US-China trade deal; Pompeo on China and tech; 1 RMB note tractor driver dies
I am ecstatic that we may finally be on the cusp of no longer having to speculate about whether there be a US-China trade deal, and what might be in it. Some of the details of the phase one deal to be signed Wednesday have started to leak, much I believe to the consternation of the Chinese side who would prefer to keep it secret.
One question I have is how much of the deals to be announced tomorrow are ones that have already been announced one or more times?
If there is a phase two deal expect it to be done in small chunks, like phase 2A, phase 2B etc, rather than one big agreement as the really difficult issues that go to the heart of the PRC economic system look so far to be mostly untouched in this phase one deal, and are likely untouchable in any future deal.
And as this newsletter has been saying ad nauseum, the trade deal is actually the easy part of the US-China relationship, and do not be surprised to see more US pushback in the technology realm before the ink is barely dry on this phase one deal.
Enjoy the pause in the downward trajectory in US-China relations but do not stop making contingency plans. Sorry to be pessimistic, need to go to one of those positive energy classes I guess…
Thanks for reading.
The Essential Eight
1. US-China trade
China would also buy over $50 billion more in energy supplies, and boost purchases of U.S. services by about $35 billion over the same two-year period, the source told Reuters on Monday.
The Phase 1 agreement calls for Chinese purchases of U.S. agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year, said the source, who was briefed on the deal.
When combined with the $24 billion U.S. agricultural export baseline in 2017, the total gets close to the $40 billion annual goal touted by U.S. President Donald Trump.
The trade deal to be signed this week will include pledges by China to buy US$200 billion of US goods over two years in four industries, a Trump administration official and two other sources briefed on the matter said.
The target for manufactured goods purchases will be the largest, worth around US$75 billion. China will also promise to buy US$50 billion worth of energy, US$40 billion in agriculture and US$35 billion to US$40 billion in services, the three people said.
The administration isn’t legally obligated to publish the full text of the deal because it was an executive agreement that didn’t require congressional approval, said Derek Scissors, a resident scholar at the American Enterprise Institute.
Comment: And China definitely does not want it made public
Michael Pillsbury, a China scholar at the Hudson Institute who advises Mr. Trump, said that Mr. Trump’s campaign advisers have realized that the president’s supporters are less concerned about China’s record of human rights abuses or fears that it is an existential threat and more interested in having greater access to its market. He said that Mr. Trump appears to be shifting his tone on China away from the caustic rhetoric used by Stephen K. Bannon, his former chief strategist, in favor of an argument that shows how the president succeeded in “opening up” China.
“The list of challenges Xi faces in 2020 is undoubtedly long, but from his perspective, so too are the opportunities stemming from declining global leadership and influence of the U.S., whether real or perceived,” said Jude Blanchette, Freeman chair of China Studies at the Center for Strategic and International Studies.
Navarro said the agreement will "take a big chunk out of [China's] seven deadly sins": cyber-intrusions, intellectual property theft, forced technology transfers, dumping, unfair competition from state-owned enterprises, currency manipulation and fentanyl shipments to United States that have helped fuel the opioid crisis.
will this phase one agreement be enough for Washington to put aside its hawkish ambition of fundamentally challenging China’s economic system and seeking more opening in the Chinese market? Certainly not...
For China, with a temporary break at hand, there is not really much room to sit back. Beijing is still facing an uphill battle against Washington’s unprecedented challenges to its economic model since it joined the World Trade Organization in 2001. The Trump administration favors a direct confrontation with China, which will certainly not stop after the phase one deal is signed.
Lu Zhenhua is a senior editor at Caixin Global.
Comment: The operative word for the relationship is “缠斗 fighting while embracing”, as this newsletter first noted last March in “Fighting while embracing; Huawei; Black Mirror meets blacklist”:
It looks to me that there is no turning back and now the best case for those who want stability in the relationship is "fighting while embracing", or 缠斗, as I have heard from several people Xi started describing his view of the US-China relationship a few months ago
Interesting “tick-tock” - How the U.S. and China Settled on a Trade Deal Neither Wanted - WSJ $$
Looking for a direct route to the president, Chinese Ambassador Cui Tiankai spoke with President Trump’s son-in-law and adviser, Jared Kushner, say people familiar with the episode. The U.S. offer didn’t roll back enough tariffs, he told Mr. Kushner.
It was time to settle, Mr. Kushner responded. If not, on Dec. 15 the president was ready to proceed with new tariffs on about $156 billion in Chinese imports, including smartphones and toys. “Don’t think in terms of tariff reduction,” he advised. “Think in terms of what will happen if you don’t make a deal.”...
