The Sinocism China Newsletter 03.23.17

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

The Friday, March 24 Big Daddy Dough’s China Rap Album Launch Party and Charity Fundraiser is at 6:30 PM at the Eighteenth Street Lounge in Washington, DC. You can register here.

There should be a good DC-China crowd in attendance. I am hoping to make it.

Just links today:


1. China Bets on Sensitive U.S. Start-Ups, Worrying the Pentagon – The New York Times Chinese firms have become significant investors in American start-ups working on cutting-edge technologies with potential military applications. The start-ups include companies that make rocket engines for spacecraft, sensors for autonomous navy ships, and printers that make flexible screens that could be used in fighter-plane cockpits. Many of the Chinese firms are owned by state-owned companies or have connections to Chinese leaders. The deals are ringing alarm bells in Washington. According to a new white paper commissioned by the Department of Defense, Beijing is encouraging Chinese companies with close government ties to invest in American start-ups specializing in critical technologies like artificial intelligence and robots to advance China’s military capacity as well as its economy. // Comment: Long overdue, wish that white paper would see the light of day

Related: A.I. Expert at Baidu, Andrew Ng, Resigns From Chinese Search Giant – The New York Times Comment: Not suggesting this is related to the above report but clearly Baidu’s AI lab in Silicon Valley has started to raise concerns in some parts of the US government…// The company now has more than 1,300 employees dedicated to A.I. In a signal of just how critical the efforts are to the company, it said in January that it had hired Qi Lu, a former executive at Microsoft and an A.I. specialist, to become the chief operating officer. // Comment: Ng’s resignation letter on Medium, doubt it will be the last of the American employees of the lab

Related: Tencent Hires Baidu’s Big-Data Director, Betting on Artificial Intelligence – WSJ In a sign of its ambition to compete more in artificial intelligence, Tencent Holdings Ltd. says it has hired Zhang Tong, a Stanford-trained researcher who formerly led Baidu Inc.’s Big Data Lab, to oversee its fledgling AI program. Dr. Zhang also worked on artificial intelligence at Baidu, as part of his lab-director role there.

2. As Hong Kong Chooses Its Next Leader, China Still Pulls the Strings – The New York Times Hong Kong’s next chief executive will be selected on Sunday by a committee stacked with supporters of the Chinese government rather than by a free election. With a victory by Beijing’s favored candidate all but a foregone conclusion, some are raising a difficult question: Did pro-democracy demonstrators miscalculate when they rallied against Beijing’s offer of a popular vote three years ago?

Related: Is it too late to save Hong Kong from Beijing’s authoritarian grasp? | The Guardian – by Howard W French When Britain handed over control to China in 1997, Hong Kong was a beacon of freewheeling prosperity – but in recent years Beijing’s grip has tightened. Is there any hope for the city’s radical pro-democracy movement?  // Comment: It sure looks like it

3. Jared Kushner’s White House Role Complicates Skyscraper Deal – WSJ ew details of the company’s plans were provided to The Wall Street Journal by some of these people and confirmed by a Kushner spokesman. Anbang Insurance Group, a big Chinese insurer with strong political and family connections to the government in Beijing, is in advanced talks to provide as much as half of the $2.5 billion in equity for the planned redevelopment, according to people close to the negotiations. But worries over a conflict of interest, given Jared Kushner’s role in the White House, could torpedo Anbang’s participation. // Comment: So much for the Anbang “denial” last week

Related: Inside the Troubled Kushner Tower: Empty Offices and Mounting Debt – Bloomberg Kushner Cos.’ current situation — with rising debt costs that eclipse 666 Fifth’s income — now looks familiar, and it’s once again casting about for a savior. // Comment: A Sketchy Chinese deal looks even more important for the Kushners

Related: China’s HNA Is Buying a NYC Office Tower for $2.21 Billion – Bloomberg Chinese conglomerate HNA Group Co. is leading a deal to acquire Manhattan’s 245 Park Ave. for $2.21 billion, one of the highest prices ever paid for a New York skyscraper, two people with knowledge of the negotiations said.  // Did the Kushner’s pitch HNA too?

