Xi-Biden call; Politburo meeting; Taiwan; Chip corruption
Vacation notice: I am going to my version of Beidaihe starting next week, though actually a staycation, as not much happens in the PRC in the first two weeks when the leadership mostly disappears from public view. If something interesting does happen you will hear from me.
Summary of today’s Essential Eight items:
Politburo meeting - From the readout it is clear the leadership has given up on the 5.5% GDP target, without saying so explicitly. Dynamic zero-Covid is here to stay for the foreseeable future. Some more fiscal and monetary stimulus may be forthcoming, as will more infrastructure investment. There may be some tweaks to real estate policies, specifically to ensure homes under construction are completed and likely more room for city-by-city adjustments, but they are not opening the floodgates from a policy or financial perspective. The rectification of the "platform economy" is to be completed and policymakers will "roll put a batch of "green-light" investment cases", but enhanced regulation will be the new normal. There may be some enhanced policies to bring in foreign investment and technology. The meeting also "reviewed a report on the ninth disciplinary inspection of the Party's 19th Central Committee"
Biden-Xi call - We are still relying on the official readouts and background briefings on the call, but as the readouts filter through the systems we may get more candid color on the call over the next few days. There does not appear to have been any deal on tariffs. Xi repeated a variation of his statement from the November call with Biden that those who play with fire over Taiwan will be burnt but neither readout mentions the possible Pelosi trip to Taiwan. The PRC issued a much more detailed readout much faster than the US did. Perhaps the most interesting part of the PRC readout was Xi’s comment that it is a mistake to “define China-US relations in terms of strategic competition and view China as the primary rival and the most serious long-term challenge”. Perhaps the most interesting bit from the US readout was the language “efforts to maintain and deepen lines of communication between the United States and the PRC and responsibly manage our differences and work together where our interests align”, and the most interesting omission was the word “competition”, which was used twice in the White House readout of the November 2021 call but not once in this one. The PRC has pushed back hard on the framing of the relationship in competition terms; are those efforts bearing fruit? A senior administration official did use “competition” in a background briefing after the call.
Pelosi trip to Taiwan still unconfirmed - She leaves for Asia tomorrow, the PRC continues to issue threats, and two prominent DC thinkers wrote a New York Times OpEd saying she should not go to Taiwan at this time.
Xi visits a new exhibition at the military museum - Before he heads off on vacation Xi paid a visit to a new exhibition at the Military Museum of the Chinese People's Revolution. The name of the exhibition Xi visited is "领航强军向复兴——新时代国防和军队建设成就展 Leading the strong army to rejuvenation - the new era of national defense and military construction achievements exhibition". For what it is worth the word used for "leading" is 领航, which could also be translated as "navigating" or "piloting", like a helmsman does, and I guess I could have just translated it as “navigating”. At the opening ceremony earlier in the day General Zhang Youxia, second-ranked Vice Chairman of the Central Military Commission, made clear what the exhibition is about - “The purpose of holding the exhibition is to comprehensively reflect the extraordinary achievements made by Chairman Xi in leading the cause of a strong army in the new era, and to show the new style of the whole army loyally safeguarding the core and resolutely obeying the party's command”.
Real estate bailouts may be starting - The FT reports that policymakers are trying to set up a bailout fund that will ultimately hit 1 Trillion RMB with leverage. But that is not big enough to revive the property market, and the readout from the Politburo meeting makes it sound more like the real estate policy goal remains to stabilize things as opposed to overly stimulate, so it is hard to get optimistic about property prices or real estate firms.
Ant IPO at least a year off - That is the takeaway from the moves it looks like Ant is making to restructure itself into a financial holding company. And a year may be generous, I assume there will not be an IPO until 2024.
Semiconductor corruption - Just days after his deputy was put under investigation, Ding Wenwu, president of China Integrated Circuit Industry Investment Fund, is now under investigation. There is so much cash going into this sector, it must be too tempting and too easy to skim some off.
June political discourse - China Media Project’s monthly report on political discourse trends, outside the paywall.
Thanks for reading, and I hope to see many of you in tomorrow’s weekly discussion thread.
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The Essential Eight
1. Politburo meeting
From the readout it is clear the leadership has given up on the 5.5% GDP target, without saying so explicitly. Dynamic zero-Covid is here to stay for the foreseeable future. Some more fiscal and monetary stimulus may be forthcoming, as will more infrastructure investment. There may be some tweaks to real estate policies, specifically to ensure homes under construction are completed and likely more room for city-by-city adjustments, but they are not opening the floodgates from a policy or financial perspective. The rectification of the "platform economy" is to be completed and policymakers will "roll put a batch of "green-light" investment cases", but enhanced regulation will be the new normal. There may be some enhanced policies to bring in foreign investment and technology. The meeting also "reviewed a report on the ninth disciplinary inspection of the Party's 19th Central Committee"
Chinese leadership analyzes economic situation, reviews disciplinary inspection report-Xinhua Some highlights from this abridged official translation of the meeting, held "to analyze the current economic situation and arrange economic work for the second half of the year":
China's current economic performance is facing some prominent challenges, the meeting pointed out, calling for maintaining strategic focus and running China's own affairs well. 当前经济运行面临一些突出矛盾和问题，要保持战略定力，坚定做好自己的事
For the second half of 2022, the meeting urged efforts to consolidate the upward trend of economic recovery, keep employment and prices stable, keep the economy running within an appropriate range, and strive for the best possible outcome...做好下半年经济工作...巩固经济回升向好趋势，着力稳就业稳物价，保持经济运行在合理区间，力争实现最好结果。
Efforts are needed to efficiently coordinate COVID-19 prevention and control with economic and social development, the meeting said. 要高效统筹疫情防控和经济社会发展工作
A comprehensive, systematic, long-term and, in particular, political perspective should be used to view the relationship between COVID-19 prevention and control and economic and social development, the meeting stressed. 对疫情防控和经济社会发展的关系，要综合看、系统看、长远看，特别是要从政治上看、算政治账
It reiterated the importance of unswervingly adhering to the country's dynamic zero-COVID policy, calling for the immediate and strict implementation of prevention and control work when an outbreak occurs, and warning against slackness and weariness...坚持动态清零，出现了疫情必须立即严格防控，该管的要坚决管住，决不能松懈厌战
It stressed that macro policies should play an active role in expanding demand, and fiscal and monetary policies should effectively make up for the lack of social demand. 宏观政策要在扩大需求上积极作为。财政货币政策要有效弥补社会需求不足
Monetary policies should seek to ensure reasonably sufficient liquidity, credit to firms should be boosted, and new loans from policy banks and investment funds for infrastructure construction should be better leveraged, the meeting said...货币政策要保持流动性合理充裕，加大对企业的信贷支持，用好政策性银行新增信贷和基础设施建设投资基金...
