Xi sees opportunity-"the world is undergoing the most profound and unprecedented changes in a century"; Trump Administration pushing US-China technology decoupling; Further institutionalizing the "tough battle" against pollution

Good morning from Sinocism. Here are the top things I am watching about China today.

  • Xi chaired a Central Foreign Affairs Work Conference (CFAWC) in which he confidently and with a Marxist’s view of historical developments outlined the Party’s challenges and opportunities towards advancing China’s global influence. This is Xi’s second CFAWC since he became General Secretary; his first was in 2014. Hu Jintao only held one during his ten years as General Secretary;

  • The Central Committee and the State Council released a guideline “to comprehensively enhance ecological and environmental protection and win the battle against pollution of air, water and soil”;

  • The PBoC announced a cut in the reserve ratio and more measures to channel credit to SMEs. The financial system is always under stress at the end of June (remember the “cash crunch” 5 years ago this week?) but this move may signal a reaction to credit tightening that is slowing the economy as well as making preparations to absorb any shocks from the increasingly likely US-China trade war;

  • There is still no public progress towards negotiations to halt the march towards a full-blown US-China trade war. Multiple media reported Sunday that the Trump Administration is about to announce restrictions on PRC investment in US technology firms and some technology exports to China.

A housekeeping reminder, as I announced a few weeks ago the newsletter is off this Wednesday as I take my kids to Maine for camp. The next planned holiday is Thursday July 19, when I go to pick them up. July 4 is a holiday in the US but not in China and so there may still be a newsletter that day.

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The Essential Eight

1. Xi sees opportunity-"the world is undergoing the most profound and unprecedented changes in a century"

Apologies for the long excerpt from the official report on the Central Foreign Affairs Work Conference but it is worth reading.

Xi urges breaking new ground in major country diplomacy with Chinese characteristics - Xinhua:

"We have kept a firm hold of the development trend of China and the world in the new era since the 18th CPC National Congress and made a series of important innovations on external work in theories and practices, thus forming the thought on diplomacy of socialism with Chinese characteristics for a new era," said Xi.

He highlighted major aspects of the thought:

- Uphold the authority of the CPC Central Committee as the overarching principle and strengthen the centralized, unified leadership of the Party on external work;

- Advance major country diplomacy with Chinese characteristics to fulfill the mission of realizing national rejuvenation;

- Take preserving world peace and pursuing common development as the purpose to promote the building of a community with a shared future for humanity;

- Enhance strategic confidence with the socialism with Chinese characteristics as the support;

- Forge ahead the Belt and Road construction in the principle of achieving shared growth through discussion and collaboration;

- Follow the path of peaceful development on the basis of mutual respect and win-win cooperation;

- Develop global partnerships while advancing diplomatic agenda;

- Lead the reform of the global governance system with the concept of fairness and justice;

- Take national core interests as the bottom line to safeguard China's sovereignty, security and development interests;

- Nurture a distinctive style of Chinese diplomacy by combining the fine tradition of external work and the characteristics of times...

He pointed out that in order to have a correct assessment of international situation, an accurate understanding of history, the overall situation and China's role and position in the world pattern should be formed.

Xi suggested to not only observe the current international situation, but also review the past, summarize historical laws, and look forward to the future to better understand the trend of history.

As for the accurate understanding of overall situation, Xi underlined not only the observation of phenomena and details, but also a deep appreciation of the essence and overall situation, in order not to get lost in complex and changing international situation.

He also asked to have a clear understanding of China's status and role in the evolving world pattern, and formulate principles and policies of China's external work in a scientific way, through cool-headed analysis of international phenomena and China's relation with the rest of the world.

China has been in the best period of development since modern times, while the world is undergoing the most profound and unprecedented changes in a century, said Xi, adding that the two aspects are intertwined and interacted.

He stressed that China enjoys many favorable external conditions to carry out work related to foreign affairs at present and in the years to come.

Calling the period between the 19th and the 20th CPC National Congress "a historical juncture for realizing the two centenary goals of China," Xi said the period is of great significance in the historical progress of the great rejuvenation of the Chinese nation.

Throughout the human history, the development of the world has always been the result of contradictions intertwining and interacting with each other, he continued.

Xi then called for in-depth analysis of the law of how the international situation changes when the world comes into its transitional period, and the accurate grasp of the basic characteristics of the external environment China is facing at this historical juncture, in order to better plan and facilitate the country's work on foreign affairs.

In spite all the tensions in the US-China relationship it appears Xi still views Trump and his approach to global affairs as a massive opportunity creator for the PRC.

Saturday CCTV evening News 13 minute report on the meeting — 习近平在中央外事工作会议上强调 坚持以新时代中国特色社会主义外交思想为指导 努力开创中国特色大国外交新局面

习近平:努力开创中国特色大国外交新局面-新华网:

习近平指出,把握国际形势要树立正确的历史观、大局观、角色观。所谓正确历史观,就是不仅要看现在国际形势什么样,而且要端起历史望远镜回顾过去、总结历史规律,展望未来、把握历史前进大势。所谓正确大局观,就是不仅要看到现象和细节怎么样,而且要把握本质和全局,抓住主要矛盾和矛盾的主要方面,避免在林林总总、纷纭多变的国际乱象中迷失方向、舍本逐末。所谓正确角色观,就是不仅要冷静分析各种国际现象,而且要把自己摆进去,在我国同世界的关系中看问题,弄清楚在世界格局演变中我国的地位和作用,科学制定我国对外方针政策。当前,我国处于近代以来最好的发展时期,世界处于百年未有之大变局,两者同步交织、相互激荡。做好当前和今后一个时期对外工作具备很多国际有利条件。

