Whither the RMB?; Trade war prep; More policies to fight pollution; CCP oath music video; PLA's "peace disease"; Wealth management firm chairman pulls a runner

Good Morning from sweltering, swampy DC. Wednesday is the July 4 holiday in the US but I intend to publish an abbreviated issue tomorrow. 

Here are the top things I am watching about China today:

  • PRC regulators tried to make it clear to markets that they did not intend to pursue a large devaluation of the Yuan;

  • There are still no signs of serious US-China talks underway to prevent the imposition of the July 6 round of tariffs;

  • The government released a three year plan to fight air pollution and will implement more market-based pricing for resource usage.

Netflix is now showing the Australian TV show "Secret City", about AUS-PRC-USA tensions and political intrigue in Canberra. I am up to episode 4, not perfect but entertaining, timely and something to put on the summer brainless TV list. Here is the trailer:

Thanks for reading, and for commenting.

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The Essential Eight

1. Whither the RMB?

My thoughts: China can obviously control the direction of the RMB in at least the short to medium term, so interpreting the most recent moves as signaling to the US is not illogical. But is the threat of a significant devaluation in the face of a US-China trade war really credible, given the damage to domestic sentiment and subsequent increased capital flow pressure such a move with cause, as well as the fact that a competitive devaluation would damage the image China and Xi have worked so hard to cultivate since Davos 2017 of China as a responsible major economic power and upholder of the global trading system?

China central bank seeks to reassure on renminbi weakness | Financial Times $$:

“China implements . . . a managed floating exchange-rate mechanism based on market supply and demand, with adjustments made in reference to a basket of currencies,” Mr Yi said in an interview with the official China Securities Journal posted to the PBoC’s website.

“Years of practical experience prove that this mechanism is effective, and we must persist with it,” he said.







Devaluation Risk Makes China’s Balance of Payments Interesting (Again) | Council on Foreign Relations - Brad Setser:

On one hand, China has stockpiled a bit of ammunition to use, so to speak, if it wants to turn a trade war into a currency war. It could use some of the foreign assets it has accumulated over the last six or so quarters to try to pull off another managed depreciation. I assume that China wouldn’t want to let its currency enter into an uncontrolled float down, though that conceptually is another option: it is the managed fall down, not the depreciation per se, that tends to burn through reserves.

On the other hand, the strength of China’s balance of payments position over the last few quarters suggests that China also has the option to hold its currency relatively stable, whether against the dollar or against the basket, if it wants to. Even with the modest recent erosion in China's current account surplus. Stability against the basket—and to a degree against the dollar—has led to a large reduction in the pace of capital outflows from China. Or at least created an environment where inflows (Chinese bonds yield more than Treasuries…) balanced outflows.

Falling renminbi once again fans global market anxieties | Financial Times $$:

Whatever the reason for the decline, the PBoC has learnt lessons from the 2015 and 2016 renminbi falls. Back then, the central bank lost control of the currency, which caused flights of capital and large-scale stock sell-offs.

As Geoff Yu at UBS said, “they are not going to countenance that sort of volatility. That is the scenario they would want to avoid.”

China Verbally Props Up the Yuan as Trade and Growth Fears Spike - Bloomberg:

“The PBOC is sending a verbal warning and intervention that the recent slump in the yuan was too quick,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “In the short term, the yuan could strengthen as traders take profit from the recent slide. But if the market ignores the PBOC and keeps pushing the yuan weaker quickly, the central bank may conduct heavy intervention to send a stronger signal.”

2. Trade War Prep

Sinology by Andy Rothman - Battlefield Choices:

Before I discuss the battlefield choices Trump and Xi may make, I want to emphasize that forecasts that a trade war will seriously damage the Chinese economy and its listed companies are based on an outdated understanding of that country. The ongoing rebalancing of the Chinese economy has already made it far less dependent on trade and more focused on domestic demand, which should mitigate the impact of a trade war with the U.S.

The Chinese economy is no longer export-driven. Net exports (the value of a country's exports minus the value of its imports) account for only 2% of China's GDP, down from a peak of 9% in 2007. In contrast, domestic consumption now accounts for the majority of China's economic growth and more than half of its GDP. 2017 was the sixth consecutive year in which the consumption and services share of China's GDP was larger than the manufacturing and construction share.

Because Trump would be fighting a trade war without the support of America's allies, the impact on China's exports would be relatively small. Last year, Chinese exports to the U.S. accounted for only 19% of total Chinese exports

China’s Export Growth to U.S. Abruptly Slows as Tariffs Near - WSJ $$:

China’s customs agency unexpectedly issued trade data that showed growth in exports to the U.S. slowing, though analysts dismissed the figures as part of Beijing’s messaging campaign in its tariff battle with Washington.

