Toyota: Looking good in China

1. Toyota: Looking good in China

“Car sales in China fell last year for the first time in about two decades. GM (GM) was down 10%, Ford (F) plunged 37% while Volkswagen (VLKAF) just about held its ground. Sales of Toyota (TM) vehicles, however, surged 14 percent to almost 1.5 million,” reports CNN.

• Toyota is predicting further growth in China in 2019, despite the general gloom around the auto industry in China.

• How did Toyota succeed? Analysts say there are a number of factors, “including the company’s intensified focus on the Chinese market, new tariffs that have hurt some of its rivals, and its stable of hybrid vehicles.”

• The growth comes off a lower base than some of Toyota’s competitors. Toyota “sells about half as many cars in China as GM. The Japanese company has historically prioritized the United States, its biggest international market,” according to analysts cited by CNN.

• Toyota’s hybrid vehicles are already popular with Chinese consumers, and are likely to receive ongoing government support as a practical alternative to all electric cars.

Other positive business news from China today:  

• Chinese consumers still spend big on luxury fashion and beauty brands / Yahoo Finance

• ‘Lipstick effect’ and China’s love of luxury fuels L’Oreal’s strongest growth in a decade / CNBC

2. Pacific Reset, day 218

It’s all talk and no walk on the front lines of the U.S.-China trade and tech war — what some call the new cold war, but what we’re calling the Pacific Reset. Here are today’s headlines:

Tariffs and trade talks

• Pressure grows on U.S., China to forge trade deal / WSJ (paywall)
  As summarized by Wall Street Journal reporter Bob Davis on Twitter: “From Stephen Schwarzman to Hank Paulson, top business figures are pressing US and Chinese officials for a deal. Beijing not offering much so far. Two sides are far apart. Will Trump agree to a skinny deal to keep markets happy?”

• Trump will not meet President Xi Jinping of China before trade deal deadline / NYT (porous paywall)
  “The decision not to meet ahead of the deadline was a reversal for Mr. Trump, who said last week that he planned to meet with Mr. Xi to resolve any ‘final issues’ before a trade deal.”

• Sonos considers moving manufacturing from China if trade war worsens / Axios
  “Smart speaker company Sonos will re-examine its Chinese supply chains if the U.S.-China trade war worsens,” according to the company CEO. He “said it could take ‘up to one year’ to shift manufacturing and its supply chain out of China to avoid feeling the effect from a potential escalation of tariffs.”

• China could be set for a big win as Donald Trump mulls uranium quota / SCMP
  “The United States is considering a 25 percent domestic production quota for national security reasons, sending 4.5 million kilogram back to the global market. This would benefit China’s rapidly growing nuclear power industry.”

Huawei

• We can’t tell if Chinese firms work for the Party / Foreign Policy (porous paywall)
  “Huawei claims to be an independent firm, but China’s own laws mandate a different reality,” argues Ashley Feng.

• Huawei 5G test bed launched / Reuters via Bangkok Post

The cooperation with Huawei on the test bed does not mean it is not concerned about security issues, Minister of Digital Economy Pichet Durongkaveroj told Reuters at the launch.

“We keep a close watch on the allegations worldwide. However, this 5G test bed project is a testing period for the country,” Mr Pichet added. “We can make observations which will be useful to either confirm or disconfirm the allegations.”

Mr Pichet was speaking at the test site in Chon Buri, the heart of the government’s $45-billion Eastern Economic Corridor (EEC) — about 90 km [55 miles] southeast of Bangkok. Vendors like Nokia, Ericsson and Thai telecoms operators have also set up 5G labs at the site.

Moody’s Investors Services tries to scare Canada

• Moody’s Investors Services warns big risk to Canadian schools if China pulls students / Globe and Mail (paywall)
  Moody’s Investors Services warns that three of the country’s biggest universities “would face a cash crunch if Canada’s diplomatic row with China results in the world’s most populous nation pulling its students from Canadian schools.”

3. Xinjiang: The horror follows you via WeChat

The Washington Post reports:

Alfiraa Dilshat and Rashida Abdughufur were picnicking in the small seaside town of Victor Harbor in late December when Abdughufur got a video call from her mother.

With Abdughufur living in Adelaide, a city in southern Australia, and her mother in the Xinjiang region in China, it was a rare chance for the two to connect. At first, Abdughufur said, she was excited because she hadn’t talked to her mother in a long time. Then came “disaster.”

Abdughufur’s mother appeared on the screen in handcuffs, sitting next to a police officer.

“They started interrogating me,” Abdughufur said.

