It’s Two Meetings Time! Ok, so maybe you are not that excited. Neither am I, in fact I do not enjoy writing the newsletter during this annual period because there is usually so little of actual news value. Perhaps 2019 will be different but I am not holding my breath.

The Chinese People's Political Consultative Congress started Sunday, the National People's Congress starts Tuesday and the whole show should be done by March 15. Among the things to watch:

Tomorrow we should get Li Keqiang’s work report and the 2019 GDP target (6-6.5% is the expected range);
The projected 2019 PLA budget;
The new foreign investment law;
Lots of reports of Xi visiting and speaking with various panels and delegations.

Huawei has gone on the legal offensive in Canada and the US. Their PR and legal strategies are interesting and I wonder if the response is more than the US government expected;

There has been an official update in the cases of detained Canadians Michael Kovrig and Michael Spavor. Kovrig is suspected of spying and Spavor of being one of his key sources. The timing of this update, just days after the Canadian decision to move forward with the extradition process in the Meng Wanzhou case, is clearly not a coincidence.

Kim Jong-un skipped Beijing on his return journey from Pyongyang, not sure what that means to be honest, could be as simple as Xi was too busy with the Two Meetings.

There are more reports that a US-China trade deal is close. But the deal is not done and President Trump could certainly change his mind in the face of a lot of criticism I expect is going to come his way.

Thanks for reading.

The Essential Eight

1. US-China trade deal talk

U.S., China Close In on Trade Deal - WSJ $$:

Despite the remaining hurdles, the talks have progressed to the extent that a formal agreement could be reached at a summit between President Trump and Chinese President Xi Jinping, probably around March 27, after Mr. Xi finishes a trip to Italy and France, individuals with knowledge of the plans said.
As part of a deal, China is pledging to help level the playing field, including speeding up the timetable for removing foreign-ownership limitations on car ventures and reducing tariffs on imported vehicles to below the current auto tariff of 15%.
Beijing would also step up purchases of U.S. goods..
Others involved in the talks said the U.S. is pressing Beijing to agree not to retaliate—at least in some cases—if the U.S. levies sanctions. That would be a big concession for Beijing negotiators, who say they want to make sure the deal doesn’t turn out to be an unequal treaty for China of the sort imposed by Western powers in the 19th century.
Even so, China hawks in the U.S. are concerned that enforcement measures may not be strong enough and will tie down the U.S. in endless talks.
“The whole process is a fraud,” said Derek Scissors, a China expert at the American Enterprise Institute

U.S. and China Near a Trade Deal to Drop Tariffs - The New York Times:

The Trump administration is close to a trade deal with China that would roll back tariffs on both sides of the Pacific but may do little to achieve the substantive changes to China’s economy that the United States initially set out to win, people with knowledge of the talks said.

China Says Trade Talks Have Made ‘Important Progress’ - Caixin:

China and the U.S. have made "important progress" in trade talks, a spokesperson said Monday, demonstrating Beijing's optimism toward easing trade tensions among the world's two largest economies.
The remarks came after a CNN reporter asked Zhang Yesui, a spokesperson for the annual session of China’s national legislature and a former Chinese ambassador to Washington, how China will respond to a recent consensus by U.S. politicians labeling China a “strategic threat.”

Trump's 'historic' China deal could be a bit of a horror for us - Sydney Morning Herald:

There is talk about a $US18 billion deal under which China will not only agree to buy LNG from US company Cheniere Energy but help finance the expansion of its export facilities. That gas would displace LNG from other suppliers, including Australia.
Similarly, increased agricultural commodity purchases from the US would impact existing suppliers, including the European Union and Australia.
In a free-trade environment the efficient and competitive prosper. If the US and China strike a bilateral deal which locks in a preference for US products it will damage the exports of existing, more competitive, suppliers.

Trump’s China Deal Could Punish U.S. Allies - WSJ $$:

If the U.S. and China do conclude a deal, U.S. friends in Asia could get hit as well. An extra $1.35 trillion in U.S. exports to China over five years—close to the $1.2 trillion figure cited by Treasury Secretary Steven Mnuchin in December—would cost Japan $28 billion annually (3% of its exports), Barclays estimates. Korea could lose $23 billion (3.1% of total exports); Taiwan, $20 billion (3.2% of exports).
Such a large diversion of trade may be impossible near-term. And some Japanese cars previously headed to China, for instance, would head to the U.S. instead. But the risk is that the U.S.-China pact will severely damage to the economies of the very allies the U.S. is counting on to help balance China’s rise in Asia.
For Beijing, that sounds like a very good deal indeed.

