US-China trade talks begin; Apple and Alibaba earnings; BRI; Political security and hostile foreign forces

Good morning from relatively balmy DC. Thanks to all of you who gifted three months to a friend, and welcome to all you new readers.

Things are slowing down as we approach the Year of the Pig, so the newsletter is a bit thin today:

  • The US-China trade talks start today in DC, I have heard nothing solid yet about what to expect;

  • The new foreign investment law that will pass in March looks promising but don’t get too excited until we see how it is implemented;

  • Apple and Alibaba both reported earnings Wednesday afternoon and as expected their reports showed some softness in China’s economy but nothing too terrible;

  • The Meng Wanzhou extradition case is proceeding, her next appearance in court is set for March 6.

I will be on the CNBC show “The Exchange” at about 1:40 PM EST today to discuss the US-China trade talks.

One housekeeping note: If you want to read the newsletter in your web browser just click on the headline of the newsletter.

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The Essential Eight

1. US-China trade

U.S. sends 70 questions to WTO about China's subsidies | Reuters:

The United States has accused China of hiding some trade-distorting subsidy programs from international scrutiny while disclosing others it does not need to, according to a document circulated on Wednesday at the World Trade Organization...

China is fighting a major trade dispute at the WTO against U.S. and EU claims that China is not a “market economy” and therefore that its export prices should not be taken at face value when evaluating whether it is trading fairly.

Industry Minister Calls U.S. Ban on Jinhua ‘Untenable’ - Caixin:

The U.S. sanctions against Jinhua “generalized the concept of national security” to “abuse export control measures,” Miao Wei, China’s minister of industry and information technology, said Tuesday at a regular press briefing.

Miao said “Jinhua is innocent” as it obtained the memory chip technology from its Taiwanese partner United Microelectronics Corp. (UMC), which should take responsibility in the dispute over trade secrets theft...

[Narrator: No, they are not innocent]

Miao said Tuesday that the disputes between Jinhua and Micron are pure business matters and should be solved through negotiations by the companies. Miao said Jinhua and Micron are in contact, and the Chinese government will look closely but will not interfere in the negotiation.

The minister also called on the U.S. to remove Jinhua from the export control list.

Comment: Will Liu He ask for a reprieve for Jinhua? Or would that come from Xi?

2. New foreign investment law coming soon

It could be a big deal, from what it sounds like the changes are quite material, but given the promise fatigue we all feel it is hard to get excited until we see how it is implemented. But it does look like this was accelerated due to US pressure.

China eyes further opening-up in updated draft foreign investment law - Xinhua:

Definitions of the terms are included in the article, in addition to a clause requiring the state to give national treatment to foreign investments outside the negative list.

It also stipulates that foreign-invested enterprises have equal access to favorable policies for enterprises.

In line with provisions in the Constitution, the new draft proposes that the state shall not expropriate or requisition foreign investment, except under particular circumstances and in the public interest.

If the state expropriates or requisitions foreign investment, "due legal procedures must be followed while prompt, fair and reasonable compensation should be made," it notes.

The new draft also includes regulations regarding antitrust examination on mergers and acquisitions by foreign businesses and penalties on failure to report their investment information to related authorities...

Multiple commissions of the NPC also discussed with central government agencies, experts, foreign business chambers and foreign companies to hear their opinions.

China pushes through changes to foreign investment law as U.S. trade talks start - The Washington Post:

The law would strengthen intellectual property protection for foreign companies investing in China, and says that the state will “generally not” expropriate foreign investments. But lawyers noted that it said expropriation could be justified for vaguely-worded “social and public interests.”

It also states that the standard practice of forcing foreign companies to make their technology available to Chinese partners would now be prohibited, and that instead China would encourage “technological cooperation” on a voluntary basis that could be negotiated.

It also creates a more level playing field in which foreign and domestic companies would be treated equally in the eyes of the law, and allows foreign businesses in China to freely repatriate their profits.

NPCSC Adds Special Session for Second Review of Foreign Investment Law (UPDATED) – NPC Observer

3. Huawei

U.S. formally requests extradition of Meng Wanzhou to face financial fraud charges - The Globe and Mail:

Ms. Meng was released on $10-million bail in December, including $3-million pledged by a small group of friends acting as sureties. Robert Cheng, a friend and realtor who sold Ms. Meng and her husband their two Vancouver homes, had pledged the entire value of his $1.8-million home, but was missing one required document at the time of the bail hearing, so someone else stepped in with the money.

Tuesday’s proceeding was to replace that person with Mr. Cheng and his wife, as intended, Mr. Martin said. Ms. Meng also added four more lawyers – from Peck and Company in Vancouver and Fenton, Smith Barristers in Toronto – to her legal team, bringing the total to seven.

