"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner
Happy Wednesday…it is a bit of a slow China news day so today’s newsletter is more on the quick and dirty side. I would love to know how Xi’s briefers explain Donald Trump’s poisonous Phoenix rally (Axios’ coverage of it) to him. An old school Communist Party leader like Xi may really believe that he is seeing signs that capitalism is destroying itself. Meanwhile a top propaganda item today is an interpretation of Xi’s comments at the July 26 meeting of ministerial and provincial-level officials that China is still in the primary stage of Socialism (社会主义初级阶段是最大国情). History does not look like it has ended…
The Essential Eight
1. Another Round Of US Sanctions On Firms And Individuals Doing Business With North Korea
Comment: Beijing is not happy as it thought it had bought itself cover by approving the latest round of UN sanctions. But the latest targets are relatively small fish, so far no significant PRC financial institution has made the list.
U.S. hits Chinese and Russian companies, individuals with sanctions for doing business with North Korea – The Washington Post:
The sanctions announced Tuesday by the Office of Foreign Assets Control were predominantly against Chinese companies that have dealt with North Korea by purchasing and selling coal, oil and mineral resources, or have provided banking services that made the transactions possible.
The sanctions also hit two companies that arranged for North Korean laborers to build statues in foreign countries. Tillerson has been urging countries that have relations with North Korea to downsize Pyongyang’s diplomatic presence and refuse to hire North Korean labor. Overseas labor is a source of revenue for the North Korean government, and the Treasury Department contends that some of the laborers’ income helped finance ballistic missile testing.
Treasury Targets Chinese and Russian Entities and Individuals Supporting the North Korean Regime:
OFAC also designated China- and Hong Kong-based Mingzheng International Trading Limited (“Mingzheng”). Mingzheng acts as a front company for UN- and U.S.-designated Foreign Trade Bank (FTB), and it has provided financial services to FTB by, among other things, conducting U.S.-dollar denominated transactions on behalf of FTB. FTB is North Korea’s primary foreign exchange bank; it was designated by the United Nations on August 5, 2017 as part of UNSCR 2371. OFAC designated FTB in 2013 for facilitating transactions on behalf of North Korea’s proliferation network, including for UN- and U.S.-designated Korea Mining Development Corporation and Korea Kwangson Banking Corporation. On June 29, 2017, OFAC designated Mingzheng’s owner, Sun Wei.
China urges US to correct secondary sanctions ‘mistake’ – People’s Daily Online:
“China opposes unilateral sanctions out of the UN Security Council framework, especially the ‘long-arm jurisdiction’ over Chinese entities and individuals exercised by any country in accordance with its domestic laws,” the Chinese embassy in Washington said in a statement on Tuesday.
Can the U.S. Scrap Its Trade Deal With South Korea? – WSJ:
“Both sides have reached no agreement,” Trade Minister Kim Hyun-chong said after the daylong talks ended in Seoul on Tuesday. Mr. Kim said both sides reaffirmed their opposing views: The U.S. insists on modifying the deal, but South Korea opposes any change without recommendation from an objective joint study.
Comment: This is not how you strategically treat a crucial ally, especially one whose businesses are suffering in the PRC because of its relationship with the US:
Are South Korean Carmakers in China Running on Empty? – Caixin Global International politics, market challenges and branding issues are now haunting the companies, whose vehicles once enjoyed a major following in China, the world’s largest auto market. Year-on-year China sales for Hyundai Group and Kia Motor Corp. each plummeted more than 60% each in June, according to South Korea’s Yonhap News Agency. It was the sixth consecutive month for sales setbacks.
Beijing’s Campaign Against South Korean Goods Leaves Chinese Looking for Work – WSJ “This anti-Korean sentiment doesn’t do us any good,” said one 26-year-old Kia employee surnamed Chen, who felt that punishing Kia was threatening Chinese jobs. Outside a company housing complex, Kia staff said they were working as few as three days a month on half pay in July
2. Where Is Wang Qishan?
Comment: Looks like Wang Qishan’s last appearance in the media was 22 days ago per this page from the CCTV site and this page at the People’s Daily site. Is Wang in trouble as Guo Wengui would like us to believe, or is he working on bagging another tiger head for his wall, on the way to becoming premier at the 19th Party Congress?
