Xi Reviews The Troops In The South China Sea; Bytedance And Its Offline "Duanzi User Clubs 段友会"; No Ongoing Tariff Negotiations Between US And China?; Capital Controls Easing; Sun Zhengcai Trial
|Apr 12, 2018|
Xi Jinping went from the Boao Forum For Asia and his message of inclusion and openness to board a destroyer in the South China Sea and oversee the largest review of the PLA Navy in the history of the PRC. The message could not be more clear to the US and other Asian nations.
Is resistance futile?
Thanks for reading.
The Essential Eight
1. Xi Reviews The Troops In The South China Sea
President Xi Jinping reviewed the Chinese People's Liberation Army Navy in the South China Sea Thursday morning, saying that the need to build a strong navy "has never been more urgent than today."
The navy review is the largest of its kind in China since 1949.
Xi, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, called for efforts to build a first-class navy in the world.
It was the top story on the Thursday CCTV Evening News, as a 22:35 long report - 习近平在出席南海海域海上阅兵时强调 深入贯彻新时代党的强军思想 把人民海军全面建成世界一流海军
Forty-eight warships, 76 aircraft and more than 10,000 sailors and soldiers took part in the parade which was hailed as "the biggest maritime military parade since the foundation of the new China and a heroic display of the PLA Navy in the new era," the PLA Daily reported on Thursday.
It was the first maritime military parade held in the South China Sea and to be open to the public. The PLA's previous four maritime parades were held in Beihai. China's aircraft carrier joined the parade for the first time.
All combat systems of the PLA Navy and 10 air echelons joined the parade. The most advanced weaponry, including the Liaoning, type 052D destroyers, type 052C destroyers, type 071 amphibious transport dock and type 093 submarine all appeared on South China Sea," Song Zhongping, a military expert and TV commentator, told the Global Times.
Beijing-based naval expert Li Jie said China was sending a message to the United States that its armed forces were ready to deal with any security challenges.
“Hainan is the starting point for China’s ‘Belt and Road Initiative’, while the South China Sea has the most important strategic sea waters for China to project its maritime presence and influence,” he said.
“Beijing wants to tell Washington that the Chinese navy is capable of defending the waters relating to its core national interests.”
Onboard the destroyer Changsha, President Xi reviewed the service personnel of PLA Navy and made an important speech.
The navy must comprehensively implement the fundamental principle and system of the Party's absolute leadership, Xi stressed.
He called for efforts to deepen reform and advance technology innovation.
The PLA Navy should work to develop the new type of combat forces, build up modern maritime combat system and strengthen the capability of fulfilling diversified military missions, he added.
Xi also watched the training of J-15 fighter jets, which took off from the Liaoning aircraft carrier.
China on Thursday said it will hold live-fire military exercises in the Taiwan Strait amid heightened tensions over increased American support for Taiwan's government.
The announcement by the maritime safety authority in the coastal province of Fujian coincided with remarks by President Xi Jinping on the importance of naval power while attending a massive fleet review in the South China Sea off the coast of Hainan province.
2. More On Smackdown Of Bytedance And Its Offline "Duanzi User Clubs 段友会"
The always excellent China Media Project has translated CEO Zhang Yiming's (张一鸣) letter of apology. The ritual, abject groveling reads like something out of an earlier Era...
The main target of this round of punishment of Bytedance was its joke app Neihan Duanzi 内涵段子. In addition to the lack of adherence to "Core Socialist Values" was another, potentially bigger problem in the eyes of The Party the network of groups "段友会" of users of "neihan duanzi" that had sprung up all over the country and could and did hold offline meetings? The Party fears nothing more than cross-geography, cross-social-strata organizing capabilities outside of Party control and direction.
There are videos circulating online purportedly showing protests by Duanzi Club users. So far there is no confirmation that they are real.
Here are some highlights from the translated letter--Tech Shame in the “New Era” | China Media Project:
I am responsible because I failed to live up to the guidance and expectations supervisory organs have demanded all along. Over the past few years, the regulatory authorities have provided us with much guidance and assistance, but in our hearts we failed to properly understand and recognise [their demands]. Nor did we properly rectify the situation, which led to the present failure to be responsible to our users...
