Weekly Briefing: The ‘very, very, very limited’ Carrie Lam; trade war cannot stop Costco deal seekers; Zao! Your face is now in a Chinese server

Hello, readers! The China Project Weekly Briefing details the most important China news from the past week. It also comes in the form of a free newsletter — sign up using the box at the top of our homepage.

~

Our Sinophobia Tracker has been newly redesigned and updated, and shows the development of four trends in the U.S. today: paranoid rhetoric about Chinese people; visa restrictions for Chinese students and others; targeted policing of China-connected research; and responses to rising sinophobia. Take a look here.

The top story in this Weekly Briefing is, again, about Hong Kong. The ongoing mass protests and political crisis there look unlikely to resolve anytime soon.

This Thursday, The China Project Access members will have the chance to talk directly with one of the people who knows the most about protest in Hong Kong: Antony Dapiran. Antony is the author of City of Protest: A Recent History of Dissent in Hong Kong, and he appeared on Sinica twice this summer to talk about the current demonstrations as they developed.

Join The China Project Access today to join this live chat on our members-only Slack channel, and receive many other benefits!

—The Editors

1. The ‘very, very, very limited’ Carrie Lam

Photo credit: The China Project illustration

A LEADER WITHOUT AUTONOMY

“For a chief executive to have caused this huge havoc to Hong Kong is unforgivable. It’s just unforgivable. If I have a choice, the first thing is to quit, having made a deep apology, is to step down.”

Those are the words of Hong Kong chief executive Carrie Lam, as recorded on tape at a gathering last week and obtained and reported by Reuters. At this meeting with city businesspeople, Lam also said:

• There is a “huge degree of fear and anxiety amongst people of Hong Kong vis-a-vis the mainland of China, which we were not sensitive enough to feel and grasp.”
• Her “room for maneuvering is very, very, very limited” because the Hong Kong chief executive “has to serve two masters by constitution” — Beijing, and the people of Hong Kong.
• Beijing is willing to exercise patience. “I can assure you that Beijing does not have a deadline. They know this will ripple on…they and ourselves have no expectations that we could clear up this thing before the 1st of October” — the 70th anniversary of the founding of the People’s Republic of China. Beijing “has absolutely no plan to send in the PLA [People’s Liberation Army],” she added.

This bombshell report detailing Carrie Lam’s own admitted inability to solve the political crisis in Hong Kong follows a separate report by Reuters last week. That one even more directly illustrated the lack of promised autonomy for Hong Kong’s government:

• Lam had “submitted a report to Beijing that assessed protesters’ five key demands and found that withdrawing a contentious extradition bill could help defuse the mounting political crisis in the territory.”
• But the “Chinese central government rejected Lam’s proposal to withdraw the extradition bill and ordered her not to yield to any of the protesters’ other demands at that time.”

THE LATEST ABOUT LAM

Lam later denied that she had discussed resigning with Beijing, and Chinese state media propagandist Hú Xījìn 胡锡进 claimed on Twitter that the first Reuters story is “completely fake news.” But like other screeches of “fake news” by nationalistic trolls often appearing on Twitter, it has more of an effect of confirming than denying the story.

On September 4, the South China Morning Post reported that Lam had finally agreed to withdraw the extradition bill, “after weeks of insisting bill would not be withdrawn.”

Other recent articles related to the ongoing mass protests in Hong Kong:

• In Pictures: Hong Kong students boycott classes as China warns ‘end is coming’ / Hong Kong Free Press
• ‘I am the girl whose eye got shot’ in Hong Kong / The China Project
• China’s government wants you to think all mainlanders view Hong Kong the same way. They don’t. / ChinaFile

Leverage your authority on China and set your company apart as a leader in your industry.

Sponsor and facilitate a breakout session at this year’s NEXT China conference. Benefits include:

• The opportunity to educate a captive audience of China-focused professionals in your industry
• 6-12 months of residual media coverage following the conference
• Large-scale brand exposure to a network of influential individuals
• Long-lasting working-level relationships

Click here for more information on the conference; contact sales@thechinaproject.com for sponsorship opportunities.

2. Trade war cannot stop Chinese Costco deal seekers

Photo credit: The China Project illustration

CHAOS AT COSTCO

The U.S.-China techno-trade war might be worsening at an alarming rate, but that did not deter enormous crowds of Chinese customers from going crazy over American retail giant Costco at the opening of its first China store in Shanghai on August 27.

