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US may impose tech restrictions and make cyber indictments; Bail for Huawei CFO; MSS detained Kovrig
My darling kids have brought a lovely virus home from school so I apologize for the brevity and possible incoherence today.
The Huawei CFO is out on bail and in an interview with Reuters President Trump said he might consider using her case as part of the overall trade negotiations with China.
There is a little more information on the detention of Michael Kovrig. He was picked up by the Beijing Bureau of State Security and The Beijing News reports he is under investigation for endangering state security.
Bob Davis and Lingling Wei of the Wall Street Journal reported this morning that Beijing may be considering substantive changes to the Made in China 2025 plan to reduce state subsidies and allow more access for foreign firms. This is a very big deal if China is really serious about making substantive changes to this plan, rather than repackaging it without making fundamental changes. Only time will tell, but given the history of failed promises of reform and better access for foreigners people should be wary until Beijing actually delivers. But if real changes are made then it is definitely a win for Trump, foreign firms, and frankly the Chinese economy.
Multiple media outlets are reporting that the US is about to roll out new actions against Chinese cyber activities and purchases of US technologies. Harsh measures may make it harder for Beijing to keep the trade negotiations in their own lane. Perhaps that is the intent?
Thanks for reading.
The Essential Eight
1. Changes coming to Made in China 2025?
China’s top planning agency and senior policy advisers are drafting the replacement for Made in China 2025—President Xi Jinping’s blueprint to make the country a leader in high-tech industries, from robotics to information to clean-energy cars. The revised plan would play down China’s bid to dominate manufacturing and be more open to participation by foreign companies, these people said.
Current plans, these people said, call for rolling out the new policy early next year, a time when the U.S. and China are expected to be accelerating negotiations for a deal to end their bruising trade battle.
Odds that the new plan will go far enough in addressing U.S. complaints are long...
A key concession under consideration would be dropping the numerical targets for market share by Chinese companies, these people said...
Chinese officials backing the proposed changes emphasize that China needs to move away from Made in China 2025 and state-led development for its own reasons. President Xi’s economic adviser, Vice Premier Liu He, and other senior officials have criticized Made in China 2025 for creating waste.
2. More US moves against PRC technology and cyber activities imminent
The hackers, they said, are suspected of working on behalf of the Ministry of State Security, the country’s Communist-controlled civilian spy agency. The discovery comes as the Trump administration is planning actions targeting China’s trade, cyber and economic policies, perhaps within days.
Those moves include indictments against Chinese hackers working for the intelligence services and the military, according to four government officials who spoke on the condition of anonymity. The Trump administration also plans to declassify intelligence reports to reveal Chinese efforts dating to at least 2014 to build a database containing names of executives and American government officials with security clearances.
Other options include an executive order intended to make it harder for Chinese companies to obtain critical components for telecommunications equipment, a senior American official with knowledge of the plans said.
The White House has embarked on a long-term strategy to ensure the U.S. maintains its technological lead over China, with Trump’s trade advisers tying the U.S.’s economic interests to protecting national security. Central to that effort are wider controls on a broad range of American exports including artificial-intelligence components, microprocessors and robotics.
The original Bloomberg story may have been wrong but the damage has been done - Super Micro says review found no malicious chips in motherboards | Reuters:
In a letter to customers, the San Jose, California, company said it was not surprised by the result of the review it commissioned in October after a Bloomberg article reported that spies for the Chinese government had tainted Super Micro equipment to eavesdrop on its clients.
Super Micro had denied the allegations made in the report.
A person familiar with the analysis told Reuters it had been conducted by global firm Nardello & Co and that customers could ask for more detail on that company’s findings.
In recent years, without factual basis, some Western countries accused Chinese individuals or groups of conducting cyber attacks in an attempt to steal commercial and military secrets from other countries.
The most recent example is the Marriott data breach that affected 500 million guests' information. In a recent article, Reuters cited unnamed sources as saying that China is the lead suspect in the case.
In reality, China has always been a victim of cyber attacks. The Global Times (GT) reporter Guo Yuandan interviewed Xiao Xinguang (Xiao), the chief technical architect of Beijing-based Antiy Labs, on the cyber threats China has been facing in recent years.
