Xi to Mar-a-Lago?; Liu He stops by trade talks; Lowering Q1 GDP expectations

To all of you on vacation last week, welcome back! I assume many of your inboxes are quite full. If you want a quick catchup on the big China-related stories from last week please check out the Lunar New Year roundup I published over the weekend.

The US-China trade talks have resumed in Beijing this week. The deputies started meeting today in Beijing, and as Hu Xijin tweeted, Liu He made an appearance:

The more senior talks with USTR head Lighthizer and Treasury Secretary Mnuchin arrive in Beijing are scheduled for February 14 and 15.

Jonathan Swan of Axios reported Sunday afternoon that Xi may visit Mar-a-Lago in March:

President Trump's advisers have informally discussed holding a summit there next month with Chinese President Xi Jinping to try to end the U.S.-China trade war, according to two administration officials with direct knowledge of the internal discussions.

  • Both officials, who are not authorized to discuss the deliberations, described Trump's club in Palm Beach, Florida, as the "likely" location for the leaders' next meeting, but stressed that nothing is set. The meeting could come as soon as mid-March, these sources said.

  • A third official cautioned that the team has discussed other locations, including Beijing, and that it's premature to say where they'll meet or even whether a meeting is certain to happen.

If the two are going to meet then I think the likelihood of an extension of the trade talks, if not some sort of framework agreement by the March 1 deadline, increases. We should know more by the end of the week, then again with the leaks and conflicting agendas things will probably drag out somewhat schizophrenically until Trump and Xi meet, or definitively do not.

DC readers may be interested in the Tuesday AM launch of Course Correction: Toward an Effective and Sustainable China Policy, a new report by the Asia Society’s Task Force on US-China Policy. Details of the event are here.

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Thanks for reading.

The Essential Eight

1. Holiday economic data weak, Q1 GDP 6%?

Holiday Spending Bodes Poorly for China’s Economy This Year - Caixin:

Yet while such spending rose 8.5% as China welcomed the Year of the Pig last week, it was the slowest rate of growth since at least 2011, reflecting wider troubles in China’s economy.

For the first time lunar new year spending broke the trillion yuan barrier, with 1.01 trillion yuan ($149 billion) being spent during the Lunar New Year celebration, which ran from Feb. 4 to Feb. 10 this year, according to the Ministry of Commerce. The ministry said growth was “steady and rapid,” without acknowledging the slowing growth rate.

A slowdown was also apparent in tourism statistics. Chinese citizens took 415 million trips over the period, an increase of 7.6% from the previous year, according to the official Xinhua News Agency (link in Chinese). It marks the slowest rate of growth since 2008, when the Chinese economy was feeling the shockwaves of the global financial crisis.

As official media set expectations for Q1 GDP growth as low as 6% - China GDP growth tipped to slow to 6% in Q1: state-run paper | Financial Times $$:

“It is not difficult to determine that this year our country’s economy will continue to bear pressure, with a conservative estimate for full-year cumulative growth of about 6.3 per cent and the possibility that growth for the present quarter could reach 6 per cent,” according to a front-page commentary on Monday in the Economic Information Daily, a newspaper run by China’s official Xinhua news agency.

中国经济仍将行稳致远 - 经济参考报


Will China's economy in this lunar year end up known as the Year of the Gasping Pig?

Spring Festival travel brings 513.9 bln yuan to China's tourism revenue - Xinhua:

China's domestic tourism revenue gained 513.9 billion yuan (about 76.21 billion U.S. dollars) during the week-long Spring Festival holiday that ends Sunday, an annual increase of 8.2 percent, according to the Ministry of Culture and Tourism.

A total of 415 million trips were made across the country during the holiday, rising by 7.6 percent year on year, according to the ministry...

During the Spring Festival holiday last year, 386 million trips were made domestically, contributing to an increase of 475 billion yuan in China's travel revenue.

Holiday sales of Chinese retail, catering firms up 8.5 pct - Xinhua:

Combined sales of retail and catering enterprises in China rose 8.5 percent year on year during the week-long Spring Festival holiday ending Sunday.

From Monday to Sunday, their total sales reached a new high of 1.01 trillion yuan (about 150 billion U.S. dollars), the Ministry of Commerce said in a statement on its website.

Chinese New Year travelers spent RMB 1.2 billion over WeChat Pay · TechNode:

Holiday travelers spent a combined RMB 1.2 billion (around $180 million) using WeChat Pay from Feb. 4 to 9. Small fourth, fifth, and six-tier cities made up over 40% of all WeChat Pay transactions as travelers took their payment habits home with them, which the platform termed “migratory consumption”..

