ZTE saved; US diplomats evacuated; Electric China Dream, Gaokao; Xiaomi to be the first CDR?; "Triple-win" Belt and Road 

The ZTE deal is done and the company can return to operations. Part of the settlement includes the insertion into the company of a US compliance team. Who decides who is on that team, and will it end up being a huge payday for big US law, consulting and accounting firms? And will Beijing assume that some or all of the members of the compliance team are working for US intelligence? The arrangement sounds complicated in practice…

The G-7 and the SCO summits are both happening this weekend. The SCO has always seemed a bit toothless but in the New Era might it become more important, especially as the Xi-Putin bromance appears to deepen and the G-7 strains against the Trump Administration?

On Friday Xi will issue the first Order of Friendship of the People's Republic of China to a foreigner or foreigners who "have made outstanding contributions to China's development, exchanges and cooperation between China and other countries, as well as world peace." My money is on Putin getting it. 

Some housekeeping: The newsletter will be on vacation next week, if something big happens I will try to break the silence and send something out. 

Thanks for reading, and please consider referring the newsletter to friends and colleagues.


The Essential Eight

1. Deal to save ZTE signed

The US Congress looks unlikely to block it, and it sounds like the Qualcomm-NXP will be approved imminently by Beijing. No point I guess in pretending that the M&A reviews are not politicized...

Commerce Secretary Wilbur Ross: The US strikes a deal with ZTE - CNBC:

Commerce said the deal includes a $1 billion penalty against ZTE and a U.S.-chosen compliance team to be embedded at ZTE.

"We are literally embedding a compliance department of our choosing into the company to monitor it going forward. They will pay for those people but the people will report to the new chairman," Ross said in a "Squawk Box" interview.

"This is a pretty strict settlement. The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls," he said.

The deal includes $400 million in escrow to cover any future violations as well as requiring ZTE to change its board of directors and executive team in 30 days.

ZTE Pays $1 Billion Fine in Settlement With U.S. - WSJ $$:

Although Mr. Ross said that the ZTE deal was simply an enforcement action, it clearly had a broader impact. China is ready to sign off on Qualcomm’s proposed acquisition of NXP Semiconductors , a person with knowledge of the situation said.

“The deal should be cleared very soon,” the person said. In the past few days, Chinese regulators have been working with Qualcomm’s legal team on the “technical details” required for the approval, the person said.

U.S. Congress has few options to stop Trump from saving China's ZTE | Reuters:

Sanctions laws that affect ZTE allow any president to waive them if he feels it is necessary for national security reasons. The U.S. Constitution also gives presidents broad control of foreign policy matters.

Members of Congress could try to pass legislation barring Trump from spending any money to ease restrictions on ZTE, one of the main ways they traditionally control the White House, because Congress controls federal spending.

However, Trump’s Republican Party controls both the Senate and House of Representatives, lessening the chance of passing any measure opposed by the White House. And it would be even more unlikely that the Republican-led Congress could muster the two-thirds majority in both chambers needed to override a veto.

White House's ZTE deal wins race with legislators - Axios:

Timing is everything: The Senate is nearing passage of its version of the NDAA, which contained an amendment that would block the White House’s ability to make this kind of deal with a Chinese firm.

Several offices contacted by Axios — including those of Sens. Marco Rubio (R-Fla.) and Chuck Schumer (D-N.Y.) — were counting on the amendment, written by Sen. Chris Van Hollen (D-Md.), to halt the negotiations. The Trump administration beat opponents to the punch.

Lingling Wei and Bob Davis have written a long and excellent "tick-tock" of Trump's approach to US-China trade. 

‘Get Moving’: How Trump Ratcheted Up the Trade Battle With China - WSJ $$:

President Donald Trump, fed up with hearing he was weak on China, assembled his senior trade team at the White House on May 22 and vented, according to officials who were involved. He wanted a tougher approach, including tariffs he could use as a weapon to force trade concessions.

Treasury Secretary Steven Mnuchin, who favored a milder approach, had spent months maneuvering to become the administration’s point person on talks with China. Now, along with his administration rivals, he was getting a dressing down, the officials say...

Before the May 22 meeting, Mr. Mnuchin was ascendant. He was pursuing a market-calming strategy of negotiating with China to increase purchases of U.S. goods and services and decrease import barriers, while putting aside, for the moment, the threat of sanctions.

Now his star has fallen and Mr. Lighthizer’s has risen. Mr. Lighthizer, who favors a get-tough approach with China and other nations, is moving ahead with tariffs as a way to force China to make more fundamental changes to its economy. He wants China to reduce subsidies and other aid to Chinese firms competing internationally in advanced technology....

By mid-May, U.S. national-security officials were convinced that China wasn’t helping on North Korea, and was actually trying to torpedo a June summit between Mr. Trump and North Korean dictator Kim Jong Un, U.S. officials say. National-security officials saw no need to coddle Beijing. They backed Mr. Lighthizer’s position that the U.S. needed to move aggressively to prevent Beijing from pressuring U.S. companies to transfer advanced technology—even if that meant imposing tariffs.

Obama Staffer Ben Rhodes Looks Back On His White House Years: 'It Can Take A Real Toll' | WBGO 

After the 2016 election] we saw Xi Jinping, who - you know, when Obama tried to warn him about, well, Trump means what he says on this trade stuff, he looked real comfortable. And he said, look; if an immature leader throws the world into chaos, the world is going to know who to blame. And he's referring to Trump of course. And what we realized then is that, you know, the Xi Jinpings of the world - they can manage this outcome. But the Angela Merkels and Justin Trudeaus of the world - they've got a big problem.

