Weekend US-China trade talks fail; No harmony in Shangri-La; Putin state visit to China; Tax evasion in China's film industry

US-China trade negotiations appear to be at an impasse. The weekend talks ended with no concrete resolutions and a hard statement from the Chinese side threatening to void all outcomes of all the recent talks if Trump follows through on his tariff threats. This week before the June 12 Trump-Kim Singapore Summit Special however may be relatively quiet on the US-China trade front as the US looks to focus on positive outcomes from that meeting. Then again, who knows?

The Shangri-La Dialogue sounded predictably tense and the Chinese side predictably criticized it as basically a Western-led effort against China. Will Beijing even send a delegation next year? US SecDef Mattis had tough words for China and its South China Sea efforts, and there was a nicely timed leak to the New York Times that the "Pentagon is weighing a more assertive program of so-called freedom-of-navigation operations close to Chinese installations on disputed reefs".

It is the 29th anniversary of the Tiananmen Square Massacre and bloody crackdowns in other cities in China. 

Some housekeeping: The newsletter will be on vacation next week as I will be single-parenting my twins to Arizona to see their grandfather.The newsletter will also be off June 26-27 as I take our twins to camp, and July 19 when I go pick them up. My August schedule is not set but there will likely be some vacation in there as well. 

Thanks for reading.

The Essential Eight

1. Weekend US-China trade talks fail, China threatens over tariffs

U.S., China End Latest Trade Talks Without Settlement - WSJ $$:

“Before committing to anything, the Chinese side wants assurance that Washington won’t go ahead with its tariff threats,” said one of the people.

A statement released Sunday by China’s official Xinhua News Agency said both sides achieved “concrete progress” in areas including agriculture and energy but details are yet to be hammered out. “If the U.S. introduces trade sanctions including tariffs,” the statement added, any results from the negotiations “won’t go into effect.”

That means China would not only back out of any purchasing agreements with the U.S. but also retaliate for any U.S. sanctions, Chinese officials said.

China issues statement on Sino-U.S. trade talks - Xinhua:

"To implement the consensus reached in Washington, the two sides have had good communication in various areas such as agriculture and energy, and have made positive and concrete progress while relevant details are yet to be confirmed by both sides," the statement said...

"The attitude of the Chinese side remains consistent," said the statement.

To meet the people's ever-growing needs for a better life and the requirements of high-quality economic development, China is willing to increase imports from other countries, including the United States, which will benefit people of both countries and the rest of the world, it noted.

"Reform and opening-up as well as expanding domestic demand are China's national strategies. Our set pace will not change," the statement said....

"All economic and trade outcomes of the talks will not take effect if the US side imposes any trade sanctions including raising tariffs," the statement said.

The statement - 中方就中美经贸磋商发表声明

守护共识需中美相向笃定而行——中美经贸北京磋商传递的信号-新华网:

专家认为,中美经贸磋商成果来之不易,不希望看到这些成果付之东流,希望美方同样珍惜,以积极共赢的态度解决双边贸易关切,这将不仅有利于中美两国,也有利于世界。


2. No harmony in Shangri-la

US SecDef Mattis had some tough words for China at the Shangri-La Dialogue, while the Chinese delegation complained that it is a Western-led conference that it is unfair to China and its participants. 

Remarks by Secretary Mattis at Plenary Session of the 2018 Shangri-La Dialogue > U.S. DEPARTMENT OF DEFENSE > Transcript View:

I think there are consequences to China ignoring the international community. We firmly believe in the non-coercive aspects of how nations should get along with each other, that they should listen to each other.

Nothing wrong with competition, nothing wrong with having strong positions, but when it comes down to introducing what they have done in the South China Sea, there are consequences.

I would tell you that up until -- if you'd asked me two months ago, I'd have said we are still attempting to maintain a cooperative stance with the PRC, with China. We (were ?) inviting them to the RIMPAC and world's largest naval exercise in order to try to keep the open lines of military communication between us and transparency.

But when you look at what President Xi said in the Rose Garden of the White House in 2015, that they would not militarize the Spratlys, and then we watched what happened four weeks ago, it was time to say there's a consequence to this. And the world's largest naval exercise will not have the Chinese Navy participating.

But that's a relatively small consequence, and I believe there are much larger consequences in the future when nations lose the report of their neighbors, when they believe that piling mountainous debts on their neighbors and somehow removing the freedom of political action is the way to engage with them.

China hits out at US defence secretary after he accuses Beijing of 'intimidation and coercion':

Chinese Lieutenant General He Lei issued a fiery response, telling the summit that "irresponsible comments from other nations cannot be accepted".

"As long as it is on your own territory you can deploy the army and you can deploy weapons," he said.

"It is for the sake of defending ourselves," he added, and warned Beijing would take "firm measures" if other countries sent ships and aircraft close to what it considers its islands in the South China Sea.

