US-China Trade; Living Bodhisattva Xi Jinping And His Power Machinations; International Women's Day; Beijing Forcing Xiao JianhuaTo Sell Assets; China's "New Type Of Political Party System"

The carefully scripted NPC show continues in Beijing as the White House reality show continues to confound in DC. It feels like we are all watching a depressing geopolitical version of "As The World Turns".

Trump may announce tariffs today and they may or may not hit allies. No one seems to be sure. More important though for the US-China relationship is the outcome of the Section 301 investigation. I have been hearing for a while that an announcement is close, and now it sounds like it may very well be. The Chinese are much more concerned about 301 than steel and aluminum tariffs.

Jonathan Swan@jonathanvswan

Exactly. They had the 301 action lined up and (almost) ready to go before Trump surprised everyone w the 232 (Steel and tariff) announcement. 301 = tariffs on potentially hundreds of Chinese products to retaliate against China’s theft of American IP.

March 7, 2018

Thanks for reading.

The Essential Eight

1. US-China Trade Friction

This makes more sense--Trump Tweet on China Trade Understates U.S. Demand — by $99 Billion - WSJ:

President Donald Trump tweeted Wednesday that Washington had asked Beijing for a plan to cut the U.S. trade deficit with China by $1 billion—less than 0.3% of the countries’ annual trade gap or around one day’s worth of the trade imbalance.

He was off by $99 billion.

According to people familiar with the matter, Trump administration officials requested a $100 billion reduction in the U.S.-China trade deficit when meeting with President Xi Jinping’s top economic deputy last week.

China Exports Soar, Along With Threat of Trade War - Caixin Global:

Expansion in China’s exports hit a three-year high in February, greatly surpassing market expectations, while its year-to-date surplus against the United States soared 35%, set to further fuel concerns over a trade war.

Outbound shipments by the world’s biggest exporter in goods surged 44.5% from a year ago to $171.6 billion last month, figures published by the General Administration of Customs showed Thursday.

It marked the fastest growth rate since February 2015

U.S. Considers Broad Curbs on Chinese Imports, Takeovers - Bloomberg:

An announcement following an [Section 301] investigation by the U.S. Trade Representative’s office into China’s IP practices is expected in the coming weeks, potentially handing President Donald Trump further cause to impose trade restrictions...

Under the most severe scenario being weighed, the U.S. could impose tariffs on a wide range of Chinese imports, from shoes and clothing to consumer electronics, according to two people familiar with the matter who spoke on condition of anonymity because the discussions aren’t public.

The Trump administration could combine the tariffs with restrictions on Chinese investments in the U.S., which are reviewed for national-security risks by Treasury’s Committee on Foreign Investment in the U.S., the people said. The new measures being considered by the administration could go beyond even domestic security considerations.

China Vows Retaliation if Trump Engages in Trade War - The New York Times:

Speaking on the sidelines of the annual meeting of China’s legislature, Foreign Minister Wang Yi said, “History has shown that fighting a trade war has never been a correct way to solve a problem.”

“Especially given today’s globalization, choosing a trade war is a mistaken prescription,” Mr. Wang said. “The outcome will only be harmful. China would have to make a justified and necessary response.”

He did not elaborate on the measures that Beijing might take. But he urged the United States to “sit down peacefully” to constructively discuss finding a mutually beneficial solution.

China searches for point person to manage relationship with Trump - FT $$:

Twice now, envoys have gone to Washington asking for a list of specific trade complaints that Beijing and Washington can hash out together. The first was Yang Jiechi, China’s top diplomat, in January; the second was Mr Liu last week. In both cases, they were told there was no such list. 

U.S. Allies to Sign Sweeping Trade Deal in Challenge to Trump - The New York Times:

A group of 11 nations — including major United States allies like Japan, Canada and Australia — is set to sign a broad trade deal on Thursday that challenges Mr. Trump’s view of trade as a zero-sum game filled with winners and losers. Covering 500 million people on either side of the Pacific Ocean, the pact will represent a new vision for global trade as the United States threatens to impose steel and aluminum tariffs on even its closest friends and neighbors...

In its original incarnation as the TPP, the pact was conceived as a counterweight to China, whose vast economy was drawing other Asian countries closer despite its state-driven model and steep trade barriers.