It stressed the need to guard the bottom line of safety on all fronts. China should strengthen its food security guarantee and improve its capacity to ensure energy and resource supplies. 会议指出，要全方位守住安全底线。要强化粮食安全保障，提升能源资源供应保障能力
The meeting called for work to ensure the real estate market remains stable, adhering to the principle that "houses are for living in, not for speculation." Support will be offered to meet the rigid and upgraded demand for housing, ensure the completion of houses under construction, and guarantee people's livelihoods. 要稳定房地产市场，坚持房子是用来住的、不是用来炒的定位，因城施策用足用好政策工具箱[Comment: This phrase was not translated in the abridged Xinhua english translation: have city-by-city policies, make good use of the policy tool box]，支持刚性和改善性住房需求，压实地方政府责任，保交楼、稳民生
Efforts should also be made to maintain the overall stability of the financial market, properly defuse risks within certain local rural banks, and crack down on financial crimes...要保持金融市场总体稳定，妥善化解一些地方村镇银行风险，严厉打击金融犯罪。要压实安全生产责任。 [Comment: Protests can work, per the language in her about ensuring completion of homes under construction and defusing risks in rural banks and cracking down on financial crimes]
China will promote the well-regulated, healthy and sustainable development of the platform economy, complete the rectification of the sector, carry out regular supervision, and roll out a batch of "green-light" investment cases. 要推动平台经济规范健康持续发展，完成平台经济专项整改，对平台经济实施常态化监管，集中推出一批“绿灯”投资案例
The Chinese readout also had this 要积极促进出口、扩大进口，做好技术、外资引进工作，推动共建“一带一路”高质量发展, not translated in the Xinhua English version but here is my take - We should actively promote exports and expand imports, do a good job in introducing technology and foreign capital, and promote the high-quality development of the "the belt and road initiative".
Full readout of the Politburo meeting. This CCTV Evening News report did not show the meeting, just screens of the text from the readout. - [视频]中共中央政治局召开会议 分析研究当前经济形势和经济工作
On Monday the leadership held the regular mid-year economic policy consultation session with "non-CPC personages" - Chinese leadership holds symposium to solicit advice on economic work-Xinhua
He said that suggestions from non-CPC personages have provided important references for the scientific decision-making and effective policy execution of the CPC Central Committee, and he extended gratitude on behalf of the CPC Central Committee.
Noting that opportunities abound in times of crisis, Xi said, "We will surely be able to come through and turn risks into opportunities as long as we maintain strategic focus and remain determined to run our own affairs well."
CCTV Evening News on the July 25 meeting with the "non-CPC personages"
2. Biden-Xi call
We are still relying on the official readouts and background briefings on the call, but as the readouts filter through the systems we may get more candid color on the call over the next few days. There does not appear to have been any deal on tariffs. Xi repeated a variation of his statement from the November call with Biden that those who play with fire over Taiwan will be burnt but neither readout mentions the possible Pelosi trip to Taiwan. The PRC issued a much more detailed readout much faster than the US did. Perhaps the most interesting part of the PRC readout was Xi’s comment that it is a mistake to “define China-US relations in terms of strategic competition and view China as the primary rival and the most serious long-term challenge”.
Perhaps the most interesting bit from the US readout was the language “efforts to maintain and deepen lines of communication between the United States and the PRC and responsibly manage our differences and work together where our interests align”, and the most interesting omission was the word “competition”, which was used twice in the White House readout of the November 2021 call but not once in this one. The PRC has pushed back hard on the framing of the relationship in competition terms; are those efforts bearing fruit? A senior administration official did use “competition” in a background briefing after the call. The conclusion of that background briefing was also interesting:
And one thing I would just note is that the two leaders very specifically tasked their teams to follow up on a number of these areas. There was an exchange at the end about how much work they’d created for their teams in terms of following up on the specific pieces, and again, a conversation about a face-to-face meeting being worked out between the teams.
So I would say that, from my perspective, there was very much a clear, affirmative agenda that was put forward and agreed to in — you know, by the leaders for the teams to work toward. And I think that’s a really important piece to keep in mind that was, frankly, a pretty significant part of the conversation today.