The figures released late Monday, which only covered exports to the U.S., came ahead of the scheduled July 13 release of trade data and were denominated in yuan, without accompanying dollar terms. In yuan terms, the data showed growth in Chinese exports to the U.S. ticking down to 5.4% in the January-June period from a year earlier. That is a slowing from the 5.8% pace over the first five months.

China says fully prepared if trade war kicks off this week - AP:

Foreign Ministry spokesman Lu Kang told reporters that China is “fully prepared to take a package of necessary measures” to safeguard its national interests...

Trade friction also threatens to ensnare major Chinese companies, with China Mobile the latest to encounter obstacles in the U.S. market. A U.S. agency under the Department of Commerce recommended Monday against giving operating licenses to China’s largest telecom carrier, citing national security risks posed by the state-run firm.

Lu on Tuesday called the warnings “unfounded speculation and an irrational clampdown” stemming from a Cold War mentality.

“We hope the US will provide a level-playing field for Chinese companies’ investment and operation in the US and do something conducive to the mutual trust,” he said.

Yes, a level playing would be nice for foreign firms in China too...

Full text of Chinese commerce minister's signed article on People's Daily - Xinhua:

Chinese Minister of Commerce Zhong Shan published a signed article on the People's Daily on Monday under the title "An open China and a win-win world."

China to Cancel More U.S. Soy Shipments as More Tariffs Loom - Bloomberg:

Some cargoes will get through because shipments destined for state reserves are free from tariffs, Gao said. China holds unspecified volumes of state reserves of both domestic and imported soybeans. China had been forecast to buy 97 million tons of soybeans this marketing year.

Analysts don’t expect many soy cargoes from the U.S. to arrive after the July 6 deadline as buyers have already stopped shipments

Xi Faces Hurdles Bashing American Brands in a Trump Trade War - Bloomberg:

“The perfect Stars-and-Stripes corporate victim doesn’t exist,” said Tom Orlik, chief economist in Beijing with Bloomberg Economics. “The number of big clean wins in terms of striking against the other guy -- without accidentally punching your own guy in the face -- is extremely small.”

Even when Chinese companies don’t have direct ownership links with U.S. brands, Orlik said, boycotts or other non-tariff retaliation would hit the local partners of those American companies.

This interactive map shows how each US state is threatened by this emerging trade war--Tariffs are the Wrong Approach | U.S. Chamber of Commerce 

Chinese state media call for market calm amid trade frictions | Reuters:

The comments, made in newspapers such as the Securities Daily and Economic Daily, come as China’s Shanghai bourse dove to more than a two-year low on Monday as the brewing trade war threatens to knock the world’s second-largest economy.

“Intensifying trade frictions between China and the United States is a test that the Chinese economy inevitably had to experience during its rise,” the Economic Daily said.

“We have long anticipated and prepared for this...The impact on the Chinese economy is within a controllable range.”

3. Debt crackdown resolve weakening?

Recalibration in the face of changing economic conditions is to be expected, full retreat would be surprising given that reducing financial risks is one of the "three decisive battles" outlined at the 19th Party Congress.

Beijing softens tone on debt crackdown as trade tensions threaten growth | South China Morning Post:

In a second-quarter briefing issued by the monetary policy committee (MPC) last Thursday, a stated objective to “effectively rein in macro leverage” had been removed from an earlier version released in the fourth quarter of 2017.

Moreover, the target for liquidity conditions had changed to “reasonably adequate” from “reasonably stable”, suggesting there will be more easing of liquidity supply in the coming months...

“We see some key changes [in the policy brief],” said a research note issued by analysts from Nomura on Sunday.

“The PBOC has become more cautious on its global economic outlook, calls for better forward-looking policy fine-tuning and ‘reasonably adequate’ liquidity conditions, and has softened its tone on deleveraging. These changes are in line with recent shifts, and support our view of more policy easing measures in coming months.”

4. New steps in the fight against pollution

Fighting pollution is one of the other three "decisive battles" laid out at the 19th Party Congress

China releases three-year action plan for cleaner air - Xinhua 

China's cabinet has released a three-year action plan on air pollution control, solidifying a timetable and roadmap for improving air quality.

Economic, legal, technological, and administrative means will be adopted in a coordinated, methodical and targeted manner to "win the battle for blue skies," according to the plan released by the State Council.

By 2020, emissions of sulfur dioxide and nitrogen oxide should drop by more than 15 percent compared with 2015 levels, while cities which fail to meet the requirement of PM2.5 density should see their density of PM 2.5, a key indicator of air pollution, fall by more than 18 percent from 2015 level, the plan said.

The plan, from the SCIO site - 国务院关于印发打赢蓝天保卫战 三年行动计划的通知 国发〔2018〕22号 

China Plans to Make Polluters Pay for Their Messes - Caixin Global:

China’s top economic planner is devising a raft of market-pricing mechanisms that will force polluters to pay more to use resources such as water and electricity while making companies bear the brunt of cleanup costs.

