Yet another vaccine scandal; US-China "cold war"?; "More vigorous" fiscal policy; Investors seem to like new WMP rules; Xi's trip to the Middle East and Africa; 定於一尊

The top things I am looking at today:

  • YAVS--Yet another vaccine scandal is roiling through China, angering parents and further damaging confidence in the government's ability to deliver safe medical goods. Accountability beyond local scapegoats is usually lacking in China unless there is a political aspect to the problem. Li Keqiang has been Premier for 64+ months, with oversight of the health system, and he looks particularly ineffective in this case;

  • The State Council Monday approved plans for a more "proactive fiscal policy" though there are no clear signs yet this is a precursor to a massive new stimulus program or that the "tough battle" against financial risks is being abandoned or materially scaled back;

  • President Trump again threatened tariffs on all of China's exports to the US and accused it of manipulating the RMB. There are still no indications the two sides are engaged in any meaningful discussions to deescalate, and this week has the July 25 deadline for US airlines to comply with Beijing's demands to reclassify Taiwan on their web sites, a demand the White House has already denounced. It looks to be an interesting week. 

Thanks for reading. Comments and tips are always welcome. 

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The Essential Eight

1. Vaccine scandal

Xi Jinping Orders Probe Into Sale of Substandard Vaccines - Caixin Global:

The breaching of laws and regulations in the manufacturing of the vaccine by Changchun Changsheng Life Sciences Ltd. is “abominable” and “shocking,” and authorities must respond to public concerns in a timely manner, the official Xinhua News Agency quoted Xi as saying.

Also on Monday, police in Changchun, Jilin province, where the company is based, announced that they have arrested four company executives, including Chairwoman Gao Junfang...

The news comes just days after Changchun Changsheng was ordered to stop making its rabies vaccine after it was found to have tampered with production data. The latest scandal has provoked an outcry among Chinese parents and sent authorities scrambling to contain the situation.

Over 250,000 doses of the DPT vaccine were found to be substandard. Most were sold in Shandong province, the Jilin Food and Drug Administration said in a statement on Friday.

China has been plagued by vaccine scandals in recent years. Another company, Wuhan Institute of Biological Products Co. Ltd., sold more than 400,000 doses of substandard DPT vaccines, the China Food and Drug Administration (CFDA) said in November.

Thousands of Children Injected with Faulty Vaccines in China - The New York Times:

One image circulating online showed a screenshot of a news item touting a promise from Premier Li Keqiang on Sunday to “resolutely crack down on all illegal and criminal acts that endanger the safety of people’s lives.”

Next to it was a similar statement that Mr. Li offered after another vaccine scandal in 2016, suggesting the government had done nothing to address the problem.

As new vaccine scandal grips China, parents say they’ve lost faith in the system | South China Morning Post:

Meanwhile, the Shandong edition of Communist Party mouthpiece People’s Daily called on the government to take action to ease public concerns about the scandal in an editorial headlined, “Don’t let fear and anger spread”.

It said the latest case would “lead more people to be sceptical about domestically produced vaccines” given that public confidence had barely recovered from the scandal two years ago over expired vaccines that saw 200 people arrested...

It came after state-run China Economic Times in 2010 revealed that hundreds of children in Shanxi province had died or suffered from severe side effects because of damaged vaccines over a period of three years. Shanxi officials denied there were problems with vaccines at the time and the newspaper’s editor was sacked after the report was published.

China police probe vaccine maker after scandal sparks fury | Reuters:

The case has gone viral in China, where sensitivity over food and drug safety is extremely high after a slew of scandals over the last decade. It was among the most hotly discussed topics on microblogging website Sina Weibo on Monday.

A hashtag related to the case had been read more than 600 million times by mid-afternoon on Monday, despite reports that some posts were being taken down by censors.

China Panics Over Substandard Vaccine Scandal - Sixth Tone:

A WeMedia article published Saturday on social app WeChat stoked public outrage over the public health fiasco. “These vaccines they produced are being injected into you and your kids every day,” read the article, which pointed out that the same powerful individuals who run Changchun Changsheng are also responsible, through their ownership of other companies, for producing a large proportion of the most widely used vaccines in China, including those for hepatitis B, chicken pox, and influenza.

The article was viewed over 100,000 times, the maximum number displayed by WeChat. By Sunday afternoon, it had been deleted. WeChat’s mini-app for search data shows that there were 33 million searches for the word “vaccine” on Saturday — seven times more than on Friday.

Comment: Expect the censors to have taken public opinion "control" of the story with in the next 48 hours

2. US-China trade

CNBC - Trump says he's 'ready' to put tariffs on all $505 billion of Chinese goods imported to the US:

"I'm not doing this for politics, I'm doing this to do the right thing for our country," Trump said. "We have been ripped off by China for a long time."

