US Officials To Go To Beijing; Huawei Under US Criminal Investigation; Technological Self-reliance; Xi Visits Hubei; PRC Annual Report On US Human Rights

The US is sending a large team of senior officials to Beijing next week. Perhaps there is the possibility for real breakthroughs, but if they leave without significant progress then the odds of the US imposing massive tariffs likely increases. One question the reporting and rumor mill around this trip has raised is whether the Trump Administration has a unified view of an acceptable outcome with the Chinese. I have my doubts..

The Wall Street Journal reported this morning that the US Department of Justice is investigating Huawei for violating Iran sanctions. This development raises lots of questions:

  1. Remember the leak about a draft Trump Administration plan to counter China in 5G? Could sanctions similar to those imposed on ZTE be on the table for Huawei?;

  2. Wouldn't cutting off Huawei's access to US technology cripple its 5G plans in the near-term, while also causing massive collateral damage to tech firms in the US and elsewhere?

  3. Has the Trump Administration decided it is better to fight the tech and trade war now than wait as China will only get stronger, and so there is unlikely to be a real reduction of the tension no matter what may be agreed upon in Beijing next week?

My understanding is that the publicly released National Security strategy documents were just a small piece of an overall much tougher, classified view towards China, and maybe we are starting to see clearer glimpses of that.

The May Day holiday runs from Sunday through Tuesday next week in China. Unless there is something really interesting going on there will likely be no newsletter Monday. April 30.

Thanks for reading. 

The Essential Eight

1. US Delegation To Travel To Beijing For Trade Talks

This WSJ story mentions it and I had also heard that one reason for the inclusion of so many senior officials is that there is discord inside the Trump Administration and concerns that Mnuchin and Kudlow would agree to a relatively substance-free deal to placate markets and be able to declare victory and move on. I highly doubt Lighthizer will agree to that, and so long as he has Trump's ear on the China relationship the odds of a real breakthrough are not high.

Will the Trump Administration release the details of the next $100 Billion in threatened tariffs just before they leave for Beijing? That would seem to fit with his negotiating approach, and would focus Beijing even more. 

Trump to Send Mnuchin to China for Trade Talks Next Week - WSJ $$:

“I think we’ve got a very good chance of making a deal,” said Mr. Trump, who called China’s leader Xi Jinping “a friend of mine,” but noted that there remained significant obstacles to a deal. “They trade with us,” the president said. “We can’t trade with them.”

The members of the U.S. team will include Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, National Economic Council director Larry Kudlow and White House trade adviser Peter Navarro. Mr. Trump didn’t say specifically when next week the trip would occur, but a person familiar with the discussions said they team is likely to be in Beijing around May 3 and May 4...

The composition of the team reflects divisions within the administration, say individuals involved in the discussions. According to these individuals, Mr. Mnuchin initially proposed that he make the trip on his own, presenting himself as the counterpart to Chinese envoy Liu He, who visited Washington in March to try to restart talks...

China will try to exploit the differences between Mr. Trump’s advisers, says Scott Kennedy, a China scholar at the Center for Strategic and International Studies, who recently discussed the trip with officials in Beijing. “One of my concerns is that in Beijing the primary negotiation will be between members of American team rather than between Americans and Chinese,” he said.

2. Huawei Under US Department Of Justice Investigation

Huawei Under Criminal Investigation Over Iran Sanctions - WSJ:

The Justice Department is investigating whether Huawei Technologies Co. violated U.S. sanctions related to Iran, according to people familiar with the matter—opening a new avenue of scrutiny amid wider national-security concerns over the Chinese cellular-electronics giant.

It’s unclear how far the Justice probe has advanced and what specific allegation federal agents are probing. A Huawei spokesman declined to comment...

The criminal investigation into Huawei follows administrative subpoenas on sanctions-related issues from both the Commerce Department and the Treasury Department’s Office of Foreign Assets Control, according to these people.

The Justice Department’s interest hasn’t been previously reported, and the existence of a criminal probe represents a more serious level of potential misconduct. The Commerce and Treasury departments can impose administrative penalties and regulatory sanctions on the company.

3. Growing Focus On Technological Self-reliance

Xi reiterated the imperative of ending reliance on foreign technologies during his Hubei trip and Jack Ma is calling for ending the US stranglehold in semiconductors. Ma is quite out front on this issue and clearly sees political benefits from helping to lead the charge to free China from the technological grip of the evil American imperialists. But then why did he list his firm in the US and take so much money from US investors? Perhaps he should delist Alibaba from the US, or perhaps his political posturing in China will blowback in the US and cause him and his DC team more problems here?