3. Investment In Science To Become A Superpower
The world’s next fastest supercomputer will help boost China’s growing sea power | South China Morning Post:
The machine will be based on the coast of Shandong province to process the data collected from the world’s oceans, according to scientists briefed on the project.
An Hong, professor of computer science with the University of Science and Technology of China in Hefei and a member of a committee advising the central government on high performance computer development, said the world’s first exascale computer would have a dedicated mission of helping China’s maritime expansion.
Chinese premier wants innovation to play bigger role in economic transformation – Xinhua:
During an inspection of the Ministry of Science and Technology, Li said the “torch of innovation shall be passed on in all sectors of society, and the benefits of innovation shall be shared by all.” 李克强考察科技部：实施创新驱动发展 增强科技创新能力
4. Celebrating Matriculation To China’s Elite Universities
Students paraded in streets after being accepted into China’s top universities | South China Morning Post:
The 40-minute parade took place last Friday on the streets of Bobai county in Guangxi province, the Southern Metropolis Daily reported on Tuesday…
A truck at the front of the procession carried red banners bearing the names of the four students and the top universities they were admitted into – Peking University and Tsinghua University, both in Beijing.
Comment: Story includes video of the procession. A modern twist on the celebrations after passing the imperial examinations?
5. J. Michael Cole Really Does Not Like The Book “The Retreat of Western Liberalism”
The Liberals’ Great Failure on Taiwan: A Response to Edward Luce – Taiwan Sentinel:
It is grand time that liberals recognized that the defense of Taiwan is a worthy liberal enterprise. That conservatives have tended to take the lead on the matter isn’t so much that support for Taiwan is an illiberal endeavor as the fact that liberals have tended to be missing in action. If Mr. Luce were serious about the need to re-energize liberalism worldwide, he would surely recognize that opposing revisionism and the territorial expansion of authoritarian regimes — not helping them by broadcasting their propaganda to an even wider audience — is the way to go about it. Sadly, by misrepresenting the situation in the Taiwan Strait and turning logic on its head, by turning the defense of democracy into an illiberal project, Luce fatally undermines his argument. So much so, in fact, that I am somewhat reluctant to read the rest of the book.
6. Interview With Founder Of United Family Healthcare
What ails China’s healthcare system? Roberta Lipson has a detailed diagnosis – SupChina
You asked the question why it is so hard for foreigners to penetrate the healthcare industry. Part of it might be the regulatory issues, but part of it also might be that healthcare is really complex. No matter where you are, the regulatory environment is complex. Managing healthcare in a responsible way is really complex. Managing it in an environment that’s new to you is even more difficult. Then the question is, what do foreign companies bring to the table? Are they bringing capital? I’m sure there is a lot of local capital for whatever needs to be done in China. Are they bringing a management model? You can’t just pack a management model in a box and send it off for someone to unpack. The foreign investor must have a very clear management model and actually be here to implement it. Not a lot of foreign healthcare providers have the bandwidth to do that. Are they sending talent or doctors? Maybe or maybe not. It is difficult to find talent that wants to pick up and move to another environment. Are they bringing new medications or therapy approaches? Well, the government has to approve those new therapies in order for them to be implemented.
7. Chinese Money And US Real Estate
How Chinese Real Estate Money is Transforming the San Francisco Bay Area – MacroPolo:
The future of capital controls and EB-5 reforms loom large. If the controls ease up, we can expect to see another rash of property development deals, though possibly in smaller projects that are less likely to draw the attention of Chinese regulators. And EB-5 reform that breaks the visa processing logjam would both free up funds for more massive redevelopments and open the door for thousands more immigrant homebuyers.
But even looking at just the projects currently underway—the mega-developments, skyscrapers, and Palo Alto homes—the newest wave of Chinese arrivals have already left an indelible footprint here on Californian soil, one that their predecessors a century ago could hardly have imagined.
Chinese buyers retreat from global property market as Beijing restricts deals | South China Morning Post:
Chinese were the biggest foreign investors in US and Australian real estate last year, accounting for 25 per cent of deals in the US and 26 per cent in Australia.
