Two years for the two Michaels; Sanctioned official speaks at AmCham China dinner; Debt
|Bill Bishop||Dec 10, 2020|| 9||1|
PRC officials also know how to troll.
The official VIP offered to AmCham China in Beijing for its annual appreciation dinner was not one who has an economics or trade portfolio, like Liu He or Hu Chunhua, the official VIP at last year’s dinner. This year the government sent Politburo member Wang Chen, one of the NPC vice chairmen sanctioned earlier this week by the US. Wang is supposedly close with Xi and has a background in the propaganda system.
This political “cramdown” put AmCham China, one of the key bridges of US-China business and engagement, in a very tough spot. They could not say no without risking all sorts of repercussions in China, but saying yes to and then toasting with a newly sanctioned official will likely cause them significant headaches here in Washington DC. One subscriber told me that the US Embassy, which normally would have a presence at this event, sent no one after learning Wang would attend.
I understand why the PRC government is very angry about the sanctions, but do they not understand how unconstructive it is to take out that anger on one of the handful of organizations left in China that is trying to help US-China relations? Or they just do not care if they hurt “friends” while sending a message? And what message do they think this sends to other countries and business organizations?
Today is the second anniversary of the detention of Canadians Michael Kovrig and Michael Spavor, who were both grabbed just days after Huawei CFO Meng Wanzhou was arrested in Canada. Meng is out on bail and enjoying the rights to a transparent legal process. The two Michaels remain locked up with minimal contact with the outside world and little prospect of release until there is a resolution in the Meng case.
Charles Parton has started a campaign to send them holiday postcards:
Before Christmas, post a letter addressed to the Chinese ambassador in your country and inside include an enveloped Christmas or New Year card addressed to Michael Kovrig or Michael Spavor. Request that it be forwarded to their prison.
Inside the card write a message of encouragement to one of the two Michaels and condemnation of their suffering. Please photograph this and post it on social media under the hashtag #freechinahostages.
Michael Kovrig was a Sinocism subscriber at the time of his detention. I am sure he would appreciate hearing from as many of you as possible.
Today’s Essential Eight items:
Two years for the two Michaels
Marxist theoretical research and construction projects
Community group buying
Interview with film director Pema Tseden
I hope to see many of you in tomorrow’s discussion.
Thanks for reading.
The holiday season is upon us, and for the person in your life interested in China there is no better gift than a subscription to Sinocism!
The Essential Eight
1. Two years for the two Michaels
Canada said Thursday that it has confirmed with China that two Canadians held for two years in China in a case linked to a Huawei executive have not been put on trial, contrary to remarks by a Foreign Ministry spokesperson...
Chinese officials “confirmed that the confusion was caused by an inaccurate characterization of the process made by the Chinese MFA spokesperson,” the statement said.
Chinese prosecutors announced earlier this year that Kovrig had been charged on suspicion of spying for state secrets and intelligence, and Spavor on suspicion of spying for a foreign entity and illegally providing state secrets.
David Mulroney, a former Canadian ambassador to China, said Beijing was not acting in good faith.
“Every step in the legal process against Ms. Meng is mirrored by a fake Chinese process during which China is retaliating,” Mr. Mulroney said. “Meng is a princess in their system — and they are saying: ‘How dare Canada hold her? And we will take a few pawns as ransom for her.’”
This week’s episode of Hold Your Fire! is dedicated to our colleague Michael Kovrig, who has been unjustly detained in China for two years. Rob Malley and guest host Brittany Brown talk with Michael’s wife, Vina Nadjibulla, about his life in prison, the toll his detention has taken on his family and her relentless advocacy to secure his release.
Meng continues to live in her $15m Vancouver mansion, tagged electronically, but free to move around town. The two Michaels have been tortured, interrogated and isolated for nearly two years. Face-to-face short consular meetings have been suspended since January.
There is no ending in sight to this shameful behaviour. Michael Kovrig has never seen the daughter born to him since the start of this illegal incarceration.
Meng's lawyers have argued that US and Canadian authorities coordinated ahead of her arrest, using the extended investigative powers of the CBSA to interrogate her without a lawyer present before her arrest and passing the details of her electronic devices to US officials in violation of her civil rights.
They want Meng's extradition case to be dismissed based on abuses of process.
Now, a new campaign is underway to highlight the situation of "the two Michaels" based on a similar case involving a British journalist 50 years ago.
The campaign is led by a former British diplomat, Charles Parton, who is a friend of Kovrig's from when they were both diplomats in Beijing close to a decade ago - Kovrig for Canada, Parton at that time for the European Union.
"He gave extremely good parties," recalls Parton. "He knows China very well and he loves the country and is fascinated by it."...
Parton says he came up with the idea based on the case of Anthony Grey.
Grey had only been in Beijing as a journalist with Reuters for a few months when, in August 1967, members of the Red Guards arrived at his house, not far from the Forbidden City.
Robert Malley, president and CEO of the International Crisis Group, said: “Today is a milestone all of us fervently hoped would never be reached. As has been evident from day one, this is not a legal case but a political one. Michael is being used as a pawn in a high-stakes geopolitical dispute with which he has nothing to do”. He added: “Detained over the past two years, Michael has done more to promote the value of liberty than most of us who roam free. Denied the right to see others, he has touched more people around the world than most of us who enjoy it”.
Frank Giustra, co-chairman of Crisis Group’s board, said: “China has every right to aspire to a stronger role in world affairs. It has no right to unjustly detain people. Its legitimate aspirations inevitably will be undermined by its arbitrary practice, sending a chilling effect to all those – members of the business community, diplomats, journalists, academics and researchers – who wish to travel to China”.
Admiral Lee, the retired Taiwanese military chief, believes the only thing holding back the PLA from a full assault is that it hasn’t yet achieved the overwhelming firepower needed to overrun the island. Even so, China’s military build-up over the past 20 years means it is now “far ahead” of Taiwan, he said. “Time is definitely not on Taiwan’s side,” he said. “It’s only a matter of time for them to gather enough strength.”...
