Zoom's China censorship; Hong Kong; Government work report tasks; Semiconductor subsidies; Arm's China mess
|Bill Bishop||Jun 11, 2020|| 7||3|
Bethany Allen-Ebrahimian of Axios broke the news that Zoom closed account of U.S.-based Chinese activist “to comply with local law”
Zhou Fengsuo, founder of the U.S. nonprofit Humanitarian China and former student leader of the 1989 Tiananmen protests, organized the May 31 event held through a paid Zoom account associated with Humanitarian China.
About 250 people attended the event. Speakers included mothers of students killed during the 1989 crackdown, organizers of Hong Kong's Tiananmen candlelight vigil, and others.
On June 7th, the Zoom account displayed a message that it had been shut down, in a screenshot viewed by Axios. Zhou has not been able to access the account since then, and Zoom has not responded to his emails, he told Axios.
A second Zoom account belonging to a pro-democracy activist, Lee Cheuk Yan, a former Hong Kong politician and pro-democracy activist, was also closed in late May. Lee has also received no response from Zoom.
Several other news organizations followed her story with more details, and Yuan Yang reported in the Financial times that a third meeting organized by June 4 student leader Wang Dan, who is now based in the US, was interfered with and the host accounts shut.
Zoom has a large engineering group based in China, as it discloses in all of its public filings. It also has a history of issues related to China. Zoom’s recent growth has been astronomical and in trying to deal with the massive technical challenges of scaling up so fast it is easy to understand how mistakes could be made. At the same time, Zoom is trying to keep on the right side of the PRC authorities so the service can work in China.
The censorship of these meetings does not look to be related to technical issues. Rather, the company appears to be either proactively censoring to keep Beijing happy or responding to requests from the relevant PRC authorities.
Zoom’s PR statement on this is far from adequate:
“Just like any global company, we must comply with applicable laws in the jurisdictions where we operate. When a meeting is held across different countries, the participants within those countries are required to comply with their respective local laws. We aim to limit the actions we take to those necessary to comply with local law and continuously review and improve our process on these matters. We have reactivated the US-based account.”
I have some questions I believe Zoom should answer about these incidents:
What is the PRC law cited that has those meetings not in compliance?
What is the PRC law cited to shut down the account of a US-based user?
What is the PRC law cited to shut down the account of a Hong Kong-based user?
Did a request from PRC authorities trigger these moves?
If requests from the PRC authorities triggered these moves, which PRC organization made the requests and to whom at Zoom were the requests made?
If requests from the PRC authorities triggered these moves, was Zoom CEO Eric Yuan involved in the decision to act on the requests?
Is there an established process at Zoom to deal with requests from PRC security services? If so, what is it, and how many requests does Zoom get each month/quarter/year?
Do the Ministry of Public Security or any other PRC security organs have offices inside any Zoom China facilities, as they do with large PRC Internet firms?
Does Zoom have any systems that scan keywords of meeting descriptions or participant names?
Has Zoom been given a list by PRC authorities of keywords and/or individuals to be flagged and/or filtered?
Does Zoom have any systems that scan the audio content of meetings in progress?
Why did it take an inquiry from a reporter for Zoom to reinstate the account of US-based Zhou Fengsuo?
I am sure there are more, feel free to add them in the comments, or in tomorrow’s open thread. These are very sensitive questions and most companies operating in the PRC would not answer, but Zoom should no longer get the benefit of the doubt over its China-related issues and given how many people, organizations, government bodies and political campaigns now rely on its services the company must err on the side of transparency.
Georgetown University Professor James Millward points out that whatever Zoom is doing may make it an unacceptable choice for educational institutions:
Paul Mozur 孟建国 @paulmozurSo Zoom suspended the account of @ZhouFengSuo after he hosted a virtual vigil to commemorate the Tiananmen Square Massacre. Some context on Zoom in China: it has been on Chinese censor's radar for a while, but seems to have fallen thru the cracks. https://t.co/DFVtvFdPsK
And Elizabeth Economy of the Council on Foreign Relations tweeted about a recent Zoom meeting she had, sadly not funny now:
Anna Fifield @annafifieldCritics of the Chinese government, including protest leaders in Hong Kong and pro-democracy activists in the US, say Zoom shut their accounts under pressure from Beijing. Zoom acknowledges that “a few recent meetings” related to China have been disrupted. https://t.co/VD1gu2Jhv6
Update: Soon after I wrote this Zoom issued a statement via its official blog - Improving Our Policies as We Continue to Enable Global Collaboration:
In May and early June, we were notified by the Chinese government about four large, public June 4th commemoration meetings on Zoom that were being publicized on social media, including meeting details. The Chinese government informed us that this activity is illegal in China and demanded that Zoom terminate the meetings and host accounts.
We did not provide any user information or meeting content to the Chinese government. We do not have a backdoor that allows someone to enter a meeting without being visible.
For one of the meetings, even though the Chinese authorities demanded we take action, we chose to keep the meeting undisturbed because it did not have any participants from mainland China.
For two of the four meetings, a U.S.-based Zoom team reviewed the meeting metadata (such as IP addresses) while the meeting was in progress, and confirmed a significant number of mainland China participants.
For the fourth situation, the Chinese government showed us a social media invitation for an upcoming meeting referencing a June 4th commemoration event and demanded we take action. The Chinese authorities also notified us of a prior meeting under this account that they considered to be illegal. A U.S.-based Zoom team confirmed the attendance of mainland China participants in that prior meeting.
Zoom does not currently have the ability to remove specific participants from a meeting or block participants from a certain country from joining a meeting. As such, we made the decision to end three of the four meetings and suspended or terminated the host accounts associated with the three meetings.
Going forward Zoom will not allow requests from the Chinese government to impact anyone outside of mainland China.
Zoom is developing technology over the next several days that will enable us to remove or block at the participant level based on geography. This will enable us to comply with requests from local authorities when they determine activity on our platform is illegal within their borders; however, we will also be able to protect these conversations for participants outside of those borders where the activity is allowed.
