Trade talks; National public security conference; CBS’ China-pandering censorship

President Trump, in a fairly transparent attempt to goose the US stock markets that may be seen in Beijing as a sign that he is very nervous about the market reaction to more tariffs, tweeted Wednesday AM:

As I wrote yesterday, Liu He’s Thursday arrival does not give the negotiators much time, so barring credible enough promises of the concessions the US wants that President Trump and General Secretary Xi get on a call and agree to delay this round of tariffs again, the US tariffs will increase Friday. And if they do the Chinese side is making clear they will retaliate, though perhaps not with an identical step up in rates, in the hopes that the talks will be able to continue.

Yesterday’s newsletter also mentioned the "Taoran Notes 陶然笔记" Wechat account. A reader from China tells me it is run by Lian Jun 连俊, a senior reporter at the Economic Daily 经济日报, whose offices are less than a kilometer from the Taoran Pavilion 陶然亭 in Beijing. Another PRC reader in the media confirmed this to me, so assuming it is true it does give more credence to the idea that Taoran Notes is worth paying attention to.

Thanks for reading, and feel free to forward today’s issue to anyone you think would find it useful.

1. US-China trade

China backtracked on nearly all aspects of U.S. trade deal - Reuters

The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world's two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.

The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.

In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation...

One private-sector source briefed on the talks said the last round of negotiations had gone very poorly because “China got greedy.”

“China reneged on a dozen things, if not more ... The talks were so bad that the real surprise is that it took Trump until Sunday to blow up,” the source said.

The PBS Frontline episode on the trade war is now streaming online. I think they did a good job, yours truly has first appearance at 27:00 at Sinocism HQ.

Da Wei, Assistant President and Professor at the University of International Relations in Beijing, has the last word, says there may be a way to avoid a new type of Cold War, but says in the pessimistic scenario "we will have another type of Cold War..I think it is a comprehensive confrontation...If that happens it will last for quite a long time. That that's a tragedy for everyone" - Trump's Trade War | Watch S38 E1 | FRONTLINE | PBS | Official Site

I worry that Da Wei sees a very high likelihood of that pessimistic scenario. From the January 16, 2019 newsletter:

Influential and connected think tank China Institutes of Contemporary International Relations (CICIR) releases its 2018/2019 International Strategic and Security Review. I'd love a copy. One of the contributors, a US expert, wrote on Wechat that he is both sad and happy his name is not on the cover, so I am guessing it has some pretty grim discussion of the US-China relationship and its trajectory - 《国际战略与安全形势评估2018/2019》发布暨国际形势研讨会在京举行--国际--人民网:


That expert was Da Wei. He knows the state of the US-China relationship as well as anyone in Beijing. And I am still trying to get a copy of the 2018/2019 International Strategic and Security Review.

Chinese economy full of resilience - People's Daily Online

The resilience of the Chinese economy comes from its good fundamentals. With strong material basis, vast human resources and huge development potential, China, which is in the synchronous development of new industrialization, informatization, urbanization and agricultural modernization, has a large market to maneuver.

China is still in an important period of strategic opportunity for development and the economic fundamentals sustaining sound development remain unchanged. Particularly, the outcomes of the deepening of the supply-side structural reform in recent years have guided the country’s economy into a virtuous circle of price recovery, cost reduction, profit increase and confidence boost.

Economic Watch: China secures steady, sustainable Jan.-April trade growth - Xinhua

The European Union was China's largest trading partner during this period, followed by the ASEAN, the United States and Japan.

Trade with Belt and Road countries totaled 2.73 trillion yuan, up 9.1 percent year on year, more than doubling the overall pace.

China April trade data: exports and imports - CNBC

Customs data on Wednesday showed that trade surplus for April came in at $13.84 billion. That was far lower than the $35 billion economists polled by Reuters had expected, and below the $32.65 billion posted in March.

Dollar-denominated exports also missed expectations in April, falling 2.7% from a year ago, according to data from the China’s General Administration of Customs. Economists polled by Reuters expected an increase of 2.3% from a year earlier.

However, April imports unexpectedly rose by 4% from a year ago, compared to a decline of 3.6% that economists predicted. Imports in March fell 7.6%.

China’s trade surplus with the U.S., meanwhile, rose to $21.01 billion in April from $20.5 billion in March, the data showed.

2. National public security conference

Xi stresses police loyalty, competence, discipline - Xinhua

President Xi Jinping has stressed the need to enhance the political loyalty of the police force, strengthen them through reform and technology, and run them with strict discipline, at a national conference on public security...