“China is taking this false position, that it’s innocently walking down the street and the Trump administration mugged China. That’s not what happened,” said Robert Daly, director of the Wilson Centre’s Kissinger Institute on China and the United States. “The US didn’t start this.”..“There isn’t just one thing, but if there is one thing that changed the US attitude toward China fundamentally, that’s probably the South China Sea,” he said. “It wasn't only because it built the islands. It helped Americans realised that this has crossed the line and this is fundamentally different.”
While he still maintains that engagement must be a pillar of US-China policy, Daly said the era in which engagement can be the keynote of the relationship is over.
Apple Inc.’s suppliers will consider shifting iPhone production away from China should tariffs on U.S. imports skyrocket, but the U.S. company plans to sit tight for now, people familiar with the company’s thinking said.
The tech giant’s suppliers intend to stick with the existing model even if the U.S. levies a 10 percent import tariff on smartphones, the people said, asking not to be identified talking about a private matter. But it will have to reassess the situation should U.S. President Donald Trump decide on a more punitive 25 percent, the people said.
3. Michael Kovrig
The International Crisis Group calls for the immediate release of its North East Asia Senior Adviser Michael Kovrig. Michael was detained on Monday night in Beijing by the Beijing Bureau of Chinese State Security. Crisis Group has received no information about Michael since his detention and is concerned for his health and safety. We are making every effort to learn more and to secure consular access to Michael from the Chinese authorities.
据新京报网报道，记者从有关部门获悉，加拿大公民康明凯，英文名：Michael John Kovrig，因涉嫌从事危害中国国家安全的活动，于2018年12月10日，被北京市国家安全局依法审查。目前，案件正在审理中。
China said on Wednesday that a Canadian former diplomat who was detained in Beijing had been employed by an organization that was “not registered in China legally,” citing a law passed in 2016 that has had a chilling effect on the work of foreign charities, universities and nonprofit groups in the country...
Officials, however, made no official statement confirming the detention, and they did not detail any more specific accusations against Mr. Kovrig, whose fate has further roiled relations between China and the United States and the West.
The telecom executive was released on $10-million bail: $7 million in cash and a $3-million surety made up of property from four associates. She will remain in Vancouver, where she owns two homes, while she awaits extradition proceedings.
She is ordered to stay inside her home on West 28th Ave. from 11 p.m. until 6 a.m. and be subject to 24-hour-a-day monitoring by both a live security detail and electronic ankle bracelet. She must pay for the cost of her security monitoring.
Meng must surrender her passports but is allowed to travel within Vancouver, the North Shore and a portion of Richmond excluding the airport.
Question: Is she banned from entering the PRC consulate or any other buildings owned by the PRC government?
ON THE POSSIBLE EXTRADITION OF HUAWEI EXECUTIVE
“Well I think I’d want to speak to China. We’ve spoken to the Justice Department. You know – it wasn’t good what happened with the company, you understand that, in terms of what they did. And this has been a big problem that we’ve had in so many different ways with so many companies from China and from other places. So I want to see what China requests. So far they have not made that request.”
ON WHETHER HE WOULD INTERVENE IN THE HUAWEI CASE
“Whatever’s good for this country, I would do. If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary.”
Such an advisory from the State Department would warn U.S. nationals of the risk that China could retaliate against them for the detention of Huawei Chief Financial Officer Meng Wanzhou, according to one of the sources familiar with the situation
Staff at a research agency were also told in an internal memo that if they did have to travel to the US, they should remove any sensitive information from their mobile phones and laptops, according to the source who was speaking on condition of anonymity.
The maker of telecommunications equipment and smartphones says it employs about 1,500 people in the U.S. While many are Chinese citizens, the company says about 75% of them were hired locally in the U.S. They are spread around 18 sites, including its North American headquarters in Plano, Texas, a flagship research-and-development facility in Santa Clara, Calif., and offices in Chicago, San Diego and New Jersey.
Professor Song-Chun Zhu of UCLA is one of the world’s leading authorities on computer vision. He has won numerous grants, including from the Pentagon—and more recently from Huawei Technologies. Now, Mr. Zhu, who has already received one-third of the $450,000 Huawei grant, says he doesn’t want to accept the rest because of the controversy swirling around the Chinese telecom equipment maker.