General He also apparently said he regrets never fighting in war:

Aaron Connelly@ConnellyAL

Lt. Gen. He: I am retiring soon. My one big regret is that I never had a chance to fight in a war. But that’s because China has been peaceful for over thirty years. [😧]

June 2, 2018
Mindful Mattis did just fine at the Shangri-La Dialogue - Lowy Interpreter - Euan Graham:

China’s overbearing behaviour, especially in the South China Sea, was again centre stage. While Mattis’s speech will be analysed most acutely, it was striking how many defence ministers, including Singapore’s Ng Eng Hen, went out of their way to flag China’s stepped-up militarisation of the South China Sea as cause for strategic concern...

it was surprising to hear almost nothing of the Australia–India–Japan–US quadrilateral at Shangri-La. Such oversight is perhaps deserved, since the Quad has done very little since it was reconstituted last November as a low-key senior officials meeting. Mattis admitted he had dropped a mention of the Quad from his original draft. However, downplaying the Quad at Shangri-La was shrewd, as far as helping to secure Southeast Asian buy-in to the Indo-Pacific concept.

At Western-led summit, Chinese find controversy and a clash of cultures | South China Morning Post:

Behind the scenes, Chinese delegates said they were at a disadvantage at the forum and felt their voices were ignored because it was dominated by Western countries, with different ideologies, who led the narrative.

“The US has created a grand narrative consisting of keywords including ‘rule-based order’, ‘freedom of navigation and overflight’, and ‘militarisation’ – once you hear these words, you know it’s a criticism targeting China,” said Yao Yunzhu, a retired PLA major general and a delegate at the forum.

Yao also said the Chinese military officials found it frustrating trying to communicate with their Western counterparts because of the language barrier and differences in how they approached conflict.

“At multilateral events like this, the way the Western delegates speak and behave is different from the style we’re used to,” Yao said. “The Western delegates always stick together. They all speak English and sometimes it’s difficult for us to communicate, and we do feel frustrated at times.”

U.S. Weighs More South China Sea Patrols to Confront 'New Reality' of China - The New York Times:

The Pentagon is weighing a more assertive program of so-called freedom-of-navigation operations close to Chinese installations on disputed reefs, two U.S. officials and Western and Asian diplomats close to discussions said.

The officials declined to say how close they were to finalizing a decision.

Such moves could involve longer patrols, ones involving larger numbers of ships or operations involving closer surveillance of Chinese facilities in the area, which now include electronic jamming equipment and advanced military radars.

U.S. officials are also pushing international allies and partners to increase their own naval deployments through the vital trade route as China strengthens its military capabilities on both the Paracel and Spratly islands, the diplomats said, even if they stopped short of directly challenging Chinese holdings.

平静的南海 躁动的美国 - 解放军报:

朋友来了有好酒,豺狼来了有猎枪。中国军队是维护地区和世界和平的坚定力量。我们加强海空战备建设,提高防卫水平,捍卫国家主权和安全,维护地区和平稳定的决心意志坚定不移。


3. 29th Anniversary of June 4, 1989

29th Anniversary of Tiananmen Square - US State Department:

On the 29th anniversary of the violent suppression of peaceful demonstrations in and around Tiananmen Square on June 4, 1989, we remember the tragic loss of innocent lives.

As Liu Xiaobo wrote in his 2010 Nobel Peace Prize speech, delivered in absentia, “the ghosts of June 4th have not yet been laid to rest.”

We join others in the international community in urging the Chinese government to make a full public accounting of those killed, detained or missing; to release those who have been jailed for striving to keep the memory of Tiananmen Square alive; and to end the continued harassment of demonstration participants and their families

U.S. urges China to account for the 'ghosts' of Tiananmen | Reuters:

In response to Pompeo’s comments, China had lodged “stern representations” with the United States, foreign ministry spokeswoman Hua Chunying said on Monday.

China long ago reached a clear conclusion about the events of that era, but the United States every year issues statements of “gratuitous criticism” and interferes in its internal affairs, Hua said.

“The U.S. Secretary of State has absolutely no qualifications to demand the Chinese government do anything,” she added.

Hu Xijin, editor of nationalistic tabloid the Global Times, called Pompeo’s statement a “meaningless stunt” that “represents a wish of the Western world to meddle in China’s political process”.

China Warning on ‘Dictatorship’ Chant Chills Hong Kong Vigil - Bloomberg:

At issue are a series of slogans chanted during a mass candlelight vigil in Victoria Park, specifically one demanding an “end to one-party dictatorship.” That act of defiance has come under new scrutiny after the former top Chinese official in Hong Kong suggested that those who utter the phrase should be barred from running for office.

While government officials haven’t endorsed the view, pro-democracy lawmakers worry that such remarks could represent the latest Communist Party effort to curb free expression in the former British colony. In 2016, the Chinese government banned independence activists from public office and local officials earlier this year barred a legislative candidate from running because she supported “self-determination.”

24 hours in Hong Kong: the dramatic untold story of trio’s escape after the Tiananmen Square crackdown | South China Morning Post:

For the first time, on the 29th anniversary of those bloody events in Tiananmen Square, Ah Hung talks to the Post about a dangerous flight for freedom, and the 24 hours that changed his life forever...

Ah Hung – not his real name – was an ordinary Chinese citizen in 1989, a man far removed from the student protests in Beijing, an unsung hero whose conscience spurred him into action all those years ago.

Chai Ling and Feng Conde were fugitives when they met Ah Hung. The student leaders were on China’s 21-most-wanted list and needed to get from Foshan, in Guangdong province, to Hong Kong, and from there to France...

For Ah Hung, his impromptu decision to prolong his stay in Hong Kong came at a cost. By violating the terms of his visit, and not returning to the mainland on time, he left himself no choice but to leave behind his family – details on whom he preferred not to give – and go into exile with the pair.