Interviews with current and former Taiwan government officials, serving and former military officers, conscripts, reservists and U.S. and other foreign military experts point to dire weaknesses. With the exception of some elements of Taiwan’s military, including the air force, special forces and parts of the navy, decades of isolation and underfunding by successive governments have left the military hollowed out. In any Chinese invasion, much of the island’s expensive hardware would be unlikely to survive a barrage of PLA precision missiles and air strikes, current and retired Taiwanese officers say. Crack, resilient ground forces would be crucial to repel beach landings by Chinese troops and counter airborne assaults, they say.
In addition, Taiwanese service members and Western observers say, Taiwan is suffering a serious and worsening decay in the readiness and training of its troops, particularly its army units.
President Tsai gave virtual remarks at three separate events in two days, a flurry of engagement designed to highlight her agenda for U.S.-Taiwan cooperation...
A large part of Tsai’s remarks took aim squarely at China. “It is becoming increasingly clear that today, the world is once again being faced with fundamental questions of freedom or authoritarianism,” Tsai said, citing crackdowns in Hong Kong and Xinjiang as well as militarization in the South China Sea. She added Taiwan’s own predicament to the list, pointing to “the increasing provocation from across the Taiwan Strait.”
3. Marxist theoretical research and construction projects
Thursday CCTV Evening News - "Wang Huning attended the conference on Marxist theoretical research and construction projects work" - 王沪宁出席马克思主义理论研究和建设工程工作会议_CCTV
Wang Huning said that studying and propagating Xi Jinping's socialism with Chinese characteristics in the new era should be regarded as the fundamental task, and efforts should be made to deepen theoretical arming, strengthen research and interpretation, carry out publicity and popularization, and do a good job of publicizing and introducing to the outside world. It is necessary to focus on major issues and strengthen the research on major theoretical and practical issues facing China's development and the Party's governance. It is necessary to speed up the construction of philosophy and social sciences with Chinese characteristics and promote the construction of discipline system, teaching material system, discourse system and evaluation system. It is necessary to build a strong contingent of Marxist theoretical talents and attach importance to the training of young theoretical talents.
Page 1 People's Daily Thursday - Bathing the light of truth, gathering and reviving the great power-on-the-spot record of promoting Marxist theoretical research and construction projects since the 19th national congress of the CPC
Comment: I know lots of people believe China is Marxist in name only...I think Xi is a believer, and whether or not the rest are the Party clearly views the world and history through Marxist lenses, and increasingly see their analysis of events as correct.
"The latest achievements of Marxism in China (in-depth study and implementation of Xi Jinping's socialism with Chinese characteristics in the new era)—— In-depth study of the third volume of Xi Jinping's Talks on Governing the Country" by Qu Qingshan 曲青山, head of the Institute of Party History and Literature of the CPC Central Committee
After the 19th CPC National Congress, General Secretary Xi Jinping put forward a request for measures to "enhance the awareness of worries and prevent risks and challenges". This is an important manifestation of Xi Jinping's emphasis on bottom-line thinking in his Thought on Socialism with Chinese Characteristics for a New Era. With China's rapid economic development and expanding economic output, our country's status and influence in the international community is rising, and we are getting closer to the center of the world stage. However, the great rejuvenation of the Chinese nation can never be achieved with ease or by beating gongs and drums. As the saying goes, "the going is toughest towards the end of the journey". In the face of the rising local conflicts and hotspot issues in the world, in the face of the increasing trend of anti-globalization and unilateralism and protectionism, and in the face of the bullying and extreme pressure from some American politicians, it is important to adopt the correct attitude and effective response.
Executives from several local government finance vehicles (LGFVs) have told the Financial Times that they have abandoned bond sales or loan applications after debt-saddled state-owned enterprises, led by Yongcheng Coal & Electricity Holding Group, defaulted in November. Other LGFVs are paying much higher rates of interest to borrow.
The credit crunch facing LGFVs, which are responsible for funnelling cash to China’s local governments, has raised concerns that defaults at state-owned enterprises are spilling over into other parts of an economy whose recovery from coronavirus has been supported by infrastructure spending.
“LGFVs are one of the most important tools Chinese local governments can employ to achieve their policy goals such as boosting investment and creating jobs,” said Dan Wang, chief economist at Hang Seng Bank China. “Numerous projects could be stalled if LGFVs lose access to credit.”
Comment: It is all connected, and a political and financial nightmare to untangle, which is why it just keeps growing, with occasional tweaks and attempts to change behavior, but then reversion as soon it becomes clear that fundamentally changing things means growth will have to slow. Or at least that is how is gone several times over the last few years. Will it be different this time? If so, why, and how?
Moody’s Investors Service, which tracks local government debt in China, said in a report released this week it maintained a “negative outlook” for local and regional government debt for 2021, as China’s economic recovery was uneven across the country.
Tax cuts in response to the coronavirus have further strained fiscal conditions for local governments, which have been forced to increase contingency debt through local state-owned enterprises and LGFVs, said Yubin Fu, an analyst at Moody’s.
Former vice-finance minister Zhang Hongli said on Tuesday that local authorities relied on “new borrowing to repay old debts” in about 60 per cent of cases in the first 10 months of 2020, a sign that most local governments cannot generate enough cash flow to cover debts.
Tsinghua Unigroup Co., a key player in China’s push for self-reliance in semiconductors, is in default on nearly $2.5 billion of international bonds, in the latest instance of financial stress in China spilling over into global markets.
Late Wednesday, a unit of the company said it expected not to repay principal or the last chunk of interest on $450 million of bonds due Thursday. A separate filing said that would trigger cross-defaults on a further $2 billion in dollar bonds—three issues, coming due between 2021 and 2028.
Unigroup’s potential $2.5 billion dollar-bond defaults is shocking for its scale given the relative scarcity of payment failures outside the domestic market. That’s more than 60% of the total defaulted debt seen in China’s offshore bond market all of last year.
China decided to impose reciprocal sanctions on some U.S. administration officials and congressional and NGO staff who have behaved badly and borne major responsibilities over Hong Kong-related issues, and on their immediate family members as well...
Imposing illegal and extreme sanctions on China's deputy state-level leaders is severe provocations against China's dignity, sovereignty and internal affairs. This is also "the garbage diplomacy" during the garbage period of the Trump administration, severely damaging the fundamental interests of China-US relations and the interests of Biden's foreign policy, Tian Feilong, an associate professor at Beihang University in Beijing and a member of the Beijing-based Chinese Association of Hong Kong and Macao Studies, told the Global Times on Thursday.
