consumption.
Trump: Father of UCLA player in shoplifting case is 'ungrateful fool' - Reuters LaVar Ball, the father of LiAngelo Ball, has played down Trump’s involvement in the three athletes’ release from Chinese detention after they admitted to stealing items from three stores during a team trip to China earlier this month. // Comment: Alibaba was already working it out with the Hangzhou police, Trump did not need to do anything
Tech And Media
Grieving Mother’s Firing Sparks Backlash Against Chinese Education Startup - Bloomberg This year, Misty Heitman began teaching Chinese kids online at night to help support her family. Early one morning in her home west of Nashville, the mother of six was logged on for class when tragedy struck. Her nine-year-old daughter, who’d been suffering migraines, died in her sleep. Heitman was heartbroken. She cancelled classes and mourned. The family ended up moving to a new house because they couldn't live with the memories. Then things got worse. Heitman, 42, lost her job at VIPKid—though she says she told the Chinese startup what happened and was assured her job was secure. “I got an automated email marking the days I'd been out, including some that had been cleared, and saying I'd been terminated,” she says.
Matchmaker Zhenai Hooks Up With New Owner - Caixin Global The Shenzhen-based online matchmaker has secured a new majority shareholder, after it failed to go public both at home and abroad. Private equity firm PAG has completed the acquisition of “a super-majority controlling interest in Zhenai,” the companies said in a joint statement Monday.
This start-up can identify you by your voice in a matter of seconds | South China Morning Post A start-up in China has figured out how to identify the unique characteristics of each person’s voice and cross-match it with existing “voice databases” to identify someone purely by what they say. SpeakIn, based in the southern Chinese city of Shenzhen, is currently working with police departments on the mainland. Its database of “voices” comes from places including phone banking to IT help desk queries.
China’s Xiaomi focuses on India with $1bn investment - FT $$ “India is becoming a bigger priority compared to China when it comes to R&D to make India-focused products, and supply and stock for product lines,” Xiaomi said. For example, the company will supply components for its fast-selling Redmi phones to India first in case of shortages.
Apple’s iPhone X assembled by illegal student labour - FT $$ Six high school students told the Financial Times they routinely work 11-hour days assembling the iPhone X at a factory in Zhengzhou, China, which constitutes illegal overtime for student interns under Chinese law. The six said they were among a group of 3,000 students from Zhengzhou Urban Rail Transit School sent in September to work at the local facility run by Taiwan-based Apple supplier Hon Hai Precision Industry, better known as Foxconn.
Energy, Environment, Science And Health
湖南镉米阴影难散_财新周刊频道_财新网 斥巨资修复三年却镉米犹存，湖南大浦镇的种种怪象，折射出土壤污染治理难如病去抽丝 // Hunan can not shake the shadow of its cadmium rice scandal from three years ago
Pollution fight cold comfort for families without heating in northern China | South China Morning Post One woman in Linfen, Shanxi province, who declined to be identified, said all of the boilers in her village had been dismantled, but work on new gas pipes appeared to be nowhere near completion. The 30-year-old said the local Communist Party committee had warned residents against burning coal for heating with the slogan: “If your home has smoke coming out, see you in the detention centre.”
Elderly Chinese Ready Victims for Phony Physicians - Sixth Tone According to Wang Xinliang, a lawyer from Jinan, capital of eastern China’s Shandong province, fake doctors on WeChat are a relatively new phenomenon. Many swindlers who prey on the elderly usually go door to door and leave the area before the more discerning members of the younger generation find out their parents have been tricked. But online scammers can’t hide for long, Wang told Sixth Tone, as WeChat accounts are linked to telephone numbers, which can only be acquired by presenting an ID card. Consequently, the online con artists are relatively easy to track down.
New China Star Sells First Russia Oil From $9 Billion Rosneft Deal - Bloomberg CEFC China Energy Co. sold a cargo of Sokol crude from the Sakhalin region for January loading, according to traders who asked not to be identified. It’s the first sale of oil that the company will get access to as part of the September Rosneft deal. Under the agreement, the Russian energy giant will supply the Shanghai-based firm with as much as 60.8 million metric tons over five years.
Agriculture And Rural Issues
China's pig farmers go north, upending world's top meat, grain market - Reuters Temperatures go well below freezing in the winter in China’s northeast, but the area is sparsely populated and allows for setting up large farms that would not be possible in more crowded parts of the country. “The costs in the north-east are higher because of heating. But we can achieve scale there,” said Song Weiping, vice president at Beijing Dabeinong Technology, an animal feed firm that is diversifying into pork production
韩俊：农地承包期合计达75年 强调给农民更稳定长期预期_政经频道_财新网 农地第二轮承包到期后再延长30年的决定出台后，有意见认为，这是一颗“动心丸”。韩俊表示，这实际上是强调进一步完善农村土地产权制度，给农民更加稳定长期的预期
Sage is latest publisher to warn of China censorship pressures - FT $$ Sage Publishing, a US-based company that produces more than 1,000 academic journals, said it had not yet received a formal request to “remove or block access to certain documents or content within China”. But it said that “we have however, as have other publishers, been warned that there is a risk that this may happen”.
Chinese History: A New Manual - Pleco We are truly honored to announce the release of our first ever paid e-book that’s not a dictionary, “Chinese History: A New Manual” 5th Edition by Endymion Wilkinson. It’s available right now to purchase for US$29.99 via the in-app “Add-ons” screen on our iOS and Android app
Archstudio: renovation of a siheyuan in Dashilar Beijing | Floornature Archstudio gave the name Twisting Courtyard to a renovated siheyuan, a traditional courtyard home in central Beijing. In the Dashilar district, Han Wen-Qiang of Archstudio reclaimed a courtyard home for mixed public and private use. // and bastardized it