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Happy Saturday…President Trump has started his weekend in Asia, where he will be for the next 11 days visiting Japan, South Korea, China, Vietnam and the Philippines. The expectations seem so low that perhaps anything short of triggering a trade or hot war will be considered a success?
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This week’s daily updates included:
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1. President Trump Goes to Asia, “Free and Open Indo-Pacific” Is The New “Pivot” To Counter China’s RiseThe Pivot Rebranded: The New York Times has a good overview of the strategic backdrop to Trump’s Asian tour. We will hear a lot about the concept of a “free and open Indo-Pacific”–Trump Heads to Asia With an Ambitious Agenda but Little to Offer:
- In Vietnam, his aides said, Mr. Trump will articulate a new policy for Asia built on the concept of a “free and open Indo-Pacific” region. The idea, they acknowledge, originated with the Japanese, who have been urging the United States to bond with three other maritime democracies — Japan, Australia, and India — to contain a rising China…
- Japanese officials planted the Indo-Pacific idea with two American counterparts: Brian H. Hook, the State Department’s policy planning director, and Matthew Pottinger, the Asia director in the National Security Council. But it dates further back, to a 19th-century American naval officer and historian, Alfred Thayer Mahan, whose writings about maritime power have long been studied in Japan but who has only recently drawn attention in the White House.
Other Things to Watch:
So far I am not hearing to expect any substantive breakthroughs with China on either trade or North Korea. China and the US will sign a lot of deals during the visit, but deals are easy for the Chinese and, once you wade through the PR spin, many of the signed “agreements” may actually be non-binding MOUs. I hope I am wrong but it sounds like the US President will shy away from any specific, hard asks around the metastasizing structural issues in the US-China economic relationship.
But Xi Jinping will ensure Trump is well feted. The Forbidden City will close November 8 for Trump’s private tour and Cui Tiankai, the soon-to-retire Chinese Ambassador to the US, told the media that the US President “will receive a “State visit-plus” featuring a military honor guard, official talks, formal banquet and “special arrangements”.
There has been some hope that on this trip the US might win freedom for Liu Xia, Liu Xiaobo’s widow. In the meantime Prominent international writers have asked China to release her.
Party rag The Global Times has praised Chief of Staff Kelly’s recent comment to Fox News that China has “”a system of government that has apparently worked for the Chinese people.”
The PRC-South Korea “rapprochement” just before the Trump visit is noteworthy. This newsletter has suggested a few times over the last several weeks that Xi might find some sort of face-saving solution over THAAD to allow Beijing to back away from its hysterical reaction and rebuild ties with South Korea, with a goal towards driving a wedge between Seoul and Washington over North Korea. The story I heard was that the initial briefing to Xi about THAAD dramatically overstated its capabilities, leading Xi to overreact and then the entire system to overreact with him. Just days after the 19th Party Congress Xi seems to have gotten past the THAAD issue and made a smart correction of a mistaken policy that may reduce Trump’s multilateral DPRK options and leverage ahead of his Asia visit.
2. Yours Truly Talks The 19th Party Congress
I did a fun Sinica podcast on the 19th Party Congress:
3. Xi Jinping Keeps Promoting Allies And Breaking Norms
- For the past two decades, the post has been held by the first ranking member of the party’s secretariat, a role filled by a member of the Politburo Standing Committee. Chen Xi is a member of China’s second highest decision making body, the Politburo.
- Xi himself is a former head of the academy, as was his predecessor Hu Jintao and the recently retired ideology chief Liu Yunshan.
Zhao Kezhi is the new head of the Ministry of Public Security and, as Sinocism predicted in the 10.25 newsletter, Xi loyalists Huang Kunming and Ding Xuexiang have been named Minister of Propaganda and head of the Central Committee General Office, respectively. The new head of the important Central Policy Research Office remains a mystery, as does the role that Hu Chunhua will take on.
4. PRC System Focused on Propaganda Work About the 19th Party Congress
As expected as they always do these campaigns after Party Congresses. The intensity, the focus on one individual–Xi–and the inclusion of Chen Min’er on the “central publicity team” look a bit different than years past. Party members will spend a lot of time in the coming weeks on this.
- The campaign will be the prime political task for the Party and for the country, according to a decision of the CPC Central Committee released Thursday.
- The document summarized the essence of congress and made detailed requirements for Party members and organizations during the campaign.