"In line with our legitimate rights, we have to make sure those anti-China forces continue to pay the price for encroaching on China's national interests… namely Pompeo, who has been one of the principal American officials in pushing Hong Kong-related bills," Tian said, adding that the targeted punishment should also be permanent...
"The question is how to make them feel the pain," Lawrence Tang Fei, a member of the Chinese Association of Hong Kong and Macao Studies, told the Global Times on Thursday..
Tian also said that the current size of the US consulate in Hong Kong is not compatible with its functions, which has been engaging in affairs other than diplomatic ones. "Beijing's gradual restrictions on an individual's entry would ultimately lead to the consulate's scaled down presence in Hong Kong," he added.
And more sanctions today - Public Designations of Current and Former Government Officials Under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act Due to Involvement in Gross Violations of Human Rights - United States Department
Finally, the State Department is designating Chief Huang Yuanxiong of the Xiamen Public Security Bureau Wucun Police Station for his involvement in gross violations of human rights in Xiamen, China. Huang is associated with particularly severe violations of religious freedom of Falun Gong practitioners, namely his involvement in the detention and interrogation of Falun Gong practitioners for practicing their beliefs. Today’s action also applies to Mr. Huang’s spouse. The world cannot stand idly by as the PRC government perpetrates horrific and systematic abuses against people in China, including violating the internationally recognized right to freedom of thought, conscience, and religion or belief.
"Blatant Political Bullying and Bandit Logic" - Xinhua on the US sanctions
Xinhua report on Wang Chen’s speech to AmCham - 王晨出席中国美国商会答谢晚宴并发表主旨演讲 中国将坚定不移推进改革开放 持续构建市场化法治化国际化营商环境--国际--人民网
"Wang Chen attended the American Chamber of Commerce in China and delivered a keynote speech. China will unswervingly promote reform and opening up and continue to build a market-oriented and legalized international business environment"
Wang Chen pointed out that China will fully implement the new development concept, persist in opening to the outside world in a wider scope, in a wider field and at a deeper level, continue to build a market-oriented, legalized and internationalized business environment, fully implement the foreign investment law, relax market access, treat all enterprises registered in China equally, improve the fair competition environment and achieve mutual benefit and win-win. This will bring new opportunities for enterprises from all over the world to develop in China. During the anti-epidemic process in China, the American Chamber of Commerce in China and its member enterprises have generously donated money and materials, for which China is grateful. It is hoped that the American Chamber of Commerce in China and its member enterprises will continue to play an active role and make efforts to push bilateral relations to restart dialogue, get back on track and rebuild mutual trust.
The Chinese government's determination to oppose interference in Hong Kong's affairs by outside forces is unswerving, as is its determination to implement the policy of "one country, two systems" and to safeguard the sovereignty, security and development interests of the country. The barbaric acts of the United States will only further provoke the Chinese people's strong indignation against the anti-China forces of the United States, prompting the 1.4 billion Chinese people, including our compatriots in Hong Kong, to fully understand the sinister intentions of the United States, and strengthen the Chinese government's determination to enforce Hong Kong's national security laws, crack down on anti-China acts of rebellion against Hong Kong, and maintain the long-term prosperity and stability of Hong Kong.
The Chinese people neither believe in nor fear evil. In response to the U.S. sanctions against the Vice Chairpersons of the Standing Committee of the National People's Congress, China has made it clear that it will make reciprocal countermeasures and continue to take all necessary measures to firmly defend its national sovereignty, security and development interests. The U.S. side should immediately correct its mistake, revoke the relevant decision, stop meddling in Hong Kong affairs and interfering in China's internal affairs, or else the U.S. side will surely eat its own evil consequences.
Thursday marked Human Rights Day. If there is a list of countries with severely deteriorating human rights situations this year, the US will be among the top. The US broke a daily record for COVID-19 deaths again on Wednesday, with at least 3,011 new fatalities. This was more than those who died from the 9/11 attacks (2,977).
Partisan politics has caused the institutional abandonment of the virus fight in the US, leading the country to a huge humanitarian tragedy where human lives are treated like grass. The current US administration is actually committing crimes against humanity and it will eventually face a moral trial by history.
Their capricious and reckless moves have pushed China-U.S. relations to the most critical juncture since the establishment of bilateral ties four decades ago.
It is the same group of politicians that proves to be incapable of tackling domestic issues, be it the raging COVID-19 pandemic, a widening gap between the country's rich and poor, intensifying racial tensions, the pervasive populism, or a declining economy. And "hijacking" the U.S. policy on China will do no good to cover up their own incompetence.
The United States is committing a directional and strategic blunder by projecting China as its adversary, or making "decoupling" attempts and provoking a "new cold war." Such erroneous acts will not only distract the United States from its domestic problems, but also create a stumbling block for future U.S. foreign policymakers.
China-U.S. ties are currently at a critical stage of the history. To make the ties healthy and stable conforms not only to the fundamental interests of the two peoples, but also the common expectation of the international society. The visionary in both countries understand that the extreme anti-China forces in the U.S. shall never be allowed to politicize or weaponize ideology, or make mistakes on developing China-U.S. relations. The two sides shall uphold the spirit of non-confrontation, mutual respect, and win-win cooperation, focus on collaboration, and manage disputes, so as to make steady progress in bilateral relations and work with the international society to jointly advance the world peace and development.
"The year 2021 is essential as we greet the dawn of a post-pandemic era, where China-U.S. cooperation cannot and should not be absent," said Cui in his remarks at the Annual Gala of the U.S.-China Business Council on Wednesday.
The Chinese Embassy in the United States posted a tweet saying that its Twitter account was hacked on Wednesday afternoon.
"We condemn such an act. For clarification, the Embassy didn't do any retweeting on December 9," said the tweet.
Comment: This retweet more of a diplomatic incident than UK Ambassador Liu Xiaoming’s claim that hacking led to his Twitter account toeing a Panty line in September.
“I think she’s fantastic and the right person for this moment – a substantive trade expert, well respected by business and labour, and [with] unimpeachable China-trade-enforcement credentials,” said Clete Willems, who was director Larry Kudlow’s deputy in the National Economic Council.