China considers legal changes on technology to placate US - AP:

The technology measure is part of a proposed law on foreign investment that aims to address complaints by Washington, Europe and other trading partners that China’s system is rigged against foreign companies...
It was unclear whether the vaguely worded measure would appease Trump. The American Embassy in Beijing said it had no comment.
Companies have been disappointed in the past after “hearing positive words,” said Stratford, a former deputy U.S. trade representative.
The European Union Chamber of Commerce in China said the law’s “vague language” gives regulators too much discretion. The focus on “administrative methods” would leave officials free to use other pressure tactics, it said.

2. Two Meetings

Commentary: Sprinting toward a moderately prosperous society - Xinhua:

Observers will be watching for the government's policy priorities at the two sessions. Much will be revealed when Premier Li Keqiang delivers the government work report at the annual session of the National People's Congress (NPC) that opens Tuesday. The Chinese People's Political Consultative Conference (CPPCC) National Committee began its annual session Sunday.
A new growth target will be unveiled. Further moves will also come to light such as supply-side reforms, support of private enterprise, rural revitalization, and further opening-up of the economy.

China Is Said to Plan $90 Billion Cut in VAT for Factories - Bloomberg:

China is planning to cut the value-added tax rate that covers the manufacturing sector by 3 percentage points as part of measures to support the slowing economy, a person familiar with the matter said.
The reduction in the highest of the nation’s three VAT brackets could be announced as soon as this week, when political leaders are gathering in Beijing for the annual National People’s Congress, the person said, who declined to be named as the matter isn’t public.

China NPC: economist predicts Beijing will encourage shadow lending - CNBC:

The top agenda of (the) NPC this year is to design policies to prevent further decline (of growth rate)," said Xiang Songzuo, professor at Renmin University in Beijing, referring to the National People's Congress, which kicks off on Tuesday.
"I think this year, regulators will encourage more shadow banking financing, particularly to the private sector," said Xiang, who was previously a deputy director at the People's Bank of China and chief economist at the Agricultural Bank of China...
Shadow banking is "coming back," Xiang said. In addition to spending more on infrastructure, Beijing will also need to stimulate the economy through lending, particularly to the private sector, he added.

Comment: Xiang Songzuo is the economist who claimed in December that 2018 GDP growth was actually 1.67% or lower

China Focus: China's major political season to gather momentum for achieving Xiaokang - Xinhua:

With regard to the CPPCC's major tasks in 2019, Wang said top priority would be given to studying and implementing Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.
The second task is offering high-quality suggestions on the central tasks of the Party and the country, which include completing the building of a moderately prosperous society in all respects and deepening supply-side structural reform.
Making greater efforts for unity and friendly ties is another important task, Wang said.
Other major tasks include contributing wisdom and strength to the major country diplomacy with Chinese characteristics, making solid progress in the self-improvement of the CPPCC, and holding celebrations for the 70th anniversary of the CPPCC's founding.

China to legislate on personal information protection, AI: spokesperson - Xinhua:

China plans to make a personal information protection law, in a bid to fight against improper collection, abuse and leak of citizen's personal information, a spokesperson for the annual session of the country's top legislature said Monday.
Zhang Yesui, spokesperson for the second session of the 13th National People's Congress (NPC), said at a press conference that the NPC Standing Committee will also work on a number of laws relevant to artificial intelligence (AI)

Commentary: Chinese democracy puts Western illusion in dust - Xinhua:

Democracy is not a decoration, but a means of solving problems.
The true meaning of people's democracy is finding the best way to coordinate the aspirations and demands of the whole of society and making decisions that conform to the long-term interest of the people.
It is different from a system where some here-today-gone-tomorrow politicians obtain power in turn, often failing to keep their pre-elections promises.
To govern, in China, also means to serve.
While parties in the West increasingly represent special interest groups, Chinese democracy sees people, not capital, as the most important factor in society.
Chinese leaders are listening attentively to the people and responding to their demands.
The priorities of the Chinese government are how to keep the economy growing, provide better education, housing, environment, employment and healthcare for almost 1.4 billion people and maintaining social cohesion and peace and while achieving greater prosperity for all the people.

3. Xi's first CPPCC panel appearance

Comment: There may not be much new in Xi's message but it is a useful reiteration of his views toward the cultural and social science sectors, and another sign that there is little reason to expect any near-term loosening in information controls, and many reasons to expect them to tighten...