As a start-up company developing rapidly in the wake of the 18th National Congress of the Chinese Communist Party, we profoundly understand that our rapid development was an opportunity afforded us by this great era. I thank this era. I thank the historic opportunity of economic reform and opening; and I thank the support the government has given for the development of the technology industry....
I profoundly reflect on the fact that a deep-level cause of the recent problems in my company is: a weak [understanding and implementation of] the “four consciousnesses” [of Xi Jinping]; deficiencies in education on the socialist core values; and deviation from public opinion guidance. All along, we have placed excessive emphasis on the role of technology, and we have not acknowledged that technology must be led by the socialist core value system, broadcasting positive energy, suiting the demands of the era, and respecting common convention....
1.1 Strengthening the work of Party construction, carrying out education among our entire staff on the “four consciousnesses,” socialist core values, [correct] guidance of public opinion, and laws and regulations, truly acting on the company’s social responsibility...
1.3 Further deepening cooperation with authoritative [official Party] media, elevating distribution of authoritative media content, ensuring that authoritative [official Party] media voices are broadcast to strength.
Authoritative media also does not like Bytedance because it has taken users and advertising revenue from them. Perhaps Bytedance should just offer to tithe some of its revenue to Party coffers?
Investors will likely see this latest smackdown as a positive, as Zhang now understands the costs of straying from the Party line and so will ensure he over-complies in the future, effectively reducing regulatory risk for the company. I am not sure I believe that to be the case but expect it to be spun that way...
Ultimately, Chinese companies are accountable more to the government than to their shareholders, said a political consultant who advises Chinese companies on government relations. The recent crackdown doesn’t mean that the government wants to get rid of all the media and content platforms. Rather, “the companies are expected to make adjustments and figure out ways to be more useful to the government,” the consultant said.
But delivering content that is “useful to the government” could undermine the original appeal of Toutiao and other media apps. With clickbait articles and eye-catching videos, Bytedance and its competitors have attracted audiences who were bored by the politically correct offerings from China’s state-owned TV and media giants. If the apps are forced to step up their censorship game, they could face the prospect of alienating their audiences.
A Baidu search for the Duanzi user clubs yields a lot of results--段友会_百度搜索
The crackdown of course goes beyond Bytedance-Social Media Sites Dump Content Violating ‘Socialist Values’ - Caixin Global:
China’s Twitter-like Weibo, the popular messaging apps QQ and WeChat, as well as video sites such as Weishi, Kuaishou, Douyin and Xigua Video have all said they will either remove inappropriate content or bar video playbacks on their platforms.
In a statement on Weibo’s official account page, the social media platform said it has put two users on a watch list for posts that “went beyond moral boundaries, violated mainstream social values and polluted the internet’s development.”
Weishi, a video platform under internet goliath Tencent Holdings Ltd., said it will “actively answer the call of the regulator” by policing its own content.
Facebook Inc.’s Mark Zuckerberg was prepared to cite competition with China if asked whether the social-media giant should be broken up, according to a photograph of internal notes the chief executive officer took to a congressional hearing on Tuesday.
3. No Ongoing Tariff Negotiations Between US And China?
If I am Xi I just continue to stay cool, claim China is taking the high road while signaling there will be retaliation, all the while using time and propaganda work to let the interest groups in the US fight it out to weaken or kill Trump's tariff threats.
It would be misleading to say Xi's pledge this week was a concession to the United States, commerce ministry spokesman Gao Feng said at a regular press briefing in Beijing.
Xi was merely outlining China's strategy to open up further, which had nothing to do with its trade friction with the United States, Gao said...
China and the U.S. have not held any negotiations on their bilateral trade frictions, Gao said, adding that it is not a matter of whether Beijing is willing to negotiate with Washington. It's about the United States not showing sincerity, he said.
The Chinese report on Gao's comment-商务部：到目前为止中美经贸摩擦没有任何层级的谈判_中证网:
The business coalition opposing White House plans to levy tariffs against Chinese goods has doubled to 107 trade groups, ranging from such Washington, D.C. heavyweights as the National Retail Federation and the Security Industry Association to such smaller local groups as the San Diego Customs Brokers Association.
If the threatened tariffs are implemented over the course of the next several months, it would have "a very grave impact upon operations at the ports of L.A. and Long Beach," O'Connell said.