From Xi’s perspective I think Trump looks an opportunity machine…


2. US diplomats evacuated due to mystery illness

A Medical Mystery Grows as U.S. Consulate Workers in China Fall Ill - The New York Times:

A crisis over a mysterious ailment sickening American diplomats and their families — which began in Cuba and recently appeared in China — widened on Wednesday. The State Department evacuated at least two more Americans who fell ill in China after hearing strange noises, officials said.

Many other employees at the American Consulate in the southern Chinese city of Guangzhou and their family members are also being tested by a State Department medical team that has been flown in, officials said. It is unclear how many of them are exhibiting symptoms, but officials expect more American personnel to be evacuated.

China says probe sheds no light on mystery illness striking U.S. diplomats - The Washington Post:

On Wednesday, the State Department said it was evacuating several more Americans from Guangzhou for further health screenings. That follows the initial evacuation of a government employee, who had reported hearing strange noises in his apartment and exhibiting symptoms of brain injury.

On Thursday, China’s Foreign Ministry said invesstigators looked into the case after being told about the first incident.

“China and relevant authorities conducted an investigation and gave feedback to the United States,” spokeswoman Hua Chunying told a regular news conference. “We haven’t found the cause or clues that would lead to the situation mentioned by the United States.”


3. CDRs teeing up, Xiaomi may be the first

Securities Regulator Releases Guidelines for CDR Issuance - Caixin Global:

China’s securities regulator issued highly anticipated guidelines for the China depositary receipts (CDRs) pilot program, paving the way for overseas listed Chinese tech giants to trade shares on the domestic market.

The China Securities Regulatory Commission published the guidelines (Link in Chinese) at midnight Wednesday on its website. The regulations take effect immediately on a trial basis and are divided into eight chapters with 60 clauses about issues such as the listing and trading of CDRs, investor protections and legal responsibilities, according to a statement on CSRC website.

Caixin learned that the CSRC picked eight companies as the first candidates for the program, including Alibaba, JD.com, Baidu, NetEase, Tencent Holdings Ltd., online travel agency Ctrip.com International, Weibo Corp. and smartphone lens maker Sunny Optical Technology Co.

Sources told Caixin that Baidu, NetEase Inc., Alibaba and JD.com Inc. have been waiting for the release of detailed guidelines while working with their sponsors for the planned depositary offering as early as the end of June.

存托凭证发行与交易管理办法(试行)PDF 

Caixin reports that Xiaomi planned to submit its CDR application by the end of Thursday June 7 --独家|小米CDR最早今日交申请 与港股IPO统一定价_公司频道_财新网

在CDR各项细则于6月7日凌晨陆续公布后,小米将成为第一家发行CDR的新经济独角兽公司。财新记者从多个消息源了解到,小米最快于今日(6月7日)就发行CDR向中国证监会提出申请,而招股书最快于6月8日上网公开。


4. GOP lawmakers question loyalty of the NRDC

This looks like a witch hunt against an organization that has long been the bane of the GOP? This is a very slippery slope…

GOP Congressmen Launch ‘Foreign Agent’ Probe Over NRDC’s China Program | InsideClimate News:

Rep. Rob Bishop (R-Utah) [No relation], the committee chairman, and Rep. Bruce Westerman (R-Ark.), chair of its oversight and investigations panel, requested that NRDC by next week turn over documentation of any payments it has received from Chinese officials. They also asked for documentation of NRDC's registration as a "foreign agent," or an explanation of why the environmental group should not be registered as required by law for those who lobby on behalf of a foreign government. 

"The Committee is concerned about the NRDC's role in aiding China's perception management efforts with respect to pollution control and its international standing on environmental issues in ways that may be detrimental to the United States," the lawmakers said in the letter, dated June 5. "The NRDC's relationship with China has many of the criteria identified by U.S. intelligence agencies and law enforcement as putting an entity at risk of being influenced or coerced by foreign interests." 

The full letter in PDF

Republican Lawmakers Question Environmental Group’s Praise of China - The New York Times:

It said the N.R.D.C. had sued the United States Navy over sonar testing and its potential harm to marine life, but had not raised similar criticisms with the Chinese military. The environmental group has never condemned China’s extensive work building artificial islands in the South China Sea and praised reforms to its domestic fisheries months after a 2016 Greenpeace study that said Chinese commercial fishing was a threat to fish stocks around the world, the congressmen wrote.


5. Electric China Dream

Skepticism is very much in order about this project, at least it relates to creating an international grid. Do most countries really want to have their power grids effectively under Beijing's control?

China eyes role as world’s power supplier - FT $$

In Laos, in Brazil, in central Africa and most of all in China itself, ultra high-voltage cable technology that allows power to be commercially transported over vast distances with lower costs and increased load is justifying the construction of massive power projects. It is dubbed the “intercontinental ballistic missile” of the power industry by Liu Zhenya, its biggest backer and for a decade the president of State Grid, China’s powerful transmission utility.

UHV allowed China to binge on dam building in its mountainous hinterland, then transport the power thousands of kilometres to its wealthy, industrial east coast. But by enabling this, and other projects, UHV has left western China with such a glut of power that Mr Liu in 2016 proposed using the technology to export power as far away as Germany.

