Beijing bans Cathay Pacific flight crew who protest from Chinese airspace

Dear Access member,

Have a great weekend! 

—Jeremy Goldkorn and team

1. Beijing bans Cathay Pacific flight crew who protest from Chinese airspace 

“Hong Kong is bracing for another potentially chaotic weekend, with more anti-government protests expected despite police banning four planned marches over the high risk of violence,” says the South China Morning Post. If you’re going through the airport, be prepared for delays.

Meanwhile, today Beijing revealed a new strategy to sanction people and companies that participate in protests: “Beijing has ordered Cathay Pacific to stop aircrew who joined or supported illegal anti-government protests in Hong Kong from operating flights to mainland China or using Chinese airspace, firing its first warning shot at the city’s corporate giants,” reports the South China Morning Post. 

In a statement [in Chinese] issued on Friday night, the Civil Aviation Administration of China (CAAC) told Hong Kong’s flagship carrier that from Saturday, staff who had taken part in “illegal protests,” “violent actions” and “overly radical activities” in the city would not be allowed to fly to or from the mainland.

The regulator also made it clear that from Sunday the airline would have to submit identification details of all aircrew operating all services using mainland airspace.

Flights that did not have CAAC-approved crew lists would not be allowed to use Chinese airspace, it said.

That rules out pretty much every westbound flight for crew who get blacklisted. 

Other developments in Hong Kong:

BLAMING FOREIGN “BLACK HANDS” 

Monday, Tuesday, Wednesday, Thursday, Friday: For the sixth consecutive day, Party paper the People’s Daily has a front-page opinion piece (in Chinese) about Hong Kong in tomorrow’s edition of the newspaper, titled “The interference of foreign forces is a disaster for Hong Kong society.”

The piece is both an indication of the levels of alarm in Beijing, and a doubling down on the Party’s favorite explanation for the protests: foreign “black hands” (黑手 hēishǒu) working behind the scenes. For more on this, see yesterday’s newsletter, or the following updates: 

• “China’s escalating claims of covert U.S. interference in Hong Kong are not so much warnings at Washington but classic United Front tactics aimed at HK and domestic audiences analysts say,” tweeted reporter Gerry Shih about his article China leaks U.S. diplomat’s personal information in Hong Kong as protesters flood into airport in the Washington Post.

• “China on Friday hit back at the United States, accusing Washington of applying ‘gangster logic’ after an official described Beijing as a ‘thuggish regime,’ for leaking the personal details of a Hong Kong–based U.S. diplomat to a pro-Beijing newspaper,” reports the South China Morning Post. “Gangster logic,” per the People’s Daily, is 强盗逻辑 qiángdào luójí.

• “The Auckland office of China’s Consulate General has lodged a stern warning to New Zealand and other foreign nations against turning Hong Kong into a pawn to curb China,” according to the New Zealand Herald. 

SQUEEZING TAIWAN FILM AWARDS AND HONG KONG ACTORS 

Following Beijing’s boycott of Taiwan’s Golden Horse Film Awards, organizers of the Golden Rooster Awards, China’s equivalent of the Golden Horse Awards, announced that this year’s event will be held in Xiamen, a city on the mainland side of the Taiwan Strait, on November 19–23, clashing with the Golden Horse Awards ceremony on November 23. The South China Morning Post reports:

The boycott has created a dilemma for Hong Kong filmmakers and stars, who must now make a choice between competing for a Golden Horse or a Golden Rooster — and face the political and commercial ramifications.

Taiwanese news website Line Today reported that Hong Kong film production companies had been warned by Beijing that films can’t go on release in China if they apply for the Golden Horse Awards. Hong Kong stars who attended the event would be put on a watch list, it quoted Beijing as telling them.

CHINESE CITIZEN REACTIONS

“Although discussions on the Hong Kong protests were initially silenced on Chinese social media, the demonstrations are now trending all over Weibo,” according to What’s on Weibo. State media is “propagating hashtags and illustrations in favor of Hong Kong government and in support of the Hong Kong Police Force,” which Chinese internet users are enthusiastically sharing. 

2. Erdoğan collects his payment

Despite decades of quiet support for Uyghur causes, in recent years, Turkey has never seemed able to make up its mind whether to firmly stand with the Uyghurs, whom Turks consider their kin, or whether to sweep their current existential cultural crisis under the rug — in favor of better ties with Beijing.