Fearing for her safety, she complied, sharing sensitive details and documents the police demanded from her, including her Australian driving license. When Abdughufur finished the call, “her face was pale,” her friend Dilshat remembered. Shortly thereafter, an audio message from Abdughufur’s mother arrived.

“These people will look for you,” it said.

The WeChat account used to contact Abdughufur was disconnected soon after. Abdughufur hasn’t heard from her mother since.

Other Xinjiang stories we recommend reading from the past week:

• The future of Uyghur cultural — and halal — life in the Year of the Pig / by Darren Byler on The China Project

• She fled China’s camps — but she’s still not free / Foreign Policy (porous paywall)

• And this Twitter thread by Humar — whom Emily Feng and Austin Ramzy identified as the wife of a former colleague at the New York Times — which begins, “Friends, I’m coming out as a family of the victims of China’s ethnic cleansing concentration camps.”

—–

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:

• The FBI raided Huawei’s San Diego lab, and conducted a sting operation that caught a Huawei supply chain manager admitting to an apparent export control law violation, Bloomberg reported. Both events are connected with Akhan Semiconductor Inc., an Illinois-based company which says that Huawei broke a contract in damaging a prototype of its diamond-coated smartphone screen product. The FBI has not yet announced the results of its investigation.

• CCTV claimed that the Spring Festival Gala this year was a huge success, with 1.17 billion viewers and 96.98 percent positive feedback on social media. The China Project’s Jiayun Feng calls BS.

• A billionaire political donor in Australia, Huáng Xiàngmò 黄向墨, was denied entry to the country and stranded overseas after his application for a passport was rejected and his permanent residency canceled. Huang is the most prominent of the Chinese Communist Party-linked figures whose activities in Australia sparked a backlash in the country and the passage of multiple foreign influence laws in the past two years.

• Facebook is raking in the cash from Chinese-based advertisers, despite having been blocked in the P.R.C. for years, the New York Times reported.

• The Shanghai Food and Drug Administration announced a recall of a batch of 12,000 bottles of blood plasma due to reports that some contained traces of HIV antibodies. No cases of patients contracting HIV from contaminated transfusions were reported, but even if this was a false positive or low-risk breach, it highlights endemic problems in China’s healthcare system.

BUSINESS AND TECHNOLOGY:

• The data privacy paradox
  China’s privacy conundrum / Slate
  Lorand Laskai, who co-authored this piece with Samm Sacks (soon to be featured in a live Sinica Podcast), commented on Twitter, “We are entering the strange world in which China—a country in which gov surveillance is ever-present—might soon do more to protect user privacy online than the US.”

• Entrepreneurs of the Chinese diaspora
  Chinese-born brothers build billion dollar fortunes in Silicon Valley with network security software firm Fortinet / SCMP
  “Cybersecurity has unlocked riches for Ken and Michael Xie. The Chinese-born brothers are now billionaires from their stakes in Fortinet Inc., the Silicon Valley-based network security software firm they co-founded almost two decades ago.”

• Homegrown silicon
  China’s IC production forecast to double over next 5 years / EE Times
  “Integrated circuit production in China is projected to nearly double between 2018 and 2023, increasing from $23.8 billion to $47 billion, according to market research firm IC Insights… China has been the largest consumer of ICs since 2005. IC production in China accounted for 15.3 percent of its domestic market of $155 billion in 2018.”

• Tesla marketing
  Tesla makes Enhanced Autopilot standard for Model 3 in China / Teslarati
  “In what appears to be a rather assertive tactic to push the Model 3 en masse to Chinese customers, Tesla has opted to offer Enhanced Autopilot as standard for the electric sedan.”

POLITICS AND CURRENT AFFAIRS:

• South China Sea — Beijing looking for a thriller with Manila?
  Chinese fleet ‘tries to halt Philippine work’ in South China Sea / SCMP
  “China has been accused of sending a fleet of almost 100 ships to hamper Philippine construction work on a disputed island in the South China Sea… The fleet of ships, dispatched from the nearby Subi Reef, includes vessels from the navy and coast guard along with dozens of fishing boats. The report said their presence was part of an effort to coerce the Philippines into stopping the work on the island, which China also claims as its own.”
  China sends paramilitary forces as Philippines repairs Pag-asa Island / Phil Star

• Undiplomatic diplomacy: The Chinese embassy in Stockholm
  Chinese embassy in Sweden denies secretly trying to silence daughter of detained bookseller / Hong Kong Free Press
  “China has denied contacting the daughter of detained Swedish national and former Hong Kong bookseller Guì Mǐnhǎi 桂敏海 in an effort to stop her talking to the press. In a report published last Sunday, Angela Gui told the Svenska Dagbladet newspaper that she was contacted by an unidentified person who promised her a visit with her father Gui Minhai in China, if she stopped talking to the media.”