Justice William Ehrcke acknowledged the proceedings could take some time. “I have no idea whether we’re looking at months or years,” he said. “That’s completely unknown. It will become clearer as time progresses.”

Beijing slams US request for Huawei CFO - China Daily:

Foreign Ministry spokesman Geng Shuang said on Tuesday that China is dissatisfied with and firmly opposed to the United States' extradition demand and its disregarding Beijing's stern representations.

"We call on the US side to immediately withdraw the arrest warrant for Meng Wanzhou as well as the official extradition request," Geng said at a daily news conference.

He also urged Canada to take China's position seriously, release Meng immediately and ensure that her lawful and legitimate rights and interests are protected. Ottawa should not risk endangering itself for other's gains, he added.

US charges against Huawei hit global supply chain | Financial Times $$:

Across Huawei’s vast supply chain, which stretches from China and Taiwan to Japan, the US and Finland, the impact of the US indictment sent share prices sliding as investors fretted over the future of the Chinese telecoms equipment giant and whether it would now be hit with an export ban.

China's Huawei excluded from Czech tax tender after security warning | Reuters:

China’s Huawei [HWT.UL] has been excluded from a Czech tender to build a tax portal after the country’s cyber watchdog warned of possible security threats posed by the telecoms supplier, documents showed on Wednesday.

Nation to ratchet up efforts on 5G technology development - People's Daily Online:

On Monday, a test for virtual reality live transmission via the 5G network in China was successfully completed. The broadcast, enabled by telecom equipment maker Huawei's technology, will allow TV audiences to have a panoramic view of this year's Spring Festival gala. Wang Yanhui, secretary-general of Mobile China Alliance, an industry association, said "China's open attitude toward foreign companies in 5G stands in sharp contrast to the US, which banned some Chinese enterprises from entering its telecom market on "national security concerns".

Huawei ‘distrust’ and ‘irrational’ US trade war slammed by leading Chinese academic | South China Morning Post:

Zhang Yansheng, the chief research fellow at the China Centre for International Economic Exchanges (CCIEE) - a government-affiliated think tank - said that fundamental differences over economic issues, political systems and security will not be resolved by the March 1 deadline...

“I think the conflict [between China and the US] is inevitable and will carry on in the long term,” said Zhang, at a media briefing in Beijing on Wednesday.

“It’s irrational now, but over time, after a lot of fights and talks, it will become rational and the two will collaborate again.”

4. Belt and Road 

Reports of Belt and Road’s Death Are Greatly Exaggerated - Foreign Affairs - Nadège Rolland:

Instead of expanding its “circle of friends” and gaining influence, China seems to have done the opposite, spurring a group of disgruntled countries to band together to resist its predatory practices. Some observers claim that the Chinese leadership fails to understand the dynamics that have led other countries to push back and that this blindness increases the likelihood that Xi’s “project of the century” will soon become a fiasco.

It would be premature, however, to write off BRI. The project remains the core of China’s foreign policy strategy. Since the 19th Chinese Communist Party Congress in October 2017, BRI has been enshrined in the party’s charter, and its corollary, the “community of shared future for mankind,” has been included in the Constitution of the People’s Republic of China since March 2018. Beijing is due to host its second Belt and Road Forum, an international planning and brainstorming event for heads of state, in April 2019...

China’s leaders appear undaunted, not least because the change in international perceptions did not come as a surprise to them. To the contrary: Beijing anticipated a backlash from the start. Chinese experts wrote papers for decision-makers envisaging many potential stumbling blocks, including the Belt and Road countries’ complex sociopolitical environments, with which China was not always familiar; the possibility of local conflicts or terrorist attacks stemming from the project or targeting its investments; and the criticism that would likely emanate from both jealous great powers and reluctant recipient countries. ..

Belt and Road reflects Beijing’s vision of its role as a great power atop a China-centric regional order—one free of the liberal rules, norms, and values that Beijing rejects as relics of an unfair and obsolete order led by the West...

Western observers should not overinterpret signs of pushback to the Belt and Road Initiative as harbingers of its failure, nor should they underestimate the capacity of the Chinese Communist Party to adapt and learn.

Comment: This article by the Central Literature Research Center 中共中央文献研究室 in the 12.20 People's Daily (right before Christmas so did not get much attention outside of China) recounts the timeline of how Xi put forward the Belt and Road and explains why the initiative matters.- 打造国际合作新平台 增添共同发展新动力--观点--人民网


Google translate: In short, Comrade Xi Jinping’s important exposition on the construction of the “Belt and Road” has built a high-rise and unified overall situation, with profound ideas and rich connotations, and provided fundamental follow-up for promoting the construction of the “Belt and Road”. In the past few years, the “One Belt and One Road” has been built to complete the overall layout, and a “big freehand brushwork” has been drawn. In the future, we will focus on the key points and carefully crafted the “fine brushwork”.

