Backstabbing?

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You can find all of us by emailing first_name@thechinaproject.com, e.g., jeremy@thechinaproject.com.

If you’re in a rush today:

• Huawei: The standoff between Canada and China over the arrest of Huawei’s CFO continues, with Beijing’s ambassador to Ottawa making new threats of retaliation.

• Trade war: China offered to eliminate the trade deficit with the U.S. in six years, an attempt to address Donald Trump’s pet issue.

• The religious and cultural repression targeting Muslims and Christians has arrived in Kaifeng, home to China’s tiny community of native Jews.

• Baidu, China’s top search engine, has come under intense fire after threatening a prominent Chinese journalist with legal action if he didn’t remove a “defamatory” blog post.

Finally, we will not send a newsletter on Monday, January 21 — our New York office is closed for Martin Luther King Jr. Day.

Have a great weekend,

—Jeremy Goldkorn and team

1. Huawei: Another warning for Canada from China’s ambassador

This is the latest in the global fight over China’s beleaguered telecom company:

• “China’s ambassador to Canada warned the Canadian government Thursday to stop recruiting international support in its feud with China and threatened retaliation if Canada bans Chinese telecommunications giant Huawei for security reasons,” reports the Associated Press.

• “Ambassador Lú Shāyě 卢沙野 said last month’s arrest of a top Huawei Technologies executive was an act of ‘backstabbing’ by a friend.”

• “Canada’s government on Friday dismissed China’s warning of repercussions if Ottawa banned Huawei Technologies Co Ltd from supplying equipment to 5G networks, saying it would not compromise on security,” according to Reuters.

• “Analysts” cited by the South China Morning Post say “Beijing could set higher market entry barriers to Canadian firms and tighten scrutiny of existing businesses in retaliation for any efforts by Ottawa to rally international support against China.”

• If you’re Canadian and doing business in China, you might want to read this from the China Law Blog (always a good source for practical business information about China): Doing business in China and hiding your company’s country identity: How Canadian do you want to be?

• In Poland, the former Huawei executive charged with espionage says he is not guilty, reports Reuters.

• “The University of Oxford says it will continue two ongoing partnership projects with Huawei but has decided to suspend other new research grants and donations from the Chinese telecoms giant amid growing security concerns about the company,” according to the South China Morning Post.

• “Turkey’s leading mobile phone operator Turkcell and Chinese technology giant Huawei have signed an agreement to collaborate on smart cities, Turkcell announced Tuesday,” reports the Daily Sabah.

—Jeremy Goldkorn

2. Trade war, day 197: China offers to eliminate trade deficit in six years

Though the bilateral trade deficit has very little to do with the economic benefits or drawbacks of trade, everyone knows Donald Trump is obsessed with it. And because his perception of a trade “win” is the most important deciding factor in whether the U.S. and China make a deal, it makes sense that Beijing made this offer, reported by Bloomberg (porous paywall):

China has offered to go on a six-year buying spree to ramp up imports from the U.S… By increasing goods imports from the U.S. by a combined value of more than $1 trillion over that period, China would seek to reduce its trade surplus — which last year stood at $323 billion — to zero by 2024…

The offer, made during talks in Beijing earlier this month, was met with skepticism by U.S. negotiators who nonetheless asked the Chinese to do even better, demanding that the imbalance be cleared in the next two years…Economists who’ve studied the trade relationship argue it would be hard to eliminate the gap, which they say is sustained in large part by U.S. demand for Chinese products.

Also of note, on the more substantive/structural side of negotiations, per Reuters:

The United States is pushing for regular reviews of China’s progress on pledged trade reforms as a condition for a trade deal — and could again resort to tariffs if it deems Beijing has violated the agreement…

Chinese negotiators were not keen on the idea of regular compliance checks, the source said, but the U.S. proposal “didn’t derail negotiations.”

A Chinese source said the United States wants “periodic assessments” but it’s not yet clear how often…

An enforcement and verification process is unusual for trade deals and is akin to the process around punitive economic sanctions such as those imposed on North Korea and Iran.

