No bargaining chip too big

1.  No bargaining chip too big: techno-trade war talks resume 

CNBC reports that “U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke to Chinese Vice Premier Liú Hè 刘鹤 and Commerce Minister Zhōng Shān 钟山” on July 9, marking the official resumption of negotiations in the now more than one year long U.S.-China techno trade war. 

• Zhong is “an old colleague of Xi from the Zhejiang days,” SCMP reporter Jun Mai notes, and “was not a core member of China’s negotiating team before.” 

• Zhong was vice-governor of Zhejiang Province at the same time that Xí Jìnpíng 习近平 held a variety of leadership positions in the region. 

• The implied closer watch of Xi could indicate that Liu will have less leeway to make concessions towards market reforms encoded in legal changes than he did in the last round, which by some accounts sank the previous tentative trade deal. 

Trump is determined to keep up his dealmaking brand as the next round of talks gets underway, and has taken several steps to try to ensure Beijing stays at the table: 

• One: A limited reprieve for Huawei. Commerce Secretary Wilbur Ross confirmed yesterday that licenses for some U.S. to sell to Huawei were in the works. 

• Two: Softened criticism on human rights. Vice President Mike Pence has continued to delay a speech on human rights in China that was originally slated to coincide with the 30th anniversary of June Fourth, and Treasury Secretary Steven Mnuchin has reportedly held up sanctions on Chinese officials over the abuses of Uyghurs in Xinjiang. 

• Three: Softened criticism on Hong Kong. The FT reports (porous paywall): 

Donald Trump told Chinese president Xi Jinping last month that the US would tone down criticism of Beijing’s approach to Hong Kong following massive protests in the territory in order to revive trade talks with China.

The US president made the commitment when the two leaders met at the G20 summit in Osaka, according to several people familiar with the meeting. One person said Mr Trump made a similar pledge in a phone call with Mr Xi ahead of the G20 summit… 

Following the Trump-Xi meeting, the state department told Kurt Tong, the departing US consul general in Hong Kong, to remove several critical comments about China from his final speech in the Asian financial hub. Mr Tong had told people he would give a speech about Hong Kong that would mention the erosion of freedoms by China in the territory, but the veteran diplomat was forced to water down the July 2 address.

In other words, no bargaining chip is too big — the survival of one of China’s largest technology companies, for instance — or too morally valuable — like the rights of millions of ethnic minority Muslims, or eroding promised freedoms of the residents of a Special Administrative Region — for Donald Trump, when dealing with China. 

Other techno trade war related news today:

• Huawei taps domestic lenders for $1.5 billion loan / TechNode
  “Huawei plans to raise $1.5 billion from a group of domestic lenders, an anonymous source familiar with the matter told Bloomberg. The move will mark the Chinese telecom giant’s first offshore syndicated loan secured without any help from overseas banks.”

• Trade War Threatens Chinese Factories’ Existence, Supplier Says / Bloomberg (porous paywall)

The world’s largest supplier of consumer goods says China’s factories are getting “urgent and desperate” as worried U.S. retailers accelerate a move out of the country amid heightened trade tensions.

China will see more factory shutdowns as the trade war that’s roiled the global supply chain exacerbates an exodus, said Spencer Fung, chief executive officer of Li & Fung Ltd. The company, which designs, sources and transports consumer goods from Asia for some of the world’s biggest retailers including Walmart and Nike, is being pushed by American clients to shift production out of China.

• Trade war tariffs are new normal and may be difficult to remove, says former US ambassador to China / SCMP
  “Max Baucus, the top US envoy in Beijing from 2014 to 2017, said on the sidelines of a US-China trade relations event in Hong Kong that it would be difficult for the world’s two largest economies to cancel their existing tariffs on each other’s products.”

• U.S. exempts some medical, electronic devices from China tariffs / Reuters
  “The Trump administration will exempt 110 Chinese products, from medical equipment to key capacitors, from hefty tariffs, it said on Tuesday, offering relief to some U.S. firms which have said the taxes harm their bottom lines.”

• Banned Chinese Security Cameras Are Almost Impossible to Remove / Bloomberg (porous paywall)
  “U.S. federal agencies have five weeks to rip out Chinese-made surveillance cameras in order to comply with a ban imposed by Congress last year in an effort to thwart the threat of spying from Beijing. But thousands of the devices are still in place and chances are most won’t be removed before the Aug. 13 deadline.”

—Lucas Niewenhuis

2. Xinjiang: Joint letter at UN signed by 22 countries, but not U.S.

Reuters reports that “Nearly two dozen countries have called on China to halt its mass detention of ethnic Uighurs in the Xinjiang region, the first such joint move on the issue at the U.N. Human Rights Council”:

The unprecedented letter to the president of the forum, dated July 8, was signed by the ambassadors of 22 countries. Australia, Canada and Japan were among them, along with European countries including Britain, France, Germany and Switzerland, but not the United States which quit the forum a year ago.

It fell short of a formal statement being read out at the Council or a resolution submitted for a vote, as sought by activists. This was due to governments’ fears of a potential political and economic backlash from China, diplomats said.

Other Xinjiang-related reports today:

• Good and Bad Muslims in Xinjiang / Made in China Journal
  Scholar David Brophy writes, and warns, “For those outside of China, a robust critique of China’s approach, and one that provides a blueprint for an effective response, must extend to the philosophical underpinnings that its policies continue to share with the domestic War on Terror in the West. Failure to do so carries considerable risk.”