The US is trying to targeting Huawei especially because of the company’s success in marketing cutting-edge 5G technologies globally. The US claims the company poses a specific security risk through hidden surveillance capabilities in its hardware and software. Yet the US government has provided no evidence for this claim.
Sachs features prominently and fulsomely in this November Huawei press release - Huawei Releases Digital Nation: Stronger Economy, Better Society, Adept Governance - Huawei:
Professor Jeffrey Sachs from Columbia University, a global development expert, noted: "Digital Nation is much more than a pep talk or a paean of praise for the new information and communications technologies. Digital Nation is a roadmap for governments aiming to put their countries into the fast lane of sustainable development in the 21st Century. Most importantly, Huawei draws on its deep knowledge of the new and emerging technologies, and its remarkable global experience, to highlight practical steps for governments to follow to create a dynamic, healthful, productive digital nation. Huawei also points out several possible roadblocks and impediments, and how to avoid or overcome them."
5. A nice AI primer from Macro Polo
The Chinese government has stated its intention to turn China into “the world’s primary AI innovation center” by 2030. If China were to meet that goal, it would have a profound impact on the global economy, geopolitical order, and everyday life for citizens around the world.
But what does it take to strengthen national prowess in AI? What are the building blocks or stumbling blocks for China to realize its AI ambitions?
In this series of digital interactives, we will take you through the main building blocks for creating and deploying AI, illuminating unique aspects of the Chinese ecosystem for each one.
6. PBoC taking on "too big too fail"
The People’s Bank of China (PBOC) will replace its Monetary Policy Department II with a macroprudential bureau, according to the sources, who asked not to be named because the information was confidential. The new bureau will retain the majority of the old department’s responsibilities, which include advancing the yuan’s exchange-rate reforms and internationalization, they told Caixin.
After the 2008 global financial crisis, regulators across the globe realized the urgent need to enhance macroprudential regulation, which aims to prevent systemic risks amid increasingly complex financial markets. Macroprudential policy is seen as a key supplement to monetary policy, which focuses more on currency and price stability, as well as economic development.
“Previously there was no clear framework for macroprudential regulation,” a person close to the central bank said. “Based on international experience, it mainly focuses on three dimensions: the foreign exchange (market), (institutions of) systemic importance, and countercyclical adjustment.”
7. Gearing up for the Central Economic Work Conference
Comment: I had heard it would be this week. Sorry about that
The Central Economic Work Conference, which is likely to be held next week, is an annual gathering of Chinese state leaders, ministers, provincial governors and senior advisers that is intended to build a consensus and chart out economic policies for the country’s most important economic issues, from growth to structural reform...
SOME analysts think it will lay the groundwork for another massive stimulus in 2019. I am skeptical:
Iris Pang, the chief Greater China economist at ING, believes they will take the chance to showcase their commitment to “reform and opening up”...
Pang says the Chinese government may be more aggressive in ensuring economic stability, particularly on job markets, as the economy is set to further lose steam in 2019.
Fresh stimulus measures worth 4 trillion yuan (US$579 billion), including tax cuts, special bond issuance and state funds, could be rolled out in 2019 to offset the external uncertainties, she added.
OTHERS not so much:
Lu Ting, the chief China economist at Nomura International in Hong Kong, expects the Chinese government to loosen its restrictions on the property market and increase land supply.
However, Lu said Beijing is unlikely to repeat an all-out stimulus package as the room for easing is now much smaller compared with several years ago due to surging debt, the smaller current account surplus and falling foreign exchange reserves, while the decision-making process is longer due to lack of consensus on direction and strategy.
Judging from previous cycles, policymakers usually begin to relax tightening measures after home sales have declined for six months, China International Capital Corp. (CICC) said in a research report. Based on that, CICC projected that the next round of policy easing may come at the end of the first quarter or at the start of the second quarter of 2019, but the fundamentals of China’s real estate market will still face “a year of recession” in 2019.
8. Crackdown on religion looks to be intensifying
More than 100 Protestant Christians from the Early Rain Covenant Church – one of China’s few openly operating unofficial house churches – were snatched from their homes and streets across Chengdu, Sichuan province, in a crackdown that began on Sunday night. Among those detained were church pastor Wang Yi, his wife Jiang Rong, church leaders, members and seminary students.
