Building A Leninist Panopticon; Pressure On PRC Outbound Deals; PLA Turns 90-Sinocism-07.24.17

"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner

The Essential Eight

1. Xi Wants More Control Over Foreign Deals By PRC Companies

Xi’s Sign-Off Deals Blow to China Inc.’s Global Spending Spree – WSJ:

China’s government reined in one of its brashest conglomerates with the approval of President Xi Jinping, according to people with knowledge of the action—a mark that the broader government clampdown on large private companies comes right from the top of China’s leadership.

The measures, with President Xi’s previously unreported approval last month, bar state-owned banks from making new loans to property giant Dalian Wanda Group to help fuel its foreign expansion.

Wanda Will Keep Major Investments in China, Chairman Says – Caixin Global:

Wanda will “actively respond to the state’s call and decided to put its main investments within China,” Wang said in response to a series of questions Caixin posed in an email. The sale of assets frees Wanda to pay off debt and generate greater investment returns from other business activities, he said.

Banks That Funded HNA’s $40 Billion Spending Spree Halt New Loans – Bloomberg:

The pullback by Chinese lenders began even before reports emerged that authorities had started scrutinizing some of the country’s most active overseas dealmakers. Last month, regulators began assessing the dangers to China’s banking system posed by HNA and other prolific acquirers, including Fosun International Ltd. and billionaire Wang Jianlin’s Dalian Wanda Group Co.

Comment: Another reminder that no one is bigger than the Party, especially in the Xi era. 


2. Politburo Meeting Announcement Focuses On Economy, Financial Risks, Stabilizing Real Estate Market

China’s Politburo pledges to prevent ‘systemic’ financial risks: Xinhua:

China’s Politburo, the Communist Party’s top decision-making body, said Beijing will implement a “proactive” fiscal policy and “prudent” monetary policy in the second half of the year, the official Xinhua news agency reported on Monday.

China will also strengthen coordination of financial regulation, stabilize the property market and prevent systemic financial risks, according to a statement following the meeting chaired by President Xi Jinping.

Official statement: 习近平主持政治局会议 分析研究当前经济形势和经济工作 

In China, Herd of ‘Gray Rhinos’ Threatens Economy – The New York Times:

The rhinos are a herd of Chinese tycoons who have used a combination of political connections and raw ambition to create sprawling global conglomerates. Companies like Anbang Insurance Group, Fosun International, HNA Group and Dalian Wanda Group have feasted on cheap debt provided by state banks, spending lavishly to build their empires.

Wang Qishan: China’s enforcer – FT $$ In a closed-door session in the spring, one international delegation was surprised to see Mr Wang flanked by a large number of senior financial officials, according to three people briefed on the meeting. “I have previously focused only on [the anti-corruption campaign],” Mr Wang told his visitors, leaving the strong impression that he would be leading many more discussions about Chinese economic and financial issues in coming years.


3. Foreign Suspicion of PRC Investments Grows, Bankers Despair

U.S. Message to China: Hands Off Our Companies – WSJ:

Critics in Congress and some government agencies say Chinese investment poses disproportionate risks to national security because it may be directed and subsidized by the government of China, a chief U.S. rival both economically and militarily.

Comment: And now that Xi has personally ordered firms like Wanda to cut back on their overseas deals the first question any responsible regulator needs to ask when reviewing an inbound PRC deal is why is Beijing allowing this deal? The crackdown on Wanda et al casts even more suspicion over all foreign PRC deals.

U.S. toughens stance on foreign deals in blow to China’s buying spree – Reuters:

CFIUS’s more conservative stance toward deals coincides with growing political and economic tensions between the United States and China. On Wednesday the two countries failed to agree on major new steps to reduce the U.S. trade deficit with China

UK to tighten foreign investment reviews – FT $$:

The British government is pressing ahead with plans to tighten screening of foreign investments by China and other countries amid concerns that such flows could compromise national security.

After $50 billion deal spree, China’s HNA sets out to clear ownership questions:

HNA said the change – to be announced later on Monday along with an unprecedented ownership list – was part of an effort to address interest in its structure, as the group expands.