FinCen expands beneficial owner reporting rules for real estate – The FCPA Blog – The FCPA Blog:
The Treasury Department’s Financial Crimes Enforcement Network added Honolulu Tuesday to a reporting program for real estate deals involving cash transactions.
8. Cold War Returns To The Internet?
Dispute along cold war lines led to collapse of UN cyberwarfare talks | The Guardian:
Thirteen years of negotiations at the United Nations aimed at restricting cyberwarfare collapsed in June, it has emerged, due to an acrimonious dispute that pitted Russia, China and Cuba against western countries.
Business, Economy And Trade
China tells prosecutors to get tough on ‘financial ‘crocodiles’ … and make it snappy | South China Morning Post The Supreme People’s Procuratorate on Wednesday issued a strongly worded directive ordering prosecutors across the country to get tough on “those financial crocodiles that make waves [in the markets]” and the “moles” who engage in insider trading and money-for-power deals.
Quick Take: China to Roll Over Debts That Back Sovereign Fund – Caixin Global China said it will issue 600 billion yuan ($90.1 billion) of “special government bonds” to roll over a debt that backs the country’s sovereign wealth fund.
China’s Fosun invests in local version of bitcoin tech blockchain – Reuters Chinese conglomerate Fosun Group has made a foray into blockchain with an investment in the Shanghai startup behind Onchain, a local version of the much-hyped technology that underpins virtual currencies such as bitcoin.
China money rates hit 5-month high as liquidity stress flares again – Reuters “We believe a number of factors will keep interbank liquidity fairly tight into the next macroprudential assessment (MPA) at the end of September,” economists at Nomura said in a report, citing a large amount of Negotiable Certificates of Deposit (NCDs) maturing this month and next as well as the low excess reserve ratio of commercial banks.
Senior Executive at China Minsheng Bank Targeted in Graft Probe – Caixin Global Several sources close to the matter told Caixin that investigators targeted Lin for his suspected role in cases involving other financial institutions he worked for before joining Minsheng. Lin has been prohibited from leaving the country since June, sources said.
北京将建成全球新兴机器人创新中心 产业发展蓝图浮现-产业·期货-新闻-上海证券报·中国证券网 Beijing planning to build a global robotics innovation center by 2025
FACT CHECK: Is Bannon’s Claim That Economic Warfare Is In Chinese ‘Literature’ True? – The Daily Caller A review of prominent Chinese nationalist literature confirms Bannon’s claim about the presence of “economic war” themes and tactics against the U.S. These themes are not present in “all” Chinese literature, of course — but are found throughout their political literature.
治理理财产品误导销售、私售飞单，银监会又发新规！_第一财经 CBRC mandates that all sales of WMP be recorded with audio and video to ensure they are not being pitched improperly
ICO企业被查 薛蛮子称90%项目不靠谱 – 综合 – 新京报网 Chinese government now also starting to investigate ICO deals
Chinese court awards New Balance $1.5 million in trademark case – Reuters The amount of compensation, though small by international standards, is according to lawyers one of the highest to be awarded to foreign companies in trademark disputes in China.
Politics And Law
昔日重庆被劳教“村官”任建宇转型执业律师_政经频道_财新网 Caixin on Ren Jianyu becoming a lawyer. Ren was once a Chongqing village official who 6 years ago was sent to reeducation for labor for something he posted online, then successfully appealed
Fewer Chinese citizens filing petitions against authorities as Beijing tries to curb use | South China Morning Post “This number only indicates the drop in petitions received by the letters and calls bureaus in the country, but not petitions in a whole,” he said. “Many major departments have their own petition receiving offices, and people often turn to those offices after they lose hope in the letters and calls bureaus.”
Foreign And Defense Affairs
Family of Chinese scholar missing in Illinois asks Trump for help – Reuters Yingying Zhang, a 26-year-old visiting scholar to the University of Illinois from southeastern China, disappeared on June 9. Police believe Zhang is dead, although no body has been found.