President Joseph R. Biden Jr. spoke today with President Xi Jinping of the People’s Republic of China (PRC). The call was a part of the Biden Administration’s efforts to maintain and deepen lines of communication between the United States and the PRC and responsibly manage our differences and work together where our interests align. The call follows the two leaders’ conversation on March 18th and a series of conversations between high-level U.S. and PRC officials. The two presidents discussed a range of issues important to the bilateral relationship and other regional and global issues, and tasked their teams to continue following up on today’s conversation, in particular to address climate change and health security. On Taiwan, President Biden underscored that the United States policy has not changed and that the United States strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait.
On the evening of 28 July, President Xi Jinping spoke with US President Joe Biden on the phone at the request of the latter. The two Presidents had a candid communication and exchange on China-US relations and issues of interest.
President Xi pointed out that in the world today, the trends of turbulence and transformation are evolving, and deficits in development and security are looming large. Faced with a world of change and disorder, the international community and the people around the world expect China and the US to take the lead in upholding world peace and security and in promoting global development and prosperity. This is the responsibility of China and the US as two major countries.
President Xi underscored that to approach and define China-US relations in terms of strategic competition and view China as the primary rival and the most serious long-term challenge would be misperceiving China-US relations and misreading China’s development, and would mislead the people of the two countries and the international community. The two sides need to maintain communication at all levels and make good use of existing channels to promote bilateral cooperation. Recognizing the many challenges facing the global economy, President Xi underscored the need for China and the US to maintain communication on such important issues as coordinating macroeconomic policies, keeping global industrial and supply chains stable, and protecting global energy and food security. Attempts at decoupling or severing supply chains in defiance of underlying laws would not help boost the US economy. They would only make the world economy more vulnerable. The two sides need to work for deescalation of regional hotspots, help rid the world of COVID-19 as early as possible, reduce the risk of stagflation and recession, and uphold the international system centering on the UN and the international order underpinned by international law.
President Xi elaborated on China’s principled position on the Taiwan question. President Xi highlighted that the historical ins and outs of the Taiwan question are crystal clear, and so are the fact and status quo that both sides of the Taiwan Strait belong to one and the same China. The three Sino-US joint communiqués embody the political commitments made by the two sides, and the one-China principle is the political foundation for China-US relations. China firmly opposes separatist moves toward “Taiwan independence” and interference by external forces, and never allows any room for “Taiwan independence” forces in whatever form. The position of the Chinese government and people on the Taiwan question is consistent, and resolutely safeguarding China’s national sovereignty and territorial integrity is the firm will of the more than 1.4 billion Chinese people. The public opinion cannot be defied. Those who play with fire will perish by it. It is hoped that the US will be clear-eyed about this. The US should honor the one-China principle and implement the three joint communiqués both in word and in deed.
President Biden said that the world is at a critical moment. US-China cooperation benefits not only the two peoples but also people of all countries. The US hopes to keep an open line of communication with China to enhance mutual understanding and avoid misperception and miscalculation, and will work with China where the interests of the two countries align and, at the same time, properly manage differences. He reiterated that the one-China policy of the US has not changed and will not change, and that the US does not support “Taiwan independence”.
The two Presidents exchanged views on issues including the Ukraine crisis. President Xi reiterated China’s principled position.
Both Presidents viewed their call as candid and in-depth. They agreed to stay in touch and instructed the two teams to keep up communication and cooperation.
Chinese language readout - 习近平同美国总统拜登通电话_滚动新闻_中国政府网
Analysts said that according to the official information released about the Xi-Biden conversation, it is impressive that the Chinese leader is being very candid to directly criticize US policy on China, including its strategy that sees China as a "primary rival" and the US actions to push decoupling with China, and he also reaffirmed China's bottom line on Taiwan question. Xi warned Biden "those who play with fire will perish by it." Chinese experts said that the US politicians who intended to "play with fire" on the Taiwan question will sense great pressure after the conversation.
"The phone call shows China has always refused to define China-US relations as competitor as it will only lead to more tragedies. It is clear that the US view of China-US relations as competitor has led to evident misjudgments," a Beijing-based expert on foreign affairs told the Global Times on condition of anonymity...
Yang Xiyu, senior research fellow at the China Institute of International Studies, told the Global Times on Thursday that after the Xi-Biden telephone talk, attention should be focused on whether Pelosi would still go to the island of Taiwan.
"If Pelosi abandons her plan to visit Taiwan, then it would be a critical achievement of the talk between the two presidents, and this will set a stabilizer for China-US ties that releases a strong and positive signal to the world. But if she insists on going ahead with the plan, it would bring huge damage to China-US relations, and it will bring great uncertainty to the global political and economic situations," Yang said.
President Xi stated China’s principled position on the Taiwan question. He noted the new wave of tensions across the Taiwan Strait, and ascribed the tensions to the repeated attempts by the Taiwan authorities to look for US support for their independence agenda as well as the intention of some Americans to use Taiwan to contain China. Such moves are extremely dangerous, just like playing with fire. Whoever plays with fire will get burnt. The one-China principle and the three China-US Joint Communiqués are the political foundation of China-US relations. Previous US administrations have all made clear commitments on this question. The true status quo of the Taiwan question and what lies at the heart of one China are as follows: there is but one China in the world and Taiwan is part of China, and the Government of the People’s Republic of China is the sole legal government representing China. Achieving China’s complete reunification is an aspiration shared by all sons and daughters of the Chinese nation. We have patience and will strive for the prospect of peaceful reunification with utmost sincerity and efforts. That said, should the separatist forces for Taiwan independence provoke us, force our hands or even cross the red line, we will be compelled to take resolute measures.
Given Xi's comments about competition, thought it was worth again running this bit from a 10,000+ character exposition by Qu Qingshan 曲青山, head of the Institute of Party History and Literature of the CPC Central Committee, in the CCDI/NSC newspaper - "Understanding and Grasping the "Two Establishes" from the Future Dimension 从未来维度认识把握’两个确立’". Qu's piece is an excerpt from his recent book “从五个维度认识把握’两个确立’ Understanding and grasping ‘two establishes’ from five dimensions”.