Xi stresses stronger cultural confidence - Xinhua:

Chinese President Xi Jinping on Monday called on writers, artists and theorists to strengthen cultural confidence, serve the people with fine works, and guide the public with high moral standards.
Xi, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, made the remarks when joining a joint panel discussion attended by political advisors from the sectors of culture and art, and social sciences.
They are here for the second session of the 13th National Committee of the Chinese People's Political Consultative Conference.

Top nearly 10 minutes of Monday CCTV Evening News on Xi's comments at the panel - 习近平在看望参加政协会议的文艺界社科界委员时强调坚定文化自信把握时代脉搏聆听时代声音坚持以精品奉献人民用明德引领风尚:

习近平指出，一个国家、一个民族不能没有灵魂。文化文艺工作、哲学社会科学工作就属于培根铸魂的工作，在党和国家全局工作中居于十分重要的地位，在新时代坚持和发展中国特色社会主义中具有十分重要的作用。党中央一直高度重视文化文艺事业、哲学社会科学事业。几年来，文化文艺界、哲学社会科学界紧紧围绕举旗帜、聚民心、育新人、兴文化、展形象的使命任务，明方向、正导向，转作风、树新风，出精品、育人才，在正本清源上展现新担当，在守正创新上实现新作为，马克思主义指导地位更加巩固，为人民创作的导向更加鲜明，文化文艺创作生产质量不断提升，中国特色哲学社会科学建设加快推进，取得了显著成绩。文化艺术界、社会科学界的政协委员做了大量工作。
[Sogou translate] Xi Jinping pointed out that a country and a nation cannot live without souls. Cultural, literary and artistic work and philosophical and social science work are cultivating and soul - casting work, which occupies a very important position in the overall work of the party and the country and plays a very important role in upholding and developing socialism with Chinese characteristics in the new era. The Party Central Committee has always attached great importance to cultural, literary and artistic undertakings and the undertakings of philosophy and social sciences. Over the past few years, the cultural, literary, philosophical and social sciences circles have closely focused on the mission of raising flags, gathering people's hearts and minds, nurturing new people, promoting culture, and displaying images. They have shown clear direction and positive guidance, changed their style of work, set up new styles, produced excellent products, and nurtured talents. They have shown their new responsibilities in radical reform, realized new achievements in upholding integrity and innovation, strengthened the guiding position of Marxism, and provided a clearer direction for people's creation. The quality of cultural, literary and artistic creation has been continuously improved. The construction of philosophy and social sciences with Chinese characteristics has been accelerated and achieved remarkable results. CPPCC members in the cultural, artistic and social sciences circles have done a lot of work.

4. More details on the investigations of Kovrig and Spavor

Comment: Obviously no coincidence with the timing of this official report, just days after Canada rules the Meng Wanzhou extradition process will proceed. I know Xi is comfortable with contradictions but the circumstances around detention of these two makes it hard to trust the promises of better treatment for foreign investors and foreigners...

Former Canadian diplomat stole sensitive intelligence from China: authorities - Global Times:

Chinese authorities alleged on Monday that former Canadian diplomat Michael John Kovrig had stolen sensitive intelligence from China, and another detained Canadian national, Michael Peter Todd Spavor, was Kovrig's intelligence contact.
Chinese authorities said Monday that Kovrig has been frequently traveling to China since 2017 with a regular passport and a business visa. They confirmed that Kovrig had spied on and stolen sensitive information and intelligence through contacts in China...
Authorities also said Spavor, who has been under investigation by the Dandong State Security Bureau in Northeast China's Liaoning Province on suspicion of jeopardizing China's state security, had provided intelligence to Kovrig and was an important intelligence contact of Kovrig.
Kovrig is suspected of spying and stealing national secrets for foreign agents and his behavior has severely violated Chinese law, authorities said.

Central Politics and Law Commission post on the case - 加拿大籍人员康明凯涉嫌犯罪案取得重要进展:

记者今天从有关部门获悉，加拿大籍人员康明凯（Michael John Kovrig）窃取、刺探国家秘密和情报案侦办工作已取得重要进展。
有关部门介绍，康明凯自2017年以来，经常持普通护照和商务签证入境，通过中国境内的关系人，窃取、刺探中国敏感信息和情报。迈克尔（Spavor Michael Peter Todd)是康明凯的重要情报关系人，向康明凯提供情报。康的行为涉嫌为境外窃取、刺探国家秘密和情报，已严重触犯了中国法律。

5. Huawei

Huawei CFO Meng Wanzhou suing Canada, its border agency and the RCMP | Vancouver Sun:

The claim notes that an arrest warrant for Meng was issued the night before her scheduled Dec. 1 stopover at YVR but alleges Yep “intentionally delayed the immediate execution of the warrant, contrary to the order of the court” until after she had been detained, searched and interrogated by CBSA officers.
Meng alleges she was ordered by CBSA to surrender two personal cellphones, an iPad and a personal computer. An unnamed CBSA officer then requested Meng’s passwords and, according to the claim, searched the devices. The claim notes that Meng believed she had no choice but to hand over the devices and passwords.