Now Mr Liu is promoting UHV internationally through his Global Energy Interconnection initiative. Designated a “national strategy” and championed by Xi Jinping, China’s president, the initiative feeds into one of China’s most ambitious international plans — to create the world’s first global electricity grid...

“You have to understand, the GEI is a personal priority of Xi Jinping,” says one senior power official. “Of course, Chairman Liu [Zhenya] and all the other chief executives are under great pressure. Xi does not tolerate failure.”

Sparks fly over ultra-high voltage power lines | China Dialogue:

Grid companies have been keen adopters, with State Grid, which covers 88% of China’s territory, especially interested. Its 2013-2020 construction plan envisioned six AC and 13 DC lines by 2013, and 10 AC and 27 DC lines by 2020. In Inner Mongolia alone, company officials spoke of 11 lines running from the province’s coal and renewable hotspots by 2020.

But rollouts have slowed, and few analysts expect State Grid will deliver on its 2020 target. In fact, its national UHV backbone scheme, which is the centrepiece of its UHVAC ambitions, looks unlikely to happen anytime soon...

Grid companies have their own reasons for being cautious about new UHV lines. Revenues from these mega-projects depend on the amount of power they can transmit. But utilisation of existing lines has been lower than expected, with non-hydro lines performing particularly badly.

What’s more, the impact of UHV on renewable energy “curtailment” in inland China has also been disappointing, undermining the case for investment. Curtailment refers to energy that never reaches the grid and is wasted, for reasons including a lack of transmission capacity or quotas for coal-power consumption.


6. Gaokao and the China Dream

This year, China's college entrance exam involves waxing eloquent about Xi Jinping's philosophy — Quartz:

The big topic this year? The philosophy of Xi Jinping. Of the nine essay questions asked across the nation—there are some regional variations—five were directly related to propaganda terms put forward by the Chinese president. The questions were published today by state media, shortly after the test. The ideology-oriented themes echoed those from the era of Mao Zedong, who once terminated the gaokao for a decade as part of a movement against intellectuals.

In Beijing, students were asked to choose one of two assigned titles. The first was “New youth in the new era—talking about growing up in the development of the Motherland.” The term “new era” was used by Xi during a key Communist Party event last fall, and is associated with the idea of China taking on a global leadership role. The other, “The picture of green mountains and clear water,” was inspired by a speech Xi gave in 2005 about environmental protection.

Other questions posed to students today also involved politics. One asked students to write a letter to the year 2035, when China will “basically have realized socialist modernization,” according to the Communist Party. The prompt stated, “You are walking and growing with China of the new century, and chasing and realizing dreams in China’s new era.”

新鲜出炉!今年高考作文题大全 你觉得哪篇最难写? 

Essay topics of China’s university entrance exams: Would you pass the test? - People's Daily Online:

Topic: A letter to 2035

Description: In 2000, which is the year of dragon, humans entered a new century. Millions of millennium babies were born in China.

In 2008, Wenchuan earthquake shattered the nation. The Beijing Olympics kicked off.

In 2018, Millennium babies have now come of age.

Each generation has their own circumstances and turns in life, as well as certain missions and challenges. You’ve grown up with China in a new era, chasing your own dreams alongside our nation. Please write a letter to children living in 2035, to be concealed in a “time capsule.”

Tricky political question: When writing about 2035 do you write that Xi is still the top leader?

Try your hand at the 'gaokao' - Sixth Tone - Some of the questions from years past. I failed...

How China is trying to bust high-tech exam cheats - Inkstone:

Even though cheating carries a punishment of up to seven years in jail under Chinese law, there’s no end to the schemes some will use to gain an edge...

This year in Inner Mongolia, education authorities will use a finger vein recognition system instead of the traditional method of fingerprint verification, in order to confirm that test-takers are who they say they are.

This method of biometric authentication is even harder to fool than fingerprint recognition, and will help ferret out any potential substitute test-takers...


7. Can the world do anything about the repression in Xinjiang?

How Should the World Respond to Intensifying Repression in Xinjiang? | ChinaFile Conversation:

Deliberate, systematic human rights abuses are happening in China’s northwest. Reporting and research published in recent weeks shows that the Chinese government is targeting the Xinjiang Uighur Autonomous Region’s roughly 11 million Muslims for “re-education.” Anywhere from several hundred thousand to more than a million people have been or are being held in “centers,” where they have to “disavow their Islamic beliefs, criticize themselves and their loved ones and give thanks to the ruling Communist Party.” Some are tortured. While several U.S. lawmakers have called for sanctions, much of the world remains silent, including the Organization of Islamic Cooperation, which calls itself “the collective voice of the Muslim world.” What should the international community do?

Question: Will the US use the Global Magnitsky Act against Chen Quanguo and others involved in Xinjiang's repression?


8. Track the "triple-win" Belt and Road 

Belt and Road Tracker | Mercator Institute for China Studies:

Drawing on an extensive database of BRI projects, the MERICS Belt and Road Tracker provides informed analyses of BRI-related developments and trends. Apart from the database, which is updated regularly, the Tracker provides a wide range of regional and thematic maps to visualize the initiative’s scope and progress – as well as its setbacks.

