The underwhelming new foreign investment law

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Now on with the news.

—Jeremy Goldkorn, Editor-in-Chief

1. New foreign investment law approved

The National People’s Congress gave its (rubber)stamp of approval to the Foreign Investment Law of the People’s Republic of China on March 15, and the new regulations will come into effect on January 1, 2020.

• The law was fast-tracked in the past three months, the BBC noted, and Beijing “appears to have rushed through the investment law as an olive branch to the US amid trade war negotiations.”  

• There were last-minute amendments: The Wall Street Journal says that the “language in the final draft speaks more directly to transgressions by Chinese officials,” which Jacob Parker, Beijing-based vice president at the U.S.-China Business Council, called a “very positive” development.

• It “attempts to address outstanding concerns from foreign investors, such as unfair treatment in terms of market access and government procurement, forced technology transfer to Chinese partners and the theft of commercial secrets from foreign businesses in China,” the SCMP says.

• But “at the same time, the wording of the law…is quite general, leaving many details to be addressed in other regulations and implementation procedures.” The New York Times, the South China Morning Post, and Lawfare have previously reported in more detail on the wary foreign reaction to the law as it formed.

China Law Translate has a full translation of the law’s text.

—Lucas Niewenhuis

2. Xi heads to Europe

Xinhua reports that Xí Jìnpíng 习近平 will “pay state visits to Italy, Monaco and France from March 21 to 26.”

• Last week, Premier Lǐ Kèqiáng 李克强, per the South China Morning Post, “offered an olive branch to the European Union by saying Beijing will not undermine the bloc’s interests if it reaches a trade deal with the United States.”

• No matter what China does, European business interests may be harmed. Earlier this month, the EU Chamber of Commerce published a report titled “Caught in the cross-fire: the effects of the U.S.-China trade war on European companies”:

With 53.9 percent and 42.9 percent of respondents viewing the American and Chinese tariffs respectively in a negative light, it is clear that disruptions are far-reaching… Interestingly, while many had speculated that European firms might find new oppor­tunities as a result of the conflict, only 4.2 percent reported any positive views of the situation.

—Jeremy Goldkorn

3. Europe asks Trump administration: Where are the ‘actual facts’ on Huawei?

The New York Times published a story over the weekend titled “U.S. campaign to ban Huawei overseas stumbles as allies resist.” It is the latest of many reports in the past month to show signs of strain in the American campaign against Huawei, since the U.K. and Germany signaled that they were leaning toward mitigating, rather than eliminating through a total ban, any security risk from the company’s telecommunications equipment.

• A key quote from the NYT story: “European and Asian officials have complained privately that recent American intelligence briefings for allies did not share any sort of classified information that clearly demonstrated how the Chinese government used Huawei to steal information, according to people familiar with the discussions.”

• One “senior European telecommunications executive” went further, and indicated that “no American officials had presented ‘actual facts’ about China’s abuse of Huawei networks,” the Times reports.

• American tactics against Huawei are becoming more extreme: Last week, the Wall Street Journal reported that the Trump administration told Germany that if it went ahead with using Huawei equipment, intelligence sharing would be “pared back.” And in the NYT story, there is a hint that export controls of the kind imposed on ZTE last year are being considered:

American government officials are now looking for other ways to curb Huawei’s global rise without the cooperation of overseas allies, including possibly restricting American companies from supplying Huawei with key components that it needs to build 5G networks across the world.

These kinds of restrictions, which crippled ZTE last year, were of course reversed by Trump after a direct phone call from Xi Jinping. After that debacle, the Times reports that the current campaign against Huawei is understandably “hampered by a perception among European and Asian officials that President Trump may not be fully committed to the fight.”

Other news from the front lines of the fight over Huawei, and the never-ending trade war (currently on day 256):

• Beijing’s line on Huawei
  China rejects ‘groundless’ US warnings over Huawei as it seeks to ease Europe concerns / Reuters via SCMP

• Huawei fallout: Diplomats fear being detained in China
  China-based diplomats warn case of detained Canadians Kovrig and Spavor is ‘Sword of Damocles’ hanging over their heads / SCMP
  “The detention of the former Canadian diplomat Michael Kovrig — held along with his fellow Canadian Michael Spavor on December 10 — has shocked other diplomats stationed in China, who have been exploring legal game plans to protect themselves should they ever find themselves in the same situation.”

• General Sino-U.S. distrust
  As China builds its military muscle, it will pivot to head games / SCMP
  US at UN takes aim at China’s Belt and Road initiative / AFP
  “The United States on Friday (March 15) clashed with China at the UN Security Council over Beijing’s Belt and Road initiative, saying the infrastructure investment scheme had ‘known problems’ with corruption and debt distress.”

• The ever-distant trade war resolution
  Donald Trump-Xi Jinping meeting to end US-China trade war may be pushed back to June, sources say / SCMP

—Lucas Niewenhuis

4. A propaganda pushback in Xinjiang

The latest news about China’s far-western gulags:

• The Swedish Migration Board on January 25 came to the decision that any asylum seeker from China who is Muslim and Uyghur, or belongs “to any other Turkic minority group, with past residence in the Xinjiang province,” is now to be viewed as a refugee.  The news comes from journalist Jojje Olsson, who, last September, reported on a Uyghur family that had been denied asylum in Sweden and were about to be deported to Xinjiang.