There were three-hour waiting times just to get into the parking lot. Before long, the store was forced to shut down for the day over safety concerns.

The American bulk-selling supermarket chain uses the same membership model it does in other countries — the annual fee for membership is 299 yuan ($42).

For details and photos of the Costco frenzy, please click through to The China Project.

MORE TRADE WAR UPDATES

New tariffs went into effect September 1, raising import taxes to a higher level as announced during a Twitter tirade by President Trump on August 23. China also responded with more tariffs — see The Guardian for details.

Eighty-seven percent of American companies do not plan to leave China. Those who have moved or plan to move operations outside the country are three times more likely to move to a third country rather than back to the U.S. Those are two of the findings of a U.S.-China Business Council survey — see more details on The China Project.

No further negotiations are scheduled, Bloomberg reports, despite Trump’s regular claim of “We are doing very well in our negotiations with China.”

3. Wall Street Journal punished by Beijing for report on Xi cousin

Photo credit: Reuters

As we detailed in our August 6 Weekly Briefing, several Australian media outlets made an extremely rare revelation about the family of China’s top leader, Xi Jinping: The 60 Minutes TV show and the newspapers The Age and the Sydney Morning Herald reported that Ming Chai (齐明 Qí Míng), the cousin of Xi, is a high roller at Crown Casino in Melbourne, Australia.

Philip Wen and Chun Han Wong of the Wall Street Journal followed up with a report titled Chinese president Xi Jinping’s cousin draws scrutiny of Australian authorities. Among the things reported:

• Chai has “links to…one man under investigation for money-laundering… Over 18 months in 2012 and 2013, Mr. Chai bet about $39 million at the casino.”
• “There is no indication that Mr. Xi did anything to advance Mr. Chai’s interests, nor that the Chinese leader has any knowledge of his cousin’s business and gambling activities.”

The attempt to shed light on the finances of Xi Jinping’s family apparently went over a red line for Beijing because Chun Han Wong — a Singaporean national — has been denied his journalist credentials, the Washington Post reports.

The Foreign Correspondents’ Club of China says that “Wong is the sixth journalist to leave China under such circumstances since 2013,” and added in a statement:

Expulsions amount to an extreme attempt by Chinese authorities to punish news organizations that conduct factual work that does not cast the country or its leadership in a flattering light. Foreign correspondents are not propaganda workers, and should not be treated as such.

4. Open night markets to stimulate consumers

Photo credit: The China Project illustration

As the Chinese economy faces a trade war, long-term slowdown, and rebalancing away from manufacturing-driven growth, a top priority for Beijing is to stimulate consumption. The South China Morning Post reports that the State Council — China’s cabinet of government ministries — announced 20 proposed measures to do just that. They include:

• Giving out licenses for night markets to operate and encouraging customers with parking facilities and other infrastructure.
• Making comfortable pedestrian sidewalks to encourage streetside commerce. This probably won’t result in hipster-friendly urban centers; this is one of the measures: “Expand the scope of the pilot demonstration of upgrading the national demonstration pedestrian street.”
• Encouraging internet companies to partner with factories to develop homegrown brands, encourage recycling, and grow “smart consumption.”
• Renovating struggling department stores and turning old sports stadiums and factories into shopping malls and entertainment centers.

5. Zao! Your face is now in a Chinese server

Photo credit: @AllanXia on Twitter

Hardly six weeks after the viral sensation of FaceApp — which dramatically aged up any selfie a user uploaded, but also, some users feared, would send their facial recognition data to Russia —  a new facial manipulation app has gone viral.

• This time, it’s Zao, a Chinese “deepfake” app that overlays a user face onto characters from famous movies and TV shows.
• Zao has even worse privacy problems than FaceApp did. According to Sixth Tone, in the user agreement on the app, there was a “clause — which has since been deleted — [that] said Zao maintained the portrait rights to user-supplied images within the app, as well as the right to distribute or sell such images.”

With a name like Zao, it’s unlikely that many American users were unaware that this is a foreign-made app. But another app hugely popular with American young people, TikTok, is also Chinese-made, and according to a survey by China Books Review, most of the app’s American users have no idea that it is made in China.

~

The China Project Weekly Briefing is sent as a free newsletter every week — subscribe by entering your email into the box at the top of our homepage. To get daily roundups of China news, access to a members-only Slack channel and exclusive expert chats, and discounts on other The China Project events and products, sign up for The China Project Access today!