4. Senior CPC leader calls for media integration – Xinhua Liu Yunshan, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, made the remarks during an inspection tour of the People’s Daily. Liu urged staff on the newspaper to make more new media products and extend their influence to the Internet. He also stressed that new media should shoulder social responsibility and guide online public opinion…”Media integration needs to abide the CPC’s ideology and the Marxist idea of the press,” Liu said. “Content is the key to the development of media integration, and more new media workers must be trained.” // Comment: 刘云山:为党的十九大召开营造良好舆论氛围 and CCTV Evening News report on his visit [视频]刘云山在人民日报社调研 Expect harsher media controls between now and the 19th Party Congress

5. Grisly Murder Sheds Light on Gangs Who Kill Workers for Compensation – Caixin Global The 30-year-old from a rural village in Shaanxi province was murdered by his associate and several accomplices in August 2014, who then used his corpse to stage a fake accident and claim over 1 million yuan in compensation from the construction company by posing as the victims’ relatives. His grisly death and what followed echoes stories of murder frequently heard in construction sites and coal mines across China.

6. Beijing Tightens Tax Rules in Bid to Contain Runaway Housing Prices – Caixin Global Beijing has made it harder for people who are not officially registered as local residents to buy homes in the city by tightening tax-payment prerequisites. The move comes as the municipal government struggles to contain runaway housing prices.

Related: Beijing Cracks Down on School-Area Housing Bubble – Caixin Global The policy will discourage owners of residences that meet the enrollment criteria of schools dubbed as “xuequ fang”, or “school-district houses” from partitioning one property into small, unlivable cabins and selling them to different buyers, said Chen Zhi, secretary general of the Beijing Property Association. A room of two square meters in a courtyard house in Financial Street in the city’s west was sold for 260,000 yuan ($38,000) last year and a three-square-meter-corridor in Qianmen to the south of Tiananmen Square was priced at 900,000 yuan, the official Xinhua News Agency reported previously.

7. Outcomes of China’s “Two Sessions:” A Conversation with Carl Minzner by CSIS  In this episode, we sit down with Carl Minzner to discuss the outcomes and significance of this year’s “Two Sessions” and look ahead to the 19th Party Congress this fall.

8. Blackwater founder to open bases in Xinjiang – Global Times via People’s Daily Online Military company Blackwater’s founder plans to build new bases in China, a move to support the One Belt and One Road initiative. Frontier Services Group (FSG), a company that helps businesses operating in frontier markets overcome complex security, logistics and operational challenges, is planning to built two operation bases in Northwest China’s Xinjiang Uyghur Autonomous Region and Southwest China’s Yunnan Province, Erik Prince, executive chairman of the firm, told the Global Times in mid-March.  // Comment: Erik Prince, brother of Trump’s Secretary of Education Betsy DeVos


China Ramps Up Charm Offensive With U.S. Business Leaders – WSJ “We are obviously seeing very positive rhetoric for how China sees its potential future place in the economy,” said Jake Parker, vice president of the U.S.-China Business Council, although he added that companies were hedging their bets until they saw concrete policy changes. China also has been seeking to open lines of communication. Wang Qishan, a member of the ruling Politburo Standing Committee and a top ally of Chinese President Xi Jinping, gathered with a group of U.S. and European executives in a private meeting Monday, according to two people briefed on the matter. // Comment: Show them the money, not just platitudes

Tiny Team Wants to Unlock China’s Wealth Secrets – Bloomberg Gan Li’s quest to bring new openness to the Chinese economy ran into trouble again during a survey in June of 2013, when suspicious villagers in the southwestern province of Guizhou seized his students’ computers. But by then, Gan’s growing reputation had helped strengthen his relationship with financial officials in Beijing. He flew the next morning to the capital to meet with a department director at the statistics bureau to ask for help. Calls were made to the village cadres, who promptly returned the equipment and apologized.

China has regained economic stability, but clues are in the weeds of finance | George Magnus The catalyst could be capital flight, property prices, political or a trade shock in which there’s a scramble to withdraw liquidity. No Lehman moment as such in a state controlled financial system, but most likely the precursor to a much more difficult and protracted growth slowdown. No one can time this. The good news is it’s not imminent or likely before the Party Congress. The bad news is that it’s probably not more than 2-3 years away if there isn’t a material change in economic policy and management.