China calls on more foreign companies to share ‘triple win’ under Belt and Road - People's Daily Online:

The flourishing development of the China-proposed Belt and Road Initiative has gone beyond win-win cooperation. Now it is “triple win” and China has renewed its call on international big names to join the feast.

The term, “triple win,” was first brought up by Joe Kaeser, President and CEO of Siemens AG, in Beijing on Wednesday at the Belt and Road International Summit 2018, which was hosted by the German conglomerate.

An open, fair and collaborative participation in the Belt and Road Initiative and the Digital Silk Road projects - more open to local companies in the BRI countries - said the the president, would send a powerful message to the rest of the world that together we can build a better world. “This is what I call a triple win!”

China's Belt and Road Could Boost Global Trade by 12%, ING Says - Bloomberg:

The BRI will have a significant impact on transport and trade facilitation expenses, both of which are large factors in final trading costs, Joanna Konings, senior economist for international trade analysis with ING in Holland, said in a June 6 report.

“Trade between Asia and Europe, not including trade between EU countries, accounts for 28 percent of world trade, so making those trade flows easier has a large potential impact,” Konings said in the report. “The size of this impact depends on the sensitivity of trade to changes in relative costs.”

EU warns UK-centered China import scam may shift to Europe's 'Silk Road' | Reuters:

“It is maybe too soon to jump to conclusions, but it is worrying that fraudsters are now obviously looking at infrastructure investment as a business opportunity for them too,” Bianchi said, urging EU authorities to make sure that the infrastructure built by the Chinese “is not exploited for illicit traffic”.

In the British scheme, Chinese criminal organizations used the German port of Hamburg as Europe’s first arrival point for undervalued clothing and footwear cargos. But goods passed customs controls only after having been shipped to Britain’s ports, under EU rules that spare checks on items in transit between the bloc’s member states.


Business, Economy, Finance And Trade

Ant Financial Braces to Be Regulated as Financial Holding Company - Caixin Global With a systemically important presence in the financial industry, Ant Financial Services Group is one of five companies involved in a pilot program that the central bank started in December to test new rules for financial holding companies, Caixin has learned. Ant Financial has developed rapidly. It now operates the world’s largest money market fund, which has more than 1.7 trillion yuan ($266 billion) in assets. The company now serves more users than some of China’s largest banks, which themselves are considered global systemically important financial institutions by the Financial Stability Board, an international body that monitors the global financial system...Alibaba’s main competitor, Tencent Holdings Ltd., was not included in the pilot program despite having stakes in a number of financial firms including online bank WeBank, Futu Securities, Howbuy Fund and WeChat Pay. // Comment: Did the investors in the most recent Ant fundraising round know this was coming?

China Banks Have Yet to Feel the Worst of Deleveraging Pain, UBS Says - Bloomberg: A squeeze on their interbank borrowing was mitigated through extensive use of a short-term funding instrument called negotiable certificates of deposit, the report by UBS analysts led by Jason Bedford said. Regulators have clamped down on interbank activity because some banks had used it to boost shadow loans and add leverage. “We believe many market watchers have overestimated the rate of progress” in credit tightening, Bedford’s note said. “A meaningful re-balancing of the banking sector will be a long, drawn out process.”

Western Cities Want to Slow Flood of Chinese Home Buying. Nothing Works. - WSJ After the first Vancouver 15% tax failed to put a lid on foreign buyers, Mr. Robertson worked with the province of British Columbia on more aggressive steps. In February, province officials raised the foreign-buyers tax to 20% and expanded coverage well beyond Vancouver. Officials also imposed a new levy—0.5% of the property value and climbing to 2% next year—on homeowners who don’t pay income tax in Canada. In April, British Columbia also announced measures to deter the resale of condo units before construction was completed, to discourage investors from flipping units before they are occupied.

How Durable is China’s Rebalancing? | Council on Foreign Relations - Brad Setser One. I think China’s balance of payments position is fairly robust. In both a “flow” and a “stock” sense. The current account isn’t that close to falling into a deficit (and it wouldn’t be that big a deal if China did have a modest deficit). And China’s state is back to adding to its foreign assets in a significant way. The days of “China selling reserves” are long past. And two, I think the rebalancing that has lowered the measured current account surplus is more fragile than most think. It is a function of policies—call it a large off-budget “augmented” fiscal deficit or excessive credit growth—that some believe to be unsustainable, and many think are unwise.

China’s state enterprises cut debt, while private groups lever up - FT $$ The liabilities-to-assets ratio at industrial SOEs dipped two percentage points from the end of 2016, to 60 per cent at the end of April this year. By contrast, at private groups this ratio has climbed six percentage points to 56 per cent.  “Local governments and SOEs should be the focal points . . . while private enterprises need to moderately add leverage,” Yan Yan, chairman of Chengxin, said in Shanghai on Thursday.

Fear the China Put Nobody's Talking About - Bloomberg Here’s an alarming and frequently cited statistic: Chinese industrial companies have at least $124 billion of debt maturing over the next two years. Actually, it’s worse. They have another $34 billion of bonds with put options – giving creditors the right to sell back their securities or get a higher coupon – that can be exercised within the next two years. Lenders could be asking for their money back much sooner than companies and investors expect.

