Tanzania says no to China’s largest port operator

Dear Access member,

Our word of the day is China Merchants Port Holdings Company (招商局港口 zhāoshāng jú gǎngkǒu). 

Outside of China, the state-owned company calls itself China Merchants Holdings International, and is featured in our top story today about Tanzania. 

If you’re in New York on November 4, come listen to Michael Yamashita talk about and show photographs from his more than three decades on the Silk Road from Europe to China as an award-winning lensman for National Geographic. 

—Jeremy Goldkorn, Editor-in-Chief 

Tanzania’s coat of arms. “Uhuru na umoja” means “freedom and unity” in Swahili. 

1. Tanzania is not messing around anymore with China 

In 2013, Tanzania signed a deal with China Merchants Holdings International, China’s largest port operator, to build a $10 billion port and economic zone at Bagamoyo, an ancient Indian Ocean trading town with a pleasant beach. In May this year, Reuters reported that the project had hit an impasse, “with the two sides disagreeing on terms of the infrastructure investment”: 

“The conditions that they have given us are commercially unviable. We said no, let’s meet halfway,” Deusdedit Kakoko, director general of the state-run Tanzania Ports Authority (TPA) told Reuters. “It would have been a loss…they shouldn’t treat us like schoolkids and act like our teachers.”

The impasse is not over. A tweet by Eric Olander of the Africa-China Project describes the state of play: “Tanzania is not messing around anymore with China… by issuing a take-it-or-leave-it ultimatum. This is definitely something we don’t see very often, if ever, in the China-Africa relationship.” The East African newspaper (of Kenya) has details:

Tanzania Ports Authority chief executive Deusdedit Kakoko said the government rejected and revised five stringent demands made by the investor — Beijing-based China Merchants Holdings International — because they were not beneficial to the country.

The five demands that Tanzania rejected or modified: 

• A 33-year lease on the port instead of the 99-year one asked for.

• No tax holiday.

• No special rates for water and electricity.

• China Merchants cannot “start and run any other business they deemed necessary within the port without government’s approval and were open to scrutiny and regulation by relevant agencies in line with law like any other investor.”

• The government of Tanzania retains its right “to develop other ports to be in direct competition with Bagamoyo.”

2. NordVPN hacked

A security alert for those of our readers who use this popular virtual private network service:

Hackers stole “secret crypto keys” for NordVPN. The breach happened 19 months ago, but the company is only disclosing it now. All this according to Ars Technica, where you can find a summary of what is known so far about the hack.

3. U.S.-China techno-trade war

Yesterday, Marketwatch reported that Donald Trump said, “The deal with China is coming along very well. They have to make a deal because their supply chain is going down the tubes.”

The prospect of a deal was also talked up today by Vice Foreign Minister Lè Yùchéng 乐玉成, who said, per Reuters: “China and the United States have achieved some progress in their trade talks…and any problem could be resolved as long as both sides respected each other.”

But this is weak tea. In the words of Dan Ivascyn, group chief investment officer at Pimco, the enormous U.S. bond house, as cited by Barron’s: 

We think you could see a continued attempt to reduce some of the more negative rhetoric to calm markets further, but any type of significant deal is going to be very hard to come by.

Many other irritants and tensions in U.S.-China relations persist, and any of them could derail trade talks. Ivascyn is prepared for “a scenario where negotiations deteriorate again or where there is a further escalation.” Some of the many issues that could flare up: 

“The United States has forced an unwanted trade war on China and Beijing must take the necessary countermeasures to protect its interests,” senior Chinese diplomat Wáng Yì 王毅 said on Tuesday, according to Reuters.

Peter Navarro’s fake friend is evidence that Washington makes “policies based on lies,” according to the Chinese foreign ministry, reports the South China Morning Post. Books written by Navarro, Trump’s economic advisor and most reliable China basher, cite a made-up person named Ron Vara to say negative things about China. Ron Vara is an anagram of Navarro. 