The round-up in Chengdu is part a broader crackdown on unofficial or underground churches that Beijing launched early this year, bolstered by amendments to the Religious Affairs Regulation that gave grass-roots officials more power to act against churches and impose tougher penalties for “unauthorised religious gatherings”...
Three months ago, Beijing police closed the Zion Church, one of the largest Protestant house churches in China with more than 1,500 regular church-goers.
Authorities in Southwest China's Tibet Autonomous Region launched on Monday the opening session of a five-year training program for Tibetan Buddhism teaching staff as part of efforts to better adapt Tibetan Buddhism to socialist society...
A special textbook was compiled for the course, as monks and nuns are expected to firmly set up the concept that government power is higher than religious power, and that national laws are above religious rules, the report quoted Danke, head of the United Front Work Department of the Tibet Autonomous Regional Committee of the Communist Party of China, as saying.
Xiong Kunxin, an ethnic studies professor at Tibet University in Lhasa, told the Global Times on Tuesday that some Tibetan monks and nuns only have a vague or no understanding of these topics, which could lead to illegal activities without them even realizing.
Over 100 members of Early Rain Covenant Church in Chengdu, China, were arrested beginning Sunday, December 9. At the time of publication of this translation, arrests are still being made. Among those taken away were Pastor Wang Yi, senior pastor of Early Rain, and his wife, Jiang Rong, who have not been heard from since Sunday.
Foreseeing this circumstance, Pastor Wang Yi wrote the declaration below to be published by his church should he be detained for more than 48 hours. In it he explains the meaning and necessity of faithful disobedience, how it is distinct from political activism or civil disobedience, and how Christians should carry it out. We thank Brent Pinkall and Amy Cheung for their contributions in translating this letter.
Secretary of State Mike Pompeo on Tuesday announced the US has deemed 10 countries guilty of severe religious freedom violations.
The nations -- China, Eritrea, Iran, Myanmar (also known as Burma), North Korea, Pakistan, Sudan, Saudi Arabia, Tajikistan and Turkmenistan -- were categorized "Countries of Particular Concern" under the International Religious Freedom Act of 1998. They were found to have engaged or tolerated "systematic, ongoing, (and) egregious violations of religious freedom."
Business, Economy, Finance And Trade
PCAOB enlists in the trade war | China Accounting Blog | Paul Gillis: The remedy to China’s refusal to allow inspections has been what is referred to as the nuclear option. The PCAOB could deregister accounting firms that it cannot inspect. The consequence of that would be that most U.S. listed Chinese companies (and some multinational firms) would be unable to file audited financial statements with the SEC and without being granted an exception would be delisted from U.S. exchanges. This has been viewed as a step too far for the PCAOB, since it would likely hurt investors in the Chinese companies. Most of these investors are Americans, since it is difficult for Chinese to buy shares of companies listed in the U.S. because of currency restrictions. The result of a mass delisting would likely be a surge of IPOs on the Hong Kong exchange. I suspect the SEC and PCAOB are raising this issue at this time because of the trade war. Allowing inspections would not seem to be a huge concession for China to make in a settlement of the trade war. Threatening to cut off access to U.S. capital markets for Chinese companies is yet another way for the U.S. to escalate the trade war.
SEC.gov | Statement on the Vital Role of Audit Quality and Regulatory Access to Audit and Other Information Internationally—Discussion of Current Information Access Challenges with Respect to U.S.-listed Companies with Significant Operations in China
Beijing’s small businesses face uncertain short-term future due to tighter tax rules despite China’s government vowing to reduce overall burdens | South China Morning Post From January 1, small privately-owned businesses will have to pay their business rates based on their actual accounts, rather than the current practice of paying a fixed amount periodically based on revenue estimated by the tax department. The move, which was announced at the end of last month by tax authorities in all districts of China’s capital city, comes despite the Chinese government vowing to reduce the tax burden of small firms to help bolster the slowing economy amid the trade war with the United States. The move has the potential to increase payments for around 540,000 small businesses, from tiny restaurants to small industrial factories, who have up to now benefited from often generous estimates.