Hong Kong pro-democracy activist Joshua Wong to be council member of Chinese think tank led by dissident Wang Dan | South China Morning Post:

Hong Kong pro-democracy activist Joshua Wong Chi-fung will be a council member on a think tank led by Chinese dissident Wang Dan, to be launched on Monday in the United States.

Dialogue China is set to be established on the 29th anniversary of the Tiananmen Square crackdown in 1989.

Geremie Barmé on a Maoist education, and Tiananmen remembered-Something in the Air – China Channel 

Unseen shots from Tiananmen 1989 - When Beijing's students dared to dream of change | Hong Kong Free Press


4. Putin state visit to China for upcoming Shanghai Cooperation Organization Qingdao summit 

China Focus: What to expect from SCO summit in Qingdao - Xinhua:

The SCO's full members are China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India and Pakistan. Its observer states are Afghanistan, Belarus, Iran, and Mongolia...

The summit will also focus on issues like improving global governance and consolidating the multilateral trade system, and lay out new plans to enhance the synergy of development strategies of member states, especially promoting the construction of the Belt and Road to lift regional economic cooperation.

On the sidelines of the summit, the presidents of Russia, Kazakhstan, and Kyrgyzstan will pay state visits to China, and the Iranian president will pay a working visit to China...

The summit will issue the Qingdao Declaration to summarize the development experience of the SCO and promote the "Shanghai Spirit" of mutual trust, mutual benefit, equality, consultation, respect for diverse civilizations, and pursuit of common development.

It will ratify a five-year outline for the implementation of the Treaty on Long-term Good Neighborliness, Friendship and Cooperation, and approve more than 10 cooperation deals covering areas including security, economy, and people-to-people exchanges.

Russian president's upcoming visit is of great significance: China's top diplomat - Xinhua:

Chinese State Councilor and Foreign Minister Wang Yi made the remarks while meeting with Russian Foreign Minister Sergei Lavrov on the sidelines of the Formal Meeting of the BRICS Ministers of Foreign Affairs here.

President Putin is scheduled to pay a state visit to China on June 8-10 and attend the Qingdao Summit of the Shanghai Cooperation Organization (SCO), said Wang...

During the talks, the Chinese foreign minister also said that faced with an ever-changing international landscape that is full of uncertainties, China and Russia, as comprehensive strategic partners of coordination, should further strengthen coordination and cooperation to uphold the fundamental principles of international relations, maintain international fairness and justice and protect the overall interests of emerging markets and developing countries...

Lavrov said that Russia fully agrees with China in its thoughts about the current international situation and is willing to strengthen coordination with China in multilateral mechanisms such as the SCO, BRICS cooperation, the Group of 20 and the United Nations.

Russia will make joint efforts with other emerging market countries to oppose unilateralism and protectionism and to safeguard world peace and stability, said Lavrov.

During their meeting, the two foreign ministers also exchanged views on the situation on the Korean Peninsula and agreed to further enhance coordination and cooperation to make efforts towards and contribute to the realization of a nuclear-free Korean Peninsula of lasting peace and stability.

Breaking the Grip of Western Newswires | China Media Project:

Last Friday, the Shanghai Cooperation Organization (SCO), an international political, economic and security organization with members and observer states spanning Eurasia and South Asia, held its first Media Summit in Beijing. During the meeting, attended by representatives from more than 110 media organizations, the group released a “cooperation initiative” calling on all SCO members to use the opportunity of the upcoming summit in Qingdao to “drive media dialogue and cooperation to a new level.”..

People’s Daily deputy editor-in-chief Fang Jiangshan points out that the media constitute an important resource and means of national governance and global governance, and whoever controls discourse power has a grasp of great soft power, and therefore can better stand in a position of righteousness and justice (道义制高点). In the present international public opinion framework, the members of the SCO currently lack media organizations with global influence, and the media of many member states still seriously rely on Western news agencies for their international news reports. “The political security, economic development and social stability of SCO member states is upset by a massive gap in terms of digital technologies,” said Fang Jiangshan . . . . Fang believes that to change this situation, the SCO and its members states must place a strong emphasis on media development and media cooperation, further building mechanisms for media cooperation.


5. Is China friendlier to scientists than the US now?

China increasingly challenges American dominance of science - The Washington Post:

Like many ambitious young scientists, José Pastor-Pareja came to the United States to supercharge his career. At Yale University, he worked in cutting-edge laboratories, collaborated with experts in his field and published in prestigious journals.

But the allure of America soon began to wear off. The Spanish geneticist struggled to renew his visa and was even detained for two hours of questioning at a New York City airport after he returned from a trip abroad. In 2012, he made the surprising decision to leave his Ivy League research position and move to China.

“It is an opportunity not many take,” Pastor-Pareja said. But the perks were hard to resist — a lucrative signing bonus, guaranteed research funding, ample tech staff and the chance to build a genetics research center from scratch...

“More and more people keep coming, that’s for sure,” Pastor-Pareja said. “Right now, China is the best place in the world to start your own laboratory.”..

Within the scientific community, one of China’s most successful plans has been an aggressive recruiting program called Thousand Talents....