Willems said she would “share Lighthizer’s hawkishness on China and has a tonne of direct background on China’s industrial policy from her days at USTR”, adding that “having someone who can directly converse with China in their own language is going to command respect”.
Lu Xiang, a senior fellow on US studies with the Chinese Academy of Social Sciences, said Pillsbury was a knowledgeable hawk with an interest in Chinese history and culture.
“Unlike the ignorant China hawks in the US administration, Pillsbury has a passion for knowledge and is interested in understanding China,” Lu said.
Investigators have been examining multiple financial issues, including whether Hunter Biden and his associates violated tax and money laundering laws in business dealings in foreign countries, principally China, according to two people briefed on the probe.
Some of those transactions involved people who the FBI believe sparked counterintelligence concerns, a common issue when dealing with Chinese business, according to another source.
The investigation began as early as 2018, predating the arrival of William Barr as US attorney general, two people briefed on the investigation said.
Comment: This investigation may constrain President Biden on China policies, though so far his transition is showing signs of a softer approach to China.
European Union ambassador to China Nicolas Chapuis said on Thursday the bloc will seek common ground with the United States to stand up to Beijing’s bullying, intimidation and “wolf warrior diplomacy”, while recommending the government revisit “Deng Xiaoping’s legacy” to seek goodwill in Europe.
The speech was made just days after China’s vice foreign minister Le Yucheng rejected the “wolf warrior” label used to criticise the aggressive rhetoric adopted by some Chinese diplomats. He described the tag as a “discourse trap”, adding foreign envoys were only standing up for the country.
Chapuis said China’s image in Europe was worsening and Beijing must do its part to change the “extremely worrying” erosion of goodwill that had taken over the past year.
The annual China-EU CEO and Former Senior Officials Dialogue—a closed-door event that includes around 40 chief executives, top officials and academics from Europe and China—would have been its fourth edition and taken place this year by videoconference...
“We hope to hold the dialogues next year and in person,” said a member of the China Center for International Economic Exchange, the association co-organizing the event, who declined to be named...
The CCIEE official, when pressed about the reasons for the cancellation, said that the dialogue’s aim was to promote international economic research and trade cooperation but that some participants didn’t seem to fit the principle or goal of the event. He also said that one participant had in a previous year broken the meeting’s ground rule that listeners may use information they hear in sessions but not disclose who made which comments...
Officials familiar with the exchange say the two people Beijing wanted to exclude from this year’s virtual event were Reinhard Bütikofer, the European Parliament’s chairman of the EU-China caucus who has publicly criticized Beijing over Hong Kong and its treatment of the Uighur minority; and Mikko Huotari, the head of Merics, a German think tank critical of the Chinese Communist Party.
Comment: This is not a great way to convince European officials your nice rhetoric about trade and investment over the last few months can be believed.
5. Taking the opportunity of the Winter Olympic Games Beijing 2022 and the Olympic Games Paris 2024 to increase Olympic and people-to-people exchanges and cooperation, so as to strengthen mutual understanding and friendship.
Comment: So France would not be on board with any efforts to move the 2022 Beijing Winter Games.
Zhou Yongsheng, an international relations professor at China Foreign Affairs University in Beijing, said it was in China’s interests to seek greater engagement with EU countries.
“France is one of the core engines of the EU. The conversation reflects the importance China attaches to its cooperation with both France and the EU,” he said.
“Also, France is a hi-tech country, so Sino-French space cooperation would be mutually beneficial.”
Xi is quoted in Beijing’s readout calling 独立自主 as among the original aspiration of the establishment of diplomatic relations between China and France. The Chinese word’s literal translation is "independent autonomy”, just one word away from "strategic autonomy”, the latest catchphrase in the EU since the von der Leyen administration took over in December 2019.
It’s worth mentioning that in recent months, Beijing has been repeatedly applauding European 战略自主, literally translated as "strategic autonomy”. That happened in State Councillor and Foreign Minister Wang Yi’s phone call with HRVP Josep Borrell, Wang’s phone call with French Foreign Minister Jean-Yves Le Drian, and Wang’s in-person meeting with Macron, etc.
After Joe Biden takes office, the US will thus adjust its measures to rope in European allies including France. US President Donald Trump has engaged in a maximum pressure campaign to force European allies to take sides. Biden will try to fix US-EU ties, but France and other European countries will not prefer becoming America's political puppets. Europe has highly prioritized its autonomy, and the core of this now is not to rely solely on other countries for its success.
Against this backdrop, it will be difficult for European countries, including France, to follow the US' lead. They will not want to obey Washington's aggressive agenda against China. European countries will certainly compete with China, but they will coordinate, communicate and coexist peacefully too. Biden is about to take office, and bilateral ties between China and Europe will encounter a fresh international situation...
Objectively speaking, France belongs to the Western camp and indeed shares consensus with the US and Britain in respect to ideology and understanding of China. But as France gradually shows its leadership within Europe, the country will make its China policy based on its strategic independence, considering its own interests and also the interests of Europe as a whole.
The author, Dong Yifan, is a research fellow with the Institute of European Studies, China Institutes of Contemporary International Relations
7. Community group buying
“The online grocery market battle is bigger than China’s [restaurant] food delivery or ride-hailing war, and we have many more players to participate this time,” said Will Wang, a venture capitalist at Bertelsmann Asia Investments. Whoever wins this fight could create one of the country’s biggest retail businesses, he said.
Part of the optimism around China’s grocery battle is due to its business model, which differs from grocery-delivery businesses in the West. Chinese players are using a new approach called community group buying, in which multiple households—often neighbors within an apartment complex—pool their food orders to buy in bulk. Unlike U.S.-based grocery-delivery startup Instacart, which picks up food from retail grocery stores and delivers it straight to each customer’s door (or lets customers pick up orders at the store), customers of the Chinese apps place orders ahead of time with local neighborhood “team leaders”—typically small shop owners or young mothers and others who earn commissions from transactions—and then pick up the groceries themselves the next day from designated locations.
