US-China tariff week; CCP turns 97; Real estate blues; Party pressure on foreign university JV; North Korea; Recalibrating the BRI

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Here are the top things I am watching about China today:

  • It is US-China tariff week and with just 4 days left until they go into effect there is little sign that the US and China are near a breakthrough;

  • The Chinese Communist Party turned 97 on Sunday and now has about 89.6 million members (and several hundred million relatives of members);

  • North Korea may soon re-emerge as a serious point of contention in the US-China relationship. There are reports that Kim has asked Xi to relax sanctions while over the weekend multiple US media ran deeply sourced stories reporting that US intelligence agencies believe Kim has no intention of denuclearizing and in fact is actively deceiving the US (shocker I know…).

Thanks for reading, and please give me feedback in the comments.

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The Essential Eight

1. Trade war countdown

An official censorship instruction - Minitrue: On U.S.-China Trade Tensions – China Digital Times (CDT):

Don’t attack Trump’s vulgarity; don’t make this a war of insults.

Note different implementation stages in the breakdown of the [U.S. tariffs on Chinese exports worth] US$50 billion: levies on the $34 billion from July 6 are highly likely to happen. Levies on the remaining $16 billion will be considered on July 13, and take effect at the beginning of August, if approved.

All media should prepare well for protracted conflict. Don’t follow the American sides’ fluctuating declarations. Play down the correlations between the stock market and trade conflict.

China Rebound Gone Within a Day as Even Biggest Stocks Crumble - Bloomberg:

The Shanghai Composite Index slumped 2.5 percent on Monday, more than wiping out a 2.2 percent rally on Friday. That follows a pattern over the past few weeks, where any gain has been erased the following day. In a further sign of capitulation, state-owned giants are bearing the brunt of the declines, with index heavyweight Industrial & Commercial Bank of China Ltd. plunging the most since February...

The yuan weakened 0.5 percent to a seven-month low. Bets are rising that the central bank will allow the currency to continue weakening provided selling remains orderly

China Will Halt a Disorderly Yuan Slide, Morgan Stanley Says - Bloomberg:

China is not using yuan depreciation as a tool in its trade conflict with the U.S., and will likely step in to avert any disorderly decline, according to Morgan Stanley.

“We don’t expect policymakers to encourage material RMB depreciation,” China economists at the bank, led by Robin Xing in Hong Kong, wrote in a July 1 note, referring to the renminbi, the official name of China’s currency. “The PBOC could step up intervention if depreciation risk intensifies.”

China confident in managing financial panic: economist - Global Times:

A financial panic that's brewing in the Chinese economy won't evolve into a wider financial scare as exemplified by the Lehman Brothers bankruptcy, a famed Chinese economist said on Monday.

The authorities have been aware of the problem with the economy and the government's proven ability in terms of policy implementation has shown to be effective in pacifying market sentiment, Li Yang, director-general of the National Institution for Finance and Development (NIFD) with the Chinese Academy of Social Sciences, told the Global Times in an exclusive interview.

Deleveraging is the biggest problem facing China and it matters greatly how policy coordination and the pace of policy implementation can be well dealt with. The regulatory authorities need to respond to market fluctuations in a timely manner.

Comment: The NIFD may be feeling some pressure after news of its recent report on the possibility of a financial crisis?

Trump Trade War Arrives in the Data as China Awaits Tariffs - Bloomberg:

Purchasing manager index readings for June released on Saturday showed a gauge of export orders tumbling into contraction, the clearest sign yet that the oncoming trade war is having a real, negative impact on growth...

The arrival of a bear market in the nation’s leading stock exchange and the fastest slump in the currency since 2015’s devaluation have already made it clear that investors are on edge. Now comes the question of how the People’s Bank of China will follow through on last week’s signal that they’ll be more supportive of growth, and whether the current ‘structural’ approach -- where targeted policy tweaks aim at specific sectors, like small business -- will be enough.

Manufacturing Expansion Holds Steady, Caixin PMI Shows - Caixin Global:

"The index for new export orders fell to a low for the year so far and remained in contraction territory, pointing to a grim export situation amid escalating trade disputes between China and the U.S.," said Zhong Zhengsheng, director of macroeconomic analysis with consultancy CEBM Group, a subsidiary of Caixin Insight Group.

2. While China keeps saying it is opening up more

China commerce minister says will significantly widen market access | Reuters:

China will significantly widen market access and oppose any kind of protectionism, Chinese Commerce Minister Zhong Shan said in an article published in the state-run [why does Reuters not say Party-run?] People’s Daily on Monday.

Zhong Shan’s article - 开放的中国与世界共赢 ——写在《中国与世界贸易组织》白皮书发表之际 

China puts new tariff cuts into effect - Xinhua:

Tariffs on 1,449 taxable consumer goods were reduced from an average rate of 15.7 percent to 6.9 percent, including home appliances, food and beverage, cosmetics and medicines, according to the Customs Tariff Commission of the State Council...

Meanwhile, vehicles and auto parts also saw marked tariff reductions. The 20-to-25-percent tariffs for cars were cut to 15 percent, and duties on auto parts were lowered to 6 percent from the previous levels of 8 to 25 percent.