Trump said the U.S. is "being taken advantage of" on a number of fronts, including trade and monetary policy. Yet he said he has not pushed the tariffs out of any ill will toward China.

"I don't want them to be scared. I want them to do well," he said. "I really like President Xi a lot, but it was very unfair."

Trump also said he was told by unspecified Chinese officials that "nobody would ever complain" from past administrations "until you came along — me. They said, 'Now you're more than complaining. We don't like what you're doing.'"

US’ Steven Mnuchin ‘available for talks’ but G20 summit brings no dialogue with China and no global consensus on ending trade war | Reuters:

US Treasury Secretary Steven Mnuchin told a news conference on Sunday that he had had no substantive discussions on bilateral trade disputes with China’s finance minister, Liu Kun, at the G20 gathering, engaging mainly in “chit-chat”. Mnuchin had said before the summit that no such meetings were planned.

“Any time they want to sit down and negotiate meaningful changes, I and our team are available,” Mnuchin said on Sunday.

China’s Stealth Yuan Devaluation Catching Trump’s Attention - Bloomberg:

Wang Tao at UBS Group AG is among those predicting China will use other tools than the exchange rate to “cushion the blow” from the trade war.

“The central bank will work to stabilize the currency,” Wang, UBS’s head of China economic research in Hong Kong, said in a Bloomberg Television interview. “So what can China do? At this moment I think they can ease some of the tightening” in credit and fiscal policy, to support infrastructure investment, she said.

China Says It Has ‘No Desire’ to Devalue Yuan Amid Trade War - Bloomberg:

“The exchange rate of China’s RMB is determined by the market. There are ups and downs. It’s a two-way float,” Geng Shuang, foreign ministry spokesman, said at a regular briefing in Beijing when asked to comment on Trump’s remarks on the yuan.

U.S. lawmakers cut anti-ZTE measure from defense bill | Reuters:

“By stripping the Senate’s tough ZTE sanctions provision from the defense bill, President Trump – and the congressional Republicans who acted at his behest – have once again made President Xi and the Chinese government the big winners,” he said in a statement.

Rubio called the change “bad news” in a tweet, lamenting that it increased chances ZTE stays in business.

3. Is the US already at war with China?

CIA: China is waging a 'quiet kind of cold war' against US - AP:

“I would argue ... that what they’re waging against us is fundamentally a cold war — a cold war not like we saw during THE Cold War (between the U.S. and the Soviet Union) but a cold war by definition,” Michael Collins, deputy assistant director of the CIA’s East Asia mission center, said at the Aspen Security Forum in Colorado...

On Wednesday, FBI Director Christopher Wray said China, from a counterintelligence perspective, represents the broadest and most significant threat America faces. He said the FBI has economic espionage investigations in all 50 states that can be traced back to China.

“The volume of it. The pervasiveness of it. The significance of it is something that I think this country cannot underestimate,” Wray said.

Comment: The trade conflict is one piece of the much broader reframing of the relationship, as the Trump Administration articulated in the 2017 National Security Strategy and the 2018 National Defense Strategy. 

CNBC interview with Steve Bannon:

STEVE BANNON: We're at war with China. Ray Dalio, he tweeted it the other day. We're at war with China. There's three types of war, the Chinese look at it: Information war, economic war, and guns-up kinetic war. They're at -- been at economic war with us for 25 years. The -- no great power in world history has ever looked away of the greatest threat and at the same time dissipated its energy on something -- we spent 7 trillion dollars. Brown University, the Watson Center, showing we spent 7 trillion dollars in 17 years on this war on terror and the war in the Middle East, right, with very bad outcomes. And we've allowed the rise of China. In fact, many people in this room, the elites of our country, have exacerbated the rise of China. And we were told time and time again until Donald Trump got here that it was the inexorable rise of China.

Bannon is having a renaissance in media coverage and appearances. Is his influence with Trump returning, did it ever wane, or is he running an effective PR campaign post-firing from the White House? Regardless of the answer his views on China are worth listening to as it looks increasingly obvious Trump fully agrees with him. And if Xi and his team have come to the conclusion that President Trump’s goal is to “destroy” China then they see no point in making any significant concessions to him. It is hard to be optimistic about the trajectory of US-China relations and the trade war...

4. A more vigorous fiscal policy

China Unveils New Measures to Aid Growth Amid Trade Uncertainty - Bloomberg:

From a tax cut aimed at fostering research spending spending to special bonds for infrastructure investment, the measures announced late Monday following a meeting of the State Council in Beijing are intended to form a more flexible response to “external uncertainties” than had been implied by budget tightening already in place for this year.