We are improving our global policy to respond to these types of requests. We will outline this policy as part of our transparency report, to be published by June 30, 2020.
They should still be asked all of the above questions.
Thanks for reading.
The Essential Eight
1. Zoom’s China censorship
The three incidents are reviving concerns about the fast-growing Silicon Valley company’s susceptibility to Chinese government influence weeks after the firm began facing scrutiny over security, including its routing of data through China. Coming in the midst of the coronavirus pandemic, the episode also highlights the world’s dependency on services such as Zoom and their ability to control speech.
Zoom on Thursday acknowledged that “a few recent meetings” related to China have been disrupted.
In each instance, event organizers told The Washington Post that they relied on Zoom in lieu of in-person events because of social distancing and travel restrictions. And each of the Zoom accounts and events was created and hosted outside mainland China but appeared to be quashed under Chinese government pressure after they were publicly advertised...
Lee Cheuk-yan, a union leader and Labour Party figure in Hong Kong, said a Zoom account he used to host talks was shut down without explanation on May 22 just 30 minutes before he was scheduled to stream a talk by Jimmy Sham, a leading Hong Kong pro-democracy activist.
The talk, which had been promoted in Hong Kong protest circles, went ahead and was streamed on YouTube and Facebook without incident, Lee said, but his Zoom account remains disabled.
The annual Tiananmen Square commemoration was hosted on Zoom by a group of Chinese activists in the US, including Wang Dan, one of the most prominent leaders of the pro-democracy student movement that was crushed by the Chinese army in Beijing on June 4 1989.
Mr Wang’s team shared screenshots with the Financial Times of his Zoom call being cancelled twice and two of his team’s paid Zoom accounts being disabled. The cancellations started just as the meetings were due to begin on the morning of June 4 in Washington, where Mr Wang is based. He added that as of Thursday, the accounts remained disabled.
The event marked the first time so many high-profile figures with direct ties to the 1989 pro-democracy movement had come together in one space, said Zhou, who kicked off the conference by playing The Wound of History, a Chinese song written to commemorate the June 4 movement.
Other speakers included Zhang Xianling, a member of Tiananmen Mothers, a group of human rights activists led by mothers of protesters believed to have died in the crackdown.
California-based videoconferencing company Zoom Video Communications has suspended individual users from signing up in China, the Nikkei Asian Review has learned.
As of May 1, individual free users can no longer host meetings on Zoom but will still be able to join them. Only paid enterprise accounts and individuals who had upgraded to paid accounts prior to the cutoff date will be able to host meetings.
Going forward, the company will allow only enterprises with proof of business registration and corporate banking accounts to purchase its service, according to details posted on a Chinese Zoom website managed by China reseller Donghan Telecom. "Individual purchases will not be accepted," it says.
2. Hong Kong
Another source close to the matter told HK01 that the central government is likely to take extraordinary measures in handling the law, adding that there was a chance the NPC would hold two sessions this month to give the appearance that it was listening to the opinions of Hong Kong citizens and also to fast-track the decision-making process.
The source told HK01 that, while the security law appeared to be omitted from the agenda, it was likely to be raised as one of the “other discussion points” during the session to instruct relevant government departments to start collating feedback on the legislation so that a formal plan could be put forward at the next meeting of the NPC for review and implementation. The source also said that there is a ‘high chance” that a second meeting would occur this month on the 26th and 27th or the 29th and 30th, adding that two days would be more than sufficient to review the law.
Beijing’s liaison office in Hong Kong privately urged senior local government officials to throw their weight behind the contentious national security law in a series of briefings on an “unprecedented scale”, the South China Morning Post has learned.
China’s foreign ministry issued a “fact sheet” on Wednesday defending Beijing’s decision to impose a national security law on Hong Kong, following worldwide concern that the proposed legislation would undermine the city’s freedoms and autonomy, and destabilise the business environment...
The statement said that the 1984 Sino-British Joint Declaration – which China has been accused of breaching by undermining Hong Kong’s partial autonomy – was “not relevant” to the national security law, and that “other countries and organisations have no right to meddle in Hong Kong affairs on the grounds of the joint declaration”.
Education Secretary Kevin Yeung said on Thursday that students should not sing songs that are "political propaganda" – like the protest anthem like Glory to Hong Kong – on campus, adding that schools will be left to decide what it and isn't allowed.
Hong Kong police on Thursday notified Jimmy Lai, founder of the Apple Daily newspaper, and three other prominent pro-democracy activists that they will face charges over their roles in holding an unauthorized vigil to commemorate the June 4, 1989 Tiananmen crackdown...
The other three notified by the police are former legislators Lee Cheuk-yan and Albert Ho Chun-yan, as well as Richard Tsoi Yiu-cheong, another veteran of the Hong Kong Alliance in Support of Patriotic Democratic Movements of China, the group that has organized the annual vigil for the past 30 years.
The People’s Daily overseas edition WeChat account Xiakedao again targeted HSBC for helping the US to go after Huawei COO Meng Wanzhou. The article said the bank has always been “two-faced”, and it has violated Chinese laws for giving Americans the evidences of Huawei evading sanctions.
3. Government work report tasks
This announcement lists the key tasks from the recently approved report
The State Council recently issued a circular aimed at navigating departments concerned with fulfilling tasks set by the Government Work Report released during the two sessions in 2020.
According to the circular, stable employment will sit on top of the government's agenda, in an effort to secure people's livelihoods.
Xi's "three tough battles" are still a priority:
Work on poverty alleviation will be successful...
Precaution and prevention against major risks in fields like finance will be further strengthened, with systematic risks nipped in the bud...
the government will press ahead with the uphill battle against air pollution in key areas
The full circular -国务院关于落实《政府工作报告》重点工作部门分工的意见_中证网
China will substantially reduce the negative list for foreign investment market access by the end of June and will release the negative list for cross-border services trade by the end of December, according to a document released by the State Council, China's cabinet, on Thursday.