- The Central Committee requires full training for Party members, as well as courses specifically for Party officials.
- Textbooks will also be compiled, said the document, dated Wednesday.
- Observers said the decision to include Chen Miner, Xi’s close associate and one of the youngest Politburo members, in the group pointed to his expanding role in the leadership.
- The Politburo trio will be part of a 36-member “central publicity team” that from Sunday will go to companies, villages, schools, communities and government departments to talk about the key points made in Xi’s 3½-hour speech at the Communist Party’s national congress last month, according to Xinhua.
5. Time Magazine Asian Edition Cover Declares That “China Won”
Ian Bremmer of The Eurasia Group goes full pundit in his cover story China’s Economy Is Poised to Win the Future:
- The China striding into that spotlight is not guaranteed to win the future. In this fragmenting world, no one government will have the international influence required to continue to set the political and economic rules that govern the global system. But if you had to bet on one country that is best positioned today to extend its influence with partners and rivals alike, you wouldn’t be wise to back the U.S. The smart money would probably be on China.
6. Commander In Chief Xi Reiterates The Need To Be Ready To Fight And Win Wars
- Xi, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission (CMC), made the remarks while inspecting the CMC joint battle command center as its commander in chief.
- “The CMC should lead the armed forces to be ready to fight and win wars, and to undertake the missions and tasks of the new era entrusted to them by the Party and the people,” said Xi, in military uniform.
More: Xi also held a video chat with troops at China’s base in Djibouti, on the northwestern edge of the Indian Ocean–Promote peace, China’s Xi tells soldiers at first overseas base – Reuters
Go Deeper: The Friday CCTV Evening News led with Xi’s visit. Let’s hope a certain other commander in chief does not decide to start wearing combat fatigues–习近平在视察军委联合作战指挥中心时强调 强化备战打仗的鲜明导向 全面提高新时代打赢能力_CCTV
7. The AI Race with China Is A New “Sputnik Moment”?
Don’t Be Complacent: Industry and policy leaders sound the alarm–Our Artificial Intelligence ‘Sputnik Moment’ Is Now: Eric Schmidt & Bob Work « Breaking Defense:
- “If you believe this is important, as I believe, then we need to get our act together as a country,” Schmidt said this morning. In a Q and A session at the event organized by the Center for a New American Security, Schmidt said he thought the US will maintain its lead over the People’s Republic of China for the next five years, but he expects China to catch up about then and pass us “extremely quickly.”
Finding Talent: A former Facebook engineer, now venture capitalist in China explains that China can take a shortcut to catch up in AI by poaching people from the US-A Cross Border Perspective on Frontier Tech Investing – With Linear Venture Founding Partner Harry Wang:
- The talent is there (e.g. software and deep learning). But just like in hardware design and hardware making processes where there are expensive mistakes, those people are extremely limited and they are mostly concentrated in the US. So it’s a question of whether you can hire these people to China or whether you can buy certain smaller companies with experience.
And that approach appears to be part of a more coordinated strategy:
- “I have been visiting scholars and engineers in universities, Google, Microsoft and high-flying start-ups like iRobot, trying to bring AI and big data experts back to Nanjing,” Du said.
- Du, 38, was working for Nanjing’s city government as a recruiter for more than six years, helping to set up labs and companies in the city.
- Now, he has struck out on his own, using the network he established to help Chinese technology companies like Baidu and Alibaba Group Holding – as well as local governments from Nanjing to Guangzhou – find talent and technology to bring back to China.
8. Does The Communist Party Hamper Basic Scientific Research?
Or: Is it better to have the money and political will to spend on the research and then figure out how to work with and around the Party? Physicist Yangyang Cheng examines a proposed Chinese supercollider that, at 34 miles in circumference, would be double the size of the Large Hadron Collider (LHC).
- Western scientists are given to dismissing the party presence as a “formality” — but Chinese scientists know that when ideological loyalty and behavioral compliance directly factor into professional advancement and social mobility through “digital Leninism” aided by new technology, the party branch is never a figurehead, always the real boss.
- That doesn’t mean they’re willing to admit this to outsiders. It was my asking about the party branch at the proposed supercollider that prompted the CAS official’s fury. “Never heard of it,” was his initial response. A member of the academy’s party committee himself, the official quickly reversed course to state that the party branch has “its own functionality” to perform “work on the thought process” for collaboration members and act as a “unifying force.”