Competition with the US is now deeply embedded in the PRC system, and a US President just saying "OK, we should stop the strategic competition" is unlikely to change that.
The great rejuvenation of the Chinese nation is destined to be an extraordinary journey that will change history and create the future. On the other hand, Western countries, led by the United States, do not want to see the emergence of a strong China, much less a strong socialist China. The United States regards China as a strategic competitor and has launched comprehensive containment and extreme pressure on China from all aspects, including science and technology, economy, politics, military and diplomacy, in an attempt to obstruct the historical process of the great rejuvenation of the Chinese nation, and China is facing a complicated international environment. The struggle between two social systems and two ideologies will also be long-term, complex, arduous and severe. The strategic contest between China and the United States is bound to last for a long period of time, for which we must be fully prepared ideologically and work.
3. Pelosi trip to Taiwan still unconfirmed
She leaves for Asia tomorrow, the PRC continues to issue threats, and two prominent DC thinkers wrote a New York Times OpEd saying she should not go to Taiwan at this time.
House Speaker Nancy Pelosi is set to leave for a trip to the Asia-Pacific region Friday, but it’s still unclear whether her stops will include Taiwan, according to a person familiar with the situation.
In Washington, some experts think a crisis with Beijing over Taiwan is inevitable and that the United States should not back down. And Chinese leaders reflexively characterize almost all U.S. actions in support of Taiwan as dangerously provocative, creating the perception that Beijing’s dire warnings about Ms. Pelosi’s trip are mere bluster that can be ignored.
But neither side needs a war. And from a U.S. strategic standpoint, this is a particularly bad issue to pick a fight with China over: Even Democratic leaders in the executive and legislative branches are divided over Ms. Pelosi’s trip.
Washington and Beijing must stop the escalation and clearly communicate their concerns and red lines. This is all the more difficult because China’s aggressive propaganda has desensitized Americans to Beijing’s messaging.
informal conversations with foreign officials and experts suggest that few are supportive of Pelosi’s visit and most would tend to blame the United States for precipitating a crisis. They see a pattern of recent US actions by a variety of leaders as undermining the cross-strait status quo. American leaders will rightfully argue that China should not escalate by creating a military crisis, but these arguments are likely to fall on deaf ears in most foreign capitals.
The People's Liberation Army (PLA) will not tolerate any "Taiwan independence" moves or interference from external forces, and will resolutely stop such attempts, Wu Qian, spokesperson for the Defense Ministry, said at Thursday's press briefing.
The root cause of a turbulent Taiwan Straits is the collusion between "Taiwan independence" forces and external interfering forces, Wu said, urging relevant parties to learn to adapt to the new reality (PLA operations near the Straits), to reflect on their own deeds and "most importantly, to pull back from the brink."...
China has warned the US six times in the past few days over Pelosi's plan via different departments and channels. China's Foreign Ministry on Monday used the phrase "yanzhen yidai" (We are fully prepared for any eventuality) which literally translates into "streamlining army formation to wait for the enemy," and the Defense Ministry said the PLA "will not sit idly by" should Pelosi visit Taiwan. Hu Xijin, a commentator for the Global Times, said that China's recent responses, including the two rare expressions, sent a message that Beijing is determined to frustrate Pelosi's plan to visit Taiwan island.
“In Taiwan, the focus is more on whether the U.S. can withstand the pressure,” said Jeremy Huai-Che Chiang, a Taipei-based analyst and former researcher at the Taiwan-Asia Exchange Foundation, a think tank. “Many experts in Taiwan are surprised by the overreaction to the Pelosi trip in the U.S. think tank community.”
The ministry said the drone twice "glanced by" the air space of Dongyin island [東引島], part of the Matsu archipelago off the coast of China's Fujian province and controlled by Taiwan since the end of the Chinese civil war in 1949.
The ministry added that it was "not ruling out" that the drone was probing the island's defences to see what reaction it generated.
The Dongyin command fired flares at the drone to warn it away, the ministry said, without identifying it further.
4. Xi visits a new exhibition at the military museum
Before he heads off on vacation Xi paid a visit to a new exhibition at the Military Museum of the Chinese People's Revolution. The name of the exhibition Xi visited is "领航强军向复兴——新时代国防和军队建设成就展 Leading the strong army to rejuvenation - the new era of national defense and military construction achievements exhibition". For what it is worth the word used for "leading" is 领航, which could also be translated as "navigating" or "piloting", like a helmsman does, and I guess I could have just translated it as “navigating”. At the opening ceremony earlier in the day General Zhang Youxia, second-ranked Vice Chairman of the Central Military Commission, made clear what the exhibition is about - “The purpose of holding the exhibition is to comprehensively reflect the extraordinary achievements made by Chairman Xi in leading the cause of a strong army in the new era, and to show the new style of the whole army loyally safeguarding the core and resolutely obeying the party's command”.
Between the politburo meeting (and maybe a study session that will be in the news tomorrow), this visit and the medal ceremony yesterday, it is possible Xi is heading out of sight a few days earlier than normal to Beidaihe, and whatever happens there?
Xi...made the remarks on Wednesday during a visit to the Military Museum of the Chinese People's Revolution.
Xi visited an exhibition featuring achievements made in strengthening China's national defense and armed forces in the new era.