Fiscal policy should now be “more proactive” and better coordinated with financial policy, according to the statement -- a signal that the finance ministry will step up its contribution to supporting growth alongside the central bank. The People’s Bank of China has cut reserve ratios three times this year and unveiled a range of measures for the private sector and small business.

Official statement on the meeting - 李克强主持召开国务院常务会议 部署更好发挥财政金融政策作用等 

China’s $74bn cash injection highlights growth worries | Financial Times $$ :

China’s central bank injected Rmb502bn ($74bn) of cash into the banking system on Monday morning through loans to commercial banks, in the latest indication that policymakers are moving to ease monetary policy as the economy slows.

The injection was the People’s Bank of China’s largest ever using its so-called Medium-term Lending Facility, a policy tool created in 2014 to provide loans to commercial banks for three to 12 months.

Central Bank-Linked Media Questions Fiscal, Deleveraging Policies - Caixin Global:

In an article headlined “Monetary Policy Alone Can Hardly Cope With Credit Contraction, Fiscal and Regulation Policy Support Urgently Needed,” the Chinese-language Financial News lamented that liquidity in the economy has remained tight despite multiple monetary loosening efforts by the central bank this year.

The report was quickly taken down from the website of the newspaper, a publication that was created by the People’s Bank of China (PBOC) and major state-owned financial institutions in 1987. The comments mark a rare instance of differing opinions among top policymakers emerging in public, since most such debate is usually done behind closed doors...

The Financial News on Friday noted that official figures showed national fiscal revenue rose 10.3% year-on-year in the first six months of the year, outpacing an increase of 7.8% in fiscal spending.

“There is still ample room for fiscal policy to play its role,” it quoted CITIC Securities analyst Ming Ming as saying.

5. New WMP rules 

Caixin - China Raises the Bar for Banks’ Wealth Management Business 

The issuance of the draft rules was delayed because of the recent slump in Chinese stocks and the yuan, Caixin has learned. They were expected to be introduced in early July after review for comment by a select group of market participants...

Under the new rules, banks will be allowed to sell privately offered WMPs to an investor whose family has at least 3 million yuan ($443,500) in financial assets net of debts and obligations, or 5 million yuan in gross financial assets.

An individual whose annual income has been at least 400,000 yuan over the past three years can also purchase these products, according to the draft. The income definition for qualified investors for privately offered WMPs would be double the existing standard for the higher-return but riskier products. Each privately offered WMP could be sold to no more than 200 buyers, all of whom must also have at least two years of investment experience, according to the draft regulations.

Meanwhile, the minimum purchase of each WMP by both average and high-net-worth investors, which the draft defines as a “publicly offered WMP,” would be lowered to 10,000 yuan from the current 50,000 yuan, in line with the central bank’s asset management rules.

Financial Institutions Get Leeway to Meet New Asset Management Rules - Caixin Global:

Financial institutions are now allowed to set their own agenda for complying with the new rules before a grace period expires at the end of 2020, according to a notice (link in Chinese) published Friday on the website of the People’s Bank of China.

China in April published new rules covering the country’s $16 trillion of asset-management products, in a bid to close loopholes, reduce leverage levels and rein in the expansion of shadow banking. The regulations set industry-wide requirements on leverage ratios, risk reserve funds and investment restrictions covering asset-management products offered by banks, brokerages, trust firms, insurance companies and other institutions.

PBoC- 关于进一步明确规范金融机构资产管理业务指导意见有关事项的通知 

CBIRC - 中国银保监会就《商业银行理财业务监督管理办法(征求意见稿)》公开征求意见

China Stocks Rise as Banks Boosted by New Wealth Product Rules - Bloomberg:

Chinese stocks advanced as the market welcomed new guidelines on asset management products.

The Shanghai Composite Index closed up 1.1 percent, building on Friday’s 2.1 percent gain. Lenders led the advance, as regulators were seen taking a softer stance on asset management product rules to balance deleveraging with a slowing economy.

Deleveraging Drive Undiminished by New Asset Management Rules: Chinese State Media - China Banking News

According to the state-run Economic Information Daily the supplementary regulations do not mark a change in the overall pace or direction of China’s ongoing deleveraging campaign.

The focus of the new raft of supplementary rules is instead to “clarify a number of uncertainties during the implementation of new asset management rules, strengthen operability, stabilise market expectations, guide the steady transition of financial institutions, and ensure the stable operation of financial markets.”

6. Pakistan the next bump on the Belt and Road?

China’s Global Building Spree Runs Into Trouble in Pakistan - WSJ $$:

Three years into China’s program here, Pakistan is heading for a debt crisis, caused in part by a surge in Chinese loans and imports for projects like the Orange Line, which Pakistani officials say will require public subsidies to operate...

