A setback for Beijing in Solomon Islands

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Our word of the day is Solomon Islands (所罗门群岛 suǒluómén qúndǎo). 

—Lucas Niewenhuis, Associate Editor

A map from Wikipedia of the various groupings of island nations in the Pacific, which we included in our brief guide to China and the Pacific island nations last year. Solomon Islands is in the Melanesia subregion. 

1. A setback for Beijing in Solomon Islands

After Beijing convinced the government of Solomon Islands to switch ties from Taipei last month, there was immediate speculation that it could be the first of multiple dominoes to fall among Taiwan’s Pacific Island allies. 

But Solomon Islands saw an immediate grassroots backlash to the decision, such that the country’s prime minister canceled his visit to New York for the UN General Assembly. 

Then the New York Times reported on October 16 that “a Beijing-based company with close ties to the Chinese Communist Party has secured exclusive development rights for the entire island of Tulagi and its surroundings,” sparking further uproar. 

The NYT today reports that the deal has been condemned by the country’s attorney general, though it is unclear if this means it won’t end up happening:

The deal for the island, Tulagi — a headquarters for world powers both before and during World War II — granted exclusive development rights for at least 75 years. It was signed by the head of the provincial government and executives from China Sam, a Beijing-based conglomerate founded as a state-owned enterprise.

The attorney general’s office said in a statement on Thursday that the agreement should be terminated because it lacked vital details, such as timelines, and encroached on the powers of the national government… 

The agreement had shocked residents of the island, some of whom feared that China was seeking to establish a military foothold there. Critics of the deal welcomed the attorney general’s decision, but warned that China Sam — and other Chinese interests — may see this more as a temporary setback than a cancellation of their plans.

2. Ucommune shines as WeWork looks to leave China

The Financial Times reports that Ucommune, a coworking company based in Beijing that is “valued at about $3bn in a $200m fundraising round a year ago,” has filed for an IPO in the U.S. by the end of the year. 

The decision “has surprised investment bankers given the similarities between its business and that of embattled U.S. rival WeWork, which this week had to be bailed out in a $10 billion deal after investors soured on an IPO plan,” according to Reuters. 

Meanwhile, WeWork is struggling in China and could shut down locations there, per separate reporting in the FT:

China has emerged as one of WeWork’s worst performing markets as a local operation once seen as critical to the office provider’s global growth suffers from ultra-low occupancy rates and is “bleeding cash”, said people with direct knowledge of the business… 

WeWork locations in Shanghai, where it has installed 43,600 desks, had a vacancy rate of 35.7 per cent in October. In Shenzhen, where the company has 8,000 desks, 65.3 per cent were vacant, while 22.1 percent of the group’s 8,900 desks in Hong Kong sat unfilled. The company was also expanding in central China, with multiple offices in Xi’an. There, it suffered a vacancy rate of 78.5 percent.

The group is now evaluating properties in China for closure.

3. As Fourth Plenum approaches, is Xi strong, or strongly misguided?

The South China Morning Post reports:

The elite of China’s ruling Communist Party will meet for their long-awaited fourth plenum from Monday, according to state media.

More than 300 full and alternate members of the party’s powerful Central Committee will gather behind closed doors for four days in Beijing… 

It is the first full meeting of the Central Committee in nearly 20 months, the longest interval between two plenums — as they are officially called — in recent decades.

The wait — seen by some China-watchers as a delay — has fueled much speculation about discord within the party, as it grapples with headwinds from a trade war with the United States, slowing economic growth and — since this summer — a political crisis in Hong Kong.

But others argue that given the previous plenum was convened ahead of schedule, the meeting this time does not amount to a delay.

“Policy insiders say the trade war, China’s slowing economy and Hong Kong will be discussed, even if there is no direct mention of them in the final closing communique,” Reuters adds.

And, if Xi were to make the unexpected decision to begin to line up a successor to take over from him in 2022, despite his abolition of term limits signaling he intends to rule for longer than two terms, some behind-the-scenes action could happen next week. We might not know for a long time. 

A rare peek into the shrouded world of top Chinese politicians, and the information they receive and act on, was reported early this week by Tom Mitchell at the Financial Times. It’s not exactly encouraging: 

The real risks that Mr Xi’s administration needs to worry about are “blindside” ones that catch it by surprise. And there have been plenty of these this year, ranging from the continuing protest movement in Hong Kong to a nationwide African swine fever epidemic. 

