The Sinocism China Newsletter 03.27.17

AnchorTHE ESSENTIAL EIGHT *

1. Chongyi Feng, Australian academic banned from leaving China, told not to talk | The Guardian Chongyi Feng, a professor at the University of Technology Sydney, was stopped twice at immigration checkpoints at the weekend while attempting to take flights to Australia from the southern Chinese city of Guangzhou, his lawyer said. He has not been formally detained or arrested and is still living at his hotel with his wife. Feng’s interrogation came in the middle of a high-profile, five-day visit by the Chinese premier, Li Keqiang, to Australia – the first by a Chinese premier in 11 years. Li was pushing closer trade ties and cautioned his hosts on picking sides between the US and China in a return to “cold war” mentality. // Comment: Stopped and prevented from leaving while Li Keqiang was still in Australia trying to say all the right things to Australia. PRC Security service trumps all, Li Keqiang gets no respect from inside the PRC system, hard to see how Australia can now move forward with things like an extradition treaty with the PRC or any shift away from the US towards the PRC. If President Trump can get past insulting Prime Minister Turnbull this should be a good opportunity for the US to remind anyone in Australia who still needs reminding that leaning closer to the PRC is very fraught. And Feng’s harassment may make it harder for those in Australia who are pro-PRC…

2. Carrie Lam Wins Vote to Become Hong Kong’s Next Leader – The New York Times Mrs. Lam, a former No. 2 official in the city, received 777 out of 1,163 votes cast to become the next chief executive, as Hong Kong’s leader is called. She defeated John Tsang, a former finance secretary who polls indicated was more popular with the public. // Comment: Just another step in the road to Hong Kong becoming just another PRC city

Related: Former pro-democracy student activists outed as part of Carrie Lam’s team | Hong Kong Free Press Marco Li Chun-lam, a former member of the now-defunct student group Scholarism, appeared in a photo of Carrie Lam’s private celebration event, which only around 60 people attended. Lam was seen as Beijing’s favourite candidate and won by 777 votes out of 1,194. Joshua Wong Chi-fung, the former convener of the group, spotted the photo published by Apple Daily and said in a widely shared Facebook post: “The face of someone who gives up on their principles is very horrifying indeed. I often remind myself not to turn into someone I would have hated.”

Related: Day after new pro-Beijing chief is chosen, Hong Kong police move to arrest activists – The Washington Post Hong Kong police arrested nine leaders of the 2014 pro-democracy campaign on Monday and charged them with violating public order, protest leaders said — just a day after a new chief executive who has pledged to “unite society” was chosen for the semiautonomous territory.

3. Democrats Question Potential Kushner Deal With China’s Anbang – Bloomberg Five Democratic lawmakers are raising ethics concerns about a Chinese conglomerate’s potential investment in a Manhattan office building owned by the family of Jared Kushner, President Donald Trump’s son-in-law and a senior White House adviser. The lawmakers asked the White House in a March 24 letter to explain whether Kushner was involved in any talks about the possible partnership with China’s Anbang Insurance Group Co. They also asked for additional details on Kushner’s divestment from his family’s company, Kushner Cos. // Comment: The Anbang deal gets stinkier by the day, Xi should realize that given the current trajectory of the Trump administration and its relationship with Congress, the FBI and the IC an Anbang “gift” to the Kushners will not help US-China relations and could actually pose problems. While I do not believe Anbang was told or even encouraged to do the deal by Beijing, Xi could certainly shut it down with one phone call. 

Related: Senate Committee to Question Jared Kushner Over Meetings With Russians – The New York Times Senate investigators plan to question Jared Kushner, President Trump’s son-in-law and a close adviser, as part of their broad inquiry into ties between Trump associates and Russian officials or others linked to the Kremlin, according to administration and congressional officials.  // Comment: Beijing should be concerned that the Senate wants to question Kushner, its main conduit to trump admin, about Russia. Who is plan B?