HNA Group Questions Bank of America’s Stance on Working With the Company – WSJ:

The letter, which provides an unusual window into the normally secretive relations between an investment bank and its client, is dated July 21 and addressed to Bank of America’s Chief Executive Brian Moynihan from HNA’s CEO Adam Tan. In it, Mr. Tan said that the bank’s “team from Asia just this morning expressed strong interest to my team in continuing to work with us in a deal in the U.S. as a financial adviser.”

Scaramucci Still Has Unfinished Business in China – Bloomberg:

Anthony Scaramucci, the Trump administration’s new communications director, finally made the leap from Wall Street to the White House. Selling his hedge-fund firm to a Chinese company will take longer.

The sale of SkyBridge Capital to conglomerate HNA Group Co. has been delayed by the Committee on Foreign Investment in the United States, according to two people familiar with the situation.

Comment: Yet another reason for Beijing to push HNA to kill this deal. Beijing will not want the optics of having a PRC firm give so much cash to one of Trump’s top advisors. 

Beijing-backed fund makes a play for chip pioneer Imagination – The Telegraph:

Canyon Bridge Capital Partners, which is based in Silicon Valley but funded by authorities in Beijing, has held talks about a potential bid for Imagination or parts of its business, The Sunday Telegraph can reveal.

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4. PLA Turns 90 As Xi Pushes Reforms To Build A Strong, Modern Military That Can Fight And Win Wars

Top Chinese leaders visit military exhibition – Xinhua:

Top Chinese leaders, including President Xi Jinping, on Friday visited a major exhibition marking the 90th anniversary of the founding of the People’s Liberation Army (PLA).

Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, called for unremitting efforts to build the army into a world-class military.

Xi Jinping picks war games over military parade for Chinese army’s 90th birthday bash | South China Morning Post:

Sources close to the PLA, the world’s largest army, have told the South China Morning Post that President Xi Jinping will make his first known visit to the Zhurihe Combined Tactics Training Base, 400km northwest of Beijing in Inner Mongolia, to observe war games involving cyberwarfare, special troops, army aviation and electronic countermeasures.

There had been speculation the anniversary would be marked by a parade in Beijing, but Xi, who as chairman of the Central Military Commission (CMC) has been pushing the PLA to modernise, will instead be guest of honour at Zhurihe to see how that effort is progressing.

庆祝中国人民解放军建军90周年_新闻频道_央视网( CCTV News micro-site on the 90th anniversary of the founding of the PLA

《将改革进行到底》第七集:强军之路(上) – 中国军网 episode 7 of the 10 part series on reform is about reforming and modernizing the PLA

速览 | 四分钟看《将改革进行到底》第八集《强军之路》(下) Episode 8 of the reform series also about PLA reform and building a strong, modern army.

5. South China Sea Tensions Rising Again As US FONOPs Plan Leaked And Beijing Reportedly Threatens Vietnam

Trump’s Pentagon Plans to Regularly Challenge China in the South China Sea – Breitbart:

Defense Secretary Jim Mattis sent the plan to the White House in April that outlines a schedule for the whole year of when U.S. Navy ships will sail through international waters China illegally claims, according to a U.S. official.

Although the U.S. Navy has routinely conducted these “freedom of navigation operations” all around the world for decades, the Obama administration put a stop on them in the South China Sea from 2012 to 2015, with only a few in 2016, out of concern for upsetting China.

South China Sea: Vietnam halts drilling after ‘China threats’-BBC:

According to the industry source, Repsol executives were told last week by the government in Hanoi that China had threatened to attack Vietnamese bases in the Spratly Islands if the drilling did not stop.

Progress in the South China Sea? | Foreign Affairs:

A senior Chinese general reportedly cut short an official visit to Vietnam in June this year because of news that Hanoi had begun drilling in a disputed area that Beijing had previously leased out to a different entity. But Beijing has done nothing to stop Hanoi’s drilling, nor has it made any public statement condemning it. The tribunal’s award has made clear that China has no legitimate claim to resources in this area.