Nice infographic--China Culls Foreign Investment ‘Negative List’ - Caixin Global 

The official Chinese announcement-- 《外商投资准入特别管理措施(负面清单)(2018年版)》修订说明 

New list for FTZs opens key Sectors - China Daily:

The National Development and Reform Commission and the Ministry of Commerce released the shortened negative list for FTZs on Saturday, two days after rolling out a list applicable nationwide. The list in Chinese,a PDF on the NDRC site 

3. More real estate blues

This week's Caixin cover story looks at the change in policy around financing of shantytown redevelopment. Local governments, banks and real estate developers have been using it to pump up real estate prices. The biggest concern around a tightening of this policy appears to be the impact on 3rd and 4th tier city housing prices.

Slum Redevelopment Draws Debate Over Government Debt, Housing Prices - Caixin Global:

Reports last week that the China Development Bank (CDB) had halted funding for new shantytown redevelopment projects across the country have highlighted the unintended problems the national slum-clearing effort has caused in recent years...

In 2015, the State Council issued a policy document allowing local governments to give monetary compensation to residents displaced by renovations as a first resort, over the alternative of compensating them with actual new homes. As a result, monetary compensation grew to more than 50% of all redevelopment compensation in 2017, a sharp increase from just 9% in 2014. The practice, which injects money into the local housing market without increasing the housing stock, has helped push up housing prices.

The majority of funds for shantytown redevelopment comes from loans granted by policy banks like the China Development Bank. These loans, in turn, are largely funded by money from the People’s Bank of China, the nation’s central bank, which it lends to policy banks through a special facility known as Pledged Supplemental Lending.

Because of lax controls on the use of these loans, many local governments have "expanded the category of shantytown redevelopment to suit their whims, 'packaging' ordinary projects as shantytown projects" to get around restrictions on other types of local government lending, Xu Zhong, director of the central bank’s research bureau, warned recently...

…some analysts warn that a sharp drop in the level of monetized resettlement compensation could cause a complete collapse of housing prices in some third- and fourth-tier cities, many of which are already experiencing a net migration outflow.

The original Chinese Caixin story - “棚改”重定规矩 

China's Top Villa Developer Asks Staff to Speed Up Cash Inflow - Bloomberg:

China’s top high-end developer Greentown China Holdings asked its staff to accelerate cash inflows “on all fronts” and speed up sales, according to memos seen by Bloomberg, amid escalating regulatory scrutiny of the sector.

The Hangzhou-based builder urged faster sales, redoubled efforts to collect accounts receivable and called for strict control over payments, according to the memos. Moves to speed up sales include shifting those originally scheduled in 2019 to this year, provided the projects are unhindered by pre-sales pricing restrictions.

China Cracks Down on Real Estate Speculation Via Shell Companies - China Banking News:

These new control measures include barring enterprises from purchasing homes, as well as safeguarding the share of housing supply dedicated to inelastic demand.

State media reports that the “focus of the current round of housing controls is striking against speculative investment in property, and supporting the purchase of homes by those subject to inelastic demand.”

According to Yan Yuejin (严跃进) from the Shanghai E-house Real Estate Research Institute, a number of speculators in the property market have taken to the use of registered shell companies as “sock puppets” to participate in the lottery system for home purchases – a measure that municipal governments have already introduced as a means of curbing speculative investment.

4. Latest North Korea developments

Kim Jong Un asked China's Xi Jinping to help lift sanctions: Japanese newspaper - The Straits Times:

North Korean leader Kim Jong Un has appealed to China's Xi Jinping to help end sanctions against Pyongyang following his landmark summit with US President Donald Trump, a Japanese newspaper reported on Sunday (July 1), citing multiple unnamed sources in the two countries.

Kim made the request during his third meeting with Xi in Beijing last month, and the Chinese president promised to do his "utmost" to satisfy it, the Yomiuri Shimbun newspaper said.

"We are feeling great pain due to economic sanctions. Now that we have concluded the US-North Korea summit in success, I want (China) to work towards early lifting of the sanctions," Kim reportedly told Xi, according to the newspaper.

US Department of State - Secretary Pompeo's Call With Chinese State Councilor and Foreign Minister Wang Yi:

Secretary Michael R. Pompeo spoke by phone today with Chinese State Councilor and Foreign Minister Wang Yi. They discussed ongoing efforts to achieve our shared goal of the complete, verifiable, and irreversible denuclearization of the Korean Peninsula. The Secretary noted that the DPRK has a bright future if it denuclearizes and emphasizes the continued importance of full enforcement of all relevant UN Security Council resolutions related to North Korea, especially as they relate to North Korea's illegal exports of coal and imports of refined petroleum through UN-prohibited ship-to-ship transfers. They also discussed ongoing cooperation on the recent health related incident in Guangzhou, China, as well as other issues in the bilateral relationship.

Reuters - Pompeo tells China continued North Korea sanctions enforcement needed: 

Pompeo told a U.S. Senate hearing this week he had seen “modest” backsliding by China, North Korea’s neighbor and main trading partner, which Trump has courted on the nuclear issue even while threatening a major trade war with Beijing.

“We have observed China not enforcing control over their cross-border areas as vigorously as they were six or 12 months ago,” Pompeo said.