4. In Rare Move, Chinese Think Tank Criticizes Tepid Pace of Reform – NYTimes The new report, a 217-page study titled “The Reform Obstruction Phenomenon,” was written by researchers from the Economic System and Management Institute of China’s National Development and Reform Commission, which steers policy on industry, energy and many other sectors. The head of the commission, He Lifeng, and his deputy, Liu He, both have ties to Mr. Xi. But nothing in the report suggests that it had their blessing. The authors declined to be interviewed.

5. China takes fresh look at gangster’s ‘murder’ | South China Morning Post China’s top prosecutor’s office said on Sunday that it would investigate whether a man jailed for life for murdering a gangster acted in self-defence, amid public demands for leniency in the case. Shandong man Yu Huan was jailed for life by the Liaocheng Intermediate People’s Court last month for killing gangster Du ­Zhihao in Guan county last year. Du was one of 11 thugs who confronted Yu and his mother, Su Yinxia, at Su’s brake-lining factory over a loan repayment on April 14. // Comment: The Yu Huan case lighting up the ChiComNet, of course lots of claims that it exposes massive local corruption

Related: 最高检已派员对“辱母案”全面审查_综合_新京报网 昨日,针对备受关注的“辱母杀人案”,多部门相继发声。山东省高院表示已受理此案。最高人民检察院发布微博表示,已派员赴山东阅卷并听取山东省检察机关汇报,正在对案件事实、证据进行全面审查。

Related: “辱母杀人案”背后,高利贷的这些事你知道多少?_网易新闻 “我们误入高利贷陷阱,害了自己,也伤了别人。”“我们误入高利贷陷阱,害了自己,也伤了别人。” 在山东聊城市于欢故意伤害案即“辱母杀人案”中,受辱母亲苏银霞为儿子于欢写的“陈情书”中有着这么一句话。

6. Zhou Signals China Financial Opening Will Need Negotiation – Bloomberg Areas of potential liberalization include banking, insurance, investment banking, securities firms, and payment systems, Zhou told a gathering of Asian leaders Sunday during a panel talk at the Boao Forum for Asia on the southern Chinese island of Hainan. Foreign financial companies are mostly banned from doing business in China except in partnerships with domestic entities.  “Sometimes it’s a negotiation process,” Zhou said at the annual conference. “China would like to see that when we open wider in the financial sector, whether we can access some things. China is very interested to see that Chinese investors, especially private investors, should get better treatment overseas in other countries.”

7. Huge Plunge in Shares of China Huishan Dairy May Have Been Triggered by Leak of Meeting – Caixin Global The meeting included government officials of Liaoning, China, where Huishan is located, company executives, and representatives from more than 70 financial institutions, according to people with knowledge of the matter. The goal was to find a solution for Huishan’s imminent default on loan interest payments worth a combined 300 million yuan ($43.5 million). Instead, the meeting ended up throwing a spotlight on the severity of the firm’s liquidity problems, which could threaten the survival of the company itself.

Related: Fallout from China Huishan Dairy spreads-FT $$ Ping An Bank faces 2% hit to pre-tax profit from indirect holding in struggling group

8. Baidu Set to Open Second AI Lab in Silicon Valley – Caixin Global Baidu, Inc. announced it will open a second research facility in Silicon Valley Friday, in the hope of poaching talent for its machine-learning units, which are expected to shape its future business as traditional profits wane. The news follows the tech giant’s recent loss of three research executives in rapid succession. Wang Jin, former head of the company’s autonomous car unit, announced his resignation today, revealing plans for his own driverless-car startup //  Comment: Meanwhile, hearing rumors that Baidu may be about to lay off thousands

AnchorBUSINESS, ECONOMY AND TRADE *

Rich Chinese rush to get US investor visas before costs may soar | South China Morning Post As members of Congress in Washington debate raising the minimum required to obtain a US immigrant investor visa from US$500,000 to US$1.35 million, concern about the rise has set off a scramble among wealthy would-be participants in China. “Some clients are demanding that we make sure their applications are submitted before April 28”, the date the programme expires unless extended or amended by Congress, said Judy Gao, director of the US programme at Can-Reach (Pacific), a Beijing-based agency that helps with EB-5 Immigrant Investor visas  // Comment: Such a sketchy program, if Congress won’t kill it then should at least raise the price to 5m USD

China’s Sinopec Says Saudi Aramco Invited It to Be Investor – Bloomberg President Xi Jinping said in a meeting with King Salman that the nations should step up energy cooperation, Xinhua News Agency reported March 16, adding that the countries signed $65 billion worth of memorandums of understanding during the visit.

