Tariff spiral; Xi climbs into a nuclear sub; Huawei's Australian troubles; National real estate registration database; Debates about engagement and illiberalism; Spiritual spine straightening; Truckers strike

Happy Dragon Boat Festival! China is on holiday today.

I missed a busy week and I appreciate your patience. Unfortunately I need to go to a funeral in Boston this Thursday so there will likely be no newsletter Thursday. I will make it up to you.

The Trump-Kim summit was a generally positive event for China. Trump endorsed Beijing's long-advocated "freeze for freeze" proposal and Xi is certainly happy with a reduction in immediate risk of war or chaos on the Korean Peninsula. But with the benefit of a few days reflection I think it is premature to conclude that China is the victor. 

Trump gave Xi Jinping a sour June 15 birthday present when the US announced details of the planned $50 Billion in tariffs. None will go into effect until July 6 so there is time for further negotiation, but the immediate Chinese response of $50 Billion tariffs increases the likelihood of a downward tit-for-tat spiral, and we may even see a US announcement of the next $100 Billion tariffs imminently.

The budding Trump-Kim bromance may have freed the US to take much tougher actions against China across a range of issues, including trade, the South China Sea, influence/interference operations and Taiwan, if it has the effect of disintermediating Beijing from the US-DPRK negotiations enough so that Trump believes he no longer needs to subordinate the other thorny issues to get Beijing’s “help” on North Korea. If that is the case then prepare for the possibility of a much nastier turn in US-China relations over not just trade and investment.

Things look depressing, but HBO's John Oliver adds some satirical cheer in his 20 minute monologue on Sunday's "Last Week Tonight" show that takes a mocking look at Xi Jinping:

This is not the soft power China likes, you have to wonder if punishments are coming for HBO and its owner...

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The Essential Eight

1. US-China relations

USTR Issues Tariffs on Chinese Products in Response to Unfair Trade Practices | United States Trade Representative:

This list of products consists of two sets of U.S tariff lines. The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6. These lines cover approximately $34 billion worth of imports from China. USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees. Customs and Border Protection will begin to collect the additional duties on July 6, 2018.

The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy. These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

Next Move Is Trump's After China Hits Back in Trade-War Opener - Bloomberg:

The Chinese list released Saturday covers almost all farm products imported from the U.S., said Li Qiang, chief analyst with Shanghai JC Intelligence Co. Ltd. “Given China’s big trade surplus with the U.S., it will be more difficult and complicated for China” in the future to retaliate if the Trump administration expands the tariffs to more products, said Li. The new list includes more agricultural produce, including dairy, alfalfa and seafood, than a initial group published in April.

US tariff list aims to hinder China’s high-tech development: expert - Global Times:

The revised list is longer and involves more categories of products than a preliminary list of 106 US goods published by the ministry in April, but the total value of the products remains at $50 billion.

A Chinese commerce expert found that aircraft were removed from China's new list, which is noteworthy.

"We need aircraft [from the US]. We have to consider the costs of the countermeasures we plan to take," Bai Ming, deputy director of the Ministry of Commerce's International Market Research Institute, said on Saturday soon after the Chinese tariffs were announced.

China Warns of Corporate Casualties as Trade War Brews - WSJ $$:

When a group of American executives and other global corporate chieftains met with Chinese Vice President Wang Qishan in late March, they received a stern message about the simmering U.S.-China trade conflict: If tensions escalate, buckle up.

“The message was pretty clear,” said a person who attended. “A lot of companies would become victims in a U.S.-China trade war.”

'The fool builds walls': China takes aim at Trump trade war threats | The Guardian:

An editorial in the People’s Daily on Saturday said the latest trade provocations allowed China “to see more clearly the face of the Trump administration, one that is rude, unreasonable, selfish and headstrong”. China’s official Xinhua news agency added: “The wise man builds bridges, the fool builds walls. With economic globalisation there are no secluded and isolated islands.”

人民时评:美方一意孤行必将损人害己--观点--人民网:

“以地事秦,犹抱薪救火”,这是中国人自古就明白的道理,面对强权者悍然发动的这场贸易袭击,中国从一开始就没选择退让,而是针锋相对、据理力争,坚决捍卫国家利益和人民利益,坚决捍卫经济全球化和多边贸易体制。能战方能止战,贸易战的挑动者,不感觉到疼痛是不会停止无理行为的。应对贸易战,我们虽然要付出一定代价,但放眼未来,这是在维护和平发展的良好国际环境,维护改革开放40年形成的大好局面,这样的代价可以付出,也值得付出,扛过了眼前的挑战和阵痛,中国就将迎来广阔发展空间和更大发展机遇。

Chinese senior official visits U.S. on ties - Xinhua:

Wang Chen, a member of the Political Bureau of the Communist Party of China (CPC) Central Committee, visited the United States from June 13 to 16 at the invitation of the U.S. Congress to promote bilateral ties.

Wang, also vice chairman of the Standing Committee of the National People's Congress (NPC), met separately with U.S. House of Representatives Speaker Paul Ryan, president pro tempore of the Senate Orrin Hatch, and House Minority Leader Nancy Pelosi.