The program has brought more than 7,000 scientists and entrepreneurs to China, the government says. They are given a $160,000 signing bonus, and the government often guarantees research funding for years to come. Foreign-born scientists often get additional perks, like subsidies for housing, meals, relocation, additional bonuses from their provincial government, guaranteed jobs for spouses and regular trips back home.


6. Shocked that there may be tax evasion in China's film industry...

Now that is has exploded into public view with the Weibo accusations against Fan Bingbing the regulators are on it. Wonder when they will get to the corruption among the film regulators…

Fan Bingbing’s Leaked Contract Breaks the Chinese Internet - China Film Insider:

The issue of dizzyingly high celebrity pay tends to rile up the Chinese public whenever it comes to light — so when outspoken TV presenter and producer Cui Yongyuan on Monday alleged that A-list actress Fan Bingbing had been paid millions of dollars for just four days of acting work, a storm of mudslinging followed, with fans from both sides rushing to the defense of their idols.

“Don’t bother acting, you really suck!” Cui posted on microblog platform Weibo, along with screenshots of what appeared to be Fan’s employment contract. The document, which is blurred-out in places, states that Fan would earn 10 million yuan ($1.6 million) and details several unconventional terms and conditions..

The barbs continued on Tuesday, when Cui posted again to reveal that the 10 million-yuan contract was in fact the smaller of two contracts — the other being worth 50 million yuan. This post — which had amassed over 220,000 likes by Wednesday afternoon — questioned why two contracts were needed, complained about the many things Fan refused to do, and disclosed the duration of the deal to be just four days.

Fan Bingbing Tax Evasion Probe Sparks Film Industry Crisis in China | Hollywood Reporter:

Celebrity pay is a sensitive issue in the Chinese industry, where surging ticket sales have often resulted in bidding wars over the limited number of top actors who are believed to guarantee box office results. In 2017, government regulators intervened in the market by ordering production companies to limit actors' paychecks to no more than 40 percent of a film's total production budget. It also added that leading actors' salaries cannot exceed 70 percent of the total payments to the film's full cast....

Chinese authorities responded with actions suggesting that they are taking the allegations seriously. The State Administration of Taxation ordered local tax bureaus to investigate and pursue action against the double-contracting trick, so-called "yin yang contracts," in the film business. Shortly after the tax bureau in Wuxi, in China's Jiangsu Province, where Fan's company is based, announced that it was investigating the studio.

Concerns that ying-yang contracts could be a common practice in the industry sparked a sell-off of shares at several leading Chinese film and television companies fell on Monday.

China’s Highest Paid Celebrity Probed for Tax Evasion - Caixin Global:

In several posts on his microblog, Cui said he was not specifically targeting Fan, 37, but instead was taking aim at celebrity director Feng Xiaogang and scriptwriter Liu Zhenyun. That pair made the 2003 Chinese blockbuster “Cell Phone” in which Fan played a mistress of a TV talk show host, and are now making a sequel which will feature Fan again.

Fan, via her studio, dismissed Cui’s allegations, and said his posts are a breach of business confidentiality and infringed upon her legal rights.

Fan has topped the Forbes China Celebrity 100 list for five years in a row and made 300 million yuan from July 2016 to June 2017, according to Forbes.

揭秘崔永元“撕”范冰冰事件:明星或逃税2300万 

Comment: Will any Hollywood producers or firms be sucked into this? And why did Cui decide to go after Fan Bingbing?


7. Overseas Chinese students mixed views of the West

A fascinating essay, from the increasingly excellent LA Review of Books' China Channel. 

Double Dissidents-The cognitive dissonance of overseas Chinese students – Xiaoyu Lu – China Channel:

Was I defending China’s authoritarian regime unconsciously? Could I separate my national identity from my intellectual stance? And why didn’t I develop a stronger resonance with the so-called liberal world? Almost immediately, I realised I was not alone. Years of conversations with other Chinese students abroad had left me with a strikingly homogenous impression. Put simply, we are not enchanted by the West. Why do years of lived experience in a liberal democracy fail to validate, and largely shake, our belief in it? I became a double dissident, both at home and abroad – upholding scepticism of China’s system, while also finding myself a dissident of liberal democracy.


8. Don't forget Liu Xia

Merkel did not get her out of China, Trump does not seem to care about her. Will Beijing ever release her?

‘Love Is a Serious Crime, a Life Sentence’ – Liu Xia Audio on May 25, 2018 « China Change:

Dear friends, I am hereby once again publicizing a portion of a conversation with Liu Xia (劉霞), this time on May 25, 2018. The recording runs 21 minutes; I have excerpted the final 8 minutes. Liu Xia said: “Loving Liu Xiaobo is a crime, for which I’ve received a life sentence.”..

As for Liu Xia, several days before Merkel’s visit, police entered her apartment and commanded her to leave the city on ‘travel.’ Liu Xia staunchly refused, and the police didn’t force it. Instead, they tried to persuade her, again and again, and said that soon there would be someone coming to speak with her about leaving the country.

I’ve lost count of how many times this promise has been made. The police said that in July, after the first anniversary of Xiaobo’s death, she’d absolutely be allowed to leave China. I made clear my doubts, and advised Liu Xia to consider countermeasures beforehand in case they don’t let her go in July. Upon these words of mine, Liu Xia was terrified and sunk into a bout of despair.