U.S. Soybean Farmers Work to Loosen China’s Grip - WSJ $$ Replacing China is a tall order. China last year bought 57% of all U.S. soybeans that were exported, more than eight times the total sold to Mexico, the next-biggest buyer by quantity, according to data from the U.S. Department of Agriculture. Since the turn of the century, no other country has matched China’s purchases of U.S. soybeans. As China imposed retaliatory tariffs on the U.S. oilseed, however, exports to China plunged 62% in the first 10 months of 2018 compared with year-earlier levels.
China’s Anbang steps up disposals with $2.4bn bank stake sale | Financial Times $$ Anbang sold a 35 per cent stake — its entire holding — in unlisted Chengdu Rural Commercial Bank for Rmb16.8bn ($2.4bn), according to a disclosure on the Beijing Financial Asset Exchange on Wednesday.
China: foreign asset managers eye a vast savings pot | Financial Times $$ UBS forecasts that annual fees for running Chinese mutual funds will expand fivefold to $42bn by 2025 — an enticing prospect for investment groups facing intensifying fee pressures and rising costs elsewhere. A $42bn fee pot amounts to nearly two-thirds of the total 2017 revenues of listed US asset managers — or more than Fidelity and BlackRock’s total revenues combined.
Chinese startup Luckin Coffee's valuation doubles to $2.2 billion | Reuters The fundraising was led by investors including Singapore sovereign wealth fund GIC [GIC.UL] and China International Capital Corp Ltd, Luckin said in a statement.
China Said to Near Megamerger of ChemChina, Sinochem Group - Bloomberg Significant issues around how the companies will be combined have largely been resolved, according to the people, who asked not to be identified because the information is private. A deal is ready to be announced as soon as the coming weeks, the people said.
Trade War Damage to China's Economy Is Already Done, Citi Says - Bloomberg That’s because the tariff war is underlining China’s rising cost of labor at a time when the job market is under pressure, Citi economists led by Liu Li-Gang said in their 2019 economic outlook report. The trade war with the U.S. could cut China’s export growth by almost half next year, putting around 4.4 million jobs at risk, the economists wrote.
Baidu found to be falsifying corporate information in China - TechInAsia The Chinese government has censured search giant Baidu and 84 other companies for providing false or misleading information about their business activities. An investigation revealed that the companies had reported erroneous information in documents such as corporate annual findings. Rule breakers will be included in a government database of companies that have conducted illegal activities, which may limit their access to new business licenses.
China Aims to Double Its Number of Airports - Caixin China’s aviation regulator is aiming to almost double the number of airports in the country to 450 by 2035, with analysts expecting air travel in smaller cities to take off. A major infrastructure spending binge over the last decade saw runways laid down for 234 airports across the country. But many major cities’ airports are already packed to capacity, before the industry even reaches cruising altitude, with DBS Group Research expecting 1.5 billion people in the country to take at least one flight per year by 2036 on the back of rising wealth.
Politics, Law And Ideology
Deng Xiaoping’s top aide in Chinese army, Wang Ruilin, dies aged 88 | South China Morning Post “General Wang Ruilin, former deputy head of the People’s Liberation Army’s General Political Department, passed away at the PLA’s General Hospital in Beijing on Saturday morning,” said a source close to the military, adding that a funeral service would be held on Monday at the Babaoshan Revolutionary Cemetery in the Chinese capital...“Wang was Deng’s secretary from before the Cultural Revolution [1966-76],” the person said. “He wielded huge power in Deng’s heyday during the 1980s, when every single senior leader who wanted to see Deng had to go through Wang.”