The Chinese model cuts out the 50% markup charged by traditional retailers who rely on layers of distributors and middlemen. The grocery app makers hold only about a day’s worth of inventory, getting it directly from wholesalers and farms. And they rely on a distribution network of small mom-and-pop shops—millions of them, according to a Citic Securities’ estimate
Community group-buying has more presence in lower-tier cities, due to less bricks-and-mortar groceries near residential communities than in higher-tier cities, and the higher mutual trust among community members. According to data compiled by QuestMobile, about 60% of Chinese community group-buying platform users are from lower-tier cities and rural areas.
Fresh groceries have remained the holy grail of e-commerce. A task so daunting that even Amazon hasn't been able to crack it. In China, the retail grocery market is estimated by McKinsey to be worth 5.2 trillion RMB (794bn dollars) in 2019, with only 10% of that currently online. In 2020, it seems like we've finally found a business model where the unit economics works at scale. Theoretically at least.
That's 社区团购 or community group-buying, the least understood business model in online retail right now. In this edition, we'll look at this business model’s innovations, its enabling factors, what will determine the winner’s success and ultimately its challenges.
Y: Before we begin, let’s clarify what we mean by grocery e-commerce. And unfortunately, the definition is actually somewhat convoluted. In Chinese, what we’re talking about is 生鲜电商, which translates to “fresh food e-commerce,” but most people, by which we mean investors, entrepreneurs, analysts, and journalists, also include within this category “new retail” concepts like Alibaba’s Hema, which are offline supermarkets with mobile-app driven experiences and home delivery capabilities.
R: So not really e-commerce, but a hybrid online-offline experience, which means that technically, they should really be saying, 生鲜电商与生鲜新零售, or grocery e-commerce and grocery new retail, but most people aren’t this exact, and usually mean both, as we also will in this episode, because when it comes to shopping for groceries in China using technology, we just don’t think you can exclude the new retail part of it.
8. Interview with film director Pema Tseden
Director Pema Tseden discusses his award-winning new movie “Balloon” and the struggle to promote diversity in China’s film industry...
When “Balloon” was released on the Chinese mainland in late November, the movie only accounted for 2.4% of total screenings in domestic theaters. Within days, this figure dropped to 1%. To date, “Balloon” has generated a total box office revenue of just 6.4 million yuan ($980,000), according to ticket platform Maoyan.
Such a deflating debut for “Balloon” has sparked heated discussion in China, with media, film critics, and cinephiles arguing that the movie deserves more screen time. Tseden has even waded into the debate himself, calling for China’s film industry to work harder to support minority voices...
Sixth Tone: The protagonist, Drolkar, faces conflicting pressures from her family’s religious beliefs and China’s family-planning rules. How do you see the movie reflecting on this conflict?
Tseden: It offers different perspectives. For example, the female doctor at the health center partly causes Drolkar’s resistance. This female doctor represents a group of Tibetan women who may be more awakened. In a conversation with Drolkar, she says: “Women aren’t born to give birth.”
The movie is also themed around the idea of reincarnation. But as the writer, I play around with this concept. The film is mostly realist, but there are also some surrealist parts interspersed.
The trailer on Youtube:
Business, Economy and Trade
Xi sends congratulatory letter to vocational skills competition - Xinhua Chinese President Xi Jinping on Thursday sent a letter of congratulations to the country's first vocational skills competition in Guangzhou, capital city of south China's Guangdong Province...Xi urged efforts to carry forward the spirit of model workers and craftsmanship, stimulate more workers, especially the younger generation, to improve their skills, and foster more highly skilled workers and craftsmen in a bid to achieve the goal of fully building a modern socialist country. Chinese Premier Li Keqiang said in his instruction that improving vocational skills is a crucial foundation for the country's manufacturing and services industries to move to a medium-to-high level.
China’s Xi Ramps Up Control of Private Sector. ‘We Have No Choice but to Follow the Party.’ - WSJ $$ “The market-reform camp is all but gone,” says an economist who advises the government. “By now, it’s pretty clear what kind of reform the top guy really wants.” There was no mistaking the shifting winds in September, when Liu He, the leadership’s top economic adviser with a reputation for supporting market reforms, summarized Beijing’s plans for the state sector for the next three years. “State-owned enterprises,” he said, “must become the competitive core of the market.” // Comment: Don’t be surprised if we start a lot more about Xi Jinping Thought on the Economy or some other variation after the Central Economic Work Conference
Speculative buying lifts China iron ore futures to contract high | Reuters Benchmark iron ore futures in China surged more than 7% on Thursday to hit a contract high, as speculative buying was fuelled by expectations that a recovering economy would lead to strong demand for the steelmaking ingredient.
Yicai - China Levies Anti-Subsidy Duties on Australian Wine China will impose temporary import duties on some Australian wines from tomorrow, saying that the subsidized wines have caused “substantive damage to the local industry.” The tariffs will vary between 6.3 percent and 6.4 percent for different makers, the Ministry of Commerce said in a statement today.
GT Voice: Iron ore no exception in twisted China-Australia trade - Global Times Australian winemakers took a further hit on Thursday when China's Ministry of Commerce announced to impose temporary anti-subsidy duties on wine imported from Australia starting from Friday. The move came in just two weeks after the imposition of anti-dumping tariffs on Australian wine. On Wednesday, some Australian media outlets suggested lamb may be the latest product blocked by China, with two lamb exporters being barred from the Chinese market. On Monday, China reportedly banned a sixth Australian beef exporter...If iron ore prices continue to soar, resulting in turmoil in the industry, more calls for regulatory interventions should be expected. If a price surge really disrupts the industry and market, then the government holds responsibility for maintaining price stability. Heightened tensions between China and Australia, any move aiming at stabilizing prices could be misread or politicized by rabid Australian officials, further damaging bilateral relations. The difficulties faced by bilateral relations stem from Canberra's reckless approach to dealing with China. The burden rests with Australia to reflect on its mistakes and take corrective efforts.