Beijing slams Ottawa move in Meng case - China Daily:

The Chinese embassy in Canada issued a statement on the issue on Saturday, opposing Ottawa's move to allow Meng's extradition case to move forward. The statement said Meng's case"is not merely a judicial case, but a political persecution against a hightech Chinese enterprise."
"The subsequent developments have proved this. The so-called 'rule of law' and 'judicial independence' asserted by Canada cannot cover up the mistakes made by the Canadian side in the case of Meng Wanzhou," the embassy statement said.

Huawei exec’s lawsuit likely aims to affect extradition proceedings, legal experts say | The Star:

While the lawsuit itself is on solid footing and refers to established Supreme Court precedent, awards in civil claims like the one brought by Meng are generally only in the thousands of dollars, said Kyla Lee, a Vancouver-based criminal lawyer with Acumen Law Corporation.
Meng’s extraordinary wealth suggests the likely motivation for the lawsuit is its use as a tool in her longer-term bid to avoid extradition to the United States to face criminal charges, she said.

Huawei Said to Be Preparing to Sue the U.S. Government - The New York Times:

The lawsuit that Huawei is preparing to file in the United States is expected to challenge a section of a defense spending authorization law that was approved last year. The provision blocks executive agencies from using telecom equipment made by Huawei and another Chinese company, ZTE.
According to one of the people familiar with the matter, Huawei’s lawsuit is likely to argue that the provision is a “bill of attainder,” or a legislative act that singles out a person or group for punishment without trial. The Constitution forbids Congress from passing such bills.

As patriotic propaganda video praising Huawei goes viral, netizens mock the company's political connections | Hong Kong Free Press HKFP:

Indeed, every detail of the video suggests that it’s a sophisticated piece of political propaganda. The lyrics were written by Li Yourong (李幼容), a prominent lyric writer of the CPC Central Military Commission Political Department Song and Dance Troupe, and Zang Sijia (臧思佳), a hired lyric writer of Police Literature And Arts Association of China...
The composer, Cheng Lengheng (郑冷横), has won many national awards for contributing to the country’s “spiritual civilization”, and he has been endorsed by the State Council for his outstanding performances.

Cisco CEO Suggests Fear of Huawei 5G Dominance Is Overblown - Bloomberg:

“The current infrastructure around the world is built on a combination of communication suppliers from Europe, from China, from the U.S., everywhere,” Robbins said in a CNN interview on Sunday. “And I think that despite everything that we hear, I think that’s going to be the case in the future as well.”

6. World Bank report too sensitive

China is blocking World Bank report calling for changes in economy - The Washington Post:

The report, titled “New Drivers of Growth in China,” has been ready for a year, according to four people involved in drafting it, but Chinese authorities have not allowed it to be published.
The delays underscore the Chinese Communist Party’s extreme sensitivity about its economy as growth rapidly slows, particularly amid a protracted trade war with the United States...
“We were trying to put out a road map that would provide China with a sustainable growth path,” said one academic involved in the drafting of the report who, like others, spoke on the condition of anonymity to protect his ongoing work in China.
The report was jointly written by the World Bank and the Development Research Center, an influential think tank under China’s State Council, or cabinet. It was designed to be a follow-up to “China 2030: Building a Modern, Harmonious, and Creative Society,” a 2012 report published before President Xi Jinping took power.

From the "acknowledgements" section of the 2012 report:

President Robert B. Zoellick of the World Bank, Minister Xuren Xie of MOF, and Minsters Wei Li and He Liu [Liu He] of DRC provided valuable guidance and strong support throughout.

About those structural reforms the US is trying to get from China...

7. Xinjiang

He Needed a Job. China Gave Him One: Locking Up His Fellow Muslims. - The New York Times:

For months, he stood at roadside checkpoints, looking for people on the government’s blacklist, usually from Muslim ethnic minorities. As a Kazakh Muslim himself, he sometimes felt uncomfortable about his work, but he needed the money.
Then he was asked to help bring 600 handcuffed people to a new facility — and was stunned by what he saw. Officials called it a job training center, but it was basically a prison, with toilets and beds behind bars. One detainee was an acquaintance he barely recognized because he had lost so much weight.

