Zuckerberg's 180 on China; MoFA says TikTok is a Chinese Company; Semiconductor chokehold
|Bill Bishop||Jul 29, 2020||8||2|
Saturday, August 1 is the 93rd Birthday of the PLA Day, known as Army Day. Most years Xi promotes new generals right before the anniversary, and this year he promoted just one, Xu Zhongbo 徐忠波, political commissar of the PLA Rocket Force.
The CEOs of Amazon, Google, Apple and Facebook testified today at a US house of Representatives hearing on antitrust issues. China did not loom large, other than in Mark Zuckerberg’s opening statement, in which he made ironic comments using China as a foil to argue against more regulation of or a breakup of Facebook. They are ironic because Zuckerberg tried so desperately for many years to find a way to launch Facebook in China.
Here is what he said in his prepared remarks:
Although people around the world use our products, Facebook is a proudly American company. We believe in values -- democracy, competition, inclusion and free expression -- that the American economy was built on. Many other tech companies share these values, but there’s no guarantee our values will win out. For example, China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries. As Congress and other stakeholders consider how antitrust laws support competition in the U.S., I believe it’s important to maintain the core values of openness and fairness that have made America’s digital economy a force for empowerment and opportunity here and around the world.
Remember these happier times for Zuckerberg, back in 2015, hobnobbing with Xi Jinping and now jailed, then Internet czar Lu Wei?
That photo was taken September 23, 2015 in Redmond, Washington, just days before Zuckerberg attended Obama’s state dinner for Xi and asked Xi to give his child a Chinese name. I wonder what Zuckerberg would have said in his opening statement today if Xi had agreed to give a name?
TikTok is one of the Chinese companies that now competes with Facebook. We may learn this week what if any actions the US government may take against the company, just days before Facebook launches a competitor. Unfortunately for TikTok and its claims that it is somehow not a Chinese company, the Ministry of Foreign Affairs spokesperson today made clear the PRC government views it as a Chinese company- Foreign Ministry Spokesperson Wang Wenbin's Regular Press Conference on July 29, 2020
Reuters: A group of Republican US Senators said this week they were concerned that the Chinese Communist Party could use the video-sharing app TikTok to meddle in US elections. Do you have any comment on this?
Wang Wenbin: First, China is not interested in US elections. We don’t intend to and we will not meddle in them. We also hope the US can stop dragging China into its election campaigns.
With regard to TikTok, the US Senators’ smears are just baseless. The Chinese government always asks Chinese companies to comply with laws and regulations when conducting economic cooperation with foreign countries. We urge certain people in the US to take a fair and unbiased view on this matter, stop using state power to oppress Chinese companies, and do things conducive to China-US relations instead of going the other way.
This is an official statement from the spokesperson for the Ministry of Foreign Affairs, a person whose job it is not to misspeak, acknowledging that the PRC government sees TikTok is a Chinese company. It will be fun watching TikTok PRC and CEO dance around this, especially as contradicting Wang could be politically problematic. Maybe they should do it in a short video?
Today’s Essential Eight:
Teenagers arrested in Hong Kong for violating National Security Law
NPC Standing Committee to meet August 8
Nothing is sacred for PRC hackers
Vacation notice: I am joining Xi on his upcoming August vacation to Beidaihe, in spirit if not in person. Assuming precedent holds Xi will disappear from public view by the end of this week, to reappear sometime in the third week of August. The newsletter will be taking next week off and then the following week may be on a reduced schedule, barring any big developments.
Thanks for reading.
The Essential Eight
1. Army Day
Xi Jinping, chairman of the Central Military Commission (CMC), Wednesday presented a certificate of order at a ceremony to promote Xu Zhongbo, political commissar of the Rocket Force of the Chinese People's Liberation Army, to the rank of general.
CCTV Evening News Wednesday top story is on the promotion of General Xu. These ceremonies are quite something, though this year only one promotion
The Guard of Honor of the Chinese People's Liberation Army (PLA), Chinese naval hospital ship Peace Ark and an institute under the Academy of Military Sciences were honored with first-class citations for merit.
Professor Shan Dongsheng with the Army Academy of Armored Forces, Professor Wan Mingjie with the Army Academy of Artillery and Air Defense, and Professor Da Lianglong with the Naval Submarine Academy were awarded second-class citations for merit.
Senior Engineer Tan Keke of Troop 96911 and Senior Engineer Hu Xiaofeng with the National Defense University were honored with third-class citations for merit
Ming Pao reported that the PLA had made a breakthrough in the corruption investigation into former Navy commander Wu Shengli, and Wu had been summoned for questions in Beijing. Last month, a military auditing team said publicly that they are auditing the Navy’s finances under Wu, and asked the officers to report wrongdoing if they know any.
The Publicity Department of the Communist Party of China Central Committee announced the decision through an online release ceremony.
The heroic unit, known as the "hard-boned sixth company," fought 161 battles in wars, including the Chinese People's War of Resistance Against Japanese Aggression, the Chinese People's War of Liberation, and the War to Resist U.S. Aggression and Aid Korea.
To celebrate the upcoming China's Army Day, the PLA air force's troops in Xizang Autonomous Region holds the third open day activities on Tuesday in Lhasa, attracting thousands of local people from all ethnic groups to take a tour.
On the open day, after performances of guard boxing and bayonet charge exercise, multi-type military aircraft soared into the sky successively, carrying out a number of tactical training courses, such as low pass, high-speed rolling, and release of jamming bombs.
PRC propaganda continues to remain remarkably restrained since Pompeo’s speech last week.
Driven by political needs, Pompeo and some others are negating previous U.S. administrations' China policy and the progress achieved in relations with China and attempting to stoke ideological confrontation, he said.
This has proven to be unpopular even in the U.S., Wang said, adding that over the past few days, many former politicians, academics and media have questioned and criticized Pompeo's remarks, pointing out his misconceptions on China, China-U.S. relations and the U.S. China policy objectives.
"This fact itself speaks volumes," he said.
U.S. Secretary of State Mike Pompeo's recent speech on China cannot alter the general course of development of China-U.S. ties, Hu Zhaoming, spokesperson for the International Department of the Communist Party of China (CPC) Central Committee, tweeted on Wednesday.
