Trade talks extended; Animal spirits back in the stock market; Modernizing education

DC is in the midst of a wind storm and after this weekend I am worried the East Wind may be prevailing over the West Wind 东风压倒西风 (See Mao’s 1957 speech).

President Trump announced on Twitter that the US-China trade talks will be extended with no increase in existing or addition of new tariffs on the original March 1 deadline. It is not clear why the President didn’t wait to announce this until closer to March 1. We are left waiting for more talks and an expected Trump-Xi meeting at Mar a Lago, likely in the third or fourth week of March.

Earlier this morning Trump said a deal is close and would be struck at a “signing summit” with Xi, though he hedged by saying it may not happen.

Everything I am hearing supports that idea that Chinese have offered little in the way of the core structural concessions the US wants but Trump is eager for a deal regardless of what some of his advisors are telling him.

Liu He has returned to Beijing but sources tell me Vice Minister of Commerce Wang Shouwen has remained in DC to continue the negotiations, and various reports say the US team will go back to Beijing in the next couple of weeks. Perhaps the Chinese are saving the real concessions for a Trump-Xi meeting and there is still a possibility of a more substantive deal. One can always hope…

The animal spirits are back in China’s stock markets. The key indexes are now technically in a bull market and the turnover Monday was the highest since November 2015. The trade negotiation extension helped sentiment but the bigger drivers in China appear to be comments Xi made about capital markets at Politburo Study session over the weekend, the growing belief that the government is easing off the deleveraging campaign, and stock margin lending.

It is the year of the Pig so you can’t blame punters for being greedy, though they should remember that eventually pigs get slaughtered. In the meantime, my Mother-in-law stock trading sentiment index (long-time readers will remember 2014-15) is shooting up, so good luck to PRC stock market and RMB bears in the near-term at least.

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The Essential Eight

1. US-China trade

Trump says U.S., China 'very, very close' on trade deal | Reuters:

U.S. President Donald Trump said on Monday he was optimistic that a final trade deal could be reached with China and that he would hold a summit to sign any pact, but cautioned an agreement may still not happen.

China Trade Talks: Trump Vents Frustration With Lighthizer - Bloomberg:

After Friday’s exchange, said two people familiar with the events, the president complained that Lighthizer had embarrassed him by publicly correcting him in front of the Chinese delegation and the press. The president also expressed frustration that Lighthizer hadn’t yet stitched up a deal that Trump views as increasingly important...

Trump’s disappointment with his trade czar has built in recent months, according to people close to the administration, fueled by the stock market’s precipitous drop in late 2018 as the trade war with China escalated. U.S. stocks logged their worst December performance since the Great Depression, and had their biggest annual decline since 2008...

On the flight back from the leaders’ Dec. 1 dinner in Argentina, at which a 90-day truce was agreed, the president tasked Lighthizer with getting a China deal. When Lighthizer told him that he believed Beijing wasn’t ready to make meaningful concessions, Trump insisted a resolution had to be found, according to one person briefed on the exchange.

Comment: How many calls has Trump made on his unsecured cell phone and discussed his views of the trade negotiations? Did the Chinese have access to near-real time intelligence on what Trump is saying privately about his trade talks strategy and goals?

Trump to Delay Tariff Increases on Chinese Imports - WSJ $$:

In recent talks, Beijing offered to increase purchases of U.S. farm and energy products and services, ease restrictions on U.S. firms in financial services and auto manufacturing and improve protection of U.S. intellectual-property rights, according to people briefed on the discussions.

But China’s leadership sees all those measures as aligned with the nation’s own interests. Beijing so far hasn’t given much ground on issues it sees as crucial to maintaining the Communist Party’s rule, including government subsidies and support to state-owned companies and other policies that underpin its state-led economic model.

“We’re taking steps to reform state-owned enterprises to make them more competitive, just not in the way the U.S. wants us to,” a Chinese official said.

Cautious optimism in Beijing for US-China trade deal | South China Morning Post:

Commentaries from top Communist Party mouthpieces like newspaper People’s Daily and state news agency Xinhua said the just-concluded round of talks in Washington sent a cautiously positive sign for a settlement to the friction between the world’s two biggest economies, but also cautioned that any final deal would face criticism both within China and the US.

Trump Delays a Tariff Deadline, Citing Progress in China Trade Talks - The New York Times:

After a long weekend of talks, this person said, the Chinese delegation returned to the Chinese embassy in Washington and, over secure communications, received permission from Beijing to make a commitment in principle to satisfy the American negotiators and Mr. Trump.

An American delegation is expected to travel to Beijing sometime between now and Mr. Xi’s trip to Mar-a-Lago to continue to work out the remaining differences. The fact that Mr. Xi has agreed to come to Mar-a-Lago is viewed by the Chinese as a concession, as they originally hoped that such a meeting would take place on China’s Hainan island...

Lawmakers will get a chance to grill the administration about its plans this week when Robert Lighthizer, Mr. Trump’s top trade adviser, testifies about the China talks and other trade actions on Wednesday.

People's Daily Zhongsheng on the trade talks - 人民日报钟声:按中美元首共识加快达成互利双赢协议 

[rough translation] People have reason to believe that under the guidance of the consensus of the heads of state of China and the United States, China and the United States will continue to do a good job in the next step of negotiations, promote the long-term stable and healthy development of Sino - US economic and trade relations, and play a positive role in promoting the well-being of the two peoples and the stable growth of the world economy.