James Leibold | China Leadership Monitor - The Spectre of Insecurity: The CCP’s Mass Internment Strategy in Xinjiang:

In this article, I seek to tackle the question of how China arrived at the current situation—with upwards of one million Uyghurs, Kazakhs, and other Muslim minorities held in extrajudicial detention and subject to forced re-education—and where China might go from here. I explore the key policy-drivers, institutions, and actors involved in this radical turn in Xinjiang policy. Political decision-making in the PRC is often a black box; yet we can uncover threads of authoritative information through a close reading of official sources, and then construct a reasonably coherent and plausible narrative of how and why a given policy unfolds and its implications for Chinese society...
Even noted dissident voices within China, such as Ai Weiwei, Xu Zhiyong, Woeser, and others, have remained circumspect regarding the party’s new radical strategy in Xinjiang, rightfully afraid to speak out because of fears of reprisals. Stoked by racial chauvinism and virulent Islamophobia, the Chinese public is widely supportive of the crackdown in Xinjiang, and even if some liberal elite view the policy as counterproductive or foolhardy, none are willing to publicly voice their opposition to a policy that has the direct imprimatur of Xi Jinping. Beijing-based dissident Hu Jia was one of the few PRC-based critics to openly condemn party policies in Xinjiang when he spoke in defense of his friend Ilham Tohti during a recent VOA interview

China’s expanding war on Islam: Now they’re coming for the Kazakhs. - The Washington Post:

Sometimes Zharqynbek Otan can be found in the middle of the night, standing stiffly at attention beside the bed he shares with his wife, Shynar Kylysheva. She says his memory fails him, and he periodically wanders off into the streets of Almaty, Kazakhstan’s largest city. When his family manages to find him, he has difficulty recognizing them and resists returning home. Otan, a 31-year-old cook, spent nearly two years in various forms of detention in neighboring China, including in one of the notorious “reeducation” camps in Xinjiang, the massive western region that shares a 1,100-mile border with Kazakhstan. His wife petitioned tirelessly for his release from a camp in Zhaosu County, but when he came home in late 2018, he brought the trauma of his ordeal back across the border with him: Otan is not the man he was.

Translation: a Han Tourist in Xinjiang – China Digital Times (CDT):

Amid an ongoing security crackdown in Xinjiang that has included the controversial use of a network of “reeducation” camps holding over a million ethnic Uyghurs and other Turkic Muslims, an anonymous Han student posted her account of the intense “atmosphere of control” she witnessed while touring the region over the recent National Day holiday. The account, shared on Douban, has since been made private, but is archived in full at CDT Chinese. CDT has translated excerpts from the full post focusing on the tourist’s overall impressions of Kashgar, interactions with a Han police officer, and her experience talking with two young Uyghur civil servants tasked with “maintaining stability” in their home region

8. China stock markets

China stocks: Impact of US-China trade talks, MSCI A-share inclusion - CNBC:

The Shanghai composite ended the day above the 3,000 level for the first time since June 2018 on Monday, while shares in Shenzhen skyrocketed more than 2 percent. Reuters reported that in February, the benchmark index in Shanghai saw its biggest monthly gain since April 2015.
"I think momentum is ... very, very strong. It's very difficult to stop a runaway train," Hao Hong, head of research and chief strategist at Bank of Communications International, told CNBC's "Street Signs" on Monday. "Most people are piling money into the stock market, especially the retail investors."

China Speeds Final Rules For Start Of New High-Tech Board - Caixin:

The final rules clarify the listing criteria for non-listed companies that have structures similar to variable-interest entity (VIE) arrangements. VIE structures are designed to get around Chinese rules banning foreign investment and ownership in certain sectors, including internet businesses and value-added telecommunications services....
In an effort to kick off trading on the new board as soon as possible, other preparations are underway. Caixin earlier reported that the SSE, which will host the new high-tech board, has completed the recruitment of staff, with the new employees expected to start work in mid-March.

Legal Deadline Threatens Passage of Securities Law - Caixin:

Under legislation that governs how laws are made, proposed bills and amendments have to undergo a reading by the Standing Committee of the National People’s Congress (NPC), the country’s legislative body, every two years. If they don’t the whole process has to be abandoned and started again from scratch. That fate may now be awaiting the Securities Law, which has yet to have its third reading with less than two months to go before the deadline. The Standing Committee was scheduled to debate the new law in February but did not do so.

China sets threshold for individual investor's participation in sci-tech board - Xinhua:

Individual investors who want to participate in the much-anticipated science and technology innovation board have to have an asset of 500,000 yuan (US$74,627) and at least two years of experience in securities trading, according to the latest regulations released by China's top securities regulator.