Chinese officials feel they have little to gain from a phase-two deal forcing Beijing to ease state control of the economy, and Mr. Trump recently said that a phase-two agreement probably wouldn’t conclude until after the Nov. 3 election. The Chinese government continues to plan for a future where the two economies would be less intertwined and China would develop technology rather than rely on American imports.
“The Trump administration has adopted a different definition of manipulation than the standard definition for China,” said Brad Setser, who worked at Treasury during President Barack Obama’s administration and is now at the Council on Foreign Relations. “It isn’t seeking that China step back from guiding the foreign exchange market; rather, the administration wants China to resist depreciation pressure.”
Mr. Schumer, in a letter to the White House released Tuesday morning, said U.S. businesses stand to lose billions of dollars if the administration can’t secure concrete commitments from China to stop subsidizing domestic firms and sponsoring efforts to steal intellectual property, among other changes. Making a temporary deal could concede leverage the U.S. needs to pressure China, Mr. Schumer said.
2. US Secretary of State Pompeo’s speech on China and technology
He gave it at the Commonwealth Club in San Francisco to the Silicon Valley Leadership Group. I believe it is one in the series of speeches Sec. Pompeo promised he would make about China
I want to talk to you about one specific topic today, the challenges and opportunities that the United States has with China. We need to think bigger, perhaps, and better as well. Because I am convinced that we can cooperate with China, as this administration has shown with what I hope will be in the next several hours the signing of a phase one trade deal. That’s a fantastic thing, I believe, for the United States. We’d welcome more of it.
But we also have to honestly confront tough questions about the national security consequences of doing business in a country controlled by the Chinese Communist Party. That especially goes for companies that develop some of our most sensitive technology, as many do here in this region...
Under Xi Jinping, the CCP has prioritized something called “military-civil fusion.” Many of you will know this. It’s a technical term but a very simple idea. Under Chinese law, Chinese companies and researchers must – I repeat, must – under penalty of law, share technology with the Chinese military....
I also want to remind each of you as Americans, as citizens of a free nation, that it is increasingly at risk from Chinese actions that may undermine the very freedom that you have to build your business and create. This is not to be alarmist. It’s not to be threatening. It is for all of us to be aware of.
Look, that’s already happened in Washington, D.C. We now see China for what it is, not what we wish it would be. It’s happened on both sides of the political aisle, and American companies have also rallied to patriotic causes. It’s a long history of that here in the United States. Any of you who have read history would remember that the so-called “Arsenal of Democracy,” also known as American manufacturing, was essential for our victory back in World War II....
with respect to 5G we see so many countries that are completely unprepared for what installing 5G technology in their nationwide systems will do for their security. You go to European countries and they’re keenly aware of the need to protect the private information of their citizens, their health care records, all of the things that none of us want out in the public space, and yet they’re prepared to make that – allow that information to transit across Chinese infrastructure.
And I remind them – and this is an imperfect analogy, and I’m deeply aware of that – but none of us would have installed Soviet technology. Right?
On Monday US Secretary of State Mike Pompeo warned US tech companies against China's so-called "Orwellian surveillance state". Does the foreign ministry have any comment on that? And how does China view the US Treasury decision to remove the currency manipulator label for China?
A: On your first question, I haven't seen the latest remarks from the US and will need to check for more information. However, this won't be the first time the US has made such remarks. Certain individuals in America keep attacking and smearing China by force of habit. This has not only tarnished America's international credibility, but has also been questioned and rejected by more and more countries. We urge the US to give up its prejudice and obsession against China and work to create an enabling atmosphere for the development of China-US relations.
A non-partisan DC think tanker’s view - Fear Not Technological Disengagement and Competition with China - War on the Rocks
The degree to which technological disengagement is beneficial to U.S. national interests should be determined through defining American goals in the U.S.-Chinese relationship and assessing the strategic paths available to U.S. policymakers. A technology cost-imposition strategy should not constrain China’s development for its own sake. But technology is inherently linked to national security, and technology and innovation are fundamental American strengths. Technology is therefore a favorable domain to which policymakers in Washington can shift Sino-U.S. competition and incrementally apply pressure to Beijing within a broader long-term strategy of compelling China to recognize international laws and norms and abstain from destabilizing behavior. - Jack Bianchi is a senior analyst at the Center for Strategic and Budgetary Assessments, where he focuses on Asia strategy and U.S.-Chinese competition
3. More on the UK and Huawei
In his first interview of the new year with BBC Breakfast, Johnson said: “The British public deserve to have access to the best possible technology. We want to put in gigabit broadband for everybody. Now if people oppose one brand or another then they have to tell us what’s the alternative.”