North Korea working to conceal key aspects of its nuclear program, U.S. officials say - The Washington Post: 

U.S. intelligence officials, citing newly obtained evidence, have concluded that North Korea does not intend to fully surrender its nuclear stockpile, and instead is considering ways to conceal the number of weapons it has and secret production facilities, according to U.S. officials. 

NBC News - North Korea has increased nuclear production at secret sites, say U.S. officials :

The intelligence assessment, which has not previously been reported, seems to counter the sentiments expressed by President Donald Trump, who tweeted after his historic June 12 summit with Kim that "there was no longer a nuclear threat from North Korea." 

Analysts at the CIA and other intelligence agencies don't see it that way, according to more than a dozen American officials who are familiar with their assessments and spoke on the condition of anonymity. They see a regime positioning itself to extract every concession it can from the Trump administration — while clinging to nuclear weapons it believes are essential to survival. 

Kim visits factory bordering China, arousing investment expectation - People's Daily Online:

Chinese analysts say the visit is Pyongyang's latest move to show its expectations of Beijing and to reassure international investors about North Korea's economic determination after the country's historic and fruitful meetings with leaders from China, the US and South Korea.

Kim's visit to the factory was announced by the Pyongyang-based Korean Central News Agency on Sunday, a day after it reported that Kim gave "field guidance" to Sindo county, where the factory, co-developed with China, is located.

5. Stealing from Taiwan to catch up in technology

Taiwan’s Technology Secrets Come Under Assault From China - WSJ $$:

HSINCHU, Taiwan—In late 2016, an engineer at Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip manufacturer, received a call from a Chinese rival company asking if he would be interested in a job as chief engineer to advance work on chips used in mobile phones and game consoles.

The offer was notable, according to a court in Taiwan, because the engineer had no expertise in that type of chip.

What he did have was access to records. Over a two-week period, he illegally downloaded, printed, then photocopied—using a company copier—reams of TSMC’s trade secrets he planned to send to the Chinese rival, state-owned Shanghai Huali Microelectronics Corp., according to the Taiwanese court. The engineer, Hsu Chih-Peng was intercepted in a TSMC probe days before he was to start his new job, said the court, which in November handed Mr. Hsu a suspended 18-month prison sentence on charges of stealing company secrets.

The New York Times reported on June 22 on the looting of Micron's secrets via UMC engineers in Taiwan - Inside a Heist of American Chip Designs, as China Bids for Tech Power 

I will guess these recent media reports barely expose the tip of the iceberg...

6. Foreign universities with JVs in China will bow to the Party

China tightens party control of foreign university ventures | Financial Times $$:

The University of Nottingham Ningbo China, the first joint venture university in China, has removed a foreign academic from its management board for being critical of Communist party-backed initiatives.

The management shuffle marks a setback for joint venture universities — legally independent institutions 49 per cent held by a foreign university — which for years have operated in tenuous conditions as China’s Communist party seeks to exert more influence on educational institutions.

The academic, Stephen Morgan, had served as Nottingham Ningbo’s associate provost since 2016. The party objected to the renewal of his contract with the university after he wrote an online essay critical of the 19th party congress, a top meeting of Communist party officials held every five years, according to two people familiar with the situation.

This bit of history mentioned in the FT article may be totally unrelated but it still deserves more explanation:

The removal of Mr Morgan comes three years after Nottingham abruptly shut its School of Contemporary Chinese Studies in the UK, just as its students were preparing to sit exams. The decision, which came directly from the university’s executive board in April 2016, led to the departure of Steve Tsang, an outspoken professor who was head of the school.

The "offending" blog post - The 19th Party Congress and China’s sorrow: 

The changes to the constitution of the Communist Party of China passed at the 19th party congress are a tragedy for the Chinese, for their intellectual curiosity and for their future economic prosperity. Enshrining the ‘Thought of Xi Jinping’ in the party constitution, and surprisingly one of his key policy initiatives, the One Belt One Road (OBOR, 一带一路, or Belt and Road Initiative, as it is increasingly known), closes down debate. To challenge Xi’s policies is now to challenge the party fundamentally. That is political suicide.

Stephen Morgan's comment on Twitter when he retweeted the FT story:

Stephen Morgan@SimaHui1

Higher Ed JVs r making a difference to the most ‘unreformed’ sector in China. Hard as it might be for JVs it is not so hard as everyday life is for so many Chinese HE academic colleagues.

July 2, 2018
Does anyone really think Nottingham will be the only one to face such pressure? 

7. Xiongan's environmental mess

Xiongan’s Cleanup Efforts Don’t Hold Water - Caixin Global

But for now, the area, consisting of numerous rural communities in the three largely underdeveloped counties in Hebei, is plagued by severe water and air pollution and encroachment of unsorted waste due to decades of negligence and the absence of a basic sewage and solid-waste disposal system, according to professor Liu Jianguo with Tsinghua University’s School of Environment.

“People might have been thinking that development of Xiongan New Area is like drawing on a piece of blank paper, but the area is no longer as clean as a blank sheet of paper,” he said.

Hundreds of wastewater ponds, some as old as 30 years and scattered throughout the new special economic zone, have not only scarred the landscape but also pose a health hazard, the Chinese Academy of Environmental Sciences warned in a recent feasibility study on pollution-fighting operations in Xiongan.