The timelines are part of the detailed measures of the government work report released during the two sessions in May. They are aimed at stabilizing foreign investment and creating an equal and fair market for domestic and foreign companies.
The USDA confirmed the sales after reporting that weekly U.S. soybean export sales last week were the largest in at least 16 months, with the majority slated for shipment to China or undisclosed destinations widely believed to be China.
State-run and private buyers have purchased at least 10 cargoes this month, with three being sold overnight, according to people familiar with the matter, who asked not to be named because the deals are private. China will need the supply and U.S. prices are attractive for cargoes delivered after the harvest...
“There was a recent speculation that maybe China kind of ordered their state-run enterprises or stop buying, well, the reality of matters, we -- the same week, we’ve been actually receiving orders in terms of shipping products over to China,” CFO Ray Young said Wednesday at a Stifel virtual conference. “So our counsel to people is that let’s look at the facts, and let’s avoid the speculation.”
Just as bipartisan opinion in Washington has coalesced around alarm at China’s rise, an elite consensus has emerged in the Chinese capital. Especially in this summer of pandemic and street protests, America is called a nation in decline: a rich country too divided, selfish and racist to keep its citizens safe. Chinese elites see Mr Trump as a symptom and an agent of that decline. State media long refrained from direct attacks on Mr Trump. Not now. The Global Times, a nationalist tabloid, this month reported that Chinese netizens mockingly call him Chuan Jianguo, or “Build-up-the-country Trump”. Their joke, that he is a double-agent wrecking America to make China strong, prompts lines like “Comrade Chuan Jianguo, don’t blow your cover!” Does such scorn mean that China wants Mr Trump re-elected? There, elites are divided. At root, their debates turn on two questions: is American decline irreversible, and would its acceleration suit China just now?
All star cast of interviewers and audience members chat with Bob Davis and Lingling Wei about their new book on the US-China Trade War.
China already has far more economic influence than the U.S., and slightly more political power, in Southeast Asia, and the gap is expected to widen in the next decade, the survey by the Center for Strategic and International Studies (CSIS) think tank found.
The survey by the respected Washington-based think tank targeted “strategic elites” – nongovernmental experts or former officials from six Southeast Asian countries. There were 188 respondents from Vietnam, Thailand, Indonesia, Malaysia, Singapore, and the Philippines. Another 13 people in Fiji responded to the survey.
Beijing will honor its trade deal with the U.S. and wants to see better ties with Washington, senior Chinese officials said Thursday.
Zhu Guangyao, a former finance minister and Cabinet advisor, said the two countries should “waste no time” in improving relations to help better coordinate a response to the coronavirus pandemic.
He and other officials told reporters in Beijing that the two biggest economies are so closely entwined that they must find a way to work together because a lack of cooperation has come at a “high price.”
The China Society for Human Rights Studies on Thursday issued an article titled "The COVID-19 Pandemic Magnifies the Crisis of 'U.S.-Style Human Rights'."
The U.S. government's self-interested, short-sighted, inefficient, and irresponsible response to the pandemic has caused the tragedy in which about 2 million Americans became infected with the virus and more than 110,000 have died from it, the article said.
It has exposed the long-existing and now deteriorating problems in the United States, such as a divisive society, the polarization between the rich and the poor, racial discrimination, and the inadequate protection of the rights and interests of vulnerable groups, according to the article.
The CCTV Evening News broadcast a commentary titled “Does the sanctimonious US, the ‘human rights defender’, still have some basic sense of shame?” The article said the racism and inequality in the US suggests the country has no right to criticize others. It said Pompeo’s attack on China’s human rights record while staying quite about the protest in America only highlights his hypocrisy and the fact that he merely see democratic values as a foreign policy tool.
The Paper: The US State Department rebuked China's religious policies in its 2019 Report on International Religious Freedom. US Secretary of State Pompeo also attacked the CPC on religious issues at a press conference. What is your comment?
Hua Chunying: China-related contents in this report and what Pompeo said are full of ideological bias. They have degraded China's religious policies and seriously interfered in China's internal affairs. China is firmly opposed to that.
The Chinese government protects our citizens' freedom of religious belief in accordance with law. In China there are nearly 200 million religious believers, more than 380,000 clerical personnel, approximately 5,500 religious groups and more than 140,000 places of worship registered for religious activities. People of all ethnic groups enjoy full freedom of religious belief. The facts are there for all to see.
By contrast, ethnic minorities in the US find themselves in a worrisome situation with regard to religion. The US has a long-standing problem of systemic racism. According to poll results release by Gallup and Pew Research Center, 75 percent of Muslims in the US believe they are under severe discrimination due to their religion. According to the publicly available data I've seen, the number of mosques in the US nationwide is less than a tenth of that in Xinjiang. There are mass protests in the wake of George Floyd's death, which in itself reveals deep-rooted problems. Instead of reflecting on it, the US still points the finger at China. Why on earth does it feel so entitled to do so?
“China is dealing with the barbaric and greedy capitalism that doesn't care about humanitarianism. US politicians have fooled ordinary American people and promoted social Darwinism. Thus, they are more carefree about lying about China and inciting extreme emotions. Once US politicians believes it is beneficial to stir trouble with China, whether for domestic or international reasons, they will unscrupulously trample on the rules the way Pompeo does.”
Chinese embassy to UK issued a statement regarding Pompeo’s saying that China is using economic interests to coerce UK. The statement said China has never coerced anyone, and the world can see it clearly which country likes to coerce others and even overthrown legitimate foreign governments.
Students at Harbin Institute of Technology and Harbin Engineering University recently discovered that they can no longer access MATLAB, a widely used coding language for technical computing, with their college accounts. In an email to affected students, MathWorks, the company that developed MATLAB, wrote that they are “prohibited from providing technical or customer support” to the two institutions “due to recent U.S. government regulations.”