The new rules will demonstrate how the Communist Party’s overarching goal of creating an “ecological civilization” — announced at the 19th National Congress last year — is to be implemented at the provincial, city and town levels, according to the National Development and Reform Commission (NDRC), which released the rules on Monday.

The key aim is reforming how companies use core resources, particularly water and electricity, with waste disposal also receiving significant attention.

国家发展改革委 关于创新和完善促进绿色发展价格机制的意见 

China Quarterly on Environmental Governance in China: 

We are offering free, for a limited period, a special section on Environmental Governance in China, from the September issue of China Quarterly

5. Catchy new MV for the Communist Party Oath

No surprise, lots of martial scenes, doesn't quite jibe with the "peaceful rise" idea


The MV on Youtube:

Chinese Communist Party Oath:

“I volunteer to join the Communist Party of China, to support the Party’s principals, to respect the provisions of the Party constitution, perform the duties of a Party member, carry out the Party’s decisions, strictly observe Party discipline, protect Party secrets, be loyal to the Party, work enthusiastically, fight for communism all my life, be ready at all times to sacrifice everything for the Party and the people, and never betray the Party.”


6. Does the PLA have the "Peace Disease"?

Not sure this is that noteworthy as training has always been an issue for the PLA, but clearly under Xi the PLA is much more focused on realistic training and combat readiness

China’s army infiltrated by ‘peace disease’ after years without a war, says its official newspaper | South China Morning Post:

China’s People’s Liberation Army is ridden with “peace disease”, its official newspaper has said as efforts are stepped up to address a lack of battle-readiness and anti-graft measures continue to stamp out corruption of its military drills.

According to the People’s Liberation Army Daily in an editorial on Monday, “peace disease” has infiltrated every corner of the PLA since its last battles, with Vietnam in the late 1970s, threatening to undermine the fighting capability of what is the world’s largest military...

To prevent some military officials falsifying training data, the Central Military Commission (CMC) has since November been sending military disciplinary officers – representing the PLA’s anti-graft watchdog – to the army’s five theatre commands as inspectors, to monitor drills.

Comment: This was the first in a series of at least two, The second one ran on July 3. Here are the originals:




7. International Crisis Group report on the China-Pakistan Economic Corridor (CPEC)

China-Pakistan Economic Corridor: Opportunities and Risks | Crisis Group:

What’s new? Pakistani leaders say the China-Pakistan Economic Corridor (CPEC), launched in 2015, is a “game changer” for the country’s ailing economy. But opaque plans for the corridor, the upheaval likely to affect locals along its route, and profits flowing mostly to outsiders could stir unrest. The government has repressed CPEC critics.

Why does it matter? CPEC could help revive Pakistan’s economy. But if it moves ahead without more thorough debate in parliament and provincial legislatures and consultation with locals, it will deepen friction between the federal centre and periphery, roil provinces already long neglected, widen social divides and potentially create new sources of conflict

Is China’s US$62 billion investment plan fuelling resentment in Pakistan? | South China Morning Post:

The China-Pakistan Economic Corridor (CPEC) – a collection of US$62 billion worth of infrastructure projects under construction across the country – may raise political tensions and animosity if Islamabad and Beijing cannot mitigate existing concerns, according to a report by the Belgium-based International Crisis Group.

“Pakistan’s economy clearly needs reform to better serve its people, and many officials say CPEC will help in this regard,” it said. “But as currently rolled out, the corridor risks aggravating political tension, widening social divides, and generating new sources of conflict in Pakistan.”

 8. "We never thought that he would run away"

Boss of Shanghai Wealth Management Firm Vanishes - Caixin Global 

Zhu Yidong, chairman of the Fuxing Group (FX Group), which owns Yilong Wealth Management, has been missing since June 26. On that date he posted a message to social media saying that long-term interpersonal relationships are based on shared traits rather than repression and flattery...

His disappearance has left a slew of urban commercial banks that invested in FX Group in limbo, including the Bank of Beijing, Hengfeng Bank and SPD Bank, as well as several trust companies. The total amount that these entities invested in FX Group is not clear, but Caixin learned that at least one institutional investor has plowed billions of yuan into the company.

“(We) had some preventive measures, but never thought that he would run away,” an employee working for an institution that has cooperated with FX Group told Caixin, adding that Zhu became very slow to respond to messages on popular instant messaging app WeChat on June 22. The employee said Zhu always replied within half a day before then.

Business, Economy, Finance And Trade

CDR Excitement Wanes - Caixin Global One after another, China’s internet giants are growing less enthusiastic about Chinese depositary receipts (CDRs), as the country suffers its first bear market since 2015. Companies including Alibaba Group Holdings Ltd. and JD.com Inc. have pushed back their timelines for issuing CDRs, Caixin learned from multiple industry sources.... Baidu, which had hoped to be the first firm to issue CDRs after smartphone-maker Xiaomi Corp. shelved its issuance plans, has not made any recent moves after racing to prepare to offer its securities domestically, a person close to the company told Caixin.