人们有理由相信,在中美元首共识引领下,中美双方将继续做好下一步磋商工作,推动中美经贸关系长期稳定健康发展,为增进两国人民福祉、促进世界经济稳定增长发挥积极作用。


2. Politburo study session on financial sector

Xi stresses role of finance in serving real economy - Xinhua:

Xi made the remarks when presiding over a group study session of the CPC Central Committee Political Bureau Friday afternoon.

The country should keep a fine balance between maintaining growth and forestalling risks and deal with risks in key areas in a targeted and effective manner, he said, adding that China should deepen opening-up of the financial sector.

Xie Duo, Party secretary and chairman of Silk Road Fund Co., Ltd, briefed on the issue and made suggestions.

Xi pointed out that finance is a core competitiveness of a country, financial security is an important part of national security, and the financial system is a major fundamental system in the process of economic and social development...

Xi stressed the need to establish a standard, transparent, open, dynamic and resilient capital market that has sound fundamental institutional arrangements, proper management on market access and exit and tightened full-process supervision on transactions.

The number of small and medium-sized financial institutions as well as their proportion of businesses should be increased, while financial services to the small and micro firms as well as agriculture, rural areas and rural people should be improved, Xi said....

Education and supervision of senior officials of financial institutions and regulators should be enhanced, and more should be done to fight corruption in the financial sector, Xi said.

He called for dynamic supervision of domestic and cross-border capital flow to enable financial watchdogs to fully monitor all flows.

CCTV Evening News on the report 习近平在中共中央政治局第十三次集体学习时强调 深化金融供给侧结构性改革 增强金融服务实体经济能力 

PBoC's Financial News on three main directions from the Politburo study session - 中共中央政治局第十三次集体学习定调三大方向 金融业发展兼顾促增长与防风险_本报关注_中国金融新闻网:

建立多层次、广覆盖、有差异的银行体系 Establish a multi-level, wide-coverage and differentiated banking system;

构建全方位多层次金融支持服务体系 Build an all around and multi-level financial support service system;

在稳增长基础上防风险 Preventing risks on the foundation of steady growth


3. Deleveraging campaign looks to be easing

`Deleveraging Is Dead': China Signals Renewed Focus on Growth - Bloomberg:

While seasonal effects explain some of the gains, analysts say the trend has staying power as authorities shift their focus from containing the nation’s $34 trillion debt pile to shoring up the weakest economic expansion since 2009. ..

Xi signaled a greater emphasis on growth at a meeting of the Communist Party’s elite 25-member Politburo on Friday, saying that healthy economic development is the foundation for risk prevention. A statement released after the meeting said “risk prevention should be done on the basis of stable growth.” Previous statements cited the need “to balance efforts to stabilize growth, restructure the economy and prevent risks.”...

In another sign of the government’s evolving stance, a quarterly policy report published by the People’s Bank of China on Thursday watered down language on the campaign to curb excess credit, removing a reference to deleveraging and adding wording on “stabilizing the macro leverage ratio.”

China says meets debt control target as it ramps up economic support | Reuters:

Though top officials have repeatedly pledged not to resort to another massive spending spree like that during the global financial crisis, analysts say it is vital for policymakers to revive weak credit growth to avoid a sharper slowdown.

“After two years of work, various financial disorders have been effectively curbed,” Wang Zhaoxing, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC), told a news conference.

“This breaks overseas predictions that the ‘barbaric’ growth of shadow banking and the financial overheating of real estate might lead to systemic financial risks and crises in China.”

银保监会"两会"前重磅发声!定调结构性去杠杆达到预期目标_证券时报网 

Chinese commercial banks see higher profits, lower NPL ratio - Xinhua:

The commercial banks raked in a net profit of over 1.83 trillion yuan (about 273 billion U.S. dollars), up 4.72 percent year on year by the end of December last year, according to the China Banking and Insurance Regulatory Commission.

Outstanding bad loans of the commercial banks in Q4 dropped 6.8 billion yuan from Q3 to 2.03 trillion yuan.

By the end of December 2018, the NPL ratio of commercial banks stood at 1.83 percent, 0.04 percentage points lower than that in Q3.

China orders banks, insurers to sharply step up lending to private firms | Reuters:

China’s banking and insurance regulator said on Monday it had told all of the country’s banks to sharply increase lending to private companies, as policymakers step up support for the slowing economy.

Big state-owned commercial banks should increase outstanding loans to smaller companies by more than 30 percent this year, the China Banking and Regulatory Commission said in an online statement.

Lots of debt coming due this year - China's Pullback on Subsidies Tests Debt-Laden Industrial Sector - Bloomberg:

Issuers are on the hook for more than 6 trillion yuan 1 ($890 billion) in 2019, up 15 percent from a year earlier. Companies in sectors including mining and materials, capital goods and real estate make up 4 trillion of the pile – and of that, industrial companies comprise about 60 percent.


4. Bull market in Chinese stocks

China Stocks’ Trillion-Dollar Rally Pushes Another Index Toward Bull Market - Bloomberg

The CSI 300 Index surged 6 percent Monday and the Shanghai Composite Index climbed 5.6 percent, extending their gains from a Jan. 3 low to more than 20 percent, the level that typically denotes a bull market after a drop of the same size. The ChiNext Index of small caps and technology stocks, which entered a bull market Friday, rose a further 5.5 percent. 