A U.S. C-40A, a military version of the Boeing 737, entered Taiwan air space with permission, though it did not land at any Taiwan airports, Taiwan’s Defence Ministry said on Tuesday.
In our second China Watcher roundtable video conversation, I asked them what the changing landscape for journalism means for policy-making in both capitals, how Washington and Beijing can arrest the downward cycle and whether any of them thought China’s “Wolf Warrior” diplomats — so named for a top-grossing Chinese action movie depicting a Chinese hero beating up on foreign mercenaries — could change U.S. hearts and minds with their strident anti-U.S. tweets.
Most important—and often overlooked by knee-jerk, partisan critics of the deal—is that the administration has maintained pressure on China through a 25 percent tariff that remains on half of its exports to the United States, including nearly all high-tech products. These duties help offset the unfair advantage China has obtained through forced technology transfer and market-distorting subsidies. At the same time, China has made a series of purchasing commitments that will create long-term market access for U.S. exporters, particularly farmers. Whether there will be a Phase 2 depends on whether China complies with the terms of Phase 1 and whether it is willing to fundamentally change its model of state-run capitalism. Regardless, the policy in place today protects American jobs, blunts China’s unfair advantages, and minimizes the pain to U.S. exporters and consumers.
5. Semiconductor subsidies and Arm’s growing China mess
Chip factories can cost up to $15 billion to build, with much of the expense in the form of pricey tools. The proposal would create a 40% refundable income tax credit for semiconductor equipment, $10 billion in federal funds to match state incentives to build factories, and $12 billion in research and development funding.
It would authorize the Defense Department to use funding under the Defense Production Act to “establish and enhance a domestic semiconductor production capability.” While a network of “trusted foundries” exists in the United States to help supply chips to the U.S. government, many chips must still be sourced from Asia.
The Semiconductor Industry Association (SIA) today applauded the introduction in Congress of the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act), bipartisan legislation that would invest tens of billions of dollars in semiconductor manufacturing incentives and research initiatives over the next 5-10 years to strengthen and sustain American leadership in chip technology, which is essential to our country’s economy and national security...
The CHIPS for America Act includes a range of federal investments to advance U.S. semiconductor manufacturing, including $10 billion for a new federal grant program that would incentivize new domestic semiconductor manufacturing facilities. The bill also includes a refundable investment tax credit for the purchase of new semiconductor manufacturing equipment and other facility investments.
Question: Might this be a deal whereby the SIA and its member companies back down on lobbying against Huawei restrictions if this go through?
Another supply chain executive familiar with the matter said: "There are suppliers who also need to address their U.S. semiconductor clients' requests to produce outside of China over security reasons, so they chose not to expand their Chinese capacity."
And a third executive said: "The supply chain is so complicated and intertwined like a big onion. Huawei could peel the skin, and the first few layers of the onion and get them to relocate to China or support its domestic players as alternatives, but when you really dig and peel inside, it could be challenging to really bring everyone there."
The comments from industry sources suggest the Trump administration's salvo against Huawei may be having some success, making suppliers weigh looming geopolitical uncertainties and an economic slowdown that could hit demand
Multiple sources told Caixin that Arm and Chinese shareholder Hopu have expressed concerns over Wu’s excessive power in Arm China. They were disturbed by Wu’s moves to set up new facilities and business partnerships without adequate disclosure to shareholders. Wu also set up an investment fund privately without the board’s knowledge, triggering fears over conflicts of interest, sources said...
Arm China’s business registration record with Chinese commerce regulators showed that Wu, who also goes by Allen Xionang Wu, remained the company’s legal representative as of Wednesday night. Caixin learned that Wu still controls Arm China’s corporate seal, which would allow him to block registration changes...
Local media have quoted Wu as saying the company would continue to work with Huawei. Arm continues to supply technology to Huawei unit HiSilicon, but it’s unclear whether it can license future designs to the Chinese company.
China has in recent weeks banned Australian beef imports and imposed tariffs on Australian barley. It has also urged Chinese tourists to avoid Australia.
In both cases, officials in Beijing said the warnings were due to racist attacks against Asians during the pandemic.
“That’s rubbish. It’s a ridiculous assertion and it’s rejected. That’s not a statement that’s been made by the Chinese leadership,” Morrison said in a separate interview on 3AW.
“We hope the Australian government will adhere to an open and pragmatic investment policy, strengthen communication with foreign investors, maintain transparency, create a fair and non-discriminatory investment environment for foreign investors, and observe the legal rights of all foreign investments, including those from Chinese companies,” Ministry of Commerce spokesman Gao Feng told the weekly media briefing, when asked about the law.
Prime Minister Scott Morrison has blasted Victoria's Belt and Road Initiative agreement with China, saying it is against Australia's national interest, and is urging Premier Daniel Andrews to scrap the deal.
Monash University is pushing ahead with a plan to help a Chinese state-owned company build its new commercial passenger airliner, despite concerns within the federal government some of the designs have been stolen as part of a global espionage campaign...
Monash and COMAC signed a $10 million research agreement in Beijing in October last year alongside Victorian Premier Daniel Andrews as he announced a second agreement with China under the Belt and Road Initiative.
The product gets shipped regardless of wolf wankers in Beijing.
We don’t need China. China needs us.
The Chinese government directive urging its citizens not to travel to Australia threatens to render a still under construction $2.2bn casino complex on Sydney harbour a “white elephant”, according to industry experts who say the project can no longer rely on income from high-roller gamblers from China who were central to its business model.
Australia’s top political affairs diplomat in Beijing during the Tiananmen Square massacre says the Australia-China relationship is unlikely to improve while Xi Jinping remains in power, but Australia should work hard to ensure it doesn’t get worse.
Days after the Chinese government warned students and tourists not to come to Australia, Richard Rigby urged the federal government to “speak with one voice” on China to avoid inflaming the relationship further.