On July 2, Turkish president Recep Tayyip Erdoğan visited China. During a meeting with Xí Jìnpíng 习近平, state media reported that Erdoğan said that “residents of various ethnicities living happily in Xinjiang Uygur Autonomous Region thanks to China’s prosperity is a hard fact, and Turkey will not allow anyone to drive a wedge in its relations with China.”

Erdoğan seems to have collected his reward. Bloomberg reports (porous paywall): 

China’s central bank transferred $1 billion worth of funds to Turkey in June, Beijing’s biggest support package ever for President Recep Tayyip Erdogan delivered at a critical time in an election month. The inflow marks the first time Turkey received such a substantial amount under the lira-yuan swap agreement with Beijing that dates back to 2012.

3. Trade war weapons  

We’ve been calling it a “trade war” since July 6, 2018, but a year ago, economists surveyed by the Wall Street Journal were evenly split as to whether to use this word for U.S.-China trade tensions. In a new survey (paywall), 87 percent of respondents are happy with the term. 

Here are today’s reports: 

COMPARING U.S. AND CHINESE LEVERAGE

Bloomberg says (porous paywall) that “while President Donald Trump has fired two large weapons in the past week by green-lighting his biggest swathe of tariffs yet and formally branding China a currency manipulator, his arsenal is far from exhausted.” 

His noisiest if not most effective weapon “may be the one that he increasingly appears focused on: weaponizing the dollar, the world’s reserve currency.” Meanwhile, China’s responses are, according to the New York Times (porous paywall), taking shape: 

China may turn its currency into a weapon. It has already stopped buying American crops. Its mining industry stands ready to hold back minerals that are crucial to making iPhones and missiles, and its policymakers are openly discussing doing without American trade.

In addition, “China is expected to dramatically reduce its intake of U.S. crude imports over the coming weeks, energy analysts have warned, following the latest flare-up in trade war tensions between the world’s two largest economies,” reports CNBC. 

The Chinese central bank, however, appears to be reassuring markets that it will not weaponize the yuan: “Senior People’s Bank of China officials reassured foreign companies that the currency won’t continue to weaken significantly, after the yuan fell below 7 per dollar for the first time since 2008,” reports Bloomberg (porous paywall). See also this Reuters explainer: How does China manage the yuan, and what is its real value? 

HUAWEI 

“Trump has succeeded. Now lots of Chinese people are buying Huawei phones,” writes Yàshēng Huáng 黄亚生 in the New York Times (porous paywall): Trump’s “maximum-pressure tactics have delivered no meaningful results — other than undermining the good will of the Chinese public and its liberals toward America.”

“The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies after Beijing said it was halting purchases of US farming goods,” reports the South China Morning Post.

Back in China, Huawei officially unveiled a self-developed operating system (OS). If the OS works, it would be a major step in Huawei’s new quest to become independent of American technology. However, as The Verge notes, “the extent to which it would be able to act as a substitute for Android is unclear.”

Finally, Huawei “said it was seeking compensation from its contract manufacturer Flex Ltd for illegally withholding some 400 million yuan ($57 million) worth of its goods in the wake of a U.S. trade ban on the Chinese firm,” according to Reuters. 

4. A sensible policy on opioids

The first time I went to a dentist after moving to America from China, I was shocked to be prescribed 30 oxycodone tablets after a relatively minor procedure. 

Here’s a policy that the U.S. could consider copying from China. Sixth Tone reports (links below in Chinese):

Amid a concerning trend of opioid addiction cases in China,the country’s National Medical Products Administration announced…that medication containing up to 5 milligrams per unit of the painkiller oxycodone will be upgraded to a Category II psychotropic drug beginning next month.

Doctors may only prescribe Category II drugs for a week at a time, according to a report Thursday from financial news outlet Jiemian that quoted an official from the Chinese Association of Drug Abuse Prevention and Treatment. Only vendors approved by provincial-level governments can sell Category II psychotropic drugs, and under current regulations, doctors are required to keep records of any prescriptions for such drugs for at least two years.