He also held meetings with Congressman Rick Larsen and other members of the U.S.-China Working Group, U.S. senators including Steve Daines of Montana, as well as Deputy Secretary of State John Sullivan.

Remarks By Secretary Mattis at the U.S. Naval War College Commencement, Newport, Rhode Island > U.S. DEPARTMENT OF DEFENSE > Transcript View:

The third category is that of political will, and that is a potential rivalry, with China harboring long-term designs to rewrite the existing global order.

The Ming Dynasty appears to be their model, albeit in a more muscular manner, demanding other nations become tribute states, kowtowing to Beijing; espousing One Belt, One Road, when this diverse world has many belts and many roads; and attempting to replicate on the international stage their authoritarian domestic model, militarizing South China Sea features while using predatory economics of piling massive debt on others.

After World War II, our Greatest Generation, in collaboration with our allies and partners, built the open international order that has benefited global prosperity. It's unrealistic to believe, today, that China will not seek to replicate its internal authoritarian model elsewhere, as it expands globally.

China has benefited enormously from the open international order, but it had no say in drafting it. Today, how we engage with China and how the Chinese choose to collaborate by it dictates to the world that it will provide the roadmap for our future relationship.


2. Xi's latest inspection tour included a tour of a nuclear submarine

Xi stresses building elite maritime force during navy inspection - Xinhua:

Xi emphasized the need to resolutely implement the Party's thinking on strengthening the military for the new era and continue to enhance the political loyalty of the armed forces, strengthen them through reform and technology, and run them in accordance with law.

Xi also spoke of the need for the navy to meet the requirements of transformation.

Xi visited a submarine force around 3:30 p.m. Monday as a summer breeze rustled through the trees on the coast of Qingdao, east China's Shandong Province....

Xi spoke of the need to grasp the changes of national security circumstances, speed up preparations for military struggle, including battle planning, capacity building and command system building.

Xi said the intensity of training needs to be enhanced, its modules to be innovated, and its supervision to be strengthened. He stressed the need for targeted training, training for commanders, and training under combat conditions.

Friday CCTV Evening News on Xi's inspection, including video of him in the submarine 习近平在视察北部战区海军时强调 贯彻转型建设要求 锻造海上精兵劲旅 

People's Daily on all the times Xi has discussed building a 'maritime superpower"--建设海洋强国,习近平总书记在多个场合这样说--理论-人民网 

Navy urged to boost combat readiness - China Daily:

Xi also toured a building that houses simulation-training equipment of the submarine unit. He gave a little quiz to officers taking part in a sonar training session and put his thumb up to show appreciation to an officer who gave the correct answer.

According to a news program broadcast by China Central Television, the submarine that Xi boarded is the Changzheng 16, a Type 093G class nuclear-powered attack submarine.

Jane's Fighting Ships speculates that the 6,100-metric ton Type 093G is the PLA Navy's latest and mightiest attack submarine and is capable of launching China's supersonic anti-ship cruise missile and long-range land-attack cruise missile.

This may help the PLAN--China hacked a Navy contractor and secured a trove of highly sensitive data on submarine warfare - The Washington Post:

Taken were 614 gigabytes of material relating to a closely held project known as Sea Dragon, as well as signals and sensor data, submarine radio room information relating to cryptographic systems, and the Navy submarine development unit’s electronic warfare library.

The Washington Post agreed to withhold certain details about the compromised missile project at the request of the Navy, which argued that their release could harm national security.

As seems to be protocol with his inspection tours Xi's visit with the local troops came after a public inspection tour-Xi calls for efforts to boost innovation ability in economic and social development - Xinhua:

In Weihai City, Xi visited a battery relics and the museum of the Sino-Japanese war of 1894-1895. He talked with Party members taking a training course there and museum staff, saying that Chinese people must draw lessons from history and work hard to build China into a better and stronger nation.

When inspecting an ecological restoration project, Xi stressed that good ecological environment is an important basis for sustainable and healthy economic and social development. He urged authorities to give higher priority to ecological conservation.

On Wednesday, Xi visited the city of Penglai, once a starting point of the ancient Maritime Silk Road. He asked officials to learn from history and enhance protection of cultural relics.

While visiting the industrial park of Wanhua Chemical in Yantai city, Xi stressed the importance of independent innovation to make breakthroughs in the development of key technology.

Xi visited the Yantai base of CIMC Raffles and inspected submerged oil drilling platform and other marine engineering equipment manufactured by the firm.

Xi talked with company officials and workers, and stressed that state-owned enterprises (SOEs), especially central SOEs, must strengthen their independent innovation capacity and develop more advanced equipment for the country.

On Thursday morning, Xi made a trip to a high-end fault tolerant computer production base of the Inspur Group in the high-tech zone of Jinan, capital of Shandong Province.


3. Huawei may get the highway down under

Why 5G Leader Huawei Could Get Shut Out of a Major Rollout - WSJ $$:

Australia is looking at barring Huawei Technologies Co. from taking part in the rollout of next-generation 5G telecommunications infrastructure, which would deal a blow to the Chinese company’s global ambitions to be a leader in the technology.