He added: “On the other hand, let’s be clear, I don’t want, as the UK prime minister, to put in any infrastructure that is going to prejudice our national security or our ability to cooperate with Five Eyes intelligence partners [the UK, Canada, the US, New Zealand and Australia].”
The American delegation of six officials included Matthew Pottinger, the Deputy National Security Advisor, Robert Blair,special representative on international telecommunications policy, and Dr Christopher Ford, Assistant Secretary of State. They met senior British ministers, with discussions focusing on 5G.
A senior US official said Donald Trump is personally engaged with the matter and said: “The President is watching this.”
Another senior US government official said the delegation on Monday "provided new technical information to the UK government that indicates it is harder for the UK government to mitigate the risks than previously thought."
Former Australian prime minister Malcolm Turnbull has warned Boris Johnson that allowing Chinese company Huawei to build Britain's 5G network would compromise the ability of the Five Eyes countries to collect and share intelligence.
Mr Turnbull responded to the UK Prime Minister's challenge issued earlier that critics of Huawei should offer alternatives. Johnson's National Security Council (NSC) is due to make a decision within a fortnight, nearly 12 months after the original determination was due.
This FT article is from November, Taiwan would never agree to block TSMC work for PRC firms as it is too expensive politically and economically, and plenty of US firms are also lobbying against this - US urges Taiwan to curb chip exports to China | Financial Times $$
Washington has over the past year repeatedly asked the government of president Tsai Ing-wen to restrain Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, from selling chips to Huawei, according to Taiwanese and US government officials.
Last month, a US official told Taiwanese diplomats in Washington that chips made by TSMC for Huawei were going straight into Chinese missiles pointing at Taiwan — a statement intended as a “metaphor” illustrating the risks of supplying China.
But so long as the US restrictions against sales to Huawei remain relatively toothless the company will probably be OK. There is talk of new restrictions coming from the Department of Commerce, but the industry lobbying against them is intense.
4. Tech decoupling, VC investment, and new CFIUS FIRRMA rules
On January 13, 2020, the Department of the Treasury released two final regulations to implement the changes that FIRRMA made to CFIUS’s jurisdiction and processes. The regulations, which become effective on February 13, 2020, were released in two parts:
Provisions Pertaining to Certain Investments in the United States by Foreign Persons (31 C.F.R. part 800)
These regulations are scheduled to be published in the Federal Register on January 17, 2020.
Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States (31 C.F.R. part 802)
These regulations are scheduled to be published in the Federal Register on January 17, 2020.
Martin Chorzempa, a research fellow at the Peterson Institute for International Economics, tweeted about the final rules:
He also wrote about the draft back in October, and says the final version is not much different - New CFIUS Regulations: More Powerful, Transparent, and Complex and Complying with New Foreign Investment Rules Will Pose a Complex Challenge | PIIE
The volume of American venture capital investment in Chinese start-ups is estimated to fall to less than US$4 billion in 2019 from its peak of US$17.4 billion in 2018, according to a report published by Rhodium Group and the National Committee on US China Relations on Monday.
With 30 unicorns and over 30 exits, Qiming has been one of the most successful VCs in China, investing in numerous companies that have gone on to become household names in the country. Gary reflects on his years in China and the folly of decoupling.
5. 2019 PRC trade data
The data was surprising to the upside, seems to have been improved by higher import prices, and probably orders for import and export that were made in December since the Lunar New Year falls on January 25 this year and most factory workers started heading home last week. PRC data in the first two months of every year is notoriously squirrelly because of the long Lunar New Year holiday, and this year that impact may have also fallen a bit more in December than usual.
Goods exports grew 7.6% year-on-year to $237.7 billion last month, ending four straight months of contraction, data (link in Chinese) released Tuesday by the General Administration of Customs showed. The December growth rate was the highest since March and beat the median forecast of a 4% increase by a Caixin poll of economists.
Imports in December jumped 16.3% from the same period in 2018 to $190.9 billion, the second monthly consecutive increase after six straight months of decline. The pace of growth also beat the Caixin median forecast of a 9% increase.
China’s export juggernaut last year showed it can be nimble too, quickly diversifying into new markets to cushion the impact of Donald Trump’s tariff onslaught.
That’s the key trend seen in China’s 2019 trade data published Tuesday, which show exports to the U.S. plunged 12.5% even as overall shipments rose 0.5%. The trade balance tells a similar story, with China’s surplus with the U.S. dropping 8.5% to almost $296 billion even as its overall surplus rose more than 20% to about $422 billion...
Amid the ratcheting-up tariffs, China’s exporters wasted no time finding alternative markets and by year end shipments to the Association of Southeast Asian Nations had surged almost 13% while those to the U.K. rose 10%. So effective was this strategy that China’s share of global exports held firm through the first three quarters.