7. More on the street stalls
China is facing a public outcry over its claim that Beijing had “basically won” the war against poverty after Premier Li Keqiang admitted that more than two-fifths of the population made less than $140 a month.
A week after Mr Li announced the figure, saying it was “hardly enough” to rent a home in a big city, academics and netizens raced to question Beijing’s pledge to eradicate poverty by the end of this year.
“Given the current price level, the premier is suggesting 600m Chinese people are having trouble maintaining a basic living standard,” said a Beijing-based policy adviser, who declined to be named. “The poverty relief [campaign] needs to carry on.”
Caixin on the study that says there are 600m people in China who make less than 1000 RMB/mo
So “stall economy” became a buzzword, and Mr. Li became the talk of the Chinese internet. Some social media users praised him for daring to speak the truth. Many said he cared about the well-being of ordinary people, a subtle dig at the rest of the party leadership, suggesting it cares more about meeting arbitrary goals and building its power abroad...
Then the backlash set in. Some commentaries about the income figures disappeared. On the WeChat social media platform, an article that Mr. Li wrote in 1997 about a childhood teacher was deleted for violating regulations
As an upgraded version of the “street stall economy”, outdoor businesses have more scientific, refined and intelligent standards, Zhou Shen, a researcher from the School of Public Policy and Management of Tsinghua University, told People’s Daily Online. In a bid to regulate outdoor business, many places across the country have issued new regulations, such as stipulating specific operating hours and areas for booth and stall vendors.
Wuhou district in Chengdu has issued “green cards” with serial numbers, business locations, and operating hours and distributed plastic carpets to stall owners for free to encourage them to keep their spots clean. Zhengzhou, capital of central China’s Henan province, has implemented an odd-even policy for outdoor businesses, allowing vendors with odd number plates to operate on odd dates, and those with even number plates to run on even dates.
On May 27, the Office of the Central Spiritual Civilization Development Steering Commission said that from this year onward, roadside booths, street markets and mobile vendors will no longer be included in the assessment criteria for the title of National Civilized City.
As I wrote Monday about the "stall economy" pushback:
Premier Li Keqiang has recently been pushing the idea of street vendors as a way to mitigate employment issues, and there has been bit of a fever around the “stall economy”. The Beijing Daily made clear over the weekend that bringing back lots of street vending is not going to happen in the nation’s capital, and a commentary from CCTV suggested it is not appropriate for Tier-1 cities. Tier 1 cities- Beijing, Shanghai, Guangzhou, Shenzhen - have many special policies, starting with much tougher hukou restrictions than other cities in China.
The seeming reversal has spurred more speculation about a split between Xi Jinping and Li Keqiang. But is this really an about-face from the central government, or is it a clarification of a policy shift that was not clearly formed when it was announced? Whatever is going on, any move to revive the stall economy is sign of how worried the policymakers are about employment, the most important of the “6 ensures”.
But plenty of people are speculating on it signaling something bigger. We do not know, but if this does signal some sort of a split, it sure looks like Xi showed he can shut down Li in a matter of days. Here is one piece speculating on the politics behind it:
Street stalls have a long history in China. A famous painting from the Northern Song dynasty, "Along the River During the Qingming Festival," depicts ordinary people gathering at various stalls in the capital of Kaifeng.
The national treasure is enshrined in the Palace Museum in Beijing's Forbidden City.
Next door, in the Zhongnanhai -- which holds the headquarters of the party, which Xi leads, and of the State Council, which Li heads -- the final Xi-Li battle is brewing.
8. The epidemic
The patient, a 52-year-old man, checked into a clinic on Wednesday due to a fever, according to the official party newspaper People's Daily. The patient said he has not left Beijing or been in contact with anyone who travelled from overseas in the last two weeks, the report said
His two family members are now in quarantine, one is child who is a fourth grader at a Beijing primary school
Comment: The focus on one case is a sign of how they have so few cases, and how concerned they are about a resurgence.
official translation of yesterday's Zhong Sheng
China is looking to make testing universal, available in every corner of the mainland.
Procurement documents and official notices show it is sharply expanding its testing capability, already the world's largest, extending it even to rural health facilities as it looks to revive the economy after an unprecedented plunge in the first quarter.
People’s Daily published part three of the series of commentary that praised the CCP and the Chinese people for their great performance in fighting the COV19. It said “the facts undisputedly demonstrate the CCP and the Chinese government’s firm dedication to its responsibility to the people and to lives.”
Business, Economy and Trade
人民银行召开打击治理跨境赌博资金链工作会议_监管动态_中国金融新闻网 PBoC convenes meeting to discuss cracking down on the "financial chains" of cross-border gambling
5 Questions About China That Boards Should Be Asking Right Now - Harvard Business Review Are we too dependent on Chinese supply chains?; Are we too dependent on sales to China?; What is our exposure to legal changes in Hong Kong?; How much should we collaborate with Chinese companies?; How secure are our company’s IT system
JD's Hong Kong Listing to Give League Table Boost to China Banks - Bloomberg JD.com Inc.’s $3.9 billion Hong Kong listing is set to give several Chinese banks a boost in league table rankings, displacing from the top 10 some of their international peers that usually dominate in equity capital markets transactions
China’s Trillion-Dollar Campaign Fuels a Tech Race With the U.S. - WSJ $$ Since the start of the year, municipal governments in Beijing, Shanghai and more than a dozen other localities have pledged 6.61 trillion yuan ($935 billion) to the cause, according to a Wall Street Journal tally. Chinese companies, urged on by authorities, are also putting up money. Under a plan outlined earlier this year by China’s Ministry of Industry and Information Technology, these efforts would contribute to at least $1.4 trillion in investments during the next five years in artificial intelligence, data centers, mobile communications and other projects.