Trust Companies Scale Back Channeling Business - Caixin Global Data released by China’s banking and insurance regulator Wednesday showed that assets managed by the country’s 68 trust companies via the so-called “channeling business” totaled 14.97 trillion yuan ($2.3 trillion) by the end of April, a decline of 670 billion yuan, or 4.3%, from the end of last year. In channeling, banks, companies and high-net-worth individuals invest customers’ deposits or their own cash in high-yield products via “channels” — which are usually nonbank vehicles such as trusts — to achieve higher returns.

Troubled Tomorrow Group Selling Control of Baoshang Bank - Caixin Global Tomorrow Holdings plans to sell up to 30% of the bank to Shenzhen Investment Holdings Co., an arm of the city’s state-owned assets supervision and administration commission. Tomorrow Holdings holds at least a 70% stake in Baoshang Bank through various subsidiaries, sources told Caixin. The deal, which is likely to be valued at more than 18 billion yuan ($2.8 billion) based on the bank’s market capitalization, will make Shenzhen Investment Holdings the controlling shareholder of Baoshang Bank, Caixin has learned.

Luxury Sales Are Rebounding in China. Just Not in Stores. - The New York Times As a result, luxury brands have revised their pricing strategies in China, and have worked to cater to local customers. They communicate with customers via WeChat, a ubiquitous messaging and social media app that is increasingly used as a shopping portal, they partner with regional celebrities and “influencers,” and they offer additional services like white-gloved delivery staff to replicate the old-fashioned shopping experience. “Buyers of luxury in China are young, increasingly fashion-savvy and well aware of the price-value equation,” said the lead author of the study, Claudia D’Arpizio, a Bain partner. According to Ms. D’Arpizio, the strong performance of the mainland China market suggests that luxury brands’ new strategies are bearing fruit.

U.S. Should Chill Out About High-Tech China Threat, Pettis Says - Bloomberg "The fear of China is a form of paranoia," he said . "I tell my friends in Washington: ‘Yes, step up the pressure a bit but China is not the great existential threat that you think it is.’ China’s not going to become the dominant superpower of the 21st century." Pettis estimates China’s share of global output will shrink to 10 percent and perhaps lower in 20 years from about 15 percent now, as the burden of its rising debt drags on growth. Expansion is extremely unlikely to be more than 3 percent annually now and is overstated in official data, he says... This is not a country we can expect major innovations from. In the west we don’t have enough confidence about this. How many governments in the world have decided they’re going to become major innovation centers? None of them have succeeded. //Comment: I think Pettis is wrong about innovations coming out of China over the next few years. 

Crypto's 32-Year-Old Billionaire Mining King Is Mulling an IPO - Bloomberg In an interview with Bloomberg News, Wu said Bitmain booked $2.5 billion of revenue last year and that he and co-founder Micree Zhan together own about 60 percent of the business. While Bitmain has few direct comparables, applying a multiple similar to that of publicly traded chipmakers such as Nvidia Corp. and MediaTek Inc. would give the company a valuation of about $8.8 billion. That would make the co-founders’ holdings worth a combined $5.3 billion, according to the Bloomberg Billionaires Index.

Reversion to the Mean: Why Chinese Investment in the US Did Not, In Fact, “Collapse” - MacroPolo The rapid decline of US-bound Chinese direct investment in 2017 has led many to conclude that the wave of Chinese money is subsiding. To be sure, the drop in Chinese direct investment from 2016 to 2017 was nothing short of dramatic, but that is because 2016 was, in fact, a significant aberration and an exceptional year, not because Chinese investments are now disappearing. From my vantage point, 2017 simply marked a “reversion to the mean.” In other words, it is premature to declare the drying up of Chinese foreign direct investments (FDI) in the United States.

Demystifying U.S.-China Energy Trade | cogitASIA CSIS Asia Policy Blog In the first quarter of 2018, the United States sold $3.2 billion worth of energy commodities to China. While the volumes and values of U.S. exports to China will continue to grow this year, especially given the wide Brent-WTI spread and Chinese government pressure on state-owned enterprises to import U.S. crude specifically, $40–$50 billion is a still a very long way off. 

Cities Fight for Skilled Migrants - Caixin Global China must avoid a situation in which better-performing cities continue to grow stronger thanks to their attractiveness to skilled migrants, while poorer cities continue to do worse, Wang Yukai, a professor at the Chinese Academy of Governance, told Caixin. “The concentration of education and healthcare resources should be shifted downward toward large and medium-sized cities, so that overcrowding in Beijing and Shanghai can be alleviated,” Wang said.

 

Politics, Law And Ideology

How Chinese Communist Party officials can find 'honour' in returning home for dinner | Hong Kong Free Press - Qian Gang Appearing recently on the public account of the official People’s Daily on the popular WeChat platform, the following editorial prompted a wave of interest. The piece bore the headline: “Party Members and Cadres Should Find Honour in Returning Home for Dinner.”.. For the idea of “returning home for dinner” to become mixed up with this moralistic discourse about “honour,” and for it to be elevated in this way politically, suggests that while the Party has actively pushed an anti-corruption agenda under Xi Jinping, and has sought to restrain the use of public funds for evening entertainment, the problem is still widespread enough to cause concern.

