1. No Surprises From The Initial U.S.-China Diplomatic And Security Dialogue
Comment: President Trump accepted an invitation to visit China later this year and he will meet with Xi Jinping in July at the G-20 Hamburg Summit. There of course was no resolution to the the major outstanding issues like North Korea and the South China Sea, probably because there are no good solutions to them. Beijing’s diplomatic efforts to push a “dual freeze” interim step on the Korean peninsula seem to be gaining traction with South Korea and the DPRK, though the US continues to reject the idea outright.
“We reiterated to China that they have a diplomatic responsibility to exert much greater economic and diplomatic pressure on the regime if they want to prevent further escalation in the region,” U.S. Secretary of State Rex Tillerson told reporters at a joint news conference with Defense Secretary Jim Mattis.
Mattis vowed to “continue to take necessary measures to defend ourselves and our allies” against North Korea, which is working to develop a nuclear-tipped missile capable of hitting the United States.
Comment: Xinhua says the Wednesday meeting sent four signals: 1. High-level communication continues to strengthen; 2. The two militaries are working to find areas of cooperation; 3. the two countries are making efforts to expand areas of cooperation while controlling disagreements; 4. They continue to push for the stable development of relations
Versions of the proposal, floated by Beijing for several months, have been revived several times this week, first by South Korea’s newly installed president and then by China’s foreign minister and one of its top military officials in talks on Wednesday with Secretary of State Rex W. Tillerson and Defense Secretary Jim Mattis.
But White House officials say they are not interested in any proposal that would require the United States to lift military or economic pressure on the North, even in return for a moratorium on tests.
“I believe China is making efforts to stop North Korea from making additional provocations, yet there are no tangible results as of yet,” Moon told Reuters at the sprawling Blue House presidential compound.
“China is North Korea’s only ally and China is the country that provides the most economic assistance to North Korea,” Moon said. “Without the assistance of China, sanctions won’t be effective at all.”
Comment: President Moon is working both sides, it will be quite the feat if he can keep both Washington happy and get Beijing to pull back on its hysteria and punishments over THAAD. His visit to DC next week is very important.
2. Overseas Deals Of HNA, Fosun, and Wanda, Some Of China’s Most Connected And Aggressive Firms, Are Under Scrutiny
The investigation started on June 6, when officials at the China Banking Regulatory Commission held what was described as “urgent” conference calls, asking lenders to look over loans made to the five groups as well as the guarantees provided by banks to let them borrow overseas.
The goal, one of the people said, is to “examine those companies’ leverage situations and risks.” Banks are required to report the results of their checks to the regulator, which then will assess whether lenders should cut down their exposure to the companies, the people said.
The China Banking Regulatory Commission said the risk assessment includes Anbang Insurance Group Co., HNA Group, Fosun Group, Wanda Group, and the unit of Sino-Europe Sports Investment Management Changxing Co. that recently acquired Italy’s AC Milan soccer team, the sources said.
The check aims to uncover potential credit-risk links to those firms and to weed out potential systemic risks related to overseas acquisitions, the sources added.
Following the assessments, a few banks had cut down their holdings of bonds issued by some of these companies and sold in the open market earlier this week, the sources added. Bond and share prices of some of these companies, such as Wanda and Fosun, were substantially lower as of Thursday.
独家丨监管摸底海外并购明星风险 企业忙澄清–Caixin’s original story
In an email seen by the Financial Times, a risk management executive at Industrial and Commercial Bank of China instructed colleagues to gather information on credit exposures to the four companies.
The companies are affiliated with a wide range of political factions, suggesting a broad crackdown by Beijing and underlining the ruling Communist party’s resolve to tackle stability risks posed by the use of unconventional financing tactics for acquisitions.
HNA is relying on margin loans and complex derivatives to help fund its overseas acquisitions
Why it matters: More proof if we needed it that no one is untouchable, and a reminder to foreign partners and service providers that more efforts may be required to know your PRC customer. Are these checks part of some political crackdown, as some are speculating, or part of the broader effort underway for months to deal much more seriously with the excesses and regulatory messes in the financial sector, as well as continue the crackdown on capital flight?