Trading Volume of Mainland Shares Tops 1 Trillion Yuan for First Time in 3 Years - Caixin Global:

The two exchanges reported volumes of 465.9 billion yuan and 574.5 billion yuan, respectively. China hasn’t seen a day of this much trading since Nov. 27, 2015

China's Stock Surge Puts World-Beating Bond Rally in Shade - Bloomberg:

A surge in equities is blunting the attraction of China’s world-leading bond rally, prompting analysts to recommend clients pile into stocks rather than debt. News that the U.S. will extend a tariff truce is likely to fuel that momentum.

The rally since Jan. 3 has added more than $1 trillion to the value of the country’s equities, while China’s sovereign notes have barely moved. 

CSRC said Monday it has aware increase in news coverage about stock margin loans by informal lenders, will play close attention, provide guidance and intensify supervision. - 证监会回应“场外配资抬头”:指导加强对交易的全过程监管_牛市点线面_澎湃新闻-The Paper 


5. Shaanxi judicial misconduct cover-up

The judge who released a video describing the disappearance of files from a very sensitive case in Shaanxi and then himself disappeared has reappeared, in a confession video aired on CCTV. This official explanation is not well-received online, and will have the opposite effect of giving investors and business owners confidence that China is improving rule by law and the environment for businesses...There is lots of speculation about which senior officials are involved but are protected, from Zhou Qiang, Chief Justice and President of the Supreme People's Court of China to Zhao Leji, standing committee member and head of the CCDI who was once the Party Secretary of Shaanxi. We may never know, but the official story is hard to believe... 

Investigation on alleged misconduct by supreme court wrapped up - Xinhua: 

The investigation started on Jan. 8 after video footage spread online in which Wang Linqing, an SPC assistant judge, exposed alleged misconduct in the trials of two civil cases, including the mysterious disappearance of files in one of the cases. 

Investigations found that Wang stole the files due to a "personal grudge" he held against the SPC and his superior, according to the statement from the investigation team made up of officials from the Commission for Political and Legal Affairs of the Communist Party of China (CPC) Central Committee, the CPC Central Commission for Discipline Inspection and the National Supervisory Commission, the Supreme People's Procuratorate and the Ministry of Public Security. 

According to Wang's statement, he tried to sabotage the trial by stealing the case files because his superior decided to remove him from the panel of judges on the case, the investigators said.

The CCTV report - 中央政法委牵头的联合调查组公布“凯奇莱案”卷宗丢失等问题调查结果 

Judge Who Exposed Missing Supreme Court Documents Confesses to Taking Them - Caixin Global:

“I took them away to stop others working on it because I had put lots of energy into the case from the start,” he said on the news broadcast on China Central Television. He added that he didn’t want others to share credit for dealing with the significant case, which involved a mining rights dispute between a private and a state company in Shaanxi province.

Wang in January exposed the disappearance of the legal documents from his office, sparking public outcry. He said at that time in video footage, which went viral online, that he made the recording “to protect himself and leave some evidence.”

Xi highlights favorable legal environment for reform, development, stability - Xinhua:

Xi...made the statement when presiding over and addressing the second meeting of the Commission for Overall Law-based Governance of the CPC Central Committee. Xi is the head of the commission...

The meeting stressed efforts to maintain and promote sustained and sound economic growth with the high-quality development of legislation. Unified fundamental laws regarding foreign capital must be formulated, early arrangements must be made for the legal authorization for areas designated as reform and opening-up pilot zones, and a comprehensive and coordinated approach must be adopted in making laws regarding intellectual property right protection, bio-safety, land system reform and ecological civilization...

The rule of law is the most favorable environment for business, the meeting stressed, calling for equal protection of the property rights and legitimate interests of all market entities, and efforts to train more legal professionals and develop more services for foreign-related legal affairs, in order to maintain and support the country's high-level opening-up.

Official Chinese report 习近平主持召开中央全面依法治国委员会第二次会议 

China’s Entrepreneurs Are Wary of Its Future - The New York Times:

Chen Tianyong, a Chinese real estate developer in Shanghai, boarded a flight to Malta last month with no plans to return anytime soon.

After landing, Mr. Chen, a former judge and lawyer, shared on social media a 28-page article explaining himself. “Why I Left China,” read the headline, “An Entrepreneur’s Farewell Admonition.”

“China’s economy is like a giant ship heading to the precipice,” Mr. Chen wrote. “Without fundamental changes, it’s inevitable that the ship will be wrecked and the passengers will die.”

“My friends,” he urged, “if you can leave, please make arrangements as early as possible.”..

Now 53, Mr. Chen decided in early 2013 that he had better start looking at places outside mainland China. The trigger was a widely circulated party directive that urged an offensive against liberal political ideas and values. “It was a very terrifying signal,” he said.

Comment: I have some friends who have been saying the same since Xi came to power, and the smart ones have left or long ago their foreign identities and moved enough money offshore. Sentiment does seem to be getting worse but I am wary of over-reading this as a sign of imminent collapse of Xi or the economy...A revival of the stock markets and the chance to make money quickly in them may do wonders for sentiment, though the longer terms worries about the political tightening and the lack of rule of law are not going away any time soon.


6. Modernizing education

Modernizing education was listed as a key goal in the 19th Party Congress report, and now concrete plans are out. There have been some foreign media reports noting the language about optimizing Confucius Institutes but there are far more important things going on here.

China issues plans to modernize education - Xinhua:

One of the plans set the goals and tasks for 2035, while the other one detailed the facilitation of the education modernization drive from 2018 to 2022.

