No Chinese official speaks with such optimism

Dear Access member,

The latest piece from our science columnist, Yangyang Cheng, is out, and as always, it’s a good read: The highest exam.

—Jeremy Goldkorn, Editor-in-Chief  

1. Trade war: ‘No Chinese official speaks with such optimism’ 

U.S. Treasury Secretary Steven Mnuchin told CNBC on Wednesday that “the U.S. and China were close to a trade deal, and he’s optimistic that progress can be made during weekend talks between President Donald Trump and China’s Xí Jìnpíng 习近平.” He added, “We were about 90% of the way there [with a deal] and I think there’s a path to complete this.”

Perhaps Mnuchin should be speaking to a few more Chinese officials or at least reading translations from state media. This is the response to Mnuchin’s remarks from Hú Xījìn 胡锡进, the mouth-frothing editor of nationalist rag Global Times, on Twitter: 

No Chinese official now speaks with such optimism. With dozens of hours left before Xi-Trump summit, Chinese state media has been keeping criticizing the US harshly, a situation that never happened in the previous China-US summits.

Like the Trump administration, Hu’s newspaper is not a reliable source of accurate information. But Hu has an excellent read on the mood of senior Party members, and I would believe his comments on this subject over spin from Mnuchin anyday. 

Other news from various fronts of the U.S.-China trade and tech war: 

A weeklong hearing on Trump-proposed new tariffs on around US$300 billion of Chinese goods ended yesterday after “testimony by hundreds of companies and industry associations seeking shelter from the costs of the countries’ escalating trade war,” reports the South China Morning Post.

“Data from Vietnam show surges in both imports from China and exports to the U.S., highlighting how transshipment circumvents levies,” says a Wall Street Journal article titled American tariffs on China are being blunted by trade cheats (paywall).

Huawei’s U.S.-based research subsidiary — Futurewei Technologies — “has moved to separate its operations from its corporate parent since the US government put Huawei on a trade blacklist last month,” reports Reuters. Based in Santa Clara, California, the company has “banned Huawei staff from its offices, moved its own employees to a new IT system and forbidden them from using the Huawei name or logo in communications.”

“About a dozen rural U.S. telecoms carriers that depend on Huawei for network gear are in discussions with its biggest rivals, Ericsson and Nokia, to replace their Chinese equipment,” according to Reuters. 

American chip makers “have found ways to avoid labeling goods as American-made,” and are “still selling millions of dollars of products to Huawei” despite the Trump administration ban, says the New York Times (porous paywall). Intel and Micron are the companies named in the article. 

2. Tanzania scraps $10 billion Chinese port project 

John Magufuli, the president of the East African nation of Tanzania, has suspended a $10 billion port development at Bagamoyo, a deal his predecessor struck with China just before Magfuli was elected in 2015. The new port would have been the largest in Africa, to be operated by China Merchants Holding International. Work began four years ago, but now shipping news website Splash 247 reports:

Tanzania’s president John Magufuli has accused the Chinese project backers of presenting “exploitative and awkward” terms in exchange for financing. Chinese financiers set “tough conditions that can only be accepted by mad people,” Magufuli told local media.

“They told us once they build the port, there should be no other port to be built all the way from Tanga to Mtwara south,” Magufuli told a delegation of business people at State House in Dar es Salaam earlier this month.

“They want us to give them a guarantee of 33 years and a lease of 99 years, and we should not question whoever comes to invest there once the port is operational. They want to take the land as their own but we have to compensate them for drilling construction of that port,” he said.

Magufuli also said the new Bagamoyo port risked undermining the ongoing $522m expansion of Dar es Salaam port that would enable it to triple its current capacity when complete by the end of this year.

In October last year, tiny West African Sierra Leone “canceled plans to build a $318 million China-funded airport outside the capital Freetown in an incident that…sent shock waves throughout Beijing’s largest financial institutions,” according to Construction Kenya. 

3. Armyworms on the march 

In April, the U.S. Department of Agriculture warned of a new threat to China’s farms in a report titled Voracious Fall Armyworm Invades South China. The information in it was broadly consistent with this Chinese-language report from the Beijing News. The armyworms are still on the march. Reuters reports: 

China’s agriculture ministry said on Wednesday it had now found fall armyworm in 19 provinces, across 5 million mu or about 333,000 hectares of crops.

The situation around the prevention and control of the pest remained severe, the ministry added…

The pest was expected to reach China’s northeastern corn region in June or July, according to an expert with a government think tank.

• Fall armyworms are the larvae of Spodoptera frugiperda, a species of moth. They gorge on a variety of important crops, including corn, soybeans, and rice. 

• The outbreak was first detected in China in January 2019, and by April had spread across China’s southern border, impacting about 8,500 hectares (127,000 mu) of grain production in Yunnan, Guangxi, Guangdong, Guizhou, Hunan, and Hainan provinces.” The Beijing News report linked above said the pest had been found in 11 provinces and was officially a “local pest disaster” (局部虫灾 júbù chóngzāi).

• An official emergency action plan was put in place in April; here are the outlines (in Chinese). Measures include biological and chemical pesticides, and weeding to get rid of plants that encourage armyworms.  