With a general election in Pakistan scheduled for July 25, an ascendant opposition is pledging to publish secret details about the financing of Chinese projects, including the Orange Line, and Pakistani industry is agitating for less-generous perks for Chinese companies.

Pakistani authorities have fallen behind on payments for electricity from new Chinese power projects—the bulk of the infrastructure program—because of longstanding problems getting Pakistanis to pay their bills, according to a senior Pakistani official.

The problems are expected come to a head by early fall, when Pakistan’s new government is likely to seek a bailout from the International Monetary Fund, the nation’s first since 2013, according to Pakistani officials. Such a bailout would likely include restrictions on borrowing and spending, the officials say, which would force the country to curtail its Belt and Road program with China, known as the China-Pakistan Economic Corridor, or CPEC.

So will the IMF effectively bailout China's existing investments into Pakistan? And how many of these BRI deals involve bribes and kickbacks to the target country politicians?

China's Xi offers fresh $295 million grant to Sri Lanka | Reuters:

President Maithripala Sirisena of Sri Lanka, a partner in Beijing’s multi-country Belt and Road infrastructure push, made the announcement on Saturday at a ceremony marking the start of construction of a Chinese-funded kidney hospital in his home constituency of Polonnaruwa, 230 km (142.92 miles) from Colombo.

“When the Chinese ambassador visited my house to fix the date for this ceremony, he said that Chinese President Xi Jinping sent me another gift,” Sirisena told the gathering.

“He has gifted 2 billion yuan to be utilized for any project of my wish. I’m going to hand over a proposal to the Chinese ambassador to build houses in all the electorates in the country,” he added.

Comment: This seems like a Chinese-backed slush fund to buy votes?

7. Xi's trip to the Middle East and Africa

Rwandan leader says China relates to Africa 'as an equal' - AP:

Rwandan President Paul Kagame is praising China’s treatment of Africa “as an equal,” calling it “a revolutionary posture in world affairs” and “more precious than money.”

Kagame made the remarks Monday after signing bilateral agreements with the visiting Chinese president, Xi Jinping. Xi is the first Chinese president to visit Rwanda.

Jinping arrived in Rwanda late Sunday from Senegal and will also be visiting Mauritius and South Africa, where he will attend a summit of the BRICS emerging economies.

Chinese president arrives in Rwanda for state visit - MoFA:

Rwanda is the third stop of Xi's first overseas trip after being re-elected Chinese president in March, which has already taken him to the United Arab Emirates (UAE) and Senegal.

Xi will also pay a state visit to South Africa where he is scheduled to attend the 10th BRICS summit, and visit Mauritius during a stopover.

China, UAE agree to lift ties to comprehensive strategic partnership - MoFA:

At present, the majority of people in West Asia and North Africa are longing for social stability, said the Chinese leader, adding that peace, reform and development are today's irresistible trend.

China stands ready to work with the UAE to deepen strategic cooperation, explore ways of achieving peace through development in the Middle East, address hotspot issues via political channels, so as to jointly promote the security and stability of the region, Xi said.

8. Propaganda love coming for the dying Yangtze River

What Killed the Yangtze River? - Caixin Global:

Scientists studying the river’s fish populations have given it the worst possible score — “no fish” — on the Index of Biological Integrity, a measure first developed by U.S. scientist James Karr in the 1980s to measure the effects of pollution on bodies of water, President Xi Jinping said in a speech in April.

“This doesn’t mean that there are literally no fish in the river, but there are far fewer in the Yangtze compared with other rivers,” Wang Hongzhu, an aquatic life researcher at the Chinese Academy of Sciences, told Caixin. But some tributaries that have been cut off from the main river by hydroelectric dams are, in fact, totally devoid of fish, Wang said.

Nearly a third of all fish species in the Yangtze are now endangered, Wang said. In the 1950s, the river was able to produce 430,000 tons of catch for fisheries each year, but that volume has now fallen by over three-quarters.

Yangtze River Economic Belt expedition launched to better protect China’s longest river - People's Daily Online:

A thematic expedition on the “Yangtze River Economic Belt" was launched in Shigu Town, Lijiang city of SW China’s Yunnan Province on July 20, aiming to explore, present and protect the region’s economic, ecological and cultural development.

Organized by the Publicity Department of the Central Committee of the Communist Party of China(CPC), the activity aims to explore the important connotations of culture, folklore, historical inheritance and ecological civilization of the Yangtze River and showcase the all-round development of the Yangtze River Economic Belt.