5. Xi’s hot words about garbage and North Korea

Today, Xinhua News Agency’s top stories in English and Chinese are a return to one of the regular themes of Xí Jìnpíng 习近平: “the need to improve community-level healthcare services, promote equitable access to basic public services in urban and rural areas and provide safe, effective, convenient and affordable public health and basic healthcare services for the people.”  

The People’s Daily leads with a story (in Chinese) titled “What words did Xi Jinping popularize in the first half of 2019?” There are 15 words. Here are a few of the most interesting ones:

Garbage sorting

垃圾分类 lājī fēnlèi

Xi is determined to get China to sort its garbage. It’s actually happening in Shanghai, where new rules are forcing residents and companies to change their waste disposal habits. 

Reduce the burden on the grassroots; we will not withdraw troops until we have achieved absolute victory 

基层减负 jīcéng jiǎnfù; 不获全胜、决不收兵 bù huò quán shèng, jué bù shōubīng

These are two separate phrases in the People’s Daily’s list, but they are both connected to one of Xi’s major projects: poverty alleviation. 

I am willing to negate myself in devotion to the people

我将无我，不负人民 wǒ jiāng wú wǒ, bù fù rénmín

Annata, the Buddhist concept of “non-self,” is 无我 wú wǒ in Chinese. It’s rather amusing for a man running a propaganda operation resembling a personality cult to claim he is “selfless.”

Gold does not change with the passing of time

历久弥坚金不换 lìjiǔ mí jiān jīn bùhuàn

When he met North Korea leader Kim Jong-un in June, Xi praised the long friendship between the two countries as being as constant as gold. 

Black swans and gray rhinos 

黑天鹅 hēi tiān’é 灰犀牛 huī xīniú

In a January speech, Xi warned of heightened risks to the economy. Black swans are risks that are completely unpredictable. “Gray rhinoceros” comes from a book about large and obvious “dangers we ignore” until they start running too fast, or, as a People’s Daily explainer (in Chinese) puts it: “A gray rhino is massive, and responds slowly — you can see it clearly in the distance, but if it charges you, it will catch you off guard and gore you.”

Don’t forget the Party’s original aspirations and firmly remember your mission

不忘初心、牢记使命 bù wàng chūxīn, láojì shǐmìng

Respected Zhongnanhai scholar and tea leaf reader Willy Wo-Lap Lam (林和立 Lín Hélì) recently wrote about this slogan:

However, the calls for professing allegiance to the Party and reinstating its chuxin may be a cynical way for Xi to demand further loyalty to himself. As Xi stated in a Politburo study session in mid-2018, “[I]n upholding party leadership, the most important thing is to safeguard the authority of the party central authorities (中央, Zhōngyāng) and to concentrate and unify leadership [at the top].”

—Jeremy Goldkorn, Editor-in-Chief

Here are the stories that caught our eye this week:

• The U.S.-China techno-trade war is spinning out of control. Here is a brief summary of what has happened in the past week, since Donald Trump on August 1 announced another tariff escalation (reportedly without first consulting his trade representative, Robert Lighthizer):

  • China allowed the yuan to depreciate past the psychologically significant seven-to-the-dollar level. It was not currency manipulation — the move brought the yuan’s value closer, not farther away, to what economists consider its true value — but the Trump administration nonetheless took the opportunity to officially label China a currency manipulator. This is best interpreted as a political messaging move, with few significant policy implications. 

  • China canceled purchases of soybeans and other crops that Trump had earlier cheered plans for. 

  • American farmers say they are suffering under the weight of tariffs and the now seemingly permanent reduction in access to the Chinese market. 

  • A global recession as a result of Trump’s inability to resolve the trade war now seems possible: Lawrence Summers, the Harvard economist who served as the director of the National Economic Council during the first Obama administration, said, “We may well be at the most dangerous financial moment since the 2009 Financial Crisis.”

  • Chinese exports increased due to growth in shipments to Southeast Asia and the European Union markets, as China signaled it may continue to allow the yuan to weaken. 

• Hong Kong protestors have not given up, as a general strike on August 5 attended by thousands of workers escalated into city-wide clashes with police. Anxiety in Beijing over the turmoil in Hong Kong is extraordinarily high, as indicated by these signals:

  • Six consecutive front-page People’s Daily commentaries, starting on August 5, that communicated support for the Hong Kong police, support for the Chief Executive Carrie Lam, a defense of Beijing’s interpretation of “One Country, Two Systems,” an exhortation to patriotism, a plea to return to “stability and prosperity,” and a condemnation of “interference of foreign forces” that Beijing blames for the unrest. 

