Wuhan virus; US-China; Huawei and the UK

The latest figures from the virus outbreak are 653 confirmed cases and 18 deaths 武汉新型肺炎疫情动态. The 18th death was in Hebei Province, the victim an 80 year old man who had spent more than two months in Wuhan 河北确诊第2例新型肺炎病例 系湖北外首现死亡病例.

The authorities have extended the effective quarantine to Huanggang and Ezhou, neighboring cities to Wuhan.

Caixin reported that sources in Wuhan expect the number of cases in the city to grow to 6000.

Beijing and several other cities have canceled annual New Year’s events, including the very popular temple fairs.

The disconnect in the People’s Daily and CCTV Evening News continued Thursday. There was nothing on the front page of the Thursday People’s Daily, and it was only the fifth story (国家卫健委通报新型冠状病毒肺炎疫情防控情况 累计报告确诊病例571例) on the Thursday CCTV Evening News, after a report on Xi's speech at the State Council New Year's Banquet, a report on New Year cultural activities around the country, a happy report on new year's travel at the Beijing West train station, and a report on the rehearsals for the CCTV Spring Festival. Other CCTV News programs are reporting a lot on the outbreak.

A CCTV Online paean to Xi’s Yunnan trip used “people’s leader” in what is really an unfortunate use of words given the situation-新春 习近平这几个拜年瞬间暖人心扉

"人民领袖和蔼、可亲的形象穿过人群,透过屏幕,感染着每个人。The amiable image of the people's leader moved through the crowd and through the screen, infecting everyone."

This propaganda department disconnect is remarkable if predictable, but other Chinese media have been unleashed. How far they can push with accurate reporting before the censors pull them back is unclear, but the Party is trying to show there is transparency, though its credibility gap is so great that it is going to be hard to convince most people they are being told the true picture.

Caixin, which has several reporters in Wuhan, has taken down the paywalls for its Chinese and English sites.

If Xi is a superstitious person he must be very worried about what an inauspicious start to the Year of the Rat he and the PRC are having. This outbreak is a severe test of “China’s governance system and capability”, as a commentary (人民网评:越是艰难险阻,愈益众志成城) on the People’s Daily website today said.

Housekeeping note: In years past there was not enough news to write the newsletter during the Lunar New Year holiday week. This year looks to be different, but next week may not have four newsletters.

Thanks for reading, and Happy Lunar New Year 祝大家鼠年大吉、万事如意!


The Essential Eight

1. Wuhan virus

Spreading Coronavirus Prompts Lockdown of More Chinese Cities - WSJ

On Thursday, authorities in Huanggang—a city of 7.5 million people—said they wouldn’t let long-distance trains and buses run from the urban center and would shut its public transportation system in the lockdown zone, effective midnight Friday local time. Ezhou, another neighboring city with just over a million residents, said it would enact similar restrictions, bringing the total number of cities with travel restrictions to three.

Wuhan to build special hospital in six days to receive patients - CGTN

The government said it learned from experience from SARS fight at Beijing Xiaotangshan Hospital, which was built in 2003 to deal with the disease.

The hospital is required to be built within six days, according to local authorities.

China's finance ministry allocates $144 million to Hubei Province to help fight Wuhan coronavirus - Global Times

Q&A: WHO representative addresses China's new virus outbreak - AP

Shortly before authorities closed off the Chinese city at the epicenter of an outbreak of a new virus, the World Health Organization sent a team led by country representative Gauden Galea to check conditions on the ground in Wuhan...

To my knowledge, trying to contain a city of 11 million people is new to science. It has not been tried before as a public health measure, so we cannot at this stage say it will or will not work. If this is happening we will note carefully to what extent it is maintained and how long it can take. There are pros and cons to such a decision. Such a decision obviously has social and economic impacts that are considerable. On the other hand, it demonstrates a very strong public health commitment and a willingness to take dramatic action. It sends a message to Wuhan, to China and to the rest of the countries. It remains to be seen what it’s effect will be...

We are now daily hearing of massive increases in the numbers. Part of that increase is coming from the processing of specimens earlier. Another part is a broadening of the case definition. So numbers are going to increase. Even if they are in the thousands, this would not surprise us. That is not an indicator of seriousness. Indeed it is very, very good to get and identify as many cases as possible.

