News roundup: Ripples spread after billionaire vanishes in Hong Kong

Caixin reports that the head of a state-backed newspaper that covers financial markets is under investigation, apparently for links to Xiao Jianhua 肖建华, the tycoon who was hustled away from his Hong Kong apartment under mysterious circumstances and apparently taken to the mainland by Chinese security officers.

Xie Zhenjiang 谢镇江 was removed from his posts as the president of Beijing-based Securities Daily and the chairman of the newspaper’s business arm. Securities Daily is one of four media organizations designated by the China Securities Regulatory Commission for information disclosure such as the publication of prospectuses for initial public offerings. Caixin quotes an anonymous staffer at Securities Daily who said Xiao Jianhua’s Tomorrow Group “had obtained absolute control over the newspaper’s business operations and intervened on editorial issues over the years.” Another source told Caixin that the Tomorrow Group had also “sent a list of firms to the editorial team” and asked them not to publish any critical coverage of them. Securities Daily released a terse statement (in Chinese) on its WeChat account saying that Xie had already stepped down in March 2016, and that there has never been any interference with the editorial board.

The New York Times has further investigated the mysterious disappearance of Xiao Jianhua and concluded (paywall) that he was removed from his luxury Hong Kong apartment in a wheelchair with “his head covered by a sheet or a blanket,” accompanied by about six unidentified men. The Times also reports (paywall) that at least 30 employees of the Tomorrow Group have been stopped from traveling outside of China.

Fake exam takers arrested

The China Daily reports that a “gang of fake exam takers” has been arrested in Hebei Province. More than 100 people took an adult college entrance examination in place of actual candidates for the exam, who paid them fees ranging from 2,000 yuan ($291) to 3,000 yuan ($436). The gang’s leader found clients online and paid each fake exam taker 100 yuan ($15) to 500 yuan ($73) per test. The fake exam takers had to resemble the actual candidates and received special training to learn to use fake admission cards and deal with uncomfortable questions if their scam was discovered.

—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:

• China accused of undermining drive to cut steel capacity / Financial Times (paywall)
  A study commissioned by Greenpeace shows that despite China’s stated determination to cut excess capacity in its steel industry, the country actually increased its net operating steelmaking capacity by 36.5 million tonnes last year, as the closure program primarily targeted mills that were already idle. Last October, the National Development and Reform Council announced that it had already exceeded the 2016 national target of steel cuts with 85 million tonnes of capacity being shut, but “the closures in operating capacity were outpaced by new plants or mills that restarted as price rose.” The study also found that around 80 percent of the net increase in capacity took place in the heavily polluted regions surrounding Beijing, such as Hebei Province.  
• China’s monetary policy is looking like alphabet soup / Bloomberg
  Since China liberalized interest rates in 2015, the People’s Bank of China has been seeking to upgrade its monetary tool kit while dealing with a slow economic growth, weak currency, and mounting debt. In recent years, apart from adjusting the benchmark rate and reserve-requirement ratio (RRR), the central bank has developed at least seven tools with which it has managed liquidity, such as daily Open-Market Operations for short-term money supply, Medium-Term Lending Facility for longer tenors, and Pledged Supplementary Lending for certain sectors. Compared with conventional adjustments to the RRR and benchmark rate, these money-market instruments are likely to cause greater market volatility and uncertainty when they expire. So far this year, the central bank has increased rates on three different liquidity facilities, created a new tool to provide temporary funding support to some major commercial banks, and ordered banks to curb new loans. According to an analyst at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong, “They’re trying to juggle way too many balls.”