If China is now going to redouble its efforts to remove dependency on the US for core technologies then expect efforts to pilfer technology to surge again. That is the fastest way for China to catch up.

Xi made some comments on the importance of indigenous tech while visiting the Three Gorges Dam—习近平总书记湖北之行第一天--时政--人民网:


The propaganda around Xi's Hubei visit is just starting, and appears it will focus on environmental protection and indigenous technical innovation. So far no word of a swim in the Yangtze, but some of the pictures kind of harken back to an earlier Era...

Commentary: Urgent need for China to start new round of self-innovation - People's Daily Online:

Operating systems are related to the core competitiveness of information technologies. They are the groundwork for controlling a computer or network, and they can even control users’ information and operations if it's necessary, said Ni Guangnan, an academician at the Chinese Academy of Engineering.

It's a long-cherished dream of Chinese scientists to independently develop an operating system like Windows. To this aim, China has developed the Kylin and other operating systems, but it is extremely difficult to make a system that’s commonly used and widely applied.


Ni has been pushing this for years, so far China's efforts have not succeeded. 

Jack Ma Says Nations Need Tech to Sidestep U.S. Grip - Bloomberg:

The billionaire executive chairman of Alibaba Group Holding Ltd., explaining the e-commerce titan’s growing interest in chips including this month’s acquisition of local design-house Hangzhou C-Sky Microsystems Co., said he’s motivated in part by a desire to make chips “inclusive:” cheap, efficient and available to all. He said his company has invested in five semiconductor firms in the past four years.

“America was the early mover and China, we need a lot of things. 100 percent of the market for chips is controlled by Americans,” he told students and entrepreneurs at Tokyo’s Waseda University. “And suddenly if they stop selling -- what that means, you understand. And that’s why China, Japan, and any country, you need core technologies.”

China Invites Foreign Cash to Build a World-Class Chip Industry - Bloomberg:

As part of efforts to reduce an overwhelming reliance on foreign technology, the Chinese government set up a fund that aims to raise up to 200 billion yuan ($31.7 billion) to back a spectrum of domestic firms from processor designers to equipment makers. The China Integrated Circuit Industry Investment Fund Co. will now take foreign money, the country’s tech industry overseer said Wednesday.

“The second phase of the national IC fund is still raising money. We welcome overseas companies to participate in the fund,” Chen Yin, general engineer and spokesman of the Ministry of Industry and Information Technology, told reporters in Beijing.

I will guess that the US government will not want US funds to invest in this…

4. More On US-China Trade

China’s car concession not enough to halt a US trade war - FT $$:

The first problem with China’s latest concession was the timeframe — hardly fast enough for a US president who wants credit for “solving” the problems he sees in the bilateral relationship by November’s midterm Congressional elections. 

A second problem is the long-term nature of the joint venture contracts that America’s two largest car companies, GM and Ford, are locked into in China.

China to end foreign ownership limits on passenger vehicles by 2022 - ECNS:

China will scrap a limit on foreign ownership of automotive ventures by 2022 amid similar deregulatory moves in shipbuilding and aircraft industries, said Chen Yin, chief engineer of the Ministry of Industry and Information Technology, on Wednesday.

Why 4 more years? Whatever tariffs that were to be imposed because of these ownership restrictions should be implemented and only removed when China delivers on this commitment, the time has long passed to give China credit for promises.

China Is Opening Its Car Market. But Not Enough, Say Auto Companies. - The New York Times:

As details are emerging, foreign auto executives attending China’s annual auto show in Beijing this week said Mr. Xi’s initiative was too narrow and vague to change business on the ground. That means the initiative may not be a strong enough starting point for talks to stave off the Trump administration’s threats to impose tariffs on $150 billion in Chinese-made goods...

They also cited China’s ambitious program to use state support to build up world-beating competitors in electric and self-driving cars, among other emerging technologies, a program called Made in China 2025.

Donald Trump is right: China must play by the rules - FT - Jamil Anderlini $$:

Mr Trump has been astute in targeting forced technology transfer and Beijing’s attempts to shut out foreign competition from industries it hopes to dominate globally. But he is seriously mistaken in his apparent belief that he can win a trade war on multiple fronts by simultaneously attacking some of America’s closest partners.

Germany, in particular, is a natural ally since it is such a huge exporter of high-tech products to China and, until recently, it did not even have a mechanism that allowed it to block foreign investments on the grounds of national security.

Angela Merkel, German chancellor, is due to visit the White House on Friday and will then travel to Beijing next month. Mr Trump has the chance to recruit Ms Merkel to his cause, but he could just as easily alienate her and thus badly undermine his efforts to level the playing field for foreign companies in China.