Caixin - Wuhan Virus Latest: Wuhan Imposes Massive Quarantine, Shutting Down Public Transit

A Hong Kong-based virologist who helped identify the coronavirus that caused SARS has weighed in on the current outbreak with some sobering words. “I’ve never felt scared,” he told Caixin on Thursday. “This time I’m scared.”

Guan Yi, who heads the University of Hong Kong’s State Key Laboratory of Emerging Infectious Diseases, said he traveled to Wuhan this week expecting the city to be on a war footing. He said despite strong words from China’s central authorities, that’s not what he saw. “I don't think the local government has done what it should do. They haven’t even been handing out quarantine guides to people who were leaving the city.”

Guan told Caixin he feared the spread of this virus could be over 10 times larger than SARS, and that the lockdown implemented Thursday was unlikely to be effective because the window for controlling its spread ahead of the Lunar New Year holiday had already closed...

Doctors at several major local hospitals in Wuhan told Caixin that it is estimated that the number of people infected with the epidemic may eventually exceed 6,000.

The original interview with Guan - 管轶:去过武汉请自我隔离_财新网_财新网

Guan says he has been through many epidemics, and this is the first time he has felt afraid.

保守估计,此次感染规模最终可能会是SARS的10倍起跳。我经历过这么多,从没有感到害怕过,大部分可控制,但这次我怕了。

Wuhan mayor under pressure to resign over response to coronavirus outbreak | South China Morning Post

Zhou Xianwang, the 57-year-old mayor of the Hubei provincial capital, is weathering what will likely be the toughest crisis of his career, with a flood of calls for his resignation after he told state broadcaster CCTV that the city’s “warnings were not sufficient”...

“From the perspective of continued understanding of the situation, it is only at this time that everyone realises it is so dangerous,” said Zhou, who has been mayor since September 2018. “If we knew at first from the virus spread that it would be so serious, finding effective control and prevention methods of course would be good, but the problem is usually we cannot realise the severity from the outset.”

How China’s slow response aided coronavirus outbreak | Financial Times $$

Chinese censors also initially instructed media to stick to reprinting official reports on the virus from central government-controlled media, severely restricting independent reporting, according to multiple journalists.

In one example, a Chinese reporter said this month that they were told by a medical professional that hospitals in the city were given a target of “zero infections” among staff, with hospital deans liable to be fired for failing to meet the target. As a result, medical staff were slow to report infections among nurses...

Part of the reason for the tightly controlled release of information was that Wuhan, a provincial capital, was hosting annual meetings of the top municipal and provincial officials from January 7 to 17.

Opinion | Is China Setting Itself Up for Another Epidemic? - The New York Times OpEd - Huang Yanzhong

It is exploding in China and spreading to other countries, much as SARS did in 2003. Has the Chinese government fundamentally changed its response to a possible epidemic since then? It appears not, or at least not enough. And to my surprise, people in China, including some in the know, seem to agree. “From 2003 to 2020,” according to one article shared by a government adviser on a WeChat group, Beijing’s “conduct has not changed at all.”

China tightens preventive measures to curb novel coronavirus - Xinhua

The National Health Commission (NHC) has issued a prevention and control plan, which has been continuously updated in accordance with the development of the pneumonia situation.

The NHC also announced that the country would take preventive and control measures of category A infectious diseases to effectively fight against pneumonia caused by the novel coronavirus.

The Ministry of Finance and the National Healthcare Security Administration have jointly issued a circular to offer financial support for treating patients with such pneumonia.

A leading workgroup has been established by the National Administration of Traditional Chinese Medicine to organize hospitals of traditional Chinese medicine at all levels and of all kinds to coordinate in the control and prevention of pneumonia.

It also encouraged experts of traditional Chinese medicine to participate in treatment, especially for severely-affected patients, as well as research on the disease.

Wild animals that are likely to carry the novel coronavirus are banned from transshipment and sale, according to a plan jointly proposed by the State Administration for Market Regulation and other departments.