China state firms eye land around Panama Canal: waterway authority | Reuters Chinese state firms have expressed an interest to develop land around the Panama Canal, the chief executive of the vital trade thoroughfare said, underlining China’s outward push into infrastructure via railways and ports around the world.

Japan gov’t may ban Toshiba from selling chip business to China firm – The Mainichi The government is concerned that Toshiba’s key technology could get into the hands of a foreign company deemed risky to national security, as the embattled company could sell it to an entity offering a higher purchase price without full consideration of security risks.

Jing-Jin-Ji: China Planning Megalopolis the Size of New England – NBC News China’s rulers are planning a megacity that would be home to 130 million people and cover an area the size of New England. Sitting on the northeast coast of China, Jing-Jin-Ji — which stands for “Beijing-Tianjin-Hebei” — is a central plank of the country’s economic development plan over the next century.  //  Comment: And apparently a project very important to Xi

China’s HNA to buy stake in Old Mutual US asset management unit-FT $$ Acquisitive travel-to-finance conglomerate to pay $445m for 25% stake in OMAM

China Slinging Salmon on the Internet Lures Norway Seafood Fund – Bloomberg Trade relations between China and Norway were normalized in December, ending a six-year freeze that began after the Norwegian Nobel Committee awarded the Peace Prize to a Chinese dissident. Norway, the world’s largest Atlantic salmon producer, is seeking to increase seafood exports as the global demand for healthy proteins rises, especially in emerging markets such as China.

NZ-China trade talks to start next month | Radio New Zealand News Talks on upgrading the New Zealand-China Free Trade Agreement will begin on Anzac Day, the Prime Minister and the Chinese Premier have announced.

Chinese banks record expansion in external assets – Xinhua External financial assets of Chinese banks, excluding the central bank, climbed to 877.6 billion U.S. dollars by the end of 2016, up from 827.6 billion dollars by the end of September last year, according to the State Administration of Foreign Exchange (SAFE). Meanwhile, the nation’s banking industry recorded 964.5 billion dollars of external liabilities as of 2016, resulting in net external liabilities of 86.9 billion dollars, down from 152 billion dollars of net external liabilities three months ago, said SAFE.

Beijing punishes developers, agents violating property sale ban – Xinhua Six business apartment projects and 15 real estate agent offices in Beijing were punished Monday for violating a government ban aimed at cooling the red-hot housing market. The six projects, including some belonging to China’s top developers Vanke and Evergrande, were banned from sale, while the 15 real estate agent offices were ordered to close shop for overhauls, according to the Beijing Municipal Commission of Housing and Urban-Rural Development.

Beijing Tightens Controls on Commercial Housing in Capital – Caixin Global Property developers have for years bought land registered for commercial use and built developments that were really aimed at residential use, dividing buildings into apartment-sized units. Such projects became increasingly popular among buyers because they were cheaper than regular housing and because the increasingly tight restrictions on purchases — such as a Beijing residency permit and proof of tax and social security payments — did not apply to commercial buildings. Known as “altered-use properties,” these apartments come with land-use rights of 40 to 50 years, less than the 70 years given to normal residential housing.

Beijing City Regulator Calls For Blockchain Standards – CoinDesk According to a speech published by Sina Finance, Huo Xuewen, secretary of Beijing’s Municipal Bureau of Finance (a group that sets the city’s economic strategy), invoked the need for “healthy” progress in the blockchain industry during a fintech event last week.