3. Wang Qishan Reappears In Propaganda Organs After A 39 Day Absence
Wang Qishan, chief of the discipline watchdog of the Communist Party of China (CPC), has urged new local anti-graft agencies to maintain a good political ecology.
Wang, head of the CPC Central Commission for Discipline Inspection, made the remarks during an inspection tour from Tuesday to Thursday in southwest China’s Guizhou Province.
王岐山在贵州检查工作时强调 当好党内政治生态“护林员” 以新面貌新气象迎接十九大 –Thursday CCTV Evening News 3 minute report on Wang’s inspection tour, he also visited a big data application exhibition.
Comment: This is Wang’s first publicized appearance since May 14.. As discussed in Monday’s newsletter, he has “disappeared” for extended periods several times before (six times according to this article from Apple Daily 蘋論：王岐山六度神隱 將下台或讓誰下台? ), each time spurring rumors of health problems, political issues or preparation for announcement of investigation of a big “tiger”. Soon after his reappearance June 22, 2014 Zhou Yongkang and Xu Caihou went down and in other instances provincial-level officials were put under investigation. What is going on this time remains to be seen, clearly there are rumors swirling given Guo Wengui’s allegations. He also looks thinner and not well-rested.
4. Xi Goes To A Revolutionary Base in Shanxi
Xi, who is also general secretary of the Communist Party of China (CPC) Central Committee, made the remarks during a tour Wednesday of Lyuliang and Xinzhou, two revolutionary base areas in Shanxi Province…
Xi spoke highly of the “Lyuliang spirit” and said it should be used as motivation to “improve people’s lives and to achieve the great rejuvenation of the nation.”
Comment: Xi makes an inspection tour to Shanxi, visits the Jinsui Border Area revolutionary memorial hall, calls for using the “Luliang Spirit” from the revolutionary era to motivate people to strive for national rejuvenation. He also looked at poverty alleviation work, and commented on the importance of training and promoting good grassroots cadres.
Poverty alleviation is a major focus for Xi, visiting an important revolutionary site politically just another reminder Xi is the legitimate inheritor of the revolution, and given the massive corruption mess in Shanxi over the last few years a visit by Xi may be heartening for the local officials.
No video of the visit released yet but expect a good 15-20 minutes at the top of an upcoming CCTV Evening News broadcast.
And no indications that he wrote an inscription in the Jinsui Border Area, as Chairman Mao did, memorialized in this propaganda poster
5. No Let Up In Infrastructure Investment For Xiongan And Greater Beijing
Hebei, which borders the capital on three sides, plans to spend 600 billion yuan ($87.86 billion) on transportation infrastructure by 2020, nearly twice the amount allotted to building the transit system in the area five years ago.
The hefty budget strives to link neighboring cities within 90 minutes of one another and limit the 100-kilometer trip between Beijing and Xiongan to 30 minutes. The budget was disclosed in the province’s transportation blueprint for the 13th Five-Year Plan (2016-2020).
The new airport, due to open in 2019, has been designated by authorities as the hub for members of the SkyTeam alliance, a global group of airlines that includes China Eastern and China Southern. The two Chinese carriers will each be allowed to capture 40 percent of the airport’s passengers, gaining coveted time slots to Europe and the U.S. in Air China’s backyard.
Comment: There is a lot more infrastructure going in around Beijing. The new airport at least is much needed.
6. Soil Pollution May Be A Bigger, More Expensive And Harder To Remediate Problem Than Air Pollution
Speaking at a press briefing on Wednesday, Qiu Qiwen, head of the soil environment department of the Ministry of Environmental Protection (MEP), said the cost of cleaning up one mu (0.066 hectares) of polluted farmland in China could reach as much as 20,000 yuan ($2,928.86).
According to the last nationwide survey published in 2013, about 50 million mu (3.33 million hectares) of China’s farmland – an area the size of Belgium – was too polluted to grow crops. That would put total clean-up costs at 1 trillion yuan.