习近平强调,从党的十九大到党的二十大,是实现“两个一百年”奋斗目标的历史交汇期,在中华民族伟大复兴历史进程中具有特殊重大意义。纵观人类历史,世界发展从来都是各种矛盾相互交织、相互作用的综合结果。我们要深入分析世界转型过渡期国际形势的演变规律,准确把握历史交汇期我国外部环境的基本特征,统筹谋划和推进对外工作。既要把握世界多极化加速推进的大势,又要重视大国关系深入调整的态势。既要把握经济全球化持续发展的大势,又要重视世界经济格局深刻演变的动向。既要把握国际环境总体稳定的大势,又要重视国际安全挑战错综复杂的局面。既要把握各种文明交流互鉴的大势,又要重视不同思想文化相互激荡的现实。

Xi thought enshrined as supreme guidance to China's diplomacy - Global Times:

"Many solutions China has proposed to global issues have proven to be of great help in recent years, and thanks to those useful solutions, the global system is witnessing a positive reform toward fairness and justice," Wang Wen, executive dean with the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times.

China's development pattern has offered developing countries a fine example, China's economy has contributed to one third of global growth, and China's proposals in solving matters such as North Korea's nuclear issue have been adopted by the world, according to Wang.

"The global governance system has reached a balance between the West and the rest with China's contribution," Wang said.

China's proposals have also guaranteed international order in global free trade and UN system-based political agreements, both of which have turned chaotic due to the US government's radical polices, Li Haidong, a professor at China Foreign Affairs University, told the Global Times.

But it's not enough for China to just participate in the global governance system, rather China is expected to lead the reform of the system to help change the current closed and unfair system, experts said.


2. Trump Administration pushing US-China technology decoupling

Trump Plans New Curbs on Chinese Investment, Tech Exports to China - WSJ $$:

President Donald Trump, already embroiled in a trade battle with China, plans to ratchet commercial tensions higher by barring many Chinese companies from investing in U.S. technology firms, and by blocking additional technology exports to Beijing, said people familiar with administration plans.

The twin initiatives, set to be announced by the end of the week, are designed to prevent Beijing from moving ahead with plans outlined in its “Made in China 2025” report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology.

The Treasury Department is crafting rules that would block firms with at least 25% Chinese ownership from buying companies involved in what the White House calls “industrially significant technology.” The ceiling may end up lower than that, according to people familiar with discussions finalizing the plans.

U.S. Plans Curbs on Chinese Investment, Citing Security Risk - Bloomberg:

Under the plan, the White House would use one of the most significant legal measures available to declare China’s investment in U.S. companies involved in technologies such as new-energy vehicles, robotics and aerospace a threat to economic and national security, according to eight people familiar with the plans.

Treasury Secretary Steven Mnuchin, in a report scheduled to be released on June 29, will suggest administering that law through an inter-agency government panel called the Committee on Foreign Investments in the U.S., or CFIUS, the people said, requesting anonymity to discuss the plans.

One concept under review would be to create a two-tracked CFIUS process to review investments, with one specifically for China, two of the people said. A Treasury spokesman did not immediately reply to a request for comment.

Trump to use emergency act in trade war against Beijing | Financial Times $$:

The exact scope of the investment measures has been the subject of internal discussions in the Trump administration in recent days, say people familiar with the debate. It is unclear how quickly restrictions would take effect and if they would apply to Chinese investments in venture capital funds, which provide much of the seed money for US technology start-ups. 

But according to officials and people briefed on the discussions, the administration has decided to restrict China’s ability to invest in or acquire US companies in the industries identified by Beijing in its so-called Made in China 2025 plan.

U.S. Faces ‘Unprecedented Threat’ From China on Tech Takeover - Bloomberg:

China’s “Thousand Talents” program to tap into its citizens educated or employed in the U.S. is a key part of multi-pronged efforts to transfer, replicate and eventually overtake U.S. military and commercial technology, according to American intelligence officials.

The program, begun in 2008, is far from secret. But its unadvertised goal is “to facilitate the legal and illicit transfer of U.S. technology, intellectual property and know-how” to China, according to an unclassified analysis by the National Intelligence Council, the branch of U.S. intelligence that assesses long-term trends.

Congress wants DeVos to investigate Chinese research partnerships on American campuses - The Washington Post:

A bipartisan group of 26 lawmakers wrote Education Secretary Betsy DeVos on Tuesday to highlight the national security implications of Huawei’s research partnerships and other relationships with several dozen American colleges and universities. They want Devos to investigate the Huawei Innovation Research Program and other programs through which Huawei partners with institutes of higher education across the country.

“We believe these partnerships may pose a significant threat to national security and this threat demands your attention and oversight,” states the letter, which was organized by Sen. Marco Rubio (R-Fla.) and Rep. Jim Banks (R-Ind.). “Huawei is not a normal private sector company the way we have grown accustomed to thinking of the commercial economy in the West.”

China Vice Premier Liu says China, E.U. aim to conclude talks on bilateral investment deal:

China hopes the E.U. will take concrete steps to ease restrictions on European exports to China, said Liu in remarks in a joint press conference with E.U. Commission Vice President Jyrki Katainen in Beijing.

Katainen in his remarks called on China to ease market access restrictions and tackle the issue of steel overcapacity.


3. More on US-China trade

Beijing ‘won’t target’ US firms in China to hit back at US President Donald Trump’s trade threats | South China Morning Post:

The sources said the authorities were trying to reassure foreign businesses in China amid fears that Beijing could hit back at US President Donald Trump’s proposed tariffs on Chinese goods by harassing American firms or depriving them of commercial opportunities.

“A big worry for China is that foreign investors are opting to leave the country,” one source said. “The option of targeting US firms in China has never been on the cards.”

Chinese President Xi Jinping’s round table with foreign business executives on Thursday and his promises that China’s market would remain open “sent a very clear message from the top leadership” that US firms were still welcome, the source added.