Australia’s security agencies are pushing for Huawei to be locked out of supplying equipment to the latest mobile communications networks because of cyberspying fears. While Australia isn’t a big market, a ban would be significant as the most extensive effort by a U.S. ally to block Huawei from participating in 5G due to national security concerns. A decision is expected within weeks.

China's Huawei goes on offensive as exclusion from Australia 5G deal looms | Reuters:

There has been much speculation about Huawei in recent weeks as Australia prepares to announce a tender for its massive 5G mobile telecommunications rollout, with local media reporting the country’s spy agencies have advised against including the company.

Australia, like the United States, worries Huawei is de facto controlled by China, raising fears that sensitive infrastructure will fall into the hands of Beijing.

“Recent public commentary around China has referenced Huawei and its role in Australia and prompted some observations around security concerns,” Huawei’s chairman and two board directors wrote in a letter to government that the company released to the media on Monday. “Many of these comments are ill-informed and not based on facts.”

Spies could reveal Huawei 5G security concerns | afr.com:

Australian spy agencies may detail their concerns about Chinese phone company Huawei if Beijing retaliates to any 5G ban by the Turnbull government with trade measures or other sanctions.

AFR Weekend has been told consideration is being given about how to make public long-held "national security concerns" regarding Huawei.

Can we trust the spies on China's Huawei? | afr.com:

"The evidence against Huawei was substantial back then … now it's overwhelming," says one person with knowledge of the issue...

One person with direct knowledge of what the securities agencies are thinking says the advice given to the government was "very direct" and allowed "little wriggle room".

And he says if Beijing retaliated, possibly through trade measures, there was a desire to make some of these "national security concerns" public.

That would be a huge step and appears some way off, but it does showcase the hardening attitudes in Canberra towards Huawei and, by extension, China.


4. National real estate registration database finally completed

The resistance and delays have been epic, I do wonder if everyone's properties really are all included, or if some families are unsearchable. And how many officials with too many properties for their income have them in relatives’ or “white gloves’” names? Things could get more dicey if China ever gets serious about a property tax, as the person on the deed will have to come up with the tax payments and they may be unwilling or not actually have the cash to do so…But the politics of a property tax are so complex, in part because of exactly this issue, that I wouldn’t hold my breath for a real property tax anytime soon.

China's nationwide property database comes into effect - CGTN:

The unified real estate database not only helps simplify the whole registration procedure, but also facilitates the real-time disclosure of property owners' holdings, which has been regarded as vital for property market management and a major step to fight against corruption.

With the national database, individual ownership of houses and house mortgage records in China will be traceable so speculation will be effectively restrained under the country’s property-purchasing limits.

Meanwhile, a unified property registration system is believed to force corrupt local officials to disclose properties purchased with illicit funds.

Will Nationwide Registration of Immovable Property Rights Weaken Chinese Housing Prices? - China Banking News:

CCTV reports that many observers have expressed concern that immovable property registration will trigger a rapid decline in housing prices.

According to CCTV that the new unified registration system brings together the registrations scattered across disparate offices into a single, integrated platform, and will not have a pronounced impact upon housing prices.

The system will provide citizens with “complete transparency” when it comes to home ownership, with experts hoping that it will put a check on official corruption

不动产登记体系全面运行 能否成为促房价下跌的猛药? 


5. Debates about engagement and illiberalism

Foreign Affairs runs a discussion from several experts about the March article The China Reckoning by Kurt Campbell and Ely Ratner-- Did America Get China Wrong? - Foreign Affairs:

The Engagement Debate By Wang Jisi; J. Stapleton Roy; Aaron Friedberg; Thomas Christensen and Patricia Kim; Joseph S. Nye, Jr.; Eric Li; Kurt M. Campbell and Ely Ratner

China and the West -Should the West worry about the threat to liberal values posed by China's rise? | Debates - The Economist:

Minxin Pei and Kishore Mahbubani powerfully set out the arguments for and against worrying about a challenge to liberalism posed by China. More than 60% of you thought that we should indeed be worried.

IISS- Competing with China - Aaron L. Friedberg

The United States and China are separated not only by divergent interests, some of which might be reconciled, but by incompatible visions for the future of Asia and the world...

If there is a single theme that unifies much of what follows, it is the often underestimated importance of political beliefs and ideology. America’s post-Cold War strategy for dealing with China was rooted in prevailing liberal ideas about the linkages between trade, economic growth and democracy, and a faith in the presumed universality and irresistible power of the human desire for freedom. The strategy pursued by China’s leaders, on the other hand, was, and still is, motivated first and foremost by their commitment to preserving the Chinese Communist Party’s monopoly on domestic political power. The CCP’s use of militant nationalism, its cultivation of historic claims and grievances against foreign powers, and its rejection of the idea that there are, in fact, universal human values are essential pieces of its programme for mobilising popular support and bolstering regime legitimacy. It is impossible to make sense of the ambitions, fears, strategy and tactics of China’s present regime without reference to its authoritarian, illiberal character and distinctive, Leninist roots.