A summary of this week’s trade-war-related developments can be found in the “Week in Review” section below.

Other trade-war-related links for today:

• China might be eating American chickens again soon
  The U.S. and China are hatching a plan to reopen chicken trade / WSJ (paywall)
  “If the talks are successful, U.S. meat giants like Sanderson Farms Inc., Pilgrim’s Pride Corp. and Tyson Foods Inc. could begin clawing back some of the business in China, a key market that represented hundreds of millions of dollars in annual sales before a ban was implemented in 2015 in response to an outbreak of avian flu in the U.S.”

• Wang Qishan to Davos
  With Donald Trump absent, Wang Qishan will seek to make China’s case at World Economic Forum in Davos / SCMP

• Perspective of William Kirby
  Is the US overreacting to the China threat? Yes, but Beijing’s iron grip isn’t helping, says leading Harvard professor / SCMP

• Jobs pressure in trade-dependent industries
  Foxconn cuts 50,000 contract jobs in China: Nikkei / Reuters
  “Apple Inc’s biggest iPhone assembler Foxconn Technology Group has let go around 50,000 contract workers in China since October, months earlier than normal…”
  Jobs in China’s export-import industries wither in the heat of Washington’s trade war with Beijing / SCMP
  “Demand for labor at China’s importers, exporters, and related manufacturers fell by 40 percent in the last quarter of 2018 from a year earlier, showing the trade war with the US has taken its toll, a survey [by the China Institute for Employment Research (CIER) at the Renmin University of China] released on Friday revealed.”

—Lucas Niewenhuis

3. And then they came for the Jews because of course they would

Yesterday, we noted that police in Bishkek, Kyrgyzstan, dispersed an anti-China protest, and linked to James Milward’s excellent essay in the New York Review of Books: ‘Reeducating’ Xinjiang’s Muslims. A new report by Eurasianet says there were up to 250 people at the demonstration showing their “unease at the presence of Chinese laborers in the country.”

Back in China, Bitter Winter reports that the religious and cultural repression targeting Muslims and Christians has arrived in Kaifeng, home to China’s tiny community of native Jews:

When news of [a plan to reconstruct the community’s synagogue] reached the central offices of the CCP, orders came down to shut down the projects and to cut off Shavei Israel’s other efforts in the community. The Kaifeng Jews, now a rural and mostly poor people, were unable to maintain any of the reconstruction efforts.

New rules also forbade public Jewish gatherings on holidays. The Hebrew signs were torn down. A museum exhibit showcasing Kaifeng’s Jewish history disappeared under a new regulation.

—Jeremy Goldkorn

4. Baidu threatens to sue a journalist for mentioning past scandals

Baidu, China’s top search engine, has come under intense fire after threatening a prominent Chinese journalist with legal action if he didn’t remove a “defamatory” blog post. The article in question, published by Wáng Zhì’ān 王志安, an experienced reporter and prolific writer with a focus on social issues, called out Baidu for its role in facilitating the rise of Quanjian, a dodgy Chinese healthcare products maker that is under investigation for operating a pyramid scheme and false marketing.

For more, please click through to The China Project.

—Jiayun Feng

—–

Our whole team really appreciates your support as Access members. Please chat with us on our Slack channel or contact me anytime at jeremy@thechinaproject.com.

—Jeremy Goldkorn, Editor-in-Chief

Here are the stories that caught our eye this week:

• A Canadian man was sentenced to death for drug trafficking by a Chinese court, in a dramatic escalation of Beijing’s retaliation against Canada for arresting Huawei CFO Mèng Wǎnzhōu 孟晚舟 in December. The Global Times warned (in Chinese) that Poland, which also arrested a Huawei employee recently, could be next to “pay…a price.” Robert Schellenberg plans to appeal his case, but law scholar Donald Clarke predicts: “the Supreme People’s Court will sit on the review decision for as long as Meng’s fate remains undetermined.” China and Canada both issued travel warnings for their citizens in the other country. It was also reported this week that another Canadian was briefly detained in Beijing, en route back to Canada, but released after two hours.