Comment: This is huge if true, but what then are the "qualitative measures" threatened by the Ministry of Commerce last week?

What Would Happen if China Started Selling Off Its Treasury Portfolio? | Brad Setser - Council on Foreign Relations:

if the National Security Council ever was convened to discuss China’s options for asymmetric retaliation, I would encourage it to spend most of its time worrying about the consequences of a Chinese exchange rate move. The impact on any such Chinese depreciation on the United States would be limited if the U.S. could convince its allies in Asia to take action to avoid following China's currency down (even though it is against their short-run economic interest; their export driven economies compete directly with China). They have plenty of reserves—and could sell those reserves to absorb market pressure for their currencies to depreciate along with the Chinese yuan. But they aren't likely to do that if they think the U.S. brought on the Chinese devaluation through reckless trade action. ..

Treasuries sales in a sense are easy to counter, as the Fed is very comfortable buying and selling Treasuries for its own account. I have often said that the U.S. ultimately holds the high cards here: the Fed is the one actor in the world that can buy more than China can ever sell.

Peter Navarro explains his journey from globalist free-trader to protectionist China hawk - Axios:

"The research I did in preparation for my 2015 Crouching Tiger book and companion film provided much greater situational awareness about how unfair trade practices perpetrated by a strategic rival can lead to very serious national security vulnerabilities. Since China joined the WTO in 2001, the U.S. has lost over 70,000 factories, more than five million manufacturing jobs, and suffered from substantially lower real GDP growth rates. As America’s manufacturing and defense industrial base has weakened, China’s has strengthened and we now face a strategic rival in places like the South China Sea whose military forces have been largely financed by the massive trade deficits the U.S. runs with China.

China central bank sees trade friction, geopolitics as uncertainties in economic outlook:

"The global economy is expected to continue to pick up, but trade frictions, geopolitics and the normalization of monetary policies in major economics pose uncertainties," the People's Bank of China, the country's central bank, said its website www.pbc.gov.cn

Trump’s China crackdown enjoys wide support. Here’s why that could be a problem for him. - The Washington Post:

More than twice as many jobs are exposed to Chinese tariffs in counties that voted for Trump in 2016 as in areas that backed Hillary Clinton, according to the Brookings Institution.

“They have mapped this out to a very fine level of detail, down to congressional districts,” said China expert Aaron Friedberg of Princeton University. “It is intended to inflict maximum pain on people they recognize as being Trump’s primary constituents in hopes that it will make him change course.”

What a Trade War With China Looks Like on the Front Lines - The New York Times:

How this will play out is idiosyncratic to any given product and unique to each supply chain,” said Daniel Rosen, partner at the economic research firm Rhodium Group. “Nobody can honestly claim high confidence that they understand what the overall impact will be. You may as well project the weather on a Tuesday afternoon a year from now.”


4. Reserve ratio cut, new measures to channel credit to SMEs

China Eases Credit Policy as U.S. Tariffs Near - WSJ $$:

In a statement Sunday, the People’s Bank of China announced that it is reducing the amount of reserves banks are required to keep with the central bank by half a percentage point starting July 5. That is the day before a U.S. deadline to slap punitive tariffs on tens of billions of dollars in Chinese goods.

Under the reserve cut, some 500 billion yuan ($76.86 billion) will be released for 17 large banks, including the Big Five state-owned banks, the central bank said. It said the banks are to use the freed-up funds by converting bad loans into equity in companies that default on their debts.

Another 200 billion yuan is being unleashed for the country’s city-level commercial banks and other smaller lenders, and those funds are to be used to expand lending to small businesses, the central bank said in the statement.

A PBoC official explains the move - 中国人民银行有关负责人就定向降准支持市场化法治化“债转股”和小微企业融资答记者问 

China to Unleash $108 Billion in Reserve Cut for Some Banks - Bloomberg:

“The size of the liquidity being unleashed has beat expectations and it’s larger than the previous two cuts this year”, said Ming Ming, head of fixed-income research at Citic Securities Co. in Beijing. “It’s almost a universal cut as it covers almost all lenders.”

The move will ease liquidity shortages currently seen in the implementation of debt-to-equity programs, and it shows that policy makers still don’t want to send a signal of across-the-board easing, Ming said. "The central bank may have predicted rising debt risks in the near future, so it decided to set up such an arrangement," he said.

PBOC Research Head Calls for Shift Towards Price-based Monetary Policy - China Banking News:

According to domestic press Xu Zhong (徐忠), head of the PBOC research department, recently came out in strong support of greater use of reserve cuts with a working paper published on the central bank’s official website entitled: “Shifts in China’s Monetary Adjustment Methods During the Era of High-quality Economic Growth” (经济高质量发展阶段的中国货币调控方式转型).

“The Chinese economy has already shifted from a high-speed growth phase to a high-quality growth phase, and Chinese monetary policy adjustment methods should shift from a focus on monetary quantity adjustments to monetary price adjustments.

Renminbi weakens as PBoC cuts banks’ reserve requirement | Financial Times $$:

The renminbi weakened to a fresh five and a half month low on Monday after China’s central bank said it will free up more than $100bn to help cushion a slowing economy and the impact of a potential trade war with the US.

The offshore renminbi exchange rate softened to Rmb6.5333 per dollar on Monday, 0.3 per cent weaker on the day and at its lowest level since January 10. The onshore renminbi, which is limited by a trading band of 2 per cent in either direction, was also 0.3 per cent weaker at Rmb6.5195.

PBoC , CBIRC, CSRC, NDRC, MoF jointly issue guideline for better channeling financial resources to SMEs人民银行、银保监会等五部门联合印发《关于进一步深化小微企业金融服务的意见》-新闻-上海证券报·中国证券网 


5. Further institutionalizing the "tough battle" against pollution

China unveils guideline to win battle against pollution - Xinhua:

China has unveiled a guideline to comprehensively enhance ecological and environmental protection and win the battle against pollution of air, water and soil. The guideline, published on June 24 by the Central Committee of the Communist Party of China (CPC) and the State Council, specified pollution prevention and control targets the country expects to achieve by 2020 and beyond.