China Auto Sales Recovery Rolls Into Second Month - WSJ $$ Sales totaled 2.19 million, the government-backed China Association of Automobile Manufacturers said Thursday, up 14.5% from a year earlier—a result the association said exceeded its expectations. April’s 4.4% year-over-year rise had ended 21 months of sales declines.
Chinese securities regulator strengthens supervision of listed companies - Xinhua Practices including lying, accounting frauds, and illegal guarantee must be severely punished, Yan Qingmin, vice chairman of the China Securities Regulatory Commission, said at a meeting. The commission will improve the system of rewarding informants and use it as an important way to cleanse the capital market, so that more market participants can actively play the role of social supervision, Yan added.
Solar-Panel Maker Trina More Than Doubles in Shanghai Debut - Caixin Previously listed on the New York Stock Exchange, the company was delisted in 2017 amid a wave of privatization bids launched by U.S.-listed Chinese companies in the belief the shares were undervalued and would get better prices back home.
Billionaire Zhou Eyes China Online Lending With Bank Stake - Bloomberg Zhou Hongyi’s 360 Finance Inc. -- an online lending platform -- plans to use a group company’s purchase this week of a 30% stake in a Tianjin bank to access cheaper funding and lure small companies and individuals away from rivals with lower-cost loans. Non-state-owned Kincheng Bank of Tianjin Co. is now the third Chinese lender to count an internet company as its largest shareholder after Ant-backed MYbank and Tencent-backed WeBank.
Yicai - Near-USD1 Billion Chinese Mask Order Is Left in Limbo as US Buyer Misses Payment The Guangzhou-based company received a USD975 million order for KN95 face masks from a US buyer on May 17. From that single contract Kingfa would earn more than half of what it did in the whole of last year, which was a net profit of CNY1.2 billion (USD170 million). News of the contract sent its share price soaring by the exchange-imposed limit of 10 percent. // sounds like maybe a fake buyer?
Ousted Dangdang Founder Li Guoqing Will Auction Off Luncheons Starting at USD141 Wining bidders can chat with Li about reading, or share startup stories or life experiences. Bidding starts at CNY1000 (USD141) for one-hour luncheon and has reached CNY30,000 by 3:20 p.m. today during the online auction
Chinese eye bigger slice of Manila as real estate prices tank - Nikkei Asian Review Much of the Chinese interest in the Manila real estate market has been driven by the online gaming boom which caters almost exclusively to clients based in China where gambling is banned.
The mystery document holding up China’s sale of Anbang hotels | Financial Times Much of its content focuses on trademark disputes. But a clause towards the end of the 16-page document states that, in the event that Anbang is seized by China’s insurance regulator or other government entities, the Wu and Deng families “unconditionally agree to have the four parties of the United States to sue and file an additional complaint against the institutions”. Travis Laster, the vice-chancellor of the Court of Chancery in Delaware who will be the judge when the case between Anbang and Mirae resumes in August, recently said of the “parties”: “Those folks have vanished into the ether. It may be because they never existed in the first place. It may be because they are fraudsters. It may be because they are somewhere in China. I don't know.” //sounds really sketchy
Mirae Trying to ‘Wriggle Out’ of $5.8 Billion Deal, Seller Says - Bloomberg May 1 Mirae officials contend one of the reasons they called off the acquisition was the discovery that some hotel titles had been improperly recorded with the wrong owners, Dajia said in the suit. In the course of preparing the deal, Dajia officials said they discovered a group of California businessmen had submitted phony titles for six of the hotels involved in the Mirae deal. Dajia executives disclosed their findings to their Mirae counterparts and moved to retitle the properties, the suit said...In a footnote in the suit, Dajia officials say they’ve probed the fake arbitrators who signed the phony awards and found a half-dozen have criminal records. Three others lived in the same R.V. Park in San Rafael, California, Dajia’s lawyers said. One arbitrator was the mother of a member of the group and another worked as a waiter in a Chinese restaurant
Over Thirty Local Governments in China Provide Home Subsidies of up to 8 Million Yuan – China Banking News According to a report from Zhongxin Jingwei from 11 June six of these local government are providing maximum home purchase subsidies of over one million yuan (approx. USD$141,510), with Nanjing’s Jiangbei New District proposing a maximum subsidy of three million yuan, and Hangzhou a subsidy of eight million yuan
Stimulus to boost culture, tourism consumption in Beijing - Xinhua Beijing has announced a slew of measures to stimulate demand in the areas of culture and tourism as the city reins in the novel coronavirus, according to a new guideline issued by the municipal government
Beijing's 21 major projects to start in June - Xinhua The projects include seven on infrastructure, five focusing on the improvement of people's livelihood, and nine on high-end technological industries, according to the Beijing Municipal Development and Reform Commission. The total investment of these projects is expected to reach 108.3 billion yuan (about 15.3 billion U.S. dollars), said the commission
Beijing issues guideline for stimulating economy - China.org.cn Beijing published a guideline on Wednesday for promoting new industries and new business models as part of its plan to drive high-quality growth and stimulate the economy. The guideline says Beijing will build over 10 demonstration sites displaying the city's urban charms and major innovation achievements, scale up over 100 new applications for urban management and service, and support over 1,000 high-growth companies. More new technologies will be applied to the preparation and hosting of the 2022 Winter Olympics and help to create a more immersive audience experience.
中国新闻网：多省份扩大公务员招录规模，考试将有这些变化 China News reported that to help the employment, many local governments plan to hire more officials this year. In Mongolia for example, the provincial government plans to hire 7270 officials this year, compared with 1471 in last year.
Politics and Law
长安街知事：刘少奇长女去世，遗愿捐出遗体 Liu Aiqin, eldest daughter of former president Liu Shaoqi, died in Beijing. She was 92.
