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SupChina : Newsletter on China

Tuesday, July 10, 2018


GIF by Lucas Niewenhuis. View pronunciation video from Jia.

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Dear reader,

We’ve got seven things at the top for you: tidings both sad and glad.

Liu Xia’s flight to freedom and German trade deals with China are the top two stories.Our boom and doom update on the U.S.-China trade war today focuses on China’s strategies for softening the blow to its economy.Clampdowns on reality talent contest TV shows, and unwelcome statements from the Thai Deputy PM about last week’s boat disaster that killed more than 40 people are two issues vexing the Chinese internet today.Know anyone looking for a China relevant internship? Scroll down!

—Jeremy Goldkorn, Editor-in-Chief

1. Liu Xia is free

Eight years after being placed under de facto house arrest despite committing no crime, Liu Xia 刘霞 — the widow of 2010 Nobel Peace Prize laureate Liu Xiaobo 刘晓波 — left China on Tuesday morning, boarding an 11 a.m. Finnair flight from Beijing to Berlin. Her plane transited in Helsinki, where the above photo was snapped by AFP.

Not coincidentally, German Chancellor Angela Merkel met Chinese Premier Li Keqiang 李克强 in Berlin shortly before Liu was allowed to leave.During Li’s visit, “Germany and China signed a raft of commercial accords worth some 20 billion euros ($23.5 billion) on Monday, with their leaders reiterating commitments to a multilateral global trade order despite a looming trade war with the United States,” according to Reuters.Liu’s release seems to have been part of the deal. Germany appears to be the only country of the traditional West that is still prepared to make human rights issues part of its conversations with China.On June 1 in this Access member newsletter (unpaywalled for non-members today), we noted: “Police have reportedly promised Liu that in July, after the politically sensitive month of June — particularly for the remembrance of a June 4, 1989, protest leader like Liu Xiaobo — and after the first-year anniversary of her husband’s death, she would finally be free to leave the country.”Her brother, Liu Hui 刘辉, who was previously incarcerated on trumped-up fraud charges, is still in China, and observers worry the Chinese government will use him as leverage to keep Liu Xia quiet now that she herself is free.Our report on her flight from Beijing is here, or follow the links below for coverage elsewhere:“Never an activist herself, Liu Xia’s life in the public eye has been defined by her marriage to her late husband… But Liu Xia’s poetry makes clear that despite long separations and political strife, their private life together was defined by devotion and lasting love.” —Inkstone“It looks like a signal from Beijingthat they recognize that during this period, they need Germany as someone who affirms their willingness to be a responsible player on the world stage,” said Kristin Shi-Kupfer, director of public policy research at the Mercator Institute for China Studies. “Because of the U.S. trade war, China seems to have the sense that they need more reliable and supportive partners in Europe.” —Wall Street Journal(paywall)“After Ms. Merkel’s visit to Beijing in the spring, the Chinese authorities let the Europeans know that if Ms. Liu’s case was not publicized, her release would be possible, a European diplomat with knowledge of the case said.” —New York Times (paywall)“We noticed that Liu Xia’s brother Liu Hui still remains in the country, just like a hostage. Liu Hui was previously sentenced to 11 years for so-called fraud, and used to pressure Liu Xia to stop speaking out about Liu Xiaobo, he was released on medical parole, but his sentence could be carried out at any time…,” a group of Liu Xiaobo supporters called Xiaowaves said. —Hong Kong Free Press

—Jeremy Goldkorn

2. Angela Merkel and Li Keqiang get down to business

As mentioned above, Premier Li Keqiang met German Chancellor Angela Merkel in Berlin yesterday, where Reuters says they signed “a raft of commercial accords worth some 20 billion euros ($23.5 billion)” involving German industrial giants like BASF, BMW, Volkswagen, Daimler, Siemens, and Bosch. Li and Merkel also made a bunch of friendly noises:

“Angela Merkel praised China for opening up to foreign investment, drawing a contrast with trade conflicts burdening both countries’ relations with the U.S.,” says Bloomberg (porous paywall), while Li Keqiang “presented himself as an ally in her defense of rules-based global trade.”BASF signed a memorandum of understanding “to spend as much as $10 billion on a second chemical complex in China, its largest expansion project yet.” The plant will be 100 percent owned by BASF, and become the first wholly foreign-owned chemical factory in China. Caixin has more on the deal (paywall).CATL Battery a.k.a. Contemporary Amperex Technology is China’s biggest maker of electric car batteries. Bloomberg says it plans to set up a battery factory in Germany’s eastern state of Thuringia, which “means China’s biggest maker of battery cells for electric vehicles is planting its flag in the land of Volkswagen, Daimler and BMW.”“BMW AG will make Mini cars in China for the first time, sealing a joint-venture agreement to produce electric vehicles with partner Great Wall Motor Co. in the world’s largest automotive market,” according to a separate Bloomberg story (porous paywall).Iran nuclear deal: Li and Merkel “also agreed that they want to preserve a nuclear accord with Iran that President Donald Trump has ditched,” according to the Bloomberg article first linked above (porous paywall).Here are the Xinhua News Agency readouts of the meeting between Li and Merkel: EnglishChinese.