Over 100 reporters from People’s Daily, China Media Group, Xinhua News Agency and other central and local media will conduct in-depth interviews and investigation along the Yangtze River, which flows 11 provincial regions in China.

Business, Economy, Finance And Trade

Qualcomm-NXP Deal Faces Moment of Truth With China 'Yes' or 'No' - Bloomberg: Chinese agencies responsible for vetting deals have already signed off, people familiar with the steps have said. The final authorization could be processed and made public at short notice if China’s political leaders decide to release it. NXP gave Qualcomm until 11:59 p.m. on Wednesday, July 25 in New York to get it done. Absent any word from China, Qualcomm doesn’t plan to seek an extension.

Collapse of Chinese peer-to-peer lenders sparks investor panic | Financial Times $$ In the wealthy city of Hangzhou, local officials converted two sporting stadiums into makeshift welcome centres where various district-level petition bureaus — the traditional channel for Chinese citizens to file miscellaneous grievances — could receive complaints from P2P investors. Hangzhou is best known as the headquarters of Alibaba, its finance affiliate Ant Financial, and other fintech groups.

Bond Market’s Dirty Little Secret Exposed - Caixin Global Interviews with bond underwriters, securities firms, fund managers and traders reveal that many private funds, whose function has traditionally been to invest and manage money on behalf of institutions and wealthy individuals, have been boosting their income by acting as intermediaries to help companies with low creditworthiness issue bonds. Some funds have taken on the role of investment banks, offering a full-service package for companies that includes a promise to introduce them to small securities firms that have a license to underwrite bond issues and to find buyers for the bonds. They may also pledge to buy the bonds if the issuance is not fully subscribed and then stuff them into the asset management products they sell to clients including commercial banks. The fees charged by the funds and the commissions they earn are not disclosed to investors in bond prospectuses and are often hidden in the price of the bond or the interest rate the company pays investors.

Former Bank Head Charged With Embezzling $110 Million - Caixin Global In a trial that began last week in East China’s Shandong province, prosecutors accused Jiang Xiyun of transferring shares of Hengfeng Bank to himself and his relatives while he served as the bank’s chairman from 2008 to 2013, according to a report by the official Xinhua News Agency. Caixin has learned that one of the four counts of embezzlement involved 150 million bank shares being transferred to a Nanjing construction company controlled by Jiang’s relatives.

The Creeping Threat of Rural Banks’ Rising Bad Debts - Caixin Global Sudden surge in soured loans has been partly caused by changes in regulatory requirements for the recognition of bad debts, which have forced many lenders to reclassify loans at risk of nonpayment * Some analysts say the relatively small size of the rural banking sector means the risks it could pose to the health of the financial system are controllable, but others are concerned about the potential spillover effects on the interbank market

Regulators Tap Tech Giants to Curb Online Finance Risks - Caixin Global This is the seventh agreement Ant Financial has struck with local financial regulators over the past three months, including those in the capital city of Beijing, the southern city of Guangzhou, Chongqing in the southwest, and Xi’an in the north. More than 10 local authorities in other regions are also exploring cooperation with the company, an executive with Ant Financial who declined to be named told Caixin. Chinese local authorities are trying to tap the technology know-how of internet companies to beef up their ability to detect violations in the fight against rampant online money swindling schemes. The web makes wide-scale scamming easy partly because it transcends geographic boundaries and provides access to investors in locations outside the jurisdiction of local regulators.

China Huarong trying to recall some loans as cash crunch bites - sources | Reuters China Huarong Asset Management (2799.HK), one of four state-backed so-called “bad banks” formed in 1999, has been trying to raise cash since Lai Xiaomin resigned as chairman in April amid a graft probe, the sources said. Huarong’s attempts to call back loans shows the extent of its liquidity woes. It has already begun divesting equity stakes that were bought as part of a diversification push and has also forced employees to take pay cuts.

Beijing Moves to Ensure Power Supplies in Summer - Caixin Global China’s state planner is taking steps to ensure adequate energy supplies during the high-consumption summer months amid some of the strongest growth in demand for electricity in recent years, a government spokesman said. The steps by the National Development and Reform Commission (NDRC) come as China’s power consumption grew 9.4% in the first half of the year to 3.23 trillion kilowatt-hours, representing a 3.1 percentage point increase over the growth rate a year earlier and marking the fastest expansion since 2012.

World Bank debars two China construction companies - The FCPA Blog - The FCPA Blog The World Bank debarred two big Chinese construction companies that lied about their progress on an energy project in China so they would be paid early.  Shanghai-based China Nuclear Industry Fifth Construction Co., Ltd. (CNF) was debarred for two years. China Machinery Industry Construction Group, Inc., based in Beijing, was debarred four years.