Henan Considers Credit Default Swaps as Debts Mount – Caixin Global Comment: Henan Credit Default Swaps…If you are considering buying them call me first  //  The government of Henan is planning to set up a financial institution to sell credit default swap (CDS) contracts in a bid to offer credit enhancement services to SOEs, including the largest coal producers and steel makers in the province, including Zhengzhou Coal Industry Group Co. Ltd., and Anyang Iron & Steel Group Co. Ltd., to lower their financing costs, according to a document posted on the official website of the Henan provincial government.

Sinology by Andy Rothman – Trump, Trade & China Part II In this edition of Sinology, we will explain that the U.S. has benefited significantly from trade with China, and that American firms have done well in that market. We acknowledge that a rapid rise in U.S. imports from China has added to labor market volatility, especially in labor-intensive sectors, but we explain why protectionist policies are not the right response.

Auto Makers Target China as New U.S. Trade Rules Loom – WSJ Sales of foreign-made cars accounted for just 4% of China’s 24.4-million vehicle market in 2016, which is nearly unchanged from 15 years ago, according Michael Dunne, founder of consultancy Dunne Automotive Ltd. “There might as well be a sign saying: Imports not welcome,” Mr. Dunne said.

China Group in Front for Major New York Subway Contract – Caixin Global A consortium led by CRRC Corp. Ltd. and Canada’s Bombardier is the lead candidate to win a major contract to supply subway cars to New York City, extending a recent round of global wins for the aggressive Chinese rail firm as it seeks to export its technology.

Chinese Firms Help to Update Tehran Subway – Caixin Global Chinese state-owned train makers announced two separate deals to supply subway cars to Iran, which is trying to bolster one of the largest urban rail systems in the Middle East.

China’s Love Affair With Leverage Is Tricky to Break, PBOC Finds – Bloomberg First in the line of fire was the bond market, which had its worst month since 2010 in December as officials tightened up liquidity in money markets. This week, smaller banks got caught in the cross hairs as some were said to have missed debt payments amid a surge in interbank rates, spurring an injection of emergency cash from the central bank. And more bond pain is in store thanks to a shift in collateral rules.

Trust-Company-Managed Assets Top 20 Trillion Yuan in 2016 – Caixin Global Since the end of September, assets managed by the trust industry increased 11.3% to 20.22 trillion yuan, according to a report released Wednesday by the China Trustee Association.

Detained Manufacturer Admits to Providing Substandard Subway Materials – Caixin Global Wang Zhiwei, owner of Shaanxi Aokai Cable Co. Ltd, confessed on camera to using inferior products in an attempt to reduce costs and increase profits, according to a video released Tuesday by the city government’s Internet Information Office.

China tells cornerstones to bring money home in blow for smaller HK IPOs: sources | Reuters The State Administration of Foreign Exchange (SAFE) has informed investment bankers and lawyers of the rule, borne out of government concern that cornerstone investment allowed large amounts of funds to leave the country and contribute to a decline in the value of the yuan, the people said.

Zhang Xin Appointed Deputy Administrator of Foreign Exchange Regulator – Caixin Global Zhang Xin, deputy director at the Shanghai branch of the People’s Bank of China (PBOC), has been appointed as deputy administrator of the State Administration of Foreign Exchange (SAFE), sources familiar with the matter told Caixin.

MSCI Shuns Most of China’s $7 Trillion Market in Index Proposal – Bloomberg Only 169 mainland China-listed companies will be considered for inclusion by benchmark gauges, down from 448 under a previous proposal, and all will be large-cap shares currently accessible to foreign investors through exchange links with Hong Kong.

China-led AIIB approves 13 new members, Canada joins | Reuters The approved applicants include eight non-Asian countries – Canada, Belgium, Ethiopia, Hungary, Ireland, Peru, Republic of Sudan and Venezuela – and five regional members – Hong Kong, Afghanistan, Armenia, Fiji and Timor Leste.

ZTE Pleads Guilty to Violating Sanctions on Iran Tech Sales – Bloomberg The company agreed to pay $892 million in fines and forfeitures and be subject to an additional $300 million in penalties if it violates the terms of the settlement. A federal judge in Dallas accepted and approved the plea deal on Wednesday. Although it’s the largest U.S. criminal fine against a Chinese company, an obscure provision in the plea agreement may deny the Justice Department the kind of cooperation that it typically receives from such deals.