8. Recalibrating the BRI

China Taps the Brakes on Its Global Push for Influence - The New York Times:

The value of the deals that Chinese companies are striking under the country’s big global plan — called the Belt and Road Initiative — is smaller than a year ago, according to new data. Chinese officials themselves are sounding a cautious note, voicing worries that Chinese institutions need to be careful how much they lend under the program — and make sure their international borrowers can pay it back.

“Current international conditions are very uncertain, with lots of economic risks and large fluctuations for interest rates in newly emerged markets,” said Hu Xiaolian, the chairwoman of the Export-Import Bank of China, a state-controlled lender that plays a big role in financing the projects, at a forum this month in Shanghai. “Our enterprises and Belt and Road Initiative countries will face financing difficulties.”

China has begun a broad, interagency review of how many deals have already been done, on what financial terms and with which countries, say people close to Chinese economic policymaking, who asked to speak on the condition of anonymity because the effort has not been made public.

Comment: I lean towards thinking that the reporting about backlashes is a bit over-egged, and that of course there are rough patches as China works it’s way through figuring out exactly what BRI is and what works. I would not wager my money against the Chinese adjusting and self-correcting just enough to make the project effectIve overall

NYT report: Outcry to reveal probe on CHEC funding Rajapaksa campaign | Sunday Observer:

State Minister of Finance and Mass Media, Eran Wickramaratne yesterday called on investigating agencies to reveal either the status or outcome of the investigation into the alleged transfer of over US$ 7 million to affiliates of former President Mahinda Rajapaksa Presidential election campaign.

Noting that although originally in 2015, it was reported that China Harbour Engineering Company Ltd (CHEC) which is involved

in a number of key construction projects including the Hambantota Harbour, has paid money for the Rajapaksa’s campaign, which the CID was investigating, he said that subsequently, there were reports the FCID was investigating several suspicious financial transactions worth more than Rs. 3 billion.

Sri Lanka moves navy unit to Chinese-run port - Rappler:

Sri Lanka will move its southern naval command to a port leased to a state-run Chinese firm but China will not use it for military purposes, the prime minister's office said Saturday, June 30.

Colombo's announcement will likely raise fresh concerns in New Delhi over China's military potentially getting a foothold in the Indian Ocean through the deep-sea port of Hambantota, which straddles a major east-west shipping route.

Business, Economy, Finance And Trade

Eric Branstad, Son of U.S. Envoy to China, Used Trump Ties to Lure Business - WSJ $$: In his travels to Shanghai and Beijing this week, Mr. Branstad was representing Mercury Public Affairs LLC, a Washington communications firm he joined in February as managing director weeks after leaving U.S. government service. At his presentation, Mr. Branstad said Mercury plans to soon open an office in China, attendees said... Mercury, a division of Omnicom Group Inc., recently began representing a Chinese telecommunications equipment maker that has been in the crosshairs of the U.S. government: ZTE Corp.

ZTE Replaces Board, but Power Structure Remains - WSJ $$: All 14 directors, including Chairman Yin Yimin, resigned from ZTE’s board. The company named eight new directors as part of an overhaul that includes the firing of dozens of top executives. The incoming board members, however, were handpicked by ZTE’s state-backed controlling shareholder, filings show, and the majority are veteran officials of the shareholder or its state-backed parent companies. At least two of ZTE’s outgoing directors may also continue to wield influence over the firm because they hold stakes in a company that owns part of the shareholder, a holding company called Zhongxingxin. The U.S. Department of Commerce demanded new leadership at ZTE but it doesn’t require any executives or directors to divest stakes.

Taking Softbank's lead, China, UK managers form $15 billion tech fund | Reuters China Merchants Group and peer SPF Group will join forces with London-based investment firm Centricus to launch the 100 billion Chinese yuan ($15 billion) China New Era Technology Fund, to invest or acquire firms across China and around the world.

Top Chinese steelmaking city to halve mills by 2020: government source | Reuters China’s top steelmaking city Tangshan plans to halve the number of its steel producers by 2020 and eliminate inefficient equipment, in its latest push to consolidate its steel sector and help clear one of the country’s most polluted cities.

China’s Two Biggest Chemical Companies to Merge - Caixin Global *Sinochem Chairman Ning Gaoning to lead merged company; ChemChina Chairman Ren Jianxin to retire ...Merger believed to be one of the Chinese government’s conditions for its support of ChemChina’s $49 billion takeover of Swiss agrichemicals giant Syngenta AG

Chinese-owned vineyards worth US$64 million seized by French police in tax fraud investigation | South China Morning Post Haichang Group, based in the northeastern port city of Dalian, is the biggest of numerous Chinese investors that have bought into one of France’s most famous wine-growing regions in recent years. It spent an estimated €55 million (US$64 million) to acquire 24 estates producing an array of brand-name wines.

PBOC Says China's Fiscal System Reason Behind Its Leverage Woes - China Banking News The head of research for the Chinese central bank has imputed China’s leverage-related risk to problems with the country’s fiscal and taxation system, and said that policymakers cannot depend rely excessively upon monetary policy. Xu Zhong (徐忠), head of the People’s Bank of China research department, made the remarks during a speech he delivered at the 2018 Institute of International Finance Summit. “The root cause of China’s high-leverage risk lies in the aftermath of reforms of the fiscal and taxation system…irrespective of whether it’s the hidden debt of government, the high leverage of state-owned enterprises or the rapid rise in household leverage in recent years, defects with the fiscal and taxation system are primary reason.