On every street - China’s Communist Party worries about its grassroots weakness | China | The Economist The pandemic has prompted debate about how to give the neighbourhood committees more muscle. State media quoted one scholar as saying that the party must “thread” them together with landlords’ associations and property-management firms. In recent years the party has been laying the groundwork for this by forming cells within these groups. The central city of Hefei wants at least half of those sitting on landlords’ committees to be party members, according to Legal Daily. State media often use the term “red property-management” to refer to firms that use their party cells to interact with property owners and try to keep them happy.
政事儿：陕西省委：赵正永对党不忠诚，口号喊得震天响、但只表态不行动 As requested by the disciplinary watchdog CCDI, the Shaanxi CCP committee held a meeting to criticize the disgraced former party secretary Zhao Zhengyong. One of the crimes of Zhao listed in the meeting is that he back pedaled the policies given by Beijing. It didn’t specify but said Zhao “shouted the slogans out loud but he gave only gesture and never action.” The Shanxi CCP committee also set up a special leading small group to “cleanse the toxic residue” of Zhao.
Deadly Floods in Southern China Set to Continue, Ministry Says - Caixin Tian Yitang, head of the ministry’s flood and drought prevention office, said at a press conference that southern regions will be especially vulnerable during the flood season, which typically lasts from June through August. Deluges across parts of China have ruined crops, burst dams, and brought down houses since the start of the month. As of 2 p.m. Tuesday, flooding had affected 2.6 million people, forced 228,000 to evacuate, and caused damage totaling more than 40 billion yuan ($5.6 billion), the Ministry of Emergency Management said.
A reader responded to yesterday’s comment about Organization department head Chen Xi’s inclusion on Xi’s Ningxia inspection tour:
Foreign and Defense Affairs
Dominic Raab urges China to heed UK's Hong Kong warnings | The Guardian The warnings come in the latest six monthly report on Hong Kong submitted by Raab to the UK parliament. In some of the strongest language ever seen in the oftentimes bland reports, Raab warns the plans to impose new security laws bypassing the Hong Kong legislature are in direct conflict with international law. The Foreign Office is trying to build a diplomatic alliance against the security measures in an attempt to convince China that the reputational and economic price for going ahead with the new security laws is too high.
Britain’s ties with China are set for a sea change | Financial Times Editorial $$ The west as a whole needs realistic engagement with China, not the retreat into hostile opposing camps that typified cold war relations with Russia. The UK should be no exception to that principle. But it can equally no longer carry on business with Beijing on the same basis as before.
Japan conveys ‘deep concern’ over China’s Hong Kong security law - UPI.com Tokyo's Chief Cabinet Secretary Yoshihide Suga said Thursday at a regular press briefing the message was conveyed to the Chinese government in response to recent communication, Japanese television network NHK reported.
Germany′s Merkel urges China′s Li to ensure ′equal treatment′ of foreign companies | DW The chancellor "highlighted the need for further steps on market access ... and equal treatment of foreign companies," her spokesman Steffen Seibert said after the talks.
Chinese premier holds video meeting with German chancellor - Xinhua "China is further expanding its opening up and is willing to create a sound business environment for foreign companies, including German ones, to operate in China," Li said, calling on the two countries to expand a two-way opening up, make good use of the "fast lane" of personnel exchanges that has been launched to facilitate bilateral business cooperation and the resumption of production, and jointly maintain the safety and stability of supply and industrial chains...She said Germany is looking forward to the opportunity of serving as the EU's rotating presidency to jointly prepare for high-level EU-China exchanges, promote existing institutional dialogues, accelerate the negotiation of the EU-China investment agreement, strengthen Europe-China-Africa anti-pandemic cooperation, and promote Germany-China, Europe-China relations to achieve greater development
Xi calls for coordinated efforts to promote China-Philippines cooperation - Xinhua Chinese President Xi Jinping suggested Thursday that China and the Philippines devise innovative approaches and methods while conducting COVID-19 control on an ongoing basis in order to gradually resume exchanges of necessary personnel and promote practical cooperation in various areas in a coordinated way. Such efforts will help the two countries promote their respective social and economic development for the benefit of their people, Xi added in a telephone conversation in the night with his Philippine counterpart, Rodrigo Duterte
Xi calls for deeper China-Belarus BRI cooperation - Xinhua Xi made the remarks in a telephone conversation in the night with his Belarusian counterpart, Alexander Lukashenko
Eased border tensions bring China-India economic relations back to crossroads - Global Times If the Modi government chooses to make friends with China, then China-India economic ties will surely see more growth potential. But if India joins the US in confronting China, China will not hesitate to protect its own interests, whether political or economic. And the cost of losing China's friendship will be too high for India to bear.
中国青年报：76集团军重型合成旅，4200米雪域高原驻训 China Youth Daily reported that a PLA brigade, heavily equipped with tanks, armored vehicles and howitzers, is moving into Tibet for an exercise.
The Pentagon wants to base missiles in the Pacific to counter China. Some allies don't want them - Task & Purpose "It wouldn't make much sense to announce plans now, which would stoke Chinese anger and possibly play into the domestic politics," said Randy Schriver, who was a senior Pentagon official responsible for Asia until his resignation last year.
India and Australia sign military pact as China tensions rise - Nikkei Asian Review The "arrangement concerning Mutual Logistics Support," which calls for reciprocal access to each nation's respective military bases, was sealed during a remote summit between Indian Prime Minister Narendra Modi and his Australian counterpart, Scott Morrison.
Sweden-China ties grow ever icier over Hong Kong and coronavirus - Nikkei Asian Review A Pew Research Center survey last year found 70% of Swedish respondents held unfavorable views of China, the highest percentage among Europeans and the second-highest worldwide after the Japanese.
Nepal ruling party split over US aid threat to China relations - Nikkei Asian Review There are widening divisions in the leadership of Nepal's ruling party over a U.S. promise of aid that rivals of Prime Minister K.P. Sharma Oli worry will damage the country's blossoming relations with China. A Millennium Challenge Corporation (MCC) grant agreed in 2017 has widened splits in the Nepal Communist Party. Oli has been pushing for its parliamentary approval, but influential party members are opposed. They argue that the aid is part of the U.S. Indo-Pacific Strategy to limit China's influence in the region.
