Chinese drones, made in America

Dear Access member,

Please check out our new feature: 2020 U.S. Presidential Election China Tracker. It assembles everything we can find on the views of Democratic Party candidates on China. It’s a work in progress that we’ll update frequently throughout the long, long American election season. 

Also on TheChinaProject.com today: What is Hong Kong for? by Antony Dapiran, a Hong Kong–based writer and lawyer, and the author of City of Protest: A Recent History of Dissent in Hong Kong. Access members can listen to an ad-free Sinica Podcast with Antony in advance of its public release by plugging this RSS feed directly into your podcast app: http://sinicaaccess.libsyn.com/rss. Let us know if you need assistance. 

The latest edition of our new free weekly newsletter is out. You can see it here, and if you like it, you can click “subscribe” on the top left to get it every Tuesday. Everything in it is compiled from material you will have seen in Access newsletters or on our website, so you won’t miss anything if you don’t subscribe. 

—Jeremy Goldkorn and team

1. Chinese drones, made in America

Shenzhen-based DJI is the world’s leading manufacturer of consumer drones. Since the drones they make are essentially flying computers that transmit geodata and can be accessed remotely, it’s hardly surprising that the company has come to the attention of America’s political class. 

On June 10, Donald Trump said in a memo that “the domestic production capability for small unmanned aerial systems is essential to the national defense.” Last week, DJI was discussed at a U.S. Senate Commerce subcommittee hearing. Reuters reports:

Senator Rick Scott, a Republican, asked at the hearing if Congress should outlaw the U.S. sale of Chinese-made drones.

“I think we’re crazy to do business with the Chinese,” Scott said during the hearing. “We ought to be buying American products in every way we can…. They are not our friend.”

Senator Ed Markey, a Democrat, said at the hearing that Americans who own Chinese-made drones are worried about individual privacy and security concerns. “Chinese animate (drones) with their values, which are inconsistent with ours,” Markey said…

Harry Wingo, a faculty member at the National Defense University, told the Senate panel “the U.S. is over-reliant” on DJI, saying its market share may exceed 70% globally…He suggested the issue “presents a national risk, similar to that highlighted by President Trump in calling out the risk of using 5G equipment from Huawei in U.S. telecommunications networks.”

In response, DJI yesterday announced “plans to use a company warehouse in California to assemble them,” Reuters reports. The company said it “will assemble its Mavic 2 Enterprise Dual drones in Cerritos, California, after the U.S. Customs and Border Protection determines that the U.S. produced value of its drones will qualify under the U.S. Trade Agreements Act,” which should “make it easier for some U.S. government agencies to buy the drones.” 

If I were DJI, I’d make another backup plan. 

2. Xi and Trump ‘consolidate important consensus’  

Negotiating teams from China and the U.S. have been in touch in advance of the G20 in Osaka, June 28–29, when Donald Trump and Xí Jìnpíng 习近平 are expected to meet.

“The sides were seeking to ‘consolidate the important consensus reached between the two leaders’ in a telephone call last week, Wáng Shòuwén 王受文, a Commerce Ministry vice minister, told reporters,” reports the AP. Wang gave no details about the “important consensus” or what was discussed. 

“A phone call on Monday between Chinese Vice-Premier Liú Hè 刘鹤, President Xi Jinping’s point man for trade talks, and his U.S. counterparts, Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin,” resulted in an agreement “to resume talks,” according to the South China Morning Post. 

 Other news from the U.S.-China trade and tech war, day 355 by our count:

• Instant Pot, a popular brand of pressurized cooker, could “get a $38 price hike due to China tariffs,” reports Bloomberg (porous paywall).  

• “After FedEx refused to ship a Huawei phone from Britain to the United States, and the Chinese Foreign Ministry demanded answers, FedEx filed suit against the U.S. Department of Commerce on Monday to avoid having to follow the most recent restrictions the federal government has imposed on doing business with Huawei,” per the Washington Post. 

• “American chip startup SiFive sees an opportunity to gain ground in China amid the intensifying trade war by offering an open-source alternative for chip design that could help reduce the country’s reliance on Western technology,” says Nikkei Asian Review (porous paywall).

• Some Chinese semiconductor engineers are pessimistic about developing a homegrown chip industry, according to Nikkei Asian Review (porous paywall):

“There are alternatives in China, but the gap in technology is too big,” said an executive from one of China’s leading artificial intelligence chipmakers, which relies on U.S. technology for chip design. “If we lose access to U.S. software or can no longer receive updates, our chip development will run into a dead end.”