Eight goals were proposed in the education modernization plan 2035, which was released by the Central Committee of the Communist Party of China (CPC) and the State Council, highlighting the accessibility of quality education from pre-school to higher education stages, and from vocational training to special schooling for the disabled.

It also specified 10 strategic tasks, including ensuring equal access to basic public education services, building world-class universities and opening education further to the world.

Under the opening-up item, there are also detailed objectives such as promoting the mutual recognition of degrees and diplomas as well as education cooperation under the Belt and Road Initiative.

The number 1 strategic task of the 2035 plan is to study Xi Thought, push it throughout the education system and strengthen political thought education in institutes of higher education - 中共中央、国务院印发《中国教育现代化2035》:

《中国教育现代化2035》聚焦教育发展的突出问题和薄弱环节,立足当前,着眼长远,重点部署了面向教育现代化的十大战略任务:

一是学习习近平新时代中国特色社会主义思想。把学习贯彻习近平新时代中国特色社会主义思想作为首要任务,贯穿到教育改革发展全过程,落实到教育现代化各领域各环节。以习近平新时代中国特色社会主义思想武装教育战线,推动习近平新时代中国特色社会主义思想进教材进课堂进头脑,将习近平新时代中国特色社会主义思想融入中小学教育,加强高等学校思想政治教育。加强习近平新时代中国特色社会主义思想系统化、学理化、学科化研究阐释,健全习近平新时代中国特色社会主义思想研究成果传播机制。

中共中央办公厅、国务院办公厅印发《加快推进教育现代化实施方案(2018-2022年)》 

China’s About-Face on Education | China Media Project:

In late January, Introduction to Constitutional Law (宪法学导论), a textbook on China’s Constitution first published in 2004 and now in its third edition, vanished from online bookstores, including Amazon.cn, JD.com and dangdang.com. Offline, the book was apparently pulled from shelves at Xinhua Bookstore, a government-affiliated book chain that is also the country’s largest...

And as Zhang’s book vanished, one clear winner emerged in the arena of constitutional law that illustrates what is at stake for legal education in China. Several colleges, including Jiangsu Normal University, demanded teachers use instead a textbook called Constitutional Law (宪法学), published in 2011 as part of the “Marxism Theory Studies and Construction Project” (马克思主义理论研究和建设工程), an initiative launched back in 2004...

The “Marxism Theory Studies and Construction Project” that spawned the poorly-rated alternative to Professor Zhang’s book is perhaps a reminder that the ideological turn we associate with President Xi Jinping was already nascent in the Hu Jintao era [Emphasis mine]...

This official textbook on China’s Constitution is directed not just at legal students in China, but has become regular and required reading for college students more broadly, with the premise that students should become more adept at refuting frequent criticism from the West on China’s failure to abide in terms of policy, practice and law enforcement by many of the stated rights and principles outlined in the Constitution.

Removal of classic Chinese literature segment depicting failed uprising from textbook is “an academic adjustment”: editor in chief - Global Times:

The national unified Chinese language and literature textbook in question refers to the one complied by the Ministry of Education, and published by People's Education Press, the report said.

The chapter of Shiji in question documents the Dazexiang Uprising, better known as the Uprising of Chen Sheng and Wu Guang, named after its two leaders Chen and Wu, who served as army officers before the movement.

Their uprising against the Qin's harsh rule was the first of its kind after the death of Emperor Qinshihuang, according to Shiji.Che Sheng styled himself as Chen She.

The insurrection led by Chen and Wu failed, but Chen's remarks "Are kings and nobles given their high status by birth," passed on through generations.


7. Xinjiang

China defends Uighur internment camps as part of global terrorism fight | Financial Times $$:

Deputy foreign ministry Zhang Hanhui briefed diplomats and officials from 80 countries and international organisations about China’s policies on Friday, presenting them as “development achievements” that are “worthy of praise”. He was accompanied by Xinjiang’s deputy governor Erkin Tuniyaz.

“Xinjiang’s antiterrorism and de-extremisation efforts have created a new way to solve the worldwide problem of treating both antiterrorism and the root cause of the crime. It is worthy of praise,” Mr Zhang said.

Turkey worried about Uighurs, urges China to protect religious freedom in Xinjiang | Reuters:

The U.N. Human Rights Council opened its main, annual four-week session and diplomats and activists say China has lobbied hard to avoid scrutiny over its policies in Xinjiang and other rights issues...

[Turkish Foreign Minister Mevlut] Cavuslogu did not specifically mention mass detention camps in the remote western region of China. But he told the Geneva forum that reports of human rights violations against Uighurs and other Muslims in Xinjiang were serious cause for concern...

A distinction should be made between “terrorists and innocent people”, Cavusoglu added.

MBS Turns Blind Eye on Uighur Plight During China Visit | Al Bawaba:

The Uighur community both inside and outside China had expected bin Salman, the de facto ruler of Saudi Arabia and custodian of Islam’s holiest sites, to raise the issue of China’s human rights violations against ethnic Uighurs.

Instead, he chose to side with China.

"We respect and support China's right to take counter-terrorism and de-extremism measures to safeguard national security. We stand ready to strengthen cooperation with China," bin Salman said, according to China’s state-run Xinhua news agency.


8. Huawei

US-China battle over Huawei comes to head at tech show - AP:

Huawei has an outsize presence at MWC Barcelona, from its displays in three separate show halls down to its red sponsorship logo adorning visitor pass lanyards. The focus at this year’s meeting is new 5G networks due to roll out in the coming years. But the dispute over Huawei, the world’s biggest maker of networking gear, is casting a pall.