Social credit system work progressing - China Daily China will make strenuous efforts to build a more comprehensive and rigorous social credit system to improve the business environment and boost development, the State Council decided at an executive meeting chaired by Premier Li Keqiang on Wednesday. Key priorities for improving the social credit system were identified at the meeting. These include building social credit-centered regulatory procedures, establishing blacklist procedures and enhancing social credit building in areas concerning people's livelihoods. "Breakthroughs have been made in developing the social credit system. Going forward, the system needs to be improved in key areas in response to specific needs." Li said at the meeting China has made visible progress in developing a national social credit system. A unified social credit code, which identifies businesses and their specifics, has been introduced nationwide. Seventy-one central government departments and provincial governments have been connected to the national credit information-sharing platform.

China Spotlights 50 Fugitives in Search for Dirty Officials Hiding Abroad - Caixin Global The Central Commission for Discipline Inspection (CCDI), China’s top graft buster, published on its website information about the fugitives, including names, photos, ID and passport numbers, alleged offenses and possible current whereabouts. According to the information released by the CCDI, 23 fugitives may have fled to the U.S. and that Canada and New Zealand are also among the main countries where fugitives may be hiding. Some possible addresses including community or street names are listed.

Top Chinese Communist Party cadre criticises Cultural Revolution for damage to tradition | South China Morning Post “The Cultural Revolution eliminated a large part of both the essence and the dregs of traditional culture on the mainland,” said Wang Yang, chairman of the Chinese People’s Political Consultative Conference, China’s top political advisory body. “But Taiwan preserved it well.” Wang made the assessment on Wednesday in a meeting with a group of about a dozen Taiwanese working in Fujian province, across the strait from Taiwan, according to the Taipei-based Central News Agency.

Reading the China Dream: This web site is devoted to the subject of intellectual life in contemporary China, and more particularly to the writings of establishment intellectuals. What you will find here are essentially translations of Chinese texts that we consider important, together with discussions of related issues and a number of reference tools that can help those interested to navigate the project... Reading the China Dream is run by David Ownby (professor of history at the Université de Montréal), Timothy Cheek (professor of history at the University of British Columbia) and Joshua Fogel (professor of history at York University).

读者集团董事长王永生被带走 或涉王三运案_政经频道_财新网 Wang Yongsheng, chairman of Duzhe Publishing, has been taken away for investigation, may be related to Wang Sanyun case. 财新记者获悉,读者出版集团有限公司(下称读者集团)董事长王永生前天(6月5日)在办公室被有关部门带走接受调查。王永生同时还是读者集团下属上市公司——读者出版传媒股份有限公司( 603999.SH ,下称读者传媒)董事长兼总经理。

 

Foreign and Military Affairs

China looks to bolster militancy fight at security summit | Reuters China has long found a sympathetic audience from Russia and Central Asian countries for its security crackdown, although Western nations have expressed concern about rights abuses, charges China denies. The Saturday-Sunday summit in the northern Chinese port city of Qingdao comes ahead of an historic planned meeting next week between North Korean leader Kim Jong Un and U.S. President Donald Trump in Singapore.

Putin heads to China to bolster ties as US pressure grows - AP Russia and China have responded to the U.S. national security strategy describing them as America’s top adversaries by vowing to further expand their economic, political and military cooperation. They have also sought to strengthen the Shanghai Cooperation Organization, a regional grouping they created... “Put simply, everything the U.S. has done in an attempt to sanction Russia and curb China will make China and Russia step up cooperation in all fields,” said Li Xin, director of the Shanghai Institute for Foreign Studies’ Center for Russian and Central Asian Studies.

Putin talks Xi Jinping, FIFA World Cup and relationships with Western countries in Chinese interview  Russian President Vladimir Putin said Chinese President Xi Jinping was the only world leader to congratulate him on his 61st birthday during an exclusive interview with Shen Haixiong, president of the China Media Group in Moscow. This was the leader's first interview with a foreign media outlet since his re-election to power, reports state-run news agency Xinhua.

China's Order of Friendship to make debut Friday - Xinhua Chinese President Xi Jinping will present the first-ever Order of Friendship of the People's Republic of China at the Great Hall of the People in Beijing on Friday, according to Xinhua news agency. The report has not revealed who will receive the honor. The Order of Friendship is the highest honor of China. It is awarded to foreigners who have made outstanding contributions to China's development, exchanges and cooperation between China and other countries, as well as world peace.

PM Modi to meet Xi Jinping at sidelines of SCO Summit | Times of India The meeting would come over a month after the two leaders held an informal summit in the Chinese city of Wuhan in April during which they exchanged views on solidifying the relations between the two Asian powers

China, Kyrgyzstan agree to establish comprehensive strategic partnership - Xinhua Noting that Kyrgyzstan was one of the first countries to support and participate into the Belt and Road Initiative and related construction, Xi said China would like to make joint efforts with Kyrgyzstan to open minds and explore potentials to lift bilateral cooperation to a new level. He called on both sides to enhance synergy in development strategies and policy coordination, seek more converging interests and growth points, jointly plan key areas and major projects, expand trade and investment, and speed up construction of major projects. Both countries should expand cultural and people-to-people exchanges and local cooperation to boost neighborly friendship, said Xi, who also stressed the importance of improving security cooperation to fight the "three evil forces" of terrorism, extremism and separatism and organized crime across the border.

Kyrgyzstan Navigates Domestic Political Firestorm, Hopes to Avoid Burning China | The Diplomat With arrests, the investigation stemming from the breakdown of the Chinese-modernized Bishkek Heating and Power Plant earlier this year has entered a new phase. Meanwhile, Kyrgyz President Sooronbay Jeenbekov is in China for a state visit, hoping to keep the bilateral relationship insulated from the firestorm building back home and former President Almazbek Atambayev has denounced a “witch hunt” against his allies.