• “Washington’s efforts to isolate Huawei could shut out U.S. tech giants from the continent,” argues the Financial Times (paywall). Because Huawei and other Chinese companies dominate the handset and networking equipment markets in Africa, restrictions on American internet companies’ ability to work with Huawei mean African mobile phones get sold without apps from Google, Facebook, and others. 

3. First World health problems

A study published in the Lancet this week finds that over the last three decades, lifestyle diseases that afflict wealthier countries have overtaken lung infections and neonatal disorders as the leading causes of premature death in China. According to the research:

• Chronic illnesses like stroke, chronic obstructive pulmonary disease, liver and lung cancer, and heart disease are now leading causes of premature death. 

• High blood pressure, smoking, and air pollution are now significant contributing factors to deaths in China. The two risk factors that increased the most in China were high body mass and “ambient particulate matter pollution.”   

• China spent 5 percent of GDP on healthcare in 2016, compared with 17.1 percent in the U.S., 11.5 percent in France, and 9.8 percent in the U.K., according to the World Health Organization.

Bloomberg has a summary of the Lancet study, via Straits Times. 

—–

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:

• Party control of internet companies
  Chinese technology moguls’ latest obsession: Red tourism / Bloomberg (porous paywall)
  The headline is misleading: it’s not that Chinese tech executives are obsessed with visiting historical sites that celebrate Communist Party history, it’s just that they have no choice:

As China’s cyber watchdog steps up the frequency of crackdowns — including by halting operations of internet operators — companies have bolstered their efforts to study Party history and ideology as a means to appease regulators

China’s internet watchdog rallied the founders and Communist Party representatives of 45 startups for a “study tour” celebrating the life of Mao Zedong, as Beijing tightens its grip on the country’s largest internet firms.

• China-Japan stock connect
  Beijing launches China-Japan stock connect scheme, showcases it as a move to defy rising protectionism / SCMP
  “China on Tuesday accelerated the liberalisation of its capital markets, launching yet another stock connect scheme linking Shanghai and Tokyo stock exchanges and in the process took a swipe at the U.S. for its trade protectionism.”

• No more Chinese money in New York real estate
  Why China fell out of love with New York property / Financial Times (paywall)
  “There’s no money coming out of China,” after Beijing implemented capital controls and tight oversight of foreign investments by Chinese companies, said a New York real estate lawyer who “was unwinding a multibillion-dollar U.S. property fund bankrolled by a Chinese fund.”

• China’s own enterprise software
  China’s biggest startups ditch Oracle and IBM for home-made tech / Bloomberg (porous paywall)

Beijing-based PingCAP already counts more than 300 Chinese customers. Many, including food delivery giant Meituan, its bike-sharing service Mobike, video streaming site iQIYI Inc. and smartphone maker Xiaomi Corp. are migrating away from Oracle and IBM’s services toward PingCAP’s, encapsulating a nation’s resurgent desire to Buy China.

• Scrutiny of corporate bonds
  A dark alley in China’s credit market suddenly getting rough / Bloomberg (porous paywall)

One of the most opaque areas of China’s credit markets involves the practice of companies buying their own bonds. That may soon get a lot tougher, contributing to financing difficulties that are already bedeviling the nation’s policy makers. At issue is a sharp increase in scrutiny by financial institutions of the collateral that their counterparties offer up in the repurchase market, a crucial channel for short-term funding.

POLITICS AND CURRENT AFFAIRS:

• Another reported death — Uyghur internment camps
  Young Uyghur tour director dies under questioning by Xinjiang authorities: mother / Radio Free Asia
  “A young Uyghur woman who worked as a tour guide in Xinjiang has died while being questioned by Xinjiang Authorities, according to a recording by the woman’s mother recently smuggled out of the country by members of the Uyghur exile community.”
  Indonesia and the Xinjiang issue: The diplomatic options for resolving the Uyghur crisis / Asia Dialogue
  The authors argue that “the situation in Xinjiang should feature prominently in Indonesia’s foreign policy and state diplomacy,” because the country is “one of China’s most important international partners,” and the world’s largest Muslim country. The Indonesian government does not seem to agree.
  Xinjiang camps defended at UN human rights forum / Reuters via SCMP
  “Xinjiang vice-governor Erkin Tuniyaz told the UN Human Rights Council on Tuesday that state-run detention camps in the far western region of China were vocational centres that had helped to ‘save’ people from extremist influences.”