Trade with BRI partner countries totaled 9.27 trillion yuan (about 1.34 trillion U.S. dollars) in 2019, up 10.8 percent year on year, outpacing the country's aggregate trade growth by 7.4 percentage points, according to the General Administration of Customs (GAC).
In the 2014-2019 period, the total trade volume between China and BRI countries surpassed 44 trillion yuan, with an average annual growth of 6.1 percent. China has become the biggest trade partner of 25 BRI countries, GAC data showed.
BRI countries' share of China's total trade approached 30 percent last year, up by 2 percentage points from 2018.
Foreign trade conducted by non-state firms jumped 11.4 percent to CNY13.48 trillion (USD1.95 trillion) in 2019, accounting for 42.7 percent of the country's total, the General Administration of Customs of China said today. That was an increase of 3.1 points over 2018.
The corresponding figures for overseas-invested businesses was CNY12.57 trillion, making up 39.9 percent of the total, followed by state-owned enterprises at CNY5.32 trillion, or 16.9 percent of the whole.
6. PRC global investment in 2019
Chinese investment and construction around the world contracted in 2019, regardless of Beijing’s claims to the contrary. However, the decline is concentrated in large, headline-winning deals, and Chinese firms remain active on a smaller scale.
A contraction in acquisitions in rich economies has boosted the relative importance of greenfield spending. The number of countries in the Belt and Road continues to expand, and power plant and transport construction continues to be preeminent.
American policymakers were initially spurred to act by intense Chinese investment in 2016. This has dropped sharply, but there are challenges related to investment review that are more important, starting with strengthening export controls.
The China Global Investment Tracker (CGIT) from the American Enterprise Institute and Heritage Foundation reasonably tracked official government investment levels from 2005 through 2018. In 2019, official figures proclaim stability, while the CGIT sees a dramatic fall. The main possibilities are (1) China is manipulating data and (2) the average size of transactions has dropped and the CGIT is missing more of them. These are not exclusive. Most likely there is an important slump beyond what Beijing reports, but still not the plunge seen in the CGIT.
7. How might China view US-Iran tensions?
Start with oil, and the need for stability in the Middle East to prevent any price spikes that could be a very damaging exogenous shock to the PRC’s already struggling economy.
Last year, China imported a record 506 million tonnes of crude oil, 9.5% above 2018's level, according to data from the General Administration of Customs. That is equivalent to 10.12 million barrels per day (bpd), according to Reuters' calculations based on the data...
Meanwhile, natural gas imports, including fuel supplied as liquefied natural gas (LNG) and via pipeline, were 9.45 million tonnes, the third-highest on record on a monthly basis.
The hefty December purchases included LNG imports that rose to a record last month with China overtaking Japan the world's top importer of the fuel for the second month in a row.
while the U.S. entrapment in the Middle East was an important component of China’s strategic window of opportunity in the early 2000s, the times are now vastly different. Given its heavy reliance on the region’s energy supplies and its growing investment portfolio in Arab countries, Beijing seeks above all to maintain the status quo. A stable Middle East is better for China than a war that will put at risk its growing portfolio of interests in the region. In short, 2020 is not 2001, and the expansion of China’s global interests and investments mean that instability in the Middle East would come at a great cost, even if it weakens U.S. capacity to engage in rivalry with China.
If the conflict continues to escalate – even if it stops short of all-out war – the US will most likely redirect significant resources toward confronting the Islamic Republic, and, like after 9/11, move China to the foreign-policy back burner...
Seventeen years ago, Bush entered into a war of choice in the Middle East that, besides costing huge amounts of US blood and treasure, derailed efforts to contain China. Trump can still avoid making the same mistake. But with every unhinged tweet – for example, threatening to attack Iranian cultural sites (a war crime) if the country retaliates – the chances that strategic sanity will prevail seem to grow smaller, and Xi’s hopes for the new year grow brighter.
Comment: Think Pei’s take is much less on the mark than Blanchette and Glaser’s.
8. Tractor driver on 1962 1 RMB note dies
Liang Jun, the woman featured on the 1 RMB note issued in 1962, has died at 90. News of her death was the top trending item on Weibo as I write this. She was the first female tractor driver in New China, and became a model for women in the Mao Era.
“"Women hold up half the sky", a "red quotation" from the 1940s and 1950s, is a true portrayal of women in Liang Jun's era who broke free from feudal bondage. Liang jun is a typical representative of that era.
Business, Economy and Trade
The Stronger Yuan Is Sending Waves Through Assets Worldwide - Bloomberg As the yuan blasts through key levels, the dollar is now the most oversold against it in two years. The yuan -- up about 4% against the greenback since August -- has gained far less versus a basket of currencies, making this just as much a story of dollar weakness.