823 million WeChat users sent or received virtual hongbao, “red envelopes” stuffed with money, a 7.1% increase over the Spring Festival holiday period last year.


2. US-China

South China Sea, Fentanyl, Huawei…just another reminder that trade is just one part of the multi-dimensional, deepening tensions in the US-China relationship.

U.S. destroyers sail in disputed South China Sea amid trade tensions | Reuters:

The official, speaking on condition of anonymity, said the two guided-missile destroyers traveled within 12 nautical miles of Mischief Reef in the disputed Spratly Islands.

U.S. Naval Patrol Prompts Chinese Protest as Trade Talks Start - Bloomberg:

Chinese Foreign Ministry spokeswoman Hua Chunying deflected a question about whether the move would impact trade talks expected to get underway Tuesday in Beijing. “You have observed very carefully, and observed a series of tricks by the U.S. side. I believe you all see through these small tricks by the U.S. side,” Hua told a regular news briefing in Beijing.

China strongly dissatisfied by U.S. warships entering South China Sea - CGTN:

The two warships entered China's territorial seas around the Nansha Islands without permission from the Chinese government, ministry spokeswoman Hua Chunying said at a daily news briefing.

The Chinese side immediately conducted verification and identification on the U.S. ships and warned them to leave, said the spokeswoman.

The relevant action by the U.S. side infringed upon China's sovereignty, and undermined the peace, security, and order of the relevant waters, Hua said, adding that China will continue to take necessary measures to safeguard itself.

美两艘军舰再闯南沙海域 中方敦促美方立刻停止挑衅行动 

CNO Richardson Calls for Tougher Actions in Gray Zone Conflicts with Russia, China - USNI News:

On the topic of China – where Richardson recently visited – the admiral said the two navies were increasingly encountering each other at sea and ought to behave as safely as possible during those encounters. The two navies have a Code of Unplanned Encounters at Sea (CUES) that governs how ship captains ought to handle any meetings at sea, but Richardson said the U.S. may need to look for ways to impose consequences if these rules aren’t followed.

“One of the things we made clear during the visit to China was that, hey, in terms of rules of behavior on the high seas – first of all, we do have an operational construct that is designed to minimize the chance of miscalculation when two of our ships meet on the high seas. And since our presence there has been consistent in terms of force level and what we do, the Chinese navy is growing, there’s going to be more opportunities where we meet. And so these rules are going to be operative more and more. We should approach each other all the way down to the tactical level, our front-line commanders, in ways that actually make it easy for us to adhere to these rules of behavior,” he said.

Grading the impact of Trump's China tariffs - Axios:

After accounting for frontloading to get out in front of the tariffs early in the year, the rate of tariffed goods exported from China slowed, a new report from the Institute of International Finance shows, and will likely continue to slow without a resolution.

China's reciprocal tariffs on U.S. goods are slowing American exporters' sales, too.

But because the U.S. imports more from China than it exports there, tariffs should continue to lessen the trade deficit.

Schumer announces fentanyl sanctions bill before China talks | PBS NewsHour Weekend:

Schumer’s legislation — known as the Fentanyl Sanctions Act — would direct U.S. officials to publicly identify foreign opioid traffickers, would deny the traffickers visas in the U.S. and would prohibit them from doing business using American banks.

The bill aims to “hold accountable” fentanyl manufacturers in China and other countries that illegally drugs to the U.S., Schumer said. It could also be used to target transnational gangs and cartels involved in fentanyl trafficking, as well as banks that help those organizations, he said.

“For years, Chinese laboratories have been cooking-up formulas of death and freely exporting lethal fentanyl across New York, and to many other places across America, where it is killing tens-of-thousands of people_and it has to stop,” Schumer said

Trump to lay out an AI plan - Axios:

Between the lines: The American AI Initiative, as the new strategy is named, is unlikely to call out China directly. Administration officials skirted reporters' questions about China during a Sunday press conference.

But there's little doubt among experts that the administration is responding to Beijing's unrelenting push to fund Chinese AI research, encourage its implementation, and export AI tools.

"This executive order is about ensuring continued America leadership in AI, which includes ensuring AI technologies reflect American values, policies, and priorities," an administration official told Axios.

