Russian and American warships nearly collide in the East China Sea

Dear Access member,

On June 19, we’ll be hosting another The China Project Direct conference call. Our guest this time: Stephen Roach, former head of Morgan Stanley Asia and currently a professor at Yale University.

It’s free for all Access members — please click here to sign up.

Also: Happy Dragon Boat Festival!

—Jeremy Goldkorn, Editor-in-Chief

1. Russia vs. United States in the East China Sea  

Friday, June 7 — This morning, CNN broadcast a video of a Russian warship almost colliding with an American warship, and reported that both sides were blaming the other. This comes just a few days after a similar dispute between the two countries about plane intercepts over the Mediterranean.

WHAT HAPPENED?

• A U.S. Navy spokesperson said: “A Russian destroyer…made an unsafe maneuver against USS Chancellorsville, closing to 50-100 feet, putting the safety of her crew and ship at risk.”

• The near-collision happened earlier today, as Xí Jìnpíng 习近平 was wrapping up a three-day state visit to Russia. Xi earlier called Putin his “best friend” while Putin said that Russian-Chinese relations had reached “an unprecedented level.” Xinhua has published a couple of Xi-Putin bromance photos.

• The Russian Navy blamed the American vessel for the incident, accusing “the US Navy of ‘unacceptable’ and dangerous maneuvering,” according to Russian state-owned blog RT.

• Former U.S. Navy officer and New York Times reporter Mike Forsythe does not buy the Russian story, commenting on Twitter:

It’s pretty obvious who was doing the provoking in this shot. The Russian ship was closing the distance between the two ships. At [the] beginning of the clip was on starboard quarter of the US ship, at the end was athwartships and much closer.

WHY DID IT HAPPEN?

If we assume, as I do after watching the video, that the Russian action was intentional, this explanation offered by retired U.S. Navy rear admiral John Kirby to CNN makes the most sense:

“Clearly this sends a strong message to President Xi, from Putin’s perspective, that we are on your team.”

IN MOSCOW, EXPLICIT RUSSIAN SUPPORT FOR CHINA

While Russia may not be admitting to acting on China’s behalf with the actions of its navy, Russian President Vladimir Putin was quite explicit on Friday, June 7, in slamming U.S. moves against Huawei. Reuters reports that he condemned “the situation around the company Huawei that they are attempting not just to squeeze but to unceremoniously push out of the global market.”

Russia is doing its part to ensure Huawei does have a role in the global market. On Wednesday, June 5, Huawei “signed a deal…with telecoms company MTS to develop a 5G network in Russia over the next year,” according to Agence France-Presse.

2. China’s central banker is as cool as a cucumber

In an interview with Bloomberg (porous paywall), People’s Bank of China Governor Yì Gāng 易纲 said that China has “tremendous” room to adjust monetary policy to mitigate effects of the trade war:

“We have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy toolkit, I think the room for adjustment is tremendous,” he said. Yi said the currency has been weaker recently due to “tremendous pressure” from the U.S. side but the impact will be temporary.

“A little bit of flexibility of renminbi is good for the Chinese economy and for the global economy because it provides an automatic stabilizer for the economy,” he said. “The central bank of China is pretty much not intervening in the foreign-exchange market for a long time, and I hope that this situation will continue, not intervening.”

3. The largest grave relocation in human history

Here is yet another record set by China: As the country has urbanized in the last 20 years, more than 10 million corpses have been exhumed in the largest grave relocation in human history.

Stanford historian Thomas S. Mullaney explains in this Q&A:

I found that the driving force behind these grave relocations has been the rapid development of third- and fourth-tier Chinese cities — cities that, unlike major metropolises like Beijing and Shanghai, few people outside of China have heard of. This development entails new highways, railways, airports, hospitals and primary schools, among other things. But the relocations are also centrally important to the income of local governments across China, who make money from leasing their land. Because there is no private land ownership in China, a central part of local governments’ budgets is money they make on renting their land.

For more on this fascinating subject, see the website Mullaney has created, Grave Reform in Modern China, comprising a series of essays on matters sepulchral, together with an interactive map of grave relocations.