  • A statement by Yáng Guāng 杨光, a spokesperson for the Chinese government’s Hong Kong and Macau Affairs Office, on August 6 that blamed “black hands” for whipping up trouble and warned the protestors, “Play with fire, you’ll get burned” (玩火者必自焚 wánhuǒzhě bì zìfén). 

  • A drill by 12,000 police officers in neighboring Shenzhen on August 6. 

  • A statement by Zhāng Xiǎomíng 张晓明, the top official at the Hong Kong and Macao Affairs Office, that compared the events in Hong Kong to a “color revolution” on August 7.

  • A conspiracy theory, now widely propagated by Chinese government statements and state media reports, that American diplomats and CIA “black hands” are behind the unrest. 

• Some Hong Kongers do have hope, still. A notable example of this is Cheah Cheng Hye (謝清海 Xiè Qīnghǎi), an enormously successful hedge fund manager and certainly part of the city’s elite, who wrote an op-ed to urge “badly needed political reform” as the correct response to the protests. 

• China criticized India’s decision to unilaterally revoke the autonomous status of Jammu and Kashmir, the Indian-contolled section of disputed territory that borders Pakistan-controlled Gilgit-Baltistan. One section of the territory in question happens to share a border with China. 

• New Zealand called on China to respect free speech, after China’s consulate general in Auckland released a statement praising the “spontaneous patriotism” of pro-Beijing students who reportedly manhandled a Hong Kong-supporting protester at a demonstration at the University of Auckland. It could be part of a shift in the Kiwi government toward a harder line on China. 

• Positive news for the Chinese LGBT community: More and more same-sex couples of all age ranges in China are naming their partners as their legal guardians, Weibo users overwhelmingly welcomed Budweiser packaging featuring same-sex couples for Chinese Valentine’s Day or Qīxì 七夕, and on August 8, the Beijing Guoxin public notary office announced that it had approved the first legal guardianship in northern China for a same-sex couple.

• The Canadian government appears to be too timid to confidently challenge China on the arbitrary detention of two Canadians, Michael Kovrig and Michael Spavor, judging by recent government statements. 

• The Party’s policing of cartological political correctness has reached new extremes, as a top propaganda official said that censors had to stay alert “every second” to make sure content in cartoons and documentaries supported the leadership of President Xi Jinping, and Chinese television drama Go Go Squid! was investigated after showing a map that did not show Taiwan and Hainan Island as part of China. 

• China cut gasoline prices for the fifth time this year. Gas costs about $4 a gallon in China, whereas in the U.S., it currently costs $3 a gallon, and in Germany, about $6 a gallon. 

• A Uyghur man stuck in Qatar fearing deportation to China arrived in the U.S. on August 6. 

• Some Western scholars, institutions, and companies are complicit in the racial profiling of Uyghurs and others in China. An article in Coda revealed how institutions like Imperial College London and companies like Microsoft had collaborated with culpable Chinese companies on facial recognition and other artificial intelligence technologies. 

• A rare plea for rule of law was published in Chinese by The Paper, and in English by its sister news site Sixth Tone. 

BUSINESS AND TECHNOLOGY:

• Alexa, how many child laborers made you?
  Schoolchildren in China work overnight to produce Amazon Alexa devices / The Guardian
  The Guardian has revealed new allegations of labor abuse at an Amazon plant in China, via leaked documents from its supplier Foxconn.

According to the documents, the teenagers — drafted in from schools and technical colleges in and around the central southern city of Hengyang — are classified as “interns,” and their teachers are paid by the factory to accompany them. Teachers are asked to encourage uncooperative pupils to accept overtime work on top of regular shifts.

Bloomberg reports that Foxconn has taken action against the plant, firing the plant’s chief and head of human resources, while also punishing some managers involved.

• Tech and China’s enormous market for senior care 
  Smart home tech makes inroads into China’s emerging elderly care market / Reuters

Charging elderly clients just 1 yuan or about 15 cents a day, little-known Lanchuang Network Technology Corp has embarked on one of the most ambitious undertakings in aged care by a private sector firm in China. 