Related: Understanding China's AI Strategy | Center for a New American Security - By Gregory C. Allen

In the second half of 2018, I traveled to China on four separate trips to attend major diplomatic, military, and private-sector conferences focusing on Artificial Intelligence (AI). During these trips, I participated in a series of meetings with high-ranking Chinese officials in China’s Ministry of Foreign Affairs, leaders of China’s military AI research organizations, government think tank experts, and corporate executives at Chinese AI companies.

Rural U.S. Carriers Resist Proposed Chinese Telecom Ban - WSJ $$:

President Trump is weighing an executive order that could ban Chinese telecommunications gear from U.S. networks, but the plan is facing resistance from U.S. carriers in rural areas whose networks run on Huawei Technologies Co. equipment...

“We’ve obviously been in touch with the administration to make sure they understand whatever they do in that [order] doesn’t have the unintended consequence of hurting rural America,” said Carri Bennet, general counsel of the Rural Wireless Association, a trade group of smaller carriers. “What nobody in the administration or government or Congress seems to have looked at is how pervasive is all this gear in our networks.”

U.S. Campaign Against Huawei Faces Challenge in Eastern Europe - WSJ $$:

In the Czech Republic, officials have taken opposite sides on how to balance security concerns raised by the U.S., and the country’s own cybersecurity officials, with the desire for Chinese investment, trade and business opportunities. The Czech prime minister wants to consider restrictions on Huawei, but the country’s president has embraced the company.

The divide in Czech Republic speaks to the headwinds Mike Pompeo will encounter this week when the secretary of state travels to a region that has seen relatively few high-profile U.S. visits in recent years. Chinese premiers, by contrast, have met yearly with virtually every Central and Eastern European head of government since 2012, and in 2016 President Xi Jinping spent three days in Prague, touring a castle and drinking pilsner with Czech President Milos Zeman. Mr. Zeman is now one of Huawei’s biggest defenders in Europe.

3. Turkey condemns China's Uighur policies

Turkey Urges China to End Mass Detention of Muslims - The New York Times:

“Many of us have criticized the Turkish government for its stance on the subject, but today many Uighurs expressed their happiness and joy thanks to the Turkish authorities,” Tahir Imin, a Uighur academic and activist, said by telephone from Washington. “This is very encouraging for us. It gives us strength and hope that the Turkish government can lead the way for the other Muslim nations to bring some more pressure on the Chinese government.”

Turkey made the statement despite recently receiving a $3.6 billion loan for its energy and transportation sector from the Industrial and Commercial Bank of China, a state-owned bank.

QR-6, 9 February 2019, Statement of the Spokesperson of the Ministry of Foreign Affairs, Mr. Hami Aksoy, in response to a question regarding serious human rights violations perpetrated against Uighur Turks and the passing away of folk poet Abdurehim Heyit:

Practices violating the fundamental human rights of Uighur Turks and other Muslim communities in the Xinjiang Uighur Autonomous Region have worsened, especially during the last two years, and have been brought to the agenda of the international community.

In particular, the official declaration of the "Sinification of All Religions and Beliefs" policy in October 2017 was another step towards the goal of eliminating the ethnic, religious and cultural identities of the Uighur Turks and other Muslim communities in the region...

we invite the Chinese authorities to respect the fundamental human rights of Uighur Turks and to close the internment camps.

We call on the international community and the Secretary General of the United Nations to take effective measures in order to bring to an end this human tragedy in Xinjiang.

China releases video of Uighur poet said to have died in custody |The Guardian:

Turkey’s foreign ministry said on Saturday it had learned that poet and musician Abdurehim Heyit had died while serving an eight-year prison sentence. ..

On Sunday, the state-owned China Radio International’s Turkish edition released a video of Heyit, dated 10 February while the Chinese embassy in Turkey said Ankara had “seriously violated the facts”.

In the 25-second video a pale-faced Heyit, seated in front of a grey wall, says he is being investigated for “allegedly violating national laws”. “I’m now in good health and have never been abused,” he said, according to the subtitled video.

Comment: It is a grim video, so far authenticity not confirmed, but clearly he is not speaking freely

China refutes Turkish FM's accusation on Xinjiang training centers - Global Times:

"What needs to be emphasized is that the right to life is the basic human right, and terrorism and extremism severely threaten that right, and the safety of all people in Xinjiang," the embassy spokesperson said.

The spokesperson, who was not named in the two statements released on the embassy's website on Sunday, also said that "both China and Turkey are faced with grave counter-terrorism situations. We oppose double standards on counter-terrorism and hope Turkey correctly learns and understands the counter-terrorism and de-extremism measures that China have taken."

