Did this phone call get results?

Xi and Trump talk again — some observers see results

The top headline on the People’s Daily and other central state media today is “Xi Jinping talks on the phone to Donald Trump” (story in Chinese and English). The two presidents discussed the situation on the Korean peninsula and in Syria.

In its report on the call, the South China Morning Post emphasized Xi’s calls for restraint over the North Korean crisis, while a report on Business Insider is headlined, “Whatever Trump said to China about North Korea, it seems like it worked.” It seems early to declare any kind of victory when it comes to China and North Korea, but the article argues that while China may have been swayed by American military posturing — the deployment of the THAAD missile defense system in South Korea, and the flotilla of warships headed for the area right now — a perhaps more credible threat could have moved the needle. The article quotes Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies: “I think that [the Chinese] are quite worried about what Trump might do in the area of trade and economics — that’s really credible.” Trump himself tweeted yesterday that he “explained to the president of China that a trade deal with the US will be far better for them if they solve the North Korean problem!”  

Meanwhile, the Chinese Ministry of Defense categorically denied (in Chinese) a rumor that there were 150,000 Chinese troops on the way to the border with North Korea.

Drone deliveries for ecommerce in mountainous Sichuan

Amazon.com has been hyping the potential for deliveries by drone for several years and recently applied for a relevant patent. This week, China’s second largest ecommerce company JD.com announced that it plans to build 150 air bases in Sichuan Province. The bases will enable drone deliveries to mountainous regions where logistics costs are prohibitive. Caixin reports that the drone bases will be open over the next three years. JD.com is apparently already using drones that can transport packages weighing up to 50 kg, and is developing one with “capacity for up to 500 kg.”

Live Sinica Podcast tonight in Washington, D.C.

If you’re in the American capital tonight, please come to a live taping of the Sinica Podcast with Acting Deputy Secretary of State for East Asia and Pacific Affairs, Susan Thornton. Details are here.

As always, we love to hear your feedback – simply reply to this email address to reach my inbox, or write to our whole editorial team at editors@thechinaproject.com.

—Jeremy Goldkorn, Editor-in-Chief

A view inside Zhongnanhai

Zhongnanhai (中南海 zhōngnánhǎi), leadership compound for the Communist Party, is off limits to the public. However, a video compilation of rare images inside Zhongnanhai has gone viral on WeChat. We present you an abridged version of the video with subtitles.

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:

Starbucks aims to retain employees by providing parents’ health insurance

Coffee giant Starbucks has done brisk business in China since it opened its first store in Beijing in 1999. The company is currently opening more than one store a day. In December last year,  CEO Howard Schultz predicted Starbucks’ China business to eventually become bigger than its home market. The company has now announced that it will provide health insurance that covers serious and chronic illnesses to parents of employees in China, according to the Washington Post and Xinhua News Agency (in Chinese). The plan will be available to any parent of a Starbucks employee who has worked for Starbucks China for at least two years, as long as the parent is under 75 and resides in mainland China. The policy is expected to improve employee retention, as it responds to the increasing concerns of an aging society: According to Starbucks, a recent employee survey showed that 70 percent of their employees in China worried about the health of their parents.

• China’s Dianrong eyes Hong Kong or New York for IPO / Caixin
  Dianrong.com, a Chinese peer-to-peer lender backed by Tiger Global Management, is considering an initial public offering in either New York or Hong Kong.
• NetEase online music unit hits a high note with $100 million in funding / Caixin
• Why China and Canada are playing economic footsie / Washington Post
• The surprising rise of China as IP powerhouse / TechCrunch
• German car brand gets new lease on life with Chinese money / Bloomberg
• Chinese firms ‘to face tougher obstacles securing tech overseas’ / SCMP

POLITICS AND CURRENT AFFAIRS:

Undrinkable water and pollution in Shanghai

A Ministry of Environmental Protection (MEP) investigation in Shanghai late last year released results on Wednesday, showing that the wealthy city lags behind in water quality. Eighty-eight of 259 water samples tested showed a level of pollution “unfit even for farm and industrial use,” and some districts in the city had even worse quality than previous tests in 2013. Additionally, 800 polluting enterprises in the area that were ordered to shut down in the past four years have continued to operate. This and other recent MEP reports reflect how many local governments, including that of the capital city Beijing, continue to drag their feet on environmental compliance in order to preserve jobs and revenue. There is a press release from the MEP in Chinese here, and a Reuters report on the issue here.

• China emerges as digital rights champion with new info privacy law / The Register
  Although the phrase in the headline above, “digital rights champion,” is completely misleading, the article reports that “China plans to impose the world’s strictest digital privacy rights rules against large corporations like Facebook and Google by requiring them to obtain users’ permission before sending any data on them outside the country.”  
• Opinion: Why does China pretend to be a democracy? / Washington Post
• Hong Kong lawmaker charged for upending Chinese flag / AsiaOne
• Yahoo is sued for failing to keep 2007 dissident promises / Bloomberg

SOCIETY AND CULTURE:

Oil prices see biggest increase in 2017, prompting complaints

Gasoline prices jumped by 0.15 yuan a liter ($0.02 a liter, or nearly $0.08 a gallon) today throughout much of China. Media reports, such as this one (in Chinese) on Sina.com blamed delayed output from OPEC and suspensions of oil production in Libya. While the increase was not huge, gas now costs close to 7 yuan or $1.02 per liter ($3.86 a gallon) across the country, marking a return to the “seven yuan age.”

The heavy costs of urban living, from housing to food to gasoline, are common topics of complaint on social media in China, and this event was no exception. One commenter wrote (in Chinese), “housing prices have gone crazy, building materials are crazy, metals are crazy, energy is crazy, and [our currency’s] been devalued…,” and blamed it all on the “good deeds” of a few powerful people. Many commenters jokingly referenced an old internet meme of a fake state media headline, “The whole nation gladly welcomes the rise in oil prices” (“全国人民喜迎油价上涨,” quánguó rénmín xǐ yíng yóujià shàngzhǎng).

Data from the World Bank indicates that pump prices for gasoline are generally higher in China than many oil-producing countries around the world, including the U.S., but cheaper than in pacific neighbors Japan, South Korea, and Australia, and much cheaper than in most of Europe.

• China’s aged and sick flock to a hamlet known for longevity / NYT (paywall)
  Accompanied by video on China’s “fountain of youth.”
• Pets, not food: Taiwan to ban eating, selling of dog and cat meat / SCMP
• AI wins $290,000 in Chinese poker competition / BBC News
• Commemorating an Anti-Authoritarian Provocateur: Reflections on Wang Xiaobo (May 13, 1952–April 11, 1997) / LARB Blog