4. And then, to nobody’s surprise, they came for the finance bloggers

In the Financial Times, Christian Shepherd reports (paywall):

Censors at two of China’s largest social media companies appear to have taken aim at independent financial bloggers, as Beijing continues pumping out propaganda to garner public support for its trade dispute with the US.

At least 10 popular financial analysis blogs on social media app WeChat had all present and past content scrubbed, according to screenshots posted by readers. The Weibo accounts of two non-financial popular bloggers, including Wang Zhian, a former state broadcast commentator who wrote about social issues, were also blocked.

This latest act of censorship, whatever the cause, should surprise no one. Also published today is this profile of former investigative journalist Liú Wànyǒng 刘万永 in the New York Times by Jane Perlez (porous paywall). Excerpt:

…Mr. Liu earned the nickname “Tibetan Mastiff” for his perseverance at the China Youth Daily, a paper run by the Communist Party but with a reputation for sometimes bending the rules.

More than a decade later, Mr. Liu, 48, has quit journalism. More than just a personal decision, however, his departure from the newspaper where he worked for 21 years represents the end of investigative journalism in China, a profession left in tatters by the pressure of Communist Party orthodoxy under President Xi Jinping.

5. German warship in the Taiwan Strait?

According to Politico, “high-ranking” German officials “are contemplating sending a warship through the Taiwan Strait — joining the United States and France in challenging Beijing’s claims to what the West regards as an international waterway.”

Why? Bloomberg says (porous paywall) that “a naval mission to the region would be a low-risk way for Germany to show that it’s committed to alliances — and that it still has a navy.”

6. Faceprint is required for security purposes

Stephen McDonell of the BBC’s Beijing bureau was locked out of his WeChat account after he posted photos of June 4 demonstrations in Hong Kong. The app told him he was suspected of  “spreading malicious rumors,” but there was a way for him to reinstate his account. He just had to submit to a biometric scan:

Then came a stage I was not prepared for. “Faceprint is required for security purposes,” it said.

I was instructed to hold my phone up -— to “face front camera straight on” — looking directly at the image of a human head. Then told to “Read numbers aloud in Mandarin Chinese.”

My voice was captured by the App at the same time it scanned my face.

Afterwards a big green tick: “Approved.”

You can read the whole thing here: China social media: WeChat and the Surveillance State.

—–

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 30th anniversary of June Fourth was marked by a large number of reports, commentaries, and remembrances of the bloody crackdown. The China Project’s Anthony Tao published a list of 30 essential stories to read about June 4, 1989. The Chinese embassy in Washington responded to Secretary of State Mike Pompeo’s criticism of Beijing on the anniversary with a statement asserting, “China’s human rights are in the best period ever.”

• China blamed the U.S. for trade talk breakdowns in a white paper published by the State Council Information Office, and the U.S. Trade Representative accused China of having chosen to “pursue a blame game misrepresenting the nature and history of trade negotiations.” Chinese government departments then issued three warnings to Chinese citizens traveling to the U.S. in two days:

  • The Ministry of Education said that Chinese students in the U.S. are facing restrictions and difficulties with visas that are affecting their ability to complete their studies.

  • The Ministry of Culture and Tourism warned all Chinese citizens about “American shooting incidents, robberies, and incidents of theft.”

  • The Ministry of Foreign Affairs warned of “many kinds of harassment” by U.S. authorities.

  Meanwhile, Trump threatened to expand tariffs to include another $300 billion in Chinese imports, but said he would wait to make a decision until after the G20 meeting in Osaka, June 28–29.

• China’s threat to cut the U.S. off from rare earths is getting real, as indicated by a June 4 meeting of the powerful National Development and Reform Commission (NDRC), which focused on rare earth supplies. In response, the U.S. Commerce Department vowed “unprecedented action to ensure that the United States will not be cut off from these vital materials.”