• If you’re searching for further information in Chinese, fall armyworms are variously called cǎodì tān yè é 草地贪夜蛾, nián chóng 黏虫, and tìzhī chóng 剃枝虫.  

4. Beijing suspends Canadian meat imports

Beijing is not in a forgiving mood when it comes to Canada. After the arrest of Huawei CFO Mèng Wǎnzhōu 孟晚舟, Beijing took hostages and then began blocking imports of Canadian canola oil, amongst other retaliatory measures.

Now China has suspended all meat imports from Canada, reports the South China Morning Post. The stated reason this time: “forged veterinary health certificates.”

If you’re interested in Canada-China agricultural trade, you might enjoy this paper from the Canadian Agri-Food Policy Institute: Canola Disputes in Canada-China Agricultural Trade: A Chinese Policy Perspective.

5. Former gang leader goes to bat for Beijing in Taiwan

Reuters reports on the latest moves by Beijing to cultivate “networks of supporters in Taiwan and ramping up campaigns to lure Taiwanese with lucrative business opportunities in exchange for backing Beijing’s agenda.”

One of the groups mentioned in the piece is the Chinese Unification Promotion Party (CUPP or  中华统一促进党 zhōnghuá tǒngyī cùjìn dǎng), founded in 2004 by a man named Chang An-lo (张安乐 Zhāng Ānlè), also known as White Wolf (白狼 bái láng).

White Wolf himself was a leader of the Bamboo Union (竹联帮 zhū liánbāng), the largest triad in Taiwan. The gang has been involved in kidnapping, drug smuggling, extortion rackets, and other nefarious activities for years. In the 1980s, Chang spent time in American federal prisons on a drug-smuggling conviction. He returned to Taiwan but in 1996 fled criminal charges again and found refuge in Shenzhen, where he remained until 2013. Chang went back to Taiwan that year, and has been in and out of trouble since then. 

For more on Chang’s colorful history, see The White Wolf of Taiwan by John Pomfret on The China Project. 

—–

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:

• China opens electric car battery industry
  A new road for electric vehicles in China / WSJ (paywall)

Last Friday, Beijing scrapped its list of certified EV battery manufacturers, paving the way for foreign suppliers to start selling in the country again. Getting on the list when it was introduced in 2015 qualified battery makers for government subsidies that account for a significant chunk of the price of an EV. No big foreign players made the grade.

Meanwhile, domestic battery companies such as Contemporary Amperex Technology (CATL) have boomed. CATL’s revenue has quintupled since 2015, and the quality of its batteries is good enough to supply to the likes of BMW .

The list was likely to become obsolete in any case because China is phasing out EV subsidies. Yet its early retirement is a nice surprise for Korean battery makers such as Samsung SDI and LG Chem , which have manufacturing facilities in China that are currently used for exports.

• Artificial intelligence in casinos
  China’s Big Brother casinos can spot who’s most likely to lose big / Bloomberg (porous paywall)
  Casino operators in Macau “are starting to deploy hidden cameras, facial recognition technology, digitally-enabled poker chips and baccarat tables to track which of their millions of customers are likely to lose the most money.”

• Starbucks vs. Luckin
  Starbucks, Freshippo ‘Star Kitchen’ tie-up opens in Beijing as delivery catches on / TechNode
  “Starbucks and Alibaba’s tech-powered grocery chain Freshippo are expanding a delivery kitchen concept to the capital city of Beijing” as Starbucks competes with tech-focused coffee delivery company Luckin. 

• Buying Hong Kong on the cheap
  Chinese developers snap up discounted Kai Tak land as Hong Kong’s mood for property sours amid protest rallies and trade war / SCMP
  “The time to buy is when there’s blood in the streets” is investing advice attributed to Baron Rothschild. China Resources Land and Poly Property Group, two state-owned Chinese property developers, have taken his advice to heart, buying “a plot of residential land on the runway of Hong Kong’s former Kai Tak airport, paying a lower-than-expected price for the oceanfront property as the city’s biggest public protests in decades sapped appetite for investments amid a U.S.-China trade war.”

• The end of a baguette empire
  Chinese baguette king’s dream goes stale / AFP via CNA 

Chinese conglomerate Reward, whose CEO had ambitious plans to open 1,500 bakeries in China using flour produced on swathes of French land that he snapped up, has gone bankrupt according to court documents…

The Beijing-based group, which originally specialised in infant formula and cleaning products, has triggered debate in France about land grabs with its large purchases of agricultural land in recent years.

• Shadow banking is back
  For China, kicking a $9 trillion habit is tough work / Bloomberg (porous paywall)
  “So much for deleveraging. China’s biggest shadow lenders are back,” according to this report by Bloomberg. “Trust companies,” essentially financial entities that do the work of banks (i.e., lend money), are lightly regulated and are not required to hold a certain amount of financial reserves, but end up lending to many parts of the real economy, despite the risks. 

• Beidou — China’s GPS
  China launches latest Beidou satellite for global navigation system / Space.com
  China launched the 21st satellite of the Beidou-3 positioning system satellite network, which is currently being rolled out globally. 