• The editorial board of the New York Times yesterday published an opinion piece, titled China’s brutal ‘boarding schools,’ which calls the camps in Xinjiang “indoctrination centers for Muslim Uyghurs [that] are stark violations of human rights.” Also published yesterday, on the other side of the Atlantic: The Guardian view on Xinjiang’s detention camps: not just China’s shame.

• China claimed to have arrested 13,000 “terrorists” in Xinjiang over the last five years, reports the Lily Kuo:

On Monday China’s state council released a white paper on “the fight against terrorism and extremism” and “human rights protection in Xinjiang,” in which Beijing attempted to quantify the campaign…
…Over the last few weeks Chinese state media have released a steady stream of reports and slickly produced videos [that appear] to be aimed at foreign audiences… China’s accounts contrast sharply with satellite imagery that shows prison-like facilities surrounded by barbed wire and watchtowers, and testimonies by former and current residents, as well as ex-detainees of the camps.

• “Joko Widodo, the president of Indonesia, faces an election next month in the world’s largest Muslim-majority country, and presenting himself as defender of the faith is central to his campaign strategy,” write Jamil Anderlini and Henny Sender in the Financial Times (paywall):

But there is one topic in the Islamic world that remains taboo — China’s incarceration of an estimated 1 million Muslims in the western territory of Xinjiang… In an interview with the Financial Times, the president, popularly known as Jokowi, rebuffed several questions on the restive Chinese region, claiming he had no knowledge of the situation there and was unable to comment.

• There is a new direct flight between Chengdu and Istanbul, according to Xinhua News Agency. This news comes after a series of critical remarks from Turkish officials on treatment of Uyghurs, to which China has responded by threatening that economic ties with Turkey could be put at risk by “irresponsible and bad remarks.”

—Jeremy Goldkorn

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

BUSINESS AND TECHNOLOGY:

• Gloom and doom from Prada  
  Prada loses $864 million in value as China slump hits profit / Bloomberg via Yahoo

Prada SpA shares fell to the lowest close since 2016 as slower Chinese spending contributed to an unexpected drop in the Italian fashion house’s annual profit.

The Hong Kong-listed luxury group attributed a slump in Asia mostly to Chinese tourists reining in spending in Hong Kong and Macau because of the weakness in the yuan. Other luxury brands, including Kering SA’s Gucci, have seen the impact of softer buying by Chinese tourists offset by increased spending on the mainland, but Prada failed to get a similar boost from Chinese spending at home, said Citigroup analysts led by Thomas Chauvet.

• Stimulus and risk
  China to speed up construction project approvals in push for growth / Reuters
  “China by mid-year will slash the time needed to obtain approvals for construction projects, the housing ministry said on Monday. In some parts of China, the process now can take more than 1,000 days. The ministry said it can be reduced to within 120 days.”
  China’s Banks Have a Hidden Wave of Bad Debt / Bloomberg (porous paywall)
  “Factor in the amount of soured loans they stripped from their balance sheets last year, and the situation looks a lot more troubling.”
  China shadow banking cools for first time in a decade / FT (paywall)
  “Contraction of $9.1 trillion sector is win for regulators but problem for cash-starved companies.”

• Auto price cuts
  BMW, Mercedes-Benz lower prices in China after VAT drop / Reuters

BMW AG and Mercedes-Benz said on Saturday they will lower their prices in China, after the government announced it will reduce the country’s value-added tax (VAT) starting on April 1.

The German automobile companies each published posts on Chinese social media announcing immediate price cuts for several models. The discounts come as China endures a shrinking market for automobiles as the economy slows.

• China’s space ambitions
  China plans a solar power play in space that NASA abandoned decades ago / CNBC
  China launched its 300th Long March Rocket this month / Space.com  

• Transsion — new mobile phone player hot from success in Africa
  Xiaomi rival Transsion to list on Shanghai tech board / TechNode  
  “Chinese phone manufacturer Transsion, a rival to Xiaomi in Africa, is planning to list on the Shanghai new tech board, said China’s biggest state-owned brokerage on Friday.”

• Australian coal sales really are slowing
  Chinese go-slow on Australian coal imports may be starting to show / Reuters
  “China’s unofficial go-slow on clearing Australian coal through customs didn’t show up in the first two months of this year, but it may now be starting to have an impact.”

POLITICS AND CURRENT AFFAIRS:

• Swine fever: U.S. seizes pork shipments
  U.S. seizes 1 million pounds of pork from China on swine fever concerns / Reuters
  “U.S. border agents have seized around 1 million pounds of pork from China, a spokesman for the agency said on Friday, over suspicions that it might contain African swine flu disease which has hit Chinese pork output. Federal agents have seized the supplies over the past week in New York.”