Since the 18th National Congress of the CPC in 2012, the CPC Central Committee and the CMC have been leading the armed forces in enhancing their political loyalty, strengthening them through reform and technology and the training of competent personnel, running them in accordance with the law, and intensifying military training for better combat readiness, Xi said.
Xinhua from the opening of the exhibition earlier today - “领航强军向复兴——新时代国防和军队建设成就展”在京开幕-新华网
Zhang Youxia stressed that the purpose of holding the exhibition is to comprehensively reflect the extraordinary achievements made by Chairman Xi in leading the cause of a strong army in the new era, and to show the new style of the whole army loyally safeguarding the core and resolutely obeying the party's command. In combination with the exhibition, we should deepen the arming of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, highlight the study of Xi Jinping Thought on Strengthening the Military, profoundly understand the decisive significance of the "two establishments", anchor the centenary goal of the army, continuously push forward the cause of strengthening the military in the new era, and greet the victory of the 20th National Congress of the Party with practical actions
Some scenes from the CCTV report on the visit:
May 2020 Galwan clash with India has its own exhibit, and gets an appearance in the CCTv Evening News report:
5. Real estate bailouts may be starting
The FT reports that policymakers are trying to set up a bailout fund that will ultimately hit 1 Trillion RMB with leverage. But that is not big enough to revive the property market, and the readout from the Politburo meeting makes it sound more like the real estate policy goal remains to stabilize things as opposed to overly stimulate, so it is hard to get optimistic about property prices or real estate firms.
In a bid to end a property downturn that played a big role in bringing year-on-year growth down to just 0.4 per cent in the second quarter, the People’s Bank of China will initially issue about Rmb200bn of low-interest loans, charging about 1.75 per cent a year, to state commercial banks, according to people involved in the discussions.
Under the plan, recently approved by China’s State Council, or cabinet, the banks will use the PBoC loans along with their own funds, lent at market rates, to refinance stalled real estate projects.
The government hopes the banks will be able to leverage its initial fund by up to five times to raise a total of about Rmb1tn and partially fill the funding gap needed to complete unfinished projects, the people said. But bank executives and analysts have warned that the PBoC may struggle to raise its targeted amount given the difficulties banks will face in making a return on distressed real estate projects...
“Many unfinished projects have zero or negative value after taking into account their existing debts,” said an executive at a state lender that has been asked by the PBoC to join the bailout fund.
“We are not going to touch such projects even if it is politically correct to do so,” added the banker
Comment: Governments may need to buy some of the unfinished projects outright and turn them into rental housing, but if they do then the stimulus effect from building more rental housing will be diluted
Western predictions of a crash in Chinese property dragging down the financial system remain wide of the mark. The outlook is instead for slow, attritional correction. The authorities will keep some parts of the industry on life support and let others expire.
At a televised meeting on July 25, China’s banking regulator said it would “support” local governments in ensuring that delayed property projects can be completed, though it did not elaborate further. On banking, it said it will support the issuance of local government debt in bolstering capital at smaller banks, as part of a broader plan to mitigate bad loans at such banks. The watchdog also said it would “severely punish” corruption behind regulatory loopholes at small banks.
A government-backed bailout fund for developers, if realized, could help some home buyers get what they paid for, but it likely wouldn’t be enough to rescue the sector more broadly, said Li Yujia, chief researcher with the Policy Researcher Center under the Guangdong Urban and Rural Planning and Design Institute, a policy advisory body linked to the local government.
“The so-called bailout will only focus on protecting home buyers and ensuring social stability,” Mr. Li said. Developers would likely be an afterthought, he added—meaning that the broader pain for a property sector that by some measures accounts for up to one-third of the Chinese economy could face a rocky road ahead.
6. Ant IPO at least a year off
That is the takeaway from the moves it looks like Ant is making to restructure itself into a financial holding company. And a year may be generous, I assume there will not be an IPO until 2024.
Billionaire Jack Ma plans to relinquish control of Ant Group Co., people familiar with the matter said, part of the fintech giant’s effort to move away from affiliate Alibaba Group Holding Ltd...
He has controlled Ant since he carved its precursor assets out of Alibaba more than a decade ago...
Diminishing his ownership could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control...
Ant told regulators of Mr. Ma’s intention to cede control as the company prepared to convert into a financial holding company, the people familiar with the matter said. Regulators didn’t demand the change but have given their blessing, the people said
Ant established a new committee under its board to oversee risk management and consumer protection, the company said in a semi-annual report released Wednesday. The creation of the panel is a key step to enhance corporate governance and strengthen the functioning of the board, Ant said...
The move is seen as another step forward as Ant ramps up efforts to apply for a financial holding company license. In April 2021 Ant said it would restructure as a financial holding company overseen by the central bank
7. Semiconductor corruption
Just days after his deputy was put under investigation, Ding Wenwu, president of China Integrated Circuit Industry Investment Fund, is now under investigation. There is so much cash going into this sector, it must be too tempting and too easy to skim some off.
Ding Wenwu, president of China Integrated Circuit Industry Investment Fund, has been probed by authorities and remained out of contact, several people with knowledge of the matter told Caixin. The fund, known as the “Big Fund,” is a key part of China’s drive to develop its homegrown integrated circuit industry to reduce reliance on imported technology...
The fund has been rattled by graft scandals over the past year. Earlier in July, Lu Jun, former president of Sino IC Capital Co. Ltd., the sole manager of the Big Fund, was probed for corruption by the nation’s top anti-graft watchdog.
In November, Gao Songtao, who served as vice president of Sino IC Capital from October 2014 to November 2019, was placed under investigation for “serious violations of laws,” a standard euphemism for corruption.
8. June political discourse
China Media Project’s monthly report on political discourse trends, outside the paywall.