• How China is crushing the Uighurs / The Economist via Youtube
  An 8-minute report by The Economist. 

• A “Struggle of Life or Death”: Han and Uyghur Insecurities on China’s North-West Frontier / The China Quarterly
  An academic paper by David Tobin which analyses “ethnocentric insecurity cycles” at play in government policy in Xinjiang since the Urumqi riots in 2009. 

—Lucas Niewenhuis

—–

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:

• The internet and technology landscape
  China Internet Report / SCMP
  “China has emerged on the world stage with a host of global tech companies that are innovative and competitive. And increasingly, their successes are being studied and replicated in other markets. This report, informed by on-the-ground reporting by the South China Morning Post and Abacus, offers insights into China’s tech trailblazers and the big important trends shaping the world’s biggest internet community.”

• Fraud case in asset management
  Exclusive: Camsing Global becomes focus of fraud probe / Caixin (paywall)

A fraud investigation into the founder of a private conglomerate has sparked quarrels between financial institutions and e-commerce giants JD.com and Suning.com over their roles in a fundraising scandal.

Leading Chinese wealth manager Noah Holdings Ltd. said 3.4 billion yuan ($490 million) of asset management products backed by entertainment-to-health care conglomerate Camsing Global’s accounts receivables from JD.com were in danger of default. But JD.com said it is “unaware” of the matter.

Similar debates arose between Yunnan International Trust Co. and Suning involving products that raised more than 1 billion yuan for Camsing Global backed by pending payments from Suning.

• The exit of South Korean companies
  One of China’s most successful investors is quietly leaving / Inkstone
  “Large South Korean firms have historically been among the most successful investors in China. But, they’ve been gradually withdrawing from the country, in order to avoid tariffs on exports of their China-made products to the US and to head off a repeat of a major political crisis.”

• Auto market
  China’s car market set for second year of falling sales / FT (paywall)
  “Purchases fall 14% in first half of 2019 but signs suggest worst may have passed.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• The trees of Hong Kong
  A conversation with Andy Brown, executive director of Kadoorie Farm and Botanic Gardend / Thomas L. Frasier
  “Thomas Fraser talks with Andy Brown, Executive Director of Kadoorie Farm and Botanic Garden about reforestation and nature conservation in Hong Kong.”

• African swine fever
  China swine fever hits small farmers and rural communities hard / FT (paywall)
  The FT reports on how the toll of swine fever is easier for larger hog farms to handle — partially because government has favored them — “accelerating a shift to big industrial producers.” 

POLITICS AND CURRENT AFFAIRS:

• The engagement debate
  Opinion: Why the United States doesn’t need to return to a gentler China policy / by John Pomfret in Washington Post
  See also yesterday on The China Project: Is China the enemy?

• Will Britain censure CCTV over forced confessions?
  Chinese state broadcaster hires former Ofcom director / FT (paywall)

China’s state television broadcaster has hired a former director of the UK media watchdog that is investigating the Beijing-controlled group over allegations that it aired forced confessions.

The move could help China Global Television Network’s battle to avoid being stripped of its UK licence and to preserve its ambition of breaking into Europe’s news market.

• The Party in the boardroom
  Xi doctrine comes before profit for China’s state-owned companies / Nikkei Asian Review (porous paywall)

With the 70th anniversary of the People’s Republic approaching on Oct. 1, the state propaganda machine is in full swing to make sure that the message permeates throughout society, including into corporate boardrooms. Huge amounts of time and energy have been spent trying to divine the meaning of, and act in accordance with, Xi’s sacred pronouncements.

• Hong Kong protests
  Hong Kong families are feuding as China extradition bill exposes generational fall in living standards
  An “inter-generational spat that has played out in many families across Hong Kong over the past month, as violence and unrest rocked the city. Family WhatsApp chat groups have descended into political shouting matches.”

• Repression of activists
  Chinese grassroots rights activist dies of cancer in a Fujian hospital / RFA
  “Award-winning Chinese human rights activist Jì Sīzūn 纪斯尊 has died of cancer, weeks after the end of his prison term. He was 71.”

SOCIETY AND CULTURE:

• Mulan by Disney
  Disney’s Mulan is not the feminist Mulan Chinese girls recognize / Quartz
  “The movie trailer reveals a storyline that diverges from the Ballad of Mulan, the famous, centuries-old poem on which the film is based, and the main way Chinese audiences have traditionally learnt about the character, and about the importance of female power.”
  See also this Twitter thread by novelist Jeanette Ng.  

• Changing notions of masculinity
  Behind the scenes with an androgynous livestream star / Radii China
  Frankie Huang writes, “Livestreamer Little Zhouzhou, who fell into beauty blogging quite by accident, exemplifies the changing face of masculinity in China.”

• Child sexual abuse
  A billionaire’s fall spotlights child sexual abuse in China / NYT (porous paywall)
  “Chinese officials and state media have increasingly criticized Wáng Zhènhuá 王振华, a real estate billionaire, after the Shanghai police said they had detained a man named Wang in a child-molestation case.”
  Procuratorate approves arrest of two on suspicion of child abuse / CGTN
  “A procuratorate in east China’s Shanghai City approved on Wednesday the arrest of two people, surnamed Wang and Zhou, on suspicion of child molestation, according to a statement by the Supreme People’s Procuratorate.”

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