Chinese expert who came down with Wuhan coronavirus after saying it was controllable thinks he was infected through his eyes | South China Morning Post

Wang Guangfa, a respiratory specialist from Peking University First Hospital in Beijing, confirmed his infection and subsequent recovery on his personal Weibo account on Wednesday.

Chinese people stand united against pneumonia outbreak - People's Daily Online

The special measures cannot be taken without faith that the government will serve the people wholeheartedly. Responding to the reasonable demands of the people and minimizing the unfavorable factors brought by the emergency measures are also urgent matters.

It is a test for China’s governance system and capability, as no city in the country would be able to just stand by and watch...

Wuhan, hang in there! You have the support of all people across the country. The more difficult the situation is, the more united the Chinese people are. This has been constantly proven by both history and reality.

The original - 人民网评:越是艰难险阻,愈益众志成城--观点--人民网:

武汉加油,全国人民支持你们。越是遭遇艰难险阻,我们愈益众志成城。这是被历史和现实不断验证的中国逻辑。

Salute to Wuhan citizens for their sacrifice - Global Times

It is first time for China since 1949 to shut down the outbound channels of such a large provincial capital. Wuhan is also known as a thoroughfare to nine provinces and the largest transportation hub in Central China. Therefore, it is undoubtedly difficult to make the decision to close the city down. It needs much courage and rationality to take this step.

We sincerely appreciate the sacrifices made by Wuhan citizens. They will make a great contribution to stop the uncontrolled spread of the epidemic. Some Wuhan people's normal travels will be affected and the suspension of public transportation in the city will also bring a serious inconvenience to Wuhan locals.

As a media organization, we want to pay tribute to the city of Wuhan and its over 10 million citizens. We also believe that the entire Chinese nation will pay tribute to Wuhan citizens who think of the big picture at this critical moment.

Beijing cancels New Year events to curb virus spread: Beijing News - Reuters

Beijing's Forbidden City to be closed to tourists amid virus outbreak: People's Daily - Reuters

reopening of what is the capital city’s most famous tourist attraction is pending further notice

Yicai Global - Taobao Sells 80 Million Masks in Two Days; Makers Pay Fivefold for Holiday Work

Scientists Dispute Whether Snakes Are Source of Wuhan Coronavirus In Humans - Caixin Global

scientists at the MRC-University of Glasgow Centre for Virus Research (CVR) and the Xi'an Jiaotong-Liverpool University disputed the findings.

Citing recombination analysis, which create visual depictions of similarities between various genetic sequences, the researchers argued in a Thursday post on a medical discussion forum that 2019-nCoV is most closely related to several viruses originating from bats.

疫情下的“野味” 有商家转场网络挂靠资质“洗白” - 国内 - 新京报网

long Beijing News story on the illegal sale of wildlife in wet markets, not just in Wuhan but around the country. Too bad authorities don't care as much about this as they do about Internet censorship...The government can be effectively when it cares about something, like political security.

Release dates for 7 new movies postponed amid China's pneumonia outbreak - Xinhua

The movies, including "Detective Chinatown 3," "Lost in Russia," "Leap" and "Legend of Deification," were scheduled to hit Chinese cinemas during the upcoming Spring Festival, or the Chinese Lunar New Year.

Concerns over the safety of watching movies in cinemas, usually considered as a confined space with the risk of virus transmission, have increased amid the spreading of the country's novel coronavirus-related pneumonia.

Yicai Global - Huawei Delays Developer Conference Over New Virus

will defer its annual developer conference to March and host it via an online live-feed instead of a public gathering in view of the outbreak of the novel coronavirus

Comment: Expect most events to be cancelled at least through March if not even later.


2. Xi’s speech at New Year’s banquet

Xi Focus: Xi stresses racing against time to reach Chinese Dream - Xinhua

Xi made the remarks while addressing a Chinese Lunar New Year reception held at the Great Hall of the People in Beijing.

Under the strong leadership of the CPC, all members of the Party, armed forces and people of all ethnic groups must fear no wind or wave, rise up to challenges and keep marching toward the glorious goal of national rejuvenation and the great prospect of building a community with a shared future for humanity, Xi said...

From now to the middle of this century, the Chinese people will strive to build China into a great modern socialist country. It will be a great era in which a new splendid chapter of the Chinese civilization will be written, he said.