2. Living Bodhisattva Xi Jinping And His Power Machinations 

Chris Buckley, one of the the best western journalists writing on Chinese politics today, has a terrific story in the New York Times on Xi's machinations to end Presidential term limits. 

How Xi Jinping Made His Power Grab: With Stealth, Speed and Guile - The New York Times:

Some 200 senior Communist Party officials gathered behind closed doors in January to take up a momentous political decision: whether to abolish presidential term limits and enable Xi Jinping to lead China for a generation.

In a two-day session in Beijing, they bowed to Mr. Xi’s wish to hold onto power indefinitely. But a bland communiqué issued afterward made no mention of the weighty decision, which the authorities then kept under wraps for more than five weeks.

That meeting of the party’s Central Committee was the culmination of months of secretive discussions that are only now coming to light — and show how Mr. Xi maneuvered with stealth, swiftness and guile to rewrite China’s Constitution...

Reuters, citing two unnamed sources, has reported that the Central Committee failed to reach a consensus at the January meeting and convened its next meeting earlier than usual.

But four party insiders — two retired officials, a party newspaper editor and a businessman with family links to the leadership — told The New York Times that Mr. Xi prevailed in January, essentially confirming the official timeline.

Any committee members with misgivings were unlikely to speak out, given the array of punishment they could face, and party elders who may have once opposed such a move — including Mr. Hu and another former president, Jiang Zemin — are too old or too cowed by Mr. Xi’s anticorruption investigations to muster resistance, party insiders said.

Xi Jinping's latest tag: living Buddhist deity, Chinese official says - Reuters:

Speaking on Wednesday on the sidelines of China’s annual meeting of parliament, the party boss of the remote northwestern province of Qinghai, birthplace of the Dalai Lama, said Tibetans who lived there had been saying they view Xi as a deity.

Wang Guosheng said the province had been following Mao Zedong’s advice about inspiring the masses to love the party and its leader, distributing “images of the leader” to people in poverty-stricken areas being moved into new homes...

“The ordinary people in the herder areas say, only General Secretary Xi is a living Bodhisattva. This is a really vivid thing to say,” Wang said. //活菩萨

Xi Jinping and China’s ‘good emperor, bad emperor’ problem - FT $$:

“Only people of the highest quality, who are careful, discerning and attentive, are suitable for long-term rule without making mistakes,” the scholar adds. “As the Chinese public knows, of 422 Chinese emperors [throughout history] only a few have been truly enlightened and open . . . It is understandable that society has some doubts about this revision to the constitution.”

People close to China’s leadership say that in private, Mr Xi has no illusions about Mao’s mistakes. His own father, a high-ranking party and government official, was purged by Mao and as a teenager Mr Xi was “sent down” to the countryside during the cultural revolution...

“Everyone is unhappy, even senior staff who tend to be more conservative,” says one editor at a large state media outlet. “Many of my younger colleagues are very angry.”

3. International Women's Day

China dominates self-made woman rich list - BBC News:

The top four women in the report by publisher Hurun - and five of the top 10 - come from the Asian superpower.

Zhou Qunfei, who founded a firm that makes glass used to cover laptops and smartphones, was the world's richest self-made woman, with $9.8bn (£7.1bn).

Lies and statistics: How many of China's women are actually in the tech sector? · TechNode;

This year again for Women’s Day, Chinese state media reported that women account for 55% of entrepreneurs in the internet field, a statistic repeated since 2015. So far, however, nobody has been able to figure out what it actually means. Is it women that have founded a startup? Women who work for a tech company? Women who happened to open a shop on Taobao?

Other research has given vastly different results. According to one report by NetEase Cloud and IT Juzi, the number of female entrepreneurs is as low as 16%.

Qiu Jin, Beheaded by Imperial Forces, Was ‘China’s Joan of Arc’ - The New York Times:

Her legacy as one of China’s pioneering feminists and revolutionaries was cemented on July 15, 1907, when she was beheaded at 31 by imperial army forces who charged her with conspiring to overthrow the Manchu-led Qing government. It was her final act of resistance, and it would later earn her a place in the pantheon of China’s revolutionary martyrs.