The Chinese embassy has asked the Turkish foreign ministry to withdraw its false accusations and take measures to eliminate their bad influence.

The vocational education and training centers are not "concentration camps," as the Turkish side alleges and their core objective is to counter terrorism and extremism, the spokesperson said.

4. Pushback on the "Polar Silk Road"

How the Pentagon Countered China’s Designs on Greenland - WSJ $$:

Beijing must not be allowed to militarize this stretch of the Arctic, Mr. Mattis told his Danish counterpart Claus Frederiksen at a meeting in Washington in May, according to officials close to the discussion...

Pentagon officials expressed worry that Greenland’s aid-dependent government could struggle to repay a loan for the $555 million project, and after a few missed payments, China’s government could take control of runways that could potentially be used by warplanes on an island where the U.S. has a missile-tracking air force base. A presence in Greenland could also help China access new shipping lanes and resources under the Arctic’s retreating ice.

Months later, after the airports question precipitated a collapse of this polar island’s government and serial visits by U.S. and Danish officials, Greenland announced that its new capital airport would be built with loans backed by the Danish government, as would another 400 miles up the coast. Greenland will finance the third facility, and no role for China is foreseen...

Greenland is key to China’s strategy, which it calls the “Polar Silk Road.”

“China needs to carefully consider the possibility that a small and weak Greenlandic nation could emerge in the Arctic in the next 10 years,” wrote Xiao Yang, director of the Arctic Research Center at Beijing International Studies University, in a recent paper. “This will be the key node for the successful implementation of the Polar Silk Road.”

5. Maldives calls out BRI corruption

The Maldives counts the cost of its debts to China | Financial Times $$:

But while China has portrayed its Maldivian projects as an example of how its Belt and Road Initiative can drive development in smaller countries, the new government in Male is taking a darker view. It claims that Mr Yameen’s administration saddled the country with vast debts — owed principally to China — through inflated investment contracts that involved personal gain for corrupt Maldivian officials.

Over the past two months, the Maldives has been struggling to establish the full scale of its exposure to Chinese debt, most of which is in the form of sovereign guarantees on Chinese loans to companies. Finance ministry data show that these guarantees amount to $935m, on top of the $600m directly owed to Beijing by the government...

Comment: The finance minister does not mince words about the corruption that is a feature, not a bug, of so many of these BRI deals. The cynical side of me wonders if the re-evaluation of BRI deals by new governments is about ensuring the terms are good, or ensuring that the newly installed officials and their cronies also get a taste of Chinese largesse…

Ibrahim Ameer, finance minister, says the new government will ask China to reduce the sums owed, as well as amending the interest rates and repayment schedules for them.

Its argument is blunt: that the stated project costs, and the loans that funded them, were substantially inflated, with much of the surplus flowing to the pockets of Yameen administration officials.

“Everything was engineered by government officials so as to ensure the most enrichment for them,” Mr Ameer says. “It was done that way by design.”

6. Propaganda for the younger masses

How official Chinese propaganda is adapting to the social media age as disaffection spreads among millennials | South China Morning Post:

After 40 years of rapid growth, China’s younger generation now feel they have fewer opportunities to move upwards, while facing a lot more pressure in work and life.

The growing disaffection that resulted has alarmed the party leadership and prompted a debate about what some academics characterise as “intergenerational inequality” as younger Chinese people lose out on the benefits enjoyed by the generation who grew up at the peak of the country’s economic boom...

Another leading voice in the backlash against “irresponsible” social media users “cashing in on people’s anxiety” is the official WeChat account of the Central Political and Legal Affairs Commission.

This lies at the heart of the party’s efforts to control the social media narrative and operated for three years under the nickname of Chang An Jian – or Sword of Long-lasting Security – complete with anime-style avatar, before disclosing its true identity in November.

The South China Morning Post understands that this new media operation is run by a small central team of fewer than 10 people, all of whom were born in the 1980s or 1990s...

According to Leibei.com, which tracks WeChat public accounts, Chang An Jian has about 670,000 active subscribers and its Weibo account has more than 6 million followers.

Another official media account operated by People’s Daily, Xia Ke Dao – or Swordsman of the Island – has more than 1 million active followers.

Blockbuster nationalism and viral propaganda | China Media Project:

Beginning on February 5, the Central Committee of the Chinese Communist Youth League (CCYL) began running reviews on its official WeChat account of how the League, nicknamed “Tuan Tuan” (团团), engaged with audiences over the past year through various social media channels. The point of the reviews is apparently to highlight the work the CCYL has done to modernise propaganda and reach younger audiences with the messages of the leadership.