—Jeremy Goldkorn

3. Handouts to companies and domestic soy drive — China tries to absorb U.S. trade punch

It is day five of the U.S.-China trade war. There are no signs that either side will back down or negotiate in the near term.

SupChina covered the dispute’s official opening salvos and impact on U.S. industryin Access member newsletters (become a member here). The big question for today is: How is China dealing with the impact of bilateral tariffs?

First, the Chinese Ministry of Commerce is redistributing “the new tax income from the countermeasures” to “relieve the impacts on companies and their employees,” and encouraging companies to seek out alternative markets to import from, according to Xinhua (in Englishin Chinese).Second, China is boosting domestic soy production, continuing a now months-long effort to subsidize the replacement of other crops such as corn with soy in farmland throughout the country. But the New York Times reports (paywall) that “China buys so much soy from the United States — $14 billion last year — that it can hardly switch to new suppliers overnight,” and that “the math is daunting, and the obstacles are formidable” for the country to move closer to soy self-sufficiency. It’s worth noting that most of the imported soy is used for livestock feed, not human consumption.But at least for now, Chinese consumers are mostly unaffected by the trade disruption. Reuters underlines that China’s “consumer price index (CPI) rose 1.9 percent in June from a year earlier, in line with expectations for a slight pick-up from May’s gain of 1.8 percent. On a month-on-month basis, the CPI fell 0.1 percent.”

Two more trade war related developments:

Tesla has signed a memorandum of understanding to build a factory with the capacity to build 500,000 cars annually in Shanghai, according to Bloomberg (paywall), although the factory will take years to build and realize full operations, and investors continue to worry about the company’s financial stability. Nevertheless, “the carmaker’s stock rose as much as 2.9 percent” upon the announcement.The EU Chamber of Commerce has raised concerns about the supply chain disruption of the trade war, the AP says, and released what it calls “a new major report analysing the progress and shortcomings of China’s reform agenda since President Xi Jinping spoke at the World Economic Forum in Davos in early 2017.”

See also:

GOP has varying responses to Trump's imposition of tariffs / AP
A look at how Trump’s tariffs are playing politically in the American heartland state of Kansas.What the tariff battle means for auto plants in South Carolina / WSJ (paywall)Hedge fund sees China stocks climbing in spite of trade war / Bloomberg (paywall)
“China’s strength in technology is one of the reasons for Wong’s confidence -- but it’s also a factor fueling tensions, as the White House sees a threat to U.S. national security.”

—Lucas Niewenhuis

4. Reality talent shows and other poison for teenagers

The State Administration of Press, Publication, Radio, Film and Television (SAPPRFT), China’s top media regulator, is deeply concerned about what TV networks have lined up for teenagers on vacation from school this summer. A notice (in Chinese) released by SAPPRFT on July 10 specifically asks online video platforms to cut down their production of reality talent shows that require public participation through voting.

There are three major points made in the document:

Online networks are ordered to createmore teen programs that “spread positive energy,” “promote socialist core values,” and “embody Chinese excellent traditional culture.”TV shows “that do harm to teenagers’ health” must be cancelled.Talent competition reality shows must engage “experts” to give them a thorough assessment in terms of “theme, values orientation, ideology, and format,” before greenlighting.

Why is SAPPRFT worried about? For an analysis of the regulator’s concerns, and a brief history of Chinese government concern about the “poison for the youth” of reality talent shows, please click through to SupChina.

—Jiayun Feng

5. Thai Deputy PM’s remark on boat disaster outrages Chinese internet

Last Thursday, a tour boat carrying mostly Chinese visitors sank in a storm off Thailand’s southern resort island of Phuket. More than 40 people died and several people are still unaccounted for. On Monday, as the rescue efforts progressed, Thailand’s Deputy Prime Minister General Prawit Wongsuwon blamed the tragedy on Chinese tour operators.

“The whole incident is basically Chinese people harming their fellows,” he stated, adding that had the operators listened to safety warnings before venturing out to sea, the tragedy could have been avoided. On the Chinese internet, people called him irresponsible and offensive.