Chinese president Xi Jinping is only halfway through his rule yet China’s already trumpeting his legacy — Quartz Xi is set to start his second five-year term with the party congress meeting this fall. In the past few months, China’s propaganda machines have been busy churning out videos crafting his personal image. The latest installments, receiving some of the heaviest promotion in years, arrived this week in a series of slick segments looking back at Xi’s three-decade career. On March 19 state broadcaster CCTV aired the first of them, in a three-part series entitled Beginner’s Mind

China Looks to Disqualify Xi Doubters Ahead of Crucial Congress – Bloomberg For the first time local party committees are using “negative lists” — including everything from bribe-taking to involvement with illegal construction projects — to screen delegations to the 19th Party Congress

Why PR chiefs are running Communist Party branches at China tech firms | South China Morning Post At the meeting, Zeng said Sohu was launching a campaign to learn the party charter. Wen Gao, deputy head of the party committee at NetEase, said the total number of the internet company’s party members reached 223 last year, 6.4 times more than the previous year. In contrast, tech giants that were expanding their business overseas, such as Huawei and ZTE, were keeping their party committees low profile, Liu said. “It’s not good for building up their international image if they have strong state involvement,” he said.

Chinese netizens praise police for admitting use of torture on suspect – Global Times Chinese netizens praised police from a county in Central China’s Henan Province for admitting online that some of their officers may have been involved in torturing a suspect they arrested in connection with a telecom scam, who eventually died. The Wenxian county procuratorate has filed charges against the officers and are conducting further investigation, said the notice issued by the county public security bureau on its Sina Weibo account on March 13.

Novel exploring excesses of 1950s land reform draws criticism from Maoists – Global Times A recent historic novel, Soft Burial, came under attack because it appears to sympathize with the landlords during the land reform in the 1950s. China’s Maoists, who have become increasingly active online, have relentlessly criticized the book.

State Council Releases Legislative Plan for 2017 – NPC Observer The State Council on Monday released its legislative plan for 2017 (2017 Plan). Because of this Blog’s focus, this post will only take a look at those projects in the 2017 Plan that will require the approval of the National People’s Congress (NPC) or its Standing Committee (NPCSC)—that is, proposed new laws or revisions of existing laws.

Beijing Poet’s Wife ‘Loses Sanity’ Amid Evictions, Death Threats to Family-RFA Beijing poet and political activist Wang Zang, who was detained in 2014 for posting a performance art selfie in support of Hong Kong’s pro-democracy movement, says his wife has developed severe mental health problems following serial attempts to evict his young family from their home.

How I Help Pull China’s Rural Poor out of Poverty | Sixth Tone An Ping is the pen name of a village official charged with poverty alleviation in eastern China.

中央三部委为何给这几百名干部敲警钟? 一年一度的西部地区和其他少数民族地区干部挂职锻炼工作又开始了,200多名干部正在中央统战部进行短期培训。 政知道(微信ID:upolitics)注意到,这个挂职锻炼和其他的挂职项目有一些不同,比如这是中央层面各种挂职锻炼项目中规模最大的,目前已经有近万名干部参加;也是时间最长的,从1990年开始至今;主办方包括中组部、统战部和国家民委,等等。

党史国史研究中抵制历史虚无主义的三个关键抓手-来源:《红旗文稿》2017/6:宋月红 (作者:中国社会科学院当代中国研究所理论研究室主任、研究员


U.S. Preparing Cases Linking North Korea to Theft at N.Y. Fed – WSJ Federal investigators are focusing on Chinese individuals or businesses who allegedly helped North Korea orchestrate the theft, according to the people familiar with the matter. U.S. Treasury authorities are considering sanctions against the alleged middlemen, these people said, an approach the government is increasingly using to go after suspected lawbreakers who are unlikely to land in U.S. custody.

Chinese officials warned US bomber – CNN The US plane was flying 70 nautical miles southwest of South Korea’s Jeju Island. The area sits in the controversial Chinese East China Sea Air Defense Identification Zone, which Beijing declared in 2013. The zone covers airspace and islands that are also claimed by Japan.