A shockingly violent attack on several women dining at a barbecue restaurant in Tangshan, a prefectural-level city in northeast Hebei province, became one of the key focal points in public opinion in China in June 2022. Owing to the graphic nature of video footage of the attack shared across social media, and poor official handling of the case, the incident gripped the public for several days on end.
On the domestic political front, there was a clear downturn in the number of reports in the Chinese Communist Party’s official People’s Daily newspaper mentioning the country’s premier, Li Keqiang (李克强) – this following premature speculation in international media in late May that Xi Jinping might be receiving less prominent coverage in the flagship newspaper. Contrary to such guesswork, by the second week of June, there seemed to be a clear rise in prominent acts of “loyalty signaling,” or biaotai (表态), by senior CCP officials, paving the way for the further elevation of Xi and his banner term, “Xi Jinping Thought,” ahead of the 20th National Congress of the CCP later this year.
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Business, Economy and Trade
US Audit Watchdog Says ‘Time Is of the Essence’ in China Talks - Bloomberg Public Company Accounting Oversight Board Chair Erica Williams said Thursday that her agency is working to reach an agreement with Chinese authorities. However, she added any accord would just be a first step toward ensuring that PCAOB inspectors can thoroughly review the audit work papers of businesses based in China and Hong Kong. “Access to the US capital markets is a privilege, not a right,” Williams said during a virtual event hosted by the Council of Institutional Investors. “The PCAOB will follow US law, and the law is clear that we must have complete access to audit work papers of any firm we choose to inspect or investigate -– no loopholes and no exceptions.” // Comment: US is playing hardball, not sure the PRC side is used to this from US government negotiators.
杭州市场监管局就低价恶性竞争等问题约谈美团、饿了么平台 The marketing watchdog in Hangzhou summoned Eleme and Meituan over practices related to “vicious competition” and problematic appraisal of certain businesses that use their platforms.
Miners Unfazed by China’s Plan to Control Iron-Ore Imports - WSJ $$ In the early 2000s, China tried to present a united front against the mining companies that dominate the global iron-ore trade, negotiating long-term nationwide supply contracts. But this system was eventually abandoned as many steelmakers, especially midsize ones, secretly bought iron ore when spot market prices fell—sometimes selling it when prices rose.
Rio Tinto signs rail, port JV with China-backed consortium for Guinea's Simandou | Reuters The joint venture (JV) for the Simandou railway and port is a milestone for Rio and WCS, whose shareholders include a unit of China Hongqiao, but the firms said they must still negotiate final JV agreements, without giving a timeline.
Evergrande Creditors Demand Further Explanation for Billions in Seized Cash - WSJ “From the disclosure, one can see the poor corporate governance of Evergrande in the past, and the type of off-balance sheet debt arrangement it made, which negatively impacts bondholders’ overall recovery,” said Michel Lowy, co-founder and CEO at SC Lowy, a Hong Kong-based high-yield and distressed-debt manager.
China Banks Rush to Raise Record Debt as Credit Losses Mount - Bloomberg A record amount of fresh money has come from financial markets, with banks selling 29% more bonds in the first half of the year compared to last year to replenish capital and cover credit losses. Local authorities also provided funds from government bond sales to help cash-strapped regional lenders.
Yicai - Shady Dealings That May Be Behind Downfall of China Everbright’s Ex-CEO As the former chief executive of China Everbright is hauled off for questioning by the country’s anti-graft watchdog, Yicai Global has learned from a source close to the Chinese financial services firm that the probe might have to do with his role in a company acquisition that caused a huge loss to Everbright, as well as a dodgy private equity business he set up after leaving the firm. Chen Shuang is being investigated for suspected violations of the law, the Central Commission for Discipline Inspection said on July 26...Another subject of the investigation might be Chen’s role in a private equity firm APlus Partners that he set up after leaving Everbright, the source said...It has previously been reported by the media that Major venture capital firms Sequoia Capital China and IDG Capital are shareholders of APlus Partners
China Developer Shimao Sued by UOB Over Loan Terms - Bloomberg UOB alleged that Shimao and the group entities breached terms of certain loan and security agreements, by purportedly re-allocating loans and allotting shares between the entities without the Singapore bank’s consent, according to a writ in the High Court of Hong Kong dated July 12.
Stellantis's Jeep Pulls Out of China Over Government Meddling in Business - Bloomberg Stellantis NV shuttered its only Jeep factory in China because local politicians are increasingly meddling in the world’s biggest car market, Chief Executive Officer Carlos Tavares said Thursday. The carmaker is implementing an “asset-light” strategy in the country out of concern that rising political tensions between China and the rest of the world could lead to economic sanctions, the CEO said in an interview with Bloomberg Television.
China’s ‘Fragrance Queen’ Released on Bail While Police Investigation Continues A wealthy business woman under police detention since the beginning of this year has been released on bail, as authorities transferred police surveillance on her from one jurisdiction to another, according to a company filing. Zhu Linyao, known as China’s “fragrance queen” and founder of the largest flavor-maker, Huabao International Holdings Ltd., is currently under “residential surveillance at a designated residence” by the police in Anyuan county, Jiangxi province, according to the Tuesday statement.
Tiger Global-backed Missfresh stops paying salaries as it runs out of cash | Financial Times $$ Missfresh, a Chinese grocery delivery start-up once valued at $3bn, told hundreds of employees that it had run out of cash, as a group of unpaid suppliers protested at its Beijing offices. An executive at the Tiger Global-backed company told employees on a hastily arranged call that an expected investment from a coal mining group had not materialised, and that it could not pay overdue June salaries.
