News roundup: Where to now for the Chinese tech industry?

TODAY’S TOP STORIES

Startup funding slowdown

There was a dramatic drop in funding for technology startups in China in the second half of 2016, according to Tech in Asia. Funding for the whole year, at $56.1 billion, still surpassed last year’s $45.1 billion, but investment in startups fell “back to 2014 levels” after the summer. One reason for the high number for the whole year was the $6.5 billion worth of funding put into “Alibaba spin-off Ant Financial in April and Uber’s China division in January.” Another factor highlighted by the article is that the recent explosive growth of new venture capital funds, some government-backed, has caused valuations for startups to skyrocket to levels that more established investors find unattractive.

How can China’s tech giants keep growing?

The Wall Street Journal examines a different problem in Chinese tech: the anxiety about future growth of established companies. The article, titled Chinese tech firms need wider reach in 2017 (paywalled), attributes the uncertainty to “the diminishing growth in the number of mobile internet users.” Paths to maintaining the extraordinary growth of the large Chinese technology firms may include expansion to China’s rural hinterland, pursuing foreign markets and selling products and services to senior citizens.

Sinica Podcast: Ian Johnson on ties between the Communist Party and the Catholic Church

Today we release an interview with Ian Johnson, a Pulitzer Prize-winning author and journalist, on the warming ties between the Chinese Communist Party and the Vatican.

On The China Project: Top China news of 2016

Today we publish a year-end review summarizing the most significant China news stories of 2016. Please do send us feedback if you think we’ve left anything out – editors@thechinaproject.com.

More stories worth your time are summarized below, with the more important headlines at the top of each section.

BUSINESS AND TECHNOLOGY:

• China fault lines: Where economic turbulence could erupt in 2017 / Bloomberg
  Rising capital outflows, a potential trade war with the U.S., poor execution of policies and a property market slump are among the chief risks for the new year.
• China business confidence index rises for third straight quarter: Central bank survey / Reuters
  “The entrepreneurs’ confidence index rose to 54.2 percent in the fourth quarter, 3 percentage points higher than in the third quarter,” Reuters notes.
• China’s cash-strapped LeEco in talks to gain $1.4 billion from investor / Reuters
  “The announcement was seen as insufficient to dispel concern over the high-tech conglomerate’s financial health,” report David Stanway and Jess Macy Yu.
• How China built ‘iPhone city’ with billions in perks for Apple’s partner / NYT (paywall)
  “A hidden bounty of benefits for Foxconn’s plant in Zhengzhou, the world’s biggest iPhone factory, is central to the production of Apple’s most profitable product,” reports David Barboza.
• Aluminum billionaire planning escape from China: Lawyer / WSJ (paywall)
  “[A] giant aluminum stockpile in Mexico and Vietnam may represent an effort to get wealth out of China by Liu Zhongtian, chairman of China Zhongwang Holdings,” writes Scott Patterson.
• China would outlast U.S. in trade war, billion-dollar fund says / Bloomberg
  “By design, decision-makers in a democracy face difficulties coordinating a relief effort and must eventually face a political backlash from impacted domestic producers,” wrote James Wang in a commentary for the Pine River China Fund. “On this basis, the Chinese may have more runway to play the long game in a trade war.”
• China hits reset on yuan fixing / WSJ (paywall)
  “China’s central bank is adjusting the mix of foreign currencies used in setting the yuan’s official daily value, a change that analysts said should help ease its depreciation pressure,” reports Lingling Wei.
• Chinese keep buying London property despite Brexit / Financial Times (paywall)
  Total investment in London real estate has dropped 55 percent in the last year, but Chinese investment has dropped only 22 percent.

POLITICS AND CURRENT AFFAIRS:

• China’s top party cadres pledge loyalty to Xi Jinping in Mao-style self-criticism session ahead of reshuffle / SCMP
  “In a self-criticism session that recalled the era of former leader Mao Zedong, members of the 25-strong decision-making Politburo made soul-searching reports about their ideological orientation and behavior.”
• Senior Chinese general being investigated for bribery / Reuters
  Military prosecutors have opened a case against Wang Jianping, who was reportedly detained in August and was an associate of jailed former security chief Zhou Yongkang.
• Chinese state media calls for tighter national security after detailed photos of PLA’s second aircraft carrier appear in Japanese media / SCMP
  Japanese news outlets published images of the PLA carrier being assembled at a port in Dalian, which Chinese media characterized as a “wake-up call” to protect security interests.
• Pop culture successes point to warming relations between China and Japan / Variety
  “The recent warming toward Japan comes at a time when China has politically turned its shoulder against South Korea,” writes Vivienne Chow.
• China: Police shoot dead 3 who killed 2 in Xinjiang attack / Washington Post
  “The incident Wednesday afternoon was the first such publicly reported fatal attack in months in Xinjiang, where information is strictly controlled by authorities and reporting access has tightened over the past couple of years.”
• Through reclusive Wa, China’s reach extends into Suu Kyi’s Myanmar / Reuters
  “China is extending its sway over an autonomous enclave run by Myanmar’s most powerful ethnic armed group, sources in the region told Reuters, bolstering Beijing’s role in the peace process that is the signature policy of Aung San Suu Kyi.”
• China says party control over religion in Tibet will only increase / Reuters
  Wu Yingjie, the Communist Party chief for Tibet, also said that Buddhist teachings should “benefit social harmony and move with the times.”

SOCIETY AND CULTURE:

• WEI WATCH
  A regular feature about what’s buzzing on Chinese social media
  64-year-old woman gives birth: Courageous or irresponsible?
  A 64-year-old Chinese woman delivered a healthy baby boy through in vitro fertilization on Wednesday, which is likely to be the oldest childbirth case across the country so far. The topic has been a popular subject of discussion on Chinese social media with some people praising the mother for her courage, but others arguing that giving birth at such an old age is irresponsible to the child. You can read some of the discussion on Weibo (in Chinese) here.

• China experiencing baby boom now that one-child rule is lifted / SCMP
  Although 2016 may have seen the most births in China since 2000, “doubts remain about how much impact government policy has had on the increase.”
• In China, calls for end to aggressive child custody tactics / Reuters
  “Lawyers say judges tend to favor the parent who has physical possession of the child, creating an incentive for a father or mother to take their child to gain an advantage in court.”
• As China’s largest freshwater lake shrinks, solution faces criticism / NYT (paywall)
  “The local government has proposed building a sluice gate to keep more water inside the lake in the winter, but critics say the gate would essentially be a dam, and it could cause bigger problems.”
• Inside China’s ‘mosquito factory’ fighting Zika and dengue / CNN
  “I thought it was a surreal place that came out of a science fiction plot, but I soon got used to it,” says the head of the mosquito-feeding program at the research laboratory at Sun Yat-Sen University in southern China.
• Shanghai’s move to curb international programs in schools worries parents / NYT (paywall)
  Proposed regulations would aim to limit foreign influence in the city’s schools, despite increasing demand among Chinese parents for programs that will prepare students to study overseas.
• Inside 404: Video footage reveals abandoned buildings inside once-busy nuclear city / News.com.au
  The city was built in 1958 in a secret location to be “China’s base for building nuclear bombs,” but it has been largely abandoned since its population peaked in the 1990s.