Business, Economy, Finance And Trade

Central Bank to Accept Lower-Grade Collateral for Lending Facility - Caixin Global The move reflects government priorities set last year like fighting pollution and poverty alleviation, according to Lu Zhengwei, chief economist at Industrial Bank Co Ltd. But it does not indicate overall loosening or deleveraging, according to Lu, who sees the central bank notice as part of a combination of recent policies that maintains emphasis on deleveraging. Also on Friday, the PBOC and the securities regulator released tighter rules on money market funds to reduce liquidity risks, and the insurance regulator released rules to prevent excessive lending to a single corporation from multiple banks, Lu said.

China's Central Bank Expands Collateral for Mid-Term Lending - Bloomberg The People’s Bank of China said it will accept assets including AA-and-above-rated bonds backed by credit to small companies, the green economy, or agriculture, as well as corporate bonds with AA+ and AA ratings, and quality loans to small and green businesses as MLF collateral, according to a statement..Expanding the scope of collateral gives smaller lenders with less highly-rated assets better access to loans from the central bank. It also makes bonds by small companies or businesses in the rural sector more attractive to investors, promoting the liquidity conditions for those companies.published on its website late Friday.

Regulators Meet With Leading Memory-Chip Makers - Caixin Global: “Looking at these three rounds of discussions, besides addressing the oligopoly situation in the market … this shows that China wants to give more time to its own producers to make their own products,” a TrendForce analyst told Caixin. He added that China may pressure Hynix to step up the pace of production at a new factory in the city of Wuxi to relieve the situation. To ease its reliance on imported microchips, China is in the process of a major build-out of its own microchip capacity. TrendForce estimated last year that at least 17 new microchip plants had been recently announced, with a total price tag of about $110 billion. But most of those factories, which will produce a wide array of chip types, won’t come online until later this year at earliest.

China Launches Probe of Foreign Chip Makers - WSJ $$ Chinese regulators are investigating memory-chip makers Micron Technology Inc., MU 2.00% Samsung Electronics Co. and SK Hynix Inc., 000660 -1.75% all three of which said State Administration for Market Regulation officials have visited their China offices recently... DRAM prices have generally been on the rise over the past two years while NAND flash prices have been declining in recent quarters, a Bernstein analysis showed. China has been on a drive to develop and produce memory chips domestically. Major projects include DRAM Innotron Memory’s and Fujian Jinhua Integrated Circuit Co.’s DRAM production plans as well as the Yangtze Memory Technologies Co.’s 3D-NAND plant in Wuhan.

China's ZTE built to spy and bribe, court documents allege - Sydney Morning Herald ZTE, the Chinese telecommunications company bidding for major contracts in Australia, and at the centre of Donald Trump’s trade war with Beijing, was established partly as a front for military intelligence and has been linked to corruption in 18 countries, according to explosive court documents filed in the US. The previously unseen court filings, document how ZTE handed over “brown paper bags” of cash to win contracts in Africa, building on an earlier report by Fairfax Media showing institutionalised corruption within the Chinese company.

China’s controls on payment and settlement sector key to curbing risk, central bank official says | South China Morning Post China will continue to prioritise security in its payment and settlement sector, a central bank official said on Friday, as regulators continue to tighten controls on domestic players and keep foreign investors at arm’s length. “Standardisation and security will remain the most important tasks as regulators try to prevent and tackle market risks,” said Fan Shuangwen, deputy director general of the People’s Bank of China’s payment regulatory department. “It’s unrealistic to pin our hopes on market entities to prioritise social responsibility” when it conflicts with their business interests, he told a symposium hosted by the National Institution of Financial Development (NIFD), a government think tank.

王小鲁:国企改革并非为了强化政府控制 关键要提高效率-王小鲁-搜狐博客 Wang Xiaolu on SOE reform  //  “国企存在的意义并非保持政府对经济的控制力。国企改革最重要的目标,应该是改善经营,提高效率。改革的结果,是国企做大了还是民企做大了,不是问题的关键。”,国民经济研究所副所长王小鲁接受《国子策》专访时表示,目前国企改革在一些地方难以推进,地方政府需要进一步明确指导思想,不应把做大国有企业作为改革目标。   王小鲁还表示,国企改革过程中一些僵尸企业要退出,一些企业要减少冗员,可能出现裁员问题,需要做好社会保障等兜底工作。但这一轮国企改革进程比较平缓,总体冲击不会太大。

China ‘insurtech’ pioneer ZhongAn loses lustre on bubble worries - FT $$  Alibaba chairman Jack Ma, Tencent chair Pony Ma and Ma Mingzhe, chairman of PingAn Insurance, are known collectively as the “three horses” because their shared surname is the Chinese character for horse. The three companies jointly founded Shanghai-based ZhongAn in 2013...But the company’s latest financial results reveal a problem: instead of paying agents to sell products, ZhongAn is paying “ecosystem partners” like Ant Financial, Tencent and online travel agency Ctrip to generate premiums.

China Banks' Waning Demand Hints at More Bond Defaults Ahead - Bloomberg The central bank moved on Friday to address some of the funding problems of smaller Chinese firms, announcing plans to add lower-rated corporate bonds into the collateral pool for its medium-term lending operations. The change will make it easier for smaller banks to apply for central bank funding and increases incentives for small company lending, according to Guosen Securities Co.