6. The Party's spiritual backbone needs straightening

The latest Seeking Truth has a retrograde, hardline "Qiushi" commentary--"Straighten the Communist Party's Spiritual Backbone". It warns against hostile forces who "in their bones" do not wish to see China get strong, are still working hard for "peaceful evolution", "constitutional democracy", "universal values" etc. I wonder how many of the participants of the debates cited above read this kind of stuff, or read it and dismiss it as just "rhetoric". It is not...

挺起共产党人的精神脊梁 

敌对势力骨子里是不希望中国发展壮大的,一个分裂动乱、软弱涣散的中国才符合其利益。他们以意识形态领域为突破口,进行政治信仰上的颠覆、价值观念上的渗透、生活方式上的侵蚀,手段不断翻新、形式更加隐蔽。

从不遗余力搞“和平演变”,到大肆鼓吹历史虚无主义、“宪政民主”、“普世价值”等错误思潮,再到卖力推销新自由主义、质疑改革开放,敌对势力对我国实施西化、分化战略,何曾停止过片刻!

有人把腐败问题跟经济问题划等号,这是不对的。腐败问题往往与政治问题相伴而生,本质上是重大政治问题。

值得警惕的是,有人在热炒马克思主义“过时论”“无用论”的同时,把西方制度模式说成是“普世价值”,我们搞得好就是“中国威胁论”,遇到困难就是“中国崩溃论”。

坚持思想建党 推进理论强党 《求是》2018/12 作者: 本刊评论员


7. The roots of the recent truckers' strike

This is the best explainer of the truckers strikes I have read. Big data and big capital disruptions that risk social disorder will likely come under much more scrutiny from the Party.

Truckers on Strike and the Structural Contradictions of China’s Logistics Industry « China Change:

China boasts a fleet of about 15 million trucks demanding two drivers each, making around 30 million truckers across the country. Some own the vehicles they drive; others rent trucks, and others don’t personally drive anymore and provide their trucks to the second group. Most drivers are renters. The supply side of the logistics sector is diverse, as is the demand side — the enterprises and goods owners. This plurality of supply and demand once made for an essentially free arena of competition, but recent and sudden shifts in the industry have led to the rise of monopolies.

The shift came with the merger of two logistics giants — Yunmanman [满运软件科技有限公司] of Jiangsu Province and Guiyang’s Truck Alliance, Inc. [货车帮科技有限公司] — to form the Manbang Group... [Hence the calls of "down with Huochebang", mis-reported in some places as "down with gongchandang [communist party]

The merger of Yunmanman with Trucking Alliance Inc. brought about a fundamental change in industrial relations within the logistics sector. First, Manbang introduced an annual fee of somewhere between 1680 and 3000 yuan directed at the truck drivers and related information service personnel, which forced the hands of many who had already become dependent on the app for their business.

The second and more explosive event occurred on June 4, when the Truck Alliance app implemented a client update that made it impossible to receive information in real time. Job pricing was fully automated, depriving users of the ability to set their own prices. As a part of the new merger, Truck Alliance was blatantly and openly exerting control over its customers with impunity. Suppose a supplier pays Manbang 1000 yuan, then of that sum the driver gets only 800 yuan and Manbang pockets the rest. This situation caused an uproar among vehicle owners, suppliers, drivers, and other industry personnel.


8. Teng Biao in the US

Exiled in the U.S., a Lawyer Warns of ‘China’s Long Arm’ - The New York Times - Ed Wong:

From his suburban home in New Jersey, Teng Biao has watched in frustration as what he sees as the apologies to China from Western companies have come fast and furious this year...

For Mr. Teng, one of China’s pre-eminent civil rights lawyers, it all amounted to craven behavior from Western companies trying to stay in the good graces of Chinese officials and citizens to maintain access to the enormous consumer market in China...

Mr. Teng and his family also ran into financial difficulties in the United States after his wife was dismissed from her job as an international representative for a Chinese technology parts company — a move that he said had been forced by Chinese officials. His wife had worked for the company for 17 years...

He went to the Chinese University of Hong Kong as a visiting scholar in 2012, then flew to the United States with his younger daughter two years later after getting an invitation from Harvard. By then, his wife and elder daughter had been barred from leaving the mainland, but they fled through Southeast Asia in 2015 with the help of smugglers, at one point riding on the backs of motorbikes through the hills of Thailand.


Business, Economy, Finance And Trade

China Prepares State Support for HNA Fundraising - Bloomberg Officials at the highest levels of government have recently determined that Hainan-based HNA is currently facing a liquidity issue and should be helped, according to the people, who asked not to be named discussing a private matter. On June 12, a senior official at the People’s Bank of China led a meeting with three regulators, the Hainan provincial government, HNA Co-Chairman Chen Feng and the group’s biggest creditor, instructing attendees to support HNA’s future bond issues, the people said.

China Securities Regulatory Commission to Include “Party Development Work” into Corporate Articles of Publicly Traded Companies – Chinascope On June 15, the China Securities Regulatory Commission published a revision to the existing “Corporate Governance of Public Traded Companies” and solicited public opinion to be submitted for a period of one month. Described as “important content on the Corporate Governance for companies with Chinese Characteristics,” the revised governance required that publicly traded companies “strengthen the efforts to develop the party” and include the requirement that relevant party development work be included in the company’s articles of incorporation.