“U.S. Secretary of State Mike Pompeo said Monday that it is ‘completely inappropriate’ for China to retaliate against U.S. businesses whose employees have commented on pro-democracy protests in Hong Kong,” per CNBC. 

“YouTube star PewDiePie says he was banned from China after commenting on the Hong Kong protests and Chinese President Xí Jìnpíng 习近平,” reports the South China Morning Post. While it is highly unlikely that there is any kind of formal ban on a gaming and internet culture celebrity whose primary channel is blocked in China, his claim shows how recent events have raised global awareness of China’s heavy censorship. 

American military might is on show in this video tour given to Sophia Yan of The Telegraph of the aircraft carrier USS Ronald Reagan, as it conducted training exercises in the South China Sea. 

Finally, perhaps there is hope for some kind of trade deal after all. Reuters reports:

China on Tuesday offered 10 million tonnes of tariff-free quota to major Chinese and international soybean crushers to import soybeans from the United States, according to two people briefed on the matter.

The quota to import U.S. soybeans was offered to state-owned crushers, privately owned crushers and major international trading houses with crushing plants in China at a meeting called by the state planner, said the sources who were briefed by people that attended.

4. A mental health crisis in Hong Kong

If you’re following Hong Kong closely, you’ll want to subscribe to A Procrastination, a new newsletter on the City of Protest by Antony Dapiran, author of a book of that name, and occasional Sinica Podcast guest.  

Today’s news: 

The Hong Kong protests have sparked a mental health crisis, says Lily Kuo of the Guardian. “Nine suicides have been linked to the wave of unrest as young people grow frustrated and exhausted by the intense, months-long standoff.” 

“U.S. Senator Kamala Harris, who is also a candidate for the Democratic presidential nomination, became the latest lawmaker to come out in favour of the Hong Kong Human Rights and Democracy Act of 2019, bringing the number of cosponsors to nearly one-third of the Senate,” says the South China Morning Post.

The murder case the Hong Kong government used to justify the introduction of the extradition bill that sparked the protests is still creating political trouble. The murder suspect, a Taiwanese man in Hong Kong, has offered to surrender himself to the Taiwanese police, but they are insisting on coming to Hong Kong to arrest him there, which Hong Kong will not allow. Try to sort out the details, if you can, in this South China Morning Post report. 

“Fears are growing among mainland Chinese living in Hong Kong,”says Bloomberg (porous paywall) in one of several recent reports that highlights anxieties amongst P.R.C. migrants to the city. Many warn their family members against speaking Mandarin in public. 

—Jeremy Goldkorn

BUSINESS AND TECHNOLOGY:

• Logistics IPO — the geopolitical environment is more favorable now?
  Logistics specialist looks to raise $1.45 billion in Hong Kong’s second-largest IPO this year / Caixin Live

ESR Cayman Ltd., an Asia-focused logistics facilities designer and operator…is seeking to raise as much as HK$11.4 billion ($1.45 billion), in a revived listing plan that could become Hong Kong’s second-largest initial public offering (IPO) this year, according to a newly filed company prospectus.

The company, co-founded by private equity company Warburg Pincus, has set a price range for its planned sale of about 653.68 million shares at between HK$16.2 and HK$17.4 each, according to its prospectus filed with the Hong Kong stock exchange on Monday. It plans to price the offering on Oct. 25 and begin trading on Nov. 1.

In June, ESR postponed its original listing plan in Hong Kong because of an unfavorable geopolitical environment, chairman Jeffrey Perlman said in a news briefing on Monday.

• Russian pipeline to provide nearly 10 percent of China’s natural gas
  The pipeline that could derail China’s LNG boom / OilPrice.com

Earlier this month, Russia’s gas giant Gazprom said that the Power of Siberia pipeline to China is being filled up with gas as scheduled, with operations slated to begin in December.

While the initial volumes of Russian gas shipments to China will be low and unlikely to have a major impact on this coming winter’s LNG market in China, at full capacity in 2023, the pipeline from Russia is set to provide as much as 9.5 percent of China’s expected gas supply.