China's financial stability body to strengthen regional coordination - Reuters The office of the cabinet’s Financial Stability and Development Committee will establish a regional coordination mechanism to help shore up risk controls, the People’s Bank of China said in a statement...Under the new mechanism, senior officials at provincial central branches, local banking and securities regulators will be responsible for coordinating with the office of the financial stability body, the bank said 央行：建立金融委办公室地方协调机制 加强央地协作
U.S., EU, Japan agree new subsidy rules with China trade in focus - Reuters After meeting in Washington, Japanese Economy Minister Hiroshi Kajiyama, U.S. Trade Representative Robert Lighthizer and EU trade commissioner Phil Hogan said in a joint statement that existing World Trade Organization (WTO) rules were insufficient to tackle market distortions from subsidies. The proposed rules are the outcome of two years of trilateral discussions, but are only a precursor to the hard work of convincing other WTO members, including China. // Joint Statement of the Trilateral Meeting of the Trade Ministers of Japan, the United States and the European Union | United States Trade Representative
Reforms to give market forces more IPO clout - China Daily China will accelerate capital market reforms this year, giving priority to expanding the market-based initial public offering system, improving the quality of listed companies and increasing market openness to draw more long-term institutional capital from home and abroad, analysts said. The country's top securities regulator, the China Securities Regulatory Commission, will hold its annual work conference later this month to set the agenda for the reforms and will lay out the regulator's key tasks and main objectives.
Chinese vice premier stresses cutting red tape, improving business environment - Xinhua Chinese Vice Premier Han Zheng on Tuesday called for achieving new breakthroughs in cutting red tape and improving the business environment. Han made the remarks at a meeting on transforming the government's functions and reforms that streamline administration, delegate power, improve regulations and upgrade services
Regulator Hints Banks Will Get More Time to Comply with Asset Management Overhaul - Caixin China’s banking watchdog may give some large lenders even more time to comply with sweeping new regulations for the asset management sector after they complained of difficulties meeting the end-2020 deadline set almost two years ago...The China Banking and Insurance Regulatory Commission (CBIRC) has not made any announcement but a senior official at the watchdog gave the strongest hint yet that a change may come during a briefing on Monday when he was asked about an extension.
Giant Pork Producers See Revenue Soar as Swine Fever Strangles Supply - Caixin Because the hardy African swine fever virus persists in the environment, small and midsize farmers face greater risk in raising their own pigs. Meanwhile large pig companies have announced plans to dramatically ramp up their production in coming years, aided in part by government subsidies.
Top Chinese Carmaker’s New-Energy Vehicle Sales Plunge After Subsidy Reductions - Caixin SAIC Motor Corp. Ltd. sold between 50,000 and 60,000 NEVs last year, compared with nearly 100,000 in 2018, Deputy Chief Engineer Zhu Jun told an industry panel on Sunday. He added that NEVs aren’t competitive enough in the market yet, and only the rapid lowering of costs will change that.
Chinese football club owner hits out at state lender | Financial Times $$ The disagreement between Xu Guoliang, the controlling shareholder of Shanghai Shenxin Football Club, and Bank of Shanghai centres around two real estate projects in the Chinese city that Mr Xu says were misappropriated from him. Mr Xu alleges that he was “intimidated” by a Bank of Shanghai vice-president into signing over the two property developments as a form of collateral for loans granted to a third company, Shenzhen-based Baoneng Group.
Fundamentals simply do not matter in China’s stock markets | Financial Times - Michael Pettis $$ They do not, and never have. It has been almost impossible during the past few decades to find a credible correlation between the performance of the Chinese stock market and any measure of growth prospects or profitability. Monthly surges or drops of 10-20 per cent or more occur far too often to suggest any relation with normal economic volatility...for now share prices provide no meaningful information at all about China’s economy. // nor have they ever
Guangdong legislators meet in shadow of US-China trade war and Hong Kong protests | South China Morning Post A meeting of the Shenzhen city congress last week highlighted the problem, when officials warned that the tech hub needed to redouble its efforts to secure its supply chains – a veiled reference to Washington’s threat of trade restrictions that could hamper the city’s tech industry. While Shenzhen achieved 7 per cent economic growth in 2019, analysts were less rosy about the outlook for Guangdong as a whole this year.