央行和公安部将对互金等领域违法犯罪加大打击力度|央行|公安部|互联网金融_新浪科技_新浪网 PBoC's Pan Gongsheng visits the Ministry of Public Security, meets with vice minister Meng Qingfeng to discuss work combatting internet finance risks, underground banking and illegal forex exchange platforms  //  近日,人民银行副行长、国家外汇管理局局长、互联网金融风险专项整治工作领导小组组长潘功胜带队赴公安部,与副部长孟庆丰举行工作会谈。  双方就互联网金融风险专项整治、打击地下钱庄及非法外汇交易平台等有关情况及下一步工作安排交换了意见。双方将进一步加强协作配合,继续深入推进相关工作,加强信息数据交换和工作衔接,加大对相关领域重大违法犯罪活动的行政处罚和刑事打击力度,开展广泛宣传教育,构建监管长效机制,坚决整治金融乱象,维护良好金融秩序。

China Bondholders Set to Learn How Much a Promise Is Worth - Bloomberg So-called keepwell provisions, disproportionately seen in the offshore Chinese debt market the past several years, are a sort of gentleman’s agreement - a commitment to maintain an issuer’s solvency which stops short of a payment guarantee from the parent company. Now, two issuers of debt with keepwell provisions, China Energy Reserve & Chemicals Group Co. and CEFC Shanghai International Group Ltd. have defaulted on their dollar notes in May. They are among the region’s first defaults to carry such agreements, according to Goldman Sachs Group Inc., and investors are about to discover whether they provide the benefit that was promised.

Jack Ma goes all-in on smart logistics infrastructure network · TechNode In a surprise appearance at last week’s Cainiao’s Global Smart Logistics Summit, Chinese tech tycoon Jack Ma announced that Cainiao Network, the logistics affiliate of Alibaba, is going to invest more than RMB 100 billion ($15 billion) to build the technical backbone for a smart logistics network aimed at improving delivery reach and efficiency.

China's Xiaomi plans $3 billion CDRs in blockbuster July IPO: sources | Reuters hinese smartphone and connected device maker Xiaomi plans to raise up to 30 percent of its blockbuster $10 billion IPO by selling shares in mainland China while offering the remainder in Hong Kong, said people with knowledge of the matter.

China Allows Insurers to Invest in Long-Term Rental Housing - Caixin Global The China Banking and Insurance Regulatory Commission said in a statement published Friday that insurance firms now can invest directly in projects based in Beijing or Shanghai, or invest through equity or debt investment plans established by asset management firms.

Property Developers Suspend Bond Issuances Amid Investor Jitters - Caixin Global Five listed real estate companies suspended $6 billion in bond issuances, days after a public-private partnership firm raised just 5% of its target in an issuance *Their moves come amid investor jitters, sparked by rising bond defaults and a record-high real estate industry debt-to-asset ratio

 

Politics, Law And Ideology

维护核心就是维护整个中华民族的利益--观点--人民网 Xu Li 徐 立, a professor in the Ministry of Education "education equipment research and development center 作者为教育部教育装备研究与发展中心教授" , writes on page 7 of the June 4 People's Daily that "safeguarding the core is safeguarding the interests of the entire Chinese nation" // Comment: So textbooks and teaching materials will add more content on the idea that safeguarding the core is safeguarding the interests of the entire Chinese nation?

These Lucky Chinese Citizens Get to Vote—on How Their City Spends Its Money - WSJ Residents in Haikou’s Meilan District are invited to offer suggestions on how to improve their quality of life, such as through parks and senior services, and this week they vote among the citizen-proposed ideas on how to spend 12 million yuan ($1.9 million) of government money—around 1% of the budget. ..Li Fan, a think-tank founder who is consulting on Haikou’s project, said such programs help satisfy the desire of Chinese citizens to have a voice in public affairs. “You absolutely can’t stop it,” he said. “And since you can’t stop it, you need to give it an outlet.”

中共中央党校 - 学习时报网_激扬起新时代青年的强大思想共鸣和行动力量 陕西师范大学开设《习近平的七年知青岁月》导读必修课纪实

中青评论:西安购房摇号内定被查,净化了政商关系-腾讯网 Big trouble for a property developer and some officials in Xian, who were caught getting preference in a (rigged) lottery for rights to buy apartments in a new development. 7 people arrested, some for "computer crimes" for messing with the lottery system, 35 officials in trouble, 8 removed from posts, the remainder disciplined// 6月2日晚上,西安市长安区调查组通报了“南长安街壹号”项目摇号的调查处理情况,其中,西安天磊置业有限公司和武汉矩阵科技有限公司相关工作人员涉嫌破坏计算机信息系统犯罪,西安市公安局长安分局已于5月31日立案侦查,并对7名犯罪嫌疑人采取了刑事强制措施;“打招呼”的35名公职人员,8人被免职,5人受到党内严重警告处分,8人受到记大过处分,14人受到记过处分。

China has turned Xinjiang into a police state like no other - Apartheid with Chinese characteristics - The Economist - $$: In Hotan there is a new police station every 300 metres or so. They are called “convenience police stations”, as if they were shops—and in fact they do offer some consumer services, such as bottled water and phone recharging. The windowless stations, gunmetal grey, with forbidding grilles on their doors, are part of a “grid-management system” like that which Mr Chen pioneered when he was party boss in Tibet from 2011 to 2016. The authorities divide each city into squares, with about 500 people. Every square has a police station that keeps tabs on the inhabitants. So, in rural areas, does every village.