Provided with a setup box, a webcam paired with a TV set and “Xiaoyi,” a Siri-like voice assistant, customers gain access to telemedicine and an SOS system as well as for-pay services that include housekeeping and meal deliveries.

A small robot that can ring up a medical center in response to verbal calls for help costs an extra 2 yuan per day.

Launched just four months ago, Lanchuang’s smart care system has already signed up 220,000 elderly clients in 16 cities, half of which are in Shandong, a rapidly aging province in eastern China where the company is based.

• Food prices up 9 percent
  July 2019 producer prices PPI and consumer price index CPI / CNBC
  China’s Consumer Price Index (CPI) rose 2.8 percent over the last year, buoyed in large part by rising prices for food (up 9.1 percent). Meanwhile, China’s Producer Price Index (PPI) — which gauges corporate profitability and industrial demand — fell by 0.3 percent, the first contraction since 2016. The data, according to CNBC, adds “to concerns of deflationary risks in the world’s second largest economy.”
  According to an analysis by the Wall Street Journal (paywall), these signs of deflation pose a problem for China’s central bank on the best way to proceed:

It could loosen monetary policy in a bid to stimulate demand and lift producer prices out of deflation, but a massive stimulus program would risk pushing consumer inflation higher and causing the property market to overheat, economists say.

• SenseTime
  China’s SenseTime chases global AI dreams amid tech cold war / Nikkei Asian Review
  In this long profile of facial recognition and AI startup SenseTime, Nikkei notes that its valuation “has soared to $4.5 billion since it was hatched in 2014 out of the multimedia lab at the Chinese University of Hong Kong.” But can it avoid a Huawei-style backlash?

• Senior Alibaba exec charged for Malaysian financial scam
  Alibaba president among those charged in Malaysia’s 1MDB scandal / Caixin (paywall)

Alibaba Group Holding Ltd. President Michael Evans is among 17 current and former Goldman Sachs directors facing criminal charges over their alleged role in $6.5 billion of bond sales by 1MDB.

Evans, the international face of China’s e-commerce leader, was among a group of individuals who served as directors at three Goldman units Malaysia accused of misleading investors when arranging deals for 1MDB.  

• Communist video games from Tencent
  Tencent helps Communist Party pay homage to the China Dream / Bloomberg (porous paywall)

Tencent Holdings Ltd. is teaming up with the Chinese Communist Party apparatus to develop “patriotic” video games, edging closer to a government that’s increasingly intolerant of gaming.

In Homeland Dream, which was developed in partnership with Party mouthpiece the People’s Daily, players simulate building a city while alleviating poverty and executing tax breaks. Such actions are meant to echo real-life policies in China. Other political buzzwords such as President Xi Jinping’s Belt and Road Initiative also feature.

The second title — Story of My Home — is still under development in collaboration with the publicity department of the Guangdong government, Tencent’s home province. The Chinese technology giant revealed the collaborations at ChinaJoy, the country’s largest gaming expo, in Shanghai last week.

The games “will focus on the accomplishments of our country’s development in the new era, as well as the lives of ordinary people,” Tencent Senior Vice President Steven Ma said during a speech at ChinaJoy.

• Another bank bailed out
  Unit of China’s sovereign wealth fund takes over Xiao Jianhua-linked Heng Feng Bank in third case of nationalization since May / SCMP
  Another small Chinese bank, HengFeng Bank, has been taken over by the state, “the third case in as many months of the state exerting its grip over wayward financial institutions.”
  HengFeng is notable for being linked to fugitive financier Xiào Jiànhuá 肖建华, a billionaire who disappeared from his Hong Kong hotel in 2017 only to reappear the following year in Shanghai court, facing charges of stock manipulation. 

• Auto market blues
  China car market resumes historic slump with no respite in sight / Bloomberg (porous paywall)
  “Retail sales of sedans, sport utility vehicles, minivans and multipurpose vehicles in July fell 5.3 percent from a year earlier to 1.51 million units, according to the China Passenger Car Association. That’s the 13th decline in the past 14 months.”