U.S. Seeks to Block China Mobile's Entry, Escalating Tension - Bloomberg: The Federal Communications Commission should deny state-backed China Mobile’s seven-year-old application to offer international voice traffic between the U.S. and foreign countries, the National Telecommunications and Information Administration said in an email on Monday. NTIA, a branch of the Commerce Department, said China Mobile’s entry "would pose unacceptable national security and law enforcement risks.”

NTIA Statement on China Mobile’s Section 214 Application to the FCC  After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved. Therefore, the Executive Branch of the U.S. government, through the National Telecommunications and Information Administration pursuant to its statutory responsibility to coordinate the presentation of views of the Executive Branch to the FCC, recommends that the FCC deny China Mobile’s Section 214 license request.”

新一届国务院金融委成立:刘鹤任主任,易纲、丁学东任副主任_金改实验室_澎湃新闻-The Paper Liu He is the new director of the State Council Financial Stability and Development Committee. Yi Gang and Ding Xuedong are deputy directors

Bonds Account for Growing Share of China’s External Debt - Caixin Global China’s outstanding external debt, which includes money that the government, corporations and financial institutions owe to foreign creditors, rose 7.8% from the end of 2017 to $1.84 trillion at the end of the first quarter, according to data (link in Chinese) released by the State Administration of Foreign Exchange (SAFE) on Friday. Debt securities, which include government and corporate bonds as well as shorter-term debt instruments, represented 21% of China’s outstanding external debt by the end of March, compared with 16% a year ago. Currency and deposits accounted for 26%, up from 25% a year ago; loans represented 23%, compared with 24% a year ago; and trade credit and prepayments accounted for 15%, compared with 19% a year ago.

China Bank's Capital Almost Wiped Out as Loan Rules Tighten - Bloomberg Guiyang Rural’s woes stem from recent moves by Chinese regulators to force lenders to classify as non-performing all loans that are overdue for more than 90 days, the ratings company said. Such overdue loans accounted for about 24 percent of Guiyang Rural’s total advances in 2017, resulting in a fourfold jump in the bank’s NPL ratio, to 20 percent of total loans, Chengxin said.

China Set for Record Defaults, and Downgrades Tip More Pain - Bloomberg Chinese companies have reneged on about 16.5 billion yuan ($2.5 billion) of public bond payments so far this year, compared with the high of 20.7 billion yuan seen in all of 2016, according to data compiled by Bloomberg. Strains are set to get worse if the trends of credit-rating companies are anything to go by -- agencies including Dagong Global Rating Co. have been downgrading firms by an unprecedented margin.

China's Banking Regulator Dispenses More Than 1600 Fines in First Half of 2018 - China Banking News The total value of fines issued by the banking regulator was in excess of 1 billion yuan (approx. USD$149.17 million)  including 12 fines of over 10 million yuan, five fines of over 50 million yuan, and one fine of 461 million yuan. The infractions that most commonly incurred penalties included lending operations in breach of regulations, breaches of prudent operating principles, and breaches in relation to notes operations.

Shanghai further restricts speculation by limiting enterprises' ability to buy - SHINE Shanghai took a further step in its fight against housing speculation last night by stating that only qualified enterprises will be allowed to purchase new residential units in the city, following similar moves taken earlier in Xi'an, Changsha and Hangzhou. Effective today, to be eligible for new home purchase, companies need to have been set up for at least five years, pay taxes totaling at least 1 million yuan (US$150,475) in Shanghai, and employ at least ten staff who have paid social security insurance and public housing provident funds within the company for at least five years, according to a statement posted on the official website of the Shanghai Housing and Urban-Rural Development Commission.

ZTE denies rumors of buyout by telecom giant - Global Times A market rumor went viral on Monday about a potential merger and acquisition (M&A) between ZTE and Wuhan-based State-owned telecom equipment provider FiberHome Telecommunication Technologies Co. FiberHome has recently been involved in restructuring with an affiliate of Datang Telecom Group, another major telecom equipment maker. A PR representative from ZTE denied the rumor when contacted by the Global Times

The Grads Caught in the Battle for China’s Best and Brightest - Sixth Tone Like many Chinese cities that lack the allure of Beijing or Shanghai, Wuhan — a metropolis of 12 million — struggles to stand out. To realize its dream of building a knowledge-based economy, the Wuhan government last year launched a set of initiatives to entice a million young university graduates to live and work in the city over the next five years. According to recent figures, some 140,000 university graduates have become official Wuhan residents, suggesting incentive programs like Linkonggang Youth City are drawing crowds. But few seem set on staying.