Politics, Law And Ideology

It’s Time to Talk About ‘Evening Talks at Yanshan’ – China Heritage On the evening of 17 July 2018, China’s party-state media reported on a meeting of the Standing Committee of the National People’s Congress in Beijing. Chaired by Li Zhanshu 栗戰書, a member of the ruling Politburo and formal head of the National People’s Congress, the meeting hailed Xi Jinping’s statement that ‘Every era has a narrative arc; people of every generation have a mission’ 一個時代有一個時代的主題,一代人有一代人的使命. The gathering then set to discuss the theme of the ‘Historical Mission, Historical Responsibility and Our Historical Duty’ 歷史使命、歷史責任和我們的歷史擔當...The meeting called for all Party members of the Standing Committee of the National People’s Congress to weaponise their thinking with Xi Jinping Thought, to redouble their efforts to internalise the ‘Four Awarenesses’ and the ‘Four Self-beliefs’. In this process they are to be self-motivated in remoulding themselves politically while strenuously abiding by the political discipline and political regulations governing the Party. They are to ensure the absolute authority of Party Central with Comrade Xi Jinping as its Core which Sets the Tone for All 一錘定音 and is the Ultimate Arbiter 定於一尊

Trade war fallout to lead agenda as Xi Jinping gathers elite for strategy session at Beidaihe, the Communist Party’s Camp David-style retreat | South China Morning Post The source said the regular monthly Politburo meetings and weekly meetings of Politburo Standing Committee would be held in Beidaihe during the retreat but any extra informal meetings would require the approval of the general office of the party’s Central Committee...Sources said Beijing sent clear instructions to cadres to tone down public nationalism after China’s delegation led by Vice-Premier Liu He failed to negotiate a trade truce with Washington in May. “When the Chinese side complained that the US was irrational about trade issues, the US hit back with the nationalism among Chinese media,” a source said in May.

Inside China’s surveillance state | Financial Times $$ When the British philosopher Jeremy Bentham envisaged his panopticon penitentiary in the late 18th century — a circular building with an inspection tower at its centre — the idea was that inmates would never know if they were being observed or not. This “simple idea in architecture” would offer “a new mode of obtaining power of mind over mind”, Bentham wrote. For some analysts looking at the impact of China’s growing surveillance state, any technological shortcomings are incidental. Like the panopticon itself, it is the fear of being watched that is the most powerful tool of all.

10 State Media Cartoons on China's Social Credit Implementation | What's on Weibo Chinese state media roughly illustrate the country’s much-discussed Social Credit implementation in two ways; as punishing individuals and bringing harmony to the collective.

China Focus: CPC releases findings of latest disciplinary inspection - Xinhua | Based on the findings, the latest round of inspection has shown some trends:-- It sticks to the duty of political inspection. Being emphasized is the need for Party organizations to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment, as well as to uphold the authority of the CPC Central Committee and its centralized, unified leadership.Some were found to have not implemented well the central authorities' policies and decisions on issues like poverty alleviation, environmental protection, or anti-gang fight.The CCDI stressed the need of strengthening political duties to ensure all targets set at the 19th CPC National Congress will be met and strategic plans be realized.--十九届中央首轮巡视反馈情况开始公布 “问题清单”彰显巡视新特点 


Foreign and Military Affairs

Retired Air Force general in contention to lead Pompeo’s Asia team - The Washington Post Dave Stilwell served for 35 years before retiring from the Air Force at the rank of brigadier general in 2015. His last government job was as a top Asia official on the Joint Staff at the Pentagon. There, he worked closely with then-Pacific Command chief Adm. Harry Harris, who just became U.S. ambassador to South Korea. From 2011 to 2013, Stilwell was the defense attaché at the U.S. Embassy in Beijing. Two administration officials told me that Stilwell is now a top contender to be assistant secretary of state for East Asian and Pacific affairs..But officials not authorized to speak say Stilwell is leading a small group of contenders that also includes former Pentagon China official Dan Blumenthal, now at the American Enterprise Institute, and Matthew Pottinger, the current National Security Council senior director for Asia.

Hearing | United States Senate Committee on Foreign Relations - The China Challenge, Part 1: Economic Coercion as Statecraft July 24, witnesses are Ely Ratner and Dan Blumenthal

China Built an Army of Influence Agents in the U.S.- Daily Beast:Standing in front of a ruby-red backdrop, a Chinese diplomat’s hand resting lighting on her lower back, He Xiaohui looked radiant. The Chinese-American woman, a local activist in Maryland politics, had just been appointed president of the National Association for China’s Peaceful Unification in Washington, D.C., which describes itself as a non-profit for Chinese-Americans dedicated to the eventual unification of China with Taiwan. He Xiaohui posed for a photo with the previous president, who was symbolically handing over an object to her. Presiding over the January 13 handover was Li Kexin, a high-profile minister at the Chinese embassy in Washington. Li stood between two, a hand on each of their backs.