The United States government dispatched a big delegation to press its case with telecom executives and government officials that they should not use Huawei as a supplier over national security concerns. U.S. President Donald Trump’s administration says the Chinese government could use Huawei equipment to snoop on the world’s internet traffic — accusations Huawei has rejected, saying there has been no proof of a cybersecurity breach.

Nokia says 5G would not be delayed by ban on Chinese suppliers | Reuters:

Nokia does not expect the possible exclusion of Chinese companies on security grounds to delay the rollout of next-generation 5G services in European markets, CEO Rajeev Suri told Reuters...

Suri, however, downplayed concerns that a reduced field of vendors could slow network upgrades. The real reasons for Europe’s growing 5G lag behind the United States are hold-ups in issuing spectrum to operators, as well as high auction costs in countries such as Italy, he said.

“I think you cannot say that you know the situation caused by some of this will delay 5G rollout or that others are not capable or ready to provide equipment. That would not be accurate,” Suri said on the sidelines of the Mobile World Congress , the industry’s main annual gathering, in Barcelona.

Nokia Positions Itself as More Secure Than Rival Huawei - WSJ $$:

Mr. Suri also appeared to support concerns that the Chinese government could order Huawei to spy or conduct cyberattacks. “People everywhere are asking the legitimate questions about how best to secure critical networks, about which vendors are appropriate to use and which are not,” he said, without specifically naming China or Huawei during a news conference...

The Nokia chief said manufacturers will rely on internal high-speed wireless networks, which both Nokia and Huawei make, to connect factory components in the near future. Without security, he said, “essential trade secrets will fall with those networks—airplane innovations, pharmaceutical formulas, electric-car schematics—things worth not just millions, but billions.”

Huawei to Build Saudi Arabia’s 5G Infrastructure - Caixin:

“This year Saudi Arabia will definitely go towards 5G,” Mark Xue, Huawei’s vice president, said during a session at the China-Saudi Investment Cooperation Forum on Friday. He said the kingdom will begin deploying the company’s 5G infrastructure over the next year, becoming one of the first countries to roll out the technology along with China, Japan and South Korea and a handful of European states without providing further details.

China's technology challenge is bigger than just Huawei, British spymaster says | Reuters

Jeremy Fleming, the head of Britain’s Government Communications Headquarters (GCHQ), said the incredible rate of technological change was unleashing unprecedented uncertainty, instability and risk.

“The strategic challenge of China’s place in the era of globalized technology is much bigger than just one telecommunications equipment company,” Fleming, one of Britain’s top three spies, said in Singapore.

“It’s a first order strategic challenge for us all,” he said. “We have to understand the opportunities and threats from China’s technological offer.”


Business, Economy, Finance And Trade

A Surprise China Debt Default Upends Assumptions on Official Aid - Bloomberg Qinghai Provincial Investment Group Co., an aluminum producer that was seen by some analysts as a bellwether for assessing government support due to its struggles to make payments on offshore debt last year, had failed to wire funds for a coupon payment due Feb. 22 as of late afternoon China time....As recently as mid-December, S&P Global Ratings had removed QPIG from CreditWatch with negative implications, concluding that it would “continue to receive ongoing government support and be able to meet its short-term financial obligations over the next 12 months, despite its weak liquidity.”

Risks Pile Up for China's Local Government Financing Vehicles - Bloomberg For yield-thirsty investors, off-balance sheet local government debt can be very attractive: Such bonds offer corporate bond yields while seemingly having quasi-sovereign credit status.

In-Depth: Payment Companies’ Free Lunch Comes to an End - Caixin At stake is more than 1 trillion yuan ($149 billion) of customer funds — mostly prepayments for goods and services — that are temporarily held by payment providers before the transactions are cleared. According to the People’s Bank of China, the amount of such funds totaled 1.4 trillion yuan by the end of January, about 90% of it held by the payment services of Alibaba Group-affiliated Ant Financial Service Group and Tencent Holdings...The money was once a lucrative revenue source for payment companies, which could earn interest on cash deposited in banks or even invested in government bonds. Annual interest income on 1 trillion yuan could average more than 10 billion yuan.

Shanghai, Beijing Disposable Income Hits Double That of Rest of Country - Caixin The average disposable income of residents in Beijing and Shanghai topped 60,000 yuan ($8,931) last year, more than double the country's overall average. That overall average was only 28,228 yuan, but was still up 6.5% from the previous year.

Meituan labor strikes underscore profitability pressures · TechNode The conflict has become physical at times, according to local media, with confrontations breaking out between striking workers and merchants who continue to use the platform as well as striking workers sabotaging deliveries for peers that continue to take orders from the platform. Meituan Dianping deliverymen complain that rates for single journeys have been lowered and delivery times are shorter than transit times calculated on popular map apps. These differences leave little profit once overhead costs like gas, scooter repairs, and phone bills are accounted for.

Mastercard Charges Into China With Online Clearinghouse Venture - Caixin An extended wait to offer its core transaction clearing services in China may finally be coming to an end for Mastercard Inc. The global credit card giant has agreed to form a joint venture with China’s newly launched online clearinghouse Nets Union Clearing Corp. (NUCC), seeking to crack into the nation’s vast transaction clearing market, Caixin has learned.