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Business, Economy, Finance And Trade

China’s bureaucrats tighten belts ahead of annual Congress | Financial Times $$ A Financial Times review of this year’s work reports — the annual plans drawn up by provincial or regional governments — shows that most of them expect to cut their spending by 5 per cent or more. Nearly all have reduced projections for revenue growth.

New Economy Index Dips to Lowest Level in 21 Months - Caixin The contribution of high value-added industries to China’s overall economic inputs dropped in February for the third month in a row to its lowest in 21 months, due to a decrease in capital inputs in country’s new economy industries, according to a private index released on Saturday. The Mastercard Caixin BBD New Economy Index (NEI) dropped to a reading of 27.4, indicating that new economy accounted for 27.4% of overall economic input activity. The monthly reading is the lowest since the index was first released on March 2, 2016. The index measures labor, capital and technology inputs in 10 emerging industries relative to those used in all industries.

KFC names restaurant after China's altruism paragon Lei Feng - Xinhua International fast food chain KFC on Sunday launched its first "Lei Feng spirit" themed restaurant in China to pay tribute to the soldier, lauded by the late Chairman Mao Zedong for his altruism. Lei's cartoon figures and wallpaper printed with his diary excerpts adorned the outlet in the Wangcheng district of Changsha, capital city of central China's Hunan Province, known as Lei's hometown.

Chinese legislator urges removal of family planning policies from Constitution - Global Times China's aging population has turned into such a big concern that at least one legislator feels it is imperative to remove the family planning policy from China's Constitution as soon as possible. Huang Xihua, a National People's Congress (NPC) deputy, made such a proposal after the National Health Commission (NHC) rejected her suggestion in 2018 that government should delete family planning policies in all laws. NHC cited the family planning clause in the Constitution as a legal obstacle to revise laws on population and family planning.

‘The risk paid off’: How Apple prevailed in the U.S.-China trade war - POLITICO The Apple CEO's willingness to meet personally with Trump and his aides, rather than send other executives to deal with the White House, has benefited the company, according to an administration official familiar with the CEO's tactics.

Kuwait Is Said to Plan $10 Billion Investment Fund With China - Bloomberg The Gulf state is discussing the creation of a Kuwait-China Silk Road Fund that would invest in Kuwaiti projects related to the Silk City and islands development, according to the people. It could also be used for strategic investments in China and other areas under the Asian country’s “One Belt, One Road” initiative, the people said, asking not to be identified because the information is private.

Tesla’s price cut ignites anger among Chinese buyers - Global Times Tesla's recent move to cut the selling prices of eight models has drawn strong criticism from Chinese buyers. While some users said on social networking platforms that "buying an electric car is even more thrilling than purchasing stocks," a few buyers also reportedly put up banners at the electric carmaker's stores to protest the price cuts, which they claimed had "infringed consumers' legal interests."

Returns on Structured Deposits Drop to 4.21% as China's Banking Regulator Targets Bills Arbitrage - China Banking News Data from Rong360 indicates that 135 structured deposit products were issued during the final week of February (22 to 28 February), for an increase of 20 compared to the preceding week. The average expected return for structured deposits was 4.21%, for a decline of 11 basis points compared to the preceding week, with analysts pointing to concerns over heightened regulatory scrutiny as a key reason for the decline.

China Car Slump Has Dealers Slashing Prices, Giving Cheap Loans - Bloomberg

Yicai Global - FAW to Sell 100,000 Revamped Hongqi Cars This Year, GM Says

Office Depot and Alibaba.com Form Strategic Collaboration to Serve U.S. Businesses | Office Depot

Politics, Law And Ideology

Chinese prosecutors forced by public opinion to accept self-defence plea from couple who killed stalker | South China Morning Post Public pressure has forced prosecutors in northern China to drop charges against a couple arrested for killing a man who stalked their daughter and broke into their home. The decision by the procuratorate of Baoding, Hebei province, on Sunday followed hundreds of thousands of appeals for leniency from the public over the past two months.

Foreign and Military Affairs

Spending splurge masks questions over China’s military capability | Financial Times $$ The PLA Daily, the force’s main newspaper, ran a report (当“合成营”遇见“数字化”，将迸发多大能量?) last week scrutinising the military’s weaknesses, noting how in a recent ground forces exercise, the reconnaissance network link within the attacking unit failed to function properly, which would have left advance attack troops exposed to enemy fire. The article criticised the “chaos in command” at one battalion and revealed how another unit had mishandled technology, which prevented the battlefield situation map being updated. The picture of a force struggling to master basic command and control tasks contrasts sharply with a developing western narrative about an increasingly dangerous PLA itching to fight.