王瑞林同志逝世 习近平李克强栗战书等到八宝山革命公墓送别_CCTV Wednesday CCTV Evening News on Wang's memorial service, Xi, Li Keqiang and Li Zhanshu attended...no mention of his service to Deng Xiaoping
王瑞林同志逝世 习近平李克强栗战书等到八宝山革命公墓送别--时政--人民网 The Xinhua report lists Wang's service to Deng // 王瑞林同志1946年7月从山东招远入伍，1947年2月加入中国共产党。历任胶东招远县独立营战士，东北军区司令部机要处译电员，中华人民共和国政务院机要处办报员、副股长，邓小平副总理处机要秘书，中共中央邓小平总书记处秘书，中共中央邓小平副主席处秘书、办公室主任，中共中央办公厅副主任，中央军委主席办公室主任。1990年4月后历任中央军委纪律检查委员会书记，总政治部副主任，中央军事委员会委员。是中共第十三届、第十四届、第十五届中央委员。1988年9月被授予中将军衔，1994年5月晋升为上将军衔。
[视频]王岐山在广东调研时强调 建设好粤港澳大湾区 谱写新时代改革开放新篇章_CCTV After his speech at the 2018 Imperial Springs International Forum Wang Qishan inspects Guangdong. - CCTV Evening News. Among his stops was Tencent// 王岐山还巡览了港珠澳大桥，参观了广东改革开放40周年展览。他强调，要坚持历史文化哲学的思考，从中华民族的苦难辉煌中汲取实现伟大复兴的精神滋养，从改革开放40年光辉历程中坚定中国特色社会主义“四个自信”。对历史最好的纪念是通过接续奋斗创造新的历史，离复兴越近越要保持冷静清醒，前进的道路不会一帆风顺。一代人有一代人的使命，要负起历史的责任和担当，书写好新时代一个个生动具体的故事，创造让世界刮目相看的新的更大奇迹。
Uighur leaders warn China's actions could be 'precursors to genocide' | The Guardian On a visit to Australia, leaders of the Uyghur Human Rights Project (UHRP), based in Washington, said governments, businesses, academics and thinktanks all had a responsibility to stop “business as usual” relations with China. They also warned of China’s “extra-territorial reach”, which saw coercion and threats against Australian Uighurs, who were unable to escape the reach of the Chinese state.
Jaw-Jaw - Vicious Cycle: The Opening and Closing of Chinese Politics - War on the Rocks Over its history, the People’s Republic of China has cycled through softer and harder periods of authoritarianism. This is known in China as the “fang-shou cycle.” Today, we are seeing a harder period of Chinese politics. The country’s leader, Xi Jinping, is consolidating power and cracking down on both corruption and civil liberties. What does this mean for the future of China? What lessons did the Chinese Communist Party learn from the color revolutions and the fall of the Soviet Union? Can China avoid the “middle-income trap”? Professor David Shambaugh and Brad Carson discuss these issues in the third episode of “Jaw-Jaw,” the newest addition to the War on the Rocks family of podcasts.
Man sentenced to death for deadly SUV crash in central China - Xinhua Yang Zanyun deliberately drove his Land Rover SUV into a crowd in a square in Hengdong County in the city of Hengyang on Sept. 12. Yang then continued his attack with a shovel and a knife. The attack left 15 people dead and 43 injure
Reform and opening up ushers in new chapter in China's human rights development - China Daily The white paper, titled "Progress in Human Rights over the 40 Years of Reform and Opening Up in China," was issued by China's State Council Information Office. China has shown respect for, protected and promoted human rights in the course of reform and opening up, blazed a trail of human rights development that conforms to the national conditions, and created new experiences and made progress in safeguarding human rights, the document said. China has summed up its historical experience, drawn on the achievements of human civilization, combined the universal principles of human rights with the realities of the country, and generated a series of innovative ideas on human rights, it said.
任贤良：以网络诚信建设助力网络综合治理--科技--人民网 didn't realize China holds a "China Internet Integrity Conference"
Foreign and Military Affairs
President's discourses on Belt, Road published - China Daily A book of discourses on the Belt and Road Initiative by President Xi Jinping has been published by Central Party Literature Press, with national distribution launched on Tuesday. The book, compiled by the Communist Party of China Central Committee's institution for Party history and literature research, contains 42 discourses totaling about 130,000 words written since 2013, when Xi first proposed the initiative .// Comment: So while the BRI may undergo some revisions it is clearly not going away
[视频]习近平会见出席“2018从都国际论坛”外方嘉宾_CCTV节目官网-CCTV-1_央视网(cctv.com) Wednesday CCTV Evening News on Xi Jinping meeting the foreign VIPs who attended the 2018 Imperial Springs International Forum, reiterates message of reform and opening and support for global trading system
Is this the Beginning of a New Cold War? | ChinaFile Conversation In short, the contours of the competitive relationship are different from those that existed during the Cold War. This is important to understand, not for the sake of reassuring Beijing, but to avoid relying on strategies that worked against the Soviet Union that are unlikely to work against Beijing. For example, the U.S. won’t convince China to engage in a costly arms race—and even if it could, China’s economy could handle the expense in a way that Moscow could not. Every rising power pursues a unique power accumulation strategy, and with that comes a new type of competition with each potential power transition dynamic. We are only in the early stages of seeing what that dynamic will be for the U.S.-China competition.