• Building a domestic 5G network is now an urgent national priority for China, one to be achieved by any means necessary, and possibly at great cost. The Ministry of Industry and Information Technology announced this week that it has approved licenses for the commercial rollout of fifth-generation telecom technology to major state-owned mobile carriers. Meanwhile, China’s 5G leader, Huawei, reportedly has as many as 10,000 of its employees, some of them working nonstop for days, assigned to reducing the company’s reliance on American technology.

• Chinese Defense Minister Wèi Fènghé 魏凤和 made an uncompromising speech in Singapore on June 2, at the annual Shangri-La Dialogue. He said that China has no intention to be “the boss of this world,” but defended Beijing’s absolute right to do whatever it pleases in territory it controls or lays claims to — from Xinjiang to Taiwan to the South China Sea.

• Two Arabic-language videos about Xinjiang went viral on YouTube recently, giving exposure to a crisis that, in many parts of the Arabic-speaking world, has been ignored or censored.

• The U.S. Secretary of Transportation, Elaine L. Chao (趙小蘭 Zhào Xiǎolán), was the subject of a massive New York Times investigation into her family’s shipping business and connections in China. The Times found that the State Department had raised ethics questions about Chao’s family connections, that her father’s business has benefited from hundreds of millions in state-backed loans in China, and that her husband, Republican congressional leader Mitch McConnell, has benefited enormously from political and personal financial contributions from the Chao family.

• An ecommerce site is being taken to court for counterfeit goods. One blogger has spent nearly a year amassing evidence that a bottle of cleansing oil sold by NetEase Kaola (网易考拉 wǎngyì kǎolā) was a fake, and not an import from Japan as claimed. It is not the first time that NetEase Kaola has been accused of selling fakes.

• China successfully tested a floating sea launch platform for rockets for space missions. The project is a collaboration between the China Academy of Launch Vehicle Technology (CALT) and the Hong Kong–listed Great Wall Motors.

BUSINESS AND TECHNOLOGY:

• Huawei
  Huawei to answer questions on 5G from British lawmakers on Monday / Reuters
  “A senior Huawei official will face questions from British lawmakers next week amid an ongoing furore over the role it should play in next-generation 5G telecom networks.”
  Google talking to U.S. on Huawei’s behalf, official of Chinese firm says / NPR
  “Google is quietly assuming the role of Huawei emissary, according to a senior Huawei official, in effect negotiating with the Commerce Department on behalf of the Chinese telecom giant that has been blacklisted in the U.S.”

• Supermarket chains
  Germany’s Aldi enters tough China market / FT (paywall)

Aldi has become the latest overseas supermarket operator to open stores in China but the German company faces a battle to win over customers in a fragmented market in which foreign operators have traditionally struggled.

Hundreds of people lined in Shanghai on Friday to enter one of the two Aldi outlets opening in the city.

• Endless demand for liquefied natural gas
  China’s demand for gas “almost infinite” / OilPrice.com
  At a recent industry conference, CEO of SIA Energy Lǐ Yáo 李瑶 said:

China’s demand for liquefied natural gas was in no danger of dwindling over the next decade as it moves toward a decarbonated future, but is, in fact, “almost infinite.” Li went on to point out that China will actually need more liquefied natural gas, not less, in order to complete its transition away from coal, saying, “In China, we have a coal-to-gas switching campaign going on, which contributed to huge demand growth, as well as imports of LNG.”

• Tech winter
  China’s tech-heavy ChiNext Index falls into bear market / WSJ (paywall)
  “A gauge of technology stocks in mainland China has fallen into bear-market territory, amid a broader selloff fueled by trade tensions and strains in the country’s banking system.”

• But nothing takes the shine off Tencent and Alibaba
  China’s Tencent and Alibaba stock look like winners, despite a trade war / Barron’s
  Wall Street remains bullish on Tencent and Alibaba, despite China’s slowing economy and the trade war.

• Lenovo and the angry youth
  Lenovo branded ‘unpatriotic’ by Chinese consumers in nationalistic backlash / SCMP
  “Chinese technology company Lenovo is taking heat from the country’s online community which has jumped on a recent name change to revive accusations that it is unpatriotic.”