Anxieties of development: emerging voices in Chinese social media | Chublic Opinion:

Even if it is just another type of intellectual opium that the Chinese Internet routinely produces, if “people up there” are really paying attention to what the SNs are blogging about these days, they may find it reassuring that a not so small segment on social media is fully supportive of the leadership’s push to bring Chinese manufacturing to the next level against a strong trade headwind. They may be alerted by the intensity of frustration this group of people feel about the Party’s track record in managing the country’s population, education and property market. They may also be encouraged to find a reliable cyberspace ally more powerful in many ways than the official propaganda machinery in its ability to coalesce the hardworking middle class around an assertive agenda of Made in China 2025, Belt & Road Initiative and geopolitical adventures that reclaim China’s development space in the world.

7. More on the new stock exchange board

Caixin's cover story this week looks at the "coming Nasdaq-style high-tech trading board". 

In-Depth: China’s New Proving Ground for Stock Market Reform - Caixin:

China’s coming Nasdaq-style high-tech trading board may provide the kick-start that stagnating stock market reforms need, according to securities industry executives and analysts.

Draft rules issued Jan. 30 suggest that the government aims to use the new board as fresh start for revitalizing the nation’s capital markets. The proposed structure would reduce the role of regulators and free up the market for competition, innovation and normal market forces to take hold, industry experts say...

Caixin learned that regulators set the five criteria after reviewing related requirements set by regulators in Hong Kong and the U.S. But an official who participated in the rule drafting said it will still be a challenge for regulators to make accurate judgments on companies’ capacity for innovation. The Shanghai exchange plans to set up an advisory board consisting 40 to 60 leading tech and investment experts to evaluate applicants’ technological potential, according to Wang Jiyue, a senior investment banker...

An investment bank source said it will take time for the market to determine whether the changes can make a real shift from China’s long standing IPO approval system.

“If it only moves (the decision-making on IPOs) from the CSRC to the Shanghai exchange, it will be not enough,” the source said.

8. Xi cites Marx, Engels and I Ching in speech on ecological civilization 

China’s Xi Jinping goes back to Marx and the classics to push a modern green agenda | South China Morning Post:

Qiushi, the Communist Party’s journal, published in its January issue a speech Xi delivered in May in which he quoted extensively from Marx and Chinese classics such as the I Ching, or Book of Changes, and Tao Te Ching to stress that human must live in harmony with nature.

“To learn from Marx, [we] must learn Marxist thought on human and nature,” Xi said.

“If mankind conquers nature with science and creativity, nature will take revenge on mankind,” he added, paraphrasing Marx and fellow writer Friedrich Engels.

Xi went on to cite Engels’ Dialectics of Nature, saying that the ancient inhabitants of Mesopotamia, Greece, Anatolia all saw their homelands become deserts after turning too many forests into fields.

Xi also cited the I Ching, a foundation text for feng shui masters, to make his point on the significance of preserving the environment.

The Qiushi piece 推动我国生态文明建设迈上新台阶 

Business, Economy, Finance And Trade

Two Large Chinese Borrowers Are Said to Miss Bond Payments - Caixin Global China Minsheng Investment Group Corp., a private investment group with interests in renewable energy and real estate, hasn’t returned capital to some holders of a yuan bond that it pledged to repay on Feb. 1, according to people familiar with the matter. And Wintime Energy Co., which defaulted last year, didn’t honor part of a debt repayment plan, separate people said. The developments are significant because both companies were big borrowers, and their problems accessing financing suggest that government efforts to smooth over cracks in the $11 trillion bond market aren’t benefiting all firms

China iron ore rises to record on concerns over Brazilian supply | Reuters The most-active iron ore futures for May delivery on the Dalian Commodity Exchange rose to their daily trading limit when the market opened at 0100 GMT, hitting a record of 652 yuan ($96.26) a ton.

China unveils guidelines on financial services for rural rejuvenation China on Monday issued guidelines to improve financial services for rural rejuvenation, vowing to encourage local governments’ special bonds issuance to support projects in the countryside, according to the central bank. China will support qualified agriculture companies to go public, the central bank said in a statement posted on its website, which was jointly issued by multiple authorities including the finance and agriculture ministries.

Macau Casino Stocks Jump on Strong Chinese Holiday Tourism - Bloomberg China mainland visitors to Macau reached almost 900,000 during the week-long Chinese New Year holiday, climbing 26 percent from last year’s festive holiday, according to Macau’s tourism office. That accelerated from last year’s 12 percent growth and triggered a rally for the Hong Kong-listed casino operators.