Politics and Law
赵克志在安徽看望慰问基层民警-中国长安网 Minister of Public Security Zhao Kezhi goes on an inspection tour of Anhui, visits a "Fengqiao-style police station" to understand the establishment and results of the creation of these. For more on the "Fengqiao Experience" see the 12.9.19 newsletter Politburo meeting; The "Fengqiao Experience" and modernizing governance; Technology decoupling // 在合肥市公安局井岗派出所1912金大地综合警务站、逍遥津派出所，赵克志与执勤民警、辅警和驻所人民调解员亲切交谈，详细了解“枫桥式公安派出所”创建活动成效。他说，派出所是公安工作的基石，始终处于维护安全稳定、服务人民群众的第一线。要通过深入开展“枫桥式公安派出所”创建活动，积极预防化解矛盾纠纷，全力防范管控各类风险，努力把各类不稳定因素预防在早、化解在小、解决在萌芽状态，切实维护好辖区稳定、守护好一方平安。要坚持专群结合，勇于改革创新，积极推动基层社会治理创新，认真开展好“百万警进千万家”活动，努力实现基础牢、出事少、治安好、党和人民满意的目标。
电视专题片《国家监察》第三集 《聚焦脱贫》——中纪委视频页面——中央纪委国家监委网站 The third episode in the CCTV show "National Supervision" focus on corruption and problems in the war on poverty
省部级高官建"开心团"群专门寻开心 工作一塌糊涂|中央纪委_新浪新闻 One of the cases featured, this one of former Shaanxi vice governor Feng Xinzhu, who was in charge of anti-poverty work.
Yicai Global - Details Emerge in Graft Case of Ex-Kweichow Moutai Chair, Guizhou Vice Governor Yuan used his power to illegally grant franchise licenses for personal gain. His wife and children have also realized more than CNY230 million by illegal operation of Maotai liquor since 2004. Yuan's successor Liu Zili also yielded to the temptation of sitting atop the world's most valuable liquor maker by market cap, which topped USD200 billion last year, and was arrested and charged with corruption in September
East China province arrests over 17,000 in mafia-style crime crackdown - Xinhua East China's Shandong Province arrested 17,585 suspects related to mafia-style crimes last year, the provincial government said Tuesday. Nearly 20 billion yuan (about 2.9 billion U.S. dollars) involved was seized, up 575 percent, said Liang Zhanguang, deputy head of the provincial commission for political and legal affairs.
China's cabinet to solicit opinions on gov't work report - Xinhua The State Council, or China's cabinet, will send a draft version of a government work report to multiple central and provincial-level government departments to solicit their opinions. The decision was made at a plenary meeting of the State Council Monday presided over Premier Li Keqiang.
Xi Focus: Xi gathers with non-Communist party leaders, personages ahead of Spring Festival - Xinhua Members of the Standing Committee of the Political Bureau of the CPC Central Committee Wang Yang and Han Zheng attended the gathering. Wang is also the chairman of the Chinese People's Political Consultative Conference National Committee, while Han is a vice premier of the State Council.
Court in Beijing Hears Lawsuit From Evicted Family of Rights Lawyer - RFA A district court in Beijing on Tuesday made a limited award in favor of the wife of high-profile rights lawyer Xie Yanyi against the landlord who evicted her family last year under huge pressure from the police, RFA has learned.
Prisons promote ethnic unity - Global Times Prisons in provinces and regions with large numbers of ethnic minorities have been promoting ethnic unity among inmates, which experts hailed as an important move to safeguard social stability. Prisons in Yunnan Province, Xinjiang Uyghur Autonomous Region, Qinghai Province and Ningxia Hui Autonomous Region have been conducting ethnic unity classes, media reported...The prison also teaches the inmates the meaning of ethnic unity through ancient Chinese classics like the "Three Character Classic," or San Zi Jing, and gives them brochures on ethnic policies.
焦点访谈 | 关于中央八项规定 总书记是怎样带头执行的？ | 南方周末 中央党校（国家行政学院）教授 辛鸣： 总书记身体力行，在转变作风的过程中，真正体现了人民领袖与人民的深厚情谊，作为国家公仆，他尽心尽力地为党和人民工作，把这样一种情怀和境界体现出来。
Foreign and Defense Affairs
Xi to sign deal on Kyaukphyu SEZ during Myanmar visit: Chinese ambassador | The Myanmar Times China has vowed to strengthen strategic links and advance economic projects such as the Kyaukphyu Special Economic Zone (SEZ) in Myanmar, said Chinese ambassador to Myanmar Chen Hai, prior to Chinese President Xi Jinping's expected visit to the country on January 17. “Chinese president Xi Jinping’s visit to Myanmar will greatly advance bilateral relations,” Mr Chen said, according to a report by Chinese newspaper Golden Phoenix, seen by The Myanmar Times.