What's the Deal With China? - Motley Fool Answers:

The potential for a Trade War with China continues to dominate the headlines. With the help of Scott Kennedy of the Center for Strategic and International Studies we'll talk about what it means for us as consumers and investors.

Is ZTE ban the start of a tech war between China and the US?  | South China Morning Post

Robert Lawrence Kuhn says the dispute over ZTE and the related issues of trade and technology are worrying for the more fundamental problem they point to: misunderstanding on both sides of the other’s motives

5. PRC Annual Report On US Human Rights

Too bad the US makes it so easy for China to highlight legitimate human rights issues. You have to admire Beijing for returning the favor, and for the chutzpah in noting Harvey Weinstein and the #Metoo movement while it is in the middle of smacking down China's own #Metoo movement. 

China issues report on U.S. human rights - People's Daily Online:

The report, titled "Human Rights Record of the United States in 2017," was released by the Information Office of the State Council, China's cabinet, in response to the Country Reports on Human Rights Practices for 2017 issued by the U.S. State Department on April 20.

A chronology of human rights violations by the United States in 2017 was also released by the office Tuesday...

In October 2017, the scandal erupted concerning American film producer Harvey Weinstein who sexually harassed a number of female stars. The "#MeToo" campaign was initiated on social media platforms to encourage victims to protest against the widespread sex harassment and infringement, receiving active responses from more than 1 million people, according to the report.

Full text: Human Rights Record of the United States in 2017 

6. North Korea Nuclear Test Site Has Collapsed, May Be Leaking Radiation

The lack of a testing facility certainly makes it easy for Kim to tell Trump he won't test any time soon...

North Korea’s nuclear test site has collapsed ... and that may be why Kim Jong-un suspended tests | South China Morning Post:

North Korea’s mountain nuclear test site has collapsed, putting China and other nearby nations at unprecedented risk of radioactive exposure, two separate groups of Chinese scientists studying the issue have confirmed.

The collapse after five nuclear blasts may be why North Korean leader Kim Jong-un declared last Friday that he would freeze the hermit state’s nuclear and missile tests and shut down the site, one researcher said...

This next section seems quite damning about China's knowledge of and role around the DPRK nuclear tests?

Speculation grew that North Korea’s site was in trouble when Lee Doh-sik, the top North Korean geologist, visited Zhao’s institute about two weeks after the test where he met privately with senior Chinese government geologists.

Although the purpose of Lee’s visit was not disclosed, two days later, Pyongyang announced it would no longer conduct land-based nuclear tests.

7. Some More Details On The Skinning Of Financial Crocodiles

Anbang's Wu Xiaohui will learn his sentence soon, given the numbers involved a life sentence or worse is not impossible. Wu would likely have been fine in the Deng Era but in the Xi Era he will be lucky to ever walk free again. 

Xiao Jianhua is expected to go on trial soon. His Tomorrow Group's large collection of nearly priceless financial licenses points to massive corruption that leads near or all the way to the top of the Hu-Wen administration. Who might have he he ratted out and when will we learn about his revelations?

The Warning Shot: How Anbang Founder Wu Xiaohui Fell - Caixin Global:

The police started investigating the insurance giant in March 2017. As soon as Wu learned of the action, he ordered Anbang’s senior executives and key employees to flee China or take leave to avoid being investigated, as well as change their computers and cellphones, delete emails and destroy digital materials, trying to cover up all the evidence, prosecutors alleged...

In the first half of 2017, Wu repeatedly tried to speak to Chen Wenhui, deputy chairman of the then-regulator, the then-China Insurance Regulatory Commission (CIRC), but was never able to arrange a meeting, sources close to the matter told Caixin.

In the meantime, he did all he could to place himself in the public eye, as a response to rumors he was in trouble. He appeared at conferences, including the China Development Forum in Beijing and the Bo’ao Forum in Hainan province, in March 2017.

Tomorrow Holdings Affiliate to Sell Stake in Brokerage - Caixin Global:

The move comes amid a broader sell-off of assets by a larger group of aggressive Chinese conglomerates who have come under recent government scrutiny for their global purchases. Among that group, others who have been recently selling or trying to sell off assets include HNA Group, Wanda Group and CEFC China Energy.

The deal, which has yet to be sealed, is the latest move by companies affiliated with Tomorrow Holdings to unload assets since its 47-year-old boss Xiao Jianhua, one of the richest businesspeople in China, began assisting authorities with unspecified investigations in January 2017.