Every Chinese person must feel proud of living in such a great era, Xi said.

"We must maintain strategic direction and resolve, stay united, work hard and forge ahead against all odds," Xi said.

The CCTV report on his speech 中共中央国务院举行春节团拜会 习近平发表讲话, no mention of Wuhan in his speech, none of the 2000 attendees are wearing masks, assume the Great Hall of the People has a good air purification system?


3. Huawei to get a win in the UK?

British officials propose limited 5G role for China's Huawei: sources - Reuters

The officials proposed barring Huawei from the sensitive, data-heavy “core” part of the network and restricted government systems, closely mirroring a provisional decision made last year under former Prime Minister Theresa May.

“The technical and policy guidance hasn’t changed,” said one of the sources, who spoke on condition of anonymity to discuss private conversations. “Now it is down to a political calculation.”..

The proposed solution represents a “calculated compromise”, which can be presented to Washington as a tough restriction on the Chinese firm but also accepted by British operators already using the company’s equipment, one of the sources said.

Facing Pushback From Allies, U.S. Set for Broader Huawei Effort - WSJ

The latest setback came last week when U.K. officials stood their ground after the White House sent senior officials to Britain to present more evidence about the risks posed by Huawei. “We had already anticipated the kind of threat the new U.S. material demonstrates and have factored that into our planning,” said a spokesman for the U.K. government, which is expected to make a decision next week...

“The appetite for a U.S.-U.K. trade agreement could be diminished by the U.K. making the wrong decision on Huawei,” a senior Trump administration official said.

A U.S. official said Washington is “engaged in all countries” and plans to give financial assistance to developing countries to use alternative suppliers in 5G networks via newly empowered government agencies and initiatives...

The official said Washington plans to use the State Department’s Digital Connectivity and Cybersecurity Partnership, the U.S. Agency for International Development, the Export-Import Bank of the U.S. and U.S. International Development Finance Corporation, or DFC, toward this goal. Such financial assistance would help wireless carriers in foreign countries buy equipment from Huawei’s rivals, which are chiefly Sweden’s Ericsson AB, Finland’s Nokia Corp. and South Korea’s Samsung Electronics Co.

Comment: One use for the Blue Dot Network…Here is Deputy National Security Advisor Matt Pottinger at the Raisina Dialogue in India last week on the Blue Dot Network, discussing its role in the Indo-Pacific but also more generally how it might work, from an unofficial transcript sent to me by a US official:

if there isn't an American player that wants to play then we'll work with an Indian one, we'll work with an Australian company, we’ll work with an Indonesian or Vietnamese company. The amount of capital that is available under the Development Finance Corporation is now, as you put it, sixty billion dollars, a more than doubling of the amount. And it also allows DFC to participate in private equity, not just lending schemes for these various projects. So this is something that is designed to galvanize private-sector money. You talked a moment ago about, you know, do democracies have the ability to have these grand strategies? Well, in fact, the private sector is what takes the lead. They have the spotlight in free and open societies. And they're the ones who provided tens of trillions of dollars of capital globally to build the world. We don't rely on central planning or a vanity project of some autocrat to say we're going to invest there.

Saran: Can you very quickly for the benefit of all those in the room, describe the Blue Dot project? Because you were mentioning that very interesting idea yesterday night.

Pottinger: Yeah, very briefly. So the Blue Dot Network is a new initiative that Japan, Australia and the United States are the first underwriters of, but it's really a multi-stakeholder initiative that's designed to ensure that countries around the world have that private-sector led, sustainable, transparent financing for infrastructure development. So we're encouraging friends around the region, we're encouraging Europe, to look at this as well. The idea is that we will evaluate and certify infrastructure projects that meet a basic set of good standards. For example, is it financially sustainable? Are the terms of the project transparent? Is it environmentally sound? And if the projects meet those standards it’s assigned a Blue Dot. It's kind of like getting a Michelin star rating for your restaurant. And what that means is, as that catches on, private sector players are going to want to get in and participate in those projects. And anyone's able to—it doesn't exclude any country—it just says you've got to meet some basic standards. So this is designed to also crowd out some of the more corrupt approaches to infrastructure investment that that really threaten to undermine prosperity for all of us.