Foreigners invest record $9bn into Chinese stocks in January | Financial Times $$ “A big factor is that the Fed has shifted its tight stance. People are no longer expecting another rate hike in March. This is an especially large support for emerging markets,” said Daniel Li, equity chief investment officer of Gaoteng Global Asset Management in Hong Kong.  “Beyond that, investors are more optimistic about the US-China trade dispute. A big reason for last year’s sell-off was the US-China relationship, but now the two sides are negotiating, and markets are more optimistic about a deal.”

China's Bullish Start to Year Gains Momentum as Small Caps Soar - Bloomberg The ChiNext Index closed 3.5 percent higher in Shenzhen for a second straight session, its best two-day performance since October. A gauge of Shanghai-traded large caps added 1.1 percent following the Lunar New Year break. The yuan dropped 0.9 percent as it traded for the first time in over a week and the Bloomberg Dollar Spot Index rose for an eighth day.

China’s Demographic Danger Grows as Births Fall Far Below Forecast - WSJ $$ “The demographic outlook does appear to be deteriorating faster than officials had expected,” analysts at Capital Economics wrote in a recent research note. That’s making it harder for officials to lower taxes much to stimulate growth, since doing so could make it tougher to shore up underfunded pension programs. It’s also making it harder to encourage consumers to boost spending, as more people worry over health and retirement costs.

Politics, Law And Ideology

春节前后 浙江27官员充当虞关荣保护伞被查处_政经频道_财新网 27 officials including senior former Hangzhou police officials under investigation as crackdown on "organized crime" and its corrupt official protectors hits Zhejiang//, 2月3日,农历腊月二十九,己亥春节前最后一个工作日,浙江省纪委监委官网公布了杭州市公安局原党委副书记朱伟静等11人被查处的消息。   2月11日,农历正月初七,己亥春节后第一个工作日,浙江省纪委监委官网再度公布了杭州市公安局治安支队原副支队长罗伟东等16人被查处的消息。

China has no use for democracy. It needs a strong leader like Xi Jinping right now | South China Morning Post Chi Wang says China has no ideological basis for the development of a system that prizes personal freedom, nor any history with the rule of law..Understanding these realities of leadership in China, it becomes apparent that regardless of how Xi was selected, he is the leader that China needs right now. The crime and corruption that accompanied reform in China threatened to collapse the government in on itself. Further, with the US president leaning increasingly towards hawkish China policies, China cannot afford weak leadership. At this critical junction, coinciding with the 70th anniversary of the establishment of the People’s Republic of China, Xi is the right person to lead China.

Is China’s corruption-busting AI system ‘Zero Trust’ being turned off for being too efficient? | South China Morning Post Jointly developed and deployed by the Chinese Academy of Sciences and the Chinese Communist Party’s internal control institutions to monitor, evaluate or intervene in the work and personal life of public servants, the system can access more than 150 protected databases in central and local governments for cross-reference...The system can immediately detect unusual increases in bank savings, for instance, or if there has been a new car purchase or bidding for a government contract under the name of an official or one of his family or friends. Once its suspicions have been raised it will calculate the chances of the action being corrupt. If the result exceeds a set marker, the authorities are alerted.

Translation: China’s Personal Information Security Specification - DigiChina Issued by the national information technology security standards-setting organization known as TC260, it was developed by a drafting team with input from national and local cybersecurity audit and standards organizations, major universities, prominent internet companies, and government ministry research units. Just six months after the Specification entered force, the standard’s drafters have already begun to revise it to close legal loopholes that they believe allow excessive collection of personal data by companies. On January 30, 2019, TC260 released a draft of a revised version of the Specification that includes several new or modified requirements for personal information controllers:

China’s New Cybersecurity Measures Allow State Police to Remotely Access Company Systems On November 1, 2018, China issued new provisions to the law titled “Regulations on Internet Security Supervision and Inspection by Public Security Organs” (公安机关互联网安全监督检查规定). The regulations, likely evolved to clarify portions of China’s 2017 Cybersecurity Law, give the Ministry of Public Security (MPS) broad powers over the computer networks of companies in China. These ostensibly include the authority to remotely conduct penetration testing on almost any business operating in China and copy any information related to user data or security measures found during the inspection. These new provisions specify no limits on the scope of vulnerability or security inspections and require extremely minimal reporting to be provided back to the corporation. Further, the regulations continue to use vague terminology and do not limit the scope of in-person or remote inspections for network security testing. We assess that the combination of existing MSS regulations with these new Cybersecurity Law provisions for the MPS will support Chinese government attempts to both censor and surveil foreign companies. //Translation - Provisions on Public Security Organs' Internet Security Oversight and Inspections 