Tough words from the secretary of State about China - Navy Times Pompeo assured the Philippines during a visit to Manila that America will come to its defense if its forces, aircraft or ships come under armed attack in the South China Sea, in the first such public U.S. assurance in recent memory. His comments were an attempt to address Philippine concerns over the vagueness of the allies’ 1951 Mutual Defense Treaty, which Manila wants re-examined. "I think the whole world understands that the Trump administration has made a true commitment to making sure that these seas remain open for the security of the countries in the region and the world, open to commercial transit," Pompeo said at a news conference in Manila.

NZ publishers feel long arm of Chinese censorship - Newsroom New Zealand publishers are feeling the long arm of Chinese censorship, with many being told by their China-based printers to look elsewhere if their books contain material that may offend China. The "offensive" material includes information relating to historical events like the the Tiananmen Square protests in 1989, or disputed territories like Taiwan and Tibet.

N. Korean leader's train heads north without stopping in Beijing - Yonhap

China keeps mum on Qureshi's claim on Beijing's plan for special envoy to India, Pak - The Economic Times

Argentina fires on Chinese fishing vessel again - Global Times

Hong Kong, Macao

Chief of China’s top political advisory body highlights opposition to Hong Kong independence at the start of nation’s three-week annual parliamentary sessions | South China Morning Post The head of China’s top political advisory body has listed its job of “unequivocally opposing Hong Kong independence” in its annual work report and pledged to fully implement the “one country, two systems” principle under which Beijing governs the city. Reiterating Beijing’s opposition to Hong Kong independence, the comment by Wang Yang, chairman of the Chinese People’s Political Consultative Conference, came on Sunday as he delivered his first work report at the start of the nation’s three-week annual parliamentary sessions.

Powerful Investment Guru Advocates for Freer Data Flow in Greater Bay Area, Proposes Fintech Solutions - Caixin Neil Shen, Managing Partner of Sequoia Capital, said that the smooth flow of data is currently challenging under the principle of “One Country, Two Systems” – the fundamental political framework allowing for different forms of governance in the Chinese mainland and Hong Kong – particularly when it comes to cross-border data safety.

Hong Kong Student Is Expelled Over ‘Democracy Wall’ Protest - Bloomberg Hong Kong Polytechnic University expelled Gerald Ho and suspended former student-union president Lam Wing-hang for one year after they confronted the school management about interfering with the content on the school’s “democracy wall” bulletin board, the union said on its Facebook page.

US Consul Kurt Tong defends speech questioning Hong Kong’s autonomy from Beijing, saying ‘open conversation is good for everybody’ | South China Morning Post The United States’ top diplomat in Hong Kong has refused to apologise for a speech warning against Beijing’s involvement in the city’s affairs, insisting it was his job to help “stimulate transparent conversation”.
“I think people need to step back, take a deep breath, put things into context and realise that open conversation is good for everybody,” Consul General Kurt Tong said on Monday.

Murder Case Poses Dilemma for Hong Kong on Sending Suspects to China - The New York Times “I think the whole thing is a political maneuver more than anything else,” said Claudia Mo, a lawmaker who leads the pro-democracy camp in Hong Kong’s legislature. “Ever since the handover, it’s been stipulated in the law that we do not hand over fugitives to mainland China. Now they are taking advantage of this particular Taiwan case and pretend it is for compassion and humanity.”...

Taiwan

Researchers say WeChat pages share false news - Taipei Times Public accounts on Chinese social networking app WeChat disseminate false news about Taiwan, especially through articles aimed at creating a false image of public frustration with the Democratic Progressive Party (DPP) administration, a National Sun Yat-sen University research team said.

Taiwan protests exclusion from WHO flu vaccine meeting in Beijing | CNA NEWS Taiwan was unable to attend a recent World Health Organization (WHO) meeting on flu vaccines because of political interference from China, the Ministry of Foreign Affairs (MOFA) said Sunday, expressing dissatisfaction with the invitation process.

Taiwan ready to share experience as victim of China's hostility: CNA NEWS In the report that was submitted to the Legislature Saturday, MOFA said China is now turning its aggression on other countries besides Taiwan, trying to buy off their politicians, spreading fake news, and attempting to hack into their computer systems to steal classified information. Some of those countries are aware of the "attacks" from China and are seeking ways to protect themselves, the report stated, adding that Taiwan would be willing to share its experience and the strategies it has employed in response to China's aggression.