Chinese investment into US biotech start-ups soars | Financial Times $$ Chinese venture capital investment into US biotech companies in the first half of the year has already surpassed the record set for the whole of 2017, underlining Beijing’s focus on medicine as a strategic sector — a development that has flown under the radar of regulators in Washington. Chinese funds participated in investment rounds in US biotech companies worth $5.1bn in the first half of this year, beating the $4bn in 2017, the first year of large Chinese inflows into the sector, according to Seattle-based data provider PitchBook.

China lends $1 billion to Pakistan to boost plummeting FX reserves - sources | Reuters Beijing’s attempts to prop up Pakistan’s economy follow a strengthening of ties in the wake of China’s pledge to fund badly-needed power and road infrastructure as part of the $57 billion China-Pakistan Economic Corridor (CPEC), an important cog in Beijing’s vast Belt and Road initiative. But analysts say China’s help will not be enough and predict that after the July 25 national election the new administration will likely seek Pakistan’s second bailout since 2013, when it received a package worth $6.7 billion from the IMF.  //  Comment: Would an IMF bailout of Pakistan also be a bailout of the Chinese?


Politics, Law And Ideology

Xinhua - Xi underlines importance of CPC's political building  Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, has stressed the importance of the Party's political building. The CPC must regard political building as the Party's fundamental building so as to provide an important guarantee for the Party to march from victory to victory, Xi said Friday when presiding over a group study session of the Political Bureau of the CPC Central Committee. "If a Marxist political party loses its advanced nature in politics, there will be no purity and advanced nature of the party," Xi said. The Political Bureau conducted the group study in order to deepen understanding of the Party's political building and become more conscious and firm in promoting it to celebrate the 97th anniversary of the founding of CPC, Xi said...The political direction is the ideal of Communism and the shared ideal of socialism with Chinese characteristics, the two centenary goals, as well as the Party's basic theory, line, and policy, he said. The defining feature of socialism with Chinese characteristics is the leadership of the CPC. The greatest strength of the system of socialism with Chinese characteristics is the leadership of the CPC. The Party is the highest force for political leadership, Xi said. Xi stressed upholding the authority and the centralized, unified leadership of the CPC Central Committee as essential to adhering to the Party's political leadership.// CCTV Evening News report on the Politburo study session--习近平在中共中央政治局第六次集体学习时强调 把党的政治建设作为党的根本性建设 为党不断从胜利走向胜利提供重要保证_CCTV节目官网-CCTV-1_央视网

Self-buildup behind Party's 97th birthday - China Daily Last week, Xi encouraged Niu Ben, an 83-year-old Chinese actor, to play a vanguard and exemplary role as a CPC member and continue to set examples for others in engaging in the arts and conducting oneself. In a letter to Niu, who was admitted to the Party in May, Xi said that the elderly artist's resolve to follow the Party for life is touching. "You consider the Party as the mother and regard joining the Party as a sacred thing, and keep pursuing such progress for more than 60 years," Xi said. Xi's letter to Niu has encouraged the country's artistic circles after its release, with many artists vowing to uphold their belief and work for the people.

1,000-member chorus sings red classic to celebrate 97th anniversary of the Communist Party of China - Global Times More than 1,000 Chinese gathered together in Yichuan county of Yan'an, Shaanxi Province, on Friday to sing the classic red song "Yellow River Cantata" as part of celebrations for the anniversary of the founding of the Communist Party of China (CPC), which is celebrated each year on July 1st. Organized by the local county government, the 97th anniversary event gathered local officials and ordinary workers near the famous Hukou Waterfall along the Yellow River to express local people's gratitude for the achievements of the Party and act as a morale booster as they continue poverty-relief efforts.

习近平在同团中央新一届领导班子成员集体谈话时强调 代表广大青年赢得广大青年依靠广大青年 让广大青年敢于有梦勇于追梦勤于圆梦_CCTV节目官网 Monday CCTV Evening News report on Xi's meeting with the new leadership of the Communist Youth League...Xi brought the CYL to heel but don't underestimate its continued importance in bringing along the next generations to support Xi and the Party

Communist Youth League elects new leadership - Xinhua | He Junke /贺军科 was elected first secretary of the Secretariat of the 18th Central Committee of the CYLC at the committee's first plenum Friday afternoon. // He's Baidupedia bio 

Chinese leaders gather for back-to-back meetings after military veterans protest | South China Morning Post At a two-day conference in Hebei – chaired by Vice-Premier Sun Chunlan and attended by security chief Guo Shengkun and police chief Zhao Kezhi – the three state leaders shared “best practices” on veterans affairs with provincial authorities and bureaucrats. They also called on top local officials to personally take care of services for veterans. Both Sun and Guo sit on the 25-member Politburo. It followed a meeting of the newly created Ministry of Veterans Affairs on Friday, at which deputy minister Qian Feng told Communist Party members that officials had been trying to streamline and improve welfare programmes and set up an online complaints system.