Chinese firm behind the 'Amazon Coat' hits jackpot in U.S., eschews China | Reuters Using duck down sourced from China’s Hebei and Anhui provinces, the polyester coats are priced between $80 and $139. By contrast, Canada Goose jackets start from about $575 in the United States...Chiu is among a wave of Chinese merchants that have benefited from measures introduced by Amazon in recent years that have made it easy for overseas vendors to sell on its site.

Reporter’s Notebook: Farmers Could Prove Lifeline for Chinese Auto Sales - Caixin The slump in the Chinese auto market was chiefly caused by slower growth in smaller cities and towns as their disposable income dropped, according to the China Association of Automobile Manufacturers. But in my view villages are a massive “blue ocean” market which automakers should set their sights on. Half of the Chinese population — 600 million — live in such villages. And according to the National Bureau of Statistics, the wallets of rural people are fattening at a pace that far outstrips their urban peers.

China Needs to Do Better Collecting Data on Money Laundering, Agency Says “China has the foundation for a sound system to tackle money laundering and terrorist financing, but should strengthen its financial intelligence unit and use of financial intelligence,” the Financial Action Task Force (FATF) said in a statement last Thursday.

Tsvangirai's Son Blocked From Opening Bank Account In China ⋆ Pindula News The late founding president of the MDC Morgan Tsvangirai’s son, Richard Tsvangirayi was blocked from opening a bank account in China with the Industrial and Commercial Bank of China Limited (ICBC). The reason for the denial was that as a Zimbabwean, he could not open a bank account in China because Zimbabwe, like South Sudan and Yemen, was under sanctions.

Broken-down bus that crashed in China mine was bought online - AP The operators of China’s largest silver mine transported workers underground on a broken-down bus that was bought online, routinely overloaded and operating on ramp not intended for transporting people, safety officials said after the bus crashed, killing 21 miners and injuring 29.

In Depth: PBOC Mulls Role for Government Bonds in Monetary Policy - Caixin The PBOC is mulling a major shift in the way it creates and manages the country’s money supply, at a time when it is also moving to a new framework for adjusting interest rates as it integrates the country’s financial system with the rest of the world. Part of the debate now underway is how big a role Chinese government bonds (CGB) should play in this process. Officials from the central bank and the Ministry of Finance have been discussing how the issuance and trading of CGB could be used in the implementation of monetary policy and have reached a preliminary consensus to take practices used in developed countries as a guideline, sources close to the matter who declined to be identified told Caixin.


Politics, Law And Ideology

CPC meeting discusses draft government work report - Xinhua The draft government work report to be delivered by the State Council to the second annual session of the 13th National People's Congress was discussed at the meeting, which also reviewed a report on the major work of the central leading group on disciplinary inspection in 2018, a report on the central disciplinary inspection of poverty relief efforts and a regulation on assessing Party and government officials...Effective steps should be taken to stabilize employment, the financial market, foreign trade, foreign investment, domestic investment and expectations in order to lay a solid foundation for completing the building of a moderately prosperous society in all respects and to celebrate the 70th anniversary of the founding of the People's Republic of China....The political standard must be incorporated into every aspect of official assessment to ensure that leading officials and cadres at all levels closely align themselves with the CPC Central Committee with Comrade Xi Jinping at the core in terms of political stance, direction, principle and path, it said.//The official statement and the CCTV Evening News report - 中共中央政治局召开会议 讨论政府工作报告 审议《关于2018年中央巡视工作领导小组重点工作情况报告》《关于中央脱贫攻坚专项巡视情况的综合报告》《党政领导干部考核工作条例》 中共中央总书记习近平主持会议 

China's TV Confessions | 101 East - Al Jazeera - YouTube As China seeks to extend the global reach of its state-owned TV network, 101 East investigates the growing calls for the international community to hold its journalism to international standards. // Comment: These televised confessions have become more common, and their broadcast on CCTV's global network may cause regulatory issues in the UK and other countries

Beijing Cop Sentenced to Four Years in Prison for Selling Confidential Criminal Records - Caixin Global A police officer was sentenced to four years of prison and fined 300,000 yuan ($44,857) for selling over 50,000 criminal records to a consulting company in Beijing. The police officer, surnamed Nie, accepted bribes of over 320,000 yuan in total from an employee of RISQ group surnamed Dong, a company that verifies job applicants' employment backgrounds for clients, the Beijing News reported on Friday.

Senior CPC official urges more efforts for media integrated development - Xinhua Huang Kunming, a member of the Political Bureau of the CPC Central Committee and head of the Publicity Department of the CPC Central Committee, made the call at a meeting on the topic in Beijing on Monday. Describing media integration as an inevitable revolution, Huang urged media to seize the opportunity and rise up to the challenge. 黄坤明:积极适应全媒体时代发展大势 加快推进媒体深度融合 

China unveils guideline to toughen supervision over food safety China has unveiled a guideline to enhance the accountability system of local governments to strengthen supervision over food safety. Food safety will be included in the performance assessment of the Party and government leading officials, according to the guideline released by the Central Committee of the Communist Party of China (CPC) and the State Council over the weekend.中办国办印发《地方党政领导干部食品安全责任制规定》