China: ‘Women are creating a new corporate culture’ - FT $$:

Market-oriented reforms, however, have eroded the institutions designed to help women, while anachronistic policies hostile to working women, such as outright hiring discrimination, remain. The most remarkable gains are being made quietly in business, where women have a more direct impact on policies.

“In China, especially in tech companies, we are creating a new kind of corporate culture,” says Bianca Yin, a project manager at Didi Chuxing, China’s largest ride-hailing platform.

In China, retailers cash in on 'she' economy for Women's Day - Reuters:

in China, the day was dominated by sales campaigns from online retailers, a trend that has angered women’s rights activists who want to reclaim the day as an opportunity to make progress on issues like combating sexual harassment.

One gym pushed memberships by saying “it only takes three months to become a queen”, while Alibaba encouraged shoppers to “give life to your women-power”.

The women-targeted market, or the so-called “she economy”, a term coined by China’s education ministry in 2007, is expected to account for $700 billion by 2019, according to the Chinese securities firm Guotai Junan.

One China journalist’s quest to amplify female voices in media - SupChina:

The Greater China Female Experts Open Directory is a crowdsourced list of some 400 experts in a wide range of China fields. “I’ve always been a feminist and looked for ways to not only raise awareness for women’s issues, but also find solutions to them,” says its creator, Joanna Chiu.

4. NPC Roundup

习近平参加山东代表团审议_新闻频道_央视网( CCTV on Xi's meeting with the Shandong delegation---Xi calls for earnest implementation of rural vitalization strategy-Xinhua 

China plans to create energy ministry in government shake-up - sources - Reuters:

The new ministry would not be under the NDRC and would handle energy-related duties currently scattered across many government agencies, the sources said.

The planned shake-up is part of a broader reshuffle of government departments, which will be presented to China’s largely rubber-stamp parliament on Tuesday. It is not clear if details of the changes will immediately be made public.

5. Beijing Forcing Xiao Jianhua's Tomorrow Group To Sell Assets

The South China Morning Post reports that Xiao Jianhua, in custody for over a year, has been instructed to divest assets of his Tomorrow Group and give the proceeds to state banks. The article says there are three ways Beijing is handling some of the "Grey rhino" conglomerates--"instructed" divestment, takeover and prosecution (Anbang), and "guidance". Interestingly, this article claims that CEFC chairman Ye Jianming is not under investigation but rather is working under "guidance" to divest some CEFC assets...

China’s battle plan against tycoons prompts Xiao Jianhua firm to sell US$23 billion of assets | South China Morning Post:

The business empire controlled by Chinese tycoon Xiao Jianhua will divest itself of 150 billion yuan (US$23.7 billion) worth of assets this year to repay bank loans, after offloading investments of about 100 billion yuan since he returned to the mainland from Hong Kong in mysterious circumstances early last year, a well-informed source told the South China Morning Post...

Tomorrow Holdings, Xiao’s primary corporate vehicle, and a vast network of affiliated ventures were divesting assets under directions from the Chinese authorities because his opaque business, with hundreds of corporate vehicles, had accumulated risks high enough to endanger the country’s financial security, the source said.

Proceeds from the sale of the assets are meant to be returned to the state banks, the source said...

“Instructed” divestment, as in Xiao’s case, is one of three approaches Beijing has adopted to deal with tycoons. Property and investment conglomerate Dalian Wanda Group, owned by Wang Jianlin, and airline and property conglomerate HNA Group had been told to do similar things, the source said..

6. Wang Yi Praises “Chief Architect” Xi In His Press Conference

Xi spearheads head-of-state diplomacy as chief architect: FM - Xinhua

President Xi Jinping, as the chief architect of China's major-country diplomacy, has been personally involved in planning and conducting "brilliant" head-of-state diplomacy, Foreign Minister Wang Yi said Thursday. 

Xi has visited 57 countries and received more than 110 foreign heads of state since the 18th National Congress of the Communist Party of China in 2012, deepening the world's understanding of China, enhancing China's profile and influence, and facilitating the solution to many global problems, Wang said at a press conference on the sidelines of the first session of the 13th National People's Congress.

'Quad' move will dissipate like sea foam: China - Times of India

China on Thursday reacted sharply to the quadrilateral coalition between the US, Japan, Australia and India and its Indo-Pacific concept, saying it was a "headline grabbing" idea which will "dissipate like sea foam".