The meeting was held in Beijing on Tuesday and Wednesday.

Wednesday CCTV Evening News 10 minute report on the meeting 习近平在全国公安工作会议上强调 坚持政治建警改革强警科技兴警从严治警 履行好党和人民赋予的新时代职责使命:


No surprise, Xi talks about the "Fengqiao Experience"

The first People's Daily commentary on the public security meeting will appear in the May 9 issue, the theme, as one would expect, is the absolute leadership of the Party over public security work" - 人民日报评论员文章:坚持党对公安工作的绝对领导——论学习贯彻习近平总书记全国公安工作会议重要讲话精神_CCTV

3. Xinjiang

China, US clash at UN over Uighur detentions - AFP

China angrily assailed the United States on Tuesday for calling on countries at the United Nations to deprive Beijing of a seat at a UN forum over its treatment of the Uighur minority.

It was the second time in as many weeks that the two countries openly clashed at the United Nations over the rights of the Uighurs and other mostly Muslim minorities held in camps in China's Xianjiang region.

Last week, the United States invited the head of the World Uighur Congress, Dolkun Isa, to address the UN forum on indigenous peoples, infuriating China.

China protects normal needs of religions, customs: FM - Global Times

China is home to more than 20 million Muslims and 35,000 mosques, and the lawful religious needs and customs of religious believers are guaranteed, Geng Shuang, Chinese Foreign Ministry spokesperson said at a Tuesday briefing. 

He made the remarks after some foreign media, including the Guardian, claimed Xinjiang has been "bulldozing" Muslim mosques.

4. Hong Kong extradition law and US-HK relations

Hong Kong extradition law seen raising risks for U.S. interests: commission - Reuters

“The extradition bill could pose significant risks to U.S. national security and economic interests in the territory,” the U.S.-China Economic and Security Review Commission said in a report [online here] released on Wednesday...

The commission said the law could provide grounds for the United States to “re-examine important elements of its current relationship with Hong Kong, as outlined in the U.S.-Hong Kong Policy Act”.

The 1992 U.S.-Hong Kong policy act allows the United States to engage with Hong Kong as a non-sovereign entity distinct from China on matters of trade and economics.

Question: Given that Hong Kong is really just another PRC city now why is it still treated differently by the US in areas like export controls?

5. CBS’ China-pandering censorship

CBS Censors “The Good Fight” for a Musical Short About China | The New Yorker

Michelle King confirmed for me that “the cartoon was about American entertainment and companies censoring themselves in order to appease the Chinese market.” The Kings would not describe for me internal conversations at CBS about the company’s motives for censoring the segment, but Coulton said that the network’s standards-and-practices division had expressed concern that such a sequence would endanger CBS executives on the ground in China. ..

As it happens, the episode of “The Good Fight” with the censored cartoon contains another inflammatory scene: a monologue about China’s oppression of its Uighur Muslim minority. On the stand, an Uighur activist testifies about the roundup of a million Uighurs, describing the government forcing them to sing hymns praising the Communist Party and to write self-critical essays. She accuses ChumHum of having turned her e-mails over to the Chinese government, causing her family to be apprehended. “My friends, my husband, two sisters, my brother—are all in internment camps.

CBS Censors a ‘Good Fight’ Segment. Its Topic Was Chinese Censorship. - The New York Times

The show, which runs on the CBS All Access streaming channel, and is a spinoff of “The Good Wife,” often breaks from its plot for an animated musical short that digs into controversial political issues of the day with an explanatory style similar to “Schoolhouse Rock!” A theme of last Thursday’s episode was American companies that want to do business in China and the pressures they face to appease Chinese government censors. An animated short was created on that same theme.

But the short was pulled from the show at the request of CBS about two weeks before it was scheduled to stream, said Ms. King, who created the show with her husband, Robert King.

Jonathan Coulton, the songwriter who makes the shorts, said in an interview that this particular video started with the fact that “The Good Wife” had been banned in China, most likely because of an episode that showed a Chinese dissident character being tortured

Comment: This kind of self-censoring to appease Beijing should come up in any regulator examination of a possible CBS-Viacom deal.

CBS has some businesses, I believe that mostly came through its 2008 acquisition of CNET - CBS Names Lawrence Liding Head of China Operations – Variety

Liding has been executive vice president, controller and chief accounting officer since 2014. He will start his new role February 20.