AnchorPOLITICS AND LAW *

Is it Xi’s turn to be written into China’s Communist Party constitution? | South China Morning Post General secretary tipped for recognition with eponymous ideological ‘banner term’, following in footsteps of Mao and Deng  //  Comment: So much speculation in the runup to the 19th Party Congress

Poor county visited by Xi shakes off poverty – Xinhua In 2014, 11.8 percent of Lankao’s population was in poverty, but the ratio has now dropped to 1.27 percent, according to an assessment by the Institute of Geographic Sciences and Natural Resources Research of the Chinese Academy of Sciences. After evaluation results were examined and approved by the State Council Leading Group Office of Poverty Alleviation and Development, Henan Provincial Government greenlit the county’s withdrawal Monday. “Today is a commemorable day,” said Cai Songtao, secretary of the Lankao County Committee of the Communist Party of China (CPC) at a press conference. “Getting rid of poverty has been the ardent wish of Lankao residents for decades.” In 2014, as part of the efforts to improve Party-people relations, Xi Jinping, general secretary of the CPC Central Committee, visited Lankao twice as part of a campaign pairing top Party officials with the country’s poverty-stricken areas.

Did China Quietly Authorize Law Enforcement to Access Data Anywhere in the World? – Lawfare On September 20, 2016 the Supreme People’s Court, Supreme People’s Procuratorate (China’s prosecutor), and the Public Security Bureau jointly released 30 regulations governing the collection and examination of digital data in criminal investigations. Unsurprisingly, the regulations were primarily only of interest to Chinese judges, lawyers, and public security officials. Tucked in among the relatively mundane provisions, however, was a potentially rather alarming development that has thus far escaped much public notice in the United States. The regulations seem to authorize the unilateral extraction of data concerning anyone (or any company) being investigated under Chinese criminal law from servers and hard drives located outside of China.

China keeps finding millions of people who never officially existed — Quartz The group was never officially registered on the country’s household registration record system, known as hukou, which is closely linked to a person’s legal identity. That means they didn’t officially exist—until recently. On Friday (March 24), China’s Ministry of Public Security, the government department in charge of hukou registrations, announced that they had helped register the 14 million.

Brother Seeks Retrial for China Ex-police Chief Sentenced to Death – Bloomberg Zhao Liping, who had enjoyed broad powers as head of public security in the northern Chinese region of Inner Mongolia, was sentenced to death in November for murder, accepting bribes and the possession of firearms. Zhao, who has denied the charges, appealed the sentence. The appeal was rejected by a higher court in Shanxi province in February. China’s highest court, the Supreme People’s Court, is now reviewing his death sentence, as it does for all capital punishment cases.

AnchorFOREIGN AND DEFENSE AFFAIRS *

Signer of Anti-Trump Letter Withdraws From Pentagon Think Tank Patrick Cronin, a liberal Republican China hand who signed a letter denouncing Donald Trump during the 2016 presidential campaign, on Friday withdrew from taking a plum position as director of a Pentagon-funded think tank in Hawaii.  //  Comment: “Better orange than expert” in the Trump administration

Trump vs. Congress: Now What? – The New York Times These votes were gettable, Bannon believed. As he would later tell me: “The working class, and in particular the lower middle class, understands something that’s so obvious — which is that they’ve basically underwritten the rise of China. Their jobs, their raises, their retirement accounts have all fueled the private equity and venture capital that built China. Because China’s really built on investments and exports, right? People are smart enough to know that they’re getting played by both political parties. The two may be different on social issues, but when it comes to fundamental economics, they’re both the same. That’s why the American working class is interested in trade. It’s linked to their lives.”

China, Nepal to cooperate more on Belt and Road – Xinhua Chinese President Xi Jinping met with Nepali Prime Minister Pushpa Kamal Dahal on Monday afternoon, and they agreed to cooperate more in jointly building the Belt and Road. Xi said friendly ties between China and Nepal are in the fundamental interests of the two countries and two peoples.