Lenovo Owner Closes Luxembourg Bank Purchase - Caixin Global Legend Holdings Corp., parent of PC giant Lenovo, said it has closed its purchase of 90% of Luxembourg’s oldest privately owned bank nearly a year after first announcing the deal, as part of the holding company’s move into financial services. Legend said it paid 1.53 billion euros ($1.79 billion) for the stake in Banque Internationale à Luxembourg S.A., according to a company statement to the Hong Kong stock exchange late on Monday. That was slightly higher than the 1.48 billion euro figure it gave when it first announced the deal last September. //  That bank have any useful data for the CCDI?

Smaller Cities Upstage Big Brothers in Land Sales - Caixin Global A monthly private survey found 36 second-tier cities raked in more than 1 trillion yuan ($150.5 billion) in total from selling land in the January-June period, up 33% from a year earlier, with the area of land sold rising by 31%. Land sales revenue in 260 third- and fourth-tier cities jumped by 43% year-on-year to 753.8 billion yuan in the same period, while sales by area increased 25%, according to a report (link in Chinese) by the China Index Academy (CIA), an affiliate of New York-listed Fang Holdings Ltd., formerly known as SouFun Holdings Ltd.

Anbang Units Step Up Asset Transfers for Restructuring - Caixin Global The transfers are designed to reorganize Anbang’s complex asset structure for future divestiture, according to a person close to Anbang. Regulators plan for Anbang to retain only the life and property insurance business, according to the source. A financial analyst said Anbang’s asset divestitures will be difficult given the size of the assets and the potential impact on the market.


Politics, Law And Ideology

Xi tells Chinese youth to dare to dream - Xinhua He said that the 18th national congress of the CYLC, which concluded a few days ago, implemented the instructions of the CPC Central Committee, and went through the agenda of the congress, including summarizing the work of the CYLC over the past five years and laying out its development plan for the next five years. On behalf of the CPC Central Committee, Xi extended his congratulations on the success of the congress and the newly elected leadership of the CYLC Central Committee. "Since the 18th CPC National Congress, based on the overall development of the causes of the Party and the country, the CPC Central Committee has attached great significance to and vigorously pushed forward its youth work," Xi said. "It released the first ever youth development plan of the People's Republic of China, arranged for the reform of the CYLC, and has made historic achievements in youth work.

协同推进新时代社会革命和自我革命--党建-人民网 An interesting piece on Page 7 of the July 3 People's Daily by the Xi thought research center of the Ministry of Education, on social revolution and self-revolution in the New Era. There appears to be a renewed emphasis on self-revolution in the New Era, no doubt something a Marxist like Xi thinks is necessary. 社会革命是社会发展中的质变和飞跃,是人类社会进步的主要实现形式。它不仅表现为破除旧的经济基础和上层建筑、用先进的社会制度代替落后的社会制度,而且表现为经济社会各个领域的深刻变革...习近平同志强调,要把新时代坚持和发展中国特色社会主义这场伟大社会革命进行好,我们党必须勇于进行自我革命,把党建设得更加坚强有力。勇于进行新时代的自我革命,必须坚持以习近平新时代中国特色社会主义思想武装头脑、指导实践、推动工作,拧紧世界观、人生观、价值观这个“总开关”,祛除精神上缺钙的“软骨病”,在思想上构筑起拒腐蚀、永不沾的钢铁长城 Is this positive assessment of the Yan'an Rectification Movement something to be concerned about in the Xi Era? Will he also want his version of the Yan'an rectification movement? 党的自我革命与党领导的社会革命是紧密联系、有机统一的。一方面,党的自我革命是党领导的社会革命的必要前提和重要保障。历史反复证明并将继续证明,实现中华民族伟大复兴的社会革命只有在中国共产党的领导下才能成功,而党的自我革命向来都是社会革命的先导。例如,延安整风运动是党的历史上一次具有重大意义的自我革命,它破除了曾使中国革命遭受重大挫折的主观主义,初步确立起实事求是的思想路线,实现了党的空前团结,为夺取新民主主义革命的最终胜利奠定了思想基础...

Dozens of Uyghur Children of Xinjiang Village Camp Detainees Sent to Live in Orphanages - RFA An officer at the Chinibagh village police station, in the seat of Hotan (in Chinese, Hetian) prefecture’s Qaraqash (Moyu) county, recently told RFA’s Uyghur Service that local government officials were deciding the fates of children who had been left behind after their guardians had been sent for re-education. “Children left without parents have been sent to orphanages temporarily until their parents are released,” said the officer, who is a resident of nearby Yengisheher village, where sources recently told RFA that around 40 percent of the more than 1,700 residents had been detained in re-education camps.