8. The Consumer Story

'Small-town kids' shape future of China's consumption | Reuters In 2016-2020, around 50 million households will enter the middle and upper classes, with half of them likely to be located outside China’s top 100 cities, according to a report by The Boston Consulting Group and AliResearch, a unit of the e-commerce giant Alibaba (BABA.N).

That transformation has already helped spur a spending surge in the hinterland. In a report by UnionPay/JD.COM, consumption in third- and fourth-tier cities, generally cities with gross domestic product of less than $70 billion, soared 58 percent last year. Taken together, the cities have a total population of nearly 700 million.

A $7 Trillion Debt Pile Looms Large Over Chinese Households - Bloomberg:

On the back of a boom in property prices, household borrowing has been climbing for 10 years straight, at a pace that rivals any such run-up in major economies. At $6.7 trillion, and a record 50 percent of gross domestic product, private debt is now approaching developed-world levels and crimping consumer spending power...

Much of households’ surging debt level is linked to the housing bubble, which has seen new home prices in Beijing and Shanghai jump more than 25 percent over the last two years. Mortgages stood at 22.9 trillion yuan at the end of 2017, making up more than half of all household loans held by lenders, People’s Bank of China data show.

The other China story - Andy Rothman - FT $$:

I expect that political pressure from those constituencies, nudged along by Mr Xi’s well-targeted retaliation list, will lead Mr Trump to decide that a negotiation that enables him to declare victory, as he did with the renegotiation of a free-trade agreement with South Korea, will be preferable to continued bilateral strife. Additionally, Mr Trump understands that he needs Mr Xi’s help with two of the most challenging strategic issues on his agenda: nuclear weapons programmes in North Korea and Iran.

Business, Economy, Finance And Trade

China plans to establish financial court in Shanghai - ECNS China will set up a financial court in Shanghai to handle finance-related lawsuits referred by the Supreme People's Court, according to a draft decision submitted to the Standing Committee of the 13th National People's Congress. Zhou Qiang, president of the Supreme People's Court, said the proposed court will increase the international influence of China's financial laws and support economic transformation as well as the "Belt and Road Initiative".

Fintech Focus: The Fall of Peer-to-Peer Lending in China - Caixin Global Also in December, authorities began to squeeze microlender funding. Regulators banned microlenders from raising funds through asset-backed securities (ABSs), and later banned banks and other financial institutions from funding microlenders by buying structured products backed by future payments on their loans. The move hit the heavyweight Ant Financial Services Group the hardest. By the end of last year, two of its microlending units, Huabei and Jiebei, had issued 70% of the 394 billion yuan in total outstanding microloan-backed ABSs traded on China’s interbank market, according to data from Wind Infomation.

Eight charged in China over ‘Ponzi scheme posing as P2P lender’ that took US$9 billion | South China Morning Post Eight ringleaders of the Shanghai-based Shanlin Finance have been charged with illegally obtaining deposits and taken into custody, according to local public prosecutor the Shanghai Pudong district People’s Procuratorate, the official Xinhua News Agency reported on Tuesday. The scheme was disguised as a peer-to-peer lending platform, police said. Shanlin’s online lending platforms and mobile apps have been suspended from service.

Chinese banks under pressure from Beijing to boost capital- FT $$ Chinese banks have embarked on a new round of capital raising, prompted by regulations on shadow banking that are forcing lenders to bring shadow loans back on to their balance sheets.  Pressure on banks to boost capital is a key element of Beijing’s broader effort to contain financial risks from the country’s extraordinary debt growth over the past decade.

Tianjin seizes 600 Bitcoin mining computers over electricity theft - Xinhua Police in north China's Tianjin Municipality have confiscated 600 Bitcoin mining computers after the local power grid reported abnormal electricity consumption. Eight high-power fans were also seized, local police said on Tuesday, adding that it was the largest power theft case in recent years.

Crypto Billionaire Sued by Sequoia After Deal Falls Apart - Bloomberg A legal dispute between Zhao Changpeng, founder of the world’s largest cryptocurrency exchange, and a unit of Sequoia Capital is offering a rare glimpse into one of the digital-asset industry’s fastest-growing startups. Sequoia sued Zhao over a funding deal gone awry, according to Hong Kong court filings on March 26 and April 24.  //  Comment: Ironic

Corporate Reform of Central State-owned Enterprises is Complete: SASAC - China Banking News Xinhua reports that as of 30 November last year SASAC had already completed approvals of the reform plans for the more than 60 central SOE groups scheduled for reforms. Almost all of these enterprises completed amendments to industrial and commercial registration and obtained new operating licenses by the end of 2017, to become corporate enterprises registered in accordance with the Chinese Company Law. 央企公司制改制基本完成 “历史性突破”打开改革新空间 

China Doubles Quotas Under Two Outbound Investment Programs - Caixin Global The increases on investment quotas will enable overseas fund managers to raise more money from Chinese institutions and wealthy people to invest abroad. It is the first increase since the launch of the two trial programs about five years ago.