The recently revived regional grouping known as the quadrilateral security dialogue (Quad) describes Asia-Pacific region as the 'Indo-Pacific'.

Asked if the Indo-Pacific strategy being furthered by the four-nation grouping will affect China's multi-billion dollar Belt and Road Initiative (BRI), Chinese foreign minister Wang Yi said it was a "headline grabbing" exercise.

Chinese FM hails President Xi's leadership in diplomacy - CGTN:

Commenting on the recent ease of tensions on the Korean Peninsula, Wang described it as a proof that China's "suspension-for-suspension" proposal has worked.

Chinese foreign minister highlights China's four major events in 2018 - Xinhua:

First, Boao Forum for Asia annual conference will take place in Hainan this April, and focus on reform and opening-up.

Second, the Shanghai Cooperation Organization summit will take place in Qingdao this June, and focus on revitalizing the Shanghai Spirit.

Third, the Forum on China-Africa Cooperation summit will take place in Beijing this September, and focus on the Belt and Road Initiative.

Fourth, the First China International Import Expo will take place in Shanghai this November, and focus on further market opening.

China denies trying to supplant US role in global affairs | South China Morning Post:

Foreign Minister Wang Yi said on Thursday there was competition between China and the US, but the two nations should treat themselves as partners rather than rivals.

“Some people in the United States believe that China is overtaking the role of the US in international affairs. This is a fundamental strategic misjudgment,” Wang said at a press conference on the sidelines of the National People’s Congress in Beijing. “If you say there is competition between China and the US, this should be positive competition and this is normal in international relations.”

7. China's "New Type Of Political Party System" As A Contribution To The Rest Of The World

Xi Jinping said in comments at the CPPCC that China is offering a new type of political party system, a "China plan" that contributes "China's wisdom" to the development of political parties around the world.





So the late 2017 "CPC in Dialogue with World Political Parties High-Level Meeting" is part of a bigger plan, clearly. Here is 12.3.18 CGTN report on the meeting-World Political Parties Dialogue concludes with ‘Beijing Initiative’ 

8. Henan Now Mostly Urban

China's Biggest Farming Province Is Now Majority Urban - Bloomberg:

Henan, in central China, had 50.2 percent of its 96 million residents in cities or towns at the end of last year, from 48.5 percent in 2016, according to local government data. The third-most-populous province, it produces about a tenth of the country’s food and surpassed the majority urban milestone six years after China as a whole...

Just 13 years ago, Henan’s urban ratio was 31 percent, versus 43 percent nationwide and 61 percent in Guangdong, which is adjacent to Hong Kong. The transformation is all the more remarkable because of Henan’s agricultural heritage. A prolific producer of grain, cotton, cooking oil and meat, it’s sometimes referred to as “the granary of China.”

Business, Economy, Finance And Trade

China Tightens Screws on Insurance Shareholders - Caixin Global The China Insurance Regulatory Commission released new rules on Wednesday that cut the ceiling of single shareholders to 33% from the current 51%. Investors will have to use their own funds to buy a stake in an insurer and will be prohibited from hiding ownership through proxies. Insurance companies should have “clear and reasonable shareholding structures,” and must reveal “the actual controlling entity to the regulator,” the CIRC said in a statement.

First Home Loan Rates Post 22.15% YoY Rise in February - China Banking News A new report from Rong360 indicates that China’s average first home loan rate in February was 5.46%, or 1.114 times the benchmark rate, for an on-month rise of 0.55% and a year-on-year leap of 22.15%.According to the report’s data 53 out of the 533 banks monitored by Rong360 in 35 Chinese cities raised first home loan rates in February, accounting for 9.94% of the total.


Politics, Law And Ideology

Xi Jinping’s Ever More Powerful Anti-Corruption Tool | Foreign Affairs The extent of NSC intrusion into the substantive work of officials remains to be seen. But even if the NSC does stick largely to its anti-corruption focus, increased disciplinary activity and the increased use of resources in state organization will reinforce an atmosphere in which officials face far more ideological and political pressure. This is true not only for party organs but for officials working in banks, state-owned enterprises, and the financial regulatory sector too. State employees, such as hospital management and academics, may also face similar scrutiny.