Conference held to better protect veterans' rights, interests - Xinhua Chinese Vice Premier Sun Chunlan, also a member of the Political Bureau of the Communist Party of China (CPC) Central Committee, Guo Shengkun, member of the Political Bureau of the CPC Central Committee and head of the Commission for Political and Legal Affairs of the CPC Central Committee, as well as Chinese State Councilor and Minister of Public Security Zhao Kezhi attended and addressed the conference. The conference asked for better service system, good support to veterans in job seeking, business startup, education and training as well as proper assistance to those living in poor conditions.// 退役军人工作经验交流会在河北召开 

人民网三评浮夸自大文风之一:文章不会写了吗?--观点--人民网 3 People's Daily online pieces criticizing exaggeration of China's strength and achievements, strangely don't mention who authorized it... // 近期“跪求体”“哭晕体”“吓尿体”等浮夸自大文风频现,消解媒体公信力,污染舆论生态,扭曲国民心态,不利于成风化人、凝聚人心、构建清朗网络空间。 为了匡正各媒体浮夸自大、华而不实的文风,落实习近平总书记对文风“短、实、新”的要求,倡导清新文风,崇尚风清气正,今天起,人民网观点频道推出“三评浮夸自大文风”系列评论。

US ‘so scared’ of China’s progress? Communist Party mouthpiece doesn’t think so | South China Morning Post The commentary on Monday was the first in a three-part series on the People’s Daily website and comes amid an escalating trade dispute between the United States and China over Beijing’s ambitious hi-tech industrial policies, and growing concern over the “China threat” to other countries. “Recently, headlines like ‘the US is so scared’, ‘Japan is in awe of’, ‘Europe now regrets’ [China’s achievements] have been getting lots of clicks,” the commentary read. “But most of these apparently explosive articles ... are worrying.”

Mao 101: Inside a Chinese Classroom Training the Communists of Tomorrow - The New York Times “We’ve learned democracy just can’t last long here,” said Zhang Tingkai, a 19-year-old architecture major, describing the upheaval of the Cultural Revolution under Mao. “It can easily turn into populism,” said Mao Quanwu, 20, a mechanical engineering student, “like what’s happening in Taiwan.”

One in 10 Uyghur Residents of Xinjiang Township Jailed or Detained in ‘Re-Education Camp’ - RFA The head of the judicial department of Tuwet township, in Hotan (in Chinese, Hetian) prefecture’s Qaraqash (Moyu) county, recently told RFA’s Uyghur Service that more than one out of every 10 of the township’s 32,000 residents had been imprisoned or detained in a re-education camp since April last year. “There are 1,721 people in re-education camps,” said the head of the department, who gave his name as Rozimemet. “The number of people sent to prison is 1,731,” he added. An officer at the Chinibagh village police station, in the seat of Qaraqash county, recently told RFA that around 40 percent of the more than 1,700 residents of his home village of Yengisheher had been detained in re-education camps.

China wants eyes and ears on every street - Vigilaunties - The economist Mr Zhong is a “grid manager” operating in part of Huayan Beili Xi Community, a middle-class residential area near the capital’s iconic “bird’s nest” Olympic stadium. He has been recruited by the local government to watch over a “grid” of streets in the neighbourhood, solve problems if possible and pass bigger ones up the chain of command for higher-level attention. The grid system of ensuring order in urban areas was pioneered in Dongcheng, a central district of Beijing, in 2004. By 2017 about 60% of China’s cities were using it in some form, reckons Zhou Wang of Nankai University in Tianjin, up from 45% in 2015.

胡海峰到了习近平多次调研的地方|胡海峰|嘉兴|丽水_新浪新闻 据浙江日报消息,日前,浙江省委决定:张兵任中共嘉兴市委书记,胡海峰任中共丽水市委书记  //  Hu Jintao's son Hu Haifeng is now Party Secretary of Lishui, Zhejiang, after serving as mayor of Jiaxing


Foreign and Military Affairs

Senior U.S. diplomat for Asia Susan Thornton to retire in July | Reuters “Acting Assistant Secretary of State for East Asian and Pacific Affairs Susan Thornton has announced her intention to retire from the Foreign Service at the end of July,” State Department spokeswoman Heather Nauert said in a statement.

China's Most Powerful General, a Xi Jinping Henchman, Meets Mattis - Bill Gertz "A major concern is that they have arrested so many members of the military," said a specialist on the Chinese military. "So there are a lot of grievances and that has made the military unstable." Michael Pillsbury, a Chinese military affairs expert, agrees. "There are signs of increasing instability in the PLA and that presents new challenges not just for the United States, but for the world," he said.  //  Comment: What are the signs of PLA instability?

Scientific journal launched to promote China's unmanned technology - Xinhua | A journal titled Unmanned System Technology was launched in Beijing to promote the research as well as the application of unmanned technology, according to the publisher, China Aerospace Science and Industry Corporation (CASIC).

The U.S. Can’t Afford to Demonize China – Foreign Policy The relationship between Beijing and Washington is collapsing fast, to everyone’s detriment. BY MICHAEL D. SWAINE

China develops 'laser AK-47' that can hit targets at half a mile - Business Insider sorry, if thins were really ready for prime time would the developer be hawking its pr so hard to try to get funding?  //  The prototype was built by ZKZM Laser, a technology company owned by the institute in Xian. A company representative confirmed that the firm is now seeking a partner that has a weapons production licence or a partner in the security or defence industry to start large-scale production at a cost of 100,000 yuan (US$15,000) a unit.