Politics and Law
Xi stresses efforts to write new chapter in building modern socialist country in all respects-Xinhua Official translation of the readout from the opening session of the provincial and ministerial officials study workshop
China's minister of industry, information technology under probe-Xinhua Xiao Yaqing, China's minister of industry and information technology, has been put under investigation for suspected violations of Party discipline and laws, an official statement said Thursday.
Former Chinese justice minister admits taking millions in bribes-court | Reuters "The bribery part of the trial was open to the public; the part of the trial on favoritism and bending the law was closed in accordance with the law because it involved state secrets," the court said.
新京报 - 傅政华，受审 Fu was a very bad man for a very long time, based on the charges in court. So who kept promoting him? Sentence will be announced at later date. Says he took 117m in bribes, protected his criminal brother:
Foreign and Defense Affairs
Xi says Marxism shows new vitality in 21st century-Xinhua Xi said the CPC is ready to strengthen exchanges and dialogue with Marxist political parties in other countries, keep in mind their own national conditions and the trend of the times, and continue to enrich and develop Marxism, so that Marxism will display greater power of truth in the process of jointly building a community with a shared future for mankind....The forum is hosted by the International Department of the CPC Central Committee. More than 300 representatives from over 100 Marxist, left-wing political parties and political organizations in more than 70 countries attended the forum virtually. General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong, first secretary of the Communist Party of Cuba Central Committee and Cuban President Miguel Diaz-Canel, and Gennady Zyuganov, chairman of the Central Committee of the Communist Party of the Russian Federation, congratulated on the forum // 习近平向中国共产党与世界马克思主义政党论坛致贺信--时政--人民网
Chinese kingpin of transnational call centre gang arrested at Bangkok airport | Thaiger Dawei was arrested by Thai police upon his arrival in Bangkok on Saturday and was interrogated at Suvarnabhumi Airport Detention Centre. Dawei confessed to bringing Chinese people into Laos and Cambodia to work in call centre gangs. Chinese authorities informed Thai police that Dawei’s passport had already been revoked and requested that he be deported back to China to be prosecuted. Thai police put Dawei on China Southern Airlines flight CZ 3082 to Guangzhou at 5pm yesterday, July 25. The Chinese authorities paid for his deportation. // Comment: Guess the Thai extradition procedures for the PRC are efficient
中俄人文合作委员会媒体合作分委会第十五次会议在线召开 - 《 人民日报 》（ 2022年07月28日 第 03 版） high-level meeting of the Sino-Russian media cooperation sub-committee met virtually, PRC side headed by Le Yucheng, a Russia expert recently demoted from vice minister to be a deputy head of China's National Radio and Television Administration.
The meeting reviewed, summarized and spoke highly of the cooperation between the two sides since last year, and held that under the complicated and severe international situation, the media of the two countries have overcome difficulties, strengthened cooperation and achieved positive results, supported each other in news reports, content creation and large-scale events, resolutely safeguarded the common interests of the two countries, and effectively served the overall development of Sino-Russian relations.
MW Weekly: Uyghur Jihadists Active in Syria and Afghanistan; Tajikistan Repatriates Islamic State Families; Myanmar Government's First Executions since 1988 Turkistan Islamic Party Militants Remain Active in Syria and Afghanistan The United Nations Security Council (UNSC) released a new report on July 15 that includes notable updates, based on member state claims, about the Turkistan Islamic Party’s (TIP) branches’ respective operations in Afghanistan and Syria. One UN member state reports that the leadership of the Turkistan Islamic Party is active in Afghanistan’s Baghlan Province, where it “has re-established its main base”. The UNSC says the TIP “reportedly rebuilt several strongholds in Badakhshan, expanded its area of operations and covertly purchased weapons, with the aim of improving its capabilities for terrorist activities.” The report adds that the group has strengthened its ties with the Pakistani Taliban and the Tajik Jamaat Ansarullah organization.
Foreign Ministry Spokesperson Zhao Lijian’s Regular Press Conference on July 28, 2022 China Daily: According to reports, nearly 1,000 Chinese and foreign NGOs sent a co-signed letter to UN High Commissioner for Human Rights Michelle Bachelet and voiced their opposition to the release of an assessment on Xinjiang. What is China’s comment? Zhao Lijian: Recently nearly 1,000 Chinese and foreign NGOs and social organizations of various sectors in Xinjiang sent a co-signed letter to UN High Commissioner for Human Rights Michelle Bachelet. They wrote that during her visit in China, Ms. Bachelet had an extensive exchange with people across all sectors in Xinjiang. She saw with her own eyes the facts and truth that people from all ethnic background in Xinjiang enjoy human rights under the law. They expect that Ms. Bachelet can share her experience in China, including Xinjiang, with the international community in an objective and fair way, and strongly oppose the release of an “unauthorized and untruthful” assessment of Xinjiang.
Recently, Police Commissioner Third Class Zhang Guangbao, who is leader of the China Police Liaison Team to the Solomon Islands, shared many details of the training and the hard work that went into the demonstration by Chinese and Solomon Islands' police, during an exclusive interview with the Global Times.
"The police cooperation between China and the Solomon Islands is not a threat to regional security and stability, but has effectively promoted these elements," Zhang said, noting that as for some countries "feeling threatened," it is because they "do not want to see China's influence in the South Pacific region."
"I feel safer," the Solomon Islands' Prime Minister Manasseh Sogavare said after watching the demonstration, which was also attended by Chinese Ambassador to the Solomon Islands Li Ming.