Box Office Sales For 'My Country is Incredible' Soar After Party Orders Members to See Film- RFA The ruling Chinese Communist Party has ordered its nearly 90 million members to watch a propaganda movie titled "My Country is Incredible," sending the nationwide box office ratings sky-high on the first day of its release in movie theaters, RFA has learned.

China Detains Former Prosecutor Who Criticized President's Plan For Unlimited Rule - RFA Authorities in the eastern Chinese province of Anhui have detained a former state prosecutor on public order charges after he criticized plans to allow President Xi Jinping to rule indefinitely, his friends and relatives said. Shen Liangqing, who has been a vocal critic of the government in recent years, was taken away by around 10 police officers from his home in Anhui's provincial capital Hefei on Tuesday evening, his son Shen Li said.

Lawsuit Seeks Possible Negligence in Deadly Fire - Caixin Global A father of three is seeking a court order for records that could shed light on whether firefighters mishandled an apartment fire in Hangzhou that killed his wife and children in June. The case will be heard by a district court in the eastern city of Hangzhou, Zhejiang province, though a trial date has not been set, said the father, Lin Shengbin, whose wife, two sons — aged 4 and 10 — and 7-year-old daughter died in the fire.

In China’s countryside, Xi’s continued leadership warmly welcomed | ICWA Youcong had heard nothing about the term-limit issue, but was curious enough to open Toutiao. There was nothing about it in the top headlines, but typing “constitution” (宪法) in the search bar auto-populated recent popular searches: constitution term limits, constitution amendment content, constitution national chairman… One of the top articles was from the Global Times, a pro-Communist Party tabloid, on how foreign media had welcomed the proposed amendments. It seemed Toutiao’s new content screeners were doing their jobs: all news about scrapping term limits was positive. So was the response of every other villager I talked to. “That’s great!” exclaimed Brother Huang after I broke the news. “Xi is doing great work and should continue—especially in cracking down on corruption. That’s good for everyone.” 

Chinese Students in America Say ‘Not My President’ – Foreign Policy The signs are part of a small but growing campaign among Chinese university students abroad to express their opposition to the Chinese Communist Party’s proposal, announced last week, to scrap presidential term limits, paving the way for Xi to stay in power indefinitely. “The single most important driving force behind China’s growth in the past 30 years has been the check on the party leader’s power on the institutional level,” the organizers, told Foreign Policy in a message, after being contacted initially through a Twitter account associated with the campaign.

管令计划叫舅的副部,司机秘书收钱比他还多 中国裁判文书网公布的一份判决书显示,原十八届中央候补委员、山西省委原常委、太原市委原书记陈川平的专职司机汤志强,曾帮忙从检察院“捞人”,收取了30万贿赂款。 长安街知事(微信ID:Capitalnews)发现,除了司机,陈川平的秘书李源广也曾受贿63万元。讽刺的是,陈川平一审时被认定受贿91万,而他的司机和秘书加起来受贿93万,比他还多!


Foreign and Military Affairs

Chinese leader Xi Jinping to speak at key regional forum | South China Morning Post President Xi Jinping will speak at the Boao Forum for Asia on the tropical island of Hainan next month to deliver the message that a powerful China will be good for the region and the world, two sources said. “Xi’s speech will be the highlight for Boao this year as he will show up as the most powerful Chinese leader for decades,” one of the sources, who declined to be named as the schedule has not been made public, told the South China Morning Post.

China's Arctic Dream | Center for Strategic and International Studies new report on CHina's Arctic strategy

Chinese universities to work together on polar research - Xinhua Fifteen Chinese universities will form a joint center engaged in polar research, according the Ministry of Education (MOE). The research center has a faculty made up of eight academicians, 94 professors, and 38 associate professors. They will monitor and investigate the conditions of ecology, atmosphere, ocean, and glaciers in the polar regions, by sharing data with the research stations of other countries.

China’s Military Spending | ChinaFile Conversation


Hong Kong, Macao

Macau move to curtail foreign judges sparks concerns over China's growing control - Reuters Macau has finished drafting a proposed new law barring foreign judges from hearing national security and defense cases, an unprecedented move that has heightened concerns over Beijing’s grip over the gambling hub.



