Microsoft Windows — Chinese government edition

Windows for the Party

Microsoft, in partnership with the state-owned China Electronics Technology Group (CETC), has finished developing a version of the Windows 10 operating system tailored for Chinese government use, according to the Wall Street Journal (paywall). The software is designed for use by government employees and will not be sold to consumers; it is also intended to revive Microsoft’s sales to China’s state sector in the face of growing restrictions on government procurement of foreign technology companies.

CETC provides technology for Chinese military and civilian use, and owns 51 percent of the joint venture with Microsoft, which was first announced in 2015. Other U.S. technology companies with similar joint ventures include Qualcomm, Intel, and IBM. For more on the Chinese government’s technology policies and how they will affect foreign companies, see “China and the Eight Guardian Warriors of American tech,” by Graham Webster on The China Project.

Women and China: A The China Project-sponsored forum

We’re organizing a conference on May 18 in New York with female speakers who are movers and shakers in technology, business, and journalism in China. Please click here to book tickets.

Anxieties about Li Keqiang’s trip Down Under

Premier Li Keqiang has arrived in Australia with a large business delegation. On Sunday, the visitors will fly to New Zealand. Xinhua News Agency says that in both countries, the aim to strengthen economic ties extends to existing free trade agreements. There’s a large special section (in Chinese) on Xinhua’s website devoted to the trip.

China is the largest trading partner of both Australia and New Zealand, a relationship that is a constant source of debate and unease in both countries. Aside from anxieties about economic dependence on China, Australia worries about how China’s rise is affecting its close military alliance with the U.S., a dilemma the Australian Broadcasting Corporation calls “tough choices between two old friends.” One of those choices seems to have already been made: The Financial Times says (paywall) that Australia has rejected “a Chinese push for a formal alignment of Canberra’s…state infrastructure fund with Beijing’s New Silk Road [aka One Belt, One Road] strategy over concerns it could damage relations with the U.S.” In New Zealand, the worries are primarily economic: NewsHub reports on concerns that any new trade deal negotiated during Li’s visit will only benefit a few exporters instead of “all New Zealanders and all New Zealand companies.”

Today on The China Project

Fifty-five percent of new online businesses in China are owned by women, and they’re shaping the habits of a generation of shoppers. Simone McCarthy has the story: “Chinese women are killing it in WeChat commerce.”

Click here to report corruption

The People’s Daily is promoting a new online corruption reporting center: Simply go to this web page (in Chinese) and click on the relevant button to complain of dodgy dealings to the Central Commission for Discipline Inspection, the Central Organization Department, the Supreme People’s Court, the Ministry of Public Security, or the Ministry of Land and Resources. If you’d like to complain about “harmful information” on the internet, click here.

—Jeremy Goldkorn, Editor in Chief

This issue of the The China Project newsletter was produced by Sky Canaves, Lucas Niewenhuis, Jia Guo, 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:

• Airbnb adopts new name, doubles investment to woo China / Bloomberg
  Home-sharing giant Airbnb unveiled a new Chinese name, Aibiying (爱彼迎 Àibǐyíng), which translates as “welcome each other with love,” in Shanghai on Wednesday. Not everyone was pleased: On the social media platform Weibo, many people stated that the new name sounds awkward. One commentator said (in Chinese), “The name is so weird, and I think the reason why they came up with this ugly name is for marketing purposes.”

  The company also launched the Chinese version of Airbnb Trips, which offers services such as concert ticket and restaurant reservations. According to CEO Brian Chesky, who spoke at the Shanghai event, Airbnb doubled its listings to about 80,000, and increased the number of Chinese users by 146 percent in 2016. Echoing a long line of internet CEOs who have made such commitments and then failed embarrassingly, Chesky wrote on an Instagram post that “China is one of our most important countries” and will “commit to this market long term.” The enthusiasm recalls Uber CEO Travis Kalanick’s statements in 2015 that China was the “number one priority for Uber’s global team” and “one of the largest untapped opportunities for Uber, potentially larger than the U.S.” Less than a year after Kalanick made those pronouncements, Uber retreated from China with its tail between its legs, unable to compete with its local rival. Airbnb has two main competitors in China, Xiaozhu and Tujia, which the New York Times examines in an article (paywall) that also describes the American company’s efforts to challenge them, such as partnering with Chinese tech giants Alibaba and Tencent.