• Australia — suspected Beijing hacking and influence ops
  China link possible in cyber attack on Australian Parliament computer system, ABC understands / Australian ABC
  “Australia’s security agencies are investigating a cyber breach of the Federal Parliament’s computer network that the ABC understands is likely the result of a foreign government attack.”
  Connected Chinese billionaire hits back at Australia ban / AFP
  “The Chinese businessman barred from Australia on suspicions he is part of a Communist Party influence campaign said he had been treated in a ‘grotesquely unfair manner.’”
  ‘Give back my money’: Banned billionaire Huang Xiangmo hits out at political parties / Guardian
  “The Chinese billionaire and major political donor Huáng Xiàngmò 黄向墨 has hit out at a decision to bar him from Australia…telling political parties to return his money if they believe it was given inappropriately.”
  Huang Xiangmo slams ‘lies’ behind stripping of his Australian residency / SCMP
  “In his first statement since his residency was revoked, Huang proposed that Australian politicians return his donations to instead be given to charity, and argued the organizations he headed were in line with Canberra’s political stances on China.”

• The PLA in artificial intelligence and in China’s space program
  China’s military is rushing to use artificial intelligence / MIT Technology Review
  A new report from the think tank Center for a New American Security is drawn from “various conferences as well as meetings with officials in China’s Ministry of Foreign Affairs.” It says that “China is moving quickly to add ever more AI and autonomy to military weapons systems,” and that “the country’s leaders see emerging technologies, including AI, as a way to catch up with rival nations in the West.”
  China’s space station in Argentina is a mystery / Voice of America
  See also this piece from January by Reuters: China’s military-run space station in Argentina is a ‘black box.’

• Stories of censorship and television
  Yanxi Palace: Why China turned against its most popular show / BBC
  “It was one of China’s most popular shows of 2018 — but it’s now being pulled from TV screens across the country.”

• Annals of Hong Kong crime
  Mainland Chinese businessman who escaped from Hong Kong police via toilet ceiling jailed for 18 months / SCMP

SOCIETY AND CULTURE:

• Pigs and Chinese literature
  The many faces of Zhu Bajie / The World of Chinese
  “Although pigs tend not to have a positive image in Chinese language and culture (unless one is cooking them), the lure of shoppers’ sweet cash has ensured that many brands have gone the whole hog with porcine images this Year of the Pig. China’s most iconic pig, though, is still Zhū Bājiè 猪 八戒, also known as Pigsy or Zhū Wùnéng 猪悟能, one of the three disciples of the monk Táng Sānzàng 唐三藏 in the classic novel Journey to the West.”

• Co-opting independent filmmakers
  The death and revival of independent film in China / Variety
  “Independent cinema, as it existed in its ’90s heyday, is undergoing a slow death in China, suffering the joint onslaught of hot money luring away talent to commercial projects and intensifying censorship… But independent-style films that look and feel like indies — yet are nonetheless studio-financed and exist within China’s strict censorship regime — may see a renaissance.”

• Family reunions gone wrong
  Young Chinese are fighting back against scourge of Lunar New Year: interfering relatives / SCMP
  “Unwelcome criticism and meddling has turned family get-togethers into an ordeal for many from younger generations… Songs, videos and sweaters [are] among the sources of inspiration for those fed up with relatives asking about their salary and setting up blind dates.”

• Photography: Eastern Tibet / western Sichuan
  A photo trip to China’s Daocheng County / The Atlantic
  A gallery of photos that make you want to visit Daocheng County in western Sichuan, home to more than 30,000 Tibetans.

VIDEO ON SUPCHINA

The many variations of dragon dances

Like the lion dance, the dragon dance is a traditional festive performance in China. It involves a group of skilled performers who move together under a dragon costume, and it requires some serious teamwork and body strength. The dance needs at least three people to make it work, but sometimes it can involve hundreds of people. They definitely do put on a show!

We also published the following videos this week:

• An easy, cute piggy clay cup to make with your kid

• Lion dancing — a Chinese cultural tradition

• Amazing fireworks in China during New Year’s Eve

FEATURED ON SUPCHINA THIS WEEK

The curator of old China: Tong Bingxue and his photographs

You may know Tong Bingxue 仝冰雪 from his Twitter account, where he frequently posts historical yet timely photos that reveal stories of a bygone China, far from modern reference points. But his real work happens offline, where he has collected old photographs of China for nearly two decades, becoming a historian and curator along the way. Tong sat down with us to talk about his work, from his first photo purchase for 50 yuan to now hosting exhibitions around the world.