Uyghur Exile Group Leader’s Mother Died in Xinjiang Detention Center - RFA The recently deceased mother of Dolkun Isa, the president of the Munich-based World Uyghur Congress (WUC) exile group, died while in detention at a “political re-education camp” in northwest China’s Xinjiang Uyghur Autonomous Region (XUAR), according to security officials.

Language Log » The ethnopolitics of National Language in China I was struck by the ubiquitous use of the term “Guoyu 国语”, not "Hanyu 汉语", to refer to MSM by both Han and Uyghurs in Xinjiang. I was told by an official from the Kasghar foreign affairs office that Xi Jinping had mandated the use of the label Guoyu in order to demonstrate that Chinese was the national language of the Zhonghua minzu [VHM:  Chinese people / nationality / ethnicity], not the unique possession of the Han, underlying the notion that the government is promoting “Chinafication” and the Zhonghua minzu consciousness, not Sinification or Hanhua. Although there is a vast difference between Homo sovieticus and the Zhonghua minzu paradigm, my prediction is that Xinjiang in ten years will—ideologically speaking—much more closely resemble Soviet Uzbekistan in the 1980s, where society had been profoundly secularized and there was considerable indigenous identification with and loyalty towards the national project.

Underage boy accused of attack raises China's concern on law concerning minors - CGTN The case of a 13-year-old boy accused of attacking a 14-year-old girl with scissors was not prosecuted because he was too young has once again drew China’s concern regarding the country’s minimum age of criminal responsibility, which was set at the age of 14. The girl’s mother, identified as Deng, said in her post on China's Twitter-like Weibo on June 4 that her daughter, surnamed Zhang, was hijacked by a boy with scissors when she was waiting for the elevator in the building she lived in Xiaogan City, central China’s Hubei Province, on March 30

All aboard Xi Jinping’s train of Thought as city decorates subway carriages with propaganda | South China Morning Post The train, dedicated to the political doctrine of Chinese President Xi Jinping, was put into service in Changchun, Jilin province, on Sunday as a “birthday gift” to the Communist Party on its 97th anniversary, the municipal government said. The carriages are decked out in red and dozens of Xi’s quotes, and feature guides using a traditional rap style to preach the party line to the beat of handheld bamboo clappers.  //  Comment: Not sure how long this train car will last, this level of sycophancy may be a bit much...


Foreign and Military Affairs

North Korean economic official arrives in China as Pyongyang continues to lean on Beijing for support | South China Morning Post Ku Bon-tae, vice-minister of external economic affairs, arrived at Beijing International Airport on Monday aboard an Air Koryo plane, South Korea’s Yonhap news agency reported. A diplomatic source was quoted as saying that Ku’s visit was “a show of the will of North Korea and China to seek economic cooperation in earnest”. Ku is expected to discuss cooperation in the fields of agriculture, railways and electricity with his Chinese counterparts, the Yonhap report said.

Malaysia seeks sharp cuts in $20 bln China-backed rail link - AP Malaysia’s government said Tuesday a major China-backed rail link project can only be viable with a “drastic” price reduction by the Chinese contractor as the actual cost of the venture is 81 billion ringgit ($20 billion). The 688 kilometer (430 miles) East Coast Rail Link is a key part of China’s regional Belt and Road infrastructure initiative. It would connect Malaysia’s west coast to rural eastern states. It is largely financed by China and the main contract was awarded in 2016 to the China Communication Construction Company, or CCCC, by former Prime Minister Najib Razak, who was defeated in May 9 elections.

Wang Qishan Meets with Foreign Minister Abul Hassan Mahmud Ali of Bangladesh The relations between China and Bangladesh are a vivid reflection of China's neighborhood diplomacy featuring amity, sincerity, mutual benefit and inclusiveness. China applauds Bangladesh's remarkable development achievements, and stands ready to take the joint construction of the Belt and Road as an opportunity to enhance cooperation in various fields with Bangladesh, and implement the important consensus reached by leaders of the two countries in actions. Abul Hassan Mahmud Ali expressed that the two peoples enjoy profound friendship, and the development momentum of Bangladesh-China cooperation is cheerful. Bangladesh stands ready to constantly consolidate and strengthen bilateral cooperation in various fields to promote bilateral relations to a new stage under the framework of the Belt and Road.

China’s proposals drive Rohingya crisis solution - Global Times In this context, China's three-phase proposal will fundamentally solve the issue. The first phase is about ceasefire and restoration of social order to bring back stability and a safe environment for the local people. The direct cause for the exodus of Rohingyas is unrest and insecurity in the state. In the second phase, Bangladesh and Myanmar are encouraged to talk to find a feasible approach to sort out checking, repatriation and reception of refugees, during which the international community should play a facilitating role. The third phase, which is the most difficult one, involves eradicating the root cause of the Rohingya crisis while ensuring the development of the region. The crisis is closely linked with Rakhine's poverty and competition between ethnic groups for resources. Therefore, development is the key.