6. Alibaba’s global plans

Alibaba steps up competition with Amazon in global ecommerce market | Financial Times $$

Trudy Dai, president of Alibaba’s wholesale marketplaces division, told the Financial Times that AliExpress — an ecommerce business that sells goods from Chinese retailers to customers in more than 150 countries — is making changes to enable retailers from other countries to also sell products on its platform around the world. 

“From the very first day that Alibaba was founded we had a ‘global dream’,” said Ms Dai, who along with Jack Ma, Alibaba’s founder, was part of the company’s first executive team in 1999.

Alibaba's grand strategy to feed China's middle class · TechNode

Although all online grocery players are in one way or another dabbling in direct sourcing, supplier partnerships or even vertically-integrated food production, none have a supply chain strategy that is as comprehensive or as ambitious as that of Alibaba...

At the center of the strategy is Win-Chain, an Alibaba affiliate that is virtually unknown outside of China. At the end of 2018, Alibaba reorganized its online grocery businesses to make Win-Chain responsible for procurement across its entire fresh produce and food ecosystem, which includes Hema, T-Mall, RT-Mart and Eleme. The move was meant to leverage Win-Chain’s supply chain and data capabilities to make it a “global procurement hub,” which could eventually serve not only Alibaba but also third-party B2B customers.

Win-Chain is key to Alibaba’s vision to create a global food supply network. The company, whose English name appears to be a reference to building winning supply chains, originated as the procurement arm of Yiguo, one of China’s first online grocery platforms

7. Tencent’s new patriotic game

Tencent pulls blockbuster game PUBG in China, launches patriotic alternative - Reuters

In a post on the game’s official account on China’s Twitter-like Weibo platform, Tencent said it would end testing for PUBG. It also said it had launched an anti-terrorism-themed “Game for Peace”, for which it gained monetization approval in April.

“With PUBG Mobile having around 70 million average daily active users in China now, we expect Game for Peace could potentially generate 8 billion yuan to 10 billion yuan ($1.18 billion to $1.48 billion) in annual revenue”, said analysts at China Renaissance...

In a website statement, Tencent described Game for Peace as a tactical shooting game developed in-house which “pays tribute to the blue sky warriors that guard our country’s airspace”, in reference to the Chinese air force.

Tencent scraps 'PUBG Mobile,' replaces it with more compliant 'Game for Peace' · TechNode

Promoted as a “military skills competition game,” “Game for Peace” claims to have enlisted the help of the recruitment center of China’s air force, and is a “tribute to warriors who defend the territorial air space of China.” A screenshot from the game’s beta shows that there is even a recruitment notice for China’s air force on the game’s loading screen.

8. Epoch Times pro-Trump Ads

The Epoch of Social Media - Popular Information

The Epoch Times, an obscure publication aimed at the Chinese diaspora, was one of the top three political spenders on Facebook in the last week in April. The paper outspent every presidential candidate except Biden and Trump himself, according to an analysis by Acronym....

The Epoch Times spent this money to promote stories that Trump's attorney, Rudy Giuliani, has championed, including the New York Times story on "Spygate."

(They were not promoted by The Epoch Times primary Facebook page. Instead, they were funneled through a subsidiary page called "Coverage of the Trump Presidency by The Epoch Times." This made it harder to find the actual ads through the database.)

Comment: Expect the 2020 US election to get very nasty about China

Business, Economy and Trade

Broader access to attract more global investors - China Daily MSCI Inc, a provider of global stock benchmark indexes, said on Tuesday that it will announce the results of its 2019 semiannual index review by Monday, which is set to increase the index inclusion factor of all China large-cap A shares in the MSCI Indexes from 5 percent to 10 percent and add large-cap ChiNext shares with a 10 percent inclusion factor.

For Chinese Markets, There’s No Such Thing as a Bad-News Day - WSJ $$ “There was a specific instruction that we were allowed to use news reports about the trade war issued by the top state-media outlets only. We couldn’t do our own reporting,” said a television journalist with a midsize state-media outlet.

Nasdaq: Chinese companies listing in US pipeline stronger than ever - CNBC “It seems like we will have over 40 IPOs from China, [which] are coming to the U.S. this year. So [2019] could be the strongest year ever,” says Bob McCooey, chairman of Nasdaq Asia-Pacific.

China Defaults Hit Record in 2018. 2019 Pace Is Triple That - Bloomberg Companies defaulted on 39.2 billion yuan ($5.8 billion) of domestic bonds in the first four months of the year, some 3.4 times the total for the same period of 2018, according to data compiled by Bloomberg. The pace is also more than triple that of 2016, when defaults were more concentrated in the first half of the year, unlike 2018. The trend is clear: unless something changes, 2019 will be the new high.