Hu viewed the remarks made by Pompeo as an "orange alert" on China-U.S. relations, saying in a tweet: "Despite a certain consolation he seemed to find in audience applause, Pompeo was just hugging himself with total negation of China-U.S. relations like a handful of diehard anti-China elements often do."
The classified defence framework, agreed at high-level talks in Washington, creates a new bilateral team to co-ordinate decisions on joint operations and the deployment of hardware and personnel across the Indo-Pacific…
United States Studies Centre research fellow Brendan Thomas-Noone said the new defence planning arrangements were the biggest development in the bilateral defence relationship since the annual stationing of US ¬Marines in Darwin began in 2012.
“This statement is clearly the next phase, which is trying to find new ways we can operate together and show our forces are interoperable and can work together to basically deter Chinese military adventurism in the region,” he said. “We are getting together to come up with new ideas about how we can complicate China’s military planning in the region.”
Borrowing from the logic used by Mao Zedong in his On Contradiction, Pompeo tried to prove that CCP didn’t represent the Chinese people, and that actually the party is the enemy of the Chinese people. This point is fundamental because, as Mao put it, the crucial political element is to know who is with us and who is the enemy, and the party should always represent the people...
But definitely the US tried to drive a wedge between the party and the people, and who will “truly” represent the Chinese people can come later. The important element is that the CCP has been de facto labeled an “enemy of the people.” This raises a huge host of problems for the party...
But the US wedge is a probing tool. It can reveal where there’s strength and where there are weaknesses, and the next practical move may be more successful.
Externally, Pompeo made another issue clear. The US is no longer taking a bilateral approach to China. The US is telling its partners the CCP is lying and thus it is building a coalition of like-minded countries against the CCP.
The name of US Secretary of State Mike Pompeo’s key China policy adviser, Miles Yu, appears to have been chiselled out of a monument at a school he attended in southwest China, according to a video shared on social media.
Yu has attracted media attention in China since his interview with The Washington Times last month in which he was described as Pompeo’s “principal China policy and planning adviser”.
The Cold War was fought and won pretty much exclusively on military and cultural terms. The economic side was relevant only because the Soviets' doomed model inhibited any real competition. We were neither competitors nor partners in the economic space. A new Cold War between the United States and China would be something else entirely. It is difficult to see how it could be fought effectively, not to mention successfully.
I am looking forward to watching the full clip of this Tian Wei segment.
In a phone call with his French counterpart Jean-Yves Le Drian on Tuesday, Wang Yi said Beijing would make “firm and rational responses” amid the intensifying rivalry with the US, but also stressed that his country would strive to maintain stable relations with Washington.
It was the fourth time in less than two weeks that Wang, who is also a state councillor, has named the US in conversations with foreign officials, following calls with his Russian, Vietnamese and German counterparts. Before that, veiled attacks against Washington might have been made in talks with foreign governments, but the country at the heart of discussions would not have been named.
US Ambassador Todd Chapman told O Globo that Brazil would not face reprisals for picking Huawei, but could face consequences.
“Each country is responsible for its decisions,” Chapman was quoted as saying. “The consequences we are seeing in the world are that firms involved in intellectual property are scared to make investments in countries where that intellectual property is not protected.”
Delivering a keynote speech in a Brookings Institution webinar about “China’s growing regional influence and strategy”, Lisa Curtis, the US National Security Council’s senior director for South and Central Asia, ticked off a list of countries bordering or near China – including India, Bangladesh, Nepal and Bhutan – with which the US is strengthening ties economically and militarily.
“The US is willing to accept more risk in the [US-China] relationship, and I think each side will have to get used to these new guidelines that will be directing US policy in the region as we move forward,” Curtis said.
China and neighboring countries should speed up to form a tacit understanding to maintain the status quo of territorial disputes. They should avoid collisions and ease disputes. China is the most powerful country in Asia. We have the ability to achieve such a tacit understanding, which will benefit all parties. Progress in this regard will greatly squeeze the room for the US to make waves around China.
An American university whose work has contributed to some promising Covid-19 vaccine candidates has been contacted by the FBI over allegations that the Chinese consulate in Houston had sought to obtain such research.
The University of Texas told faculty and research staff in an email on Monday that it was notified of the investigation by the FBI last week. FBI agents would contact university researchers about the alleged role of the consulate and “efforts by the Chinese government to illegally procure research from American universities, including coronavirus vaccine research”, according to the email seen by the South China Morning Post. It described this as part of an “evolving national situation”.
China should prepare for potential U.S. sanctions by increasing use of its own financial messaging network for cross-border transactions in the mainland, Hong Kong and Macau, according to a report from the investment banking unit of Bank of China.
Chinese state lenders have been revamping contingency plans in anticipation of U.S. legislation that could penalise banks for serving officials who implement the new national security for Hong Kong, Reuters reported earlier this month.
Greater use of the Cross-Border Interbank Payment System (CIPS) instead of the Belgium based SWIFT system would also reduce exposure of China's global payments data to the United States, BOC International (BOCI) said in the report, which was co-authored by a former foreign exchange regulator.
China’s nuclear expansion and its refusal to engage in meaningful dialogue will affect stability on multiple levels. Increased U.S. nuclear force requirements to ensure credible deterrence against China would affect the United States-Russia strategic nuclear balance and threaten to undermine the prospects for further negotiated reductions. We should assume that Russia will also assess the implications of China’s expansion.
Comment: Who thinks a new nuclear arms race would be good for the world?
Jin Canrong, associate dean of Renmin University of China's School of International Studies in Beijing, told the Global Times on Tuesday that apart from the upcoming presidential election and failed handling of the domestic epidemic situation, "the collective hostility against China among US elites and policymakers, which we didn't expect, will also make the US more aggressive."
Hostile remarks on China made recently by Secretary of State Mike Pompeo and National Security Advisor Robert O'Brien do not just represent the Trump administration, but also meet the demand of the "deep state" in the US, and China must be aware of these dangerous signs, Jin noted.
"Direct China-US military conflicts, or even the severance of diplomatic ties, which used to be unimaginable, are being discussed more frequently by the mainstream media outlets and scholars, so the danger of military conflicts exists and is growing," he said.