“2+N”格局成型 国家技术转移一体化提速 _ 经济参考网 _ 新华社《经济参考报》官方网站 "As an important "pusher" of capitalization and industrialization of scientific and technological achievements in China, the construction of national technology transfer regional centers is accelerating. The reporter of Economic Information Daily was informed that the "2+N" system layout of national technology transfer has been formed, including Zhongguancun National Technology Transfer Cluster, Shenzhen National Technology Transfer South Center, Wuhan, Shanghai, Xi 'an, Chengdu and other regional centers. At the same time, the relevant departments require that the national technology transfer regional centers should share resources, complement each other's advantages, link vertically and horizontally, and develop synergistically. Focusing on the regional development strategies of Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong, Hong Kong and Macao, Chengdu-Chongqing Economic Zone and the construction of urban agglomerations, we will focus on promoting the regional centers to play a pioneering role."
S&P DJI removes Chinese firms from indexes after U.S. order | Reuters S&P DJI said it would remove mainland-listed A-shares, Hong Kong-listed H-shares and American Depositary Receipts (ADRs) of 10 companies including Hangzhou Hikvision Digital Technology Co Ltd and Semiconductor Manufacturing International Corp (SMIC) from all equity indexes prior to the market open on Dec. 21.
Apple AirPods Max are made in Vietnam, but still by Chinese firms | AppleInsider According to Digitimes, supply chain sources say that the headphones are being assembled by the Chinese companies Luxshare Precision Industry and Goertek. These unnamed sources say that the two companies beat Taiwanese competitors to the job even though Inventec Appliances had in some way participated in the development of the AirPods Max.
Financial Regulators Sound Alarm Over 15 Small Anhui Banks Financial regulators in eastern China’s Anhui province said 15 small and medium-sized banks there face high risks from bad loans following an anti-graft crackdown sweeping through local rural banks.
Suning to Buy Back More Bonds to Show It’s Not Running Out of Cash - Caixin Rumors emerged recently that Suning was running short on cash in a liquidity crunch, leaving it in jeopardy of defaulting on its bank loans. However, the retailer on Tuesday denied such claims in a social media post (link in Chinese), noting that the rumors were damaging to both its business and brand. It said that it had reported the case to the proper authorities.
宁波市"加码"房地产市场调控政策 提高第二套房商贷首付比例_新浪财经_新浪网 The city of Ningbo in eastern Zhejiang has raised down payment for second home purchases in a bid to curb property investment.
商务部：中方将与其他成员一道继续推动WTO上诉机构尽早恢复正常运转-新华网 Gao Feng, a commerce ministry spokesperson, said this week that China is ready to work with other WTO members to resume the appeals mechanisms at a time when the appellate body remains in limbo. He expressed “regrets” over the fate of the court, saying it was dealing a heavy blow to the multilateral trade system.
商务部：鼓励相关地区优化汽车限购措施 开展新一轮汽车下乡和以旧换新_中证网 The Chinese ministry of commerce has signaled its support behind relaxing car purchase restrictions in certain regions and promoting vehicle consumption in rural areas, the latest announcement in its broader effort to boost domestic consumption.
Yicai - China’s Credit Expansion Shows Signs of Peaking China’s broad M2 money supply, new yuan loans and social financing all maintained moderate and stable growth last month, according to data from the central bank yesterday. Market liquidity is stable, but credit expansion is showing signs of peaking, market analysts said.
Boxed out: China's exports pinched by global run on shipping containers | Reuters Exports from China surged 21% in November from a year ago as the country’s mammoth industrial engine cranked out mountains of appliances, toys, clothes, personal protective equipment and other items currently in high demand around the world. But due to China’s lopsided trade balance - exporting three containers for every one imported recently - and delays in containers returning to China due to the pandemic overseas, a severe shortage is now starting to pinch export flows
FCC Orders Equipment Removed in Step Aimed at Huawei, ZTE - Bloomberg The agency in a 5-0 vote also said it would establish a list of proscribed equipment, and it set up a program to reimburse carriers for replacing suspect gear that will start once Congress devotes an estimated $1.6 billion. The agency said the actions, which affect providers that take federal subsidies, implement a law Congress passed in March.
Politics and Law
Xi Jinping Thought on the Rule of Law guides law-based governance in China - Xinhua The first central conference on work related to overall law-based governance in the history of the Communist Party of China (CPC) from Nov. 16 to 17, 2020, marked the establishment of Xi Jinping Thought on the Rule of Law and its status as the guiding thought for law-based governance in China.
China: Covid-19 journalist tortured for exposing truth: Zhang Zhan | Amnesty International Citizen journalist Zhang Zhan, who reported stories related to COVID-19 from Wuhan starting in February 2020, has been detained and charged with “picking quarrels and provoking trouble”. Zhang Zhan went missing on 15 May in Wuhan and was subsequently revealed to have been detained by police in Shanghai, more than 640km away. At the Pudong New District Detention Centre in Shanghai, Zhang has reportedly been forcibly fed by officials after she began a hunger strike. She is also being shackled and her hands have been bound 24 hours a day for more than three months, and there is grave fear for her health and well-being and risk of further torture and other ill-treatment.
郭声琨：健全党领导政法工作体系 全面提升新时代政法工作水平-中国长安网 On December 10th, the Central Political and Legal Committee held a summary meeting on the supervision of the implementation of the Regulations on Political and Legal Work of the Communist Party of China. Guo Shengkun, member of the Political Bureau of the CPC Central Committee and secretary of the Central Political and Legal Committee, attended the meeting and delivered a speech.
China Puts Rights Lawyers, Families Under House Arrest on Human Rights Day — Radio Free Asia Authorities in the Chinese capital have placed a number of prominent rights lawyers and their families under house arrest on Human Rights Day, RFA has learned.
Caixin - 人事观察|由渝入沪 胡文容转任上海组织部长_政经频道_财新网 Hu Wenrong, a Fujian-born senior official from Shandong and Chongqing, was recently transferred to Shanghai, succeeding Yu Shaoliang as Shanghai's Standing Committee member and head of the city's organization department. Yu Shaoliang had previoulsy become deputy secretary of the Shanghai Municipal Party Committee and secretary of the Political and Legal Committee.
China denies the use of forced labour in this industrial park, but won’t let reporters visit. The Globe went anyway - The Globe and Mail Local authorities placed great energy into barring access to the area by The Globe and another Western journalist, who were met by police and asked questions on arrival at a nearby airport. As they neared the Lop County industrial area, several people stood in the road to block entry. When the journalists entered instead through a rough sand construction road, two men appeared and demanded the deletion of photos. The men attempted repeatedly to physically halt The Globe reporter and his colleague from continuing to walk in, by pushing and grabbing.