An investigation by Caixin reporters in Xinxiang found that farmers who had cultivated land next to battery factories, most of which were shut down by the government, had hidden some of their harvest.
Stockpiles of allegedly contaminated wheat were then sold to flour mills. Caixin reporters who witnessed several such transactions were unable to quantify the amount of tainted wheat sold.
Comment: In some areas it is very hard to separate the wheat from the cadmium
7. BBC Interviews Incoming Hong Kong Chief Executive Carrie Lam
“I know perception is important,” she says, “but to say that I am just a puppet, that I won this election because of pro-Beijing forces, is a failure to acknowledge what I have done in Hong Kong over the last 36 years for the people of Hong Kong”.
But after half an hour spent with the chief executive-elect, it is hard for me to escape the conclusion that a key objective for Mrs Lam is precisely to avoid saying what will upset Beijing.
8. Is There A Racist Component To The Revival Of The Chinese Nation?
To an English-speaking ear, rejuvenation has positive connotations and all nations have the right to rejuvenate themselves through peaceful efforts.
But the official translation of this crucial slogan is deeply misleading. In Chinese it is “Zhonghua minzu weida fuxing” and the important part of the phrase is “Zhonghua minzu” — the “Chinese nation” according to party propaganda. A more accurate, although not perfect, translation would be the “Chinese race”…
The most interesting thing about Zhonghua minzu is that it very deliberately and specifically incorporates anyone with Chinese blood anywhere in the world, no matter how long ago their ancestors left the Chinese mainland.
Comment: Jamil puts in print what I certainly have felt, and what I believe many other foreigners who have spent time in the PRC have felt as well.
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Business, Economy And Trade
China takes measures to boost sharing economy – Xinhua A guideline to further boost the blossoming of sharing economy was approved at a State Council executive meeting chaired by Premier Li Keqiang on Wednesday. According to the guideline, the sector will enjoy easier access, greater policy transparency, and better protection of legitimate rights of platform companies, resources providers and consumers. The guideline is aimed to create an enabling environment for sustained innovation. 李克强主持国务院常务会议 促进分享经济健康发展
China encourages private investment in key projects State-owned enterprises involved in electricity, petroleum, gas, transportation and information programs on the 165 key project list have been encouraged to invite private capital participation through mixed-ownership, the NDRC said in a circular.
Charismatic Wang Shi Stepping Down as Vanke Group’s Chairman – Caixin His departure now doesn’t come as complete surprise. He had relinquished his duties as general manager, overseeing the day-to-day business operations, in 1999. Since then, he has been taking on more of a visionary role at the company, which was established with close government ties over three decades ago as an importer of office and photography equipment. 独家|王石择机交棒 详解万科新董事会提名格局
Trump trade tsar warns against China ‘market economy’ status – FT $$ the US trade representative singled out a dispute brought last December by China against the EU and US over whether it should be deemed a market economy as the “most serious litigation that we have at the WTO right now”. “I have made it very clear that a bad decision with respect to the non-market economy status of China . . . would be cataclysmic for the WTO,” he said.
U.S. Trade Representative Lighthizer ‘troubled’ by Ford’s China move | Reuters “I find that very troubling. I want to look and see what incentives there are. It doesn’t necessarily make sense to me,” Lighthizer said before a panel of lawmakers on Capitol Hill.
EU to Resist Macron’s Call to Curb Chinese Takeovers-Diplomats – The New York Times “I don’t think blocking Chinese investments is on the cards,” one senior EU official said of the two-day summit in Brussels from Thursday, where leaders are set to discuss Macron’s ideas for a so-called protective Europe that limits what many French see as damaging aspects of globalisation.
Trump’s China Steel Trap Breaks an Iron Law of Economics – Bloomberg Chinese steel exports have certainly jumped in the past four years, but the U.S. industry’s woes date back much further, to the aftermath of the 2008 financial crisis. And if China’s share of global overcapacity is outsized, it’s not because the country is uniquely predatory, but because its share of the industry as a whole is so big.