A long and interesting story - Can China Turn the Middle of Nowhere Into the Center of the World Economy? - The New York Times Magazine:

The Eurasian Pole of Inaccessibility is a striking name for an absence. It is the point farthest from a sea or ocean on the planet. Located in China just east of the border with Kazakhstan, the pole gets you a good distance from harbors and coastlines — at least 1,550 miles in any direction — into an expanse of white steppe and blue-beige mountain that is among the least populated places on earth..

About 80 miles from the Pole of Inaccessibility, just across the border in Kazakhstan, is a village called Khorgos. It has spent most of its existence on the obscure periphery of international affairs, and its official population is just 908. But over the last few years, it has become an important node of the global economy. It is part of an initiative known informally as the new Silk Road, a China-led effort to build a vast cephalopodic network of highways, railroads and overseas shipping routes, supported by hundreds of new plants, pipelines and company towns in dozens of countries. Ultimately, the Belt and Road Initiative, or B.R.I., as the project is more formally known, will link China’s coastal factories and rising consumer class with Central, Southeast and South Asia; with the Gulf States and the Middle East; with Africa; and with Russia and all of Europe, all by way of a lattice of land and sea routes whose collective ambition boggles the mind.

Souring Deals Put China's Belt and Road Dreams Under Pressure - Bloomberg

We are seeing more backlash and challenges,” said Pang Zhongying, an international relations professor at Macau University of Science and Technology. “China needs to draw conclusions from its experience and absorb the lessons from the all these incidents, because the external landscape is changing rapidly and its internal economic challenges looming.”

5. Debt on the high speed railway

Zhao Jian: What’s Not Great About China’s High-Speed Rail? The Debt:

By the end of 2018, China’s high-speed railway’s operating mileage had reached 29,000 kilometers (18,000 miles). The cost of a high-speed railway is two to three times that of conventional railways. And because high-speed rail can only transport people, not goods, there may be sufficient demand for it only in large, densely populated areas, where the income from fares can cover the construction and operating costs....

Although CRC’s total passenger revenue reached 169.3 billion yuan in the first half of 2018, and could possibly reach 340 billion yuan for the entire year, its total liabilities have reached 5.28 trillion yuan as of September. Considering the amount of borrowing that local governments did to finance the construction of the high-speed rail network, the country is now laboring under an enormous amount of high-speed rail debt and the accompanying financial risks.

Resources are always limited, and the large investments in high-speed rail have meant less construction of regular railways, which has led to a serious imbalance in China’s transportation infrastructure. Chinese people used to call rail the “Iron Boss,” but since 2016, it has fallen behind road and water transportation for freight.

Because China’s railway freight capacity cannot meet the demand, a large number of vehicles have been deployed to transport goods and raw materials, like coal, over the roads, which greatly increases logistics costs and seriously reduces overall efficiency in the transportation system.

The Caixin article includes a very cool interactive graphic of the country's massive HSR network. 

Zhao says the HSR can not carry tanks or missiles, or much freight because of weight limits...interesting that Caixin's own English translation of this article leaves out the bit about the tanks and missiles - 谨防高铁灰犀牛_观点频道_财新网 


6. Apple and Alibaba earnings 

Apple China revenue Q1 2019 - CNBC:

Apple’s revenue in China came in at $13.17 billion during the December quarter, a drop of nearly $5 billion from a year ago, when Apple reported $17.96 billion in China revenue. Apple’s revenue is typically highest during this quarter, the first of its fiscal year.

Apple saw a similar slowdown between the December 2015 and December 2016 quarters, when China revenue fell 12 percent.

Apple Inc. (AAPL) CEO Tim Cook on Q1 2019 Results - Earnings Call Transcript | Seeking Alpha:

I'd first want to say a bit more about our business in Greater China. Our revenue there was down by $4.8 billion from last year with declines across iPhone, Mac and iPad. Most of the shortfall relative to our original guidance and over 100% of our worldwide year-over-year revenue decline was driven by our performance in Greater China...

We generated record December quarter services revenue in Greater China, fueled by an amazing ecosystem with over 2.5 million registered iOS developers. We saw very strong results from our wearables business there with revenues up over 50%. We also continued to grow our total active installed base by adding new customers.

In fact, more than two-thirds of all customers in China who bought a Mac or an iPad during the December quarter were purchasing that product for the first time. Finally, for perspective, despite the challenging December quarter, our revenue from China grew slightly for the full calendar year.

Apple blames revenue loss on China censoring video games - The Verge:

“The App Store in China is a large business for us,” Apple’s financial chief, Luca Maestri, said during an earnings call today. “We believe the issue around approval of new game titles is temporary in nature but clearly it’s affecting our business right now.”