Chinese ships' activities in waters off Diaoyu Islands legitimate and lawful: Defense Spokesperson - China Military The spokesperson made such response when being asked to comment on the reports saying that Chinese naval vessels recently sailed into the adjacent sea area of the Diaoyu Islands, and the Japanese Defense Minister said that China's move was a unilateral act of aggravating tensions, the Japanese side was seriously worried and concerned about this, and the Japanese Defense Ministry would maintain regular vigilance and surveillance. Also, according to another report, the Japan Coast Guard and Maritime Self-Defense Force recently conducted joint training in the waters east of Izu-Oshima, Tokyo, to deal with the "grey-zone situation" of Chinese warships' approaching the Diaoyu Islands.
陆克文在《环球时报》撰文：管控战略竞争，维护中美关系和平稳定 Global Times runs piece from Kevin Rudd
Hong Kong and Macao
Hong Kong government slams ‘inaccurate’ report on city’s Covid-19 risk-exposure app by overseas cybersecurity firm | South China Morning Post “Protection of personal privacy has always been the prime objective in the app’s design, development and use. No registration is required and all data related to personal privacy stored in the app is masked and encrypted,” the government body said. The statement followed the release of a report on Wednesday by Poland-based 7Asecurity which claimed to have uncovered at least 12 vulnerabilities in the risk-exposure app that could lead to phishing attacks or data leaks.
Family fear as Hong Kong protester jailed in China goes silent - Hong Kong Free Press HKFP The family of a Hong Kong protester jailed in mainland China after a failed attempt to flee to Taiwan have not heard from him in nearly half a year and are worried about his health, his brother told AFP. Tang Kai-yin, 31, was among a group of 12 Hong Kong activists caught by the Chinese coast guard in August 2020 as they fled by speedboat to avoid prosecutions related to 2019’s huge, sometimes violent pro-democracy protests.
Z-10 attack helicopter enters service with PLA Hong Kong Garrison - Global Times Official reports show that Z-10 attack helicopters for the first time participated in a recent patrol exercise organized by the Chinese People's Liberation Army (PLA) Hong Kong Garrison, indicating that the garrison has commissioned this type of helicopter to provide escort and air support to other helicopters, vessels and ground troops in joint operations, experts said on Thursday.
Top gaming hub Macau invites casino license bids from July 29 | Reuters Macau's government said on Thursday global gaming operators can submit bids for new licenses from July 29 until Sept. 14, kicking off a highly anticipated process to secure a spot in the world's biggest casino hub.
Tech and Media
Authorities investigate sudden death of 22-year-old woman after days of overworking - Global Times The young woman referred to as Huihui had reportedly worked for four or five days in a row at an internet company in Hangzhou until 4 or 5 am before she collapsed, media reported. A notice released by the resources and social security bureau of Hagnzhou's Binjiang district on Thursday confirmed the woman had worked at a company called Hangzhou Muke Cultural Media Company.
China’s Evolving Data Governance Regime | U.S.- CHINA | ECONOMIC and SECURITY REVIEW COMMISSION The document below includes an overview of China’s evolving data governance regime, which began developing in 2015 with the draft of China’s Cybersecurity Law. In 2022, Chinese regulators are implementing and enforcing more data-related laws and regulations, which stand to have a significant effect on organizations handling any data within China’s borders. As these measures create more barriers for cross-border data flows, China’s approach runs counter to longstanding U.S. policies that support free flows of information and an open digital ecosystem.
Society, Arts, Sports, Culture and History
江苏滨海县开展寻找身边的“躺平者”活动：首批7人_凤凰网 Binhai County in Jiangsu has launched a campaign to find people "lying flat" in their midst, and the first batch of 7 was already given a joint admonishment discussion
Energy, Environment, Science and Health
Schools Tell Children: Ask Your Grandparents to Get COVID Shots A screenshot of an announcement by Xuelang Middle School in the eastern city of Wuxi showed all junior school freshmen should offer vaccination certificates of their grandparents aged 60 or above — unless there were “special circumstances” — before they started school. The announcement was published Monday, though the school told domestic media the following day that such a requirement had been canceled. Earlier this month, the Third Central Primary School in Shanghai’s Hongkou District also launched a campaign urging its students to get their grandparents vaccinated during the summer holiday, or make a promotional poster or video if their older family members were unable to get the shot. The participation would qualify students for being selected for certain honors in the fall semester, according to a notice released by the public school.
China's new quantum satellite now operational-Xinhua A Chinese micro-nano quantum satellite has entered its planned orbit and is now operational, the University of Science and Technology of China (USTC), one of its developers, said on Thursday. The low-orbit satellite was designed to conduct real-time quantum key distribution experiments between the satellite and ground station, and to carry out technical verification. It was launched atop a Lijian-1 carrier rocket from the Jiuquan Satellite Launch Center in northwest China on Wednesday. The new micro-nano satellite's weight is about one-sixth the weight of the world's first quantum satellite, the Chinese satellite Micius, which weighs more than 600 kilograms, according to the USTC
Rural and Agricultural Issues
Hog Cannibalism Clip Spotlights Grim Plight of China’s Pork Producers - Caixin A 23-second clip of hungry pigs overwhelming and biting one of their kin at a farm run by a leading Chinese pork producer was all it took to spark a stock sell-off — and put a spotlight on the operator’s precarious financial position. The grim video, titled “Pigs Eating Pigs,” bore a caption saying Jiangxi Zhengbang Technology Co. Ltd. hadn’t fed the hogs for eight days. Posted on the Douyin short-video platform at the weekend by a person claiming to work for the firm, the clip was no longer accessible on Thursday but had already been widely reposted and shared. Agricultural experts told Caixin that cannibalism is not rare in industrialized farming where animals are tightly packed together
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