China will develop and implement a three-year plan to fight air pollution, with much focus on regions like the Beijing-Tianjin-Hebei region and its neighbouring areas, and the Yangtze River Delta. Efforts will be made to improve the region’s industry, energy, transport and land use structures.

The guideline 中共中央 国务院 关于全面加强生态环境保护 坚决打好污染防治攻坚战的意见 :

进入新时代,解决人民日益增长的美好生活需要和不平衡不充分的发展之间的矛盾对生态环境保护提出许多新要求。当前,生态文明建设正处于压力叠加、负重前行的关键期,已进入提供更多优质生态产品以满足人民日益增长的优美生态环境需要的攻坚期,也到了有条件有能力解决突出生态环境问题的窗口期。必须加大力度、加快治理、加紧攻坚,打好标志性的重大战役,为人民创造良好生产生活环境。

An "expert" interprets the guideline-- 建设美丽中国的总部署——专家解读《中共中央国务院关于全面加强生态环境保护坚决打好污染防治攻坚战的意见》 

Officials responsible for environment - China Daily

Leading Party and government officials at the county, city and provincial levels across China will be held accountable if they fail to protect the local environment. They will be the first to be questioned if antipollution targets are not met, according to China’s latest directive to toughen the fight against pollution.

Jointly issued by the central leadership and the State Council, the directive sets clear and detailed goals in fighting air, water and land pollution. It is aimed at targeting the problems that concern the public the most, said Xu Biwen, an official from the Ministry of Ecology and Environment’s Environmental Supervision Office.

But there remains much work to be done...

In a High-Stakes Environmental Whodunit, Many Clues Point to China - The New York Times:

XINGFU, China — Last month, scientists disclosed a global pollution mystery: a surprise rise in emissions of an outlawed industrial gas that destroys the atmosphere’s protective ozone layer.

The unexpected spike is undermining what has been hailed as the most successful international environmental agreement ever enacted: the Montreal Protocol, which includes a ban on chlorofluorocarbons, or CFCs, and which was expected to bring a full recovery of the ozone layer by midcentury. But the source of the pollution has remained unknown.

Now, a trail of clues leads to this scrappy industrial boomtown in rural China.

Interviews, documents and advertisements collected by The New York Times and independent investigators indicate that a major source — possibly the overwhelming one — is factories in China that have ignored a global ban and kept making or using the chemical, CFC-11, mostly to produce foam insulation for refrigerators and buildings.


6. Big data and privacy

Big data in China and the battle for privacy | Australian Strategic Policy Institute - Lotus Ruan:

This paper examines Chinese state policy on big data industries and analyses the laws and regulations on data collection that companies in China are required to comply with. It also looks at how those rules may affect foreign companies eyeing the China market. Case studies are included to demonstrate the ongoing tensions between big data applications and privacy. The paper concludes by outlining the implications and lessons for other countries...

This paper highlights the conflict between the fast-developing big data technologies and citizens’ diminishing rights to privacy and data security in China. A review of major Chinese big-data-related policy initiatives shows that many of those policies reflect special interest from Chinese authorities, its public security forces in particular, in potentially using data-driven analytic technologies for more effective and extensive surveillance and social control.

Compared to the growing number of regulations and national plans that support the research and development of big data technologies, there’s a lack of data protection laws and guidelines to hold relevant parties, especially the government, accountable for the collection and use of personal data. The ambivalent legal framework of data security and privacy protection, which enables state use of collected data, has led to multiple incidences of commercial disputes over access to users’ data. It’s likely we’ll see more such cases in the future.


7. Seeking foreign sycophants to bolster Xi

China’s New Science of Sycophantology | China Media Project:

Last month, China Leadership Science (中国领导科学), a journal published by the Central Party School in Beijing, ran a series of articles billed as a deep study of “the international praise for Xi Jinping’s super-strong leadership in the New Era.” In a remarkable lead article accompanying its research — “Extraordinary Leader: A Study of the International Praise for the Super-Strong Leadership of Xi Jinping in the New Era” [PDF here] —  the journal’s editorial department made the case for systematic research of the hurrahs and tributes enjoyed by Xi Jinping. Such study, they said, would serve the goal of “determinedly preserving General Secretary Xi Jinping’s core status throughout the Party, so that in our ideas, politics and actions we may willingly maintain a high level of uniformity with the Central Party of which Comrade Xi Jinping is the core.”

This knot of Party discourse, or New China Newspeak, essentially boils down to the idea that loyal Xi followers within the Party can help consolidate his power and standing by systematically channeling the praise he receives internationally. What the Party needs, in other words, is a dedicated School of Sycophantology. And the latest edition of China Leadership Science, you might say, is its manifesto — as much a profession of love as a declaration of mission. “China’s international standing,” the journal delights at the outset of its lead article, “is now at a high not seen in modern times.”


8. Do Not Marry Before Age 30

An American Lean-In Guru in China - WSJ:

Joy Chen got a glimpse of the limelight as a Los Angeles deputy mayor two decades ago, but it was nothing like the fame she has found in China urging women to forget what they’ve been taught about matrimony.

Her 2012 best-seller, “Do Not Marry Before Age 30,” became a touchstone for young Chinese career women chafing under family pressure and age-old convention to find a husband, and launched Ms. Chen on an improbable journey as an American self-help guru in China.

At a women’s leadership forum in Beijing in March, young women who had sat texting idly during a venture capitalist’s presentation sprang to attention when Ms. Chen strode on stage in a red dress. Smartphones rose in unison above a sea of ponytails, “record” buttons switched on.