India’s Nepal Challenge Intensifies | The Diplomat During Oli’s visit to China, the two nations signed eight agreements worth $2.4 billion, ranging from hydroelectric to water resources projects, cement factories and fruit production. In a veiled reference to Nepal’s dependence on India, Chinese President Xi Jinping underlined that Beijing said would “continue to support Nepal’s efforts to safeguard state independence, sovereignty and territorial integrity.” Oli, for his part, committed Nepal to be a part of Xi’s pet project, the Belt and Road Initiative (BRI), which continues to be a point of friction between India and China. The China-Pakistan Economic Corridor, part of the BRI, passes through Pakistan-Occupied Kashmir, making it difficult for New Delhi to accept the project on grounds of territorial sovereignty. Oli also signed a Memorandum of Understanding (MoU) with China to build a strategic railway link connecting Tibet with Kathmandu through Himalayan terrain. This will connect the Gyirong trading port in the city of Xigaze in Tibet with the Nepali capital Kathmandu. Chinese leaders have expressed a desire to work with Nepal to build an ambitious “cross-Himalayan connectivity network” through aviation, trading ports, highways and telecommunications. Oli has been a strong votary of greater connectivity with China. The initial feasibility study of the extension of the railway line from Tibet’s Kyrong to Kathmandu all the way to Lumbini, Buddha’s birthplace, has been completed.

China's aid to Papua New Guinea threatens Australia's influence | World news | The Guardian China’s aid spending in Papua New Guinea – with its focus on infrastructure and “few-strings-attached” concessional loans – risks eroding Australia’s influence in the country, with Australian aid sometimes viewed as paternalistic and unwieldy. A Deakin University submission to a parliamentary inquiry, based on interviews with Papua New Guinean business, political, academic and community leaders argues Australia risks being diminished by rising Chinese spending.

Belt and Router: China Aims for Tighter Internet Controls with Digital Silk Road | Council on Foreign Relations Under the guise of BRI, China is seeking to export its policy of authoritarian cyber controls, giving countries the right to regulate and censor their own internet. China has already tightened control over its domestic internet, including through the Great Firewall and its Cybersecurity Law. It is now seeking to globalize that approach, while also inserting backdoor mechanisms that could increase its intelligence and propaganda operations in BRI partner countries. China’s plans—running directly counter to U.S. aspirations for a free and open global internet—should be deeply alarming to the United States.  //  Comment: Is China aspiring to the US level of influence over and visibility into global networks and data traffic?

Sri Lankan Lawmakers Target Reporters in Times Investigation - The New York Times Sri Lankan lawmakers allied with former President Mahinda Rajapaksa have publicly denounced The New York Times in recent days, focusing their ire on two local reporters who contributed logistical help to a report detailing how China seized ownership of a seaport in the country.

The NYT should ask what US has done for Sri Lanka - Global Times The Sri Lanka handover of its strategic Hambantota Port to China on a 99-year lease in December of last year triggered concerns worldwide. The worry, which lasts till today, was conspicuously portrayed by a New York Times report published last week. The article accuses China of using a debt trap for vulnerable countries, which therefore fuels corruption and autocratic behavior in these "struggling democracies." Yet the report has drawn rebuttal from Sri Lankan politicians. The country's former Central Bank governor Ajith Nivard Cabraal said the reporter used none of his views but rather the piece was a veiled attempt at using Sri Lanka to target China. Sri Lanka's former president Mahinda Rajapaksa refuted The New York Times report in a detailed statement. When the report called the Hambantota Port a failure because it drew only 34 ships in 2012, it selectively didn't mention that the number increased to 335 in 2014 and the port made an operating profit of Rs. 900 million ($5.69 million) in 2014 and Rs. 1,200 million in 2015, said Rajapaksa.

The China Challenge to an Inclusive Asia-Pacific Regional Trade Architecture - Robert Manning There is more uncertainty about the future of global and regional trade systems than at any time since the current rules-based order was created in the aftermath of WW2. As trade wars loom, the world’s two largest trading powers, China and the United States, pursuing “America First” trade policies appear on different and discordant paths. China has gamed the system and is pursuing mercantilist policies in an effort to dominate the technology-driven economy now taking shape. The rules-based trade system brought unprecedented growth and prosperity over the past seven decades. If the world’s largest trading power, China, cannot accommodate itself to rules and standards sought by much of the world, this China Challenge renders inclusive regional and global trade architectures increasingly problematic.


Tech And Media

Cog X 2018 - The China Perspective - YouTube Caroline Daniel Jeffrey Ding conversation on China's AI landscape

China’s Censors Love The Laugh Track – Foreign Policy He Xiaoxi, the CEO of Xiaoguo Media, said: “Talk show has a different degree of development in China and the United States. The United States already has a huge number of screenwriters, performers, and audience members. … But in China it is just now developing.” A director at a leading Chinese media and entertainment investment firm agreed: “The Chinese audience’s palette for comedy shows is expanding. These forms of comedic entertainment are underdeveloped in China, partly due to the lack of properly trained creative and performance talent.”