Sri Lanka wants to reduce China’s stake in strategic port deal | Reuters The amended deal comes after the project was delayed amid protests by trade unions, landowners and political opposition led by former president Mahinda Rajapaksa and some current coalition government ministers. In January, hundreds of protesters refused to vacate their land and clashed with police at the opening of the industrial zone – the first violent opposition to Chinese investment in Sri Lanka.

AnchorHONG KONG, MACAO AND TAIWAN *

China voices firm opposition to Japanese official’s Taiwan visit, textbook – Xinhua According to a Kyodo News report, Japanese Senior Vice Minister of Internal Affairs and Communications Jiro Akama visited Taiwan on Saturday, becoming the highest-level Japanese government official to visit the island in an official capacity since 1972. Jiro Akama’s visit broke Japan’s commitment to China of only maintaining civilian and regional exchanges with Taiwan and the principles of the four political documents agreed upon by China and Japan, spokesperson Hua Chunying said at a daily press briefing.

AnchorTECH AND MEDIA *

After the Love is Gone, Hollywood-China Tie-Ups Come Unhinged – Caixin Global A five-year investment frenzy that saw billions of dollars flow between China and Los Angeles has hit a sudden rough patch, with the derailment of three major cross-border tie-ups over the last month. Two of those are seeing Chinese investors get cold feet over billion-dollar Hollywood-production tie-ups. The third, somewhat symbolically, is seeing the unraveling of a China-based animation joint venture involving DreamWorks Animation, which kicked off the love affair five years ago.

Life is but a stream: China’s new craze for live-streaming | The Economist China’s craze for personal live-streaming runs far deeper, into third-tier cities and remote rural areas where the internet is the one and only fun and cheap place to hang out. These personal broadcasts are not simply videos that fans watch, but more interactive experiences. The fans make requests, chat with their idols and give them virtual gifts. Many of those watching are small-time live-streamers themselves. They are turning each other into mass entertainment.

China’s “unicorns” nearly double to 131: official – Xinhua Zhang Zhihong, director of the ministry’s Torch High Technology Industry Development Center, made the remarks while opening an institute for small and medium enterprise research in Tianjin over the weekend. He used the term “unicorn,” rarely used by Chinese officials, which refers young, unlisted companies with a market value of over 1 billion U.S. dollars, based on private funding sources.

More high-tech zones in China – Xinhua The number of national high-tech industrial zones in China has increased to 156, with operating revenue hitting 27.9 trillion yuan (4 trillion U.S. dollars) in 2016. The high-tech zones accounted for 11.7 percent of China’s GDP in 2016 and made up for 18 percent of China’s total exports, according to Zhang Zhihong, director of Torch High Technology Industry Development Center, Ministry of Science & Technology.

AnchorBEIJING *

Beijing to Inaugurate First Driverless Subway Line – Caixin Global The new, nine-station Yanfang Line will cover 10 miles in southwestern Beijing, running at up to 60 mph, the state-owned Xinhua News Agency reported. A command center will control its speed, braking and doors, and even wash the trains, the news outlet said.

Beijing ramps up spending on housing renovation – Xinhua The budget is 60 percent more than last year. Around 36,000 homes in pockets of dilapidated areas, including four traditional hutongs around the tourist site Nanluoguxiang, will be targeted this year.

AnchorJOBS AND EVENTS *

China Reality Check: The Trump-Xi Mar-a-Lago Meeting: Expectations and Implications | Center for Strategic and International Studies Ambassador J. Stapleton Roy will open the discussion with comments on the overall US-China relationship and historical significance of leadership meetings, focusing particularly on leadership meetings early on in administrations. Christopher K. Johnson will then discuss the importance of China’s domestic political environment in shaping Chinese leaders’ views of the United States generally and the presidents’ goals at the upcoming meeting specifically. Finally, Kevin Nealer will provide remarks about the economic and trade context of the bilateral relationship and potential issues for discussion at the Trump-Xi meeting.-March 31 in DC

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