Observers say a decline in trade between the world's two largest economies would impact those workers and businesses in the supply chains that service the Southern California ports.
There are more than 14,000 dockworkers at Los Angeles/Long Beach port complex and thousands of other workers in trade operations and commerce as well as truckers involved in the movement of goods in and out of the ports. Experts say there could be layoffs in some of those operations if trade begins to slow.
"Being tough is one thing, but being tough with a strategic sense of how to move ahead is quite another," said Robert Hormats, former undersecretary of state under the Obama administration, in an interview with Xinhua on Trump's tariff sanction plans against China...
"Tough positions without a strategic process of working out differences and coming to some conclusions that are mutually beneficial, is really not a sufficient strategy for moving forward," said Hormats, now Vice Chairman of the New York-based consulting firm Kissinger Associates. "And that's really what seems to be either missing or if it's there, it's very unclear what it is."
4. Capital Controls Easing To Relieve Pressure On The RMB?
QDLP, which started as a trial in Shanghai in 2013, is one of several programs set up by the government that allow domestic investors to invest overseas. Foreign fund managers who were awarded QDLP quotas, usually for $50 million or $100 million, were able to raise money to invest in so-called alternative assets such as private equity funds, hedge funds and real estate investment trusts.
But authorities suspended the distribution of quotas not only for QDLP but for other outbound investment programs in late 2015 as part of a broader strategy to slow the flood of money leaving the country after the stock market plunge and currency volatility earlier in the year raised concerns that capital outflows were depleting the country’s foreign-exchange reserves.
SAFE resumed QDLP quota issuance in late 2017 and by the end of February 2018 had given out the entire $2 billion allowance.
Xie Yaxuan, chief economist at China Merchants Securities, said the resumption of QDII quota approval will encourage capital flows between China and overseas markets. It also indicated that China’s foreign exchange policy has returned to normal as capital flows stabilized after tightening controls to rein in capital flight since 2015, said Xie.
The QDII program was created in 2006 allowing financial institutions that meet certain qualifications to invest in overseas securities and bonds. It was the only avenue for domestic investors to legally gain access to offshore markets under the country's capital controls, until 2014 when the Shanghai-Hong Kong stock connect program was launched.
Data from SAFE show that a total of $90 billion in QDII quotas was granted to 132 qualified institutions from 2006 through March 2015. Since then, no new quotas have been handed out, part of regulators' efforts to stem rising capital outflows.
5. Beijing Rolls Out Points System For Hukou
The thresholds are high, few non-Beijingers will qualify, and that is the intention.
Under the new hukou rules, workers from outside of the capital must first meet four basic requirements regarding their age, criminal record and contribution to the local social security fund.
For instance, they must be under China’s legal retirement age, set at 50 for most female workers and 60 for the majority of men.
A person is required to have made contributions to the government-run social security fund for at least seven years in a row to be eligible.
Those who have met the basic requirements can then add up their score across nine criteria, including their age, education level and home-ownership status to see if they meet the as-yet-unannounced minimum points threshold, according to city government.
More From The Beijing News-新京报-北京首批积分落户申报下周一启动
6. Sun Zhengcai Goes On Trial
The publicized charges at the trial were about bribery. Of course the real figure is likely much greater than 170m RMB, but that should be enough to get him a life sentence. There was no public mention at his trial of any of political issues that came up earlier this year in Party briefings about his case (see 吉林省委：孙政才“十个必须”条条触犯“七个有之”样样皆占_政经频道_财新网)
Sentencing is scheduled for a later date.
Will Sun and Bo Xilai get to chat at Qincheng Prison?
Between 2002 and 2017, Sun took advantage of his posts to provide help for certain units and individuals in project procurement, enterprise operation and adjustment of official positions, and accepted money and property worth 170 million yuan (27.1 million US dollars), either by himself or through "certain affiliated persons," according to an indictment by the first branch of the Tianjin People's Procuratorate.
During that period, Sun served as CPC chief of Shunyi District in Beijing, Standing Committee member and secretary general of the CPC Beijing Municipal Committee, agriculture minister, secretary of the CPC Jilin Provincial Committee, Political Bureau member of the CPC Central Committee and Party chief of Chongqing Municipality.
