News roundup: Insider trading, a currency glitch and fears of a tech bubble

TODAY’S TOP STORIES

Foreign exchange data glitch

First, a correction: Yesterday’s The China Project newsletter noted that the Chinese yuan (also known as the renminbi) had appeared to drop precipitously for a few hours according to XE.com, a foreign exchange rate index. As the South China Morning Post reports, “ICAP, a London-based foreign exchange brokerage and data provider, was the source of the quotes,” and that “due to the inaccuracy of a third-party feed, ICAP vendor screens also displayed an inaccuracy.” Coming after a weekend of tension between China and the U.S., which was caused by president-elect Donald Trump’s phone call to Taiwanese president Tsai Ing-wen and Trump’s tweeting about Chinese currency manipulation, the technical mistake stoked some real fears that a currency war had begun. But The New York Times states that “the related rates for offshore renminbi, which trades around the clock, were unfazed on Tuesday.”

Fears of a tech bubble in China

Tech in Asia notes that a “prominent investor and financial expert in China has warned of ‘disaster’ from a desperate gold rush into tech startup funding.” According to the Asset Management Association of China, the number of venture capital funds in China had “more than doubled to 1,216 at the end of October, up from 552 at the beginning of 2015.”

Owner of a top-performing investment firm pleads guilty to insider trading

The New York Times reports that Xu Xiang, “the reclusive owner of Zexi Investment, a Shanghai-based firm with financial results that far outperformed its rivals during the years up to and even after China’s stock market bubble burst in the summer of 2015,” pleaded guilty to insider trading and stock price manipulation. His conviction is consistent with “three big campaigns under way in China” to stop corruption, manipulation of financial markets, and large outflows of capital.

Bitcoin mining in the mountains of Sichuan

Today on The China Project, we publish a Q&A with Eric Mu, the founder of a company that runs hundreds of computers around the clock in Sichuan Province to create digital currency in a process known as Bitcoin mining. He explains the factors that make China a suitable environment for this industry, and gives his take on the potential of Bitcoin currency in China and beyond.

More China news worth watching is summarized below.

BUSINESS AND TECHNOLOGY:

• • Multinationals rethink China strategy in changing market / Caixin
    “Labor unrest at Danone, Coca-Cola and Sony factories in China has cast a spotlight on a quiet pullback by some multinationals struggling with rising costs, a slowing economy and growing competition from homegrown rivals.”
  • China is transforming Southeast Asia faster than ever / Bloomberg
    “China is investing in everything from railroads to real estate in Cambodia, Laos and Myanmar — the frontier-market economies of the Association of Southeast Asian Nations.”
  • There’s only one clear winner if Facebook breaks into China — and it’s not Facebook / Quartz
    “Despite the allure of hundreds of millions of new users, the real winner of a Facebook entry into China wouldn’t be the social media giant or even consumers — it would be the Chinese government, and its vision for an ‘open’ internet.”
  • Apple takes smartphone crown in Chinese villages / Caixin
    “iPhones have become the top-selling smartphones by revenue in China’s villages, boosted by rising rural incomes and growing consumer sophistication in those areas, according to an annual survey.”
  • U.S. lawmakers urge rejection of China-linked purchase of Lattice semiconductor / WSJ
    “Lattice, based in Portland, Oregon, said last month it had agreed to a $1.3 billion buyout offer from Canyon Bridge Capital Partners Inc., a new private-equity firm backed by investors in China.”
  • In China, American Apparel courts controversy — but not over what you’d expect / LA Times
    The company’s refusal to hand over surveillance tapes to Chinese police without the consent of headquarters in Los Angeles has sparked an outcry on social media in China. “Is this small store a part of America’s territory?” asked one commenter.

POLITICS AND CURRENT AFFAIRS:

• • Trump economic adviser says ‘screw ’em!’ if China is upset by Taiwan call / Talking Points Memo
    “Taiwan is our ally,” said Stephen Moore in a radio interview. “That is a country that we have backed because they believe in freedom. We oughta back our ally, and if China doesn’t like it, screw ’em.”
  • Opinion: Wooed by Donald Trump, Taiwan trembles / WSJ
    “Taiwan’s most immediate danger is not that Mr. Trump will have a change of political heart but launch a trade war with China,” writes Andrew Browne.
  • Opinion: The wrong way to stand up to China / Bloomberg
    “Any successful strategy to change China’s calculations and behavior, however, requires several elements — chief among them clarity and consistency,” writes the editorial board. “This Trump has not provided.”
  • How to stand up to China? Mongolia’s got a playbook / Foreign Policy
    “The history of China’s relations with Mongolia shows that raw pressure and intimidation can backfire in unexpected ways.”
  • Opinion: The most important bilateral relationship in the world? China-Japan / Straits Times
    If U.S. support for Japan falters under Trump, relations between China and Japan will take on critical importance, writes political economist Jean-Pierre Lehmann.
  • Torture in secret prisons: The dark side of China’s anti-corruption crackdown / CNN
    A new report from Human Rights Watch estimates there were as many as 66,000 cases of extrajudicial detention in 2015 involving Communist Party members.
  • UN fears Chinese human rights lawyer has been ‘disappeared’ by authorities / The Guardian
    “Jiang Tianyong, a 45-year-old Christian lawyer known for defending a number of prominent human rights activists, has not been seen since November 21.”

SOCIETY AND CULTURE:

• • Chinese donors fund studies into acceptance of death / Financial Times
    “How can we cure death? That is the key of our philanthropy vision,” says Tianqiao Chen. Chen and his wife, Chrissy Luo, co-founders of Chinese online game giant Shanda, are donating $115 million to CalTech for brain research that can help humans accept their mortality.
  • ‘Overnight at IKEA’; one couple’s live-stream plans go awry / WSJ
    A couple who tried to play hide-and-seek at a shuttered IKEA store in Beijing was found and handed over to the police.
  • The case of Bai Ling / China Hands Magazine
    The appearance of the controversial Chinese-born, U.S.-based actress in a state-produced documentary about the Long March sparked an outcry from the state media, while “the intensity of reactions on Weibo lashing out against Bai Ling also shows the Chinese public’s gradual trend of mirroring official party lines.”
  • ‘No whitewashing’: Matt Damon defends being cast as lead in Zhang Yimou’s ‘Great Wall’ / SCMP
    “The American actor said he thought of whitewashing as applying to Caucasian actors who wore makeup to appear to be of another race, as was common in the early days of film and television, when racism was overt.”
  • 2016 translations from Chinese / Paper Republic
    “This year’s list is longer than ever, and several books have won international prizes.”