Chinese companies seen as less corrupt as Xi Jinping’s anti-graft campaign bites | South China Morning Post Survey by accounting firm EY finds perceptions of among local executives of corporate wrongdoing in China are lower than four years ago

Are PBOC Reserve Ratio Cuts Better for Liquidity Management Than OMO? - China Banking News Yu Xuejun (于学军), an economist and veteran regulator of both PBOC and the China Banking Regulatory Commission, believes that reductions in the required reserve ratio may prove to be more effective than open market operations when it comes to channelling funds to the real economy. During the first half of 2017 Yu delivered a series of public speeches calling for regulators to “restore warped Chinese-style monetary policy to a normal state,” via “appropriate reductions” in the usage of monetary tools such as medium-term lending facilities, pledged supplementary lending and reverse repos, and their gradual replacement with reductions in required reserve ratios.

Interest Reforms Could See Jumbo CD's Replace Wealth Management Products - China Banking News Zhang Ming (张明), banking sector analyst with Hua Chuang Securities, said to 21st Century Business Herald that he expects wealth management products to continue to shrink this year as a result of regulatory pressure, with large-denomination CD’s most likely picking up the slack. Zhang said that amidst a sharp tightening of funds following strict regulation of the finance sector, and expectations of further marketisation reform of interest rates, bank jumbo CD’s have suddenly emerged as the “parvenus” of Chinese financial markets.

Mass resignations at Chinese owner of Australia's largest dairy farm cast doubt on investment | Australia news | The Guardian A mass board resignation at the Chinese firm that bought Australia’s largest dairy farm has fuelled concerns it may not fulfil the promises of local investment and environmental protection that convinced the Turnbull government to sign off on the sale.

China announces tax cuts worth 60 bln yuan for innovative, small businesses - Xinhua China will make further tax cuts worth over 60 billion yuan (about 9.5 billion US dollars) to drive innovation and entrepreneurship and boost the development of small and micro businesses, the State Council said Wednesday. "The move aims to reduce the cost for innovation and entrepreneurship, energize small and micro businesses, and spur job creation," said a statement released after an executive meeting of the State Council presided over by Premier Li Keqiang

Tighter asset management rules 'days away' - China Daily "After some banks' lobbying and the possible revision of the proposed regulation, the new rules could be released as early as this week, before the May Day holiday starting on Sunday," an anonymous source close to the central bank told China Daily.


Politics, Law And Ideology

人民日报评论员:坚持网信事业正确政治方向——五论贯彻习近平总书记全国网信工作会议重要讲话-新华网 the 5th in series of People's Daily comments on the cybersecurity and informatization work confrerence. Clearly there is going to be might tighter censorship and control online...坚持正确政治方向,就要打造一支过硬的干部人才队伍。互联网管理是一项政治性极强的工作,讲政治是对网信部门第一位的要求。网信队伍要不断增强“四个意识”,坚持把党的政治建设摆在首位,自觉维护党中央权威和集中统一领导,自觉在思想上政治上行动上同以习近平同志为核心的党中央保持高度一致;要把讲政治、懂网络、敢担当、善创新作为重要标准,把好干部真正选出来、用起来,为网信事业发展提供坚强的组织和队伍保障。网信领域是技术密集型、创新密集型领域,必须聚天下英才而用之,让人才的创造活力竞相迸发、聪明才智充分涌流。

China to introduce default judgment against corrupt officials fleeing overseas - Xinhua | Lawmakers at the second session of the Standing Committee of the National People's Congress (NPC) were briefed on the move Wednesday as a draft revision to the Criminal Procedure Law was submitted to the top legislature for review. The default judgment will be used against suspects and defendants in corruption or bribery cases who have fled abroad, said Shen Chunyao, chairman of the Commission for Legislative Affairs of the NPC Standing Committee. 针对外逃贪官!刑事缺席审判制度要来了-中新网 

China plans to give "people's assessors" bigger role in court - Xinhua A second draft of a law on "people's assessors" was submitted to China's legislature for review on Wednesday, suggesting to grant assessors a bigger role in court. It recognizes that the assessors "have equal rights" as professional judges in trials, unless the law specifically provides otherwise. The assessors are also allowed to participate in legal proceedings in which the death penalty is possible and other cases with "severe social impacts," according to the draft.