• China’s Tech Tycoons’ Healthcare Dreams Aren’t Coming True / Bloomberg
• 14 Chinese retailers made it to Top 250 retailers list – JD.com and Gome Home Appliance Group on Deloitte’s annual Global Powers of Retailing ranking / China Internet Watch
• China’s zombie province shows what’s wrong with its bond market / Bloomberg
• China’s groups ditch car parts for Hollywood / Financial Times (paywall)
• China’s Weibo is now worth more than Twitter: chart / Bloomberg
• When it comes to Mandarin, Bill Gates is no Mark Zuckerberg / WSJ (paywall)
• A long way from Mexico: Company bets China has an appetite for Taco Bell / NYT (paywall)
• Xiaomi turns to brick-and-mortar to bolster decreasing market share / TechNode

POLITICS AND CURRENT AFFAIRS:

• China upset at disputed islands mention in Japan-U.S. meeting / Reuters
  The U.S. further signaled its support for Japan’s claim to islands to the east of China in a joint statement following Prime Minister Shinzo Abe’s visit to the U.S. The statement reaffirmed that the islands, called the Senkaku Islands in Japan and the Diaoyu Islands in China, are protected under the U.S.-Japan security treaty. China’s foreign ministry responded forcefully, insisting that “no matter what anyone says or does, the fact that the Diaoyu islands belong to China cannot be changed.” The joint statement was the strongest signal of support for U.S.-Japan ties under the new American administration so far, following pro-Japan remarks made by the new U.S. secretary of defense a week ago, which also ruffled feathers among Chinese diplomats.

• North Korea claims missile test success as China rejects U.S. criticism / SCMP
• Two men jailed in China for selling Hong Kong-published books, sources say – case handled by same police bureau as HK booksellers last year, but no evidence that they’re connected / SCMP
• China expels South Korean missionaries amid missile defense tensions – follows last week’s halting of a South Korean theme park in Shenyang / The Guardian
• Opinion: In China, the Party-Corporate complex / NYT (paywall)
• Revealed: Life inside China’s ‘Red Army’ schools / SCMP
• China’s think tanks overflow, but most still think what they’re told to think / SCMP
• Chemical factory blast kills 2 in Xinjiang / Xinhua

SOCIETY AND CULTURE:

• 30 million Chinese men to be wifeless over the next 30 years / China Daily
  A professor of population studies at Renmin University estimates that there are 30 million men who will be at marriageable age over the next 30 years but unable to find a spouse. Data released by the National Bureau of Statistics indicates that by the end of 2015, the male population totaled around 704 million, while the female population was just 670 million. The surplus of men is mainly attributed to Chinese people’s deeply rooted gender preference for boys over girls and the development of ultrasound technology that enables parents to determine the gender of unborn babies, which sometimes leads to sex-selective abortion. In reaction to a People’s Daily article (in Chinese) on the topic, internet users showed limited sympathy for the potential “bare branches” (bachelors unable to find wives) described in the article, with one comment (in Chinese) saying, “Over the years I have seen little coverage of those female babies who were killed before their birth, and now the state media is worrying for those single men who are unable to get married. How ironic it is!”
• Once poverty-stricken, China’s ‘Taobao villages’ have found a lifeline making trinkets for the internet / Quartz
  Located in a remote part of eastern China’s Shandong Province, Daiji township is a collection of villages that has freed itself from extreme poverty and become one of the country’s leading hubs for selling dance and stage costumes. In 2016, Daiji sold a total of 1.8 billion yuan worth of costumes on Alibaba-owned Taobao, the nation’s largest ecommerce platform. Under a national policy to rebuild rural China and eliminate poverty, many “Taobao villages” like Daiji have sprung up across the nation, selling more than 10 million yuan worth of goods per year. Alibaba, in a joint effort with the central government to regenerate the country’s rural economy, has developed four programs devoted to helping rural residents use its platforms.

• Chinese universities lagging in race for donations / SCMP
• China students given assignment for winter break: Go home / AsiaOne
• Watch a record-setting 1,000 drones take to the sky in China to celebrate the lantern festival / Quartz
• New Chinese online platform makes bold claim of quota-free China releasing – website claims it can stream unlimited number of foreign films / Variety