汪洋:巩固壮大新时代统一战线-新华网 Wang Yang calls for using Xi Thought to consolidate and strengthen United Front work in the New Era // 汪洋在统一战线专题研讨班上强调 用习近平新时代中国特色 会主义思想凝心聚力 巩固壮大新时代统一战线 // CCTV Evening News on Wang's comments 汪洋出席统一战线专题研讨班开班式并讲话  He reiterates is is an important "Magic weapon"

 

Foreign and Military Affairs

Chinese interference in New Zealand at 'critical' stage, says Canada spy report | World news | The Guardian A report released by Canada’s spy agency has warned that New Zealand, one of its closest allies, has been influenced at every level of society by the Chinese government, and that the situation has reached a “critical” stage. The report states that New Zealand is viewed as “the soft underbelly” of its western big brothers such as the UK and US.

坚定不移深化政治巡视 推进军队巡视工作向纵深发展 General Zhang Youxia writes the lead essay in the latest Qiushi about deepening political inspections and deepening development of inspection work in the PLA

努力把人民海军全面建成世界一流海军 PLAN Party Committee essay in the latest Qiushi on building a world-class navy

21世纪中国海洋战略再思考 -军报记者 来源:中国海军网作者:陈国强

Cambodia’s Fresh News: is it journalism with Chinese characteristics? | South China Morning Post Though far from Beijing’s sophisticated control of information, Cambodia’s media landscape is starting to echo China’s, according to Reporters Without Borders

Chinese aid funded alleged $1 million bribe to former PNG leader, Somare | afr.com Chinese aid money was used to fund an alleged $1 million bribe to the then prime minister of Papua New Guinea, Sir Michael Somare, as part of Beijing's push to exert greater influence in the Pacific. Fairfax Media has confirmed the alleged bribery was uncovered by PNG authorities and later confirmed by Singaporean anti-corruption investigators. Details of the payment to Mr Somare are contained in Singaporean court documents released late last year. They show the alleged bribe was part of a $4.7 million slush fund established by Chinese phone company ZTE in 2010 to ensure it was awarded a contract in PNG.

Myanmar reviews $9bn China-backed port project on cost concerns - FT $$ Two people with direct knowledge of the discussions within Aung San Suu Kyi’s government said that economic officials were looking for ways to negotiate down costs for the planned port at Kyaukpyu in Myanmar’s western Rakhine state. The port is set to give China’s south-west a direct trading corridor to the Indian Ocean via Myanmar, allowing companies to avoid the Malacca Straits if needed. As such, it is part of Beijing’s $1tn push to shore up transport and energy supply routes across Eurasia under its so-called Belt and Road Initiative. The port at Kyaukpyu will be one of the biggest infrastructure projects in Myanmar’s history.

J-20, J-16 and J-10C Armed and Ready; China’s New Generation of Fighters Conduct Combat Exercises Together - Military Watch China’s People’s Liberation Army (PLA)’s three most advanced serving combat aircraft, the ‘4++ generation’ J-10C and J-16 and the fifth generation J-20, took part in joint nighttime combat exercises in the early June 2018. The exercises saw the three platforms each perform the specialised role which it was designed to fulfil, and gives valuable insights into the future of the PLA’s aerial warfare capabilities. An attack on enemy targets, eliminating aerial threats before carrying out strikes, was simulated and made use of the complementary strengths of each aircraft to perform various tasks.

Congress to Crack Down on Chinese Influence in U.S. - Free Beacon The bill, called the "Countering the Chinese Government and Communist Party’s Political Influence Operations Act of 2018" also would require American intelligence agencies to provide a detailed report on Beijing's extensive covert and overt influence operations. The bill is being sponsored by Rep. Chris Smith (R., N.J.) and Rep. Marcy Kaptur (D., Ohio), both members of the House Foreign Affairs Committee. It will be introduced Monday coinciding with the 29th anniversary of the Chinese military's bloody crackdown on unarmed pro-democracy protesters in Beijing's Tiananmen Square. A congressional aide familiar with the bill said the measure would supplement concerns expressed about Chinese influence operations contained in the fiscal 2019 defense authorization bill.

China scales back investment in Ethiopia - FT $$ Business people, diplomats and bankers said Chinese entities, which have loaned more than $13bn between 2006 and 2015 for everything from roads and railways to industrial parks, were now taking a “more cautious approach” to Ethiopia. “The Chinese have said they’ve reached their limit,” one diplomat in Addis Ababa said. “’We’re way overextended here,’ they told us openly.”

 

Taiwan

Beijing wants Taiwanese to identify as Chinese. But how do Taiwanese really feel? - The Washington Post We believe that how surveys ask Taiwanese to identify themselves matters a great deal. The conventional method, with just three fixed options, captures neither the diversity of identity nor how that diversity may be relevant to different policy preferences. The allocation method may come closer to how people actually understand and live their identities on a daily basis. If so, Beijing can afford to be more relaxed about identity in Taiwan. Alastair Iain Johnston is a professor of government at Harvard University.  George Yin is a U.S. Foreign Policy and International Security Fellow at Dartmouth

Qantas to refer to Taiwan as a territory, not a nation, following Chinese demands - ABC News (Australian Broadcasting Corporation) At the International Air Transport Association (IATA) annual meeting on Monday, Qantas chief executive Alan Joyce said his company planned to comply with the request, although they needed extra time.