The question facing Chinese diaspora: for love of country or party? | This Week In Asia | South China Morning Post At home and abroad, some officials have begun to preach that true patriotism comes from not only the love of one’s country, but also of the party. This new rhetoric makes it easier to label someone unpatriotic if he or she opposes the party’s policies and challenges its legitimacy...This has created an uneasiness among some overseas Chinese as they feel pressure to choose sides. Anecdotal evidence has shown that in some Chinese communities in the western countries, Chinese-language media outlets backed by the Chinese government have started to adopt propaganda slogans and fulsome praise of the party...In its efforts to reach out to the diaspora, Beijing may want to take some cues from Israel in the way it manages its relationship with Jews around the world.Wang Xiangwei is the former editor-in-chief of the South China Morning Post. He is now based in Beijing as editorial adviser to the paper

Panda Paw Dragon Claw – A conversation about China‘s footprint beyond its border A conversation with Michael Anti, award-winning journalist, blogger and veteran media observer

The quiet diplomats: how Germany kept up pressure on China to free Liu Xia | South China Morning Post Kristin Shi-Kupfer, director of research on public policy and society at the Mercator Institute for China Studies in Berlin, said efforts from civil society helped keep the case on top of the German government’s agenda and persistent high-level intervention expedited her case. Multiple sources told the South China Morning Post that the US government also pressured China for Liu Xia’s release, with the White House, the US embassy and members of Congress working in step with German diplomats.

China military develops robotic submarines to launch a new era of sea power | South China Morning Post China is developing large, smart and relatively low-cost unmanned submarines that can roam the world’s oceans to perform a wide range of missions, from reconnaissance to mine placement to even suicide attacks against enemy vessels, according to scientists involved in these artificial intelligence (AI) projects.

PLA holds ground combat drills in Tibet to test their skills - Times of India The special forces of the Chinese military have conducted drills in Tibet, including ground training for helicopter pilots, to test their skills in the high altitude region, state-run media reported on Friday. The training simulated a behind-enemy-lines infiltration mission at an elevation of 4,000 metres in Tibet, the PLA Daily, the official organ of China's People's Liberation Army (PLA) reported.

China’s Threat to American Government and Private Sector Research and Innovation Leadership - YouTube video of House Permanent Select Committee on Intelligence (HPSCI) July 29 hearing

China, India jockey for influence in Bhutan ahead of polls | India News - Times of India India is anxiously watching an ongoing visit by the Chinese ambassador to India, Luo Zhaohui, to Bhutan in that regard. The fact that China does not have diplomatic ties with Bhutan clearly hasn't come in the way of Beijing's Thimphu outreach. While Luo landed in Bhutan Saturday, another top Chinese diplomat based in Delhi, Li Bijian, has remained stationed in Bhutan’s capital for the past few days. The Chinese diplomats TOI contacted were quiet about the agenda for the visit but diplomatic sources said Luo was expected to interact with leaders of several political parties.

A New Battle for Guadalcanal, This Time With China - The New York Times After years of largely unchecked Chinese investment and immigration throughout the South Pacific, Australia and the United States are stepping up their efforts here and across the region — warning local officials against relying too much on China, and pushing to compete with more aid, infrastructure and diplomacy.

Report on China's unmanned submarines overblown, confrontational: expert - Global Times A report that China is developing unmanned submarines to "challenge Western naval powers," was slammed by Chinese experts as overblown and confrontational. China's large unmanned submarines will be able to perform missions including reconnaissance, mine placement and suicide attacks via artificial intelligence, the South China Morning Post reported on Sunday.


Tech And Media

WPP courts Chinese tech giants‎ Alibaba and Tencent over $2.5bn deal - Sky News Alibaba Group and Tencent‎ Holdings, the two biggest names in China's technology industry, are in talks to buy a stake in the $2.5bn (£1.9bn) Chinese operations of WPP Group. Sky News can exclusively reveal that Alibaba, Tencent and China Media Capital Holdings (CMC) are in early-stage discussions about buying roughly 20% of WPP China.


Society, Art, Sports, Culture And History

After making his owner rich, this border collie gets to live in a $500,000 pet mansion in Beijing - The Washington Post The Chinese are projected to spend the equivalent of $7 billion on furry friends by 2022, a surge from $2.6 billion last year, according to the German market research firm Euromonitor...Zhou used his phone to shoot footage of Sylar’s tricks, set to Lady Gaga songs, and posted it to Meipai, a Chinese video site....The spotlight on Sylar encouraged Zhou to open a dog food and toy store on Taobao, the Chinese e-commerce giant that allows users to peddle goods online.