China Bad Debt Prices Up 30% as New Gold Rush Gets Under Way – Bloomberg Distressed investors are increasing as Chinese authorities encourage market-oriented ways to resolve lenders’ mounting piles of non-performing debt amid slowing economic growth. A jump in valuations of real estate, which often act as underlying assets for secured loans, has boosted the debt’s recovery prospects. Combined with a surge in money supply, this has lifted bad-loan prices even in some less-developed regions of China, according to domestic distressed debt investor Bald Eagle Asset Management
China Goes Shopping to Better Monitor Pulse of Consumer Economy – Bloomberg The gauges measure operations for those businesses on a scale of 0 to 100, in which 50 is the dividing line between improving and deteriorating conditions, with sub-gauges that include manager expectations and the overall business environment, the Ministry of Commerce said in a statement Thursday. it will publish the data in the first month of each quarter to reflect activity in the prior three-month period.
China supplier for Ivanka Trump brand worst labour abuser, says pressure group | South China Morning Post Shoe factory in Jiangxi province worst among dozens of plants investigated for abuses over the past year, says labour rights organisation
Billionaires’ Fortunes Are Being Wiped Out in China’s IPO Frenzy – Bloomberg The wild ride for Ding, chairman of Hangzhou-based Betta Pharmaceuticals Co., illustrates the latest upheaval surrounding wealth creation in China: tycoons who rapidly gain — and then almost as quickly lose — billionaire status amid swings in the country’s initial public offerings.
Real Estate Tycoon Removed as Political Adviser Over Bribery Allegation – Caixin Real estate tycoon Huang Rulun was removed from the People’s Political Consultative Conference of Fujian Province, a political advisory body, under suspicion of bribery, a local government-backed newspaper reported Wednesday. Separate sources told Caixin that Huang was asked to assist investigations in January by authorities. No official information about the investigation has been released. Huang, the founder and chairman of real estate developer Century Golden Resources Group, is listed by Forbes as the 49th wealthiest businessman in China with an estimated net worth of $3.6 billion in 2016
Politics And Law
China’s Xi Mines State Firms for Political Jobs Before Reshuffle – Bloomberg Over the past two years, Xi has installed eight former executives from state-owned enterprises in top provincial leadership posts across China. That’s double the four ex-corporate managers who were serving among the country’s 62 regional Communist Party secretaries and governors ahead of the last big leadership reshuffle in 2012.
China drafts law to ban ‘rampant abuse’ of its national anthem, March of the Volunteers | South China Morning Post Offenses including playing the March of the Volunteers in ads or ‘derogatory’ performances are punishable by up to 15 days in detention 国歌法草案首次提请最高立法机关审议
Chinese protester tells tale behind desperate act near Trump summit On Tuesday, in a phone interview from her home in Rockville, Maryland, arranged through defense attorney Scott Skier, Ma recounted a 16-year journey that started in her homeland in northeast China and is filled with allegations of injustice, torture and loss. As she spoke, her voice was laced with the same emotion that she said propelled her into traffic.
国家情报法草案再次提请审议 – 中国军网 据了解，有的全国人大常委会委员和部门提出，对作出重大贡献的情报工作人员的表彰和奖励，也应作出相应规定。全国人大法律委员会经研究，建议将草案二审稿修改为“国家对支持、协助和配合国家情报工作的个人和组织给予保护。”“国家对在国家情报工作中作出重大贡献的个人和组织给予表彰和奖励。”
CPC members asked to learn from late model official – Xinhua Liu Yunshan, senior official of the Communist Party of China (CPC), Wednesday called on Party members to learn from late official Liao Junbo. Liu, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, made the remarks before a special meeting to remember the exemplary life of Liao, who died at the age of 48 in a traffic accident while heading to a meeting on March 18.