Comment: This claim does not seem to be aging well…

Beware the Illusion of South China Sea Calm | The Diplomat:

The pattern of Chinese behavior over the past few years in the South China Sea suggests that any brief period of calm such as this one is likely nothing more than temporary tactical maneuvering rather than some sort of strategic rethinking that some keep hoping for.

Let’s be clear: China would call America’s bluff in the South China Sea – Hugh White:

Nothing Washington can do in Asia will convince Beijing – or others – that America is really serious about preserving its leadership, or indeed any significant strategic role in Asia, unless American political leaders first clearly articulate to Americans at home why that is necessary in America’s interests, and why America should be willing if necessary to fight a war with China to do so.


6. Artificial Intelligence Plus Limited Civil Liberties = Leninist Panopticon?

Beijing Wants A.I. to Be Made in China by 2030 – The New York Times:

The country laid out a development plan on Thursday to become the world leader in A.I. by 2030, aiming to surpass its rivals technologically and build a domestic industry worth almost $150 billion.

Released by the State Council, the policy is a statement of intent from the top rungs of China’s government: The world’s second-largest economy will be investing heavily to ensure its companies, government and military leap to the front of the pack in a technology many think will one day form the basis of computing.

The State Council Notice-国务院关于印发新一代人工智能发展规划的通知 

Big Data, Big Concerns – China Media Project – China Media Project:In many respects, China leads the world in the application of big data and machine learning to questions of law enforcement and social control. The above success story tells us that local police in China have expedient access not just to residential and other surveillance cameras, but also to national identity databases that can be matched in real time against train or other ticket purchases requiring identification. This, in fact, is just the tip of the iceberg. China is now applying a big data approach to every manner of problem, betraying a dangerous faith in the liberating power of technology, with no public discussion whatsoever about how these assumed advances might entrap citizens within the all-seeing lens of state-controlled machine data.

China seeks glimpse of citizens’ future with crime-predicting AI -FT $$ :“The police are using a big-data rating system to rate highly suspicious groups of people based on where they go and what they do,” company spokesperson Fu Xiaolong told the Financial Times.

Minority Report? AI to rank Communist Party members – CGTN:The “Smart Red Cloud”, which has been developed by tech startup Yunshu Weilai under the University of Electronic Science and Technology (UESTC), will also monitor attendance at party events and social media posts.

The Party school in Sichuan Province is collaborating with the platform in the hope of making the selection and assessment of cadres “smarter”.


7. Sun Zhengcai Officially Under Investigation

From Political Star to ‘a Sacrificial Object’ in China – The New York Times:

Three people who are close to senior officials said that before Mr. Sun was dismissed, he was put under investigation by the party. Two of them said an internal party explanation of his removal did not specify allegations but said investigators had found “violations of discipline,” a vague term that might mean political infractions or corruption. The three spoke on condition of anonymity, citing fear of punishment for discussing internal party affairs. The Wall Street Journal first reported the inquiry.

The official announcement of Sun’s investigation came on 7.24 – 中共中央决定 对孙政才同志涉嫌严重违纪问题立案审查

8. Kushner Companies’ China Sketchiness Continues

Jared Kushner’s White House connection still being used to lure Chinese investors – CNN:

References to Kushner are part of online promotions by two businesses that are working with Kushner Companies to find Chinese investors willing to invest in the 1 Journal Square development in exchange for a US visa.


Business, Economy And Trade

How LeEco Fell From Glory – Caixin Global A Caixin calculation based on public documents found that LeEco’s unlisted arms, including its filmmaking, sports and electric car units, have raised more than 25.5 billion yuan through private equity sales, in addition to 25 billion yuan raised from public share sales.

LeEco Defaults on $75 Million Convertible Bond – Caixin GlobalLeEco missed the interest and principal payment when the bond matured, bondholder Shanghai Qicheng Asset Management Co. said. LeEco has proposed deferring the redemption of its bond by another year, or converting the amount owed into preferred shares of LeEco’s unlisted units, such as car-making and entertainment, the bondholder added.  //  Comment: Has founder Jia Yueting pulled a runner to the US, or has he returned?