Comment: So happy to see a friend and Sinocism subscriber becoming such a positive star. Right after her book became a best-seller she visited CCSweets, my spouse's bakery, in Beijing. The female staff, all migrant workers, thought Joy was a rock star; it was then that I realized how much her message was really resonating. 

Defying Spinster Stereotypes: Why Chinese Unmarried Women are Rooting for Actress Faye Yu | What's on Weibo:

The unconventional attitudes on love & marriage of the unmarried 47-year-old actress Faye Yu 俞飞鸿 have taken Chinese social media by storm. In a society where women are facing real pressures to get married, many welcome Yu’s refreshing perspectives.


Business, Economy, Finance And Trade

Xiaomi puts indefinite delay on CDRs in blow to China's plans for tech listings | Reuters Sources told Reuters the decision was mainly because of a dispute between the company and Chinese regulators over the valuation of its CDRs, but the company denied this.

Investment bank China Renaissance seeks up to $800 million in IPO: sources | Reuters The bank is known for having advised both sides on some big Chinese tech deals including the 2015 merger of ride-hailing giant Didi Chuxing, with China Renaissance founder Bao Fan locking himself and the two CEOs in a hotel suite until they reached agreement. Beijing-based China Renaissance plans to raise between $600 million and $800 million, the people said, declining to be identified as the details of the offering are not yet public.

Watchdog Uncovers Illegal Loans at Top Banks - Caixin Global Two of China’s largest commercial banks and units of state-owned financial conglomerate Citic Group Corp. violated regulations that prohibited lending to local government financing vehicles, property developers and companies in polluting industries, according to an investigation by the National Audit Office (NAO).

 

Politics, Law And Ideology

Xinhua releases article on how Xi pushes development of Xiamen Special Economic Zone - Xinhua Xinhua News Agency Friday released a long Chinese-language feature titled "Comrade Xi Jinping pushes the development of Xiamen Special Economic Zone (SEZ): the explorations and practice." Xiamen is home to one of the first four SEZs in China. In 1985, the State Council approved expanding the SEZ to the whole island. In the summer of that year, Xi was assigned to leave Zhengding County in Hebei Province to work in Xiamen. He served as a member of the Standing Committee of the Communist Party of China Xiamen Municipal Committee and vice mayor of Xiamen. The article recapped Xi's ground-breaking, hard-working and dedicated experience in Xiamen over the course of three years. It said Xi was courageous to try new things and led a series of ground-breaking reform measures.

How Xinjiang's Reeducation Camps Could Influence China's Social Credit System - Foreign Affairs - Adrian Zenz: The roots of China’s denial of the unfolding human rights disaster in Xinjiang might be deeper still. The reeducation campaign has been a profound shock even to seasoned observers of Beijing’s policies in its restive western regions. From a broader perspective, however, it merely represents the logical culmination of Beijing’s wider strategy to reassert control over the spiritual-moral realm of society. The regime’s willingness to subject an entire ethnic group to inhumane indoctrination procedures simply reflects a consistent application of communist praxis to a people who stubbornly insist on maintaining their own ethnoreligious identity. But reeducation is not a specialized tool reserved for assimilating restive minorities. Any citizen is liable to some form of reeducation if he or she fails to align with a prescribed set of values and behaviors. In the nation in general, different reeducation practices could potentially be administered in tandem with the upcoming national social credit system, because the latter is ideally suited to evaluate and enforce state-sanctioned definitions of morality...

陕西榆林原市委书记胡志强落马 其父曾任山西省委书记-腾讯网 more details on investigation of Shaanxi official Hu Zhiqing, his dad is dad is Hu Fuguo, once Shanxi party secretary, he had spent much of his career in Yulin, including as mayor and party secretary. In recent weeks many Yulin moguls have been detained

China punishes 7,199 officials in May for violating austerity rules - Xinhua The top anti-graft body of the Communist Party of China (CPC) said that 7,199 officials including a ministerial-level official, were punished in May for violating Party austerity rules. The officials were involved in 4,973 cases, said the CPC Central Commission for Discipline Inspection (CCDI) in a statement. Awarding an unauthorized allowance or bonus was the most common misdemeanor, followed by giving or accepting gifts and misuse of public vehicles.

Senior security official urges efforts to win fight against gang crime - Xinhua Guo Shengkun, member of the Political Bureau of the Communist Party of China (CPC) Central Committee and head of the Commission for Political and Legal Affairs of the CPC Central Committee, made the remarks at the opening of a workshop on inspection of a national crackdown on gang crime. Guo, also head of the leading group of the national crackdown on gangs and organized crimes, urged increased efforts to investigate gang-related cases and crack the "protective umbrellas" behind them.以督导压实责任回应期待破解问题; 坚决夺取扫黑除恶专项斗争全面胜利 

Hainan Province Criticized for Plans to Create “Internet Zone for Foreign Tourists” – Chinascope According to Securities Times Online, Hainan Province recently introduced a Three-Year-Plan (from 2018 to 2020) to improve the Hainan Tourist Business using international standards. The goal is to increase foreign tourism by 25 percent and reach over two million tourists by 2020. The Plan would also create a special Internet zone for foreign tourists in cities like Haikou and Sanya and allow them to use social media such as Facebook, Twitter, and YouTube. The news caused anger among Internet users in China. They criticized the Plan because it discriminates against Chinese citizens and uses a double standard to treat Chinese citizens as second class citizens. The link to the Plan can no longer be found on the official website of Hainan Provinceand an article that the Paper.com published on this topic was also disabled

 

Foreign and Military Affairs

Mattis focusing on strategic security issues in China talks - AP Speaking to reporters on his plane Sunday en route to a stop in Alaska, Mattis avoided any of the sharp criticism of China that he had voiced recently. Instead, he insisted that he is going into the talks with Chinese leaders without any preconceived notions, and wants to focus on larger, more strategic security issues.