China’s northeastern rust belt struggling to retain population as economic slowdown speeds up exodus | South China Morning Post The northeast rust belt, once the pride and birthplace of China’s industrial development, is in its biggest economic slump as it struggles to shake off a deep-rooted planned economic mindset and dwindling resources, and a brain drain to regain competitiveness. This is the third article of a five-part series that looks at two shrinking cities.

The Rise, Fall and Possible Rebirth of China's Online Lenders - Bloomberg Industry insiders are betting that a handful of closely regulated players will emerge from the cull. They envision a revamped model -- similar to the one adopted in America -- in which P2P platforms match small borrowers with institutional money managers and banks, instead of individual savers. That would allow China to keep funneling much-needed credit to small companies, while at the same time containing exposure to investors who can bear the risk.

China Starts Trading of Defaulted Corporate Bonds - Caixin This is an important innovation to proactively dispose of defaulted bonds, stabilize the market and prevent malicious escape from debts, a person close to the central bank told Caixin. Regulators are making Trading in defaulted bonds at steep discounts from face value will become a normal operation at the Beijing Financial Assets Exchange and the central bank’s China Foreign Exchange Trade Center as part of an effort by the central bank to establish a defaulted-bond trading system, sources said.

Politics and Law

Interim regulations on decision-making given shape - The State Council recently released provisional regulations on procedures for significant administrative decisions, in a bid to improve the scientific, democratic, and law-based decision-making mechanism, standardize procedures for significant administrative decisions and enhance decisions in terms of quality and efficiency. 中华人民共和国国务院令 第713号 现公布《重大行政决策程序暂行条例》,自2019年9月1日起施行。

China to improve online government services - Xinhua China will speed up building an integrated platform for e-government services to offer easier access to the online services, according to the Ministry of Justice. The building of the integrated platform aims to standardize government services nationwide, according to an official with the ministry.

China to set up big data application platform of emergency management - Xinhua The platform, led by the Ministry of Emergency Management, will use the technologies of big data, cloud computing and the Internet of Things to conduct online monitoring of major risks, early warning and forecasting, and efficiently handling disasters and accidents.

How Beijing Embraces Public Opinion to Govern and Control - MacroPolo the CCP came to embrace the internet as a tool to both improve governance and enhance control, particularly through the collection and analysis of online public opinion. A fast-growing but under-studied case of this phenomenon is the Message Board for Local Leaders (MBLL, difang lingdao liuyanban). Run by People’s Daily Online (PDO) and also accessible via a dedicated app and through WeChat, the MBLL lets netizens leave public messages for provincial, city, and county governments, which can either ignore the message or respond publicly


外交部调整的“主要官员”,负责监督外交部--时政--人民网 5月7日,多家时政类微信公众号发布消息称,外交部“主要官员”有调整。打开链接,原来是外交部网站“主要官员”栏目更新,显示中央纪委国家监委驻外交部纪检监察组组长已由谢杭生变为张骥。 由张骥的公开简历可知,他此前任中央纪委国家监委驻中央外办纪检监察组组长。看到这里,// Zhang Ji replaces Xie Hangsheng as the discipline inspector on the Ministry of Foreign Affairs Party committee

汪建新:跟习近平学妙用毛泽东诗词--党史频道--人民网 People's Daily video on how Xi uses lines from Mao's poems

Foreign and Defense Affairs

Canadian drug smuggler to appeal China death sentence Thursday - AFP Robert Lloyd Schellenberg was sentenced to death on drug trafficking charges in January.

Huawei CFO Seeks Move to $10 Million Mansion as Hearings Resume - Bloomberg The main focus of Wednesday’s appearance, set for 10 a.m. Vancouver time, is to schedule subsequent court dates, including those related to any legal applications that Meng’s team plans to bring forward ahead of extradition hearings, according to a statement from Canada’s justice department. There may also be discussions about administrative matters including minor bail amendments, it said.

Canadian Conservative leader Scheer takes aim at China and Trump in major foreign policy speech | The Star A copy of his prepared remarks, obtained by the Star, calls for a “total reset” of the Canada-China relationship — and says Canada should not expand trade with the growing superpower until that reset is secured. “So long as China is willing to hold our exports hostage, all the while committing human rights violations on an industrial scale, we have no choice as Canadians but consider other trade partners,” Scheer’s remarks read.