A chill descends on Chinese scholars in Japan | The Japan Times Less recognized in this debate is the China threat to the human rights of Chinese scholars and students, both in China and in universities abroad, and the duty to protect them from this threat. Moreover, the Anglophone-centric character of this debate ensures that some particularly frightening instances of that threat in Japanese universities are barely noticed. The case of Yuan Keqin, a Chinese historian at the Hokkaido University of Education charged with espionage in China this year, certainly deserves to be better known.
How the World Is Responding to a Changing China - Carnegie Endowment for International Peace - Paul Haenle and Lucas Tcheyan China’s leadership may not recognize its own role in sparking such global pushback. Influential Chinese scholars have questioned the unfavorable international environment and argued that Chinese actions in the wake of the coronavirus should have garnered China acclaim rather than criticism. Washington, though outspoken in criticizing Beijing, needs to galvanize collective action with partners and allies to effectively address the growing number of shared concerns about China’s behavior.
Chinese ownership of Nunavut's resources stokes unease - NNSL The Chinese stake in Nunavut’s minerals is about to grow, if approvals are granted, and that’s raising some eyebrows. China’s government controls many Chinese mining companies, including Shandong Gold Mining, which is in line to buy Toronto-based TMAC Resources for $149 million (U.S.).
Hong Kong and Macao
Hong Kong police arrest 38-year-old man and his parents following seizure of handgun, ammunition | South China Morning Post Hong Kong police have arrested a 38-year-old man and his parents, following the seizure of a handgun along with 390 bullets and gun parts, most of which were suspected to have been airmailed into the city from the United States.
President Tsai to speak at Copenhagen democracy summit via video - Focus Taiwan President Tsai Ing-wen (蔡英文) will share Taiwan's accomplishments in handling the COVID-19 pandemic and the country's success stories on its road to democracy at the upcoming Copenhagen Democracy Summit via video, the Ministry of Foreign Affairs (MOFA) announced Thursday.
Taiwanese council wades into territorial row with Japan over island chain | South China Morning Post The council in the northeastern Taiwanese county of Yilan unanimously approved a symbolic decision to change their designation from the Diaoyu Islands to the Toucheng Diaoyutai Islands ahead of a similar vote by Japan’s Ishigaki city.
Tech and Media
Hand Over Advertiser Info or Be Taken Down: Ximalaya Shocks Podcasters- PingWest In a shocking announcement to content creators that has now been deleted, Ximalaya FM, China's top user-generated audio content platform, has required them to file their advertiser information prior to publishing content. (The same company operates a separate product for overseas market called Himalaya.)
Apple pulls podcast apps in China after government pressure - The Verge Apple has removed Pocket Casts, the popular iOS and Android podcast client, from the App Store in China. The Cyberspace Administration of China has determined that it can be used to access content deemed illegal in the country, and has demanded that Apple remove the app as a result. It’s the second major podcast app to be removed from China’s App Store this month.
Battle of Bitmain: co-founder orders halt to product deliveries · TechNode After forcefully re-taking control of Bitmain headquarters, ousted co-founder Zhan Ketuan has ordered employees to halt product deliveries, according to a report in Chinese blockchain media Blockbeats. The reasons for his decision remain unclear, as is whether Bitmain staff are taking his orders.
Yicai - Google’s Removal of Its Apps Cuts Cheetah Mobile’s 1st Quarter Revenue in Half Google withdrew nearly 600 apps from its Google Play store because they displayed out-of-context advertising and banned the accounts of their developers on its advertising platform in February. Cheetah took one of the biggest hits among these, as all 45 of its apps got the ax, including its LiveMe live-streaming platform, which targets overseas users.
Yicai - iQiyi Appoints Former Netflix Exec as VP for Global Expansion iQiyi has appointed Kuek Yu-Chuang as its vice president in charge of global strategic planning, marketing, business development, and public affairs, Beijing News reported. Kuek joined Netflix as its managing director for Asia Pacific in 2016.
Yicai - Social Media Platform Joyy Invests USD100 Million in Chinese Fresh Food E-Business Joyy invested USD100 million in Chinese fresh food e-business Tongcheng Shenghuo, Yicai Global learned from the social media and live-streaming platform operator. Joyy said the investment is its largest in life services to date.
Bilibili Breaks Out of Otaku Niche For Long Term Growth - PingWest Founder and CEO Chen Rui said that "Our website has become not only for the younger generation but for mass-market users as well. While users previously favored Bilibili for a major focus on funny anime memes, they can now can search for more regular contents like cooking tutorials or workout videos."
Energy, Environment, Science and Health
China announces 15-year plan to protect key ecosystems - Xinhua In an effort to strengthen the shields for ecological security and protect biodiversity, nine major projects and 47 key tasks have been underlined in the plan, which was jointly issued by the National Development and Reform Commission and the Ministry of Natural Resources. According to the plan, the country aims to increase its forest cover to 26 percent by 2035, raise its vegetation cover ratio of grasslands to 60 percent and develop nature reserves, with the protected areas covering more than 18 percent of the nation's land area
人民日报：《第二次全国污染源普查公报》发布 On Wednesday, the state council published the results of its “second nation-wide survey of pollution sources”, which suggest that the pollution level has dropped significantly than 13 years ago. The survey also show that more than half of the country’s pollution sources are located in the five eastern provinces: Guangdong, Zhejiang, Jiangsu, Shandong and Hebei.
Chinese universities told to tighten scrutiny of international applicants to plug loophole | South China Morning Post Yu Minhong, chairman of the New Oriental Education and Technology Group in Beijing and a member of the Chinese People’s Political Consultative Conference, raised the issue of “gaokao immigration” when the political advisory body met in May, calling for the loophole to be plugged.