A Chinese STEM student who graduated from one of those “PLA affiliated” universities sanctioned by the US, and who is now interning in a job in the US, described his experience of being targeted by all those anti-China and anti-immigration policies rolled out by the Trump administration. He talked about the constant fear and anxiety. He now has quit his gym membership, sold his stocks, cut back daily spending, and is just waiting to be kicked out anytime. He said he hoped he can still work in a multinational company when he gets back to China.
In early May, when the Trump administration announced a 90-day limit on work visas for certain Chinese reporters. I was stunned into stillness and kept asking myself: Is it really worthwhile to pursue a journalism career with my second language in a foreign country?..
For this week’s Rock the Boat, I ask fellow student journalists and recent graduates: If recent events have disrupted your academic or career plans, how are you adjusting? How confident are you about fulfilling your inspirations in this uncertain time
Comment: There is an early August deadline for a part of the journalist visa renewal process here in the US, and the journalists who have not heard anything are getting nervous
Executive Vice-President Dombrovskis said: “The current crisis gives us no other option but to work hand in hand with our global partners, including China. By pulling together we can recover more quickly economically, and make progress on areas of mutual interest such as trade and investment relations. However, we also need to address sticking points such as reciprocity in the way our companies are treated. We will need to make further progress on these and other issues ahead of the next leaders' summit in the autumn.”
Commissioner Hogan said: “EU-China bilateral and trade relations must be based on the key principles of reciprocity and level-playing field based on clear and predictable rules. Today I have called upon China to engage in serious reform of the multilateral system and its rulebook and to remove the existing barriers impeding access to the Chinese market of EU exporters of goods and services as well as of European investors. Such an approach by China would show a level of responsibility which reflects its economic and trade importance.”
China and the European Union will accelerate negotiations in order to conclude a China-EU investment agreement by the end of this year, Chinese Vice Premier Liu He said on Tuesday
EU foreign ministers expressed "grave concern" in conclusions adopted Tuesday, saying the new law restricts fundamental freedoms in Hong Kong, and calling for measures at both the national and EU level to restrict trade, review extradition rules and halt any new negotiations with Hong Kong...
Germany's Foreign Minister Heiko Maas, who currently chairs the regular meetings of foreign ministers under his country's Council of the EU presidency, also welcomed the new measures.
"I am glad that we have today reached consensus among EU Foreign Ministers on Council conclusions on Hong Kong," he said in a statement, adding that now member countries "have a common toolbox" to take action.
The European Union (EU) should respect China's position and actions on safeguarding national security in Hong Kong and stop interfering in Hong Kong affairs and China's internal affairs, a Chinese Foreign Ministry spokesperson said here on Wednesday.
The spokesperson made the remarks in response to media report that the EU issued a series of measures Tuesday against China's national security legislation for Hong Kong, including restrictions on the export of sensitive technology and equipment to Hong Kong.
Chinese Vice Premier Han Zheng met with Executive Vice President of the European Commission Frans Timmermans via video link on Wednesday in Beijing...
Han said China and the EU should continue to work together to strengthen cooperation in the fight against the pandemic, and promote an early recovery of the global economy. In areas such as climate change, biodiversity protection and clean energy, China will make contributions actively and responsibly. China is also ready to strengthen dialogue and cooperation with the EU, jointly practice multilateralism and push China-EU relations to a higher level.
4. Teenagers arrested in Hong Kong for violating National Security Law
Hong Kong’s new police unit enforcing the national security law arrested four student members of a pro-independence group on Wednesday after it announced its mission to build the city into a republic.
The arrests of the suspects, aged 16 to 21, in Yuen Long, Sha Tin and Tuen Mun marked the first such crackdown on anti-government activists not at the scene of street protests.
Police did not reveal the suspects’ identities, but images posted online showed Tony Chung Hon-lam, one of the former convenors of Studentlocalism, being taken away in handcuffs in Yuen Long by officers...
In a late night press conference, Senior Superintendent Steve Li Kwai-wah of the Department for Safeguarding National Security under the police force said the suspects’ group had recently declared the establishment of a body to promote pro-independence political ideals using any means possible and build a “Republic of Hong Kong”.
Ahead of the enactment of the security law on June 30, Studentlocalism announced in a statement that it had disbanded and dismissed of all its Hong Kong members with immediate effect: “Overseas members of Studentlocalism will officially set up a branch abroad and take over all affairs of the group. We will continue advocating Hong Kong independence until Hong Kong becomes a sovereign state.”
On July 17, it announced the founding of its US division “[i]n these times when ‘Hong Kong independence’ has become a forbidden phrase that could [lead] to life imprisonment,“ they said.
Hong Kong Baptist University has told outgoing opposition lawmaker Shiu Ka-chun it will not renew his lecturing contract after he was jailed over pro-democracy protests in 2014
5. NPC Standing Committee to meet August 8
Hong Kong is not on the official agenda, but will the meeting do something related to the upcoming Legco elections? The NPCSC will be held in Beijing from August 8-11. So at least one PBSC member- Li Zhanshu- will not be in Beidaihe for very long, assuming he goes.
The chairpersons' meeting suggested that the upcoming session review a draft law on urban construction and maintenance tax, a draft law on deed tax, draft revisions to the law on preventing juvenile delinquency, the law on animal epidemic prevention, and a draft amendment to the copyright law.
The session is expected to deliberate proposals on amending the law on NPC organs, the NPC's procedural rules, the national flag law, and the national emblem law.
Also up for discussion at the session will be reports from the State Council, the National Supervisory Commission and the NPC, as well as personnel issues.
We did not wake up today expecting to write this blogpost, yet here we are. On Wednesday, July 29, the Council of Chairpersons decided to convene the 21st session of the 13th NPC Standing Committee (NPCSC)—much to our surprise—from August 8 to 11. For the past three terms, the NPCSC’s regular sessions began only during the last ten days of each month in which it was scheduled to meet (with one exception). And this upcoming session bears all the indications of a regular (August) session: its four-day length, a full batch of bills to review, and the State Council’s mid-year reports on budget implementation and economic development (which are heard in August).