9. Zhou Xiaochuan Stresses The Roles of The Market And The Party In Financial Reforms
The context: The soon-to-retire central bank chief made the comments in a chapter in the recent released 19th Party Congress Study Guide 周小川：积极有序发展股权融资，稳步提高直接融资比重. They do not seem to differ from things said previously. The long mooted financial reforms now await political will and the perhaps the December Central Economic Work Conference. A decisive role for the market and supply side structural economic reforms were just written into the Party Constitution.
- Zhou Xiaochuan, Governor of People’s Bank of China, said that the market should play a “decisive role” in allocating financial resources, but also stressed the importance of stronger regulation and Communist Party leadership in guiding financial reform, according to the Shanghai Securities News.
- In warding off systemic financial risks, China should deal with “both cause and symptoms,” and be active in “both preemptive measures and reactive solutions,” Zhou wrote in an article aimed at helping the public deepen understanding of last month’s 19th Communist Party Congress report
Go Deeper: A China Reform Scorecard Gives Failing Grades–Quarterly Net Assessment — The China Dashboard — Rhodium Group and Asia Society Policy Institute and Rhodium Group
10. Guo Wengui And The Twitter War Between Overseas Chinese
Comment: It has been remarkable to watch the acrimony between critics and defenders of Guo Wengui. Some on each side are clearly not acting with pure motives though not every supporter or critic is simply a paid shill or spy for the other side. But accusing exiled lawyer Teng Biao of being a CCP spy calls into question all of Guo’s other allegations. Guo should actually talk less, though that is tough for someone who so loves the spotlight.
- Teng Biao, a prominent citizen rights lawyer who is now living in the US, has been working since August to demonstrate fallacies in what Guo presents as evidence of corruption. In response, Guo and his followers accused Teng of being a spy for Beijing.
- Recently Teng wrote a long piece looking into Guo’s fans by quoting some of the analyses from Twitter..
- “How could Guo Wengui attract so many brain-damaged fans on Twitter? The reason is ‘China has suffered from the regime of Zhao [CCP] for too long.’”…Resentment and hatred have accumulated for decades and now they find a warrior challenging the CCP, they project their wishful thinking onto Guo and become his followers. Guo is like an expert hypnotist, he creates strong suggestions leading people into a story plot.
Serious Question: Did any PRC official bring up Guo Wengui with Mark Zuckerburg during his recent homage to Xi Jinping?
- Florida senator Marco Rubio, who takes a particular interest in Beijing’s attempts to curtail Chinese citizens’ free speech, focused for a moment on dissident Guo Wengui. Facebook said Oct. 1 it had taken down a page associated with Guo and stopped him from posting to his own account after he had posted someone else’s “personal identifier information.”
- “We did receive a report from a representative of the Chinese government about that account,” Stretch said. “We analyzed that report as we would any other, and took action based on our policies,” he said.
11. China May Have Banned Bitcoin Exchanges But The Government Loves The Blockchain
Go Deeper: Caixin has a special report on Bitcoin, the Blockchain and China-Caixin Global – No Bit Player:
- But even as the Chinese government shook the cryptocurrency world, it signaled it will remain a key player in the unfolding story of digital money. China is exploring uses for the underlying technology known as blockchain, such as in logistics and contracts, as well as in its own digital currency.
12. Pandas As Geopolitical Fur Balls
Financial Times Asia editor Jamil Anderlini has an excellent story about How the panda became China’s diplomatic weapon of choice:
- Xi Jinping personally signs off on every panda loan to a foreign country and, in a fine display of barbarian management, requires each head of state to personally request the pandas.
- The wild Panda population has recovered enough for them to no longer be classified as “endangered”, but instead of celebrating cadres fumed because of concerns the declassification could weaken the panda’s political and financial value
Not Actually Cuddly: As part of my 1994 summer scramble to pay for my second year of graduate school I ended working as a translator on the US-China feature film coproduction “The Amazing Panda Adventure“. Most of it was shot in Jiazhaigou, Sichuan, an amazing place, especially 23 years ago when there were almost no tourists. I got to pet one of the pandas and it felt like rubbing a steel wool pad as their fur is so coarse. Since then I have always chuckled about the accusation someone is a “Panda Hugger”. The reality is if you hug a panda you are going to get scratched…