Foreign and Military Affairs

China's EU mission denies groundless reports about Chinese espionage in Brussels - Xinhua Responding to reports by Germany media that a large number of Chinese spies are active in Brussels, a spokesperson of the Chinese mission said the Chinese side is "deeply shocked by such unfounded reports." "China always respects the sovereignty of all countries, and does not interfere in the internal affairs of other countries," the spokesperson said in a statement.

Hundreds of Russian and Chinese spies in Brussels — report | News | DW | 09.02.2019 The EU's foreign service has warned there are hundreds of Russian and Chinese intelligence agents operating in Brussels, according to a report in Germany's Welt am Sonntag newspaper. The European External Action Service (EEAS) estimates there are "about 250 Chinese and 200 Russian spies in the European capital," the paper reported, citing EU diplomats.  //  As there should be...

中央军委主席习近平签署命令发布《中国人民解放军军事训练监察条例(试行)》-新华网 《条例》共10章61条,明确了军事训练监察的职责权限和工作重点,规范了组织实施军事训练监察的方式方法和程序步骤,构建了覆盖军事训练各层次各领域、贯穿军事训练全过程的军事训练监察组织运行模式。《条例》依据党纪军规细化了军事训练违规违纪问题认定标准,确立了有权必有责、有责要担当、失责必追究的鲜明导向,督导全军持续推进训练与实战一体化、持之以恒抓好训练作风建设,为把备战打仗工作抓得实而又实提供了有力制度保证。

Chinese Investment in Israel Raises Security Fears - WSJ $$ Israel is moving to create an interagency government body to oversee sensitive commercial deals involving foreign companies, U.S. and Israeli officials said, akin to the U.S.’s Committee on Foreign Investment, or Cfius. The effort has been under way in recent months but has taken on added urgency amid recent complaints about Chinese investment from American and Israeli security officials, including national security adviser John Bolton and Israel’s domestic spy chief, U.S. and Israeli officials said.

Registration mistake turned back New Zealand flight to China - AP New Zealand’s national carrier admitted a registration mistake turned back a flight to China over the weekend, prompting Prime Minister Jacinda Ardern to say Monday that politics were not involved. She said the incident had no bearing on the relationship between the two nations and she wouldn’t be seeking reassurance on that point from Chinese officials.

Tech And Media

Apple, Xiaomi Sales Shrivel in China’s Shrinking Smartphone Market - Caixin Global giant Apple Inc.’s China smartphone sales plunged nearly 20% at the end of last year, as local rival Xiaomi Corp.’s downward slide accelerated even more in the world’s largest market, according to new data released on Monday. The weak performances came as the overall China smartphone market continued to contract in last year’s fourth quarter, falling 9.7% as 103.3 million units shipped, according to data-tracking firm IDC. The China market declined 10.5% for all of last year and has now notched five consecutive quarterly contractions, reversing several years of explosive growth that catapulted it to become the world’s largest market... Huawei saw its fourth-quarter sales rise 23.3% to 30 million units, giving it 29% of the market. Homegrown players Oppo and Vivo rounded out the top five in second and third places, respectively, with each posting modest sales growth in the 1% to 3% range.

Sci-fi blockbuster proves holiday hit, amazes critics - China Daily China's sci-fi feature film The Wandering Earth was a stellar performer during Spring Festival, raking in 1.9 billion yuan ($282 million) as of Sunday at domestic box offices since it hit cinemas on Tuesday.

China's first sci-fi blockbuster reflects Chinese vision of global community - Global Times Zhao Songhui, a graduate student at Duke University in the US, plans to watch it for the third time with her friend. She watched it first on the day of release and sobbed through the second half with many other viewers.  "This is not a superhero movie or a Wolf Warrior in space. The long journey and saving of the Earth is for all humans as a community," Zhao told the Global Times on Sunday. Wolf Warrior is a popular 2015 Chinese military action movie.  Shi Wenxue, a Beijing-based film critic, noted that The Wandering Earth's overarching message is one of the "collective success of mankind that goes beyond race and nationality," seen in the sacrifice of a Russian astronaut and cooperation from international teams.