And here are Mr. Pottinger's comments at the forum about Huawei and decoupling, from yesterday's newsletter in Item #3, now outside the paywall.


4. US-China

Exclusive: Trump will 'terminate' China trade deal, 'charge tremendous tariffs' if Xi breaks rules | Fox Business

Trump, during an exclusive interview with FOX Business’ Maria Bartiromo at the World Economic Forum in Davos, said he’s fully aware that China hasn’t been trustworthy in the past, but phase one has a “tremendous policing action” that’s the “strongest anyone’s ever had,” and if China steals intellectual property, he will “terminate the deal” and “charge tremendous tariffs.”

Trump Hails Trade Deal for U.S. Farms, But China Has Other Plans - Bloomberg

The dispute with Washington exposed Beijing’s vulnerability when it comes to food imports -- especially the soybeans needed to feed its massive herd of livestock -- and the Communist Party leadership will now do all it can to wean itself off the U.S.

“Anytime you have a disruption in your supply chain, and especially with something as sensitive as food, they have to diversify their supply chain,” said David MacLennan, chief executive of Cargill Inc., the world’s largest agricultural commodity trader. “I think they don’t want to be in the same position again of being overly dependent on one supplier.”

The US government should proactively release these videos - Exclusive: US Navy footage of warships’ near collision in South China Sea | South China Morning Post

A newly-released US Navy video of the tense encounter between a Chinese and US warship in the South China Sea in late 2018 offers an indication of how seriously the Chinese side were prepared for a collision with the US vessel in the contested waterway.

In the footage of the incident, which at the time caused heated exchanges between Washington and Beijing, Chinese People’s Liberation Army Navy crew can be seen preparing buoys designed to absorb impact and protect the hull of their ship in the event of a collision between a Chinese Luyang destroyer and the USS Decatur.

Lawmaker calls on DOJ to label Chinese state news agency Xinhua foreign agent - Axios

In the Jan. 22 letter to Barr, Rep. Jim Banks (R-Ind.) notes that Xinhua does not appear to have registered yet and calls it "extremely troubling" that it hasn't. He asks the Department of Justice to look closely at the issue

Comment: Does Xinhua have US audience facing operations in the US like CGTN and China Daily?


5. More on the alleged PRC spy in the EU

The man at the center of Brussels spy probe – POLITICO

For better or worse, the spy affair roiling Brussels has given Gerhard Sabathil the limelight he always craved. A flamboyant former EU ambassador with a fondness for plaid bow ties and a taste for the finer things in life, Sabathil is the man German authorities suspect was at the center of a clandestine Chinese operation aimed at delivering European secrets to Beijing...

Last week, investigators visited nine properties in Brussels, Berlin, Bavaria and Baden-Württemberg, including Sabathil’s German residences and the offices of his employer, German-based lobbying firm EUTOP..

In 2012, after heading the European Commission’s foreign policy planning unit for several years, he was promoted to oversee the East Asia and Pacific division.

In 2015, he was appointed ambassador to South Korea but was recalled the following year after German authorities revoked his security clearance, according to a spokesperson for the European External Action Services (EEAS), a move that wasn’t made public at the time...

Around that time, he also met his current wife, a Chinese woman who worked as a translator.


6. PRC student jailed in China for tweets “denigrating” Xi

University of Minnesota student jailed in China for Twitter posts - Axios

A University of Minnesota student has been arrested in China and sentenced to six months in prison for tweets he posted while in the United States, according to a Chinese court document viewed by Axios. Some of the tweets contained images deemed to be unflattering portrayals of a "national leader."..

According to an official court document dated Nov. 5, 2019, Chinese police detained 20-year-old Luo Daiqing in July 2019 in Wuhan, his hometown, where the liberal arts major had returned after the end of the spring semester.

The court document says that "in September and October 2018, while he was studying at the University of Minnesota," Luo "used his Twitter account to post more than 40 comments denigrating a national leader's image and indecent pictures," which "created a negative social impact."

After months of detention, Luo was sentenced in November 2019 to six months in prison for "provocation." (According to the court judgment, the time he spent in detention will count towards those six months).