Chinese National Arrested for Conspiring to Illegally Export U.S. Origin Goods Used in Anti-Submarine Warfare to China | USAO-MA | Department of Justice Shuren Qin, 41, a Chinese national residing in Wellesley, Mass., was charged in a criminal complaint with one count of visa fraud and one count of conspiring to commit violations of U.S. export regulations. Qin was arrested today and will appear in federal court in Boston on June 22, 2018. According to charging documents, Qin was born in the People’s Republic of China and became a lawful permanent resident of the United States in 2014. Qin operates several companies in China, which purport to import U.S. and European goods with applications in underwater or marine technologies into China.  It is alleged that Qin was in communication with and/or receiving taskings from entities affiliated with the PLA, including the Northwestern Polytechnical University (NWPU), a Chinese military research institute, to obtain items used for anti-submarine warfare.

Sinopsis and Jichang Lulu: United Nations with Chinese Characteristics – China Digital Times (CDT): “The CCP has made it a major goal of its UN work to maximise its ‘discursive power’ at the organisation, seeking to redefine ‘human rights’ and get Xi Jinping’s pet initiatives institutionally endorsed by an international body.” This is one of the conclusions in a new report published by Sinopsis and Jichang Lulu. The report:United Nations with Chinese Characteristics: – Elite Capture and Discourse Management on a global scale, presents the first detailed look at diplomacy and corruption in Africa, Australia, Eastern Europe – and the UN. “It is hard not to see a connection between the corruption cases in the United Nations and the rise of China’s “discursive power” in the organisation. As top UN officials get arrested for corruption by Chinese actors, the global body increasingly adopts Beijing’s narrative on a new “Globalisation 2.0”, epitomised by the Belt and Road Initiative. ”

The saga of CEFC and China's push into Central and Eastern Europe - Sinica Podcast This week’s show was recorded in Prague, where major developments in the continuing saga of a mysterious Chinese company called CEFC, with deep ties to the Czech president, Milos Zeman, unfolded during a recent visit by Kaiser. He spoke with Martin Hála of Charles University in Prague about the rise and fall of CEFC, and what this means not only for China’s efforts to expand its presence in Central and Eastern Europe, but also for China’s Belt and Road Initiative more broadly.

Despite Modi-Xi bonhomie, China moves into Arunachal Pradesh - ThePrint Doklam is not the only such area where the Chinese have tried to salami-slice a neighbour’s territory (Bhutan being another) to give themselves a tactical advantage. Army Chief General Bipin Rawat had earlier spoken about this Chinese approach to slow expansion. The Tsari Chu valley in Arunachal Pradesh is another such area. It is evident from satellite pictures that over the years the Chinese have moved at least 5 km into what should be Indian territory. They may have taken advantage of the remoteness of the area and the absence of Indian forces.

India becomes AIIB's largest borrower: official - People's Daily Online India is the biggest borrower from the Asian Infrastructure Investment Bank (AIIB), getting its projects financed to the extent of 4.4. billion U.S. dollars in the past three years, Subhash Chandra Garg, the country's secretary at the Department of Economic Affairs, said in an official statement.

China targets India’s Ladakh - Gateway House Buddhist-dominated Ladakh, which comprises almost 60% of the state but accounts for just 2% of the state’s population[2][3], is all but invisible in policy circles. Its name isn’t even included in the state’s official name. This is ironic since Ladakh has historically protected India from the Tibetan and Mongol invasions from the north. It is now sandwiched between Pakistan-occupied Gilgit Baltistan and China-occupied Aksai Chin and is strategically important – and perhaps as a result, is the subject of a running border dispute.[4] While it has received some border infrastructure development from India, Ladakh may be ignored in part because it is largely peaceful. That will no longer be excused. For neighbouring China has slowly been increasing its influence, focusing not just on the border, but exploiting sectarian differences among the monasteries of Ladakh. The region is the site of frequent border face-offs with China – starting with the Sino-Indian War of 1962 and continuing with frequent territorial incursions as was seen most prominently during the Depsang Valley standoff with China in 2013.[5] Of late it has been misusing Himalayan Buddhism[6], a tactic China has used extensively and for decades in Tibet

kp oli's china visit: Railway connectivity important document of China visit: Nepal PM KP Oli - The Economic Times The new railway line will connect the Gyirong trading port in the city of Xigaze in Tibet with the Nepali capital Kathmandu. Oli expressed hope that cross-border railway projects will give an impetus to cross-border connectivity between Nepal and China.

Is China Bringing Peace to Afghanistan? | The Diplomat Economic development of conflict areas is important to build peace but China’s approach in this regard is unlikely to quell conflict. It has focused on resource extraction, a sector which has triggered conflict the world over. This could be the case in Afghanistan as well. Importantly, China’s approach is narrow and superficial. It is not keen to address the underlying causes of the Afghan conflict. It is disinterested in shaping the political outcome of negotiations between the Afghan government and the Taliban. It has done nothing to build peace constituencies in Afghanistan. China’s role in Afghanistan is undoubtedly growing. Yet, its influence there remains limited especially compared to the United States. While China has been able to establish ties with the Taliban and has even hosted its representatives for talks on its soil, it is the United States that still matters in Afghanistan. Not only is Washington’s influence over the Ghani government considerable, but the Taliban also want to talk with the United States.

Disgraced manager at shipbuilding juggernaut allegedly 'sold Chinese carrier intel to CIA' | Asia Times Sina Military and Hong Kong-based Apple Daily noted that Sun could have divulged some drawings and other information of the Soviet-built Liaoning, as well as its retrofitting work during the 2000s, to US Central Intelligence Agency operatives.