SCIENCE, HEALTH, AND THE ENVIRONMENT:

• Nuclear fusion
  China’s ‘artificial sun’ project just got a whole lot hotter, scientists say / SCMP
  A new research facility set to open this year in Chengdu “will enable Chinese scientists to carry out vital experiments in the development of a nuclear fusion reactor,” by means of a machine “capable of generating plasma — another name for hot gas — at temperatures of up to 200 million degrees Celsius.”

• Seahorses: Endangered species and traditional medicine
  Used as a natural Viagra in Chinese medicine, seahorse numbers are declining / CNN
  “Hong Kong was responsible for around two thirds of all seahorse imports from 2004 to 2017. The World Wildlife Fund has reported that their popularity as a medicine is also driving sales in China, Taiwan and Indonesia.”

POLITICS AND CURRENT AFFAIRS:

• Taiwan elections — Han Kuo-yu
  Candidate seeks closer China ties, shaking up Taiwan’s presidential race / NYT (porous paywall)
  Chris Horton profiles Han Kuo-yu (韓國瑜 Hán Guóyú), populist presidential candidate “who wants friendlier ties with China — a sharp contrast to the incumbent, Tsai Ing-wen (蔡英文 Cài Yīngwén), who rejects China’s claim that Taiwan is part of its territory.”

• Chinese warships in Australia
  China warships leave Sydney after surprise visit ‘raises hackles’ / Reuters
  “Three Chinese warships sailed out of Sydney on Friday (June 7) after an unannounced visit that came amid a tussle for influence between Australia and China in the Pacific,” a visit that was planned by the government but not announced, causing some concern by the public.
  Australian Prime Minister Scott Morrison defended the visit: “It was a reciprocal visit because Australian naval vessels visited China… So it may have been a surprise to others, but it certainly wasn’t a surprise to the government.”

• U.S. response to Uyghur internment camps
  U.S. Speaker Pelosi says Uyghur crackdown bill ‘moving in a positive direction’ / Radio Free Asia
  “House of Representatives Speaker Nancy Pelosi said this week that she supported legislation that seeks accountability for China’s harsh crackdown on Muslim Uyghurs that has landed some 1.5 million residents of the Xinjiang Uyghur Autonomous Region (XUAR) in internment camps.”

• Hong Kong extradition law
  Outrage in Hong Kong as extradition plan exposes deep fears of China’s rule / NYT (porous paywall)
  Austin Ramzy and Katherine Li write:

Politicians have staged sit-ins and exchanged blows in the legislature. Lawyers, high-school teachers and even anime fans have organized petitions. And the authorities are bracing for protests Sunday that could be the largest since the pro-democracy Umbrella Movement shut down parts of Hong Kong five years ago.

Anger is boiling in Hong Kong over a push for a law that would allow people to be extradited to mainland China, legislation that critics say would subject residents of this semiautonomous territory to the security forces and courts controlled by the ruling Communist Party on the mainland.

SOCIETY AND CULTURE:

• Running in circles — the life of an activist couple
  This woman is running to save the love of her life / BuzzFeed News

Zhèng Chǔrán 郑楚然 began to run when she had run out of options to save her husband from the police.

Over the past month she has covered almost 90 miles, running in circles around the city where she lives in southern China. She tracks her progress via Weibo and Twitter every day and plans to keep running until she’s completed 6,200 miles (or 10,000 km), which is the distance between where her husband was arrested in China and the Old Trafford stadium in England, where his favorite soccer team, Manchester United, plays.

• Suicide prevention
  Keeping an ear to Weibo’s suicidal whispers / Sixth Tone
  “Artificial intelligence is helping volunteers to intervene when people post troubled messages in online ‘tree hollows.’”

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Tiananmen Square 30 years later: 30 essential stories about June 4, 1989

On the 30th anniversary of the Tiananmen Square crackdown, The China Project’s Anthony Tao compiles 30 essential stories to read about June Fourth. The list includes firsthand and contemporary accounts of the protests and bloodshed, analysis of Communist Party documents illuminating what led to the decision to use deadly force, and poetry and multimedia resources and essays that make the monumental events of 1989 feel personal to this day.

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