China Regulator Tells Insurers to Keep Their Noses Clean – WSJInsurers should be economic ‘shock absorbers and stabilizers,’ says CIRC vice chairman

Chinese Shipbuilders May Slip Deeper Beneath the Waves – Caixin Global During the first six months of this year, Chinese shipbuilders received new orders totaling 11.51 million deadweight tons, down 29% from the same period in 2016, according to figures that the China Association of the National Shipbuilding Industry released Friday.

Shanghai Cracks Down on Devious Practice Driving Up New-Home Prices – Caixin Global Housing authorities in Shanghai this week published rules detailing how the government will get involved in the draw of the tickets. The announcement came after the city in May said developers will have to conduct the lottery under the supervision of notary officials, as the government aims to “regulate housing sales behaviors in the city and contain speculation.”

China Money Rates Come Off Highs as PBOC Boosts Cash Injections – Bloomberg The People’s Bank of China pumped in a net 220 billion yuan ($32.6 billion) via open-market operations on Monday, the most since June 16. That followed the biggest weekly injection since January, when funding demand spiked ahead of the Lunar New Year holidays. A combined 678.5 billion yuan of reverse-repurchase contracts and Medium-term Lending Facility loans are coming due this week, which will drain cash from the financial system.

In China, interest in U.S. beef is high, but ranchers and feeders need time to build supply | It will take time for U.S. ranchers to build up the supply of cattle for China and for marketers to build wide demand for a marbled style of beef unfamiliar to many Chinese. But some in the industry report signs of early levels of high interest from Chinese customers.

IGOFX中国区总代疑卷300亿跑路_深度_新京报网 30B RMB gone in IGOFX Forex trading Ponzi scheme

Pyramid Investigation Has Investors Protesting Near Heart of Beijing – The New York Times Many of the protesters waved Chinese flags, and some held banners appealing to the president, Xi Jinping, to overturn the crackdown on their investment scheme, called Shanxinhui 善心汇, and the recent arrest of its founder, Zhang Tianming.


Politics And Law

Guess who’s not invited to China’s key Communist Party congress | South China Morning Post Five cadres from out-of-favour Communist Youth League have not received invitations to key meeting this autumn, raising eyebrows among observers

Chinese government official sues exiled tycoon Guo for defamation Huang Yan, vice-minister of housing and urban-rural development, filed the complaint with the New York State Supreme Court on Wednesday, saying Guo’s “false and outrageous” claims, made in a video published on YouTube in May, had caused her “severe emotional distress” and “mental anguish”.

US student freed after week held in China over taxi dispute – APAn American university student is free following a weeklong detention in China for allegedly injuring a taxi driver who was roughing up his mother during a fare dispute, in a case that drew objections over the student’s treatment from U.S. lawmakers.

江苏高院原院长许前飞涉严重违纪被查,曾表态“敬畏权力”_长三角政商_澎湃新闻-The Paper 7月24日,中央纪委监察部网站发布消息称,江苏省高级人民法院原党组书记、院长许前飞因严重违纪问题,已被立案审查。许前飞并被撤销党内职务,由副部级领导干部降为正局级非领导职务


Foreign And Defense Affairs

China’s defence spokesman warns India to ‘not take any chances’ over border dispute | South China Morning Post New Delhi told to ‘hold no illusions’ about the commitment or capabilities of China’s military as dispute sparked by road construction project drags on

US within reach: China shows off new and improved advanced missile system | South China Morning Post A model of the Dongfeng-31AG intercontinental ballistic missile – capable of hitting the US and Europe and with a more mobile off-road trailer and launcher – goes on display at military museum

Beijing pushes for immediate start to China-Thai railway | South China Morning Post Wang Yi is in Bangkok on an official visit to strengthen political and economic relations, which have expanded in recent years as China has sought to spread its influence and Thailand’s military government has loosened ties with the United States.