The boat, the Phoenix, sank on July 5in high seas “off the west-coast island of Phuket with 101 people on board, including 89 tourists, all but two of them from China, and 12 crew, during an outing to a small island for snorkeling,” according to Reuters.On July 9, the Chinese foreign ministry urged Thailand's government to expand its efforts to rescue any survivors.Yesterday, Thai Deputy PM Wongsuwan blamed Chinese tour operators “for not respecting Thai safety legislation,” according to the Reuters piece which quotes him: “Some Chinese use Thai nominees to bring Chinese tourists in… they did not heed warnings… which is why this incident happened. This needs to be remedied.” Reuters adds: “He did not elaborate.”By last night, large numbers of Weibo users had reacted (in Chinese) angrily to Wongsuwan’s remarks.By this morning, Wongsuwan issued an apology, as reported by Thailand’s The Nation: “Saying something wrong is one thing. Rescuing people is another. If my words offended some people, I would like to apologize,” he said in a press conference.But most Chinese internet users seem to find the apology “insincere” and “unprofessional.” One angry Weibo user wrote (in Chinese), “You call this apology? He shows no respect for people who died from the incident. I suggest we Chinese people boycott Thailand from now on.”“Despite accidents, political turmoil and even bomb attacks over the past decade, the tourism sector seems immune to bad headlines, earning it the nickname ‘Teflon Thailand,’” says Reuters in the article linked above, noting that “Chinese tourists accounted for nearly one-third of last year’s record 35 million arrivals.”

—Jiayun Feng

6. A very serious PR crisis in Kenya

Eric Olander of the China Africa Project and podcast has published a short piece on LinkedIn. Excerpt:

China is facing a very serious public relations crisis in Kenya following a scathing report in The Standard on Sunday that alleges rampant anti-Kenyan racism by Chinese staff on the new Standard Gauge Railway.

The report quotes a number of SGR workers who complain bitterly of a double standard for how Chinese and Kenyans are treated and suggests the railway's Chinese managers are doing little to train local employees.

This story totally undermines China's long-standing "win-win development" narrative in Africa…

Read the whole thing for Eric’s recommendations to the Chinese Embassy in Kenya.

7. Interns wanted at National Committee on U.S.-China Relations

The National Committee on U.S.-China Relations is looking for both full- and part-time interns for the fall of 2018:

Based in New York City, the internship allows undergraduate and graduate students, as well as recent alumni, to work on the front lines of the dynamic U.S.-China relationship, interact with experts in the field, and utilize their research, writing, and organizational skills on a variety of National Committee programs and exchanges.The deadline to apply is July 15. Visit this webpage to apply.

—Jeremy Goldkorn


Viral on Weibo: The Miao Dragon Boat Festival

This year’s Miao Dragon Boat Festival, which took place from July 8 to July 10, came nearly a month after the traditional Duanwu Festival.


TechBuzz China: JD, Google, and the War for the Rest of the World

On June 18, concluded its annual shopping festival with a transaction volume of around US$24.5 billion. On the same day, the ecommerce platform also announced an investment from Google of $550 million. What does this new alliance mean? Ying-Ying Lu and Rui Ma discuss on the newest TechBuzz China.

Subscribe to TechBuzz China on Apple PodcastsOvercast, or Stitcher, or click here for the RSS feed.

Cross-dressing men in downtown Suzhou confronted by police

On July 3, three men dressed in women’s clothes were ordered to leave a shopping area in Suzhou, Jiangsu Province, after being scolded and humiliated by some police officers on public streets. On the Chinese internet, an overwhelming majority of people voiced their support for the crossdressers.

Sexual assault at Sun Yat-sen University: Professor faces accusations from multiple women

Zhang Peng 张鹏, an ecology professor at Sun Yat-sen University (SYSU) in Guangzhou, has been accused of sexual assault by multiple women as reported in a recent article published by WeChat blog the Livings 人间.

Kuora: Should Silicon Valley embrace China's '996' work ethic?

Mike Moritz, a venture capitalist and journalist, wrote an editorial in the Financial Times on January 18 titled "Silicon Valley would be wise to follow China’s lead." How right is he? Here's Kaiser Kuo's take on whether Silicon Valley should emulate China's "996" work ethic — referring to a 9 a.m. to 9 p.m., six-days-a-week schedule — to remain competitive in the tech industry.

Job not open to Beijing natives? Alibaba’s online supermarket apologizes for discrimination

China has a long history of regional discrimination, especially in urban areas like Beijing and Shanghai, where outsiders are often considered lower-class citizens. But Beijingers recently had the tables turned on them when a job seeker accused Hema (盒马鲜生) — an online supermarket subsidiary of the Alibaba Group — of regional discrimination.