So why did the NPCSC move forward this session? There could be an important (but as-yet unannounced) political event at the end of August that requires that the meeting be moved. The NPCSC could be meeting more frequently in the short term after it planned additional legislation in response to the COVID-19 pandemic. Or a reportedly forthcoming request from the Hong Kong Chief Executive could be the cause. Due to the pandemic, the Chief Executive reportedly would postpone the upcoming Legislative Council election on September 6 to next fall. Because the current Legislative Council’s term ends on September 30, the Chief Executive will ask the NPCSC to extend its term by a year, since she herself lacks the power to do so. But it does not seem necessary for the NPCSC to act almost two months in advance, unless some other actions are also being contemplated. And the readout of the Council’s meeting does not indicate that such a term-extension decision is forthcoming, although Hong Kong-related bills have been omitted from the readouts before, most recently twice in June.
6. Nothing is sacred for PRC hackers
From early May 2020, The Vatican and the Catholic Diocese of Hong Kong were among several Catholic Church-related organizations that were targeted by RedDelta, a Chinese-state sponsored threat activity group tracked by Insikt Group. This series of suspected network intrusions also targeted the Hong Kong Study Mission to China and the Pontifical Institute for Foreign Missions (PIME), Italy. These organizations have not been publicly reported as targets of Chinese threat activity groups prior to this campaign.
These network intrusions occured ahead of the anticipated September 2020 renewal of the landmark 2018 China-Vatican provisional agreement, a deal which reportedly resulted in the Chinese Communist Party (CCP) gaining more control and oversight over the country’s historically persecuted “underground” Catholic community. In addition to the Holy See itself, another likely target of the campaign includes the current head of the Hong Kong Study Mission to China, whose predecessor was considered to have played a vital role in the 2018 agreement.
Chinese hackers infiltrated the Vatican’s computer networks in the past three months, a private monitoring group has concluded, in an apparent espionage effort before the beginning of sensitive negotiations with Beijing.
The comments marked the first time the U.S. government has acknowledged that TikTok was under review by the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals by foreign acquirers for potential national security risks and is led by Treasury.
“TikTok is under CFIUS review. We will be making a recommendation to the president this week so we have lots of alternatives,” Mnuchin said.
Privately held ByteDance has received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, the sources said. It has also fielded acquisition interest in TikTok from other companies and investment firms, the sources said.
The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion, according to the sources. By comparison, Snap is valued at 15 times its projected 2020 revenue, at about $33 billion, according to data provider Refinitiv.
It is unclear whether ByteDance’s founder and CEO, Yiming Zhang, will be satisfied with the offer. ByteDance executives recently discussed valuation projections for TikTok that exceed $50 billion, one of the sources said.
TikTok employs some engineers in Mountain View, Calif., but that team reports to ByteDance’s two senior executives in China, Yang Zhenyuan and Hong Dingkun, who oversee software engineering as well as research and development. None of the engineers report to Mayer in the U.S.
Even the servers used to host TikTok outside China are managed by engineers based in China.
Some of ByteDance’s China-based managers are in charge of buying hardware for data centers. The software ByteDance uses to manage TikTok’s servers, including tools that monitor their performance, is developed in China and written mainly in Chinese, according to a person familiar with the matter.
At TikTok we welcome competition. We think fair competition makes all of us better. To those who wish to launch competitive products, we say bring it on. Facebook is even launching another copycat product, Reels (tied to Instagram), after their other copycat Lasso failed quickly. But let's focus our energies on fair and open competition in service of our consumers, rather than maligning attacks by our competitor – namely Facebook – disguised as patriotism and designed to put an end to our very presence in the US.
Without TikTok, American advertisers would again be left with few choices. Competition would dry up and so too will an outlet for America's creative energy.
8. Semiconductor chokehold
The campaign to isolate Huawei and the greater technology decoupling enterprise threatens all of this. As the United States leads an effort to close off global markets to Huawei and other Chinese firms, Beijing will certainly respond in kind, locking out U.S. firms in favor of their counterparts from Europe, South Korea, and Japan, partly out of spite, partly out of a need to have reliable suppliers. Moreover, as a result of these restrictions, China is accelerating its infamous “indigenous innovation” strategy like never before. China’s chip industry is still several generations behind, but it is more likely to advance when deprived of external supplies. Rather than crushing China’s high-tech designs, U.S. actions are fueling them
Comment: The horse is already out of the barn, even if the US this afternoon were to say it is removing all restrictions on Huawei, the PRC drive to independence in core technologies would not slow down. The lesson from the last two years for everyone in China paying attention, and not just the more security minded who have been warning of over-dependence on the US for tech and have been pushing indigenous technology innovation for decades, is that the PRC is too reliant on the US in core technologies, and especially semiconductors. Yes they would love more time to bridge the tech gap, and the ideas in this paper would certainly give them more time, while also allowing the US semiconductor industry to squeeze out more profits from the trade with China, but the end goal for Xi and his CCP is clear, even if they are not ready yet.
Xi continues to reiterate the imperative for China to "grasp the key core technologies in our own hands 一定要把关键核心技术掌握在自己手里". And if you were Xi wouldn't you do the same, knowing just how vulnerable your country is to US restrictions on technology, and as the "inherent contradictions" in the US-China relationship become increasingly sharpened? If I were Xi I would do what he is doing, pursue a dual track to “突破一批卡脖子的关键核心技术 breakthrough in key core technologies that are ‘strangling us’" using any means necessary while at the same trying to find ways to have the US back off on the worst of the restrictions to buy time.
This dynamic is now set in stone, and no matter who is the President or how tough or accommodating their China policy may be, there is no going back for Xi and his CCP. Back to Kennedy’s piece:
In chip production, even with the emergence of manufacturers such as Shanghai-based Semiconductor Manufacturing International Corporation (SMIC), TSMC is irreplaceable. This economic reality is a huge disincentive for China to openly use force against the island. A U.S. policy to strangle China’s semiconductor and telecom sectors, thereby decoupling China and Taiwan’s economies, raises the security risks for Taipei, and hence, for the United States as well.
Comment: This point is important, that if TSMC and other Taiwan semiconductor-related firms loses most of their business with mainland China then the the cost for Beijing of using force against Taiwan goes down.