The CSRC notice-证监会就修订《上市公司治理准则》公开征求意见 《准则》修订工作始终坚持以习近平新时代中国特色社会主义思想为指导,全面贯彻党的十九大精神,坚持以人民为中心的发展思想,立足中国国情、借鉴国内外经验,推动上市公司完善治理、规范运作、提高质量,注重保护投资者尤其是中小投资者合法权益,促进资本市场稳定健康发展。修改内容主要如下:一是紧扣新时代主题,增加了在上市公司治理中落实新发展理念,加强上市公司党建工作,促进上市公司参与生态文明建设、履行扶贫等社会责任的要求。

Brace for an even bigger bubble in China’s stock markets | This Week In Asia | South China Morning Post ADRs are fully fungible with their underlying shares. This means new ADRs can be created (or deleted) in line with market demand. If the demand is there, brokers bundle up shares listed in the company’s home country and lodge them with a depositary bank, which then issues receipts that can be traded in the US. As a result, ADRs always trade in line with the price of their underlying shares, as any significant divergence in price would instantly be arbitraged away. In contrast, a company’s CDRs will not be fungible with its primary shares listed offshore. In effect they will be an entirely new class of stock, not securities created by bundling together underlying shares. That means their supply will be inflexible, not adjustable like the supply of ADRs. And because arbitrage between the mainland’s markets and markets offshore is difficult at best, and often impossible, large price discrepancies are likely to open up between a company’s CDRs and its primary shares.

Mainland Bourses Announce Detailed CDR Rules Clearing Hurdles for China Tech Firm Issuance - Caixin Global The two stock exchanges also reminded investors to be wary of speculation on the CDR issues and the losses that could result. They also vowed to “severely” punish speculators through measures such as suspending their trading accounts. The rules announced by the Shanghai and Shenzhen bourses came after the China Securities Regulatory Commission, the country’s securities watchdog, released earlier this month a series of guidelines for the CDR program, aimed at making the country’s best-known tech brands accessible to domestic investors while bringing closer to home a sector crucial for upgrading the economy.

Senior Official at Central Huijin Investment to Be Named Bank of China President - Caixin Global Bai Tao, 55, currently Central Huijin’s executive director and president, will soon fill the BOC position, which has been vacant for 10 months partly due to the recent restructuring of the nation’s financial regulatory framework, according to the sources, who declined to be named. Bai is also an executive vice president of China Investment Corp., the country’s sovereign wealth fund, which is the sole owner of Central Huijin

China Lures More ‘Sea Turtles’ Home to Work - Caixin Global A new report on what’s known in Chinese as “sea turtles,” a reference to those who return to the motherland after studying abroad, was released by the business networking website LinkedIn this week. The “China Returnees Talent Report” found that among users who had studied abroad and moved back to China in 2017, there was a substantial jump in the proportion returning after gaining senior work experience overseas. The number of returnees in the 30-to-40 age bracket was 30.6%, almost double the 16.5% in 2013, according to the report, which analyzed data from 2.3 million overseas Chinese and 400,000 returnees who are members of the LinkedIn platform. The company also conducted surveys of returnees and interviewed Chinese companies.

Alibaba’s Jack Ma and Malaysia PM Mahathir Mohamad talk tech, jobs and future as China deals come under scrutiny | South China Morning Post Ma was speaking to the media after a meeting with Mahathir in Kuala Lumpur – the first by a Chinese entrepreneur since the country’s landmark election of May 9 in which the veteran politician had been critical about investments from the mainland that had not brought jobs to the country.

China to promote effective use of foreign investment - Gov.cn The steps include lowering market threshold, deepening administrative reform, promoting high-quality investment, creating a high-standard business environment, optimizing investment layout, and enhancing the role of national development zones, according to the circular. To ease market access in a large scale, the nationwide practice of pre-establishment national treatment and negative list on foreign investment will be improved. The special administrative measures on foreign investment nationwide and in free trade pilot zones, known as “negative list”, will be revised and published before July 1, 2018, aiming to enhance opening-up in an all-around way.

 

Politics, Law And Ideology

The Rise of “Xi Jinping News Thought”? | China Media Project The Party’s official People’s Daily reported on June 14 that the newspaper held a discussion forum on June 13 on the topic of “Xi Jinping News Thought and Theory” (习近平新闻思想理论). This marks the first time that the phrase “Xi Jinping News Thought” (习近平新闻思想) has appeared in the People’s Daily — and could be a mark of the term’s ascendance. According to the report, scholars from the Chinese Academy of Social Sciences, Tsinghua University, Peking University and other institutions were present at the discussion forum — and all “fully affirmed the People’s Daily‘s trailblazing role in implementing Xi Jinping News Thought.”