Alibaba Revenue Rises 41% as Retail, Cloud Drive Growth - Bloomberg:

Revenue at China’s biggest e-commerce company rose to 117.3 billion yuan ($17.5 billion) in the three months ended December. That compares with the 119.4 billion-yuan average of estimates compiled by Bloomberg. Adjusted earnings per share was 12.2 yuan compared with the 11.2 yuan projected...

Alibaba drove revenue growth during its busiest quarter, a period that includes its annual Singles’ Day promotion, by improving marketing tools and personalized recommendations that spurred purchases. Growth also sprung from billionaire Jack Ma’s decision to take control of its main delivery network, a meals-on-demand service and video platform Youku. Those expansions however have thinned margins and shifted the company away from an asset-light model.

Alibaba revenue grows at weakest pace in three years as slowing China bites | Reuters:

Alibaba typically posts its highest revenue in the December quarter due to its mega “Singles’ Day” in November - the world’s biggest online sales event that outstrips the sales of U.S. shopping holidays Black Friday and Cyber Monday combined...

In 2018, even though Alibaba netted a record $30 billion from the Singles’ Day, annual growth dropped to the weakest rate in the event’s 10-year history as a slowing China and trade tensions chilled sentiment.

Alibaba Earnings Growth Slows, Entertainment Deepens its Losses – Variety:

Data for the digital media and entertainment segment shows quarterly revenue rising from RMB5.41 billion in the third quarter of 2017 to RMB6.49 billion in the latest three month period. Adjusted earnings before interest, taxation and amortization (EBITA) show quarterly net losses expanding from RMB2.21 billion this time last year to RMB6.03 billion between October and December 2018. At current exchange rates that is an EBITA loss of $893 million on revenues of $961 million.

While other Chinese firms are struggling--Chinese Companies Slash Profit Forecasts, Fueling Slowdown Fears - Bloomberg:

At least 20 companies, including China Life Insurance Co. and Chongqing Changan Automobile Co., told investors late Tuesday that full-year earnings would fall well short of expectations. Reasons they cited included the country’s economic slowdown, as well as recent changes to accounting rules and the equity market’s $2.3 trillion rout last year, the world’s biggest loss of value. China Life fell as much as 4.3 percent in onshore trading Wednesday

But the luxury segment chugs along - LVMH Surges as China's Appetite for Luxury Bags Holds Up - Bloomberg:

The French conglomerate reported fourth-quarter sales that beat analysts’ expectations and raised its annual dividend by 20 percent. It said it saw strong demand for wines and spirits in China, but its fashion and leather-goods division was the standout performer, with a sales gain of 17 percent. That unit is considered a bellwether for luxury rivals such as Kering and Prada.

7. Historical nihilism and the Party's rewriting of history

The Party is far from the first ruling entity to rewrite history for its purposes, but the scope and intensity of the CCP's project, and its attacks against historical nihilism 历史虚无主义 and its purveyors, is significant. 

Xi’s China Is Steamrolling Its Own History – Foreign Policy - Pamela Kyle Crossley:

Chinese President Xi Jinping is directing a vast ideological war across multiple theaters—politics, culture, ethics, economy, strategy, and foreign relations. Among its most intense flashpoints is historiography, particularly of China’s last empire, the Qing, which ruled from 1636 to 1912. Historians, whether foreign or domestic, who resist Xi’s determination to design a past that serves his ideology have been targeted repeatedly by state propaganda organs. A new editorial suggests that this attack on Qing specialists is escalating.

Xi has a powerful weapon at his disposal. In 2003, 10 years before his assumption of power, the Chinese Communist Party (CCP) initiated an ambitious project dedicated to Qing history. It was granted headquarters in the Zhongguancun district of Beijing, next to China’s leading technology companies. Its budget—never definitively quantified but clearly stratospheric as far as historiographical enterprises go—supported a threefold mission...

Xi’s strategy in remixing history is to draw selectively from the Nationalist and Communist historiographies, throw in some volatile nationalism, and resolutely suppress the implications of the new globalized and comparative historiography. The primary historical design shop is the Party History Research Office of the CCP Central Committee...

“Historical nihilism” is nothing more than a denial that the past is fundamentally a resource to be plundered by the present. Xi’s imagined history of the Qing as a huge empire of wealth and glory without conquest or tears may seem inane, but Western historians should note the seriousness of the CCP and the Qing History Project, because their Chinese colleagues surely do.

8. Political security and hostile forces

I should have paid more attention to this the other day...again with the political security...2019 is going to be a very tense year, and if you are a hostile foreign force you might want to stay away.

President Xi Jinping visit to Macau confirmed as security chief issues stern warning against illegal activities threatening China’s security | South China Morning Post 

Li Chunsheng, head of the Guangdong Provincial Public Security Department, also disclosed that a communication centre for police forces in the “Greater Bay Area” would be set up on the islet of Qiao in Zhuhai by October, which would handle the security details and operational command for Xi’s trip.