Chaguan - China is doubling down in Xinjiang | China | The Economist In late 2019 officials said that all detainees have graduated from compulsory studies. On a recent weekend Chaguan visited the Hotan city camp toured by state television and found it apparently abandoned, observed only by a clutch of camels and locals digging for white jade in a dried-up riverbed. Closing highly visible sites signals shifting tactics, not a change of heart. China is merging counter-terrorism work in Xinjiang with nationwide campaigns to assimilate ethnic minorities and push the rural poor into formal employment, in the name of development and social stability. A State Council white paper from September, detailing training and job placement campaigns in Xinjiang, found 2.6m “rural surplus workers” in the region, notably Uyghurs with “outdated ideas”.
China says its human rights will be further improved - CGTN Human rights conditions in China will be further improved in the upcoming new journey of development, Chinese Foreign Ministry spokesperson Hua Chunying said Thursday on World Human Rights Day. China attaches great importance to promoting and protecting human rights of its people with a people-centered approach, addressing concerns from certain Western countries, Hua said at a press briefing.
Facial Recognition Is Running Amok in China. The People Are Pushing Back - Vice. the emerging laws are unlikely to protect Chinese citizens from the most watchful of all entities in China – the Chinese government, Yale’s Daum said, as the ruling Communist Party sees mass surveillance as critical to maintaining stability. “Ultimately, when push comes to shove, public safety and public security would take precedence over personal privacy,” he said.
中宣部授予张桂梅时代楷模称号--新闻报道-人民网 The Central Propaganda Department decided to award Zhang Guimei, Party Secretary and President of Huaping Women's High School in Lijiang City, Yunnan Province, the title of Model of the Times. 63-year-old Zhang Guimei has been sticking to the education cause in the poor mountainous areas of western Yunnan for decades. Twelve years ago, she founded the first free girls' high school in China. So far, she has helped more than 1,800 poor girls to realize their dreams, creating an "educational miracle" in the mountains. "A girl can influence three generations." Zhang Guimei said that if educated and responsible mothers can be trained, children in the mountains will not drop out of school, let alone become orphans.
Foreign and Defense Affairs
China-Australia relations: Global Times accused of ‘inflammatory’ coverage | South China Morning Post The Australian Department of Foreign Affairs and Trade confirmed that ambassador Graham Fletcher and Global Times editor-in-chief Hu Xijin met on Wednesday. But the department did not specify which comments it objected to, saying only that “Australia rejects the inaccurate and inflammatory coverage of Australia by the Global Times”.
Australia is ‘most unfriendly country besides the United States’: Global Times editor Hu Xijin - The Australian According to Mr Hu’s account, he told Mr Fletcher: “In the eyes of the Chinese, Australia is currently the most unfriendly country to China besides the United States.” Hu’s newspaper has become the Morrison government’s loudest foreign affairs critic, describing Australia as a “lackey”, a “US running dog” and a “giant kangaroo that serves as a dog of the US”.
Exporting Xi Jinping thought - How China’s Communist Party trains foreign politicians | China | The Economist In 2017 Mr Xi caused a stir in the West by suggesting that China’s development model offered “a new option” for other countries, and that a “Chinese approach” could help solve humanity’s problems. Though he later insisted that his country did not plan to export a “China model”, the country’s officials have been, in effect, doing just that. Some of those engaged in this effort belong to the foreign ministry. But many, such as those who organised the recent seminar on poverty, work for a branch of the Communist Party called the International Department. Its job is to win support for China among foreign political parties.
Foreign Ministry Spokesperson Hua Chunying's Regular Press Conference on December 10, 2020 Beijing Daily: Der Tagesspiegel criticized China's "wolf-warrior diplomacy" in an article titled "China's Wolf-warrior" on December 8, using an image of Chinese character "杈(pitchfork)", apparently a misspelling of "权 (power)". The report said that the German parliament's human rights committee held a so-called hearing on China's human rights on November 18, which was denounced by the Chinese embassy. It slammed China's "strong reaction", citing Green Party's anti-China lawmaker Margarete Bause's words that Chinese diplomats become more aggressive and China is pursuing "wolf-warrior diplomacy". What's your response? Hua Chunying: I noted that German newspaper misspelled "权 (power)" as "杈(pitchfork)", which was ridiculed by the Chinese media. But such goof doesn't surprise me at all, because there are some people who like to harp at China and criticize China as if they were China experts, when in fact, they know nothing about China. As for "wolf-warrior diplomacy", I would like to ask those who accuse China of "wolf-warrior diplomacy": have they ever watched Disney's animated film the Lion King? What do they think of that lovely little lion, Simba, who has grown up with all the suspicion, blame, and hardships as company?
South China Sea: Beijing ‘ready to work with Asean’, defence chief says | South China Morning Post The US defence chief angered Beijing with an opinion piece in the Philippine Star on Monday, accusing China of exploiting other countries’ vulnerabilities in the coronavirus pandemic to advance its interests in the maritime dispute. China’s ambassador to the Philippines dismissed the allegation and hit out at Washington’s “provocative actions”.
Keynote Address by H.E. Deng Li Assistant Minister of Foreign Affairs of China At the Opening Ceremony of the 14th Senior Officials Meeting of The Forum on China-Africa Cooperation Second, we need to deepen practical cooperation and build a China-Africa community of win-win development. At the recently concluded Fifth Plenum of the 19th CPC Central Committee, China adopted recommendations for its 14th Five-Year Plan and long-range goals for 2035, and decided to foster a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other and to build a new system of open economy of higher standards. These initiatives present more opportunities for Africa's development. In recent years, African countries have worked together to launch the African Continental Free Trade Area and advance the first ten-year plan of Agenda 2063, which has further unleashed the development potential of Africa. China hopes to work with our African friends to identify complementarities between our development plans and foster new driving forces for China-Africa cooperation. We may launch a new batch of cooperation projects that promote employment and improve people's lives, and tap into cooperation potential in free trade area, digital economy, poverty alleviation, connectivity of industrial and supply chains, and climate change.