Law to punish glorifying WWII invasion - Global Times People who malign the deeds and spirit of the heroes and martyrs and those who glorify wars or acts of invasion and disturb the social order shall be punished, and should be criminally liable in severe cases, according to the second draft of a law reviewed by legislators during the bi-monthly session of the top legislature from Wednesday to Friday. The amendment was included following recent incidents in which a handful of persons dressed in Japanese World War II army uniforms and spread the photos online to glorify the war of invasion, triggering strong public backlash. 英烈保护法草案拟增加打击“精日分子”条款 

Five years of hunting tigers and swatting flies – China Policy Institute: Analysis - Andrew Wedeman In sum, the intensity of the crackdown as a whole may be decreasing, but the pressure at the top remains significant and appears likely to remain so in the near future. That said, it seems reasonable to assume that there will be few tigers of the size of Zhou Yangkang of Ling Jihua in the future. In theory, that ought to be the case. By and large, Xi has been hunting down tigers who became corrupt when they were junior officials in the Jiang Zemin and Hu Jintao eras and then managed to climb up the ranks into the leadership during the years before Xi was named General Secretary. Five years in to his tenure in office, he has had a hand in replacing the fallen tigers and moving other officials up into the leadership, with the result that more and more of those at the top are products of the Xi era. Assuming that Xi has replaced corrupt tigers with honest and upright leaders, there ought to be few tigers lurking in the hills. That does not mean, however, that corruption at the top will not continue to be a problem or that there are not more tigers to get caught and punished.

内蒙古自治区政府副主席白向群涉嫌严重违纪违法接受中央纪委国家监委纪律审查和监察调查—要闻——中央纪委国家监委网站 Inner Mongolia Vice Chairman Bai Xiangqun under investigation

Plea Leniency Pilot Overview - China Law Translate


Foreign and Military Affairs

Chinese state councilor calls for improved SCO cooperation in defense, security - Xinhua Chinese State Councilor and Minister of National Defense Wei Fenghe on Tuesday called on defense ministers from Shanghai Cooperation Organization (SCO) member countries to implement consensus reached by heads of state and continuously improve cooperation in defense and security.

Chinese State Councilor meets foreign officials - Xinhua Chinese State Councilor and Foreign Minister Wang Yi on Tuesday held separate talks with his Tajik, Uzbek, and Kazakh counterparts in Beijing

One Step Forward, One Step Back for PLA Military Education | RealClearDefense CCP General Secretary Xi Jinping’s sweeping reorganization of the People’s Liberation Army (PLA) in 2016 was meant to shake up ossified bureaucracies, boost operational jointness and technical ability, and refocus the PLA on its mission to “fight and win wars” (China Brief, January 12). It is thus unsurprising that military academies and schools in China have seen significant reorganization since the initiation of the 2016 reforms, with some changes modeled on the training systems used in the United States and Taiwan. While some progress has been made towards desired outcomes, including combatting entrenched corruption within the PLA officer corps, significant obstacles remain, particularly in building cooperation across branches within services, and promoting the civil-military cooperation necessary for an effective civilian office reserve corps.

Pompeo planning to switch Australia ambassador nominee to South Korea - The Washington Post The Chinese government may also view Harris’s posting to Seoul with concern. He coined the term “Great Wall of Sand,” a scathing reference to Chinese militarization of rocks, reefs and submerged shoals in disputed areas of the South China Sea. Chinese news media have been attacking Harris for years, often accusing him of being Japanese, in order to question his motivations. In fact, Harris’s mother was Japanese, and his father was a U.S. Navy chief petty officer stationed in Yokosuka, Japan.

China, Russia to strengthen military relations - China Daily Air Force General Xu Qiliang, vice chairman of the Central Military Commission, made the remark while meeting with Russia's defense minister Sergey Shoygu in Beijing on Tuesday. Xu said the Sino-Russian relationship has reached new heights, thanks to a strong push by leaders from both countries.

Senate passes motion condemning China’s ‘hostile behaviour’ in South China Sea - The Globe and Mail The measure decries the “escalating and hostile behaviour exhibited by the People’s Republic of China in the South China Sea” and urges all parties to the dispute to uphold the rights of freedom of navigation and overflight as enshrined in international law and the United Nations Convention of the Sea. It’s rare for Canadian parliamentarians to criticize China so directly. The measure comes as the Trudeau government is seeking to open formal trade negotiation with the world’s second-biggest economy.

'Five Eyes' seek to counter China's Pacific influence | Asia Times The economic focus of the countermove is an acknowledgment that China has been able to make inroads in the region by filling a vacuum which probably dates back to the 2006 coup in Fiji, when Australia and New Zealand imposed a range of sanctions. Fiji strongman Frank Bainimarama turned to China instead.