How telecom fraud is piling even more strain on Taiwan-Beijing ties | South China Morning Post The Taiwanese gangs have been operating the fraud rings for four decades, recruiting university students and others who need extra cash. They give recruits like Liu a script to memorise and pay them a commission of one to two per cent of what is stolen. The alleged fraudsters are not always aware they have been hired to commit crimes, said Chan Chih-wen, an anti-fraud researcher for the Taiwan Criminal Investigation Bureau.

China urges Taiwan's few allies to follow 'irresistible trend' of recognizing Beijing - Reuters “Upholding the ‘one China’ principle and not having official contacts with Taiwan has already become one of the international norms for countries to follow,” he said on the sidelines of the annual meeting of parliament in Beijing. “Establishing diplomatic relations with the People’s Republic of China, the only legal representative of the entire Chinese people, and having normal cooperation is obviously the correct choice that conforms to the times,” Wang said.


Tech And Media

China’s Idol Groups: How to Organize Fans and Adulate People - Sixth Tone At a bustling cinema, a crowd of excited young women — and one passionate man — is buzzing about a pale boy with a bowl cut. He’s 18-year-old Wang Junkai, the lead singer from China’s squeaky-clean, three-person boy band TFBoys. Wang’s nowhere to be seen, but the women in their teens and 20s make do by posing next to a cardboard cutout and scrawling messages of their devotion on a banner. “From the beginning to the future, just for Wang Junkai,” they scream into a camera, repeating a widely used fan catchphrase.

Tencent Invests $632M In Chinese Online Game Streaming Platform Douyu – China Money Network The news comes a day after Douyu’s competitor Huya announced plans for an initial public offering in the U.S. During a music award by Douyu last month, Douyu’s Chief Operating Officer Cheng Chao told local media that the firm is preparing for an IPO. Douyu streams videos including entertainment, online games, sports events. As of last August, Douyu led the game streaming platform segment with more than 13 million active monthly users, while peers Huya and PandaTV had 9 million and 5.4 million active users respectively, according to a survey by Analysys.

China to take tech, music to SXSW - China Daily About 40 people from 15 mostly high-tech Chinese companies, including WeChat, Mobike, DataMesh and Zhihu, attended SXSW last year. This year, China Gathering at SXSW will continue to focus on high tech while additionally introducing music components. Participating companies include Alibaba, Ehang, Mobike and Ant Financial.


Society, Art, Sports, Culture And History

China’s ‘Ice Boy’ told to leave new private school after week | South China Morning Post China’s “Ice Boy”, whose photograph went viral on the internet after his freezing trek to school in an impoverished area of western China, has been removed from his new private school after just over a week because the headmaster says it cannot cope with the intense extra scrutiny from the authorities and pressures from the media.

How a British botanist opened China to the west - FT Think of a famous plant hunter associated with botanising in China, and names such as Robert Fortune, Ernest Wilson or George Forrest might come to mind. Were the vicissitudes of 18th-century living somewhat kinder, perhaps we would be celebrating a great name from an even earlier era, that of John Bradby Blake.


Energy, Environment, Science And Health

China unveils plans for x-ray satellite to probe most violent corners of the universe | Science | AAAS The enhanced X-Ray Timing and Polarimetry (eXTP) mission would be China's most ambitious space science satellite yet—and its most expensive, with an estimated price tag of $473 million. To pull it off, China is assembling a collaboration involving more than 200 scientists so far from dozens of institutions in 20 countries. If the eXTP mission passes a final review next year, it would launch around 2025.

China's Tiangong-1 space station crash site narrowed down - CNBC In the latest assessment, the U.S.-funded Aerospace Corporation said while it is impossible to plot exactly where the module will touch down, certain regions stand a higher chance. Aerospace identified northern China, the Middle East, central Italy, northern Spain and the northern states of the US, New Zealand, Tasmania, parts of South America and southern Africa.


Food And Travel

At DaDong in Midtown, Modern Art and Lame Duck - The New York Times New York City being a lush jungle of regulations, DaDong was forced to convert its wood-burning ovens to gas. Smoke might have added some flavor, but something seems to be lacking in the birds themselves, members of the Pekin breed raised on a farm in Indiana with special instructions to keep them lean, the way Mr. Dong prefers them. Unfortunately, DaDong’s problems don’t end with the duck. The menu in New York has been trimmed down considerably from the 280-page book presented to diners in Beijing, but it is still rife with dishes that are dead on arrival.