Foreign And Defense Affairs
China’s State Grid Buys Stake in Greek National Power Operator – Caixin The 320 million euro ($356.5 million) transaction gives the State Grid a 24% stake in ADMIE, according to an announcement on the Chinese company’s website. The State Grid said the investment will be more than just a financial stake, with the Chinese company planning to appoint ADMIE’s CEO, chief financial officer and a board member, and setting up a management team in Greece.
Chinese embassy shopping for new PR firm – POLITICO The current pitch process has taken a few months and no one firm has won out yet. BLJ, which earlier did some work for Syrian first lady Asma Al-Assad (and helped get her an infamous favorable profile in Vogue in March 2011), the Qaddafi Libyan government and the Ecuador embassy, declined to comment // Comment: Surprised the PRC government wants to be associated with this client list
China Cancels Military Meeting With Vietnam Over Territorial Dispute – The New York Times Tuesday, the scheduled start of the gathering, came and went without any of the coverage in the state news media that readers in the two countries had expected. The Chinese Defense Ministry later said in a terse statement that it had canceled the event “for reasons related to working arrangements.” Analysts, citing government sources, said that the Chinese delegation had unexpectedly cut short a trip to Vietnam after tempers flared during a closed-door discussion on disputed territories in the South China Sea.
Top Chinese general cuts short Vietnam trip amid South China Sea tensions | South China Morning Post “One direct reason leading to the cutting short of Fan’s visit might be because Beijing sees Vietnam as breaking its promises about not exploiting oil in disputed areas in the South China Sea,” Wu Shicun, president of the Chinese-government-affiliated National Institute for South China Sea Studies, said.
China, Rhetorical Giant on the Move? – China Media Project He Yiting (何毅亭), executive vice-president of the Central Party School, the institution charged with the ideological training of Communist Party officials, wrote recently in the Study Times (学习时报) journal that China’s return to the global summit of “discourse power” is imminent, and that the “rejuvenation of Chinese discourse” will come hand-in-hand with what Xi Jinping has called “the great rejuvenation of the Chinese nation.”
Why the White House Is Reading Greek History – POLITICO Magazine raham Allison, an avuncular foreign policy thinker who served under Reagan and Clinton, was paying a visit to the National Security Council, where he briefed a group of staffers on one of history’s most studied conflicts—a brutal war waged nearly 2,500 years ago, one whose lessons still resonate, even in the administration of a president who doesn’t like to read.
Craig Laundy and the China connection | afr.com A self-professed adviser to the Assistant Minister for Industry, Innovation and Science, Craig Laundy, is closely tied to the Chinese Communist Party’s secretive overseas lobbying organisation and has boasted of pushing the coalition MP to back Beijing’s interests.
Communist parties of China, Cuba pledge to enhance ties – Xinhua Liu Yunshan, member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, met with Jose Ramon Balaguer, head of the International Department of the Communist Party of Cuba (PCC) Central Committee.
Hong Kong, Macao And Taiwan
Tsing Ma Bridge height debacle costing Hong Kong billions | South China Morning Post The bridge is eight metres higher than official records show, meaning mega-ships have been needlessly prohibited from using the Ma Wan channel for years. Seven months after the finding was revealed, nothing has been done
The Taipei-Beijing ‘Diplomatic Truce’ Crumbles: What Next for Taiwan? | The Diplomat The Diplomat‘s Editor-in-Chief Shannon Tiezzi joins Ankit Panda (@nktpnd) and Prashanth Parameswaran (@TheAsianist) to discuss the end of the so-called diplomatic truce between Taiwan and China. The podcast assesses Panama’s decision to switch diplomatic recognition from Taipei to Beijing, President Tsai Ing-wen’s ‘New Southbound’ policy, and how the United States can buttress Taiwan’s international position.