India and China: Over to the Leaders - Carnegie India - Carnegie Endowment for International Peace The nature of the issues bedeviling the ties between the two nations has certainly not changed between 2017 and 2018. What has changed though is the international context. President Trump’s willingness to confront China on trade issues and his bold effort to alter the status quo in Beijing’s Korean frontyard has cast a shadow over the sense of China’s inevitable and indisputable primacy over Asia. After a few years of signaling that major powers and neighbours have no option but to adapt to China’s rise, Beijing is now hinting at a measure of flexibility to cover the massive geopolitical risks engendered by Trump. As it explores potential compromises with the United States, China is also reaching out to its Asian neighbours, including Japan, Vietnam and India

Facial profiling helped Donald Trump trip up Xi Jinping - Nikkei Asian Review Consider the way facial expression experts a little more than a year ago described the characteristics of Chinese President Xi Jinping: "Extremely cautious." "Well-prepared and hence makes few mistakes." "Susceptible to surprises that go beyond his expectations." This summary was provided by Japanese and U.S. sources who have been involved in negotiations with China. They said these judgments were included in an analysis that an intelligence agency delivered to the White House before Donald Trump hosted Xi in the southern U.S. state of Florida last April.

China’s intimidation in the South China Sea poses an economic threat to Vietnam | East Asia Forum Hanoi’s options are very limited. It, along with all the other Southeast Asian claimant states in the South China Sea, is still refusing to concede on the main Chinese demand for ‘joint development’. It continues to court international support and to engage China in discussions. But it does not seem to have a strategy to develop the resources that international law says rightfully belong to it. And the economic costs of this predicament are rising. - Bill Hayton

China opposes China related content in G7 foreign ministers joint communique: FM - Xinhua The joint communique is being masqueraded under the name of international law, and is pointing fingers at the South China Sea and East China Sea issues, as well as China's human rights situation, Lu said, stressing that China firmly opposes the untrue and irresponsible remarks in the communique.

Trouble in Paradise: A Chinese Occupation in Tahiti | The Diplomat China — like any lender — exacts a price for its aid, and Pacific nations are gradually learning the cost. Nothing sums up the challenges and dilemmas Pacific peoples face in dealing with a rising China more than the simmering political scandal over the Chinese consulate in Tahiti’s illegal occupation of a house used for China’s diplomatic offices in French Polynesia...The Chinese consulate has been renting the property since 2007. The property owners say that China never respected the terms of the rental agreement, so in 2017 they refused to renew the lease. According to the rental agreement, the building was to be used for accommodation purposes only. It is located in a private residential area; but China turned the house into diplomatic offices.

The Pakistan question: Ignore rhetoric, Narendra Modi-Xi Jinping meet won't go beyond clearly defined red lines - Firstpost The structural nature of the differences between two neighbours — that resists easy solutions — bears expansion. Most of the areas of friction in bilateral ties involve a third nation, Pakistan. Beijing has made New Delhi's entry into NSG incumbent on a similar arrangement for Islamabad, it has been a stumbling block in Modi government's push to designate Masood Azhar as a global terrorist and it has become a stakeholder in India's travails with Pakistan on Kashmir by making CPEC a key component of BRI. Pakistan is at the front and centre of Xi Jinping's 'great power' aspirations and it will stop at nothing to keep all levers of this tie firmly within its grasp. Its predatory policies are already making Pakistanis nervous and throwing its economy out of gear.

India China News: India sticks to its own path, says no to China’s Belt & Road initiative - Times of India A joint communique issued at the end of the meeting listed other SCO members, including Russia, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, who “reaffirmed support” for the Belt and Road plan. India is the only member not mentioned...Far from accepting the Chinese programme, foreign minister Sushma Swaraj listed a wide range of connectivity infrastructure projects being planned and executed by India in different countries.



China says further steps ready to target Taiwan independence - AP China said Wednesday that it is prepared to take further steps to counter perceived moves by self-ruling Taiwan toward formal independence following recent war games aimed at intimidating the island’s leaders. Signals sent by the military exercises “are extremely distinct and clear,” the spokesman for the Cabinet’s Taiwan Affairs Office, Ma Xiaoguang, told reporters at a bi-weekly news briefing. “We have the firm will, complete confidence and sufficient capability to frustrate any types of Taiwan independence schemes or actions and protect national sovereignty and territorial integrity,” Ma said.