In China’s Far West, Companies Cash in on Surveillance Program That Targets Muslims – Foreign Policy For those detainees and for millions of others, this Chinese experiment in technological control has transformed Xinjiang into an Orwellian prison state. But for Chinese surveillance companies, it has turned the area into something else altogether: a lucrative market and a laboratory to test the latest gadgetry. The companies include some of the leaders in their field, often backed by Western investors and suppliers, according to analysts and activists who follow the plight of the Uighurs. Their research on the issue raises the grim prospect that many people around the world are profiting from some of China’s worst human rights abuses. The companies include the world’s two largest security camera manufacturers, Hikvision and Dahua Technology. Though they are not household names, odds are you’ve been filmed by one of their products. Combined, the two firms supply around one-third of the global market for security cameras and related goods like digital video recorders. They are publicly traded at the Shenzhen Stock Exchange and are worth a combined $70 billion — billions more than better-known brands like Sony.

Beijing Is Holding U.S. Citizens ‘Hostage’ in China - Daily Beast If one of Beijing’s targets living in the United States has relatives in China, Chinese authorities aren’t shy about applying pressure to those relatives, even if they are U.S. citizens. Exit bans are a “pretty new tool in the Chinese toolbox” for exerting such pressure, said John Kamm, founder of the U.S. nonprofit Dui Hua Foundation, which works on sensitive human rights cases in China.

China issues new counterterrorism guideline - Global Times Jointly issued by four departments - Supreme People's Procuratorate (SPP), Supreme People's Court (SPC), Ministry of Public Security (MPS) and the Ministry of Justice (MOJ) - the guideline said people who write, publish, broadcast or advocate terrorism-related content online, will be criminally liable. Published on the SPP website on Friday, the guideline aims to "safeguard national security, social stability and ensure public safety by punishing terrorism and extremism." The guideline also specifies the crimes of aiding terrorist activities, preparing terrorist activities and wearing clothes or symbols which advocate terrorism and extremism. 最高检等四部门出台意见指导依法办理恐怖活动和极端主义犯罪案件 

Xinjiang Authorities Use ‘Burial Management Centers’ to Subvert Uyghur Funeral Traditions - RFA Officials in Xinjiang routinely refer to four guidelines they are to follow when governing in the region—strengthening propaganda according to the promotion of Chinese-style religion, encouraging residents to self-report and criticize their own behavior, opposing religious extremism, and expressing gratitude to the Communist Party. While the officials did not explain the specific function of the burial management centers, members of the Uyghur exile community with links to the area told RFA that authorities are using them to subvert Uyghur ethnic traditions and remove the religious context from funerary rites.

Every new car in China must have a tracking chip from 2019 — Quartz From July 1, China’s Ministry of Public Security will oversee a program to install a radio-frequency identification chip in the windshields of new cars when they’re registered. While installing the chips won’t be mandatory this year, having an “electronic license plate” (link in Chinese), as authorities are calling it, will be required from 2019, according to the Journal. The plan, which authorities say is meant to curb congestion, involves setting up hundreds of thousands of chip-reading units to track passing cars, according to a report from the website of a Chinese automotive trade show

Beijing’s hidden hitlist targets 100 fugitives here - The Australian The Weekend Australian understands the Chinese minister also pushed the security official to help facilitate the handover of ethnic Uighur Chinese citizens in Australian immigration detention, a source with knowledge of the matter said.

 

Foreign and Military Affairs

Xi urged Kim to call for a halt to U.S.-S. Korean military drills:The Asahi Shimbun: China provided the impetus for the halt of U.S.-South Korean joint military drills, which U.S. President Donald Trump proposed following his summit with North Korean leader Kim Jong Un earlier this month. When Chinese President Xi Jinping met with Kim in Dalian, China, on May 7-8, he prodded him to call on Washington to suspend military exercises with Seoul, according to Chinese diplomatic sources.

A Financier’s Profit-Minded Mission to Open a Channel Between Kushner and North Korea - The New York Times The financier, Gabriel Schulze, explained that a top North Korean official was seeking a back channel to explore a meeting between President Trump and Kim Jong-un, who for months had traded threats of military confrontation. Mr. Schulze, who lives in Singapore, had built a network of contacts in North Korea on trips he had taken to develop business opportunities in the isolated state. // Comment: He used to live in Beijing. The PRC leadership has been very concerned over the last 16 mnnths about US-DPRK backchannels into which it had little to no visibility. // FT profile of him in 2013 

How China’s squid fishing programme is squeezing its neighbours and creating global sea change | South China Morning Post China has been accused of using its dominance of the world’s supply of squid to provide low-quality seafood to other countries and intimidate their ships in neutral waters.

Man behind China’s new aircraft carrier detained in corruption investigation | South China Morning Post Sun Bo, general manager of China Shipbuilding Industry Corporation (CSIC), is suspected of serious violations of the law and party discipline, the National Supervisory Commission said in a brief statement issued on Saturday night.