• Regardless of the outcome of Beijing’s hostage diplomacy, Huawei clearly has a big fat bull’s-eye painted on its kitschy Shenzhen headquarters: The U.S. federal government is investigating it for stealing trade secrets, while the American congress is proposing bans on selling to the company, and the German government and Oxford University are also souring on Huawei.

• Beijing is stimulating the slowing economy by dropping the reserve requirement ratio for banks, and promising tax cuts that could be worth hundreds of billions of dollars.

• At least 145 parents, angry that their children received expired vaccinations, clashed with police and officials in a town in Jiangsu Province.

• Even more evidence of a U.S.-China trade deal emerging came to light this week (The China Project identified this trend last week). Donald Trump again stated that he thinks the U.S. is going to “do a deal with China” and end the trade war, and even though U.S. Trade Representative Robert Lighthizer reportedly doesn’t see “any progress” on the most important issues in economic relations with China (including the indefinitely slow-walked approvals for American credit card companies), he is being pressed by Trump to close a deal. The Wall Street Journal even reported that the Trump administration is considering easing tariffs as part of a trade deal at the beginning of March, or even sooner as a goodwill gesture. Vice premier Liú Hè 刘鹤 is confirmed to be visiting Washington, D.C., for high-level trade talks on January 30-31.

• Chinese tourism to the U.S. appears totally unaffected by the trade war. New York City and Los Angeles County both reported record numbers of Chinese visitors in 2018, even as foreign direct investment from China and business merger deals — particularly in technology — plummeted.

• In New Zealand, a popular Chinese-language newspaper and website operating in a joint venture with one of the country’s leading media organizations is soft-pedaling the China news.

• China’s lunar lander sprouted seeds in a capsule, a historic landmark for space exploration, though they died after a couple days because the lander didn’t have sufficient battery power to keep the plants warm.

• China’s TV regulators seem to have begun a stealth campaign to censor earrings from the earlobes of male entertainers.

• A Chinese kindergarten teacher who was dismissed last summer allegedly because of his sexual orientation has filed a lawsuit against his former employer to get his job back.

• Dozens of Fortune 500 companies were identified as having the “wrong listing of Taiwan” on their websites, in a second wave of what the Trump administration last year dubbed “Orwellian nonsense” from Beijing.

BUSINESS AND TECHNOLOGY:

• Remote surgery
  Surgeon in China used 5G network to operate remotely on animal / Sky News
  “A doctor in China has become the first to perform remote control surgery over a super-fast 5G network. The surgeon, who manipulated two robotic arms, was 30 miles from an operating theatre in Fujian province. During the procedure, he removed a laboratory animal’s liver.”

• Peppa Pig strikes back
  Peppa Pig trailer strikes a chord with Chinese ahead of Lunar New Year / SCMP
  “A trailer for an upcoming film starring Peppa Pig, co-produced by [British media company Entertainment One and Alibaba Pictures], has taken the country’s social media by storm with its bittersweet story about family bonds.”
  “What Is Peppa?” – Viral ad campaign for ‘Peppa Pig’ movie makes the British pig more Chinese than ever / What’s on Weibo
  “The hashtag #WhatisPeppa (#啥是佩奇# [shà shì pèiqí]) [has been posted] a staggering 400 million times on social media platform Weibo at time of writing.”

• Private British schools for wealthy Chinese
  Number of British schools in China to more than double / TES News
  “Consultancy Venture Education predicts there will be 46 British private school campuses in China by the end of the year, more than double the number two years before… Many [wealthy Chinese] want their children to attend top-tier Western universities like Oxford or Harvard and see campuses of ‘brand-name’ British schools like Harrow or Wellington as the best way in.”

• Prison: Now with extra convenience
  China’s prisons go digital for inmate convenience and clean management / SCMP
  “Beijing Prison announced last month that it had added Alipay to the online payment services families of prisoners can use to deposit money for inmates, for digital shopping or payment of medical expenses.”

• Chongqing as economic indicator
  China’s painful economic transition in full view in city of Chongqing / SCMP
  “The sharp slowdown in Chongqing is a bad sign for the Chinese national economy as a whole, given that Beijing once hoped that inland regions like Chongqing could maintain robust growth when the coastal zones ran into trouble.”