Speaking at a meeting in Guangzhou, where dozens of officials from the city of Maoming discussed the annual report delivered by the provincial governor Ma Xingrui, Li gave a stern warning on a series of threats to China’s political security in 2019. He indirectly cited a number of anniversaries, including that of the crackdown on the pro-democracy movement in Beijing’s Tiananmen Square in 1989....

“It’s the 70th anniversary of the establishment of the People’s Republic of China, it’s the 20th anniversary of Macau’s handover, and of course, it’s the anniversary of a series of incidents, which took place 20, 30 and 10 years ago,” Li said, without naming the specific incidents.

“The hostile forces inside China have long marked this year as an important time to implement their plan – which is a vain attempt – to overthrow our system.”

習將出席澳門回歸20年慶典 粵公安廳長:大灣區警察中心負責安保指揮


Business, Economy, Finance And Trade

Yicai Global - China's Power Use Growth Hit Six-Year High in 2018 - Yicai otal power use rose 8.5 percent to 6.84 trillion kilowatt hours in 2018 from a year earlier, according to official data released yesterday by the China Electricity Council. Industry saw a 7.2 percent gain to 4.72 trillion kwh, with power use by high-tech and equipment manufacturers jumping 9.5 percent, the data showed. The service sector consumed 1.1 trillion kwh, an increase of 12.7 percent and 2.1 points higher than the prior year.

Didi Chuxing Mulls Layoffs — The Information $$ While plans haven’t been finalized and the figures may still change before a decision is made, senior managers are looking at cutting headcount at some departments by as much as 20%, according to a person briefed on the discussions. The cuts will come mostly in support services such as human resources and marketing, the person said. The company has more than 10,000 employees globally.

Investors brace for China tech funding 'down rounds' | Reuters Valuations of some sizeable unicorns - startups with at least a billion-dollar valuation - have also been dropping in the more opaque market of private secondary trading, where investors trade their holdings in unlisted companies.

Bytedance cuts employees' Spring Festival hongbao · TechNode Employees who have worked at the company for more than three years were this year given RMB 3,600 (around $540) red packets, down from last year’s RMB 16,000, according to Chinese media. Staff members who had worked at Bytedance for between one and three years were last year given RMB 6,000, while they receive RMB 2,600 this year.

Yicai Global - Meituan's Meal Delivery Unit Now Employs Over 2.7 Million Drivers - Yicai Meituan-Dianping, the world's largest on-demand services provider, employs more than 2.7 million drivers across the country for its world-leading meal delivery services.  The figure was up about half a million from 2017, the Beijing-based firm said in its 2018 employment report for delivery drivers, which is based on a survey completed by 118,000 riders. Around 30 percent of the workers, who mostly deliver meals on electric bikes, earn upwards of CNY5,000 (USD744) a month. Most of them are younger than 40 and 92 percent of them are male, the report added.

China's rural areas surpass cities in growth of digital consumption - Xinhua Statistics indicate that the growth rate of digital spending on Alibaba's e-commerce platforms in rural areas reached 23.8 percent last year, 4.5 percent higher than that in first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen.

China unveils new measures to boost 5G license, consumption - ECNS According to the National Development and Reform Commission, efforts will be made to underpin higher-end consumption initiatives such as renovating shopping streets in key cities, building international consumer centers and giving support to China’s time-honored brands.  China will also speed up the process in issuing licenses for commercial use of 5G technologies that feature low latency, massive bandwidth and wide coverage, and encourage a broad range of projects to bolster use of information products and services, the plan states.

In the new lithium 'Great Game,' Germany edges out China in Bolivia | Reuters The signing of the deal in Berlin on Dec. 12 capped two years of intense lobbying by Germany as it sought to persuade President Evo Morales’ government that a small German family-run company was a better bet than its Chinese rivals, according to Reuters interviews with German and Bolivian officials.

Does the state still love state-owned enterprises even after they’re not state-owned anymore? | Andrew Batson's Blog privatized SOEs are often going to be run by people who have established relationships with government officials and managers of state banks. It stands to reason that they are going to be better at working those relationships than the executive of a run-of-the-mill private company. And that companies that have been able to obtain subsidies in the past would know best how to continue obtaining those subsidies in the future

China maintained a current account surplus in 2018: regulator | Reuters “Based on preliminary statistics, China’s current showed a certain surplus in 2018, which continued to be within a reasonable range,” Wang Chunying, spokeswoman at for State Administration of Foreign Exchange (SAFE), told, the website of the regulator’s publication.

Beijing sets up China's 2nd bankruptcy court - Xinhua Approved by the Supreme People's Court, the newly established Beijing court will handle company bankruptcies, compulsory liquidation cases and cross-border bankruptcy cases. Shenzhen set up a bankruptcy court, the first of its kind in the country, on Jan. 14. Shanghai will set up the country's third bankruptcy bank on Feb. 1.