Xinhua Headlines: Xi's trip to write new chapter of China-Myanmar "Paukphaw" friendship - Xinhua The visit, which comes on Friday and Saturday at the invitation of Myanmar President U Win Myint, is not only Xi's first overseas trip this year, but the first to the Asian neighbor by a Chinese president after an interval of 19 years. The fact that this year marks the 70th anniversary of bilateral diplomatic ties also endows the tour with unique significance. During Xi's visit, the two sides will work toward further enriching their relationship, strive toward building a China-Myanmar community with a shared future, and embark on a new era of bilateral ties, according to the Chinese Foreign Ministry.
Shanghai terminates sister-city relationship with Prague - Xinhua The city government of Prague repeatedly made wrong moves on Taiwan and other major issues concerning China's core interests, grossly interfered in China's internal affairs, and openly violated the one-China principle, the office said in a statement. The municipal government and people of Shanghai strongly condemn and protest against the behavior of Prague, the statement said.
Germany creates elite networking club to boost China ties - Reuters The organizers say the “China-Bridge” initiative is modeled on the “Atlantic-Bridge”, a non-profit organization set up in 1952 to boost German-American friendship which has 500 decision-makers in business, politics, science and media as members.
North Korea Designations - US Department of Treasury The following entities have been added to OFAC's SDN List: BEIJING SUKBAKSO, Qixingmen Store, No. 8 Apartment, Fangcaodi West Road, Chaoyang District, Beijing 100020, China (Chinese Simplified: 8号搂底商七星门葩, 芳草地面街, 朝阳区, 北京市 100020, China); Liangzi Zu Way (Ground Level, White Gate), No. 42, Gangshan Road, Shunyi District, Beijing 101300, China; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210 [DPRK3] [DPRK-NKSPEA].
Boao Forum for Asia announces 2020 conference agenda - Xinhua The conference, scheduled for March 24 to 27 in Boao, a coastal town in China's southern island province of Hainan, will be themed "A world in change: Bond together for a shared future
China’s Shipbuilders Seek New Inroads in Arctic Shipping – The Diplomat Despite forecasts of an “ice-free” Arctic, however, icebreakers, along with ice-strengthened and winterized merchant ships, remain vital to realizing these opportunities safely and effectively. Judging from the Marintec maritime trade fair held in Shanghai last month, China’s state-owned shipbuilders are positioning themselves to meet this demand.
'Talking to China the only solution,' PH official says as Chinese Coast Guard docks in Manila A marching band greeted the Chinese Coast Guard as its Vessel 5204 laid anchor at the Port of Manila, led by Major General Wang Zhongcai. The visit was unprecedented, considering reports that the Chinese Coast Guard would harass Filipino fishermen and intimidate foreign ships in the West Philippine Sea, a portion of the South China Sea claimed and occupied by Manila and contested by Beijing.
Report: Chinese hacking group APT40 hides behind network of front companies | ZDNet After previously exposing details about Beijing's hand in APT3 (believed to operate out of the Guangdong province), APT10 (Tianjin province), and APT17 (Jinan province), Intrusion Truth have now begun publishing details about China's cyber apparatus in the state of Hainan, an island in the South China Sea.
Who is Mr Gu? – Intrusion Truth In our previous articles we identified thirteen companies that this blog knows are a front for APT activity in Hainan. Following further analysis, we noticed a close association between these Hainan front companies and the academic world. Multiple job adverts for the the companies are posted on university websites. Hainan Xiandun even appears to operate from the Hainan University Library!...This company summary for Hainan Xiandun also provides a contact number: 13907545649. Cross-referencing this partial phone number and Hainan, we identified Gu Jian (顾剑) is a Computer Science specialist at Hainan University. We found Gu’s name and phone number in this list of projects on the Hainan University website.
Florida joins U.S. government in probing foreign ties of researchers | Science | AAAS Florida lawmakers have begun an investigation into the foreign ties of researchers at the state’s universities and research institutions. The inquiry, the first of its kind at the state level, dovetails with an ongoing federal probe into whether such affiliations, notably with Chinese entities, pose a risk to the U.S. research enterprise. The Florida effort is triggered by revelations last month that six scientists at the Moffitt Cancer Center had been dismissed for failing to disclose their participation in China’s Thousand Talents Program. The researchers include the center’s CEO, Alan List, and the head of its research center, Thomas Sellers.
Hong Kong and Macao
GBA in 2020: Same challenges, less drama - Greater Bay Insight The Greater Bay Area’s masterplan is not yet a year old – it began on the auspicious date of 02/18/2018 – and yet it has become economic scripture, cited by officials and entrepreneurs throughout the region’s nine cities and two Special Administrative regions. This is not only because of the top-down way China is governed. It is also because the GBA plan is a well-researched and concisely written 60-page document. The vision it lays out for the region’s integration is clear, and the priorities it lays down for the governments of Guangdong, Hong Kong and Macau are coherent.