Eleven countries signed a letter slamming China for torturing lawyers. The U.S. did not. – The Washington Post diplomatic sources say the decision not to sign the letter appears to have been made within the State Department’s internal bureaucracy, rather than by Tillerson or any of his team. That may be a function of the chaotic nature of the transition since Trump took over — with a dearth of people in senior positions — and the lack of a clear strategy in how to deal with China, rather than a sign of fundamental shift in stance.

Understanding the Belt and Road Initiative – Lowy Institute Report Peter Cai

中国一带一路网 Comment: the official “Belt and Road Portal” has launched

China’s outrageous offer to India for settling the border dispute: Give us all the territory — Quartz Both India and China are now experiencing new levels of nationalism. Territory is at the core of this nationalism, making the exchange of territories unpalatable to public opinion in both countries. If the package entails the withdrawal of the two territorial claims, it might win a modicum of support in both countries. But this is clearly not so. What Dai Bingguo is now suggesting is that India gives up its claim on Aksai Chin, and also cede the strategically vital Tawang tract.

China denies reported construction plan for Huangyan Island – Xinhua The reported plan to build an environmental monitoring station on Huangyan Island in the South China Sea is not true, a foreign ministry spokesperson said Wednesday in Beijing.

46 military officers punished for discipline violations – Xinhua These violations include false reimbursement, using public funds to treat personal guests, receptions and feasts exceeding set standards, and official cars used for private purposes, among others, according to a report of the discipline agency under the Central Military Commission.

Experts Worry the U.S. Is Losing the Race for Arctic Power – Bloomberg Russia and China are investing in a warmer, more open Arctic. The U.S. is thinking about it.

Japanese navy boosts overseas force projection capability with second big helicopter carrier – Channel NewsAsia Accompanied by a military band, Maritime Self Defence Force commanders took possession of the 248 metre (813.65 ft) long vessel at the Japan Marine United shipyard in Yokohama near Tokyo, where it was docked next to its sister ship the Izumo.

China stokes grievance against Seoul at its peril – FT $$ Beijing continues to use economic nationalism in its disputes with other countries because it believes the pressure is effective; in the past it has been quite successful in forcing those countries to back down. Wiser heads would be wary of mixing such strategic and commercial imperatives, while stoking nationalism at home. Not only does this make for difficult trading relations, but those same nationalist forces could ultimately prove hard to control.

Australia rejects China push on Silk Road strategy-FT $$ Australia has rejected a Chinese push for a formal alignment of Canberra’s A$5bn state infrastructure fund with Beijing’s New Silk Road strategy, over concerns it could damage relations with the US at a time when it is asking Washington to do more in the region.

USS Carl Vinson Shadowed by Russian, Chinese Spy Ships Near South Korea – Breitbart The U.S. aircraft carrier USS Carl Vinson, currently deployed in waters near South Korea, is being shadowed by both a Chinese spy ship and a Russian spy ship, a defense official told Breitbart News.

Official think-tank reiterates China’s Tawang claim before Dalai Lama visit – India Today A Chinese scholar, who advises Beijing on Tibet, said on Thursday that Tawang in Arunachal Pradesh was “a part of China” and that the Dalai Lama’s upcoming visit to Tawang would “hurt” relations between India and China. China was also likely to choose a successor to the 14th Dalai Lama from within China, said Lian Xiangmin, Director of Institute of Contemporary Tibetan Studies at the China Tibetology Research Centre (CTRC), an influential official think-tank that advises the government on its Tibet policy

China broadcasts marine forecasts for three Nansha reefs – Xinhua Based on the forecasting information provided by the State Oceanic Administration (SOA), the Guangzhou coastal radio station broadcasts forecasts for waves, tides, ocean temperatures, winds and tropical cyclones on the Yongshu, Meiji and Zhubi reefs, said Bai Yiping, deputy director of the SOA South China Sea forecast center.

如何看待西方资本主义世界的新变化?- 来源:《红旗文稿》2017/6  作者:丁原洪 (作者:资深外交家、外交部政策研究室原主任)


Taiwan Launches Homegrown Submarine Program to Counter China – Bloomberg Tsai touted the contract with CSBC Corp., Taiwan, on Tuesday during a visit to a naval base in the southern city of Kaohsiung as a necessary step to improve the island’s defenses. The company plans to deliver the first diesel-electric model in 2024, with deployment expected a year or two later.