Dirty Cash Probe Finds Booming Vancouver-China Luxury Car Trade - Bloomberg Grocery bags full of cash hauled into car dealerships. Gangsters paying for auto leases with proceeds of crime. A thriving grey market in which Chinese buyers pay people to purchase cars in Vancouver and claim millions of dollars in sales tax refunds. Those are some of the scenes uncovered by the provincial government’s latest probe into dirty money in the Vancouver area

Chinese interference: Anne-Marie Brady's full submission - My submission to the Justice Select Committee Inquiry into Foreign Interference is in two parts: 1. an overview of China’s foreign interference activities; 2. suggestions for a resilience strategy.

China's Xi speaks to Saudi king amid Iran tensions - Reuters China’s Foreign Ministry did not directly mention Iran in its statement on the call between Xi and Salman, instead concentrating on Xi’s comments on cementing bilateral ties.

Strategic trends across the Indo-Pacific region | The Interpreter - Kevin Rudd The missing element in US grand strategy in the Indo-Pacific region is the economic arm. Whatever the new US national security strategy may produce in new military capabilities and doctrine across the region, for the long-term US national interest, the Trump administration’s decision to withdraw from the Trans Pacific Partnership is proving to be a strategic error of catastrophic proportions.

China thinks N. Korea is willing to hold talks with U.S.: speaker Moon | Yonhap News Agency China believes North Korea is still willing to hold dialogue with the United States despite the current stalemate over the North's denuclearization talks, South Korea's parliamentary speaker said Wednesday. National Assembly Speaker Moon Hee-sang made the remarks at a breakfast meeting with South Korean correspondents in Beijing after he met with senior Chinese officials this week.


U.S. House passes pro-Taiwan bills, amid trade tensions with China - Reuters The House voted 414-0 for a non-binding resolution reaffirming the U.S. commitment to Taiwan. It also backed by unanimous voice vote the “Taiwan Assurance Act of 2019,” which supports Taiwan and urges it to increase its defense spending, noting Washington should conduct “regular sales and defense articles” to Taiwan and back Taipei’s participation in international organizations. There was no word on when the Assurance Act might come up for a vote in the Senate

Tech and Media

Chinese AI start-up Megvii raises $750 million ahead of planned HK IPO - Reuters The funding raises start-up Megvii’s valuation to slightly over $4 billion as it prepares for an initial public offering (IPO) in Hong Kong planned for later this year, said two sources with knowledge of the matter.

Oracle China to Terminate at Least 900 People, Reports Say - Caixin Global The decision is part of a global retrenchment as the tech giant falls behind in cloud computing and tries to transform its business.

Society, Arts, Sports, Culture and History

Chinese vlogger's attempt to eat live octopus immediately backfires - New York Post She begins screaming in the 50-second clip as the ill-tempered Squidward-wannabe of SpongeBob SquarePants fame puts up a fight that leaves her in pain. “I can’t remove it!” she cries out as she tries to pry a tentacle from her upper lip. “Look how hard it’s sucking!”

Energy, Environment, Science and Health

Chinese logging takes heavy toll on farmers in Guinea: Bissau - Reuters Logging boomed after a 2012 coup plunged the country into chaos. For three years the wood, which is valued for furniture in China, was shipped off by the tens of thousands of tonnes - destroying farmland and livelihoods in the process, locals said. The trade slowed when the state put a five-year moratorium on logging and exports in 2015. But with a presidential election coming up and the ban set to expire next year, farmers and activists said they fear a return to widespread plunder.

China’s mountain observatory begins hunt for origins of cosmic rays A ceremony to launch the first phase of the Large High Altitude Air Shower Observatory (LHAASO) was held on 26 April..Set more than 4.4 kilometres above sea level in Daocheng, Sichuan, on the eastern part of the Tibetan Plateau, it will track another form of radiation — high-energy γ-rays


Beijing Urbanizes, and a Much-Loved Bird Vanishes From the City - SixthTone That year, Yue counted more than 70 long-eared owls at the Temple of Heaven, but the last time she spotted one there was in 2015. Owls are vanishing from central Beijing’s other green spaces, too, she says. “The ones at the Guozijian disappeared even earlier,” she says, referring to the former imperial academy in the city’s Dongcheng District. Other bird-watchers tell Sixth Tone they haven’t seen a single long-eared owl in years.

The story behind Beijing's annual tree fluff- They are also easily ignited. 10 square meters of the dander can burn out completely in just 2 seconds when exposed to an open fire. Back in 2017, there were reports of a number of fires caused by piled up catkins.