Hashima Island’s true history revealed in Times Square video – People’s Daily Online A video advertisement started looping on the big screen of Times Square, New York since July 3. Named “The Truth of Hashima Island” (also known as Battleship Island), the video reveals a rarely-known history of Japan during World War II. Hashima Island, located 15 kilometers from Nagasaki, is reputed to be a tourism heaven on earth. However, it contains the graves of hundreds of Chinese.

The military unit that connects China’s secret ‘red phone’ calls | South China Morning Post PLA group that runs communication for leadership must memorise 3,000 numbers, know who’s calling by their voice alone and understand all Chinese dialects, state media reports

China’s intelligence gathering at sea: Some implications – The Interpreter Haiwingxing’s deployment is much more significant in other ways, firstly because it is further confirmation of both the increasing reach of the PLA-N and of its developing ability to conduct multiple, widely-dispersed operations simultaneously. A three-ship task group is currently in the Baltic to exercise with the Russian navy, while in June visits were conducted to Pakistan and Australia by two other three-ship groups. Two transport ships are on their way to Djibouti with the elements of the new forward base that the Chinese are establishing in the port. The PLA-N may have been embarrassed by the reported Indian Ocean breakdown of the brand new guided missile destroyer leading its Baltic task group, but the fact that a sister ship was in area and could be immediately substituted for the disabled vessel speaks for itself.

Donald Trump is the odd man out with Putin and Xi – FT $$ The dominant view in the west is that the “bromance” between Mr Putin and Mr Xi masks an awkward relationship, in which mutual trust is conspicuously absent. But this obscures a more complex picture. The truth is that Russian and Chinese national interests tend to coincide precisely in areas where they oppose those of the west.

Chinese jets intercept U.S. surveillance plane – U.S. officials – Reuters Two Chinese fighter jets intercepted a U.S. Navy surveillance plane over the East China Sea over the weekend, with one coming within about 300 feet (91 meters) of the American aircraft, two U.S. officials told Reuters on Monday. Comment: If US has video it should release it

China tests underwater robot in South China Sea – Xinhua The robot is 3.5 meters long and 1.5 meters wide and can dive to a depth of 4,500 meters. It will conduct 20 hours of collaborative operations with the unmanned submersible “Faxian” in the South China Sea.


Hong Kong, Macao And Taiwan

Chinese state news agency Xinhua’s official style guide: Taiwan and Hong Kong are part of China — Quartz The new guide was published on July 19 (link in Chinese). Xinhua added 57 new rules to its previous style guide, which was first released in May 2015; of the new guidelines, 51 refer to Taiwan and Hong Kong.


Tech And Media

Leading Shanghai Media Inks New Approach With Weibo, Toutiao – Caixin Global ThePaper said its new relationship with Toutiao will center on using artificial intelligence to distribute its articles, and will also entail technical support and other opportunities for commercial collaboration. A spokesman for ThePaper added that no equity investments were involved in any of the new strategic tie-ups, which also included one with software titan Microsoft Corp.

Censors Scrub Korean Soaps Off China’s Screens – WSJ Internet censors target foreign movies and TV shows popular with young Chinese as it tries to reinsert Communist ideology into public life

How to make $100,000 a month in China, live-streaming your life – The Washington Post In America, social media influencers make money off of ads and endorsements. Some Chinese stars do, too, but most of the money comes directly from fans in the form of gifts — sort of like a virtual tip jar. China’s live-stream market was worth at least $3 billion in 2016, up 180 percent year over year, according to iResearch. The sector will soon generate more money than the Chinese movie box office, analysts predic

Beijing targets foreign firms in internet crackdown | South China Morning Post In a letter to corporate customers seen by The Associated Press, the biggest Chinese internet service provider says virtual private networks, which create encrypted links between computers and can be used to see sites blocked by Beijing’s web filters, will be permitted only to connect to a company’s headquarters abroad. The letter from state-owned China Telecom said VPN users were barred from linking to other sites outside China – a change that might block access to news, social media or business services that are obscured by its “Great Firewall”.