China vows to crack down on online piracy of domestic films - Global Times China's copyright administration on Sunday vowed to crack down on online piracy to protect the copyrights of domestic films, after a number of films were pirated during Chinese New Year, including sci-fi blockbuster The Wandering Earth. China's National Copyright Administration announced on Sina Weibo the distribution of pirated New Year films has been contained to a certain extent, noting that it would transfer copyright offenders to the public security organs to investigate their criminal liability in serious cases.

Actor hit by accusations of academic plagiarism - Global Times Sina Weibo user "PITDyazhounuedaiboshizuzhi" on Saturday accused Zhai Tianlin, 32, who most recently appeared in China's 2019 Spring Festival Gala on China Central Television, of plagiarism on Sina Weibo. The user uploaded a paper by Zhai, which was published in an academic journal in August 2018, to a plagiarism software platform. The similarity score for the 2,783-word article was 40.4 percent after it was put through the China National Knowledge Infrastructure (CNKI), a similar platform to Google Scholar, according to the Weibo post.  Zhai has been mired in controversy since he asked in a live video in August 2018 what the CNKI was

A State Scientist’s Views on China’s Microchip Industry - Sixth Tone The past year has brought change to the work of Zhao Yuanfu, vice director of the Science and Technology Committee at the Ninth Academy of China Aerospace Science and Technology Corporation (CASC). The state-owned corporation designs and manufactures a type of chip technology that already rivals that of the U.S., Zhao says: space-grade microchips, those used mainly on rockets, spacecraft, and satellites. Zhao’s team’s chips feature heavily in China’s space program, and Zhao himself won the 2018 State Technological Invention Award for his work. ..thanks to the 909 Project — a 4-billion-yuan government-backed project launched in 1996 that aims to manufacture high-quality microchips at a large scale — we were able to produce space-grade microchips that have gradually caught up with American technology. I’d say these chips are now at a world-leading level, although that’s partly because space-grade microchips tend to be simpler to design and manufacture than civil-use chips.

China’s Internet Giants Hand Out Billions of Yuan in Digital Red Envelopes - Caixin TikTok, a short-video app under Bytedance Ltd., offered a total of 500 million yuan to users who completed tasks such as linking their mobile phone’s numbers or contacts with the app. Tencent’s short-video app Weishi also shared 500 million yuan. Users could win cash by watching a certain number of clips or making their own interactive “hongbao” videos that allowed users to send money to friends through its WeChat Pay payment service.

Himalaya Launches Podcast Platform With $100 Million Funding – Variety San Francisco-based podcasting startup Himalaya Media has raised $100 million in funding to establish itself as a new force in the podcast distribution space. The company has launched apps for Android and iOS, and is getting ready to roll out a series of exclusive shows. Himalaya’s main investor is Ximalaya, China’s biggest spoken word audio platform. Other investors include General Atlantic and SIG. Himalaya has also struck content partnerships with the Dallas Mavericks, Starburns Industries and Studio71.

Society, Art, Sports, Culture And History

Taiwanese spymaster looks back on killing that led to end of island’s martial law | South China Morning Post Death of writer Henry Liu in US sparked fury and eventually brought democracy to self-ruled island...“I was just doing my job,” said Chen, 79, a former deputy director of the Military Intelligence Bureau unit responsible for gathering intelligence about China since 1949 and keeping track of Taiwanese activities in the US In an interview with the South China Morning Post, he said they decided to “bring justice” to Liu because they had solid evidence that he was spying for Beijing while also receiving monetary rewards from the bureau.

Energy, Environment, Science And Health

Dam proposed to stop desertification in Qinghai-Tibet Plateau - People's Daily Online The dam's proposed site would be near the reserve's Zonag Lake, a major breeding area for the once endangered Tibetan antelopes, the newspaper quoted Lu Shanlong, a researcher at the China Biodiversity Conservation and Green Development Foundation and a professor at the Aerospace Information Research Institute under the Chinese Academy of Sciences, as saying. After bank bursting in 2011, the lake has dried up and become a major source of sandstorms wreaking havoc on the region's delicate and vulnerable ecology.

China's Potential HIV Contamination Revives Drug Safety Fears - Bloomberg Over Chinese New Year, the National Medical Products Administration said a batch of intravenous human immunoglobulin in blood plasma by Shanghai Xinxing Medicine Co. tested positive for HIV antibodies in the eastern province of Jiangxi. Shanghai regulators conducted their own tests, which came back negative for the virus, and ordered a production halt and recall. Xinxing is investigating as well, according to China Meheco Co., which owns 51 percent of the blood producer and is controlled by a state firm