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Air pollution and life expectancy
  A Chinese professor explains what air pollution does to your health / World Economic Forum 
  People who live north of the Huai River “have a lower life expectancy — up to three years less — than those on its southern banks. The reason? Exposure to higher levels of pollution caused by burning free coal for winter fuel.” Since the 1950s, the government “has been giving free or subsidized coal to residents living north of the river.”

POLITICS AND CURRENT AFFAIRS:

• Nike and the Hong Kong protests
  Nike reportedly pulled a shoe line from China after its designer supported Hong Kong protests / CNBC

Nike halted the sale of a range of sports shoes in China after its Japanese designer showed support for Hong Kong protests in an Instagram post, the Financial Times reported (paywall) on Wednesday.

The line of limited-edition sports shoes are designed by Undercover, the brand of Japanese designer Jun Takahashi, according to the report. Several Chinese retailers withdrew those shoes from sale without explanation.

• ‘Democracy now’: Thousands gather in central Hong Kong urging G20 countries to raise concerns at upcoming summit / Hong Kong Free Press
  “Thousands gathered at Edinburgh Place, a public square in Hong Kong that includes City Hall, to urge foreign leaders to raise the issue of Hong Kong and the extradition bill to Chinese leaders at the G20 leaders summit.”
  Hong Kongers emigrate as freedoms deteriorate / Taipei Times

• Uyghur internment camps
  Opinion: Why doesn’t Trump’s tough talk on China extend to Uyghur persecution? / Los Angeles Times
  LA Times columnist Jonah Goldberg derides the economic nationalism driving President Trump’s China policy — but also at the root of political discourse on both the right and the left — saying “today’s nationalists are happy to demonize a China that bootlegs Mickey Mouse but are silent about the very same China that rounds up internal enemies and puts them in concentration camps.”

• Duterte defers to China
  China can fish in Philippines’ exclusive waters, Duterte says / Bloomberg (porous paywall)

Despite anger over President Duterte’s unwillingness to challenge Chinese encroachment into nearby waters that constitute the Philippines’s exclusive economic zone, a spokesman for the President said today: “We have negotiations with China that will help develop our country. We are benefiting from them, so maybe what the president wants is that we also give a little of what’s ours,” said Salvador Panelo.

• State-sponsored hacking
  Inside the West’s failed fight against China’s ‘Cloud Hopper’ hackers / Reuters 

The hacking campaign, known as “Cloud Hopper,” was the subject of a U.S. indictment in December that accused two Chinese nationals of identity theft and fraud. Prosecutors described an elaborate operation that victimized multiple Western companies but stopped short of naming them. A Reuters report at the time identified two: Hewlett Packard Enterprise and IBM.

Yet the campaign ensnared at least six more major technology firms, touching five of the world’s 10 biggest tech service providers.

Also compromised by Cloud Hopper, Reuters has found: Fujitsu, Tata Consultancy Services, NTT Data, Dimension Data, Computer Sciences Corporation and DXC Technology.

• Chinese real estate ownership in Vancouver
  Foreign ownership main culprit for unaffordable housing in Vancouver, a top destination for Chinese funds, ‘unimpeachable’ study says / SCMP

A new study links Vancouver’s unaffordable real estate prices with foreign ownership. The study, whose findings were called “unimpeachable” by an independent researcher, found a 96 percent correlation between foreign ownership and price-to-income ratios that gauge unaffordability. The results will likely support what people in Vancouver already know, which is a city known for having taken in decades’ of wealthy immigrants from Taiwan, Hong Kong, and Mainland China. 

• A quick look inside the Central Party School
  Toilet revolution and boutique hotels on curriculum at China Party school / Reuters
  A brief sketch of a visit to the Central Party School in Beijing. 

SOCIETY AND CULTURE:

• Movie censorship
  Patriotic movie apparently falls afoul of China’s censors / New York Times (porous paywall)
  As we reported yesterday, a number of Chinese films have had their release dates postponed or cancelled, apparently because of political concerns. The New York Times has more detail on one of them: The Eight Hundred [八佰 bābǎi], a patriotic drama set in 1937.

• Workers who write nonfiction
  The Picun Writer’s Group / One-Way Street Magazine via China Channel
  Translations of work by the Picun Writers Group, which offers writing classes to ordinary workers.

• Censored comedian becomes cartoon
  Chinese TV show swapped toon for quake-japing celeb, viewers say / Sixth Tone
  “Zhāng Yúnléi 张云雷, a Chinese comedian who recently came under fire last May when a video emerged showing him making light of the Wenchuan Earthquake, has allegedly been censored from a new episode of the variety show ‘Go Fighting!’, by being substituted by an animated character.” 

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The Highest Exam: Gaokao, the most feared test in the world

It’s easy to overstate the significance of China’s National College Entrance Examination, the gaokao. Yet our author, Yangyang Cheng, writes that she is a product of the gaokao, since it shaped her education, her career, her life inside China, and her path out of it. The “highest exam,” as it is known, represents the best and worst of China, inducing the most aspirational of dreams and deepest cycles of despair. “For everything I gave up and my mother sacrificed in the hopes of an extra point in a test,” Cheng writes, “was it worth it?”