China, the battery superpower

Dear Access member,

If you’re in New York tomorrow:

Free beer and pizza…and Howard French

Free beer and pizza will be available for the audience of our live taping of the Sinica Podcast with Howard W. French of Columbia University on April 3. French is a career foreign correspondent and the author of five books, including three works of nonfiction, a work of documentary photography, and a forthcoming memoir of his life in journalism. The China Project Access members get in free. Details here.

—Jeremy Goldkorn and team

1. Just how much China dominates battery production

Damien Ma and Neil Thomas of the MacroPolo think tank at the Paulson Institute have a new piece in Foreign Policy: China is building the batteries of the future (porous paywall).

• They write that Tesla is “America’s only hope to build supply chains for a technology that will reshape the future economy: the lithium-ion (li-ion) battery.”

• That’s because its “Gigafactory” in Nevada, which produces 20 gigawatt-hours worth of battery capacity every year, is the single largest of its kind in the world. It accounts for nearly 10 percent of global li-ion battery production by itself — but no other American company is heavily invested in this. The U.S. has “sizable domestic lithium deposits” but has not utilized them, they note.

• China, meanwhile, commands 61 percent of global li-ion battery production capacity, according to numbers compiled by MacroPolo.

• The electric vehicle (EV) industry is booming around the world, but especially in China: “While the millionth electric vehicle hit U.S. roads last October, Chinese citizens bought 1.2 million in 2018 alone, on the back of generous subsidies and consumer exemptions from local lotteries and registration fees.”

• Those subsidies are now being rolled back, and Beijing is expected to completely phase out EV subsidies after 2020 — see Bloomberg report (porous paywall).

• But EV battery prices are also rapidly falling. One analysis cited by Ma and Thomas projects “the price of an average battery pack to be around $94/kWh by 2024 and $62/kWh by 2030.” $100/kWh is the breakeven price to be competitive with gas-powered cars without subsidies.  

More on EVs and battery production in China:

• Quality issues plague China’s electric-car industry / Bloomberg (porous paywall)
  “For several days last week, the often distressingly poor quality of China’s electric cars was a leading topic across Chinese media. According to one survey ricocheting across the web, nearly 70 percent of respondents said they regretted buying a new-energy vehicle (NEV).”

• In China first, Hainan vows to ban oil-fueled vehicles / Sixth Tone

• BYD builds biggest battery factory for electric cars / The China Project

• How China controls cobalt in the Congo, and what that means for electric vehicles / The China Project

—Lucas Niewenhuis

2. A massive market for mice

Bruce Einhorn of Bloomberg reports (porous paywall):

Sacks of pungent animal feed cram the corridors of a Cyagen Biosciences Inc. center for laboratory mice in southern China, maximizing space for rodents that sell for as much as $17,000 a pair.

President Xí Jìnpíng’s 习近平 drive to turn the country into a biomedical powerhouse by 2025 has pushed the country deeper into drug discovery and to the forefront of genetics. That’s helping fuel a global market for gene-altered mice predicted to expand 7.5 percent a year to top $1.59 billion by 2022.

If you’re interested in the wild frontiers of life sciences and capitalism in China, read the whole thing.

—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:

• Haici: Digital patient service for hospitals
  This Temasek-backed company has a strategy to help China’s state hospitals compete in the data economy / SCMP
  “Serving close to 600 hospitals — including 200 of the highest-ranked hospitals in China — Haici’s platform last year processed transactions totaling 15 billion yuan ($2.24 billion) from 150 million visits.”

• Tencent gets new cash cow licenses after long freeze
  China regulator approves 30 imported online video games, including Tencent’s / Reuters
  “China’s regulators approved 30 imported online video games Tuesday, including Tencent’s ‘Game of Thrones: Winter is Coming,’ according to a notice on the regulator’s website. It marked the first batch of imported online games approved since February 2018.”
  See also:

  • Chinese tech giant Tencent plans US$5 billion dollar bond sale: Sources / Reuters via CNA

  • Tencent plans 10 percent share buyback in bid to boost value / TechNode

• Xi did not actually make a new promise to buy 300 Airbus planes
  China’s huge Airbus order padded by old or incomplete deals – sources / Reuters

A landmark order from China for 300 Airbus jets signed during a state visit last week was bolstered by repeat announcements of dozens of existing deals and advance approval for deals that have yet to be struck, two people familiar with the matter said.

Echoing an umbrella order for 300 Boeing jets awarded during a visit to Beijing by U.S. President Donald Trump in 2017, the headline figure for the new “framework order” for European jets was partly driven by political considerations, the people said.