• Capital winter
  China’s largest online ticketing site lowers IPO ambition / FT (paywall)
  “Maoyan Entertainment, a Chinese online ticketing service, will seek to raise up to $345 million in a Hong Kong initial public offering this year, half of its original target of $1 billion, in the latest sign of how many Chinese companies are paring back their expectations for raising capital.”

• Another profile of Luckin Coffee
  China’s coffee upstart is pouring millions into overtaking Starbucks / Bloomberg (porous paywall)
  Luckin is “burning through $130 million a year,” though it’s “currently valued at $2.2 billion” even though it’s barely more than a year old. The company has set “a target of 4,500 stores this year, most no larger than a studio apartment rather than sit down cafes. Still, they would outstrip Starbucks’ count of about 3,600.”
  Read on The China Project: Luckin Coffee continues ambitious rampage: Is it really China’s Starbucks — or the next Ofo?

• Tesla Model S recall
  Tesla is recalling over 14,000 Model S vehicles exported to China due to Takata airbag issue / Electrek

POLITICS AND CURRENT AFFAIRS:

• African swine fever: Is the worst over, and can a cure be found?
  China lifts swine transport ban in key provinces amid vaccine project / AgriCensus (registration required)
  “China has lifted the transportation ban for pigs in two major pig-farming provinces — Liaoning and Sichuan — as the country has set up a project to potentially develop a vaccine for African Swine Fever (ASF). The transportation restriction that prevented pigs from being shipped out of Liaoning province was removed on Monday, according to a document released by the Liaoning provincial Department of African Swine Fever prevention and Control on Friday…China’s ministry of Science and Technology said Friday it has started research to develop a vaccine for ASF, which is currently incurable.”

• Second Trump-Kim summit in February
  Trump to meet with North Korean leader Kim Jong Un at end of February, White House says / Washington Post
  Read on The China Project from last week: Kim Jong-un ends fourth visit to China with Beijing’s support, eyes on second Trump meeting

• Nipping popular uprisings in the bud
  Chinese police must guard against ‘color revolutions’, says top official / Reuters
  “China’s police must ‘stress the prevention and resistance of ‘color revolutions’ and firmly fight to protect China’s political security’, Public Security Minister Zhao Kezhi said on Thursday, according to a post on the ministry’s website.”

• Ex Interpol chief’s wife applies for asylum
  Wife of Chinese ex-Interpol chief seeks asylum in France: Reports / AFP
  “Grace Meng has remained in the French city of Lyon, the site of Interpol’s headquarters, since her husband Mèng Hóngweǐ 孟宏 disappeared — and was later revealed to have been arrested — while visiting China in September.”

• One country, one system?
  Reciprocal deal between Hong Kong and mainland China will recognise court rulings on either side for cross-border disputes / SCMP
  “Hong Kong and mainland China signed a reciprocal deal on Friday that would recognise and enforce judgments in civil and commercial cases on either side of the border, effectively allowing parties to seek damages in each other’s jurisdictions.”

• Labor activism and its suppression
  Hong Kong trade unions call for release of Jasic activists / Radio Free Asia
  “A trade union body in Hong Kong has called for the release of more than 30 former workers at a factory in neighboring Guangdong province and the Maoist labor activists who were supporting them.”

• Locking up the lawyers
  ‘Táng Jīnglíng 唐荆陵 would have fought for vaccine victims, but he’s in jail’ / Radio Free Asia
  “Wang Yanfang, the U.S.-based wife of jailed human rights lawyer Tang Jingling, who once represented the victims of tainted and fake vaccines, said the problem hasn’t gone away. She added that there are fewer channels of redress for victims following a nationwide crackdown on rights lawyers since 2015.”
  Court in China’s Guangdong jails human rights lawyer for five years / Radio Free Asia
  “Authorities in the southern Chinese province of Guangdong have jailed a human rights lawyer for five years, RFA has learned. Chén Wǔquán 陈武权 was found guilty of ‘picking quarrels and stirring up trouble’ by a court in Guangdong’s Zhenjiang city and sentenced to five years’ imprisonment.”