In a statement released on Tuesday and signed by over 200 of its employees, Arm China said it “is a Chinese-controlled joint venture that should abide by the Chinese laws and fulfill the social responsibility in China. We plead with the government to pay attention to the turbulence Arm China is facing now, and intervene to protect this strategic asset.” The statement was posted on the company’s official WeChat account...
The statement further accuses Arm and Hopu Investment Management, one of Arm China’s investors, of “harassing” its employees and coercing clients in an attempt to replace Arm China’s chairman...
“Arm China is devoted to empowering the foundation of China’s semiconductor industry. This joint venture plays a strategic role in China’s chip industry in the past two years amid the dynamics of the international chip competition landscape,” it added.
Comment: It is interesting that the Arm CEO thinks he has the political juice to go against Hopu and its head Fang Fenglei. Is there more than meets the eye going on here?
Patrick Wilson, who most recently served as director of the Office of Business Liaison for the Department of Commerce, will be appointed vice president of government affairs at MediaTek USA and lead its public policy initiatives, the company said in a draft press statement seen by Bloomberg News. Wilson previously worked at the Semiconductor Industry Association, where he led the trade group’s dealings with the federal government.
Correction- Yesterday’s newsletter included this item:
DAI Xu and QIAO Liang, two hawkish Chinese generals have both recently published articles on the Sino-US conflict, both agreeing on the same key opinion: based on the current balance of power, China is by no means a match for the US. Their showing of the white feather is somewhat a reflection of the thinking at the decision-making level. Under the current international situation, the crazy wolf warrior mentality will merely bring China endless disasters. The only way out for China is peace, not war…
Dai Xu disavowed authorship of the article in a post on Weibo:
One lesson from my mistake is never trust anything from Guo Wengui-backed Gnews.
Business, Economy and Trade
China stresses stabilizing foreign trade and investment - Xinhua It decided to expand the pilot program on the innovative development of trade in services, and unveil new measures to help migrant workers find jobs or start businesses, according to a statement released after a State Council executive meeting chaired by Premier Li Keqiang. To promote a higher level of opening-up, the pilot program on the innovative development of trade in services will be expanded to cover parts of 21 provincial regions, and explore widening the field of opening-up and improving trade facilitation, the statement said. 李克强主持召开国务院常务会议 部署进一步扩大开放稳外贸稳外资 决定深化服务贸易创新发展试点等_中国经济网
Yu Yongding Opinion: China’s Fiscal Dilemma - Caixin Global When the Chinese government announced early this year that it was aiming for a total budget deficit in 2020 of 3.76 trillion yuan, equivalent to 3.6% of GDP, it implicitly assumed that nominal GDP would grow by 5.4%. This is now obviously unrealistic, so budget revenues will be lower than forecast. And if the government does not cut expenditure, China’s fiscal position may worsen rapidly in the second half of 2020. But if the government decides to reduce spending to prevent the deficit from increasing, the economy may grow by less than 2.5%. That would make it impossible for China to create as many jobs as planned, and would also significantly increase its financial vulnerability.
How China’s Craigslist became a grief circle for the unemployed - Rest of World 58 Tongcheng is the Chinese version of Craigslist and one of the most popular websites for classifieds and job posts. But, this year, users like Jiang have turned 58 Tongcheng into a repository for unemployment grief. In the absence of media documentation of the economic upheaval created by Covid-19, the app has become an unofficial record of the depth of the country’s devastation.
Rio Tinto touts 'V-shaped' China recovery as it beats profit expectations - Reuters Rio Tinto said on Wednesday it saw a sharp V-shaped recovery in China as stimulus spurred industrial activity, helping its first-half profit handily beat market expectations.
Dongfeng the Latest to See Stock Surge on China Listing Plan - Bloomberg The automaker rose a record 27% on Tuesday before closing 14% higher, the most since September 2015, on volume more than eight times the three-month average. Dongfeng’s board approved a plan to list on Shenzhen’s ChiNext board, which will soon see the first batch of listings under relaxed rules.
China Looks Into Lowering Cap on Private Lending Rates - Caixin China is likely to significantly lower an interest rate ceiling protected by law on loans offered by individuals and companies without a lending license in an effort to clean up an industry plagued by shady practices, including occasionally violent loan collections, a source familiar with the matter told Caixin.
Regulators Step In as Sichuan Trust Fails to Secure Shareholder Funding - Caixin Financial regulators stepped in with enforcement actions against Sichuan Trust Co. Ltd. as the troubled trust company failed to obtain capital support from major shareholders to resolve a repayment crisis involving $3.6 billion of investments that has dragged on since May. The Sichuan branch of the China Banking and Insurance Regulatory Commission (CBIRC) ordered Sichuan Trust to suspend repayments of some trust products, affecting both institutional and individual investors, Caixin learned from sources close to the matter.
Shenzhen housing market gets chilling effect as policy curbs flush out speculative buyers | South China Morning Post Some homeowners have started slashing their asking price by about 5 to 7 per cent after local authorities introduced harsh measures to clamp down on runaway prices, according to property listings. Some 1,019 units out of 30,000 existing homes listed on Centaline Property’s website are now offering discounts to entice buyers.
A person in the know reveals more details on Meng Wanzhou's case - CGTN During the meeting, she made a presentation about Huawei's business links in Iran and its efforts to comply with U.S. sanctions. That presentation became the key evidence of the U.S. charge of fraud against her, upon which her extradition is sought from Canada. According to Reuters, an internal probe by HSBC found the meeting was initiated by Huawei. Is this the full story? CGTN's Liu Xin spoke to a person in the know who says otherwise.
Antique Chinese bonds are now in play | Financial Times $$ In chess, new context empowers previously redundant pieces. And one such piece could turn out to be some $1tn-plus (when compound interest is accounted for) of yet-to-be-cancelled pre-People’s Republic of China debt ranging from the Hukuang Railways Sinking Fund Gold Loan of 1911 and the Reorganisation Gold Loan of 1913, to the so-called Liberty Bonds of 1937.