Comment: The CCP wants to control the global conversation about the PRC and its leaders, in any language, on any platform

U.S. Senator calls for release of University of Minnesota student arrested in China | FOX 9 Minneapolis-St. Paul

Here is the full statement from Ben Sasse:

The Chinese Communist Party ought to release Luo Daiqing immediately, and the University of Minnesota ought to give him a full-ride scholarship. Don't forget that the Chinese Communist Party has banned Twitter, so the only people who even saw these tweets were the goons charged with monitoring Chinese citizens while they're enjoying freedom here in the United States. This is what ruthless and paranoid totalitarianism looks like.


7. AI

The Question of Comparative Advantage in Artificial Intelligence – CSET ReportBy Andrew Imbrie, Elsa B. Kania and Lorand Laskai

How do we measure leadership in artificial intelligence, and where does the United States rank? What comparative advantages matter most? As nations embrace AI, answering these questions becomes increasingly critical. This policy brief examines potential AI strengths of the United States and China and prescribes recommendations to ensure the United States does not fall behind.

Reports of 'big brother' China social credit system untrue: AI expert Xue Lan - Reuters

Xue Lan, professor at Tsinghua University’s School of Public Policy and Management, told the Reuters Global Markets Forum the system was in its trial stage. He also said data protection was crucial when it came to facial recognition technology...

Q- What’s your view on China’s social credit score mechanism?

A- The system is being widely distorted, it’s still at its trial stage. Even though the court gives its judgment, the implementation becomes a huge problem.


8. Anyone want to be TikTok’s CEO?

ByteDance Is Seeking a New CEO for Its TikTok Business - Bloomberg 

The company has interviewed candidates in recent months for the CEO role, which would be based in the U.S., according to people familiar with the matter, who asked not to be named because the search is private. In one potential scenario, the new CEO would oversee TikTok’s non-technical functions, including advertising and operations, while current TikTok chief Alex Zhu would continue to manage the majority of product and engineering out of China, one person said.

Comment: So the CEO would have no oversight over and effectively no knowledge of how the service really worked with its Chinese parent? Whoever takes this job should demand a lot of cash upfront

TikTok's LA office has five floors and will have a studio for users - Business Insider

Shortform video app TikTok — which has grown 400 employees in the US — announced on Wednesday it has opened a new LA office.


Business, Economy and Trade

Chinese Company Swoops on Giant Stock of Metals Coveted by Trump - Bloomberg Now, with indium prices languishing at the lowest in more than a decade, China’s Vital Materials has paid more than $600 million to acquire the stockpile at auction…“The fear that the Fanya stocks might flood into the market and destroy the already very delicate balance of supply and demand has been overhanging onto the market,” Vicky Zeng, Vital’s global vice president for sourcing, said in a statement. “With all these metals being moved to Vital, people can be relieved as all the metals will be consumed and leveraged internally.”

China Oceanwide Sells San Francisco Project to SPF Group - Mingtiandi China Oceanwide is selling the project once called First and Mission to a little-known Beijing fund manager for just over $1 billion, according to the statement, with the company indicating that the asset disposal would help to improve its cashflow.

PayPal Moves Further Into China With UnionPay Partnership - Bloomberg Users of Shanghai-based UnionPay, the world’s largest card company by payment volume, will be able to add their UnionPay cards to PayPal accounts and use them in a number of countries where PayPal is accepted outside of China.

Foreign and Defense Affairs

China Orders Police Not to Enter Businesses Where North Koreans Work - RFA Authorities in China are ordering police officers not to enter or otherwise access businesses that employ North Korean workers, leading sources to believe that Beijing is looking the other way as the workers are in direct violation of U.N. sanctions. The sanctions, aimed at depriving Pyongyang of foreign cash and resources that could be funneled into its nuclear and missile programs, mandate that all North Korean workers were to be repatriated by late December 2019.

Pakistan's Khan calls for U.N. action on India dispute - Reuters Khan made some of his most straightforward comments when asked why Pakistan has been muted in defense of Uighurs in China...When pressed on China’s policies, Khan said Pakistan’s relations with Beijing were too important for him to speak out publicly. “China has helped us when we were at rock bottom. We are really grateful to the Chinese government, so we have decided that any issues we have had with China we will handle privately.”