• New business model: Makeup booths
  Introducing Supermakeup’s ‘beauty charging stations’ / What’s on Weibo
  “With its ‘beauty charging stations’ in public urban spaces, the Supermakeup company is trying to launch a new kind of beauty industry where women can use their self-service ‘spa booths’ and make-up product stores in the middle of a street or shopping mall.”

• Robocalls
  China’s capital city and three leading internet firms join forces to tackle robocalling phone nuisance / SCMP
  Search engines Baidu and Sogou as well as the antivirus software Qihoo 360 have agreed “to block telemarketing software ads” and blacklist the culprits.

SCIENCE, HEALTH, AND THE ENVIRONMENT:

• Plastic pollution  
  No silver bullet for China’s plastics problem / Bloomberg (porous paywall)
  “The country could make biodegradable products mainstream. But that won’t stop its flood of trash from choking the oceans.”

• Coal
  China’s renewed embrace of coal power bucks global trend / Caixin (paywall)
  “The number of coal-fired power plants in development globally decreased for the third consecutive year in 2018 — but not in China, a new report has found.”

• Nuclear energy
  China to fall short of 2020 nuclear capacity target / Reuters
  “China will fall short of its nuclear power generation capacity target for 2020, according to a forecast from the China Electricity Council on Tuesday.”
  China to resume approving nuclear power plants / Sixth Tone

• Water pollution
  Chinese villagers assured their ‘milky’ water is fine but doubts remain / SCMP

Environmental authorities have assured residents of a village in northern China that pollution is not to blame for cloudy, discoloured water which has been emerging from an irrigation well for the local wheat crop since last year.

But concerns remain among the 2,600 residents of Minzhen village, Hebei province, that the “milky” water may be linked to a neighbouring industrial complex in Xingtang county.

POLITICS AND CURRENT AFFAIRS:

• Flashpoints in the Taiwan Strait and the South China Sea
  US national security adviser John Bolton rebukes Beijing for incursions into Taiwanese airspace / SCMP
  “U.S. national security adviser John Bolton has rebuked China for sending warplanes into Taiwanese airspace in remarks analysts viewed as America backing the self-ruled island against Beijing.”
  US, Philippines said to be in talks on rocket system to deter Beijing’s ‘militarization’ in South China Sea / SCMP
  “Washington and Manila have been discussing the potential deployment of an upgraded US rocket system in a bid to deter Beijing’s ‘militarization’ of its artificial islands in the contested South China Sea.”
  Philippine defense minister Delfin Lorenzana protests over South China Sea ‘encroachment’ / SCMP
  “The Philippine defense minister has protested against Chinese ‘encroachment’ on the country’s maritime rights after the appearance of a large fleet of vessels in a disputed part of the South China Sea.”
  Duterte says he’s not ready to go to war with China over South China Sea dispute / Manila Bulletin News
  Nearly a year ago on The China Project: Is Duterte serious about a South China Sea red line?

• U.S.-China trade war, day 271
  Tariff, enforcement issues still hurdles to U.S.-China trade deal: U.S. Chamber / Reuters

A trade deal between the United States and China is now more likely to be achieved than not, a top U.S. Chamber of Commerce official said on Tuesday, adding that negotiators needed to show progress this week on an enforcement mechanism and a plan to lift U.S. tariffs on Chinese goods.

If the two sides did not get closer to a deal this week, the timing of an agreement could slip by a few weeks, said Myron Brilliant, the Chamber’s head of international affairs.

• China books fresh deal for 828,000 tonnes of U.S. soybeans / Reuters

• US-China trade war deal could be too late for the likes of Mastercard, American Express and Visa / SCMP

• China-India border tensions
  Near Doklam, China is again increasing forces, building roads & even a possible heliport / The Print (India)
  “There are at least 100 vehicles and a very large number of tents barely 2 km from the Doklam plateau. Activity is also seen in Tsona, to the east of Bhutan.”

• Canada and Huawei  
  Ottawa asks Beijing to allow Canadian canola experts to visit China in trade row / CBC
  “Canada’s agriculture minister has made a formal request for Chinese authorities to allow Canadian canola experts to go to the country to help resolve an escalating trade dispute between the two countries.” Two Canadian canola exporters had their licenses to sell in China revoked after the arrest of Huawei’s CFO.

• Huawei in the Netherlands
  Dutch security agency warns against Chinese, Russian technology / Reuters
  “The Dutch security service advised the government on Tuesday not to use technology from countries with active cyber-hacking campaigns against the Netherlands, such as China and Russia.” The Dutch government is currently evaluating options for a 5G network for use by domestic emergency services.