Politics and Law
[视频]王沪宁出席《习近平谈治国理政》第三卷出版座谈会CCTV Evening News on symposium led by Wang Huning on the third volume of Xi's Governance of China:
“Wang Huning said that the third volume of "Xi Jinping on Governance" is the latest textbook that fully reflects the great practice of Xi Jinping's leadership of the entire Party and people of all ethnic groups since the 19th CPC National Congress, and is the latest textbook to arm the Party, educate the people and promote work with Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era, as well as the latest textbook for the Party to never forget its original intention, keep its mission in mind, and unite and lead the people to create more It is the latest teaching material for a happy and good life, for seeking common ground for the world and promoting the building of a community of human destiny. We should deeply understand that Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era has opened up a new realm for the development of contemporary Chinese Marxism and 21st century Marxism, and deeply understand that this important thought is a guide to action for upholding and developing socialism with Chinese characteristics and realizing the great rejuvenation of the Chinese nation at a new historical starting point. We will organize the theoretical study of the whole Party, grasp the propagation and popularization of the theory, deepen theoretical research and interpretation, strengthen and innovate foreign propaganda, and push Xi Jinping's thought on socialism with Chinese characteristics for a new era to be more popular and spread to the world.”
赵克志强调：全力抓好当前维护安全稳定各项工作--新闻报道-人民网 In a nation-wide teleconference with public security organs, minister of public security Zhao Kezhi urged them to “thoroughly defend, prevent, and harshly crackdown the infiltration and sabotage activities by hostile forces in and out of China.” 赵克志要求，要严密防范、严厉打击境内外敌对势力的渗透颠覆捣乱破坏活动，毫不放松地抓好反恐防恐各项措施的落实。要以“细致、精致、极致”的作风，加强预警预判，强化整体防控，压紧压实责任，消除风险隐患，坚决完成好各项安保维稳任务，坚决维护社会稳定和公共安全。要针对影响社会稳定的突出问题，加强矛盾纠纷排查化解工作，最大限度把矛盾解决在早、化解在小。要勇于冲锋在前，全力做好公安机关防汛救灾工作，配合做好疫情防控各项工作，着力维护好生产生活秩序。要从严落实公安监所防疫防汛管理措施，坚决确保公安监所安全稳定。
China’s New Tool to Chase Down Fugitives: American Courts - WSJ $$ China is augmenting those strong-arm tactics by turning to U.S. civil litigation, according to a review of court documents, public statements from Chinese government officials, and interviews with lawyers and current and former U.S. government officials. The suits add to the extrajudicial pressures Beijing already applies to its targets by draining their resources. Chinese authorities have declared the lawsuit strategy a success, publicly citing one of the suits as helping to force one of their most-wanted home.
Deaths of wives prompt outrage over violence against women - Inkstone More women are reporting domestic violence incidents and expressing outrage over a new law that mandates a 30-day cooling-off period for couples seeking a divorce. They argue that the rule would make it harder for women to escape abusive marriages. The recent string of murders has only galvanized young women in China.
Chinese law professor hires legal team and human rights advocate to fight charge of soliciting prostitution | South China Morning Post Liberal scholar Xu Zhangrun has hired two lawyers to prepare legal action against police who accused him of soliciting prostitution, one of his lawyers said...The law professor, who had just completed a two-week quarantine period at home as part of coronavirus precautions, met lawyers Mo Shaoping and Shang Baojun, and former human rights lawyer Pu Zhiqiang on Tuesday.
China fights COVID-19 in people-first approach | Xinhua Since the COVID-19 outbreak, China has waged a whole-of-nation "people's war" against the virus. Under the strong leadership of the Communist Party of China Central Committee with Comrade Xi Jinping at the core, the country has put people's lives and health first, fully demonstrating its people-centered philosophy. // The original of this Xinhua piece, getting lots of propaganda play - 人民至上的战“疫”实践-新华网
西北工业大学学子走进圣地延安探寻延安精神 - 中国日报网 在梁家河，学习研究梁家河的“大学问”。So students are going to Liangjiehe to learn?
Provincial Courts Based Rulings on Legal Document That Doesn’t Seem to Exist Chinese judicial authorities are in the eye of a social media storm after courts in at least seven provincial-level regions were found to have cited a seemingly nonexistent legal document in their rulings. Decisions issued by courts in Sichuan, Fujian, Hubei, Anhui, Heilongjiang and Jilin provinces, as well as the Tibet autonomous region, have all quoted the text over a period stretching back to at least 2017. It purports to contain guidelines from the Supreme People’s Court for handling civil disputes involving criminal offenses.
中原资产管理公司原总裁岳胜利接受审查调查——中央纪委国家监委网站 Yue Shengli, former Party secretary and CEO of Zhongyuan Asset Management, is under investigation
文化和旅游部党组副书记、副部长李金早接受中央纪委国家监委纪律审查和监察调查—中央纪委国家监委网站 Li Jinzao, deputy party secretary and deputy minister of the Ministry of Culture and Tourism, is udner investigation.
男子“翻墙”访问境外色情网站，被行政处罚 A man in Hunan was caught by local police and fined for using VPN to watch porn on foreign website. Global Times reminded people that it is illegal to use VPN
Foreign and Defense Affairs
Xi to attend ceremony marking completion of BeiDou-3 Navigation Satellite System - Xinhua Chinese President Xi Jinping, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, will attend a ceremony marking the completion and launching of the BeiDou-3 Navigation Satellite System scheduled for Friday at the Great Hall of the People
Pentagon to fund rare-earth refinery by Australia's Lynas - Nikkei Asian Review Australian rare-earth miner Lynas will receive funding from the U.S. Defense Department for a planned processing plant in Texas, a project that Washington hopes will lessen its reliance on China for strategically important materials.
'Toxic climate' stops Australian business leaders speaking about China, thinktank says | Australia news | The Guardian With the diplomatic relationship between Australia and its largest trading partner coming under increasing strain, Michael Clifton, the chief executive of China Matters and a former Australian trade commission official, said people should be free to comment “without their character or loyalty being impugned”. Clifton said few business leaders were willing to make the case for balancing security interests with commercial interests “for fear of being labelled an apologist” for the Chinese government, with some critics being “quick to conflate calls for engagement with acts of appeasement”.