Chinese Exiting U.S. Real Estate as Beijing Directs Money Back to Shore Up Economy - WSJ $$ Insurers, conglomerates and other investors from mainland China were net sellers of $854 million of U.S. commercial property in the fourth quarter, according to Real Capital Analytics. That marked the third-straight quarter Chinese investors sold more U.S. property than they bought, the first time ever these investors have been sellers for that long a stretch

Politics, Law And Ideology

浙大一把手已进京 任中央统战部副部长_手机新浪网 浙江大学党委书记邹晓东已任中央统战部副部长。 //  Party Secretary of Zhejiang University Zou Xiaodong moves to Beijing to become vice minister of the United Front Work Department. Except for a brief stint from 2016.07--2017.06 as deputy head of the Zhejiang Provincial Organization Department Zou has spent his career at Zhejiang University

What do China’s reassignments of Liu Shiyu and Yi Huiman say about Xi Jinping’s policy priorities for the next few years? | South China Morning Post The All-China Federation of Supply and Marketing Cooperatives (ACFSMC), of which Liu will become deputy Communist Party secretary, is a Soviet-era holdover of China’s centrally planned economy. Tracing its genesis to November 1949 soon after the establishment of the People’s Republic, the ACFSMC was the command centre for the nation’s communes and collective farms, coordinating the production and distribution of fruits, cotton and grains, farm animals and even honey. After China began its market economics reforms in 1978, the ACFSMC went through several makeovers, leaving it in its latest iteration as a coordinator of Chinese agricultural collectives. It now operates a network of 30,000 collectives in 95 per cent of China’s townships....

NGOs in China: The rising role of “hub-style” organizations as stewards of the party (Pt. 1) In both Shenzhen and Guangzhou, social workers, business leaders, leading government officials, and academics are collaborating in WeChat groups, conferences, and salon discussions and using the same slogans to emphasize a more coordinated era of “public governance.” It is time, they say, to heed Xi Jinping’s call for “collective community building, collective governance, and collective sharing” and use it to replace the tired government/business/nonprofit sectoral boundaries of bygone eras and foreign origins. Under the leadership of the Party, “participatory” community governance will finally be realized, starting with Guangdong.

中央脱贫攻坚专项巡视反馈情况全部公布———中央纪委国家监委网站 CCDI releases the results of the recent dedicated inspection teams looking at the war on poverty efforts // CCTV evening News report on the reports 中央脱贫攻坚专项巡视完成反馈  overall says still too much formalism, imprecise policies, weak implementation...some unlucky cadre examples clearly will be found and disciplined

Foreign and Military Affairs

U.S.-China Relations At the Forty-Year Mark - Carnegie Endowment for International Peace January 2019 marks the fortieth anniversary of the normalization of relations between the People’s Republic of China and the United States. Four Carnegie scholars—two American and two Chinese—assess the relationship today

Senator: Chinese buildup in South China Sea like ‘preparing for World War III’ - Navy Times China’s ongoing military buildup on islands in the South China Sea is akin to “preparing for World War III,” the chair of the Senate Armed Services Committee declared on Tuesday. The comment by Republican Sen. James Inhofe of Oklahoma came during a hearing to discuss the challenges posed by rising military powers China and Russia, a discussion that included ideas on how the people can better understand the threats to the world order that America built and has benefited from for decades.

Changes in China’s Coast Guard | The Diplomat What should be noted is that although the CCG has been put under the command of the CMC, it is still known as a law enforcement body. Such an arrangement gives China much more persuasive power in handling “internal problems.”..Toward the end of 2018, quite a lot of high-ranking officers in the PLA and the police force changed positions. From the personnel changes, we can find possible promotion patterns and interpret the changes in terms of the relevant officers’ specialties, their grades, previous positions, functions of their new positions, and future orientations of the new positions. First of all, in December 2018 Real Admiral Wang Zhongcai of the navy was appointed as the first commander of the CCG, a position left unoccupied for quite some time. The CCG’s predecessor, the Maritime Police Bureau, was subordinate to the MPS. It was a maritime police force enforcing law at sea. In March 2018, as previously explained, the CCG was incorporated into the PAP, and thus ultimately put under the command of the CMC.

Russia Is a Rogue, Not a Peer; China Is a Peer, Not a Rogue: Different Challenges, Different Responses | RAND Russia and China represent distinct challenges to U.S. national security. Russia is not a peer or near-peer competitor but rather a well-armed rogue state that seeks to subvert an international order it can never hope to dominate. In contrast, China is a peer competitor that wants to shape an international order that it can aspire to dominate. Both countries seek to alter the status quo, but only Russia has attacked neighboring states, annexed conquered territory, and supported insurgent forces seeking to detach yet more territory. Russia assassinates its opponents at home and abroad, interferes in foreign elections, subverts foreign democracies, and works to undermine European and Atlantic institutions. In contrast, China's growing influence is based largely on more-positive measures: trade, investment, and development assistance. These attributes make China a less immediate threat but a much greater long-term challenge.