The Caixin-Sinica Business Brief, episode 55

This week on the Caixin-Sinica Business Brief: The U.S.-China trade war, Chinese stocks amid the trade tensions, summer blockbuster Dying to Survive, China’s movie receipts in the first half of 2018, Doug Young on the death of Wang Jian 王健, the chairman of HNA (formerly Hainan Airlines), and more.

Subscribe to the Business Brief on Apple PodcastsOvercast, or Stitcher.



Shares of Xiaomi rally after being included in the Hang Sang Composite Index / TechNodeHealthcare IPOs
Tencent-backed health care platform WeDoctor shrugs off bear market concerns, prepares for Hong Kong IPO/ SCMP
“Tencent-backed online health care solutions platform WeDoctor, valued at US$5.5 billion after its latest round of fundraising, said on Monday it was actively preparing for a flotation in Hong Kong, despite the recent bearish sentiment in the market.”Ping An investment moves
Ping An said to mull rival takeover offer for China biologic / Bloomberg (paywall)
“Ping An Insurance (Group) Co., China’s largest insurer by market value, is considering a rival offer for plasma treatment provider China Biologic Products Holdings Inc., people familiar with the matter said.”
Ping An to buy 20% stake in builder China fortune for $2 billion / Bloomberg (paywall)Doh! Yin
China bans ads on booming video app/ WSJ (paywall)
“Chinese authorities ordered Douyin’s parent company, Beijing Bytedance Technology Co., to suspend ads indefinitely after a search engine ran a promotional spot for the app that officials said made light of Qiu Shaoyun, a venerated Chinese soldier in the Korean War.”World Cup gambling on WeChat 
WeChat shuts down 50,000 accounts for World Cup gambling / RADII China
“Gambling is officially illegal in China, though that hasn’t stopped people’s phones from being inundated with spam text messages about the practice or from WeChat users’ feeds.”Telecom and 5G
Finland's Nokia signs 1 billion euro deal with China Mobile / Reuters‘Social fitness app’ hits the big time 
Social fitness app Keep raises $126 million in series D funding / TechNode
“The company reached 100 million registered users in August last year and claims it’s the first Chinese fitness app to achieve this milestone.”Corporate debt
Wintime group seeks to raise $6 billion after wave of defaults / Caixin Global
“Wintime Group’s financial problems come as a growing number of Chinese companies have defaulted on bonds as the government increases scrutiny on corporate debt amid a national deleveraging campaign.”On-demand bikes
Quick take: Ofo won’t follow Mobike in ending deposits / Caixin
“The decision by China’s No. 2 bike-sharing company to keep demanding deposits from users comes at a time when the cash-strapped independent company is struggling to turn a profit as investors grow weary of a business model that depends exclusively on a never-ending supply of investment capital.”Airlines
China Eastern Airlines to raise up to $2.2 billion through a share sale / Reuters
“China Eastern, the country’s second largest carrier by passenger numbers, will use $1.78 billion proceeds from the share sale to fund the purchase of 18 airplanes, 15 flight simulators and 20 backup engines.”The tale of Istuary Innovation Group
A tech guru captivated Canada. Then he fled to China. / NYT (paywall)
“The offices of Istuary Innovation Group in Vancouver were emptied by an auction house late last year. A British Columbia provincial employment department has ordered the company to pay around $2.2 million in back wages to more than 150 employees.”