Book of Changes – China Channel Twenty five years in Chinese jazz – David Moser

Tibet underage students banned from religious activities - Global Times Underage students in Southwest China's Tibet Autonomous Region must not take part in religious activities during the summer vacation, according to school regulations, with experts saying that the education law separates education from religious influences. "We have sent notices to both students and their parents, and have had students sign an agreement that they will not take part in any form of religious activity during the summer vacation," Choephel, the head of the political education department at Lhasa Middle School, told the Global Times on Monday.

Prominent Activist Accused of Sexual Assault Apologizes, Resigns - Sixth Tone Lei Chuang, the founder of YiYou Charity Center, a nonprofit dedicated to the welfare of hepatitis B carriers, apologized on Monday for sexual misconduct and resigned from his position as head of the charity


Energy, Environment, Science And Health

Questions Mount Over Crackdown on Black-Lung 'Fraud' - Caixin Global The 46-year-old physician’s alleged crime was misdiagnosing hundreds of coal miners with black lung disease. Some miners used the diagnoses for medical insurance fraud costing the state millions of dollars, the police charged. Dong was arrested along with two fellow doctors at Guizhou Aerospace Hospital in southern China — Huang Hengping and Zhang Xiaobo — who face similar allegations. The investigation is part of a crackdown by Zunyi city police on what they call false-diagnosis scams. The probe also led to the rejection of compensation claims by nearly 40 mine workers and the detention of seven miners from the Fulai Coal Mine in Suiyang county. But the police allegations have faced mounting questions from lawyers and the public as the prolonged investigation has yet to provide persuasive evidence. The handling of the cases has stirred controversy as critics charged the police with undermining the rights of miners in favor of local businesses.

China’s push to export traditional medicine may doom the magical pangolin - The Washington Post Mothers take powdered pangolin scales to help them lactate, while men drink pangolin blood or consume fetuses in the belief that this will make them more virile.

China includes more cities in air pollution rankings to pressure local officials | Reuters China extended monthly air quality rankings to 169 cities from 74, including in the high-pollution region of Shanxi-Shaanxi in the country’s northwest, adding pressure on local authorities as it intensifies its campaign against air pollution.

Deadly snake puts focus on internet sales - China Daily The death of a woman who was fatally bitten by a venomous snake she purchased online has raised concerns about the online regulation of wildlife sales. The 21-year-old woman from Weinan, Shaanxi Province - known in media reports by the pseudonym Xiao Fang - was declared dead on Tuesday after being bitten by a multi-banded krait (Bungarus multicinctus) that she bought on Zhuanzhuan, a mobile shopping app, Red Star News reported on Friday.

As China's Skies Clear, Philips Sales of Air Purifiers Decline - Bloomberg “Air quality has improved faster than anticipated. It’s a good thing for the people of China so I don’t want to complain about that,” Frans van Houten said on a call. Besides, there’s always allergens and harmful pollution from furniture containing formaldehyde resin, he added.

A top Chinese brain scientist wonders how he ended up on the U.S. visa blacklist | Science | AAAS Frustrated with a string of unexplained U.S. visa denials, a top Chinese brain scientist has decided to go public, copying numerous journalists on a 17 July email to officials at the U.S. Embassy in Beijing pleading his case. "Most embassies try to make more friends for their countries; the U.S. embassy is not afraid of offending people and making enemies," says Rao Yi, a high-profile neuroscientist at Peking University in Beijing who studied and worked in the United States for 22 years. His difficulty obtaining a visa is particularly ironic, given that he has been invited to attend a workshop by the U.S. National Science Foundation (NSF), a government agency based in Alexandria, Virginia.



American Professor Cites Academic Intolerance as Reason for Leaving China - WSJ $$ Christopher Balding said that the narrowing limits for open discussion, even of economic and business issues, made him feel unsafe and drove him to leave China. He said Peking University’s HSBC School of Business in Shenzhen—where he worked for nine years—told him last November that his contract wouldn’t be renewed. Hai Wen, dean of the business school, said Mr. Balding’s employment was terminated after an internal evaluation found “poor” performance in teaching, research and other responsibilities. His dismissal was a “normal academic employment decision,” Mr. Hai said...Mr. Balding left the school this month at the end of the academic year, according to Mr. Hai, the dean. The school also declined to renew contracts for two other faculty members due to “unsatisfactory performance,” Mr. Hai said. One of Mr. Balding’s colleagues also attributed his dismissal to poor performance.  //  Comment: Was that a foreign or Chinese colleague?

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