军报:对“敌人没胆入侵”盲目自信或致不战自败_军事_解放军报 Comment: PLA Daily warns of security “grey rhinos”…Michele Wucker 米歇尔·渥克 ,author of The Gray Rhino: How to Recognize and Act on the Obvious Dangers we Ignore, now famous in China
中国道士“贴了一道符” 美国军舰在南海出了三次事_凤凰资讯 Comment: Daoist priest claims he placed a magic talisman in the South China Sea last year, since then the us navy has had several accidents…
Chinese-American academic loses appeal against Singapore expulsion | South China Morning Post Huang Jing – a US citizen who worked at leading postgraduate school the Lee Kuan Yew School of Public Policy – and his wife were stripped of their Singapore permanent residency status on August 4. Authorities accused him of working as “an agent of influence of a foreign country”, and trying to use his prominent position to influence Singapore’s foreign policy.
U.S. Shift Boosts Afghans, Risks Pushing Pakistan Toward China – WSJ Yet analysts said the new pressure on Pakistan will deepen Islamabad’s partnership with China, as will Mr. Trump’s call on Monday for India to “help us more with Afghanistan.”
Hong Kong, Macao And Taiwan
Political prisoners unite Hong Kong’s fractious opposition – CNN The jailing of the trio is just the latest in a series of ongoing acts of “lawfare” by Beijing against dissent in Hong Kong, including the recent legal action to disqualify six duly elected pro-democracy legislators. It continues the very disturbing trend of the politicization of Hong Kong’s court system, with the government pushing the courts to serve Beijing’s political agenda.
Tech And Media
Baidu’s facial recognition solution under testing at Beijing Airport – TechNode Under the deal, Baidu is now running tests of its AI-based facial recognition solutions at the control centers of the airport, mainly for staff admission and data monitoring. This means the testing is only being used for the ground crew. But if everything goes well, it is highly possible that Baidu’s facial recognition technology would go further for support boarding passes, baggage claim or other scenarios of passenger ID verification. // Comment: Was any of this tech developed at Baidu’s research center in Silicon Valley?
Society, Art, Sports, Culture And History
Lander to Sell 54 Properties to Build Sports Villages – Caixin Global Lander’s Tonglu sports village, located near Hangzhou, will be built on 164 acres and focus on soccer — and it will even include soccer-themed hotels. This particular complex hopes to profit from China’s increasing enthusiasm for the sport, which has among its fans President Xi Jinping.
Energy, Environment, Science And Health
Powerful typhoon Hato kills at least 3 in Macau – The Washington Post The typhoon came within 60 kilometers (37 miles) of the nearby financial center of Hong Kong before heading westward into mainland China, where it was gradually weakening.
China launches first round of marine inspections – Xinhua According to the State Council, China’s cabinet, inspections will focus on reclamation processes as well as marine resource exploitation and utilization. 解决围填海“失序、失度、失衡”等问题–首次国家海洋督察启动
10 Museums in 10 Days? A Chinese Start-Up (Virtually) Gives Children a Tour – The New York Times The families each paid Aha School, an education start-up based in Shanghai that produced the shows, the equivalent of $2.85 to watch, and the company is donating the broadcast feed to 174 rural classrooms as a public service. “The children here don’t have access to any museums, let alone famous ones,” Ma Xiaoyan, a teacher at the Akeli Center School in a rural corner of the southwestern province of Sichuan, said by telephone. “For many of them, even going to the closest town is difficult because their families don’t have money for travel.”
China’s VIPKid Is Said to Raise Funds at $1.5 Billion Valuation – Bloomberg VIPKid, an online education company that matches Chinese students with North American teachers, was valued at more than $1.5 billion in a round of funding from investors including Sequoia Capital China and Tencent Holdings Ltd., according to people familiar with the matter.
Beijing may move up to half million people to Xiongan New Area – Global Times A recent report published by the Chinese Academy of Social Sciences suggested that the Xiongan New Area, a new development area south of the capital, should keep its initial population within 1 million, and within 5 million in the long term. The report said that the priority for the Xiongan New Area will be to serve as a new home for Beijing’s “non-capital” functions. Therefore, the development of the area should avoid a surge in population and the “metropolitan disease” that afflicts Beijing.
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