Doklam, One Year Later: China’s Long Game in the Himalayas - War on the Rocks Indian officials were under no illusions that intervention in last year’s crisis would permanently dissuade China from further adventurism. Nevertheless, for a brief period, some U.S. and other foreign observers were cautiously optimistic that the Doklam standoff could impart lessons on how to stall China’s territorial ambitions and assertive military actions. In the words of one analyst, “firmness on the ground,” combined with effective diplomacy, could offer a “new template for handling Chinese coercion.” Less capable countries, such as Bhutan, might coordinate with a major power to obstruct China’s infrastructure projects or military deployments. Perhaps the United States, for instance, could join forces with Vietnam or the Philippines to deny China the ability to expand its military outposts in the South China Sea. Nevertheless, post-Doklam developments illustrate two key limits on these approaches

China ‘removes missile systems’ from disputed South China Sea island – but sends warning to US | South China Morning Post Beijing seems to have removed missile systems from a disputed island in the South China Sea, although US defence officials and experts said the disappearance was likely to be only a temporary arrangement, amid rising tensions between the two countries.

China spies on Indian warships as they leave Vietnam after naval exercise - Mail Today News China tried to snoop on India Navy warships as they left Vietnam, top sources have told India Today TV. A flotilla on Indian Warships comprising the newly inducted stealth anti-submarine corvette INS Kamorta, a tanker, were leaving Vietnam in the last week of May after exercising with the Vietnamese Navy when they spotted a Chinese warship "tailing them at a safe distance".

Online searches for words unfavorable to N.K. leader blocked in China - Yonhap China has completely blocked Internet searches for words and articles that could be used to insult North Korean leader Kim Jong-un, sources here said Thursday, reflecting warming bilateral relations between the two countries. Besides the alleged online censorship, Beijing's authorities have also been prodding state-controlled Chinese media to run as many articles favorable to the North and Kim as possible, said the sources.

China may send fighter jet escort for Kim Jong-un when he flies to Singapore to meet Trump | South China Morning Post China could send fighter jets to escort Kim Jong-un when North Korea’s Air Force One travels through its airspace for a meeting in Singapore with US President Donald Trump, a South Korean military source said, as Beijing tries to boost its influence over the regime ahead of the summit.

 

Hong Kong, Macao

Can Cantonese survive? | America Magazine Whatever Beijing’s ultimate intentions, linguists point out that the real threat to Cantonese comes from Hong Kong’s parents. Most speak Cantonese as their first language and have emotional ties to it but because written Cantonese never had an official status, people see it as a useless oral language that does not help advance career prospects. In recent years, many parents have even abandoned speaking to their children in Cantonese and instead speak to them in English or Mandarin. Lau Chaak-ming is a former lecturer in Cantonese at the University of Hong Kong and the founder of an online Cantonese dictionary project words.hk. “The government might step up the push for the lingua franca and suppress regional languages, or abandon them in education to limit their domain and reduce their vitality,” he said, “[but] when parents believe their own language is of a low status and start using another one instead, that is the real threat to a language.”

Macau money chiefs order UnionPay clampdown over illicit mainland China cash fears | South China Morning Post Monetary regulators in the world’s most lucrative casino destination have issued a warning to financial institutions to tackle the illegal use of UnionPay cards to evade strict exchange controls. The Monetary Authority of Macau made the move against what it called “illegal acts” after pawn shops operating in Macau casinos had their UnionPay point-of-sale terminals removed.

 

Taiwan

Mainland to speed up policy implementation for Taiwan compatriots: top political advisor - Xinhua Wang Yang, top political advisor and senior Party official, has urged the expediting of the implementation of preferential policies for Taiwan compatriots to further communication and cooperation across the Strait. Wang…made the remarks during his visit to the 10th Straits Forum in Xiamen in east China's Fujian Province. Calling for upholding the notion that "both sides belong to one family," he said that Taiwan compatriots who study, work, or live on the mainland will step by step gain equal rights with mainland citizens.

US bill calls for Pentagon to send troops to take part in Taiwan military drills | South China Morning Post The US defence secretary should promote Washington’s policies concerning exchanges that enhance Taiwan’s security, “including US participation in appropriate Taiwan exercises such as the annual Han Kuang” drill and vice versa, according to the 2019 National Defence Authorisation Act. The bill was passed on May 24 but revealed in a report by the Senate on Tuesday.

 

Tech And Media

After Scrutinizing Facebook, Congress Turns to Google Deal With Huawei - WSJ: The review—of a facet of Google’s Android operating system partnership with Huawei—comes after lawmakers questioned Facebook Inc. FB -1.86% about its data partnerships with Huawei and three other Chinese electronics makers. Facebook said it would wind down the Huawei deal by the week’s end. Some members of Congress also plan to voice displeasure over Google’s continued partnership with Huawei in light of its more recent decision not to renew a Department of Defense contract, according to these people. The group of lawmakers taking a closer look at the Google-Huawei ties include Sen. Tom Cotton (R., Ark.), Rep. Mike Conaway (R., Texas) and Rep. Robert Pittenger (R., N.C.) // Comment: No surprise, and as I wrote Wednesday "Every US company with a Huawei deal needs to weigh whether the upside is worth the inevitable backlash in this New Era of US-China Relations..."