Taiwan denies using swaps to intervene in currency market | Reuters The U.S. Treasury, as part of its semiannual report on foreign exchange policies of major U.S. trading partners, said it was "concerned" by recent analysis from the U.S. Council of Foreign Relations "suggesting that Taiwan may have engaged in substantial undisclosed foreign exchange intervention in the swap market". The report said the analysis estimated Taiwan has conducted "undisclosed foreign exchange intervention in the swap market totalling approximately $130 billion, and perhaps as much as $200 billion".
Tech and Media
Why ‘Star Wars’ Keeps Bombing in China - The New York Times Despite an aggressive marketing push by Disney, movie after movie has flopped in the world’s second-largest market, where nostalgia for the series has no power over viewers.
Domestic reality show criticized for alleged plagiarism and gender stereotypes - Global Times Chinese Net users have criticized a domestic reality show that allegedly plagiarizes US program Queer Eye and promotes gender stereotypes. You are so Beautiful is a reality show aired by Chinese streaming platform Mango TV (MGTV) since December 19. Five hosts of the show, including controversial MGTV hostess Wu Xin and Taiwan singer Jay Chou's wife Kun Ling Hannah Quinlivan, help one person, mostly women, to change their outlook and lifestyle in each episode.
Sellers asked to choose in battle between Alibaba and Pinduoduo | Financial Times $$ Alibaba is fighting back against Pinduoduo, which has rapidly built an annual customer base of 536m people, three-quarters of Alibaba’s 693m total in China, through heavy discounts, games and group-buying promotions. It is now Alibaba’s main competition, displacing JD.com, which has 334m customers.
Society, Arts, Sports, Culture and History
Nine killed, 10 missing in northwest China road cave-in - CGTN The cave-in happened at 5:36 p.m. on Monday, when a road section collapsed in front of a hospital on the heavily-trafficked Nandajie Street in the city of Xining, the provincial capital. A public bus fell into the hole and an explosion ensued, local authorities said. The hole stretched nearly 10 meters in diameter.
Poverty in China: Student's death sparks concerns - CNN Wu Huayan, 24, died at the Affiliated Hospital of Guizhou Medical University in the city of Tongren on Monday, a spokesman for the hospital confirmed to CNN, while declining to provide a reason for her death. A third-year student at Guizhou Forerunner College, Wu was 135 centimeters tall (4.4 feet) and weighed just 21.6 kilograms (48 pounds), according to a statement by the Tongren municipal government in October. She captured national attention that month, when her story was told in Chinese media.
School Helps Top Testers Bring Home the Bacon for Lunar New Year | Sixth Tone Last Thursday, the private Hanlin school, located in the relatively impoverished county of Nayong, bought and slaughtered seven hogs before distributing the meat to 90 students who had scored well on their final exams. The top students received 18 kilograms, those in the second tier received 12 kilograms, and third-prize winners were each awarded a pig’s foot.
Energy, Environment, Science and Health
WHO says new China coronavirus could spread, warns hospitals worldwide - Reuters “From the information that we have it is possible that there is limited human-to-human transmission, potentially among families, but it is very clear right now that we have no sustained human-to-human transmission,” said Maria Van Kerkhove, acting head of WHO’s emerging diseases unit.
China’s Growing Oil-Refining Overcapacity to Fuel Surge in Exports - Caixin China’s total refining capacity will grow by 27 million tons to reach 887 million tons in 2020, helping push exports up 18% to 64.5 million tons from last year’s 54.66 million tons, the CNPC Economics & Technology Research Institute (ETRI) said in a report on Monday, putting China on a path to overtake South Korea as the largest oil exporter in the Asia-Pacific region…However, the report also predicts 170 million tons of that capacity will go unused, a 13.4% jump from 2019.
Chinese academics who work abroad are slower to win major honour - Nature Of the approximately 1,500 Chinese nationals awarded a Changjiang Scholarship in the sciences between 1999 and 2015, those who received a PhD at a foreign university had held their doctorate for 25% longer — about 2.3 years — than those recipients who did not earn a PhD overseas when they won the scholarship, reports a study led by Tang Li, a public policy researcher at Fudan University in Shanghai, China.
Prominent Chinese cloning researcher sentenced to 12 years in prison - Nature A Chinese court has sentenced leading animal-cloning researcher Li Ning to 12 years in prison. The ruling comes more than 5 years after he was arrested for allegedly embezzling millions in research funding. Li’s former assistant, Zhang Lei, also received a sentence, of more than 5 years in prison.