Tech And Media
Chinese Media Regulator Shuts Down Weibo’s Video Services for Operating Without License | Yicai Global The State Administration of Press, Publication, Radio, Film and Television announced the decision in a short notice published today, while warning popular live-streaming platform Acfun.cn and news portal ifeng.com they could also face the same fate. The platforms began providing audio and video services without licenses, broadcast “politically-related content inconsistent with state regulations,” and promoted negative comments, the administration said, adding that the platforms need to overhaul their operational model. // Comment: Official statement 广电总局要求“ACFUN”等网站关停视听节目服. There is no reason to expect anything but tightening of the Internet between now and least the 19th Party Congress. Will not be surprised if Wechat comes under more pressure soon
Amazon Takes Second Shot at China With New Import Service – Caixin “We hope to become the leader in cross-border e-commerce, regardless of whether it’s imports or exports,” said Elaine Chang, who was named Amazon’s China president after previously serving as head of its Kindle reader division in the market. One of her priorities will be to work harder to customize Amazon’s products and services to better suit Chinese tastes.
China Unicom counts Alibaba, Tencent among investors in drive to raise $10 billion – sources Four sources with knowledge of the matter told Reuters that Alibaba and Tencent would invest in the Shanghai-listed unit of the telecoms group – China United Network Communications Ltd (600050.SS) – as part of the capital-raising effort. One of the sources said Alibaba and Tencent would lead the group of investors, while Baidu (BIDU.O), the third of China’s constellation of tech giants, has pulled out
“六六们”控诉背后 独孤求败的滴滴或离用户更远|六六|司机|滴滴新浪科技新浪网 Comment: DiDi accused by well-known author Liu Liu of being an awful, monopolistic firm
Jack Ma’s Ant Financial Nearly Doubles Profits Amid Deal Push The company controlled by Alibaba’s billionaire co-founder Jack Ma racked up an 86 percent jump in pretax profit to 5.56 billion yuan ($814 million) in the year ended March, according to Bloomberg’s calculations from an Alibaba filing. Ant Financial declined to comment in an email
Tencent’s Startup Investment Frenzy Now Reaches Outer Space – Bloomberg China’s largest corporation has invested in Moon Express, a startup that aims to put drones on the lunar body; Argentina’s Satellogic, which specializes in satellite imagery; and Planetary Resources, which is looking into asteroid-mining. They’re an unusual trio of investments for a company that typically seeks out terrestrial entertainment content and up-and-coming technologies such as artificial intelligence and virtual reality.
Society, Art, Sports, Culture And History
This paleontologist races the bulldozers to track down China’s dinosaurs | Science The diggers don’t want to reveal that they are paleontologists, lest word spread that the land holds potentially valuable dinosaur tracks. The architect of that strategy of silence, and the leader of the dig, is Xing Lida, a buoyantly boyish paleontologist from the China University of Geosciences in Beijing.
Chinese double amputee fulfils his dream with 2,166km bike ride to Tibet | South China Morning Post After taking on the treacherous Sichuan-Tibet highway, cyclist, who lost both limbs on his right side in an accident nine years ago, said he’s ready for a new challenge
Beijing Organizes Memorial for Construction Worker Who Brought Found Treasure to the City in 1985 | the Beijinger This story dates back 32 years ago to 1985, when He Gang was rebuilding his house in his hometown of Guqiang, Henan Province. During his excavation, he came across a huge pottery crock full of silver antiques. Hearing about his newfound treasure, many dealers reached out to He and offered him money to purchase the antiques. Some even offered him a blank check to fill in himself, but He rejected them all. Instead, He brought the antiques to the Forbidden City with the help of his village secretary Liu Hong’en
Archaeologists have found proof that the ancient Chinese Shang dynasty used foreign slaves — Quartz Their findings, published in the Journal of Anthropological Archaeology, as “Diets, social roles and geographical origins of sacrificial victims at the royal cemetery at Yinxu, Shang China,” offer the much sought-after possibility of confirming part of what has been found written in ancient oracle bones used for divination purposes at the times.
Food And Travel
Celebrity Protests of China’s Yulin Dog Meat Festival Plummet After False Cancelation Rumors – Breitbart Animal rights experts say that rumors of a Chinese government ban on the Yulin Lychee and Dog Meat Festival, in which thousands of dogs are estimated to be killed, have severely decreased international awareness efforts to save the animals, typically tortured, killed and eaten.