  One factor that could help Airbnb succeed where most American tech companies have failed is the growing numbers of outward-bound Chinese tourists. The Chinese home-sharing companies will find it almost impossible to establish a meaningful presence outside of China, so even if Airbnb does not become the platform of choice for home sharing in China itself, there’s a whole world out there.

• Tiny team wants to unlock China’s wealth secrets / Bloomberg
• China’s extreme income inequality finally appears to be falling / Quartz
• AI expert at Baidu, Andrew Ng, resigns from Chinese search giant / NYT (paywall)
• Apple faces tough competition in China’s $5.5 trillion mobile payments market / Bloomberg
• Three China store chains pull Japanese goods in radiation scare / Financial Times (paywall)
• China’s Silk Road Fund ‘seeking investment projects in Europe’ / SCMP

POLITICS AND CURRENT AFFAIRS:

• Myanmar praises China for suspending rebels’ bank account / Reuters
  On Tuesday, the Agricultural Bank of China (aka Agbank and ABC) suspended an account used by ethnic fighters in Myanmar to crowdfund military activities against their government. The ethnically Chinese rebels, known as the Myanmar National Democratic Alliance Army (MNDAA), led attacks on government outposts in the Kokang region of Myanmar earlier this month, leaving 30 dead and over 20,000 refugees flooding over the border into China. Since 2015, when a Chinese blogger began publicizing its cause, the MNDAA raised more than $500,000, which was deposited directly to its account or sent to the account via WeChat Pay and Alipay.

  On Wednesday, the Myanmar government praised China’s restriction of financing for the MNDAA, though Reuters confirmed that, technically, AgBank had broken no laws.

• China denies work planned for monitoring station in South China Sea shoal / SCMP
• Rex Tillerson’s deferential visit to China / The New Yorker
• South Koreans now hate China even more than Japan, new opinion poll says / Shanghaiist – see also the The China Project story on anti-Korean sentiment in China
• Xi Jinping is only halfway through his rule yet China’s already trumpeting his legacy / Quartz

SOCIETY AND CULTURE:

• China arrests 168,000 for drug-related crimes in 2016 / Xinhua
  China’s National Narcotics Control Commission said on Wednesday that police arrested 168,000 suspects for drug production or trafficking in 2016. They also seized 82.1 tonnes of drugs, including heroin, methamphetamines, and ketamine. The Commission says that the country has over 1 million drug addicts, with 357,000 people successfully treated for addiction in 2016, but that the spread of drug-related crimes had been “effectively contained.”

  Earlier this week, the China Daily reported on a development “that echoes TV’s Breaking Bad” in which “some Chinese chemistry professionals have begun producing and selling illegal substances,” noting that the most abused illegal drug in China is methamphetamine, often called “ice.” Police say that the average street price for ice in 2015 was 500 to 1,000 yuan ($70 to $140) per gram (0.35 oz.). The report also says that a growing problem is the production of  new psychoactive substances, or designer drugs, that are not yet regulated. These include methcathinone and a variety of substances listed by the China Daily here. Some of the newer drugs, including the elephant tranquilizer carfentanil, which has become a serious problem in the U.S., have already been added to China’s controlled substance list.

  If you have not yet heard it, you can listen to a Sinica Podcast interview with an American who spent seven months in a Beijing detention center, accused of dealing in marijuana.

• Printing the ancient way keeps Buddhist texts alive in Tibet / NYT (paywall)
• As the 20th anniversary of the handover to China nears, Hong Kong artists meditate on space, memory / Quartz
• For China’s middle class, Brooklyn real estate offers more than a green card / CNBC
• China goes west: A ghost city in the sand comes to life / The Guardian
• Disney’s ‘Beauty and the Beast’ soars in China, a hit with young female audiences / LA Times
• Beijing’s underground secret: The proliferation of illegal basements / The Beijinger
• 30 years in the life of one Chinese square – in pictures / The Guardian