More Americans Evacuated From China Over Mysterious Ailments - The New York Times The State Department has evacuated at least 11 Americans from China after abnormal sounds or sensations were reported by government employees at the United States Consulate in the southern city of Guangzhou, officials said, deepening a mystery that has so far confounded investigators.


Hong Kong, Macao

Hong Kong gov't criticises 'disrespectful, sensational, misleading' chants at annual democracy rally | Hong Kong Free Press HKFP The Hong Kong government has criticised protesters who chanted “disrespectful” slogans at Sunday’s July 1 democracy march. “[C]hanting slogans which disrespect ‘one country’ and disregard the constitutional order or which are sensational and misleading was not in line with Hong Kong’s overall interests and would undermine its development,” a press release on Sunday read.


Tech And Media

Translation: Cybersecurity Law of the People’s Republic of China (Effective June 1, 2017) This translation is revised and corrected

Chinese online group Pinduoduo files for $1 bln U.S. IPO - source | Reuters Walnut Street Group, the parent of Pinduoduo, made the U.S. Securities and Exchange filing on Friday. Loss-making Pinduoduo was formed three years ago and in the filing claimed 295 million active users of its mobile platform, which allows consumers to group together to increase the discounts offered by merchants...Revenues at Walnut Street Group have grown sharply, reaching 1,384.6 million yuan ($208.19 million) in the first quarter of 2018 from 37 million yuan $5.56 million) a year previously, according to the filing. Losses, however, remained broadly steady at 201 million yuan versus 207.7 million yuan a year previously.

Chinese video app Douyin counts the cost of insulting Korean war hero as advertising halted | South China Morning Post The app, which is run by Beijing ByteDance Technology, was one of five China-based internet firms ordered by the Beijing office of the Cyberspace Administration of China last month to conduct a “thorough self inspection” of their advertising content and delete any material relating to heroes and martyrs, including Qiu Shaoyun, a Chinese soldier remembered for his heroism during the 1950-53 conflict....On Sunday afternoon, the watchdog said it had instructed the firms, which include the New York-listed search engine Sogou, to remove all commercials that mention Qiu and that all of them had “voluntarily suspended [their] commercial services”.
An advertising agent who works with Douyin and its clients said the suspension of commercial services would result in “huge” financial losses. “Douyin makes tens of millions of yuan in advertising revenue every day,” the person said on condition of anonymity. “One online game client spends 3 million yuan (US$452,000) a day.”

SenseTime is more just than a face recognition company, says co-founder · TechNode “SenseTime was first known to the public as a face recognition company, but we are aiming at something much bigger than that. Actually, our face recognition team only represents a small part of the company now. A great majority of the staff is dedicated to the construction of our deep learning platform,” said Xu Bing, co-founder and vice president of SenseTime, at TechCrunch Hangzhou. “In our definition, SenseTime is a technology development platform. Just like in any other factories, we set up production lines to mass-produce our product, which is the technology, at a lower cost. It’s not only about face recognition. We have the capacity to generate the technologies that could recognize any visual or video contents, no matter it’s a cup, a car, or medical imaging,” Xu added.

China Box Office: Local Hits Power the Best First Six Months Ever – Variety According to the half-year industry report from China’s Ent Group, box office as of Friday for the first six months of 2018 totaled 31.6 billion yuan ($4.77 billion), with 889 million viewers, up more than 16% from the 27.2 billion yuan ($4.1 billion) recorded in the first half of 2017.

The Fall of China's Bike-Sharers Drags Another Group of Business Owners Down | Yicai Global The country's two largest bike-sharers Mobike Technology and Beijing Bikelock Technology's Ofo raised more than USD3 billion of capital as of March but struggled to make profits for their first years. Many bike firms, such as Xiaoming, Bluegogo, and Coolqi have gone bankrupt.  Several manufacturers have been exhausted by late payments, said Yang Qingliang, general manager of Tianjin Gueyda Bike, adding that the way the contracts are made leaves the producers with little legal leverage. The spare parts of shared bikes cannot be used for ordinary bikes, said Li Shuheng, general manager of Mingzhou Bike, adding that this is why many of them end up as scrap iron.

Theft and destruction of dockless bikes a growing problem - The Washington Post To prevent thefts, China-based Ofo is exploring technology enhancements and applying penalties for users who fail to lock their bike, spokesman Jordan Levine said.

How a U.S. Game Giant Dodges China’s Censors — The Information $$ One of the hottest PC games in the world—“PlayerUnknown’s Battlegrounds,” a violent game in which 100 players fight to the death—hasn’t been approved for sale by China’s strict regulators. Yet the game is a bonafide hit in China, where more than a third of its active players reside. Most Chinese players have gotten their hands on PUBG, as the game is widely known, from Steam, a game service that has become the equivalent of an iTunes for PC games around the world. While China’s censors have blocked other Western platforms for distributing media, they haven’t yet prevented access to Steam, which is operated by the U.S. company Valve. That has made Steam a rare example of a foreign online service that has navigated around China’s strict regulations on content, mostly by flying under the radar of authorities, and by being in a medium—games—with fewer political sensitivities than other categories.