Wang Yi speaks with New Zealand's newly-appointed FM Mahuta - CGTN The Chinese foreign minister congratulated Mahuta on her appointment, and called for a prompt signing of the free trade agreement upgrade protocol between the two countries. Wang said that China hopes New Zealand to provide an open, fair and non-discriminatory business environment for Chinese enterprises in the country...Mahuta said that New Zealand firmly follows the one-China policy, noting that the relationship between China and New Zealand is one of the most important ones for her country, which has brought benefits to both peoples. China's economy has become the first one to see positive growth, she said, adding New Zealand is willing to participate in the Belt and Road Initiative and strengthen vaccine research and production cooperation with China.
China, ASEAN vow to jointly safeguard South China Sea - China Military The defense ministers have agreed to intensify efforts to enhance ASEAN's cohesion and responsiveness through strengthening defense cooperation within the group as well as with other partners to tackle traditional and non-traditional security challenges, according to the joint declaration. They also adopted a three-year work program for the 2020-2022 period, which outlines the future direction for cooperation.
ASEAN Defense Ministers' Meeting-Plus held online - China Military Wei also explained China's position on the South China Sea issue, saying that China is ready to work with the ASEAN countries to adhere to the dual-track approach. He added that China would steadily advance the Code of Conduct consultations and safeguard peace and stability in the South China Sea. A joint declaration on strategic security was adopted at the meeting.
PLA border troops in Tibet receive exoskeleton suits: report - Global Times PLA border troops stationed in Ngari, which is more than 5,000 meters above sea level, have started using the exoskeleton suit, which allows them to carry supplies that weigh about as much as an adult, while avoiding the risk of waist or leg injuries, China Central Television (CCTV) reported on Wednesday.
Hong Kong and Macao
‘State secrets’ no more: Hong Kong regulator gains access to HKEX-listed Chinese firms’ audit papers in breakthrough | South China Morning Post The Supervision and Evaluation Bureau of China’s finance ministry passed the auditors’ working papers of seven companies on Friday to the Financial Reporting Council (FRC), which oversees the auditing of companies listed in Hong Kong. The papers of another four companies – hitherto regarded as “state secrets” by Chinese authorities – would be handed over soon, the FRC said. // Question: Is this really a possible breakthrough for the US-China auditing issue? Hong Kong is not a foreign country, it is part of the PRC
Tech and Media
For Livestream Regulators, Phony Bird’s Nest Products Don’t Fly - Caixin Chinese authorities are investigating one of video-sharing app Kuaishou’s most popular livestreamers after he was accused of marketing fake bird’s nest — a luxury health product in China — made of just sugar and water. The saga began when Wang Hai, a high-profile consumer activist who targets fake products through his Weibo channel, accused the livestreamer Xin Youzhi of advertising and selling counterfeit bird’s nest health products...Xin, who goes by the name “Simba,” is the livestreaming sales champion on Kuaishou, after he sold a record 1.25 billion yuan ($191 million) worth of products in one session during a sales extravaganza this year.
Society, Arts, Sports, Culture and History
Griezmann ends partnership with Huawei, cites Uighurs - AP French soccer player Antoine Griezmann ended his affiliation with Huawei on Thursday, saying there are “strong suspicions” that the Chinese tech giant has contributed to the repression of the mostly Muslim minority Uighurs. The 29-year-old Barcelona forward’s announcement followed media reports that Huawei has tested facial recognition software intended to help China’s surveillance of the group.
Jealous Men Say They’re Better-Looking Than Tibetan Heartthrob - SixthTone Men in particular appear to be envious of Tenzing Tsondu — who is also known by his Chinese name, Dingzhen — after the man from Litang County in the southwestern Sichuan province nearly broke the internet with his sun-kissed skin, mop of hair, and infectious smile. Now, a hashtag translating to “some men’s thoughts on Dingzhen” has been trending on microblogging platform Weibo, with over 1.1 billion views as of Thursday.
Sounds of the Y2K | Neocha – Culture & Creativity in Asia Tucked away under a noisy overpass in Shanghai is Yuyintang, one of the city’s best-known livehouses, and it’s where we met up with musician Gao Jiafeng on his latest tour. His live shows are unlike other musical acts, with parts of his performance dedicated to stand-up comedy and reciting poems. Instead of a VJ, he uses a Keynote presentation as stage visuals. At one point in the show, he even receives a mini bouquet of vegetables onstage as a gift from his fans. There’s an effortless playfulness to both his music and live performances that feels immensely refreshing.
Energy, Environment, Science and Health
Cabin Crew Told to Wear Diapers on Risky Covid Flights - Bloomberg The Civil Aviation Administration of China said the recommendation applies for charter flights to and from countries and regions where infections exceed 500 in every one million people. The diaper advice is in a section on personal protective equipment
Chinese Startup Aims To Clone Large Rare Animals For Zoos – China Money Network a Chinese startup wants to clone rare animals in order to supply them to zoos in China. Ximan Gene"is engaged in commercial animal cloning and also does commercial pet cloning. Many zoos in China lack the import qualifications to introduce some rare animals, so such cloning services are urgently needed.
Stakeholders Expect Long-Planned National Carbon Market to Be Up and Running by 2025 - Caixin Some three-quarters of the stakeholders in China’s carbon market expect a national emissions trading scheme (ETS) to be up and running by 2025, according to a survey published Wednesday, even as previous plans to do so have sputtered in the face of industry and local government opposition.
China launches two satellites for gravitational wave detection - Global Times The GECAM satellites will be used to monitor high-energy celestial phenomena such as gravitational wave gamma-ray bursts, high-energy radiation of fast radio bursts, special gamma-ray bursts and magnetar bursts, and to study neutron stars, black holes and other compact objects and their merger processes. In addition, they will also detect high-energy radiation phenomena in space, such as solar flares, Earth gamma flashes and Earth electron beams, providing observation data for scientists.
Rural and Agricultural Issues
China reaps bumper 2020 harvest with grain output up 0.9 pct - Xinhua China's grain output reached nearly 670 billion kg in 2020, up 5.65 billion kg from last year. This marks the sixth consecutive year that the country's total grain production has exceeded 650 billion kg.
Quite a sharp play by Beijing