In his final statement, Sun said he deserved his punishment and he had no objections to the charges.
He admitted his guilt, repented for his wrongdoing and said he would sincerely submit to the court's judgement, according to the court's statement.
In the two weeks preceding Thursday’s trial, Chongqing’s official party newspaper ran a stream of reports and commentaries condemning Messrs. Bo and Sun’s “twisted” methods of governance.
“Sun Zhengcai positioned himself as ‘the youngest political figure in China’ and let his personal views override the party center’s wishes,” the city government said in a March 29 commentary in the Chongqing Daily. “Sun Zhengcai and Bo Xilai both used the Chongqing project as a personal tool for seeking promotion and rising through nobility.”
7. RIP Loise Wheeler Snow
Lois Wheeler Snow, a former actress and writer whose criticism of human rights abuses in China was amplified by the legacy of her husband, the American journalist Edgar Snow, the author of the landmark book “Red Star Over China,” died on April 3 at a hospital in Nyon, Switzerland. She was 97...
“I was a very privileged person and was driven around in Red Flag limousines with lace curtains,” Ms. Snow said in an interview with Time Asia in 2000. “I was able to meet a lot of people just because I was Mrs. Edgar Snow.”
But what began as a warm and vibrant friendship with Chinese officials soured following the government’s violent suppression of Tiananmen Square protesters in 1989, which left hundreds of civilians dead. Afterward, Ms. Snow began to see the Communist Party — the party that she and her husband had so ardently supported over the years — in a different light.
8. Now That China Has Cutting Edge IP It Wants To Protect It
The new “Work Rules on Outbound Transfer of Intellectual Property Rights (Trial),” translated in full by DigiChina below, were dated March 18—four days before the U.S. government released its Section 301 report on Chinese intellectual property and investment practices, and at a time when the U.S. and Chinese governments were engaged in an intense and public exchange on trade and investment rules, with a special focus on high-tech sectors. The rules were released on March 29...
The three sectors specifically identified in these rules can be seen as signalling the direction for future review processes. Each is an area of intense focus and large investment by the Chinese government, and Chinese firms in all three areas are beginning to make real strides in innovation.
Comment: The three sectors are Integrated circuits (IC)., Software and New Plant Varieties
Business, Economy, Finance And Trade
Ministry of Finance Says China's Tax Burden Will Fall by over 1tn Yuan in 2018 - China Banking News China’s Ministry of Finance expects the country’s tax and government fee burden to be reduced by in excess of 1 trillion yuan (approx. USD$160 billion) in 2018.Speaking at the 2018 Boao Forum for Asia on 11 April, vice-minister Cheng Lihua (程丽华) said that starting from 1 May China would continue to deepen value-added tax reforms
China's New Crackdown on Regional Debt May Curb Bond Sales - Bloomberg The finance ministry said last month that LGFVs mustn’t disclose fiscal and borrowing figures of local governments, which would imply support from the authorities, in bond sale documents including prospectuses. The National Association of Financial Market Institutional Investors, a Chinese local bond regulator, has also given underwriters such guidance, according to people familiar with the matter. “The intention is to untangle any association between government financial capacity to support and LGFVs’ debt repayment in the bond documents,” said Christopher Lee, managing director of corporate ratings at S&P Global Ratings in Hong Kong. He said that the reduced transparency may make foreign investors more cautious, and “the offshore LGFV bond sales may stagnate for a while.”..
China-focused salmon-smuggling ‘syndicate’ spawns raids - FT $$ Among the operations uncovered was “a smuggling crime syndicate” — led by a person identified only as Dong — which had illegally imported salmon worth up to Rmb620m ($98.4m) from Norway, according to the official report. Official sources in Oslo told the Financial Times that Dong Yimin, a Norwegian citizen and a significant figure in the salmon trade, had been detained in China. The Norwegian foreign ministry would not comment on reports that Ms Dong had been detained in connection with a crackdown on salmon smuggling.
HNA Unit Buys E-Commerce Site Dangdang for USD1.2 Billion Amid Group’s Mass Selloff | Yicai Global Tianjin Tianhai Investment Co., a unit under cash-strapped conglomerate HNA Group Co., plans to issue new shares to fully acquire the firms behind e-commerce platforms Dangdang Kewen and Beijing Dangdang for CNY7.5 billion (USD1.2 billion).