Airbnb’s new Chinese name shows how hard it is localize – TechNode The most common reaction has been the fact that the Chinese name is actually quite awkward to say and just sounds plain weird. This has been accompanied by the inevitable “I could do it better,” with some actually good suggestions.

Microsoft Modifies Windows 10 for China’s Government – WSJ Microsoft declined to say how the software was modified, but in general China’s government is concerned about technology products that could contain hidden “back doors” to enable foreign surveillance.

After Google Phone Fizzles, Huawei Turns to AT&T for U.S. Expansion — The Information he smartphone maker is in the process of getting its homegrown Chinese mobile chipset accredited by AT&T in the U.S., an early but significant move in a market it has so far failed to crack, people familiar with the situation said.

Tencent Warns of Risks Even as Profit Jumps – WSJ While Tencent’s shares fell 1.6% ahead of the company’s earnings announcement, the company’s market capitalization of roughly $270 billion makes it the world’s most valuable emerging-market stock. Rival Alibaba’s market cap stands at nearly $261 billion

Tencent-led Funding Said to Value Video App at $3 Billion – Bloomberg Kuaishou, whose platform is popular with rural communities and migrant workers, has raised $350 million in a funding round, the company said Thursday in an emailed statement.


Printing the Ancient Way Keeps Buddhist Texts Alive in Tibet – The New York Times So went a typical afternoon in one of the most revered institutions in the Tibetan world, the Parkhang printing lamasery in the mountainous heart of the Kham region. On Chinese maps, it is in the far west of Sichuan Province, across the Cho La, a vertiginous pass at 16,600 feet.

A court in China just wrote a poignant verdict on the killing of a journalist who covered domestic violence—by her husband — Quartz Feng, of the NGO, added that it’s hard to tell if the verdict in Hong’s case marks significant progress in the way that domestic violence cases are handled in China, as “there have been many court verdicts that were not made public.” Maya Wang, China researcher at Human Rights Watch, described the sentence in this case as relatively harsh, and said it would serve the purpose of deterrence, as in the past crimes carried out in intimate relationships “usually carry a lighter sentence.”


Exclusive: Three Hepatitis C Drugs from Foreign Pharmaceuticals Close to Approval, Sources Say – Caixin Global Three hepatitis C drugs from American pharmaceutical giants Johnson & Johnson and Bristol-Myers Squibb (BMS) that could cut treatment time in half will soon be available to Chinese patients, sources from the country’s food and drug authority said.

Beijing Smog to Worsen With Global Warming, Study Says | Sixth Tone Beijing’s winters are likely to become smoggier still, according to a study published Tuesday in scientific journal Nature Climate Change. The culprit is a familiar one: global warming. Climate change-induced weather patterns will more often blanket China’s capital with stagnant air, resulting in conditions that are favorable to smog, the study’s authors said.

Record-high sea levels along China’s coast ‘could spell disaster’ | South China Morning Post The SOA annual bulletin on the state of China’s marine environment noted that the average rise from 1980 to 2016 was 3.2mm per year. This was for the areas of the East and South China Sea along the nation’s 14,500km coastline.

Beijing ends hospital markups on drug prices – Xinhua Drug price were previously marked up by up to 15 percent but this will be disallowed in over 3,600 hospitals and medical institutions in the city from April 8.


Chinese premier stresses agricultural supply-side structural reform – Xinhua  In an instruction made public Wednesday to a meeting on agricultural production, Li urged local authorities to intensify work in the agricultural sector, strengthen development in rural areas and increase rural people’s incomes李克强:完善强农惠农政策 推进农业供给侧结构性改革 

Official Bludgeoned With Farm Tool Over Land Dispute | Sixth Tone  Villager bludgeoned cadre to death after group of officials came to oversee the demolition of houses in the village


China’s Fault Lines: Challenges, Instability, and Response-2049 Institute Thursday, March 30, 2017 1:30 PM – 3:15 PM EDT, DC

Follow me on Twitter @niubi for updates between newslettersSend comments/tips/complaints to

If you like Sinocism please spread the word using this link.

And if you really like Sinocism, feel free to donate some money, with Bitcoin or a credit card. Thanks.