 

Tech And Media

Unpublished Chinese censorship document reveals sweeping effort to eradicate online political content - The Globe and Mail Chinese authorities have tightened their grip on the country’s online broadcasting platforms, banning a long list of content – everything from tattoos to religious proselytizing, violations of “mainstream values,” flirtatious dancing, images of leaders and Western political critiques – as the government seeks to stamp out any venue that could be used for dissent or behaviour it considers obscene, according to an unpublished censorship directive obtained by The Globe and Mail... The document is being used as a master guideline for content blocking by some of the country’s most-used video sites, multiple sources in the industry told The Globe.

Meipai criticized for inappropriate content · TechNode Short video platform Meipai (美拍) has been criticized by regulators for spreading vulgar content and negatively affecting the physical and mental health of young people. The Meitu-owned platform has been ordered to abide by local regulations and make relevant changes. According to reports, the country’s internet regulator, the Cyberspace Administration of China (CAC), had imposed penalties on the platform for failing to abide by previous rectification orders. A CAC investigation found that the company had not properly managed video content and ignored public morals and opinions. The CAC said Meipai disseminated sexual content for the purpose of driving traffic.

Former LeEco CEO Jia Yueting banned from train and air travel · TechNode LeEco founder Jia Yueting has been banned from taking train trips and flights following the publication of Credit China’s list of individuals restricted from taking long-distance public transport. The list contains the names of 169 individuals who have been prohibited from using China’s air and rail networks for failing to pay taxes, smoking on trains, and disrupting flights. Jia’s sister, Jia Yuefang, also appeared on the list. According to an investigation by the 21st Century Business Herald (in Chinese), Jia’s ID information is consistent with previously disclosed details.

China's NetEase invests $100 million in Bungie to make new games - engadget Bungie, the studio behind hits like Halo, Myth and Destiny, has announced a new deal with Chinese online gaming company NetEase to "build new worlds and invite players, new and old, to join us there." In China NetEase publishes several Blizzard games like Overwatch, Hearthstone and World of Warcraft, among other titles. GamesIndustry reports that NetEase is making a $100 million investment in Bungie that will snag it a minority stake in the developer, but that apparently won't impact Bungie's agreement with Activision, and any decision to bring Destiny to China is still Activision's.

This Chinese graduate built Yamibuy into a US$100 million business selling Asian snacks, instant noodles in America | South China Morning Post “A local touch in building a social network is extremely important in differentiating an e-commerce platform, and Alex gets it,” said Hans Tung, the GGV Capital managing partner who made the decision to invest in Yamibuy. “That and the growing secular trend for Asian goods [in the US] made it easy to invest in Yamibuy.”

Toutiao continues public argument, accuses Tencent of "stigmitization" · TechNode The company released a statement after tensions boiled over between the two firms last week. The company alleges that starting from March 2018 Tencent blocked content from Toutiao and Bytedance-owned short video platform Douyin on WeChat and QQ. It said this was done under the guise of supervision, security, and software bugs, among others. It also said Tencent sought to “stigmatize” its content. Toutiao also said that Tencent-owned WeChat and QQ are the most prominent social platforms in China and the company should not seek to use its dominance to abuse competition in the market.

ofo co-founder denies job cuts and departure of COO · TechNode ofo co-founder Yu Xin has denied allegations that it is laying off 50% of its employees and its chief operating officer (COO) is leaving the company, our sister site is reporting. Yu responded to the assertions on WeChat Moments, saying that headhunters would probably be disappointed as the company’s COO had not left.

 

Society, Art, Sports, Culture And History

Wǒ Men Podcast: Children’s Day Special Today, on International Children’s Day, Jingjing and Yajun open their memory boxes and discuss their childhoods growing up in a rapidly changing China.  Children’s Day in China goes back to 1949, when the new People’s Republic of China leadership declared that all primary school kids would get half a day off every June 1. In 1956 it was turned into a full day’s holiday.

 

Energy, Environment, Science And Health

China summons officials to pollution 'name and shame' meeting | Reuters Local officials needed to “improve their political stance” and follow President Xi Jinping’s idea of environmental protection, officials told two mayors and a county chief at a meeting held in front of reporters on Monday. “Local authorities should learn lessons from this meeting ... you should dare to do a real job and actually grasp the problems you have failed to improve for years,” said He Xianghong, deputy head of an environment ministry monitoring team...

研究指中国猩红热疫情复苏,北京发病率最高_政经频道_财新网 Caixin - scarlet fever on the rise in China, Beijing the highest incident rate

 

Beijing

Migrant Kids Barred From Beijing Schools at Last Minute - Caixin Global Wang moved to the capital from East China’s Anhui province in 2004. Neither he nor his wife — who did not give her name — hold Beijing hukou, and they moved into their current apartment too recently to qualify under the new rules. Their son is now one of over a hundred migrant children in Tongzhou who have suddenly been locked out of the education system by policies some see as unfairly targeting migrants and renters. On Monday, Wang and his wife joined dozens of other migrant parents who had gathered at Tongzhou’s district education office to petition for their children to be exempted from the new rule. Members of the crowd shouted, “Children must go to school!”