Police Abruptly Halt Chinese Blockchain Conference - CoinDesk The one-day event, dubbed the Global Fintech & Blockchain China Summit 2018 and organized by a business conference organizer called PTP International, was originally scheduled for April 12. Yet around midday (local time) on Thursday, the morning session was halted by police, and all attendees and organizers of the
Jim Chanos: No American CEO can make money in China - CNN In a conversation with Maggie Lake on CNNMoney's "Markets Now" show Wednesday, Chanos said that "every CEO since 1848" has pointed to China as a promising market. "It seems that everybody loves the Chinese market," he said. "But nobody ever makes any money there." He didn't mention that many major American companies -- including Apple (AAPL), Boeing (BA) and GM (GM) -- generate billions of dollars of revenue every year from selling their products in China.
Politics, Law And Ideology
Vindication Arrives 20 Years Late for ‘Five Zhous’ Convicted of Murder - Caixin Global Five men convicted of murder nearly 20 years ago had their convictions overturned on Wednesday by a court in East China’s Anhui province. Zhou Jikun, Zhou Jiahua, Zhou Zaichun, Zhou Zhengguo and Zhou Zaihua — whose shared surname caused the public to term their sensational trial in the late 1990s the “Case of the Five Zhous” — have been cleared of charges that they attacked a village family, killing one member, in 1996, the court said in a statement. The Anhui High People’s Court had found that the previous judgment by a city-level court in 1999 was based on insufficient evidence, and that there was reasonable doubt over the accuracy of key witness statements
“Manas” Onstage: Ongoing Moves to Sinicize China’s Three Great Oral Epics – Altaic Storytelling A large-scale, colourful rendition of the Kyrgyz epic Manas (玛纳斯史诗) was staged March 22-23 in Beijing’s ultra-modern Poly Theater. This performance came just two days after the newly anointed President Xi Jinping, speaking at the People’s Congress, cited two of the three great oral epics of non-Han peoples, Manas and the Tibetan-language King Gesar. While he mangled the title of the latter (Xi Jinpingian Sager), their mere mention shows their importance in the Party’s current multiethnic-is-good narrative
China's $26 Trillion State-Asset Watchdog Says More M&As to Come - Bloomberg "Some of the central state-owned enterprises in certain industries are too fragmented and have low efficiency," said Xiao Yaqing, chairman of the State-Owned Assets Supervision and Administration Commission, referring to SOEs directly regulated by the central government. "We support companies that are willing to come together on their own," he said in an interview on Wednesday on the sidelines of the Boao Forum in Hainan province.
China named 'world’s top executioner' as global rate falls | World news | The Guardian China remains the “world’s top executioner” amid a decline in executions worldwide, Amnesty International has said in its annual report on capital punishment. According to the report, released on Thursday, China implemented “more death sentences than the rest of the world combined”. Amnesty believes thousands of executions and death sentences occurred in 2017 in China, where they are considered a state secret.
Foreign and Military Affairs
Wang's visit to rekindle Japan dialogue - China Daily Beijing and Tokyo have agreed to end the eight-year stall of their high-level economic dialogue with State Councilor and Foreign Minister Wang Yi making his first official visit to Japan starting on Sunday. Since becoming foreign minister in 2013, Wang has yet to pay an official visit to the country in which he once served as China's ambassador.
Xi says Belt and Road Initiative not an intrigue of China - People's Daily Online "[The initiative] is neither the Marshall Plan after World War II nor an intrigue of China. It is, if anything, a plan in the sunshine," Xi said when meeting with incumbent and incoming members of the Board of Directors of the Boao Forum for Asia (BFA), who gathered here for the BFA annual conference. // Comment: is that really the right translation of "阳某"?
Overseas Beidou center set up - China Daily An inauguration ceremony of the China-Arab Beidou System/Global Navigation Satellite System Center was held on Tuesday at the El Ghazala Technological Park in Tunis, capital of Tunisia. The event was organized by the China Satellite Navigation Office and the Arab Information and Communication Technologies Organization, the Chinese office said in a statement sent to China Daily.