What’s Behind Israel’s Growing Ties With China? | Council on Foreign Relations What do the Chinese see in tiny Israel? Its main interest appears to be in tapping Israeli research and innovation. “In China’s view, Israel, despite its small size, stands out for its scientific achievements, its number of startups, and the number of its Nobel Prize laureates,” wrote former Israeli Ambassador to China Matan Vilnai, along with Assaf Orion and Galia Lavi, in March 2017. China's investments also include high technology, agriculture, food, water, and biotechnology.

China takes surveillance to new heights with flock of robotic Doves, but do they come in peace? | South China Morning Post Sources told the South China Morning Post that more than 30 military and government agencies have deployed the birdlike drones and related devices in at least five provinces in recent years. One part of the country that has seen the new technology used extensively is the Xinjiang Uygur autonomous region in China’s far west. The vast area, which borders Mongolia, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan and India, is home to a large Muslim population and has long been viewed by Beijing as a hotbed for separatism. As a result, the region and its people have been subjected to heavy surveillance from the central government.

Is China at the forefront of drone technology? | ChinaPower Project China has found success in producing both strike-capable systems and unweaponized systems for intelligence, surveillance, and reconnaissance (ISR) missions. A 2017 DoD report noted that “China’s aviation industry has advanced to produce . . . modern reconnaissance and attack UAVs.” Its Wing Loong and Caihong (CH)2 series have become popular exports to militaries around the globe. Its fleet of reconnaissance drones includes the High Altitude Long Endurance (HALE) Soaring Dragon and Cloud Shadow.

Chinese, U.S. Coast Guards Team Up for Driftnet Bust - Maritime Executive While Chinese and American maritime interests may not always align, that hasn't stopped their respective coast guards from teaming up to fight maritime crime. The crew of the Coast Guard Cutter Alex Haley and an embarked team from the China Coast Guard recently detained the Chinese fishing vessel Run Da for illegal driftnet fishing in international waters. The intercept and boarding occurred on the high seas about 750 nm east of Hokkaido, Japan.

Enforcement powers of Coast Guard expanded - China Daily National lawmakers on Friday passed a resolution specifying the authority and responsibilities of the newly reshuffled China Coast Guard. The resolution, which serves as the legal basis for the Coast Guard, makes it clear that the force is tasked with cracking down on illegal activities at sea, safeguarding security and order of maritime operations, protecting the marine environment and ecosystems, regulating the fishing industry, and coordinating and training local governments' maritime law enforcement.

Australia works on security deal with Vanuatu in bid to counter China's influence | Reuters During a visit to Canberra by Vanuatu Prime Minister Charlot Salwai, Australia offered up to A$19.5 million (10.6 million pounds) in education aid and said it would spend A$400,000 to help develop Vanuatu’s cyber policy and security. Maritime surveillance, police and defence cooperation would underpin the security treaty, Prime Minister Malcolm Turnbull said in a statement, but gave no date to begin talks.

How China tried to shut down Australian media coverage of its debt-trap diplomacy in the Pacific | Business Insider Five days before Australia’s “60 Minutes” program aired a report on China’s dept-trap diplomacy in the Pacific region, the show received an unusually aggressive phone call. “Take this down and take it to your leaders!” the voice on the other end of the line shouted. It was the voice of Saixian Cao, the head of media affairs at China’s embassy in Canberra. According to a report from “60 Minutes” journalist Charles Wooley, she was yelling at the show’s executive producer, Kirsty Thomson, after failing to gain any traction with higher-ups at the network. “You will listen,” Cao reportedly shouted into the phone. “There must be no more misconduct in the future

China takes over Radio Australia frequencies after ABC drops shortwave - ABC News (Australian Broadcasting Corporation) Radio Australia switched off its shortwave transmissions to remote parts of northern Australia and across the Pacific in January 2017...The Australian newspaper has reported Radio Australia's former shortwave frequencies are now being used by China Radio International, the country's state-owned overseas broadcaster.

China says United States domestic opioid market the crux of crisis “China’s drug control agencies, now and in the years to come, will place greater emphasis on drug control cooperation between China and the United States,” Liu Yuejin, deputy head of China’s National Narcotics Commission, told a news conference. “But I believe that to resolve this the more important issue is for the United States to strive to reduce and compress the great demand and drug consumption markets of opioids,” he said. While China accepts that some new psychoactive substances, including fentanyl, manufactured in China are sold in the United States, the substances are not yet readily abused and trafficked in China itself, he said.

MERICS Interview: How to Resist China’s Influence – China Digital Times (CDT) Last week, we published Part One of an interview with Kristin Shi-Kupfer, Director of the Research Area on Public Policy and Society at the Berlin-based Mercator Institute for China Studies (MERICS), and Mareike Ohlberg, a MERICS Research Associate, about the findings of a report they co-published with  the Global Public Policy Institute (GPPi),  titled, “Authoritarian advance: Responding to China’s growing political influence in Europe.” In the first part of the interview, Ohlberg and Shi-Kupfer discussed the various ways the Chinese government is attempting to influence European politics and societies, and how this influence is targeted and responded to in different regions. In the second part, they discuss steps that individuals and institutions can take to counter such influence efforts:

Merics is hiring, with several interesting jobs based in Berlin posted here 

Chinese military veterans’ rally for better welfare ends as armed police move in | South China Morning Post The mass gathering in Zhenjiang, Jiangsu province, was held following a number of violent attacks on campaigning veterans in other parts of the country. Several people who took part in the protest told the South China Morning Post that it ended when the Jiangsu government sent in hundreds of armed police. Officials from other provinces and cities also arrived in Zhenjiang to “convince” people to go home, they said. China’s 57 million ex-military personnel have been fighting for years for a better deal in retirement. After several large-scale protests last year, Chinese President Xi Jinping promised to tackle the issue, and in April, the Ministry of Veterans Affairs opened for business in Beijing.