Blunting China’s Illiberal Order: The Vital Role of Congress in U.S. Strategic Competition with China | Ely Ratner Testimony 1) The United States and China are now locked in a geopolitical competition that will endure for at least the next decade. U.S.-China competition is structural and deepening across the central domains of international politics, including security, economics, technology, and ideology. What we are experiencing today is not an episodic downturn or cyclical trough in the U.S.-China relationship, nor is the current rise in tensions primarily due to President Trump or his administration. The United States, the U.S. Congress, and the American people should be preparing for long-term competition with China. 2) The United States, on balance, is currently losing this competition in ways that increase the likelihood not just of the erosion of U.S. power, but also the rise of an illiberal Chinese sphere of influence in Asia and beyond.,,

M. Taylor Fravel on How the People’s Liberation Army Does Military Strategy | The Diplomat Dr Fravel's new book Active Defense: China’s Military Strategy Since 1949 will be out in April //In writing this book, I had two goals. One is to provide, for the first time, a complete account of the military strategies that China has adopted since 1949. The book identifies nine military strategies (which the PLA calls the “military strategic guideline”) that have been formulated since the founding of the People’s Republic..The book advances two central claims to explain changes in China’s military strategy. One claim is that the PLA, historically and as an organization, has closely monitored its external security environment and especially prevailing trends in warfighting or the operational conduct of warfare. As a late modernizer of its military forces relative to other great powers, shifts in these trends have been critical in motivating the PLA to pursue major changes in its military strategy, as it considers how it may have to fight in the future. A second claim in the book is that the PLA has only pursued changes in military strategy when there is unity within the CCP itself. By unity, I mean agreement among the top party leadership over the basic policies the party should pursue (“the party line”) and over the structure of power and authority within the party.

China’s Busy Year in the Arctic | The Diplomat Having officially laid out its Arctic policy last year, 2018 was an eventful year for China in the far North.

Australian Writer Admits He Lied About Previous Detention in China, Begs for Forgiveness A Chinese-Australian novelist who is being detained in Beijing has apologised for lying that he had not been arrested in China eight years earlier. Yang Hengjun is pleading for forgiveness because he kept a March 2011 arrest by the Chinese authorities a secret at the time. In a secret letter that he left with a friend, to be released if he was detained again, Yang asked supporters to not place themselves at risk to free him but just to continue with his work. Yang is known for his writings promoting the democratisation of China, as well as freedom, human rights, and the rule of law and justice.

CMC issues guideline on strengthening management of troops - Xinhua | The guideline stressed the need to consolidate the guiding status of Xi Jinping's thought on strengthening military capabilities and deepen the troops' study and implementation of Xi's important exposition related to military. It noted that the leadership of the Communist Party of China over the military must be "firmly grasped." In the guideline, the CMC said management of the troops should focus on war preparedness and the troops' combat capability. It also urged defending the solemnity and authority of military orders and regulations and modernizing management of the troops. The CMC also demanded commanders and political commissars take the lead and shoulder their responsibilities in the management of the troops.//中央军委印发《关于全面从严加强部队管理的意见》 

China urges U.S. to drop zero-sum mentality after it gets listed as top threat - CGTN During the Senate Intelligence panel in an annual hearing, Coats pointed out that China, along with Russia, "pose the greatest espionage and cyber attack threats” to the U.S. and are more aligned than they have been in decades. "The U.S. is the world's most powerful country with unparalleled military power. If the U.S. still feels prevailing threats from all directions, then how should other countries react? I do not know where this strong sense of insecurity comes from," Geng noted. "China has been consistently advocating the establishment of a new security concept of sustainability and cooperation. We hope that the U.S. can align itself with the trend of the world and the will of the people to jointly safeguard global peace and security," Geng added.

Hong Kong, Macao

Beijing rejects Hong Kong leader’s plan to strengthen anti-corruption laws that would target gifts for the chief executive | South China Morning Post China’s central government has rejected a plan by Hong Kong leader Carrie Lam Cheng Yuet-ngor to tighten the city’s anti-corruption laws and ensure that all gifts and benefits offered to the chief executive are graft-free...“Beijing’s position is that the chief executive is appointed by the central government,” the source said. “It can’t accept the move to enact local legislation to establish a committee to grant approval for the acceptance of advantages by the chief executive.”