Society, Art, Sports, Culture And History

One in 10 Left-Behind Children Says One Parent Is ‘Dead’ – Caixin Global Children in villages left behind by parents who opt to work in cities get to meet their mothers and fathers only once or twice a year, a survey has found. These long absences have led to a “high level of resentment” among children, with one in 10 surveyed saying a parent had died over the preceding month, according to a study released Friday by On the Road to School, a Beijing-based NGO.

Authorities Investigate Fight Club for Orphaned Teenagers – Sixth Tone A mixed martial arts (MMA) club that houses and trains orphaned teenagers is under police investigation after a video circulated online over the weekend showed children fighting each other to the applause of onlookers.

School in Hot Seat for Insisting on Criminal Checks Only for Migrant Parents – Caixin Global A primary school’s decision to ask for migrant parents’ criminal histories as part of the admissions process has caused a stir in China, with many angry at “illicit barriers” curbing access to education for low-income children.

Guangzhou Renters Gain Right to School Their Kids Locally – Sixth Tone The policy means out-of-towners who fulfill certain criteria no longer have to buy a home in Guangzhou to give them the same chance as locals of enrolling their kids in a public school. Like many cities in China, Guangzhou has seen home prices soar in recent years.

Film shows Muslims in ‘unseen China’ – BBC News Knife in the Clear Water offers a rare glimpse into the lives of China’s Hui Muslim population.

Language Log » Comrades, “hike up your skirts for a hard shag”President Xi Jinping is fond of calling on the Chinese people to “roll up our sleeves and work hard” (lū qǐ xiùzǐ jiāyóu gàn 撸起袖子加油干 / 擼起袖子加油幹).  No sooner had Xi uttered this stirring pronouncement in a nationwide address at the turn of the year (2016-17) than it became a viral meme

The Anti “Halalification” Crusade of Chinese Netizens | What’s on Weibo Discussions on the so-called ‘halal-ification’ of China have flared up after delivery app Meituan introduced separate boxes for its halal food deliveries this week. Many netizens see the growing prevalence of halal food in China as a threat to a unified society and say that featuring special services for Muslims is discriminatory against non-Muslims.


Energy, Environment, Science And Health

Late Chinese geophysicist posthumously honored – Xinhua The Communist Party of China (CPC) Central Committee on Sunday decided to posthumously honor late geophysicist Huang Danian as an “outstanding CPC member.”


Food And Travel

Norway’s Salmon Run Into China Spawns Success – Caixin Global“China is currently producing a similar species to Atlantic salmon, the rainbow trout. This is mainly produced in freshwater bodies and not in the ocean like Norwegian salmon,” said Sigmund Bjørgo, director of the Mainland China and Hong Kong department at the Norwegian Seafood Council.


Books And Literature

Announcing the LARB China Channel – BLARB Thanks to a generous seed grant from the Henry Luce Foundation as well as support from the Los Angeles Review of Books, the “China Blog” will be morphing into a freestanding magazine within the magazine



Quick Take: New Commuter Rail Planned to Link Beijing to Xiongan New Area – Caixin Global State-owned China Railway Design Corp. did not reveal in its initial announcement how many stops are planned along the 100-kilometer (62 miles) line, nor how long it will take to build. But it will stretch from the town of Huangcun in the Daxing district in northern Beijing to the east of Xiongan.

“Walk on Eggshells, and Avoid Trouble Altogether”: Two Deported Foreigners Share Their Story | the Beijinger “People should know that they’re willing to go into your office, and it doesn’t matter how respectable your work is,” one of the deported expats, who hails from Canada and spoke on condition of anonymity, tells the Beijinger about how China’s anti-drug efforts extend far past random bar raids.

Sacred Lakes Threatened by China’s Growing Capital – The New York Times The government’s expansionist ambitions are clearest here in what will be known as Xiongan (pronounced Sheong-an) New Area. Three times the size of New York City, it is to be built from scratch out of the delicate swath of meres and marshlands of Baiyangdian, in Xiongan county.

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