• Xinjiang internment camps
  U.S. resident may be one of a million people imprisoned in China’s secretive detention camps / Newsweek
  “On Thursday [March 28], U.S. Ambassador-at-Large for International Religious Freedom Sam Brownback told a press conference that he had received an unconfirmed report of a 75-year-old U.S. resident who has a ‘number of chronic illnesses’ being detained during travels back to China.”
  China warned other countries not to attend UN meeting on Xinjiang human rights violations – NGO / Hong Kong Free Press
  “China warned United Nations delegates not to attend a panel event on human rights violations in Xinjiang last month, where Beijing faced criticism for detaining a reported million ethnic minority people in extrajudicial ‘reeducation’ centres.”

• The case of Nur Bekri
  Former chairman of China’s Xinjiang region arrested for graft / AFP
  “A former chairman of the government of China’s troubled northwest region of Xinjiang, an ethnic Uighur, has been arrested for graft, national prosecutors said on Tuesday (April 2). Nur Bekri was the regional government’s chairman for seven years until 2014 — a period that was marked by a spate of deadly violence in the region, including riots.”

• Baijiu dissidents
  Second man sentenced in China’s Chengdu over Tiananmen massacre liquor / Radio Free Asia
  “A court in the southwestern Chinese province of Sichuan has handed down a suspended three-year prison term to a second man who sold liquor with references to the 1989 Tiananmen massacre on the label, following a secret trial.”

• Kindergarten poisoning
  Teacher poisons 23 children at Henan kindergarten / Sixth Tone
  “One child remains in critical condition five days after being poisoned along with 22 other kids at a private kindergarten.” One media report (in Chinese) suggested the motive may have been “to take revenge on a colleague at the kindergarten.”

SOCIETY AND CULTURE:

• Fiction by a China journalist
  “Lulu” / New Yorker (porous paywall)
  Wall Street Journalist Te-Ping Chen recently published a literary exploration (paywall) of her family history inspired by finding letters written by her great-grandparents. Now she has published a short story that centers on how an ordinary Chinese person copes when his sister becomes an activist.

• Boxing
  Chinese boxer fights depression to be ‘Queen of the Ring’ / BBC
  “Huáng Wénsī 黄文斯 is one of a small but growing number of female boxers in China, challenging traditional stereotypes that often steer women away from such activities.”

• American football on Chinese social media
  How New England Patriots had a ‘monumental’ year in China / CNN
  The New England Patriots became the first NFL team to hit 500,000 followers on Weibo.

• Calendar: Chinese film screenings
  April screenings of Chinese-language films in NYC and LA / China Film Insider

• Shanghai’s most famous homeless man does not like fame
  The ‘Vagrant Master’: In China, a homeless Web sensation flees the fame / Washington Post via Straits Times

• Integrated schools for autistic students
  The inclusive school fighting China’s stigma against autism / Sixth Tone
  “Around half of the country’s autistic children don’t attend school at all. Integrated facilities are trying to change that.”

VIDEO ON SUPCHINA

Happy anniversary to the Sinica Podcast, age 9

Nine years ago yesterday, Kaiser Kuo and Jeremy Goldkorn aired their first episode of the Sinica Podcast. Over the years, they have interviewed hundreds of guests on issues related to China. Check out this video for a look back at the history of the Sinica Podcast. Much more to come in the years ahead!

Magic cotton candy turns into flowers and a duck

Cotton candy is a worldwide favorite, including in China. Although the country has its national sweets, like the White Rabbit candy (大白兔奶糖 dàbái tù nǎi táng), kids still stop in their tracks when they see a cotton candy stand on the street. The soft sugary taste that melts on the tip of your tongue is wonderful, but so is watching cotton candy form — pure joy!

SINICA PODCAST NETWORK

TechBuzz China: Ep. 41: IPO Is for Influencers: The Company Behind China’s Kylie Jenner Is Going Public

In Episode 41 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Ruhnn (RUHN), a relatively small yet significant company that filed for IPO status a few weeks ago in the U.S. on the Nasdaq. Ruhnn has become the clear leader in China’s fast-growing influencer marketing sector, an area in which — our co-hosts agree — China should be considered world-leading. Lauren Hallahan, a Chinese social media marketing expert focusing on influencer marketing, and a former live-streamer in China with over 400,000 fans, joins us with insightful commentary on Ruhnn and other influencer incubators.

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