With eyes on China and Trump, Japan to invest in ‘aircraft carrier,’ F-35 fighters - The Washington Post The plans, constituting a major review of Japan’s defense strategy, were approved by a committee of the ruling coalition Tuesday and will be presented to the cabinet for approval next week. Japan will announce plans to buy 40 to 50 F-35s over the next five years but may ultimately purchase 100 planes, media reports said. That will have the added benefit of mollifying President Trump, who has complained about the U.S. trade deficit with Japan as well as the cost of maintaining tens of thousands of troops here.
Book series revealing Japanese Kwantung Army crimes in NE China published - China Military A volume of books collecting Japanese Kwantung Army secret military files from the early 1930s was published by the September 18 Incident History Museum in Shenyang on Tuesday. The files, from the second day after the "Sept. 18 Incident" in 1931 to December 1935, were written by the Kwantung Army stationed in northeast China and presented as military reports. Edited into 20 volumes, it includes more than 560 files, totaling about 9,000 papers.
China activist held after lighting fire at war-linked Tokyo shrine - Kyodo News A Chinese man from Hong Kong set on fire a makeshift memorial tablet in an act of protest Wednesday morning at the war-linked Yasukuni Shrine in Tokyo and was arrested by police for trespassing, according to police and an activist group. The incident occurred at around 7 a.m. in front of a gate located in the middle of the Shinto shrine's premises that leads to the main shrine. There was no damage to the shrine.
China-India military drill kicks off in SW China - Ministry of National Defense A joint military drill between China and India kicked off on Tuesday in Chengdu, the capital city of southwest China's Sichuan Province. An opening ceremony was held before the exercises started. Codenamed "Hand-in-Hand 2018", the training aims to strengthen the counter-terrorism capabilities of the two armies. During the 14-day event, troops from both sides will interact with each other. They are scheduled to have basic trainings, establish a unified anti-terrorism command and conduct live-fire anti-terrorism operations.
China and Russia may set up energy alliance, Moscow’s top envoy says | South China Morning Post Speaking in Beijing, Russian ambassador to China Andrei Denisov also hailed military cooperation between the two countries over the past year.
China Girds for Undersea Battle in the South China Sea | The National Interest - Lyle Goldstein The undersea domain is a key determinant of the emergent U.S.-China rivalry in the western Pacific. Over the years, Dragon Eye columns have examined Chinese sea mines , small frigates ( type 056 ), anti-submarine warfare (ASW) helicopters, “ missile torpedoes ,” large amphibious aircraft , and unmanned undersea vehicles (UUVs) and submarines. So, American strategists should take note when China reports on the set up of a new operational unit of the People’s Liberation Army (PLA) Navy that is flying the Chinese naval service’s first genuine long-range maritime patrol aircraft (MPA) optimized for anti-submarine warfare. According to a recent issue of Ordnance Science and Technology [兵工科技], a unit comprised of several GX-6 [高新六号] ASW aircraft was activated in the South Sea Fleet during the spring of 2018.
Hong Kong, Macao
Hong Kong Won’t Prosecute Ex-Leader Over Claims of Conflict of Interest - The New York Times The former leader, Leung Chun-ying, who was Hong Kong’s chief executive from 2012 to 2017, came under suspicion in 2014, when it emerged that the Australian company UGL had agreed to pay him $6.4 million. UGL has extensive connections with the MTR Corporation, which runs Hong Kong’s subway, and held a longstanding contract then worth about $41.9 million to maintain 120 train cars.
Mainland spokesperson denounces political attacks on Taiwanese baker - Xinhua Wu Pao-chun, a popular baker in Taiwan, issued a statement on his bakery's website Monday saying that he was proud of being Chinese and supported the 1992 Consensus, which triggered attacks from supporters of "Taiwan independence." The island's leader Tsai Ing-wen said Wu's move was the result of "political repression" from the mainland. "Mr. Wu expressed a correct attitude and normal affections in his statement," said Ma Xiaoguang, spokesperson with the State Council Taiwan Affairs Office, at a press conference. "The attacks on his statement were in fact 'political repression.'"