• Pakistan and JeM
  China open to more talks with India on blacklisting JeM militant chief / Reuters
  “China said on Friday it was willing to have more discussions with all parties concerned including India on blacklisting the head of Pakistan-based militant group Jaish-e-Mohammed (JeM), which claimed responsibility for the attack on an Indian paramilitary convoy in disputed Kashmir in February. China prevented a United Nations Security Council committee on Wednesday from blacklisting JeM founder Masood Azhar.”
  Over 7,000 Pakistani students studying on scholarships in China / Associated Press of Pakistan
  “Figures show that China has become the top education destination for Pakistanis as out of 25,000 students enrolled in Chinese universities, around 7,034 are studying on scholarships. Pakistani students’ number has risen from 9,630 in 2013 to 25,000 in China last year.”
  Pakistan foreign minister to begin 3-day China trip / Economic Times (India)
  “Pakistan Foreign Minister Shah Mehmood Qureshi will begin his three-day official visit to China on Monday during which he is scheduled to attend the first Islamabad-Beijing foreign ministers’ strategic dialogue.”

• Islamophobia and the white supremacist gunman in New Zealand
  The New Zealand shooter finds support in Islamophobic corners of China’s internet / Quartz
  On Twitter, Muslim Hui activist Suleiman Gu pointed out:
  “A WeChat poll of Chinese users finds 60% of the 2,000+ respondents see the New Zealand mosque massacre as a revenge and “extremely sympathize” with the killer after reading his manifesto of terror.”
  Washington Post reporter Gerry Shih responded:
  “It’s only gotten worse since but this story in 2017 poked at rampant Islamaphobia in China and how the government condones and often inflames it. The Xinjiang government troll who fanned unrest in central China gloated about being called out in my story.”

• Anti-corruption campaign — Nur Bekri  
  China’s former energy chief Nur Bekri accused of ‘family-style corruption’ and ‘lavish life’ / SCMP
  “China has expelled one of its most senior ethnic Uygur officials from the Communist Party, the country’s anti-corruption watchdog said on Saturday, accusing the former energy chief of abusing his position to live a ‘lavish life’. Nur Bekri…was placed under investigation last September and removed from his post a month later.”

• Chinese nuclear power in Argentina
  Chinese delegation set to revive stalled Argentina nuclear power plant talks / SCMP
  “A delegation from China will visit Argentina this month to discuss the construction of a nuclear power plant, signalling possible progress in a deal that could increase Beijing’s deepening influence in the South American nation.”

• Censorship: And then they came for the shopping bloggers
  Why China silenced a clickbait queen in its battle for information control / NYT (porous paywall)

She was known as China’s clickbait queen, an irreverent blogger who prescribed shopping to combat sadness (“better than sex, orgasms, strawberry cake”) and makeovers to win back cheating husbands (“men are visual animals”).

But late last month, Mǎ Líng马凌 [online name: Mī Méng 咪蒙], a blogger who commanded an audience of more than 16 million people, went conspicuously silent.

In the battle for control of the Chinese internet, the authorities had designated Ms. Ma a threat to social stability, pointing to an article she published about a young man with cancer whose talent and virtue were not enough to overcome problems like corruption and inequality.

• Transpacific sleaze
  She extols Trump, guns and the Chinese Communist Party line / NYT (porous paywall)
  “Ms. Yang was little known outside southern Florida until her name became associated with the arrest last month of Robert K. Kraft, the owner of the New England Patriots, in a prostitution sting at a Jupiter massage parlor…Though she was not charged or implicated in the sting, her other business efforts have since come under public scrutiny. One promised rich Chinese clients access to the social scene around Mr. Trump.”
  On The China Project Access last week: An unhappy ending for Cindy Yang’s influence-massaging business

SOCIETY AND CULTURE:

• Lifestyles of the obscenely rich
  Chinese buyer pays €1.25m for racing pigeon / BBC  
  Two buyers from China ended up in a bidding war in an auction for a prize racing pigeon, “escalating from €532,000 [$600,000] up to €1.25 million [$1.42 m] in just over an hour. To put it all in perspective…the usual price for a racing pigeon is around €2,500 [$2,835].”

• Elementary school students to learn about financial markets
  China’s primary school students to learn how to avoid stock market pitfalls / Guardian  
  “China’s ministry of education and the country’s securities regulator said they would be working together to ‘increase financial literacy’ among China’s youth…the campaign to improve understanding of the country’s securities and futures markets would begin with textbooks for primary and middle schools.”

• 11-year-old math whizzes
  China’s ‘human abacuses’ get their sums right and beat mental agility challenge on national TV / SCMP
  “Two Chinese school pupils made waves on national television with their mental arithmetic skills, adding up 100 three-digit numbers within 45 seconds.”

VIDEO ON SUPCHINA

A robber in southern China has second thoughts

Just after a robber stole money from Ms. Li in front of an ATM machine in Heyuan, Guangdong Province, on February 16, the suspect returned all the money, with a smile on his face, and walked away. He was still arrested and detained for his act.

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SINICA PODCAST NETWORK

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