• Ecommerce — the punishment of Xiaohongshu
  Why was Xiaohongshu pulled from China’s app stores? / Jing Daily
  Xiaohongshu, a social ecommerce platform that grew rapidly after launching in 2013, was penalized after “complaints that it facilitates the sale of restricted, forbidden, and fake products. These products include tobacco, e-cig products, and medicinal products such as skin-injection kits.”

• Double the shorts 
  China regulator relaxes rules on short selling, margin financing / Bloomberg (porous paywall)
  “China’s securities regulator and exchanges are nearly doubling the number of stocks eligible for short selling and margin financing, and scrapped a previous automatic margin call threshold.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Panda alert!
  Rare giant panda twins born at Belgian zoo / Reuters via CNA
  “Giant panda twins born at a zoo in Belgium on Thursday face a precarious first few days, but the ‘extremely rare’ birth still bodes well for the vulnerable species, the Pairi Daiza zoo announced.”

POLITICS AND CURRENT AFFAIRS:

• Beijing pays for positive coverage in Taiwanese media
  Beijing woos Taiwan hearts and minds with ‘paid’ news / SCMP
  “Mainland authorities have paid at least five Taiwanese media groups for coverage in various publications and on television, in an effort to win hearts and minds on the self-ruled island as part of Beijing’s reunification agenda…. Reuters is withholding the names of the media groups at the request of the former and current employees who provided documents.” 

• Beijing influence Down Under
  China’s influence on campus chills free speech in Australia, New Zealand / Washington Post
  A comprehensive roundup of the intensifying problems at universities Down Under where the large numbers of mainland Chinese students are clashing with their classmates and threatening free speech, often egged on by their embassies and consulates.  

• Loyalty crackdown in Tibet
  China raises reward for informants in Tibet / Radio Free Asia

Chinese authorities in Tibet are offering large cash rewards to informants in a bid to stamp out online activities considered threatening to Beijing’s control over the restive Himalayan region, with amounts paid out now tripled over amounts offered last year, sources say. Rewards of 300,000 yuan ($42,582) are now being promised for information leading to the arrests of social-media users deemed disloyal to China.

• Trump’s tweets in Chinese
  ‘Why I translate all of Trump’s tweets into Chinese’ / BBC 
  “Ding says his main motivation to maintain @Trump_Chinese is a strong belief that Trump is the most supportive president in American history for China’s human rights.”

SOCIETY AND CULTURE:

• A sad story about adoption with a happy ending
  One is Chinese. One is American. How a journalist discovered and reunited identical twins / Los Angeles Times
  In 2009, Beijing-based journalist Barbara Demick traveled around rural China investigating the origin of Chinese girls who were put up for adoption by foreign families in large numbers in the 1990s through to 2005, when China changed its adoption policies.
  During her research, Demick met a family in Hunan who had twin daughters, one of whom was taken away by family planning officials and later adopted by an American family. This tear-jerking article and accompanying video are about their eventual reunion at the age of 19. 

• Orphans in China
  How China can improve the lives of its state-supported orphans / Sixth Tone
  “There are 68,000 parentless children living in China’s welfare homes, 20 percent of them over the age of 16,” according to government stats (in Chinese):

China’s welfare system for orphans, which is largely a holdover from the Maoist period, was designed to cover their living and health care expenses from the cradle to the grave. Since the marketization reforms of the 1980s and ’90s, however, it has become a kind of poverty trap.

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Opinion: In defense of the Yenching Academy

Ethan Paul, a current student at Yenching Academy, responds to NPR’s report last week that the FBI is targeting his classmates for questioning. 

Project Gutenberg is a fun, wild ride with a divisive final twist

Almost a year after it hit Chinese theaters and grossed more than $150 million, the crime-thriller Project Gutenberg 无双 is now available to stream on Amazon Video.  

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Uyghur love in a time of interethnic marriage

Darren Byler writes on the notable rise since 2018 of propaganda promoting marriage between Han men and Uyghur women. 

Hip-hop label shuts down after rapper chops off fingertip in live stream

HHH, one of China’s most prominent hip-hop record labels, has shut down its operations after one of its artists cut off the tip of his pinky finger during a live stream.

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Kaiser Kuo writes that on balance, Chinese don’t have qualms about the use of the atomic bomb by the U.S. to compel a Japanese surrender, and believe it was necessary. 

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