AIT Director reaffirms US support for Taiwan | Taiwan News The Director of the American Institute in Taiwan (AIT), Brent Christensen, gave an exclusive interview with the Central News Agency this week and emphasized that the U.S. remains resolutely opposed to China's use violence or coercion to alter the status quo across the Taiwan Strait...The AIT Director also announced that the institute is planning a major event in April to celebrate the 40 year anniversary of the TRA.  //  Will anyone senior from DC attend?

Tech And Media

Why NetEase and Quantic Dream are teaming up for games on multiple platforms | VentureBeat For the past 12 years, Quantic Dream has been making exclusive video games like Detroit: Become Human and Heavy Rain for the PlayStation 4. But Chinese internet company NetEase Games announced today it has acquired a minority stake in Quantic Dream. And that means that Quantic Dream will now make interactive storytelling games for a wider number of platforms.

总局新规:收视造假、社会差评的剧集或节目制作方将出局 - 娱乐 - 新京报网 1月29日,国家广电总局发布【《总局办公厅关于做好2019年度《广播电视节目制作经营许可证》和《电视剧制作许可证(甲种)》换证工作的通知》】。通知表明,对制作、经营内容导向偏差、低俗庸俗、社会广泛差评、产生不良社会影响的节目;含有境外资金或人员;参与违规买卖收视率或参与收视率造假;未按要求规范、及时缴纳税款等持《广播电视节目制作经营许可证》的机构,将不予换发新的许可证,并撤销其节目制作经营许可。

Society, Art, Sports, Culture And History

China: Tibetan Children Banned from Classes | Human Rights Watch The ban in Qinghai’s Nangchen county, published in December 2018, is titled “Urgent notice concerning stopping illegal study classes in monasteries.” It describes informal classes run by monks as “ideological infiltration among the young,” “dangerous,” and “harmful.” It calls on local officials and Chinese Communist Party cadres responsible for managing monasteries to “understand the harmful nature of monasteries running open schools,” and to stop them from doing so.

Remembering Eisenhower’s Formosa AUMF - Lawfare - January 29, 2019 On this date in 1955, President Dwight Eisenhower signed a congressional joint resolution authorizing military force to protect Formosa, as Taiwan was then called by the U.S. government, and surrounding islands. It’s one of the most interesting force authorizations in American history: It reflected Eisenhower’s complicated ambivalence toward constitutional powers, it was open-ended, it contemplated the possible use of nuclear weapons, and it was never actually invoked. It’s especially worth remembering this episode now, as President Trump calls into question the U.S.’s alliance commitments and American rivals test them.

Energy, Environment, Science And Health

China orders further cleanup along Yangtze - Xinhua China's Ministry of Water Resources said on Tuesday that illegal infrastructure along the Yangtze River is being dismantled to restore order. A year-long inspection organized by the ministry and local water authorities showed that there are 5,700 infrastructure projects along a total of 8,311 kilometers of main river shorelines. About 2,441 of these infrastructures -- bridges, ports, docks, ferry crossing and sewerage facilities -- are considered against relevant regulations, Vice Minister Wei Shanzhong said.

China’s insatiable appetite for durian swallows Malaysian tribal lands | This Week In Asia | South China Morning Post Durian can also be extremely profitable – earning growers more than nine times the modest US$4,200 per hectare that palm oil cultivation brings in each year. This fact has sparked off an unseemly land-grab as corporate giants muscle in on the cultivation of the fruit.

China Readying National Solar Subsidy Program | CleanTechnica China is readying its national solar subsidy program eight months after it was effectively shunted aside after the Central Government announced its plans to cap new solar projects, and reports suggest a quota of 3 gigawatts (GW) is being planned.

China's climate change emissions from coal rising despite strict policies - CNN A study released in the journal Nature on Tuesday shows a steady growth in China's methane emissions, primarily from the country's massive coal mining sector, undermining Beijing's claims to be leading the world on climate change action. "Methane emissions in China appear to be increasing, business as usual. We were unable to detect any impact of regulations on the country's methane emissions," the report's lead researcher Scot M. Miller told CNN.


NYU Shanghai sees record number of applicants - Xinhua The number of applications to New York University Shanghai (NYU Shanghai) jumped 25 percent this year to a record high of 16,750, according to the NYU Shanghai Admissions office. Applicants will compete for 450 spots in Fall 2019's freshman class. This was the fourth consecutive increase in the number of applicants for NYU Shanghai, China's first Sino-American higher education institute established in 2012.

China Announces New Partnerships With Foreign Universities Months After Shuttering Others - Caixin The ministry has given the green light to two new joint endeavors between Chinese universities and institutions abroad, Beijing News reported Wednesday. Chengdu University of Technology will partner with the UK’s Oxford Brookes University to create “Chengdu University of Technology Oxford Brookes College” and “Don College of Shandong Jiaotong University” will be a joint endeavor between Russia’s Don State Technical University and Shandong Jiaotong University in Jinan.