These crises have something in common. They arose in large part because the authoritarian system that Mr Xi inherited seven years ago — and has made far more rigid during his time in office — may be great at building infrastructure, repressing dissent and censoring the internet, but it is often hopeless when it comes to passing bad news up the chain. 

One senior US official, who has spent almost 30 years dealing with Chinese Communist party cadres across the country, said he was shocked during a recent visit to Beijing at how badly briefed even politburo-level officials appeared to be.

“They appeared to have been given very bad information,” the US official said. “They kept saying things that were flat-out false.” 

Even in private settings, Chinese officials cling to their official narrative that American and British “black hands” sparked the unrest in Hong Kong. It is a narrative that conveniently absolves everyone, from Beijing’s representative office in the semi-autonomous territory to Mr Xi himself, of the failure to appreciate the potentially destabilising consequences of Hong Kong’s unrepresentative political system, the chronic incompetence of its coddled civil servants-turned-politicians and its soaring economic inequality. 

In the case of African swine fever, rural officials’ reflexive reluctance to report bad news up the chain of command to provincial governments and Beijing has been reinforced by the financial consequences of doing so.

Knowing that cash-strapped local governments were either unable or unwilling to compensate them as mandated by Beijing, affected farmers rushed to cull herds or sold infected pigs across county or provincial lines, reducing pork supplies and hastening the spread of the disease. 

—Lucas Niewenhuis

Here are the stories that caught our eye this week:

• Beijing denied it had plans to replace Carrie Lam, the Hong Kong chief executive under whose leadership the city has erupted in mass pro-democracy demonstrations. The Financial Times initially reported that “candidates to succeed Ms Lam include Norman Chan [陳德霖 Chén Délín], former head of the Hong Kong Monetary Authority, and Henry Tang [唐英年 Táng Yīngnián], son of a textile magnate who has also served as the territory’s financial secretary and chief secretary for administration.”

• In Essex, Britain, 39 dead apparent Chinese nationals were found in a truck that had crossed over into the U.K. from Zeebrugge, Belgium. Police are working to identify the victims and work out if organized crime was connected to their deaths. 

• Jailed Uyghur scholar Ilham Tohti received the Sakharov Prize for Freedom of Thought, the top human rights prize of the European Parliament. It is the second award given to Ilham by European organizations this month — earlier, the European Council had selected him for the Vaclav Havel Human Rights Prize. 

• Tanzania rejected and revised five demands from China Merchants Holdings International. The Beijing-based company had been contracted in 2013 to build a $10 billion port and economic zone at Bagamoyo, but the Tanzania Ports Authority says that terms such as the lease length and tax status were “commercially unviable.” Tanzania now wants to reserve its right to develop other, competing ports, and to subject any business China Merchants starts within the port to regular government approval processes.

• U.S. Vice President Mike Pence bashed the NBA as acting like a “wholly owned subsidiary” of Beijing in its “un-American” censorship of players and employees. In a follow-up address to his China bash-fest last year, Pence was less directly critical of China, and even denied that the Trump administration wanted to “decouple” the two countries. 

• A partial “Phase One” trade deal will include $20 billion in purchases of American farm goods by China in a year, according to Bloomberg. This is half of the $40 billion to $50 billion that Trump had boasted of two weeks ago, and if implemented, would only bring Chinese purchases back to 2017 levels — no better for American farmers than if the trade war hadn’t happened at all. 

• Beijing threatened NBA commissioner Adam Silver with retribution “sooner or later” for his claim that China had asked him to fire Houston Rockets General Manager Daryl Morey. 

• Mark Zuckerberg has given up on trying to get Facebook into China, according to a speech the CEO gave at Georgetown University last week that spun his platform as a values-driven free speech defender. 

• China’s new foreign investment law is “surprisingly accommodating to all concerns…we have,” according to Joerg Wuttke, president of the European Union Chamber of Commerce in China.

• Feminist activist Sophia Huáng Xuěqín 黄雪琴 has been detained for “picking quarrels and provoking trouble,” a vague charge that can carry up to five years in prison. Huang has played an instrumental role in the #MeToo movement in China. 

• Beijing may be losing the media war abroad, even as it maintains a tight grip on information at home. News about Xinjiang is one part of this, but the Hong Kong demonstrations putting a human face on pro-democracy sentiment, the NBA-China controversy, and other controversies in Southeast Asia are also important. 