German spy chief warns of dangers from Chinese hi-tech takeovers | Reuters The head of Germany’s domestic intelligence agency has urged vigilance about increased moves by Chinese companies to invest in and acquire hi-tech German companies, warning that the loss of key technologies could harm the German economy.
Hong Kong, Macao
Public fears pressure from Beijing is leading to end of press freedom in Hong Kong | South China Morning Post The Press Freedom Index, which measures public feeling on the subject, dropped 0.9 of a point to 47.1 out of 100, its lowest level since the survey started in 2013. Hong Kong’s journalists, who were polled separately, were slightly more optimistic compared with last year, their index rising 0.9 to 40.3. This was put down to a number of factors, including the reduction of violence against journalists.
Hong Kong Intervenes to Buy Local Currency, First Time Since '05 - Bloomberg The Hong Kong Monetary Authority bought the local currency for the first time since the current trading band was imposed in 2005, after the exchange rate sank to the weak end of its permitted range. The de facto central bank purchased HK$816 million ($104 million) on Thursday, according to the HKMA’s page on Bloomberg. The Hong Kong dollar dropped to HK$7.85 earlier in the day, at the edge of its HK$7.75-7.85 range against the greenback, and has traded close to or at that level since.
Tech And Media
Apple stock price: China is catching up to Apple in AR, says KGI Securities' Ming-Chi Kuo - Business Insider The most-closely followed Apple analyst warned in a Wednesday note that Chinese smartphone companies are rapidly catching up to Apple in augmented reality technology, which CEO Tim Cook has called "profound" and a "core technology" for the company going forward. The example Ming-Chi Kuo provides is a Tencent game called Honour of Kings, which will release an augmented reality version in May. It's a big game, with over 200 million players worldwide. It's also a much more advanced augmented reality experience than Pokemon Go, he writes, and uses algorithms from $3 billion artificial intelligence startup SenseTime.
Didi vs. Meituan vs. Ele.me: China's food-delivery-app battle means basically free meals for users — Quartz Last week, Didi officially added food delivery to its app’s offerings, starting off in a city near Shanghai called Wuxi. It will expand the offering into other cities in the months ahead. The company said first-time users of the service will get a 20 yuan ($3) coupon, among other steep discounts. Days after launching the service, it announced that its share of Wuxi’s food-delivery market was already over 30%, with 334,000 orders generated on the first day alone. // Jiemian on the battle-【特写】无锡外卖大战中狂奔的骑手们|界面新闻 · 科技
Most of mobile phones on market adapt to China’s Beidou system - People's Daily Online Now most of the mobile phones on market have adapted to China’s homegrown Beidou Navigation Satellite System, including those of Huawei, Xiaomi, HTC, Meizu and Nubia. // Comment: But not Apple, so far
Ex-Googler's E-Commerce Site Valued At About $15 Billion - Bloomberg A Chinese e-commerce site called Pinduoduo, or PDD, has raised more than $1 billion at a valuation of about $15 billion, roughly 10 times the level just a year ago, according to people familiar with the matter. The Shanghai-based company, founded by ex-Google engineer Colin Huang, is getting the money from existing investors including Sequoia Capital China and Tencent Holdings Ltd.,
Society, Art, Sports, Culture And History
Summer Palace Bronze auctioned for 410,000 pounds - China Daily Despite China's objections, the sale of the Tiger Ying, named because of its tiger decorations, went ahead with the opening bid at 120,000 pounds. There were around eight telephone bidders and the hammer came down at four times the estimate. It is thought that only six similar vessels, known as ying, exist and five of those are in museums.
Parents Plead With Government to Give Kids More Homework - Sixth Tone Since the end of February, the Chinese government’s decades-old educational reforms have muscled their way back into mainstream public debate. Known as jianfu, or “burden reduction,” the policies aim to decrease the academic workloads of primary and middle school students. On social media, parents have written open letters to the Ministry of Education pleading for teachers to give their children more homework. Others claim, somewhat sensationally, that the policy’s true motive is to discourage poor people from having children, or that it is destroying the traditional Chinese family unit.
Food And Travel
Face-Scanning Technology Officially Implemented at Beijing Capital International Airport | the Beijinger Beijing is the first city in China to officially implement facial recognition technology at its airport, following the example of London's Heathrow last year. The implementation happened on March 19.