 

Tech And Media

Chinese Internet Giant Meituan Files for Hong Kong IPO - Bloomberg The food delivery and restaurant reviews service submitted documents for a share listing late on Friday, the person said. The startup was said to have been targeting a fundraising of $6 billion at a valuation of roughly $60 billion, (though Friday’s filing didn’t specify numbers.) Smartphone giant Xiaomi is now in the process of raising as much as $6.1 billion in what would be the world’s largest IPO in two years.

Losing China Has Taken Wind Out of Xiaomi's IPO Sails - Bloomberg For Xiaomi, a $53.9 billion valuation may be enough. It certainly seems to be for the four co-founders who are selling down as part of the float, along with Morningside Group, an early venture capital investor. Those who participated in Xiaomi’s later rounds may not be so impressed, particularly since the company was last valued at $46 billion in 2014.

Stay calm on tech gap between China, West - Global Times A keynote speech made by Liu Yadong, editor-in-chief of Science and Technology Daily, at a science communication salon last week has sparked heated discussions online. Liu highlighted the widening technological gap between China and western developed countries. He stressed that while some Chinese have been bragging about China's technological achievements, the country is actually standing on the shoulders of giants. Liu pointed out that China's technological achievements had long been predated and its major technological projects conquered by other countries. The editor-in-chief criticized a penchant for boasting and exaggeration in China's technological field and blamed the public for intensifying this trend. Liu's speech immediately went viral online and has been widely supported. Many people praised Liu for his courage to speak the truth.

NPCSC Defers Vote on E-Commerce Law, Grants Law Enforcement Powers to Military-Controlled Coast Guard – NPC Observer The 13th NPC Standing Committee (NPCSC) concluded its third bimonthly session on Friday (June 22) without adopting any legislative bills, including the draft E-Commerce Law that it had already reviewed three times (this session included). Several new provisions in the latest draft have sparked heated discussion during the session and could potentially further delay passage of the law..

End Times for the Chinese Newspaper? | China Media Project  We have a number of important stories on China’s media this week. Two of these speak to the rapid and steady decline of traditional print newspapers in the country — first, the closure of a major commercial newspaper in Gansu province, following a string of similar closures on the east coast (as print revenues decline in the face of internet growth), and second, the ongoing leadership saga at The Beijing News, long regarded as one of the China’s top professional newspapers. Also this week, the release of the 2018 Blue Book on China’s Media, a media industry survey produced by Tsinghua University, helps to explain where the development is actually happening in China — think mobile internet, which now accounts for almost 70 percent of the total internet advertising market and has surpassed the entire advertising market for traditional media.

Fox spirits and demons: China's tech giants splash out in cartoon arms race | Reuters China’s tech firms are engaged in a cartoon arms race to develop or buy Chinese characters in an animation market expected to hit 216 billion yuan ($33.22 billion) by 2020, according to the EntGroup consultancy, trying to emulate the success of Walt Disney Co’s (DIS.N) ensemble, which ranges from Mickey Mouse to Iron Man.

Google Huawei partnership poses threat to US national security: Lawmakers - CNBC Lawmakers have urged Alphabet's Google to reconsider its ties with Huawei because it "could pose a serious risk to U.S. national security" and American consumers. Google creates the Android mobile operating system on Huawei devices and the two firms have a partnership to do with mobile messaging.

 

Society, Art, Sports, Culture And History

Gansu Female Student Commits Suicide after School Ignores Sexual Abuse Claims | What's on Weibo The horrific suicide of a 19-year-old female student from Qingyang in Gansu province was live-streamed on Chinese social media on June 21st when she jumped from a high building in the prefecture-level city. According to various Weibo sources and some media (e.g. EBC), the young woman named Li suffered from severe depression after her school and local authorities did not believe her when she reported that her high school teacher had sexually assaulted her.

In a Chinese Village, Elderly Farmers Are Now Yogis - The New York Times The local Communist Party chief has turned to yoga to bring health and vitality to a fading, remote hamlet. Some tourist money would be welcome, too.

 

Energy, Environment, Science And Health

China’s Solar Industry Dims After Subsidy Cuts - Caixin Global Shockwaves spread abroad as the new policy is expected to cause a sudden contraction in demand from the world’s largest solar market, putting downward pressure on panel prices. Consulting firm Wood Mackenzie said it expects that at least 20 gigawatts (GW) of planned solar installations will be scrapped in China this year — equivalent to a fifth of last year’s global demand. A GW is 1 billion watts, and 20 GW would be enough to power 14 million homes.

 

Beijing

Beijing caps population of sub-center at 1.3 mln - CGTN Tongzhou district is the proposed solution to the problem of an overpopulated Chinese capital, with over 21 million residents. That is according to the latest draft of the planning document. “Through the construction of the sub-center, we can relieve and undertake the population and pressure of the central city, to ensure the capital functions effectively,” said Shi Weiliang, chief planner of Beijing Municipal Commission of Urban Planning. The document sets a population cap of 1.3 million for Tongzhou district by 2035.

Rubble Trouble: Hutong Residents on Beijing’s ‘Beautification Campaign' – That’s Beijing Last year, construction crews bricked over thousands of stores and restaurants throughout the capital, forcing many business owners to leave. We asked hutong residents and shop owners in Beixinqiao – a neighborhood that was particularly hard hit – how their lives have changed.

The possibility of getting a license plate in Beijing: 1:2,031 - China Daily The chance to get a new license plate registered in Beijing is becoming tougher every month, with the possibility of securing the license falling to 1 in 2,031, a record low, according to bjhjyd.gov.cn on Monday. As of June 8, a total of 2,808,047 eligible individuals had applied for license plates through the lottery system. The total plates available for the two months were 6,333.

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