Tech And Media 

China's 'makers' battle mistrust in hi-tech community - AFP "Makers" pride themselves on coming up with new ideas, and they expect fellow makers to give them due credit for inventions. This is a departure from the so-called "shanzhai" culture in China, where counterfeiters produce increasingly high-quality replicas of everything from computers to handbags to famous paintings.

Wanted at Chinese Start-Ups: Attractive Women to Ease Coders’ Stress - The New York Times Ms. Zhang, the human resources executive who was part of the panel that hired Ms. Shen, stressed that it is important for a programmer motivator to look good. She said the applicants needed to have “five facial features that must definitely be in their proper order” and speak in a gentle way. They should also have a contagious laugh, be able to apply simple makeup and be taller than 5 feet 2 inches. “Her position is at the front desk, isn’t it?” Ms. Zhang said. “It may be that people won’t be able to see her if they walk in.”

China Startup Eyeing $100 Billion IPO Vows to Limit Profits - Bloomberg The Beijing-based company, led by serial entrepreneur Lei Jun, is promising to limit the net profit margin in its hardware business "forever” to no more than 5 percent, according to an emailed statement. The policy will apply to smartphones -- its biggest revenue source -- as well as other gadgets it makes. It pledged to distribute the excess amount to its users if the margin exceeds the cap in coming years.

Y Combinator is officially coming to China · TechNode The company has announced plans to enter China and welcomed startups in all phases to join their program whether it is concept stage, product testing phase or fast-growing stage. Y Combinator said that they are looking forward to meeting and working with more Chinese entrepreneurs and announced the launch of their Startup School on May 19th at Beijing Tsinghua University.

Tencent Launches Movie Distribution To Boost Film Business – China Money Network Chinese social media giant Tencent Holdings has set up a film distribution subsidiary, as part of its wider push into movie production and sales. The announcement, made Monday at Tencent’s UP2018 Conference, comes after Tencent Films and China Everbright struck a deal with entertainment and media firm Tang Media Partners earlier this month to acquire 10 to 20 Hollywood movies every year to distribute in China.

China Fund Raises $500 Million to Snap Up Cheaper AI Startups - Bloomberg Lee Kai-Fu’s Sinovation Ventures is one of the biggest players prospecting for promising Chinese AI startups: a gold rush fomented by corporate touting and Chinese government backing that’s raised the cost of buying into the industry over the past year. About half of his new Fund IV has already been earmarked for investments in fields such as machine learning. But with many domestic startups offering little more than a concept, he’s counting on a crash in investor confidence to serve up cut-priced opportunities.

Chinese Ride-Hailing Giant Didi Hits Accelerator on Talks for IPO - WSJ The Beijing-based company in recent weeks has been in talks with bankers about the feasibility of tapping the public markets for cash in the second half of 2018. The discussions are in early stages, the people familiar with the matter said. It also isn’t clear whether an IPO will happen this year and Didi hasn’t decided on a listing venue, they added.  //  Comment: In a hurry to get IPO out before competition makes a big enough dent to impact valuation?


Energy, Environment, Science And Health

China Struggling to Meet 2020 Nuclear Reactor Target, Report Says - Caixin Global *Five new nuclear reactions will go online in China this year, but the country will need to bring six to eight online annually if it is to meet its 2020 target *While 20 reactors are currently under construction, achieving this pace will be ‘quite difficult,’ a non-governmental organization said

China outlines roadmap for deep space exploration - Xinhua China is planning four deep space exploration missions before 2030, including probes to Mars, asteroids and Jupiter, says Pei Zhaoyu, deputy director of the Lunar Exploration and Space Program Center of the China National Space Administration.

Dreams of Imperial Descent Drive Chinese to DNA Testing - Sixth Tone Although the industry is still fairly niche in China, such businesses have captured the imagination of venture capitalists who are betting big on their success. China’s largest direct-to-consumer genetic testing company, Chengdu 23Mofang Biotechnology — which counts Li as a customer — raised 100 million yuan ($15.8 million) in its fifth funding round in March. Its main competitor, Shenzhen-based WeGene, announced in January that it had finished its second round of fundraising, scoring an undisclosed amount.



Beijing old sites and buildings are now funky hotels and offices as land use control tightens  | South China Morning Post In Beijing, transforming old and historical sites into modern offices, restaurants and hotels is nothing new, but the pace has accelerated because of the government’s halt in providing new sites extending from the city centre to the fourth ring road. The fourth ring road has an eight kilometre radius from the city centre.  “Under the Beijing development plan 2016-2035, new commercial real estate projects are not allowed in the downtown area. So there is really a strong interest in acquiring old sites and developing them into new properties, with offices topping the demand,” said Zhang Ping, executive director of International Federation of Finance & Real Estate.