• A doctor was stabbed to death while on duty at a hospital in Lanzhou, Gansu Province, in the latest incident of yinao (医闹 yīnào), which roughly translates as “medical ruckus.”

BUSINESS AND TECHNOLOGY:

• Teslas to sell at luxury prices in China
  Tesla’s China-made cars won’t be much cheaper than imported ones / Bloomberg (porous paywall)

Tesla said Friday its China-made vehicles will start at $50,000 in the country, only about 3% less than what the most basic imported models have been going for, after the U.S. company decided to include the Autopilot driver-assistance software in each vehicle. Variants without Autopilot will be phased out in China.

The first Tesla vehicles to be produced outside the U.S. are part of Chief Executive Officer Elon Musk’s efforts to expand in Asia and take on local electric-vehicle upstarts. The pricing suggests Musk is trying to maintain Tesla’s premium image in the world’s largest auto market, leaving local competitors to compete for buyers of cheaper EVs.

• Tech innovation in Africa
  The Kenyan headphone company bucking the trend of Chinese business presence in Africa / Radii China

Kenya’s A-list is all wearing one set of headphones: PACE. Even the president, Uhuru Kenyatta, jumped on the trend and ordered half a dozen pairs last year. 

PACE was founded just two years ago by Larry Liu, a former aerospace marketing manager from China, and Jibril (or J) Blessing, a Kenyan celebrity music video producer and artist. This unique Chinese-Kenyan partnership is one of the first startups to create a wholly Kenyan-designed product, manufactured in China, that meets international standards. 

• Pony.ai
  The Chinese startup battling for robotaxi supremacy / TechNode
  “Tech unicorn Pony.ai became China’s first company to test out robotaxis on urban public roads about one year ago, and is now on track to expand its fleet to 100 vehicles by the year-end.” The TechNode article gives a good overview of Pony.ai’s progress and competition in this sector.

• Tech companies to be boosted by stimulus?
  China tech stocks are ‘screaming buys,’ Invesco’s Kristina Hooper says / CNBC

Invesco’s Kristina Hooper believes now is the time to buy them — especially since she believes China has the most to gain from trade negotiations and may even emerge from the war as a winner…

“This could be a scenario where China is actually able to stimulate its economy enough to ride out this war,” the firm’s chief global market strategist told CNBC’s “Trading Nation” on Thursday. “We’re looking at the potential for more fiscal stimulus, more monetary policy stimulus and so that could put China tech higher than where it is today.”

POLITICS AND CURRENT AFFAIRS:

• U.S.-China relations
  Pentagon, with an eye on China, pushes for help from American tech / NYT (porous paywall)

Pentagon officials have been holding private discussions with tech industry executives to wrestle with a key question: how to ensure future supplies of the advanced computer chips needed to retain America’s military edge.

The talks, some of which predate the Trump administration, recently took on an increased urgency, according to people who were involved or briefed on the discussions. Pentagon officials encouraged chip executives to consider new production lines for semiconductors in the United States.

• US and China are close to finalizing some sections of trade deal, US trade representative says / CNBC
  The U.S. Trade Representative issued a vague statement that said that “headway on specific issues and the two sides are close to finalizing some sections of the agreement.”
  China fires back at Pence’s ‘lies’ about human rights, Hong Kong / Bloomberg (porous paywall)
  An excerpt from the response of China’s foreign ministry: “The U.S. has already abandoned and cast aside its morality and credibility. We hope these Americans can look at themselves in the mirror to fix their own problems and get their own house in order.”

• Xinjiang and Uyghurs
  Knowledge of China’s gulag owes much to American-backed radio / Economist (porous paywall)
  “By employing Uighur-speaking journalists, [Radio Free Asia] has gained something that cash-strapped commercial media would find hard to replicate: a reporting team that is able to penetrate China’s wall of secrecy in Xinjiang by pumping local sources for information, using their own language. This has put rfa at the forefront of newsgathering in the region.”
  Communist loyalty no shield for Uighurs from Chinese detention / Al Jazeera

For more than thirty years, Ainiwa Niyazi devoted his life to China’s Communist Party, teaching children about the virtues of Mao Zedong and Deng Xiaoping at a school just outside Urumqi, the capital city of Xinjiang autonomous region – home to Muslim Uighurs… 

Then in early April 2018, the authorities came knocking on Nyazi’s door. They told him to follow them to the police station without giving him any explanation.