• Bolsonaro to meet Xi at G20
  Brazil’s Bolsonaro to meet China’s Xi for first time at G20 / Reuters
  Brazilian President Jair Bolsonaro, who has come out hard against China for “buying” up his country, will meet with Xí Jìnpíng 习近平 for the first time on the sidelines of this week’s G20 meeting in Japan, although “any bilateral meeting would likely be informal and brief.” 

• Warming ties with DPRK
  Red tide: China-North Korea naval cooperation / The Diplomat (porous paywall)
  Adam Cathcart, scholar of China and North Korea writes:

Indicators of a Chinese warming with North Korea are not hard to find these days. Chinese President Xí Jìnpíng’s 习近平 recent trip to Pyongyang was less of a breakthrough than the culmination of nearly a year and a half of enhanced ties and thickening lines of coordination, but it is surely as close to an indisputable signal of bilateral warming as may exist in the current environment.

• Taiwan and Beijing influence
  Red Infiltration: The reality of China’s global media expansion / Ketagalan Media

The CCP’s endeavors to infiltrate Taiwanese media began at the beginning of the new millennium. Prior to 2008, the CCP exerted influence over Taiwanese media indirectly, mostly via buying up shares in Taiwan’s media companies with money from Chinese investments in third countries. After 2008, Taiwanese businesses with investments in China, which also had an intimate relationship with China’s government, were the main proxies for the CCP.

SOCIETY AND CULTURE:

• Same-sex marriage in Taiwan
  Abused as ‘dirty’, same-sex newlyweds in Taiwan fear backlash / Reuters via Straits Times
  There was jubilation after Taiwan became the first in Asia to allow same sex marriagemarry legally, they are fearful that conservatives may reverse Taiwan’s landmark law, but it is now tempered with fear in the LGBT community that “conservatives may reverse Taiwan’s landmark law.”

• Purging foreign names
  China’s war on Western names / China Media Project
  All about recent campaigns to purge English or foreign-sounding names from companies, stores, advertisements, and media. 

• Verdict in case of Chinese scholar murdered in Illinois
  Brendt Christensen convicted of killing Chinese scholar Zhang Yingying as jury returns guilty verdict in less than 90 minutes / SCMP
  “Jurors deliberated for less than 90 minutes before returning a guilty verdict on Monday at the federal death-penalty trial of a former University of Illinois doctoral student who killed a visiting scholar from China after abducting her at a bus stop as she went to sign an off-campus flat lease.”

• Fake online celebrities and their photo shoots
  Faking street photography: Why staged “street snaps” are all the rage in China / What’s On Weibo
  “It looks as if they are spontaneously photographed or filmed by one of China’s many street photographers, but it is actually staged. Chinese online influencers – or the companies behind them – are using street photography as part of their social media strategy. And then there are those who are mocking them.” 

FEATURED ON SUPCHINA

Click Here

Opinion: What is Hong Kong for?

Antony Dapiran writes for The China Project that Hong Kong is the only place in the world that is a part of, and yet apart from, China; a place where researchers, analysts, commentators, writers, and artists can be sufficiently close to China to be well informed, to feel the zeitgeist, yet to work in an environment where they can express themselves freely. But in recent times, that safe haven status has been under threat.

2020 Presidential Election China Tracker

America is gearing up for an extraordinary presidential election, and China is a country — and an issue — about which every candidate will need to form a position in the coming months. With the first debates between contenders for the Democratic Party nomination set to take place on June 26 and 27 in Miami, we today launch our 2020 Presidential Election China Tracker.

We will update this page frequently to let you know where the Democratic Party candidates stand in China and issues affecting its relationship with the U.S.

2019 summer movie censorship preview: What you won’t see in Chinese theaters

Summer is approaching, and that means a plethora of potential blockbusters are lining up to hit the big screen in China, which is the second-largest movie market globally after the U.S. But ahead of the season, several Chinese movies have been ordered to postpone their release dates or change their titles for various reasons, probably because of the country’s notorious film censorship apparatus.

SINICA PODCAST NETWORK

Sinica Early Access: The Hong Kong protests, with Antony Dapiran

Antony Dapiran is a seasoned corporate lawyer who has worked in Hong Kong and Beijing for the last two decades. In that time, he has become a historian of protests in Hong Kong as well as the author of City of Protest: A Recent History of Dissent in Hong Kong (2017). In a conversation with Kaiser and Jeremy, Antony brings a historical perspective to his analysis of the current demonstrations over the highly unpopular extradition bill, the shelving of which has not slaked the anger of demonstrators.

• Sinica Early Access is an ad-free, full-length preview of this week’s Sinica Podcast, exclusively for The China Project Access members. Listen by plugging this RSS feed directly into your podcast app.