Xinjiang gulag
Uighur children fall victim to China anti-terror drive / FT (paywall)
Also see this Twitter thread by Emily Feng, the Financial Times reporter who wrote the story.
UBC student uses satellite images to track suspected Chinese re-education centres where Uyghurs imprisoned / Globe and Mail
Shawn Zhang, who is active on Twitter, “fears his Xinjiang re-education research places him at risk. He expects to apply for Canadian permanent residency this summer.” He told the Globe and Mail, “I don’t think I will go back to China unless I have a Canadian passport.”North Korea
China says its position on North Korean issue is consistent / Reuters
Yesterday in SupChina Access (paywall): North Korea: ‘Now heading toward a major debacle’?
North Korean leader Kim Jong-un heads back to China border on economy-first mission / SCMP
On SupChina: Will North Korea finally take China’s offer of economic know-how?Family planning: Money for having more children?
Chinese province considers incentives for couples to have more children: Media / Reuters
“China’s northeastern rustbelt province of Liaoning is studying ways to reverse its declining population and could offer financial incentives to encourage couples to have more children, the official China Daily newspaper said on Tuesday.”Money in the Middle East
China's Xi pledges $20 billion in loans to revive Middle East / Reuters
“Chinese President Xi Jinping on Tuesday pledged a package of $20 billion in loans, and about $106 million in financial aid, to Middle East nations, as part of what he called an ‘oil and gas plus’ model to revive economic growth in the region.”
“China would offer aid worth 100 million yuan ($15 million) to Palestine to support economic development, besides providing a further 600 million yuan ($91 million) to Jordan, Lebanon, Syria and Yemen.”Panama cashes in on new relationship with Beijing
Panama, China start free trade talks, eye regional hub / Reuters
“More Chinese investment, [Panama’s Minister for Trade and Industry Augusto Arosemena] told reporters, would enable Panama ‘to position ourselves as the port of entry of these products and investment for the whole region.’”
Panama, China open talks on free trade agreement / AP via Washington Post
“Panama dropped relations with Taiwan and established relations with China in June of last year.”New Zealand
China fires back at NZ, calls remarks on South China Sea and Pacific politics wrong /
Following New Zealand’s release of a defense strategy paper on China’s actions in the South China Sea, foreign ministry spokeswoman Hua Chunying encouraged the country “to view the relevant issue in an objective way, correct its wrong words and deeds and contribute more to mutual trust.”
China plans Pacific Island summit as New Zealand warns Beijing is trying to fill power vacuum / SCMPChina-Africa relations
A U.S. view on China’s so-called ‘debtbook diplomacy’ agenda / ChinaFile
The China in Africa podcast interviews Gabrielle Chefitz and Sam Parker, two researchers who published a widely read paper on China’s Belt and Road Initiative while they were students at the Harvard Kennedy School of Government. The interview focuses on Chinese involvement in Africa.India and renewable energy
India's investments in renewable energy are growing faster than even China's / Quartz India
“Indian investments into clean energy rose 22% in the first half of 2018 compared to the same period last year, while investments by China fell 15% during the period, according to a report by Bloomberg New Energy Finance (NEF).”Chinese state media tripped up by EU data protection law 
CGTN app blocked for failing EU compliance / Sixth Tone
The European Union’s General Data Protection Regulation keeps strict requirements, stating, “Failure to comply or breaches in standards result in content bans or heavy penalties: Companies can be fined up to $23 million or 4 percent of their annual global revenue — whichever is higher.”Environmental enforcement
China jails hundreds of officials for pollution violations / Reuters
“A total of 4,305 officials in 10 provinces and regions had been held to account for failing to rectify violations, with some of them facing fines and even jail time.”U.K.
Britain’s new foreign secretary Hunt ‘may now be off-limits for China’ / SCMP
“Jeremy Hunt, the controversial former health secretary who replaced Boris Johnson at the foreign office this week, is patron of the ruling Conservative Party’s ‘Friends of the Chinese’ group, which promotes ties with British-Chinese communities and calls for closer relations between China and Britain.”Japan
Japanese man convicted of spying by Chinese court / Washington Post
“Japan’s government has confirmed that a Japanese citizen was convicted of spying in China by a Chinese court.... Several other Japanese citizens have also been arrested or charged with spying in China in recent years.”Taiwan
Pentagon defends US warships in the Taiwan Strait, shrugs at China’s outcry/ SCMP
“The US Defense Department on Monday said that sending two US warships through the Taiwan Strait this weekend was ‘legally permissible’ after China accused the US of playing the ‘Taiwan card’ as the two countries’ trade dispute heated up.”


Planting trees to reduce poverty
Guizhou pilots carbon offset poverty alleviation program / Sixth Tone
“Policymakers are hoping to kill two birds with one stone through a tree-planting program that endeavors to trap carbon emissions and combat poverty. Announced Sunday at the 10th Eco Forum Global in provincial capital Guiyang, the voluntary program connects residents of Guizhou Province’s low-income villages with individuals and businesses across the country…”Former glory of the fishing industry
So long, Xiamen fishers, and thanks for all the fish / Sixth Tone
“On May 8, 2015, the city’s Siming district government announced that it would indefinitely close Shapowei harbor to all ships. The city said it wanted to ‘establish a beautiful ecosystem’ — in other words, it spelled the end of Shapowei’s fishing history.”School stabbing — death sentence for attacker
Death sentence for ‘bullied’ attacker convicted over fatal stabbing of nine students at Chinese school / SCMPTomb raiders
China’s Ming tomb raiders sent to prison for theft of ancient relics / SCMP
“Seven people have been sentenced to prison terms of up to 12 years for stealing relics from China’s famed Ming tombs, local media reported. The collection of 13 mausoleums and tombs located northwest of Beijing were built during the Ming dynasty (1368-1644).”


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