Tech And Media
China’s Tencent Music raises $1.1 billion in downsized US IPO | TechCrunch Still, this listing gives TME — Tencent Music Entertainment, a spin-out of Tencent — an impressive $21.3 billion valuation which is just below the $30 billion that Spotify commanded when it went public earlier this year via an unconventional direct listing. TME was valued at $12 billion at the time of Spotify’s listing in Q1 of this year so this is also a big jump. (Meanwhile, Spotify’s present market cap is around $24 billion.)
Quora-like Zhihu rumored to lay off hundreds of employees · TechNode A Zhihu spokesperson told TechNode that the information circulating online about job cuts is a rumor, adding that the process is part of a performance evaluation the company uses to make staffing adjustments and structural optimizations. Headhunters told Chinese media 36Kr that its unlikely the rumored layoffs are purely fiction, though they shouldn’t raise a red flag about Zhihu’s operations. Many Internet companies, including bike-rental firms ofo and Bluegogo, were forced to cut jobs because their operations or funding ran into serious problems.
China’s Government Orders Talent Home to Attend Huabiao Awards – Variety China’s government quietly ordered top Chinese talent back to the mainland from abroad this past weekend to attend a Beijing ceremony for its highest film industry honors, the loosely bi-annual Huabiao Awards. The move came just weeks after it directed mainland film executives and talent to snub after-parties and return home as quickly as possible from the Golden Horse Awards in Taipei in the wake of one winner’s controversial pro-Taiwanese independence acceptance speech.
Society, Art, Sports, Culture And History
Supping with a Long Spoon — dinner with Premier Li, November 1988 - China Heritage - Geremie R. Barmé Before too long, I heard that there was considerable displeasure with me in Canberra’s corridors of power. Not being bound by the strictures of the Australian public service, and indeed entirely ignorant of official protocol — no one had bothered to brief me on the evening, or even to suggest that the brain-numbing exchanges between Hawkie and Li Peng were tantamount to being a state secret — I’d blabbed about the dinner with fellow doctoral students, teachers and friends. In particular, I mentioned Hawke’s expletive when I had told that I thought 1989 would see a showdown between Zhao and his opposition and that Zhao was headed for a fall. The China boosterists in academia and the Australian government were not amused by such off-piste remarks, and one of the most prominent among them told me so in no uncertain terms.
Palace Museum’s China-made Heritage Lipstick Proves Hot Item | Jing Daily On December 9, an announcement “Palace Museum Lipsticks are finally here!” went viral on Chinese social media platform WeChat, attracting more than 100,000 pageviews. Priced at RMB 199 (about $29 per lipstick) the lipsticks, available in six colors, received more than 1,000 orders in a single night. Key to the swift success, apparently, is the fact that they are made by a local company, Beijing-based Bloomage Biotechnology Corp. Ltd., rather than imported like most cosmetics in China.
Energy, Environment, Science And Health
Chinese province puts 5-year ban on wild bird hunting - Xinhua China's southern province of Guangdong will put a five-year ban on wild bird hunting starting from January 1 of 2019, the local forestry department said Wednesday. During the period, hunting wild birds is banned except for ecological, scientific, disease-prevention or flight-safety purposes. Using and trading bird nets and traps are also prohibited.
Shenzhen's silent revolution: world's first fully electric bus fleet quietens Chinese megacity | The Guardian Shenzhen now has 16,000 electric buses in total and is noticeably quieter for it. “We find that the buses are so quiet that people might not hear them coming,” says Joseph Ma, deputy general manager at Shenzhen Bus Group, the largest of the three main bus companies in the city. “In fact, we’ve received requests to add some artificial noise to the buses so that people can hear them. We’re considering it.”
Agriculture And Rural Issues
Dim Sums: Rural China Economics and Policy: China Soybean Farmers Unpaid One trader who acknowledges owing farmers 2 million yuan (about $285,000) said China's soybean market is a buyers' market, and money from buyers in distant provinces doesn't always arrive. He said the payment delays are common in the industry, due to "triangular debt" and bankruptcy of processors.