Defense bureau to tackle propaganda from China - Taipei Times In the past, videos published by the military were handled by the Military News Agency and the Youth Daily News, which also handled interviews and provided source material to the Presidential Office and the National Security Council, the bureau said. However, with the establishment of the new team, those responsibilities will all be amalgamated under one group, which would fall under the administration of the bureau’s psychological warfare division, it said.

Tech And Media

China Aims to Become ‘Strong Film Power’ Like the U.S. by 2035 – Variety The Chinese government has exhorted filmmakers to turn the country into a “strong film power” like the U.S. by 2035 and called for the production of 100 movies a year that each earn more than RMB100 million ($15 million) as part of a push to increase China’s soft power. The targets were set by Wang Xiaohui, executive deputy director of the Central Propaganda Department and director of the National Film Bureau, at the first nationwide industry symposium since the former agency took jurisdiction over the latter.

Cracking Down on the Sale of Fake Accounts, Likes and Followers | Facebook Newsroom Today, Facebook and Instagram filed a lawsuit in US federal court against four companies and three people based in the People’s Republic of China for promoting the sale of fake accounts, likes and followers. They did this on both Facebook and Instagram as well as other online service providers including Amazon, Apple, Google, LinkedIn and Twitter. We’re also enforcing our rights under US intellectual property law for their illegal use of our trademarks and brand.

Central Beijing to get 5G in 2019 as network construction will cover strategic areas - Global Times

China Internet “Clean-up Campaign” Shuts Down 490,000 Accounts in Two Months – Chinascope

Yicai Global - Alibaba Pledges to Compensate Victims of Its Mass Cloud Outage

Society, Art, Sports, Culture And History

Chinese painter Ye Yongqing ‘deeply influenced’ by Belgian artist who accuses him of copying | South China Morning Post Respected Chinese painter Ye Yongqing says he is trying to get in touch with a Belgian artist who has accused him of copying works he did three decades ago. Christian Silvain, a 69-year-old painter and sculptor based in Kluisbergen, has claimed Ye copied several of his paintings – and that one of the alleged copies sold for 100 times more than the original. So far, 61-year-old Ye – an oil painter whose buyers are said to include Bill Gates and Rupert Murdoch – has not denied the accusation made by Silvain in recent weeks. // Blatant

Energy, Environment, Science And Health

Help, We’re Drowning in Recycling! Cue the ‘Internet of Trash’ - WSJ $$ The reason this problem is coming to a head now is China. Its “National Sword” policy, designed to help it deal with its own towering mountains of waste, last year declared an end to the country accepting “loathsome foreign garbage.” Before the policy came into effect, China imported about 40% of America’s recyclables, and an even greater proportion from other countries, to feed its insatiable need for raw materials.

In-Depth: SOE Hospitals on Life Support - Caixin There are more than 2,000 SOE-backed hospitals out of China’s total of 31,000 hospitals. Many of them may be unable to survive after 2021 unless they find new investors or funding sources. The central government is pressuring almost all SOE-affiliated hospitals to spin off from their parents as part of reforms to slim down the state sector and improve the efficiency of medical resources. Under rules issued by the top state-owned assets regulator and the Ministry of Finance, SOEs are no longer allowed to provide any form of financial support to affiliated hospitals as of Jan. 1. And by 2021, all such hospitals must cut all ties with their parent companies

Agriculture And Rural Issues

China urges crack down on concealing African swine fever: agriculture ministry | Reuters Authorities should combat illegal activities such as concealing outbreaks, selling and arbitrarily disposing of sick and dead pigs, and feeding kitchen waste to pigs, said the ministry following a meeting with 18 other ministries.

Food And Travel

Carlsberg buys stake in Chinese micro brewery | Reuters Carlsberg will distribute beer produced by Beijing-based Jing-A while the Chinese brewer will remain in control of producing its craft and specialty beers and developing its brand, a Carlsberg spokesman said, noting that this was a “small investment.”

China’s traditional White Rabbit sweets star in Los Angeles ice cream | South China Morning Post Shanghai manufacturer Guan Sheng Yuan – which has been making White Rabbit sweets since 1959 – asked its agent to investigate reports that an ice cream was being sold in the US west coast city using packaging similar to its famous White Rabbit brand sweets. In fact the ice cream maker Wanderlust Creamery, together with the food website Foodbeast, had launched a White Rabbit ice cream – using dissolved pieces of the sweets, including their edible rice paper wraps – as a special Lunar New Year treat for its customers.

Two meetings; Huawei's legal offensive; US-C…

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