Soon after, Niyazi vanished. He did not even get to say goodbye to his wife, Isarhan Ehmet, who returned home later that day and wondered why her husband had suddenly disappeared.

• Hong Kong
  Hong Kong tells Taipei to stop politicising murder suspect Chan-Tong Kai’s case and clear path for him to face justice in Taiwan / SCMP
  “Hong Kong has urged Taiwan to stop politicizing the case of a murder suspect whose case ignited the city’s extradition bill crisis and to clear the hurdles for his surrender to the self-ruled island as soon as possible.”
  Hong Kong police groups slam university head for publishing arrested students’ ‘unverified accusations’ of mistreatment / Hong Kong Free Press

• Protests in Malaysia
  Chinese in Malaysia told not to protest amid ‘investment scam’ anger / SCMP
  “The Chinese embassy in Malaysia has warned its citizens not to engage in street protests following reports that scores of its nationals had staged a demonstration outside the building claiming they had lost their life savings to a local investment company.”

• Brazil-China relations
  Bolsonaro to meet China’s Xi in bid to balance ties with U.S. / Bloomberg (porous paywall)

At a forum in Beijing on Friday, [Brazilian President Jair] Bolsonaro said that China and Brazil “were born to walk together” and the two governments are “completely aligned in a way that reaches beyond our commercial and business relationship.” At the same event, Vice Premier Hu Chunhua said that China was willing to increase its imports of agricultural and industrial goods from Brazil, and the two nations can also deepen cooperation in areas such as infrastructure.

• Common ground on investment but still no hint of Brazil signing up for China’s Belt and Road Initiative / SCMP
  “According to Xinhua, the two leaders acknowledged that the Belt and Road Initiative ‘may be linked’ to Brazil’s own development initiatives. But Brazil did not make a clear commitment to sign up to China’s ambitious infrastructure and connectivity plan.”

• South China Sea
  Chinese survey ship involved in South China Sea stand-off with Vietnam back home, tracker says / SCMP

• Fifa games in 2021 to help Beijing “sportswash” its reputation?
  Fifa under fire after announcing China will host 24-team Club World Cup / Guardian

World football’s governing body has confirmed that an expanded version of its showpiece event, featuring 24 teams, will take place there in June and July 2021… 

Fifa was immediately criticized for the move, with Amnesty International UK’s head of policy and government affairs, Allan Hogarth, saying: “China being chosen to host the Fifa Club World Cup in 2021 presents Beijing with yet another opportunity to try to ‘sportswash’ its tarnished international reputation.

SOCIETY AND CULTURE:

• Special education
  Chinese teacher for deaf builds World Cup squad, part 2 / Chinarrative
  The second part of a translated story about Zheng Guodong, a special education teacher in Guangdong who “assembled a straggly group of deaf students on a dirty plot of land to create a football team,” which just a few years later “would go on to represent China in the World Cup for the deaf.”

• The oddities of Chinese campus life
  Head-scratching rules at Chinese universities: A recent history / Sixth Tone
  “From policies prohibiting campus cuddling to discouraging long hair, [many] rules have been slammed as arbitrary and draconian, though some schools still defend them as vital disciplinary measures.”

• Chinese post-rock
  A guide to Chinese post-rock / Neocha
  “China’s first post-rock band wasn’t formed until 1998, but the scene has matured over the past two decades. As bands began experimenting, many started to include traditional instruments, which resulted in sounds with a distinctly Chinese flair. These unique sonic textures are what helped put Chinese post-rock on the map, but many bands are still flying under the radar.”

• European restaurant voted Beijing’s best by TripAdvisor
  This Beijing restaurant was just ranked the world’s best / That’s Magazine

On October 22, TripAdvisor announced the winners of its annual Travelers’ Choice Awards for Restaurants, and Beijing’s very own TRB Hutong was crowned the number one fine-dining restaurant in the world, according to user reviews — the first time a restaurant in Asia has received this honor since the award’s inception eight years ago… 

TRB Hutong is located in the hutongs of old Beijing, a minimalistic setting within the walls of a historic temple courtyard named Zizhusi that dates back to the Qing Dynasty, complete with contemporary sculptures in the central courtyard. Placing strong emphasis on high service standards, the restaurant delivers modern European dishes with innovative and harmonious adaptations using locally sourced, seasonal ingredients, alongside an over 1,000-strong wine list called Temptations.

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