The United States and China: The Current Global Innovation Landscape The Atlantic Council’s Scowcroft Center for Strategy and Security, in partnership with Qualcomm, embarked on a global tour of technology hubsto determine which ones are at the cutting edges of tech-based innovation—and which are at risk of falling behind. Our researchers visited nearly a dozen countries and spoke with almost two hundred experts. Below is a look at how the United States and China compare.

Alibaba, Tencent lead $1.5 billion investment in China media group CMC | Reuters CMC Inc, one half of the CMC media empire that spans from sports to amusement parks, said the A-round fundraising was led by the two Chinese tech firms along with new investors such as property developer China Vanke Co Ltd (000002.SZ). It added the firm was valued at around 400 billion yuan after the round. CMC Capital Partners is the other half of the larger CMC group, founded by media magnate Li Ruigang. Li is often portrayed as China’s version of Australian media mogul Rupert Murdoch, the head of News Corp

China's Xiaomi says American ties to smooth U.S. push amid trade tension | Reuters China’s Xiaomi Corp (1810.HK) is pressing ahead with plans to enter the United States next year, saying its U.S. connections should help the consumer-focused smartphone maker skirt the political resistance met by some of its compatriot rivals. //  Comment: seems like wishful thinking

"Secret City" on Netflix - The show, "inspired" by the novels "The Marmalade Files" and "The Mandarin Code". I am up to episode 4, have some quibbles, like the opening shot saying "Beijing" when it is clearly not Beijing but overall entertaining 'Secret City' On Netflix Review: Stream It or Skip It?: The Gist: Secret City is a story of many layers, but its central premise is thus: as tensions rise between China and America, Australia winds up in the middle thanks to the machinations of one power-hungry figure in particular. Things kick off with a chase and a gruesome murder that evidently connects to the bigger picture, one rife with conspiracy and danger for all those who dare get involved. Journalist Harriet Dunkley (Torv) stumbles into this case by chance one morning, when she sees a murder victim, a young man named Max – the same man we watch get chased in the beginning of the episode – wash up on the beach, and it turns out to be much bigger than she ever anticipated.


Society, Art, Sports, Culture And History

A Chinese court is using a popular music video app to catch deadbeat borrowers — Quartz Since the launch of a blacklist for debt defaulters in China in 2013 , China’s Supreme Court has put some seven million (link in Chinese) names on it. The goal is to expose the listed individuals and companies, and better yet, get them to pay off their debts. In that spirit, a local court has taken an innovative—if intrusive—approach. A district court in Nanning, the capital city of China’s southwestern Guangxi region, made short clips of images of defaulters’ faces, set to music, and shared them last month on the hugely popular Douyin mini-music video app.

Chinese-American woman reunites with birth family after going missing 13 years ago | South China Morning Post Kylee Bowers, or Liang Jinglang as she was known until she went missing at age five, was welcomed by her parents and three siblings in a tearful reunion at Guangzhou Baiyun International Airport on Sunday, Nanfang Daily reported on Monday... Bowers became separated from her family in Zhongshan, Guangdong province, in 2005 when she tried to find her way home from her uncle’s house. The family lived in Foshan and had left the child temporarily in the uncle’s care, the report said. Bowers said an elderly woman found her standing alone on a bridge and took her to the police but she could not understand the officers because she only spoke the dialect of her family’s hometown of Leizhou, also in Guangdong province... She was then sent to the Zhongshan Children’s Welfare Institute where she was given the name Zhong Fengmin. She stayed in the institute for two years, and in a foster home for three years before being adopted by an American couple at age 12, the report said.


Energy, Environment, Science And Health

Dozens Detained in China's Harbin After Protesters Blockade Trash Plant - RFA Authorities in the northeastern Chinese province of Heilongjiang have detained dozens of people after they complained and protested against pollution from a garbage facility near their homes. Angry residents of the provincial capital Harbin recently blockaded the Yifeng garbage plant, preventing any vehicles or people from entering or leaving, and prompting the local government to send in large numbers of police reinforcements, who detained more than 40 people, local residents told RFA on Monday.

A $6 Billion China Startup Wants to Be the Amazon of Health Care - Bloomberg Backed by Tencent Holdings Ltd., WeDoctor joins a growing contingent of tech giants hoping to revolutionize an industry seemingly impervious to online disruption. While the likes of Google seek to unlock the secrets of immortality or unravel medical mysteries, WeDoctor’s focusing on something more pragmatic: making money by unclogging bottlenecks in a Chinese health care market slated to hit 8 trillion yuan ($1.2 trillion) by 2020.