News roundup: The phone call: Trump acquiesces on One China Policy

Trump reassures Xi U.S. will honor One China Policy

On Wednesday a letter, on Thursday a phone call: American President Donald Trump has ended the freeze in top level contacts between the U.S. and China that began when then-president-elect Trump accepted a phone call from Taiwanese president Tsai Ing-wen in early December. The White House says Trump and President Xi Jinping “had a lengthy telephone conversation,” in which Trump agreed, “at the request of President Xi, to honor our ‘one China’ policy.” The two leaders also “extended invitations to meet in their respective countries,” and made pleasant-sounding noises about “successful outcomes” and “mutual interest.” The Xinhua News Agency report on the call is similar to the White House statement, if a little longer; the Chinese version of the report was the top headline on the websites of both Xinhua and the People’s Daily.

The New York Times points out (paywall) that earlier on Thursday, Secretary of State Rex W. Tillerson met with officials at the White House to discuss a statement about relations with China. In January, after his Senate confirmation hearing, Tillerson had affirmed his support for the One China Policy in written testimony (see on page 47).

Given Trump’s long record of bellicose rhetoric on China, and history of threats to use Taiwan and the One China Policy as a bargaining chip, the phone call was a remarkable flip-flop. There is a sense that the phone call was a victory for Xi: The New York Times headlined one story (paywall) on the call, “Trump, changing course on Taiwan, gives China an upper hand,” while The Wall Street Journal titled a story (paywall), “Beijing’s patience pays off with Trump’s reaffirmation of ‘One-China’ policy.”

ChinaFile has published roundup of opinions on the question, “Did Xi just outmaneuver Trump?” One respondent, the noted scholar of Chinese politics and U.S.-China relations Susan Shirk, contends that the call “put the U.S. in the humiliating position of appearing to succumb to Chinese demands instead of doing the right thing from the beginning.” She concludes that the result is that “Xi looks like a hero to the Chinese public, and America’s stature is seriously diminished.”

Mari-Cha Lion exhibition

Sponsored by Asia Society in Hong Kong

Asia Society, our featured partner this week, has a fascinating cross-cultural art exhibition in Hong Kong running until February 19. The centerpiece is the Mari-Cha Lion, a rare mid-11th- to mid-12th-century South Italian bronze sculpture bearing Arabic decorations, on show together with a selection of Asian objects from the Mr. and Mrs. John D. Rockefeller 3rd Collection and other private collections, as well as contemporary artworks by seven Asian artists. Click here for details.

Worries of a trade war persist

The Trump-Xi phone call has not completely reassured the markets. Bloomberg quotes an analyst who tempers his optimism on Chinese exports because of the “potential risk of a Sino-U.S. trade war,” while MarketWatch reports that “economists at Goldman Sachs this week predicted that a U.S.-China standoff is a near certainty.”

LAST NOTICE: Live Sinica tapings in Beijing

If you’re in Beijing on February 11 or 14, please come to a live taping of the Sinica Podcast — see details here.

Happy Lantern Festival

Lantern Festival (元宵节 yuánxiāo jié), the last day of the Chinese New year celebrations, falls on February 11 this year. All of us at The China Project wish you a year of prosperity and happiness.  

—Jeremy Goldkorn, Editor in Chief

This issue of the The China Project newsletter was produced by Sky Canaves, Lucas Niewenhuis, and Jiayun Feng. More China stories worth your time are curated below, with the most important ones at the top of each section.

BUSINESS AND TECHNOLOGY:

• Bitcoin trading shrivels under Chinese government’s glare / Reuters
  As a result of China’s determination to regulate the Bitcoin exchange market, the number of Bitcoins traded on BTCC, Huobi, and OKCoin — the three main exchange platforms for the digital currency in China — dropped significantly from 13.6 million on January 6 to around 120,000 on February 9. In January, the People’s Bank of China (PBoC) announced that it has started a wider and deeper scrutiny into major Bitcoin exchanges and held meetings with nine of them. This led to a temporary month-long suspension of Bitcoin withdrawal on major exchange platforms. China has been the world’s leading venue for Bitcoin trading and mining, with the big three taking up more than 90 percent of the global Bitcoin market as of January 11. For more on the status of Bitcoin in China, see this The China Project Q&A with Eric Mu, a Chinese entrepreneur who runs a Bitcoin mining facility and believes that “Bitcoin has outgrown the stage where a single government can profoundly affect its development.”
• China’s stock market regulator vows to ‘capture’ more tycoons / SCMP
  Liu Shiyu, chairman of China Securities Regulatory Commission, said in an annual work meeting on Friday that China won’t tolerate any “capital market crocodiles…skinning or sucking the blood of retail investors” and vowed to bring them back to the mainland to face justice. Liu’s comments highlighted a prolonged efforts by Chinese authorities to crack down on market manipulators and more tightly regulate the stock markets. Last month, Xu Xiang 徐翔, once considered China’s top hedge fund manager, was sentenced to prison for five and and a half years for stock manipulation and insider trading. A week later, billionaire Xiao Jianhua 肖建华, the chairman of Tomorrow Group, went missing in his apartment in Hong Kong, apparently in connection with corruption investigations by mainland authorities.