• The struggle of memory against forgetting
  Zhào Zǐyáng 赵紫阳: A reformer China’s Communist Party wants to forget / BBC
  “Today, on a cold, January day, on the anniversary of Zhao’s death from a stroke in 2005, numerous police vehicles flank every entrance. Parked outside the gate is an unmarked security car; the occupants monitoring arrivals and muttering into radios.”

SOCIETY AND CULTURE:

• Soccer
  A death, arrests and a Chinese football club in meltdown / AFP
  “Tianjin Quanjian’s troubles came to light late last month when its owners, self-styled experts in traditional Chinese medicine, came under scrutiny for their treatment of a young cancer patient.”

• Child abuse
  Chinese nanny caught on home security camera ‘abusing’ 10-month-old infant / SCMP
  “A video purportedly captured by a home security camera showing a nanny abusing a 10-month-old boy has gone viral in China, triggering a police investigation and an online conversation among working mothers.”

• Police departments on social media
  Chinese police are vying for viral videos / Sixth Tone
  “The wildly popular meme-making app TikTok has become an officially endorsed battleground for China’s law enforcement arms.”

VIDEO ON SUPCHINA THIS WEEK

• This dad performs surgery on fruit

• Get your nails done in Lunar New Year fashion!

• Chinese factory raises 1 billion cockroaches

• The fanciest way to eat your fruit

• An easy piggy kirigami tutorial to get you prepared for Chinese New Year!

• China’s first 3D-printed bridge put into use in Shanghai

• Not your typical rural life — meet the countryside acrobatic boys!

• Heavy smog blankets northeast China

FEATURED ON SUPCHINA

New Year’s greetings from the NBA, China and the AFC Asian Cup, and the X Games are coming

This year, a record 15 NBA teams will officially mark the Chinese New Year at their arenas for what is part of the league’s eighth CNY celebration. Also: China is safely through to the knockout stages of the AFC Asian Cup, with a very winnable game next against Thailand on Sunday, and X Games creator ESPN has partnered with Chinese sports platform REnextop to bring the coolest names in the action sports world to the Middle Kingdom this year.

The Venezuela-China relationship, explained: Belt and Road

This is the second of a four-part series that spotlights the Venezuela-China relationship. At the second China-CELAC Forum in 2018 (CELAC was formed in Venezuela in 2011, and does not include the U.S. or Canada), China’s foreign minister, Wang Yi 王毅, called Latin American countries “a natural extension” of Chinese President Xi Jinping’s Belt and Road Initiative. Venezuelan investments in China had not always been part of the Belt and Road Initiative, but they very much are today.

Hanshan: Investigating the life of Chinese literature’s most mysterious poet

The poet Hanshan 寒山, a name meaning “Cold Mountain,” ranks as one of the most eccentric and mysterious figures of Chinese literature. He is said to have lived during the Tang dynasty (618–907), dwelling in a cave or hut on Tiantai Mountain near modern-day Taizhou, Zhejiang. In Chinese and Japanese art, he is often depicted as dirty and raggedy, smiling mischievously with his friend Shide 拾得. His poetry, written in a direct, colloquial style, was satirical and spiritual, touching on both Buddhist and Daoist themes. Hanshan also wrote poems about his own life, but his real identity is completely unknown. His name, in fact, is a pseudonym that refers to a place on Tiantai Mountain.

Flavor is more than skin deep: The many ways in which Chinese eat offal

China and the United States are among the world’s biggest meat consumers, but there’s a big difference in what each country is willing to eat. American meat consumption is limited to skeletal muscle and mostly excludes offal, or the organs (heart, liver, intestines, etc.) and extremities (brain, tongue, feet, etc.). In contrast, Chinese carnivores seem to be enthusiastic about making nose-to-tail use of their livestock. Here are five Chinese preparations of the fattiest type of offal — large pork intestine — spanning across various culinary regions.