Chinese state media doesn’t care for Bytedance's apology · TechNode: After Bytedance apologized for disrespectful ad content about China’s war heroes, the People’s Daily, one of China’s largest state-owned media, forwarded the post on its Weibo page and commented, “Apologies won’t ease the situation with immediate effect.” People’s Daily said, “The mistake made people tremble with anger and shock”. It also accused the company of making the same mistakes again and again and doubts whether the apology was sincere enough. The official account concluded by quoting President Xi Jinping’s “advertising campaigns should also be oriented in the right direction” and asked the company to “firm its stand in the right values so that there won’t be any fatal errors in where the company is heading.” // Comment: "fatal errors" sounds like a real threat given all the regulatory problems Bytedance has had recently

Foxconn imagines life beyond Apple but faces major risks as it diversifies | Reuters The company, which kicks off a three-day event on Wednesday to celebrate its 30 years doing business in China, already does much more than assemble goods for others. It’s a top global producer of display screens, thanks to the acquisition of Sharp Corp. Its far-flung activities include autonomous car startups and investments in cancer research. But with its stock down almost 20 percent since late last year, Foxconn, Taiwan’s second most valuable company with a market value of $51 billion, is under pressure to show that it can convert new initiatives into growth.

Short Videos, Big Ambitions - Caixin Global Kuaishou, which launched in 2013 and first became popular among villagers and residents of smaller Chinese cities, raised $350 million in its latest fundraising, led by internet giant Tencent Holdings Ltd. Douyin, which was launched in September 2016 by Beijing-based internet company Bytedance, first took off among more-educated users in larger cities and is now trying to push into Kuaishou’s turf. In April, Douyin had 95 million daily active users who spent an average of 51.96 minutes on the app every day, while Kuaishou had 104 million daily users who used the service for 51.7 minutes, according to data service provider QuestMobile...

Evernote is spinning out its Chinese business and it plans to take it public | TechCrunch Evernote introduced its Yinxiang Biji China-based service in 2012, but now it is transitioning to a minority shareholder with the Chinese management team taking day-to-day control. As part of its move to independence, Yinxiang Biji has raised an undisclosed Series A round from the Sequoia CBC Cross-border Digital Industry Fund. The terms are not disclosed, but Raymond Tang, CEO of Yinxiang Biji, said ownership of the business is split roughly equally between Evernote, the Chinese investors and the startup’s management team — while Yinxiang Biji itself has raised “several hundred million RMB.”

 

Society, Art, Sports, Culture And History

Urbanites’ stereotyped impression of rural people worsens tragedy of girl’s cancer - Global Times The whole process of Wang's treatment was exposed online, including Yang's fundraising and the failed treatment. Following Wang's death, several we-media outlets accused Yang of spending 150,000 yuan ($23,900), raised on online funding platform shuidichou.com specifically for Wang's treatment, on the girl's brother, who had a cleft lip.Meanwhile, they claimed, Wang was left untreated and waiting to die because Yang favors boys over girls...The news outlets later were proven to have twisted the facts, only after the local police intervened. But many netizens and volunteers remain baffled as to why Yang used the money to buy clothes, milk powder, toys and diapers for Wang instead of actively seeking medical treatment?

College denies Islamic culture course taught by Pakistani student spread religious beliefs - Global Times A Chinese university denied that an Islamic culture course taught by a Pakistani student had spread religious beliefs to students, amid online criticism that the university failed to separate education from religion. Nanjing Agricultural University in East China's Jiangsu Province said on Tuesday that the course "Islamic culture," which was opened to undergraduates in the College of Engineering, was suspended half a year ago. "It was suspended after the school discovered in late 2017 that the course instructor, a Pakistani student who is seeking a PhD degree in our university, was unqualified to teach in Chinese universities," a university employee surnamed Huang told the Global Times.

 

Energy, Environment, Science And Health

China solar firms urge govt to rethink capacity cap, subsidy cut - letter | Energy & Oil | Reuters In a letter first sent to Xinhua news agency this week, executives from 11 Chinese solar firms said the surprise move to withdraw support, announced on June 1, had come far too soon. They said the sector had racked up huge debts to ensure it could compete with traditional power generators, and still needed another three to five years of government backing.

Efforts underway to clean world’s highest mountain - People's Daily Online "The altitude below 6,500 meters is where most activities such as mountaineering and training take place, so it has the most waste," said Nyima Tsering, director of the Tibet Sports Bureau. The bureau has established an environmental protection squad and taken measures to tackle the high-altitude garbage issue, with the aim of giving visitors the best view of Mount Qomolangma, the world's highest peak.

5 new national nature reserves approved - SCIO The State Council recently approved five new national nature reserves: Taikuan River in North China’s Shanxi province, the upstream section of Songhua River and Zengfengling Mount in Northeast China’s Jilin province, Xilin River in Northeast China’s Heilongjiang province, and Dasha River in Southwest China’s Guizhou province.

 

Agriculture And Rural Issues

Alibaba brings AI to China’s agriculture - TechInAsia Alibaba Cloud, the cloud computing arm of the ecommerce group, is debuting its proprietary ET Agricultural Brain initiative today. The project employs visual recognition and real-time environmental monitoring to track the growth conditions of crops and livestock. The reams of data gathered will be turned into insights for farmers using machine learning algorithms.