Japan's air force faces a 'relentless' burden, imposed by China - CNN More than twice a day, Japanese fighter pilots hear a siren blare, bolt up from their ready-room seats, run to their jets, and scream aloft, ready to intercept a potentially unidentified incursion into Japanese airspace. It happened to Japan's Air Self Defense Force (JASDF) 947 times in the last fiscal year ending in March. The culprit in most of those cases, warplanes from China's People's Liberation Army Air Force (PLAAF).
US pledges help for Japan with 'unprecedented' Chinese incursions - Nikkei Asian Review The U.S. is fully committed to help Tokyo handle China's repeated incursions into waters surrounding the Senkaku Islands, the commander of American forces in Japan said Wednesday. "The United States is 100% absolutely steadfast in its commitment to help the government of Japan with the situation," Lt. Gen. Kevin Schneider said in an online news conference. "That's 365 days a year, 24 hours a day, seven days a week."
Tensions high in waters around Senkaku Islands - The Japan News Chinese government ships have been actively sailing in waters around the Senkaku Islands in Ishigaki, Okinawa Prefecture. In early July, they stayed in Japanese territorial waters for 39 hours, the longest period since Japan nationalized the islands in 2012, and sailed close to fishing boats. On Monday, it was confirmed that the ships had sailed within the contiguous zone for the longest period yet of 105 consecutive days.
China, Japan should plan, push forward post-pandemic cooperation: Chinese FM - Xinhua China and Japan should push forward bilateral exchanges and cooperation in the next stage as well as in the post-pandemic era, Chinese State Councilor and Foreign Minister Wang Yi said on Tuesday during a phone conversation with Japanese Foreign Minister Toshimitsu Motegi.
PLAN carrier-based fighters complete nighttime buddy refueling in flight - China Military Recently, two J-15 carrier-based fighter jets attached to a ship-borne aviation unit under the PLA Navy (PLAN) have successfully completed the nighttime buddy refueling training in air space, marking a new breakthrough in their all-weather long-range combat capability.
Indian Navy deepens watch to check China ambitions - india news - Hindustan Times The Indian Navy has stepped up surveillance and activities in the Indian Ocean Region (IOR), which, it believes, China will “inevitably” try to enter in its quest to become a global power, just as it has laid claim to large portions of the disputed South China Sea, according to a top officer aware of the developments. It is to deal with this scenario that India reached out to neighbours in IOR — Maldives, Mauritius, Seychelles and Madagascar, to prevent China from expanding its footprint in the region by creating more bases — and like-minded navies, such as those of the United States and Japan, over the last two months, he added.
Navy deploys large number of ships in Indian Ocean to send clear 'message' to China Amid the stand-off with China in Ladakh, the Indian Navy has deployed a large number of ships under the Eastern and and Western Naval Commands in the Indian Ocean region to send out a clear “message” to China, ThePrint has learnt. Sources in the defence and security establishment said that the “message has been registered” by China.
India freezes out Chinese companies from government bidding - Nikkei Asian Review Procurement regulations revised last week now require businesses in countries that share a land border with India to register with the relevant authorities and receive permission from the external affairs and home affairs ministries before bidding for contracts. This applies to a broad range of public-sector business, including state governments, state-run businesses and banks, and public-private partnerships.
The Quad Is Poised to Become Openly Anti-China Soon | RAND - Derek Grossman Of the four countries, the United States may be the most anti-Chinese as bilateral relations rapidly spiral over a range of challenges including coronavirus fallout, Taiwan, the South China Sea, trade, human rights in Xinjiang, Hong Kong, intellectual property theft, press freedoms, and others. Indeed, Washington is the only country to directly label China an “adversary” in its National Security Strategy (PDF), National Defense Strategy (PDF), and Indo-Pacific Strategy Report (PDF). However, to date, the United States has resisted the urge to convert the Quad into an anti-China grouping, probably at the behest of other, more hesitant participants. This looks like it is set to change because the others want change.
Water Wars: Mekong River Another Front in U.S.-China Rivalry - Reuters A U.S. ambassador in the region described China as "hoarding" water in its 11 dams on its upper portion of the 4,350-km (2,700-mile) river, harming the livelihoods of millions of people in downstream countries. China also has been stepping up activities of its Lancang Mekong Cooperation group (LMC), a relatively new intergovernmental body that a second U.S. ambassador decried as trying to "sideline" the 25-year-old Mekong River Commission (MRC). The MRC traces its origins back to U.S. efforts to promote development during the Cold War. It works with the governments of Laos, Thailand, Cambodia, and Vietnam to foster the sharing and sustainable development of the river and its resources.
As US pledges help in South China Sea, Vietnam wary of antagonising Beijing | South China Morning Post Viet Hoang, a lecturer at Ho Chi Minh City University of Law who focuses on the South China Sea, said: “The Vietnamese government still thinks that, although Pompeo’s statement is more beneficial for them, Vietnam tries not to get caught up in the ‘war’ between China and the US. “Perhaps not only the Vietnamese government but other Asean governments are still observing the next developments cautiously,” he said.
中越两党举行中央对外部门视频会议-中新网 International Liaision Departments of the CCP and the Vietnam Communist Party hold a video conference, Song Tao talks about the third volume of Xi'The Goverance of China" 中共中央对外联络部部长宋涛表示，中越都是共产党领导的社会主义国家，习近平总书记和阮富仲总书记保持密切交往，为两党两国关系提供重要引领。两国携手抗疫并取得疫情防控重大成果，彰显了两党中央的坚强领导和社会主义制度的独特优势。宋涛重点宣介了《习近平谈治国理政》第三卷内容，希望两党加强治党治国经验互鉴，推动两国社会主义建设取得新发展。
Bits and Pieces: Harvard, Hong Kong, and China - Harry Lewis, Harvard Professor and a former dean of Harvard College one can’t help wondering if the large footprint of China in American universities may be making them cautious about antagonizing the Chinese government. What was once seen as an opportunity for universities to become global institutions may have rendered some of them so dependent on Chinese students, donations, and hosting arrangements that their business interests are tempering their voices, even as their academic counterparts in Hong Kong are losing their jobs and those at top mainland universities are being imprisoned and fired. Follow the money.