Some reflections on How the Red Sun Rose - Youshu  It is impossible to work through Gao Hua’s (高华) legendary history of the Yan-an Rectification Movement (延安整风) - How the Red Sun Rose (紅太陽是怎樣升起的 - the story of how Mao Zedong took over the Chinese Communist Party in the late 1930s/early 1940s - without reflecting on the lights it throws on the CCP today. Gao Hua, a former Nanjing University professor who wrote this encyclopedic history in his spare time, describes what Mao learnt from Stalin. John Garnaut’s 2017 speech on the brutal return of ideology in Beijing, recently re-upped on Sinocism, has got everyone talking again about Xi Jinping’s Maoist-Stalinist inclinations. How the Red Sun Rose is perhaps the best source to help us to consider this question of what Xi might have learnt from Mao...Gao Hua understands well the importance of gaining ideological pre-eminence; it is equivalent to controlling the consciousness of the Party, he writes...Here it's worth quickly considering this term, ideology, as it generates much unneeded confusion. The key point that both Mao and Xi grasped was that the content of the ideology is not as important as the fact that you control it, and that people obey you, whatever you say. Thus the importance of instituting Mao Zedong Thought, or Xi Jinping Thought. Once you’ve attained that status you can say whatever you want, and everyone has to listen...// Comment: Wish I knew who You Shu is. He/she writes really intelligently and this piece is especially insightful on how to view Xi and his strong hold on power. Apologies in advance to those engaging in wishful thinking that Xi may be toppled and the CCP will change any time soon


Foreign and Military Affairs

China’s military build-up just starting - a lot more to come, expert warns | South China Morning Post Beijing will show the world “something new” when it rolls out its arsenal of short- to medium-range ballistic missiles at its National Day military parade in October, according to a Chinese expert on international relations.
Speaking at a seminar at the University of Hong Kong on Saturday, Professor Jin Canrong, associate dean of the school of international studies at Renmin University in Beijing, said China had made great strides in expanding its military capability, but there was a lot more to come...While he did not elaborate on what the “something new” might be, he said the country was gearing up for a possible conflict over Taiwan, the self-ruled island that Beijing regards as a wayward province awaiting reunification...“For the first time in 500 years, the East has combat equipment that is at least as good as the West’s.”...“When we have dozens of destroyers and four or five [aircraft] carriers the US will not be able to meddle in Taiwan.” // Comment: I believe Jin Canrong 金灿荣 was one of the PRC scholars recently denied a US visa

Chinese government censors ruling lines through Australian books - The Age Chinese government censors are reading Australian publishers' books and, in some cases, refusing to allow them to be printed in China if they fail to comply with a long list of restrictions. Publishing industry figures have confirmed that the censors from the State Administration of Press, Publication, Radio, Film and Television of the People's Republic of China are vetting books sent by Australian publishers to Chinese printing presses, even though they are written by Australian authors and intended for Australian readers. Any mention of a list of political dissidents, protests or political figures in China, including president Xi Jinping, is entirely prohibited, according to a list circulated to publishers and obtained by The Age and Sydney Morning Herald.

U.S. Navy ships pass through Taiwan Strait amid China tensions | Reuters The two ships were identified as the destroyer Stethem and Navy cargo and ammunition ship Cesar Chavez, the statement added. The 180-km-wide (111.85 miles) Taiwan Strait separates Taiwan from China.  //  Comment: Seems like at least publicly these are being made more routine, as they should be

Tech companies scope out Africa surveillance sector - AFP The ASEC Expo in Rabat, billed by organisers as the first of its kind on the continent, last week brought together firms from across the world looking to conquer new markets in a region marked by rapid urbanisation and economic growth. And while Europe has slapped restrictions on an industry eyed with suspicion by many due to civil liberty concerns, African countries with lax legislation make tempting partners. Chinese communications giant Huawei had a large presence at the event, hyping the success of networks already installed in the capitals of Kenya, Cameroon, Mali and the Ivory Coast.

China’s military pulls back from joint war games to focus on training at home | South China Morning Post The PLA took part in fewer joint exercises in 2018 as it focused on training at home, though it has been ramping up military diplomacy activities in recent years as it tries to expand its influence abroad. Analysts said while Beijing was still keen to use defence diplomacy to gain intelligence insights, the People’s Liberation Army was focusing on boosting combat readiness amid heightened rivalry with the United States.

The Latest: China rebukes foreign opponents of Maduro - AP Foreign ministry spokesman Lu Kang says China “also opposes using the so-called humanitarian aid to serve political ends and stir up instability and even turmoil in Venezuela and its neighborhood, which is not in the interests of any party.”

Why some Chinese immigrants living in Canada live in silent fear - The Globe and Mail Over the course of the past eight months, I interviewed dozens of Chinese immigrants in Canada from various backgrounds for a Human Rights Watch report on the Chinese government’s activities undermining human rights abroad. Many expressed deep fear of the Chinese government, saying that while they are outraged by the human rights abuses in China, they worry that if they criticize the government openly, their job prospects, business opportunities and chances of going back to China would be affected or that their family members who remain in China would be in danger.

Family of American Imprisoned on Spy Charge in China Appeals for Help - The New York Times Kai Li, an American businessman born in China, had stepped off a plane in Shanghai, preparing to visit his mother’s grave. Instead, Chinese state security officers grabbed him and accused him of spying, and a court later sentenced him to 10 years in prison after a short, secretive trial. Now, two and a half years after Mr. Li was detained, his family in New York has broken its silence, saying that the espionage conviction against Mr. Li, an exporter of aircraft parts, was groundless and driven by political motives.