China Business Corner: WeChat founder Allen Zhang and the Tencent conference

In the wake of Tencent’s recent annual conference, it’s WeChat mastermind Allen Zhang week here at China Business Corner. First we’ll take a look at an extended profile of the man himself, whose product decisions about WeChat have more immediate impact on Chinese people’s daily lives than most political decisions (the article, incidentally, was censored after one day), then turn to his recent four-hour speech at the Tencent conference, which some critics have argued is a “reality distortion field” that doesn’t address WeChat’s fundamental problems.

Luckin Coffee continues ambitious rampage: Is it really China’s Starbucks — or the next Ofo?

Luckin Coffee, founded in November 2017, already has 2,000 offline stores, and it recently announced plans to open another 2,500 stores in 2019, which would make it the largest coffee retail provider in China. But it has also been significantly subsidizing its coffee and investing extravagantly in advertisements, leading many to wonder — will it surpass Starbucks in China, or is it destined to run out of money first, like Ofo?

Chinese Corner: The women who spoke out against sexual misconduct

What happens to a Chinese woman after she speaks out against sexual harassment and assault? This is the question at the center of a recent profile of a cohort of brave women who have come forward as victims of sexual misconduct in support of China’s fledgling #MeToo movement. This and other stories in Chinese Corner, Jiayun Feng’s review of interesting nonfiction from this past week on the Chinese internet.

Kuora: Yunnan, with all its history, is more than a vacation getaway

This week’s Kuora explores one of the most beautiful provinces of China — Yunnan, which was incorporated into the Han dynasty (206 B.C.E. to C.E. 220) in the 2nd century B.C.E., came to be dominated by semi-sinicized tribal people for a while, came back to Han Chinese rule in the 14th century, but soon after became a feudatory under a Chinese general…and so on and so forth. It’s an interesting story. Check it out.

SINICA PODCAST NETWORK

Sinica Podcast: Gene-edited babies, CRISPR, and China’s changing ethical landscape

This week on Sinica, Kaiser and Jeremy chat with Christina Larson, a science and technology reporter for the Associated Press, about a major story that her team broke: the announcement by the Chinese scientist Hè Jiànkuí 贺建奎 that he had edited the genes of embryos conceived in vitro, and that twin girls had been born, making them — if his claims are true — the world’s first gene-edited babies.

• Subscribe to the Sinica Podcast on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.

• Access members can get an exclusive early preview of Sinica each week by plugging this RSS feed directly into their podcast app.

TechBuzz China: Everybody was WeChat Fighting: Bytedance Duoshan, Toilet App, and Bullet 2.0

In episode 35 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about competitors to the reigning Chinese social media champion, WeChat. Specifically, they focus on three apps that all decided to launch on Tuesday, January 15, 2019, two weeks before Chinese New Year: Bytedance’s Duoshan, Wang Xin’s self-proclaimed “anti-WeChat” Toilet, and Bullet Messenger 2.0. Following their releases, WeChat promptly blocked links to all three. Our co-hosts ask: Does WeChat have a reason to be scared? Why was it so defensive? Is there truly a chance for any of these companies to topple Allen Zhang’s miraculous creation? And if so, how would that come about?

• Subscribe to TechBuzz China on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.

ChinaEconTalk: The world’s largest video game industry

China’s video game market is the world’s largest. Over 600 million people play video games in China, and collectively, they spend over $40 billion a year on games. This episode, featuring Abacus reporter Josh Ye and localization expert Frankie Huang, explores the market as well as gaming culture in China.

• Subscribe to ChinaEconTalk on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed straight into your favorite podcast app.

The Caixin-Sinica Business Brief, episode 74

This week on the Caixin-Sinica Business Brief: The arrest of a Chinese Huawei executive in Poland, missing documents from the Supreme People’s Court, Elon Musk’s visit in Beijing, China’s fertility rate in 2018, and more.

• Subscribe to the Business Brief on Apple Podcasts, Overcast, or Stitcher.

PHOTO OF THE DAY

Exercise time

Students prepare for their daily physical exercises at the Laojuntang Elementary School in Chaoyang District in Beijing in October 2018. Photo by Lavinia Liang, who is @lavinianshores on Instagram.