中央军委印发《传承红色基因实施纲要》 - 中国军网 Central Military Commission publishes outline on implementation of passing on "red genes"  //  《纲要》明确,传承红色基因要着力锻造维护核心、听党指挥的绝对忠诚,坚定社会主义、共产主义的理想信念,强化勇于改革、敢于突破的创新意识,培育一不怕苦、二不怕死的战斗精神,严明高度自觉、令行禁止的革命纪律,巩固爱民为民、军民团结的特有优势。要抓好科学理论武装、开展党史军史宣传教育、加强存史编史研史、开展重要纪念活动、建好用好军史场馆、开发红色革命文化,让红色基因永葆活力、彰显威力。

Chinese military phases out profit-making contract work - Xinhua The circular said that the gradual phasing out of profit-making services provided by the military had begun in 2016 and achieved significant progress, though there was still more work to be done. It said all such contract work should end by the end of 2018, and that programs should be closed down if they sought profit, deviated from the military’s core responsibility or provided solely civilian services.

Former Rolls-Royce engineer 'arrested under Official Secrets Act' amid fears China tried to obtain F-35 fighter jet details Readerstrust The man was named by the Sun as  Bryn Jones, a former chief combustion technologist, who it said had been detained in connection with efforts by China to obtain classified information about Britain's new £100million RAF stealth fighter jet. The 73-year-old former Rolls-Royce employee was reportedly held after MI5 received information that classified details were passed to Beijing.

King Joins Colleagues in Bipartisan Letter Raising Concerns Over Potential Threat of Chinese Attempts to Undermine U.S. Democracy U.S. Senator Angus King (I-Maine) and a bipartisan group of senators sent a letter to top Administration officials raising concerns about China’s attempts to undermine democratic institutions in the United States, and American leadership and alliances abroad. In the letter, which is addressed to Secretary of State Mike Pompeo, Secretary of Defense James Mattis, Secretary of Treasury Steve Mnuchin, National Intelligence Director Dan Coats, Federal Bureau of Investigation Director Christopher Wray and U.S. Agency for International Development Administrator Hank Green, the senators highlighted concerns regarding the Chinese Communist Party’s (CCP) attempts to influence democracies, markets and institutions around the globe, and called on the Administration to develop a comprehensive strategy to counter Chinese actions aiming to manipulate public discourse and democratic institutions in support of China’s interests

China adds to nuclear arsenal amid military modernisation drive | South China Morning Post As of January, the country had 280 warheads, up from 270 a year earlier, the Stockholm International Peace Research Institute (SIPRI) said in an annual report. But it said none of the nuclear warheads were deployed on missiles or located on bases with operational forces. They were instead classified as “other warheads” – meaning they are being stored or have been retired.

The China-India rivalry is causing an ecological disaster in the Himalayas — Quartz Most analyses of the Sino-Indian border dispute have focused on the potential for another war between these two nuclear-armed neighbours. The environmental impacts of their continued entrenchment are rarely mentioned, despite the fact that they are significant and growing.

'China begins sharing data on Brahmaputra, Sutlej rivers' | Times of India After a year's gap, China has resumed sharing hydrological data on the Brahmaputra and Sutlej rivers with India, an official of the water resources ministry said. For the Brahmaputra river, data was shared by China from May 15, while it started sharing data for the Sutlej from June 1.

China's Pacific Islands Push Has the U.S. Worried - Bloomberg Wang Dong, an international relations professor at Peking University, dismissed concerns that large concessional loans leave nations vulnerable to “debt-trap diplomacy” and said China’s expanded role in the Pacific is a natural consequence of its growing economic clout. “It’s scaremongering to think this will lead to any military design or ambition in the Pacific,” Wang said in a phone interview from Beijing. “We will see China increase its presence there and it will keep helping these countries build their infrastructure.”

China's State TV Wants To Hire More Than 350 Journalists In London - Buzzfeed Chinese state broadcaster CGTN is hoping to hire more than 350 London-based journalists in less than 18 months, according to a recruiter's email seen by BuzzFeed News. Despite severe job losses across many London-based media companies in recent years, the China Global Television Network has embarked on an eye-watering recruitment drive in a bid to set up a new European hub of operations in west London

 

Taiwan

Beijing looks for clues on US-Taiwan ties as Washington set to name new ‘ambassador’ to Taipei | South China Morning Post While Kin Moy, the incumbent director of the American Institute of Taiwan (AIT), is set to step down in the coming weeks after almost three years in charge, the office has yet to announce who will succeed him. A dedication ceremony for the mission’s new office in Taipei’s Neihu district was held last week.

Taiwan, US to share defense research - Taipei Times Taipei and Washington have signed an agreement to share information on scientific research that would allow representatives of Taiwan’s research institutions, including the Chungshan Institute of Science and Technology and the Ministry of National Defense’s Armaments Bureau, to visit national defense research institutions and laboratories in the US next year, an unnamed senior military official said yesterday.

Nice Democracy You’ve Got There. Be a Shame If Something Happened to It. – Foreign Policy Secret societies, criminal organizations, and triads have existed for centuries in China, but most were chased out after the victory of the Chinese Communist Party (CCP) in the 1949 civil war. Triads continued to flourish in Hong Kong, Macau, and Taiwan — where many fled alongside Chiang Kai-shek’s defeated Nationalists. But while the CCP drove them out of the mainland, the party has found them a very useful tool to disrupt and frustrate opponents in societies such as Taiwan and Hong Kong, where resistance to the party runs high.