• 5G rollout eats up mobile phone operator profits
  China Mobile, China Unicom growth flattens ahead of 5G rollout / TechNode
  “China Mobile and China Unicom both reported on Monday declining profits for the first three quarters of the year as the country’s race to roll out 5G commercial networks takes its toll.”

• Foreign assets for sale
  China is struggling to offload foreign acquisitions, from yachts to pizza / Bloomberg (porous paywall)
  “Chinese firms started selling off assets two years ago when the government tightened curbs on capital outflows and stepped up scrutiny on foreign acquisitions,” and in recent weeks the selloff has accelerated. The article mentions Chinese-owned or -controlled firms Ferretti, the Italian superyacht maker, and British brands Aquascutum (clothing) and PizzaExpress.

• Chinese companies building religious edifices in Africa
  In Nigeria, the largest statue of Jesus in all Africa stands almost 9 meters tall / Aleteia
  A Chinese contractor built the largest mosque in Africa. Now this:

The largest statue of Jesus in all Africa stands almost 8-and-a-half meters (28 feet) tall in Abajah village (Imo state) in southern Nigeria…commissioned by Obinna Onuoha, a devout Catholic businessman, who hired a Chinese company to carve the white marble statue in 2013.

POLITICS AND CURRENT AFFAIRS:

• Uyghur police chief arrested; forced labor in Xinjiang
  Police chief detained in Xinjiang after expressing concerns over mass detention of fellow Uyghurs / Radio Free Asia 

Himit Qari, the chief of Ucha township, in Aksu (Akesu) prefecture’s Kuchar (Kuche) county, was detained after criticizing [government policies]…while attending a gathering at a friend’s home early this year, a source from Kuchar told RFA’s Uyghur Service…

Weeks later, Qari, 45, was summoned by the Kuchar County Public Security Bureau’s disciplinary office for questioning, taken to a prison amid a further investigation into his case, and accused of “revealing state secrets,” said the source.

• Forced Uyghur labor in China’s Xinjiang could be making US-sold clothing / Quartz

[The issue of clothes made by forced labor in Xinjiang] is bigger than one apparel firm and can be far harder to trace, because much of the forced labor in Xinjiang is involved in producing cotton rather than finished clothes. This cotton winds its way through a multi-step supply chain that can obscure its origins before potentially being exported to countries such as the US.

In a report last week, the Center for Strategic and International Studies (CSIS), a Washington, DC, think tank, laid out its concern that this exact scenario is occurring.

• Guangxi police release veteran activist known for rendition from Hong Kong
  Veteran Tiananmen democracy movement leader released in China’s Guangxi / Radio Free Asia
  Zhōu Yǒngjūn 周勇军 was a student leader during the 1989 protests, and has remained a vocal government critic since then. In 2008, he became one of the more famous people to have been rendered by the Hong Kong government to Beijing, long before “extradition” was a word Carrie Lam (林鄭月娥 Lín Zhèng Yuè’é) had thought much about.
  Zhou’s most recent detention began in August 2018 in Guangxi’s Dongxing City, near the border with Vietnam, where he was arrested, indicted for “incitement to subvert state power,” and then eventually sentenced to one year and two months’ imprisonment  for “picking quarrels and stirring up trouble.” RFA says that he was “released at the end of that jail term on Saturday afternoon and left the Guangxi Dongxing Detention Center in the company of his sister.”

SOCIETY AND CULTURE:

• Petting fake pandas in a Chengdu café
  Chinese ‘panda’ pet cafe raises eyebrows / BBC
  “According to the Chengdu Economic Daily [in Chinese], a cafe recently opened in Chengdu, seems at first glance to be home to six giant panda cubs” that customers can pet. But they are in fact dogs whose fur has been dyed. 

• No fun here, please, it’s the Guangzhou subway
  Guangzhou subway asks passengers to remove Halloween makeup / RADII China
  Subway staff at a station near an amusement park hosting Halloween-themed activities refused to let a group of party-goers board a train until they had wiped off their “scary” looks.
  See also on The China Project: Guangzhou subway picks fight with Chinese goth, because ‘horrifying.’

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