Society, Art, Sports, Culture And History

Paul French's City of Devils | The World of Chinese Shanghai between the two world wars was a city of many names and reputations—both the Paris of the East and the Whore of the Orient. It was also a city of a refuge, and “a home,” writes Paul French in his latest book, City of Devils: A Shanghai Noir, “to those with nowhere to go and no one else to take them in.” // The book on Amazon 


Energy, Environment, Science And Health

China Quarterly on Environmental Governance in China We are offering free, for a limited period, a special section on Environmental Governance in China, from the September issue of China Quarterly

Public-Interest Lawsuit Nets $1.1 Million From Ocean Polluters - Caixin Global Five people have been ordered to pay more than 7 million yuan ($1.1 million) for dumping waste into an estuary in southern China, in what is believed to be the country’s first-ever public-interest lawsuit to punish ocean polluters. The case involved workers paid by a paper mill in the industrial city of Dongguan, Guangdong province, in 2016 to dispose of refuse, which was then dumped into in a shipping lane just off the coast.

Related to environmental law in China, congrats to Alex Wang, who is now a tenured professor at UCLA Law School:

Alex Wang@greenlawchina

I received great news yesterday. As of today, I am officially a tenured professor of law at UCLA. I have loved being part of this institution and look forward to many more years with these wonderful students and colleagues!

July 1, 2018
Polluted Water Exhibition Prompts Official Action - Sixth Tone The supermarket shelves are stacked with rows of bottled water, but though the packaging is that of ubiquitous Chinese brand Nongfu Spring, the liquid inside is brown and cloudy. The scene is part of an exhibit at Beijing’s 798 Art Zone. Artist Nut Brother filled the bottles with water from Xiaohaotu, a poor township in northwestern China’s Shaanxi province where the water is reportedly polluted with heavy metals.

China to charge urban dwellers garbage processing fees by end of 2020 - Global Times All Chinese cities and townships will begin charging fees for garbage processing services to promote green development, the National Development and Reform Commission (NDRC) said on Monday. China will charge its urban and town dwellers fees for daily garbage processing services, and the prices should be fixed to enable processing facilities to make moderate profits, the NDRC said in its proposed document soliciting public opinions. Households will be charged based on the quantity and types of their garbage.

China to develop new series of carrier rockets: expert - Xinhua The capacity of Chinese rockets would reach 140 tonnes for low-Earth orbit, 44 tonnes for Earth-Mars transfer orbit, 50 tonnes for Earth-Moon transfer orbit and 66 tonnes for geosynchronous transfer orbit in 2030, said Long Lehao, an academician of the Chinese Academy of Engineering and a chief designer at the China Academy of Launch Vehicle Technology, when delivering a speech in Tsinghua University.

Saudi Arabia’s Aramco to Provide Crude to Private Chinese Oil Firm - Caixin Global Hengli Petrochemical Co. Ltd. has signed a long-term agreement for Saudi Arabian state-owned oil giant Aramco to supply it with around 20 million tons of crude oil a year, starting in October. It is thought to be the first such supply deal between Aramco and a private Chinese oil company.

The Strategic Logic of China’s Energy Mercantilism – Fairbank Center for Chinese Studies, Harvard University – Medium Our article in International Security makes three key points. First, the logic of energy mercantilism is rooted in the economics and business literatures on firm behavior. Companies fear disruptions to their supply chains (1) when their supplies come from industries beset by imperfect contracting, (2) when their suppliers are collusive, (3) when supplies are geographically concentrated, and (4) when supplies are located in regions that suffer frequent conflicts. Because all four of those conditions plague the oil sector, countries are justifiably concerned about their energy access.


Food And Travel

China Warns its Tourists: Beware Gun Violence in America - The New York Times The notice (The original Chinese), issued by the Chinese Embassy in Washington on Saturday, was China’s latest effort to warn tourists about a land where gun violence kills about as many people as car accidents — a rate that far exceeds that of any other rich nation. The notice also said robberies and burglaries were common in the United States, and warned Chinese tourists to be cautious of “suspicious” people there. “Avoid going out alone at night,” it added. “If in danger, please be calm and call 911.”



Beijing unifies storefront facades, accused of hurting creativity - Global Times Beijing is launching a campaign to unify storefront signs in back streets and alleyways, a move that aims to improve Beijing's overall image, but has sparked discussions over whether unified facades would hurt the city's vitality and creativity. A number of Beijing storefronts located in back streets and alleyways are replacing their old signs with new ones which have standardized design and sizes and are installed at the same height. This is a campaign launched by the local sub-district office, a sales manager at a clothing store located in Dongtiejiangying sub-district, Beijing's Fengtai district, told the Global Times on Sunday. "The construction is funded by the government, who asked for a unified renovation," he said.


Jobs And Events

Job | Caixin Newsletter Editor This editor will help to create and lead a new Caixin Global team of 2-3 reporters which will compile and publish several newsletters for subscribers on a daily basis to complement the newsroom's regular coverage. The team will monitor other media and news sources for items to include in newsletters, and distill items to their basic points for easy reading. It may also do some short original writing to provide commentary and insight on third-party reports. She or he must have strong news judgment and be able to write and edit quickly and clearly. Requirements: The candidate should have at least five years of financial journalism experience, preferably including some managerial experience. She or he must also be fluent in English and have strong command of Chinese, and possess strong understanding of the complex China market.