Chinese Ambassador Jin Zhijian in Iceland Meets with Mayor of Reykjanesbær Ambassador Jin happily recalled his visit to Reykjanesbær in April 2019, asked about the economic and social impacts with COVID-19 in the local community and handed over to Mr. Kjartansson the masks offered by Xianyang City of China. He pointed out that China was the first country where the COVID-19 broke out, and currently the pandemic was well contained in China with effective prevention and control measures.
Harvard University Professor Charged with Tax Offenses | OPA | Department of Justice Under the terms of Lieber’s three-year Thousand Talents contract, WUT allegedly paid Lieber a salary of up to $50,000 per month, living expenses of up to $150,000 and awarded him more than $1.5 million to establish a research lab at WUT. It is alleged that in 2018 and 2019, Lieber lied to federal authorities about his involvement in the Thousand Talents Plan and his affiliation with WUT. According to the superseding indictment, in tax years 2013 and 2014, Lieber earned income from WUT in the form of salary and other payments made to him pursuant to the Strategic Scientist and Thousand Talents Contracts, which he did not disclose to the IRS on his federal income tax returns. The superseding indictment also alleges that Lieber, together with WUT officials, opened a bank account at a Chinese bank during a trip to Wuhan in 2012. Thereafter, between at least 2013 and 2015, WUT periodically deposited portions of Lieber’s salary into that account. U.S. taxpayers are required to report the existence of any foreign bank account that holds more than $10,000 at any time during a given year by the filing an FBAR with the IRS. Lieber allegedly failed to file FBARs for the years 2014 and 2015.
University of Arkansas Professor Indicted for Wire Fraud and Passport Fraud | OPA | Department of Justice “Transparency and integrity have long sustained the pursuit of knowledge on America’s campuses,” said Assistant Attorney General for National Security John C. Demers. “Mr. Ang is alleged to have demonstrated neither when he failed to disclose his financial and other ties to companies and institutions in China to the University of Arkansas and to U.S. government agencies, despite an obligation to do so. This is a hallmark of the China’s targeting of research and academic collaborations within the United States in order to obtain U.S. technology illegally. The Department of Justice will continue to work with colleges and universities to protect U.S. research and development from exploitation by foreign powers and will prosecute those who defraud the U.S. Government.”
展现真实立体全面的中国（有的放矢） Yi Yungong, president of the Hubei Normal Univeristy, wrote on page nine of the People’s Daily that China should do better in its propaganda toward foreign countries, and that officials should try to “treat others in an equal, candid and respectful manner, and understand the thinking and communication habits of the other side”.
China denies harboring 1MDB fugitive Jho Low - Reuters Malaysia’s national police chief Abdul Hamid Bador was reported by newspaper Utusan Malaysia as saying Low was hiding in Macau and that attempts to extradite him had failed as Chinese authorities “appeared insincere” in their efforts to cooperate.
Beijing vows to prioritize PH once vaccine dev't succeeds | Philippine News Agency The Chinese Foreign Ministry assured that Beijing will prioritize the Philippines once it succeeds with the vaccine development for coronavirus disease 2019 (Covid-19)
Yicai - ZTE, True to Build Commercial 5G Network in Thailand The deal will see ZTE’s full range of 5G products and services used in the network, the Shenzhen-based company said in a statement today. ZTE will provide True with 5G base stations, single- and multi-frequency 5G QCell indoor solutions.
Tech and Media
US blacklisting fails to derail ambitions of Chinese AI start-ups | Financial Times $$ China’s leading artificial intelligence start-ups Megvii and SenseTime are raising money and winning overseas contracts despite landing on a US blacklist last year, underscoring how Beijing’s brightest young companies are weathering the setback rather than scrambling to survive.
Indonesian Rapper Rich Brian, Higher Brothers to Join Bilibili’s First Hip-hop Show - Pandaily Bilibili announced the line-up of mentors for their new hip-hop competition show, Rap for Youth, including Indonesian rapper Rich Brian and Higher Brothers members Ma Siwei and KnowKnow.
Yicai - Shanghai Expects Esports to Bring In Over USD2.7 Billion This Year The eastern financial hub was the first city in the world to institute online esports events amid the pandemic and has seen a great rise in revenue from these courtesy of the growing take from the LOL Pro League and League of Legends World Championship Series, according to a report Beijing-based entertainment sector data analytics firm Gamma Data -- better known as CNG -- issued yesterday
Tencent to Pick Up Stake in Shanghai-listed Weaver Network for $110 Million - Caixin Tencent has entered into an agreement to pick up a 5 per cent stake in Shanghai-listed office automation solutions provider Weaver Network for over 771 million yuan ($110 million).
The owner of WeChat thinks deepfakes could actually be good | MIT Technology Review It wants to commercialize the technology in entertainment and e-commerce and asks regulators to be lenient. // Didn’t Wang Huning hold a Politburo study session that included discussion of AI and deep fakes?
Energy, Environment, Science and Health
Chinese mainland reports 101 new confirmed COVID-19 cases - Xinhua Chinese health authority said Wednesday that it received reports of 101 new confirmed COVID-19 cases on the Chinese mainland Tuesday, including 98 locally-transmitted cases and three imported ones. Eighty-nine of the 98 locally-transmitted cases were reported in Xinjiang Uygur Autonomous Region, eight in Liaoning Province, and one in Beijing Municipality, the National Health Commission said in its daily report.
Yicai - Shanghai Electric, Saudi’s ACWA Power Win Bid to Build Fifth Phase of World's Biggest Solar Park The group, led by Shanghai Electric Group, a leading power generation and electrical equipment manufacturing corporation, and Saudi Arabia’s renewable energy developer ACWA Power, has won the contract for the 900 megawatt fifth phase of the Dubai Mohammed bin Rashid Al Maktoum Solar Park, the report said.
Five Things to Know About the Titan Reshaping China’s Energy Landscape - Caixin China’s latest state-owned infrastructure titan, PipeChina — formally the China Oil & Gas Pipeline Network Corp. — drew attention this month when it kicked off acquisitions from the country’s biggest oil and gas companies worth hundreds of billions of yuan. The company is at the center of a major structural reform of China’s energy sector.