 

Tech And Media

Google to Invest $550 Million in China E-Commerce Site JD - Bloomberg Alphabet Inc.’s Google will buy newly issued Class A shares at $20.29 per share, equivalent to $40.58 per ADS, the companies said in a joint statement Monday. The pair plan to explore joint development of retail solutions in regions, including Southeast Asia, the U.S. and Europe. The deal comes just a week after Google struck an alliance with Carrefour SA to sell groceries online in France through the U.S. company’s platforms including Home and Assistant.

Airbnb’s China Rival in Talks to Raise $100 Million — The Information $$ Beijing-based Xiaozhu was valued at $1 billion in its previous round in November when it raised $120 million from investors including Yunfeng Capital, a private equity fund backed by Alibaba founder Jack Ma. The talks for the new round are still in the early stage and investors haven’t yet committed to a deal, the people said. A Xiaozhu spokeswoman declined to comment.

闹大了!崔永元即将正式举报华谊兄 unverified report that Cui Yongyuan, who recently accused Fan Bingbing of massive tax fraud, is preparing to our film heavyweight Huayi Brothers for all sorts of misdeeds, from tax evasion to bribery...the film business is massively corrupt, with very deep political ties, and serious investigative look at it would get very interesting...

China is winning the global tech race | Financial Times - Mike Moritz - FT $4 Another transpacific difference involves the use of cash. Between 2015 and 2017, the five biggest US tech groups (especially Apple and Microsoft) spent $228bn on stock buybacks and dividends, Bloomberg data shows. During the same period, the top five Chinese tech companies spent just $10.7bn and ploughed the rest of their excess cash into investments that broaden their footprint and influence. It’s hard to escape the view that the Chinese groups are — like all of us — creatures of their heritage. They are using their investments as one way to help fulfil the ancient Chinese definition of the Middle Kingdom — as the centre around which all else revolves.--The writer is a partner of Sequoia Capital

Macau, ‘Las Vegas of Asia’, trades in casino chips for microchips as part of China’s tech ambitions | South China Morning Post The state laboratories in Macau have been focusing on micro-electronics and Chinese medicine since 2010. The city could be setting up two more state-level labs this year, as Beijing is set to approve a lab on smart cities and the Internet of Things at the university, as well as another on planetary science at the Macau University of Science and Technology.

 

Society, Art, Sports, Culture And History

Team Stays Home, But Chinese Fans Flock to World Cup - Caixin Global Chinese fans will make up a significant chunk of the audience across the five venues where matches are being played, having snapped up more than 40,000 of the 2.4 million tickets that have been sold so far, according to FIFA. This makes China the ninth-biggest purchaser of tickets and puts it ahead of England, whose fans bought only 32,000 tickets although its national team made the tournament. China comes second only to the United States in terms of fans from countries not appearing at the World Cup. U.S. fans bought over 88,000 tickets, second only to Russia in tickets bought overall.

‘Ruling Through Ritual’: An Interview with Guo Yuhua | by Ian Johnson | NYR Daily | The New York Review of Books Guo Yuhua is one of China’s best-known sociologists and most incisive government critics. A professor at Tsinghua University in Beijing, she has devoted her career to researching human suffering in Chinese society, especially that of peasants, the promised beneficiaries of Communist rule.

 

Energy, Environment, Science And Health

Lawmakers encouraged to expose loopholes in enforcement of air pollution control law - Xinhua Four teams of lawmakers were sent to inspect enforcement of the air pollution control law in eight provincial-level regions in early May. Being briefed on their work in the past month, Li, chairman of the National People's Congress (NPC) Standing Committee, said that the inspections have exposed several problems, such as low awareness and lack of practical protocols and standards. Inspection teams are expected to find ways to help local governments improve their work, he said.

State Council reshuffles committee for AIDS prevention - Gov.cn The State Council reshuffled the working committee for AIDS prevention, appointing Vice-Premier Sun Chunlan as the committee leader, according to a notice issued on June 14. Ma Xiaowei, head of the National Health Commission, and Ding Xiangyang, vice-secretary general of the State Council, were appointed deputy directors.

 

Education

DHS Investigating Identity Theft, College Admissions Fraud Ring - NBC 7 San Diego According to the search warrant filed in federal court Wednesday, the subject of the investigation helped Chinese students get into the U.S. illegally and enroll into state schools by having imposters with fake ID's take entrance exams for them. The University of California, Irvine, Los Angeles, and Riverside are mentioned in the search warrant that accepted applications or enrolled foreign students who used "Mayen International or Mayen Global services,” according to the warrant.

Government Relies on Student Informants at China's Universities - RFA Chinese authorities are stepping up their use of "student information officers" at colleges and universities across the country to serve as frontline informers on their classmates, RFA has learned. Informants report back to the ruling Chinese Communist Party (CCP) on the expressed opinions of their classmates and teachers, resulting in sanctions and sackings for government critics in higher education. Reports emerged last month that the Beijing University of Civil Engineering and Architecture had issued an administrative demerit to one of its associate professors, Xu Chuanqing, after she made comments in class that the authorities deemed inappropriate

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