The future of Uyghur cultural — and halal — life in the Year of the Pig

Up until 2018, a Lunar New Year celebration was conspicuously absent from Uyghur society. Today, it is the largest cultural event of the year, replacing the sacred holidays of Uyghur traditional life, Eid al-Adha and Eid al-Fitr, and the traditional Uyghur spring festival, Nawruz, which are all now forbidden as signs of “religious extremism.” We learn more about this and take a look at a nationally televised “Uyghur cultural performance” for a mostly Han audience in Mekit County on January 19.

Opinion: In dealing with China, the U.S. can draw on a Cold War lesson: Be more open

Scott Moore writes: Recently, China has seriously shaken America’s techno-confidence, and in response, U.S. policymakers have adopted a siege mentality. But the great techno-freakout of the past two years is hardly America’s first crisis of technological confidence. And the last one — a long battle for technological supremacy with the Soviet Union during the Cold War — shows that America’s real advantage has less to do with technology itself than with its culture of openness and innovation.

The Year of the Dog in live music: 21 bands that rocked Beijing in 2018

Rock in China largely exists in small, dedicated communities in a few large cities, and Beijing in particular has had a vibrant community of original bands representing every genre for more than 30 years. For this end-of-(lunar)-year list, three venue showrunners — from Temple Bar, Dusk Dawn Club, and School Livehouse — have compiled a list of 21 of their favorite live acts.

Five classic Chinese New Year movies

The Lunar New Year has long been a big and profitable time for the Chinese movie industry. Reflecting the hope that people have for the new year, the movies shown during the holiday often feature happy endings. To celebrate the new lunar year, we’ve put together a list of five classic Chinese New Year movies, arranged in chronological order. It’s by no means a definitive list, so feel free to mention in the comments section any other essential viewing we missed.

The five best CCTV Spring Festival Gala sketches of all time

The CCTV Spring Festival Gala, arguably the world’s most watched television program, offered its 37th edition yesterday while desperately trying to maintain its relevance. But there was a time when the show was undeniably good: In the early years of the gala, before it was transformed into a carefully orchestrated show overloaded with political messages and ideological statements, the gala’s sole purpose was to delight its audience. And it did! Here are some of the best and most unforgettable sketches the gala had to offer.

Eight lucky foods to eat on Lunar New Year’s Eve

In Chinese culture, superstitions intertwine with food to bring about special dishes intended to bring good luck for the new year. Auspicious meanings are represented by a food’s appearance or pronunciation, and common homophones include words for prosperity, success, and family togetherness. While every region has different styles for preparing their feasts, here are eight of the most common dishes seen on the tables of families celebrating Chinese New Year.

Kuora: Visiting Beijing during Chinese New Year

Chinese New Year (CNY) isn’t the best time to visit the city, but neither is it the worst. Kaiser Kuo lays out the pros and cons and you can decide.

Here it is, the best act from the 2019 CCTV Spring Festival Gala

The 2019 CCTV Spring Festival Gala — one of the most watched shows on the planet despite its familiar schmaltz, predictability, and overarching disregard for what young viewers might consider entertaining — ended not long ago, and we can go ahead and say that, in its defense, it was at least more cheerful than the Super Bowl. One act in particular was awesome.

SINICA PODCAST NETWORK

Sinica Podcast: Live from the US-China Business Council: The bilateral trade relationship in 2019

This week on the Sinica Podcast, we’re live from the US-China Business Council’s Forecast 2019 Conference in Washington, D.C. This show was recorded on January 31 — the day (and hour) that Donald Trump met with China’s top official in charge of trade negotiations, Liu He. Kaiser and Jeremy spoke with Tim Stratford, the chairman of the American Chamber of Commerce (AmCham) in the People’s Republic of China, and with Craig Allen, the president of the US-China Business Council. The wide-ranging conversation covers everything from technology policies to the structural changes that China is being asked to make to address U.S. complaints over unfair trade practices.

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

ChinaEconTalk: The Obama era of U.S.-China economic relations

How did the U.S.-China economic relationship evolve during the Obama administration? Are the economic tensions we see today between the two countries a product of inevitable forces, or more contingent on the choices of the Trump and Xi administrations? To discuss these topics and more, we have on today’s show Caroline Atkinson, who served as President Barack Obama’s deputy national security adviser for international economics.

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

PHOTO OF THE DAY

At the Tesla showroom

A kid checks out a Tesla Model 3 at the company’s showroom inside The Mixc (万象城 wànxiàng chéng) shopping mall in Qingdao, Shandong Province. Photo taken by The China Project’s Jia Guo on February 2. See more from her on Twitter and Instagram.