Taiwan

Taiwan’s darkest military secrets revealed by Google Maps | South China Morning Post Google’s new 3-D maps – an extension of its original satellite mapping of the world’s major cities – feature better imagery and three-dimensional terrain for four major cities in Taiwan: Taipei, New Taipei, Taoyuan, and Taichung, according to Google Earth. But all structures – down to the types of launchers and models of the missiles – are clearly visible on the new maps, including the previously secret Patriot missile base in Ankeng, Taipei, as well as defence infrastructure at the National Security Bureau and the Military Intelligence Bureau.


Tech And Media

Producer of China’s Second Biggest-Ever Movie Says Don’t Believe the Hype “It’s not realistic to think that China’s sci-fi movie industry has taken a qualitative leap just because of one success,” said Gong Geer, producer and writer of hit Chinese film “The Wandering Earth” in an interview with Caixin...“A lot of people have commented that ‘The Wandering Earth’ marks the first year of a new era for Chinese sci-fi movies, but I think it is more likely just a starting point for the industry’s sustainable development,”

State Media Blasts Fake 'Likes' on Weibo - Caixin The state-run CCTV called for a “healthier” entertainment industry, when an investigation it aired this weekend found that roughly one-third of China’s 337 million Weibo users had “shared” and “liked” a pop star’s new album – a number that is not possible. CCTV did not specify the star’s name, but the broadcaster did show a screenshot of the Weibo page of Cai Xukun, a popular K-Pop-style star who boasts over 22 million followers on the Twitter-like platform. // 艺人宣传微博转发过亿 “惊人”数据背后有何秘密? 

Yicai Global - Alibaba Pictures Group Co-Produced Green Book Wins Best Picture Oscar Green Book, which Chinese e-commerce giant Alibaba Group Holding's unit Alibaba Pictures Group co-produced, has won the Oscar for Best Picture, marking the first time a Chinese internet company has helped produce an Academy Award winner.

Yicai Global - China's NationalChip Nets USD22.5 Million in Round-B; National VC Fund Leads A national venture capital fund for emerging industries under State Development & Investment is the lead investor and the Beijing-based venture capital firm Sinovation Ventures also partook, VC investment information website PEdaily.cn reported.  Proceeds will go to develop NationalChip's core central processing units, software and algorithm technologies.

Taiwanese 'Devotion' Game Taken down in Mainland China amid Discussions over "Hidden Insults" | What's on Weibo Just within days after made-in-Taiwan horror game Devotion was released and became an online hit with Chinese players, the game has been blocked in mainland China amid discussions of the game containing secret insults towards Chinese President Xi Jinping...


Energy, Environment, Science And Health

Depression and Anxiety on the Rise in China, Study Shows - Caixin “The findings of our survey suggest that most mental disorders have become more common across China in the past 30 years,” the authors, led by Huang Yueqin, director of the Division of Social Psychiatry and Behavioral Medicine at Peking University’s Institute of Mental Health, write in the report. The study was funded by China’s National Health Commission and the Ministry of Science and Technology. The China Mental Health Survey, the first results of which were published in peer-reviewed journal The Lancet Psychiatry this week, is the first nationally representative survey on mental disorders in China. From 2013 to 2015, researchers interviewed and screened 32,552 people in 31 provincial-level regions for mood disorders, anxiety disorders, alcohol-use and drug-use disorders, schizophrenia, eating disorders, and dementia.

Beijing pollution hits record low as city’s urban reforms take effect - Global Times The annual average concentration of PM2.5 in Beijing declined to 51 micrograms per cubic meter in 2018, the lowest on record, CCTV.com reported on Sunday.  The 42.7 percent drop since 2013 is a result of the city's effective air pollution control measures and urban reforms, the report added.  The historic achievement was also attributed to the joint efforts of Beijing, Tianjin and Hebei Province in reducing emission, such as reducing coal burning, controlling vehicles and economizing on oil, upgrading clean energy, and strengthening air pollution control, an official from the Beijing Municipal Commission of Development and Reform said, CCTV.com reported.


Agriculture And Rural Issues

Farmer Accuses Province of Dragging Feet on Swine Fever Outbreak - Caixin The announcement comes after Hebei Dawu Agriculture and Livestock Group founder Sun Dawu took to Weibo Friday to accuse the government of staying silent on the recent deaths of 15,000 pigs on his Hebei farm, despite quickly making plans to cull his remaining pigs, which numbered nearly 6,000. Sun’s post has been shared over 20,000 times on the Chinese social media platform. Sun, who has previously been outspoken on rural issues, gained prominence after his 2003 arrest for allegedly running an illegal credit cooperative sparked debate over financing for smaller businesses. The outbreak confirmed by the Ministry of Agriculture — which didn’t say if the farm in question was Sun’s — is the first reported in Hebei province, which had officially been swine fever-free until Sunday.

China’s Tech Firms Are Mapping Pig Faces - The New York Times As a devastating disease afflicts the country’s swine, companies are scrambling to roll out facial and voice recognition and other unproven ways to save them... “I like the idea, I like the concept, but I need to be shown that it works,” said Dirk Pfeiffer, a professor of veterinary epidemiology at the City University of Hong Kong. “Because if it doesn’t work, it’s counterproductive.” Facial recognition won’t help unless China has a comprehensive database of pig faces to track their movement, he pointed out. Also, facial recognition doesn’t help “once the animal is in the slaughterhouse and they chop it into bits.”

Japanese police arrest man who took Wagyu cattle sperm to China - Asean+ | The Star Online Japanese police have arrested a man trying to take genetic material that could have been used to breed Japan’s renowned Wagyu cattle to China, causing consternation in an industry that guards its reputation jealously.