• China’s VR ‘boom’ is a bust, say some experts / Tech in Asia
• Plan for $10 billion chip plant shows China’s growing pull / NYT (paywall)
• Xiaomi to take on top tier with smartphone chips of its own / WSJ (paywall)

POLITICS AND CURRENT AFFAIRS:

• China ‘beefing up military’ on disputed islands in the South China Sea, says U.S. think tank / SCMP
  The Asia Maritime Transparency Initiative is a project of the Center for Strategic and International Studies in Washington, D.C., and it has previously released satellite photos showing China’s deployment of military equipment to the Spratly Islands in December. This week it released new photos of China’s military buildup in the Paracel Islands. The photos showed that China has now “­occupied 20 outposts in the ­Paracels, and that there had been an extensive military build-up on eight islands.”
• Vatican and Beijing near deal on appointment of bishops, Hong Kong cardinal says / SCMP
  Cardinal John Tong Hon, the head of Hong Kong’s Catholic Church — a branch directly affiliated with the Vatican, unlike Catholic churches in mainland China — has praised progress in Vatican-Beijing negotiations. Writing in the Hong Kong-based Sunday Examiner, Cardinal Tong said that Beijing “will also recognise the pope’s right of veto and that the pope is the highest and final authority in deciding on candidates for bishops in China,” addressing one of the most contentious issues between the Church and China. For more on the recent unsteady outreach between Chinese and Vatican officials, see this Sinica Podcast and a follow-up Q&A with Ian Johnson, a veteran journalist and scholar of religious issues in China.

• Trump hugs ally Japan after easing U.S.-China tensions / PBS
• US, China military planes come inadvertently close over South China Sea / CNBC
• China says United States should ‘brush up’ on its South China Sea history / SCMP
• How China plans to beat the rebalance / The Diplomat
• China probes seven for graft in Xinjiang’s restive deep south / Reuters
• Xi’s Swiss tour speeches published – including Davos speech / Xinhua

SOCIETY AND CULTURE:

• Wang Lin, disgraced Chinese ‘spiritual guru’ to the stars, dies in custody / The Straits Times
  Wang Lin, a self-proclaimed qigong master who was facing several criminal charges including the kidnapping and murder of one of his former disciples, died on Friday at the age of 64 at a hospital in east China’s Jiangxi Province. The Fuzhou City Intermediate People’s Court said his death was due to multiple organ failure resulting from an autoimmune disorder. Qigong is a set of beliefs and practices based on traditional Chinese medicine, martial arts, meditation and philosophy.
  Wang came to public attention in 2003 when videos and images of him performing acts such as conjuring live snakes from thin air were widely circulated on the internet. He also claimed to have supernatural powers to cure cancer. Over the years, Wang cultivated relationships with celebrities, businessmen and top officials, including Alibaba’s Jack Ma, the pop star Faye Wong (王菲 Wáng Fēi), and Liu Zhijun, China’s ex-railway minister, who was sentenced to death in 2013 for bribe taking and abuse of power. An investigative article (in Chinese) from the Beijing Times in 2013 showed that most of his fortune was made from connecting wealthy businessmen to government officials through his circle of friends, rather than from his magic skills or healing powers. Internet users have been speculating on the real cause of his death, and much of the social media commentary on the news has been censored.

• Why this choir is a huge hit with China’s stressed-out millennials / CNN
• Meet the architect behind China’s ‘smog-sucking’ vertical forests / Mashable
• China detains a man for five days — for using his phone on a flight / Washington Post
• Capital controls are hitting wine lovers where it hurts / Bloomberg
• How beer brewed 5,000 years ago in China tastes today / SCMP

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