Pakistan to build a border fence, but will China pay for it?

Dear Access member,

The 13th annual CHINA Town Hall of the National Committee on U.S.-China Relations is happening on Monday, November 18, at 6 p.m. EST. The webcast discussion, moderated by George Stephanopoulos, will feature a panel with NCUSCR President Stephen Orlins, Melanie Hart, Yasheng Huang, and Ely Ratner. 

A new element of the program this year is the opportunity for audience members to submit video questions to be aired during the national webcast. The National Committee welcomes questions from The China Project Access members: Question submission guidelines can be found here.

—Jeremy Goldkorn and team

A map of Pakistan’s railway networks, via Wikipedia. China has agreed to provide a loan to upgrade Main Line 1 (or ML-1 or the Karachi-Peshawar Railway Line), shown in black on the map. Click on the map to view a full-resolution version.

1. Pakistan promises to build a border fence and expand CPEC 

Representatives from China and Pakistan signed “cooperation documents during the ninth Joint Cooperation Committee (JCC) meeting of the China-Pakistan Economic Corridor (CPEC) in Islamabad, Pakistan” on November 5, according to Xinhua.  

The two sides agreed “to set a new direction of CPEC for future cooperation in high economic impact areas by largely shifting away from infrastructure projects, except the $9 billion Main Line 1 projects,” reports the Pakistan Tribune. Main Line 1 (or ML-1 or the Karachi-Peshawar Railway Line) connects Pakistan’s most populous city and busiest port with the Afghan border at the Khyber Pass. China will provide a loan for its upgrade.

Pakistan committed to the “complete fencing of Afghan and Iran borders on priority to ensure peace and security,” according to Dawn (Pakistan), with a target completion date of 2020. It is not clear if China has promised to pay for it.   

Oil, gas, steel production, gold, copper, agriculture, and affordable housing are other new directions for CPEC projects, according to Pakistani and Chinese officials cited in the above-lined reports and this one from Radio Pakistan. 

2. AstraZeneca to raise $1 billion China pharma fund 

Regular readers know that I am a booster of the Chinese pharma and biotech sectors, which I believe are set for rapid growth and innovation. AstraZeneca, the pharma behemoth based in Cambridge, U.K., seems to agree. The Wall Street Journal reports (paywall): 

AstraZeneca PLC plans to raise up to $1 billion for a new fund that would invest in Chinese health-care startups, making it the latest drug giant to place a bet on the world’s second-largest pharmaceuticals market.

The fund — a joint venture between AstraZeneca and a Chinese investment bank — has drawn interest from investors such as Sequoia Capital, the drugmaker’s chief executive, Pascal Soriot, said in an interview. The fund plans to raise between $200 million and $300 million this year, and as much as $1 billion over four years.

At the same time, AstraZeneca is expanding its current business operations. Xinhua reports that the company “will set up its western China headquarters in Chengdu, capital of the southwestern province of Sichuan, according to a memorandum on strategic cooperation” signed on November 5. 

AstraZeneca China has around 13,200 employees who generated nearly $3.8 billion in revenue in 2018, according to Xinhua. 

3. Voices from scary China? 

Chinese Storytellers is a group of excellent Chinese nonfiction writers and journalists who send out a regular newsletter with links to their English-language work. The latest issue is edited by Yáng Yuán 杨缘, aka Yuan Yang, a Beijing-based tech correspondent for the Financial Times. This is her introduction:

When I first moved to Beijing three years ago, a seasoned foreign journalist joked to me that there were three stories about China: big China, bad China, and weird China.

In the subsequent years I’ve been reporting on China’s tech world, I’ve seen another narrative develop: scary China. “Bad China” used to be about the government doing bad things to its own people. “Scary China” is about the threat that China, specifically through its technology, poses to the rest of the world. 

We as journalists should take some responsibility for the rise of this meme. As an example, I recall that it was early 2017 when the phrase “AI arms race” started to gain prominence. Although I can’t remember exactly how the phrase entered the collective consciousness of our English-speaking newsrooms, I can guess at the reason we all reached for it: it sounded scary. Scary things are important, and important things are newsworthy.

It’s not a logic that is specific to China: the emotional lens of fear is more common than any other lens in news headlines around the world. As populists well know, humans are easily motivated to act by fear. But fear also dulls our ability to see, to open our minds, and to take in information critically. 

My question to all storytellers is: how do we create narratives that extend our emotional palettes beyond fear, and how can these narratives stand out? In this issue’s Rock the Boat, we discuss the complications of challenging existing narratives about China when one is ethnically Chinese, and speaking to a non-Chinese audience.

4. Phase one trade deal might not happen

Surprise, surprise, the “fabulous” and “greatest and biggest…ever made” phase one trade deal is very far from being worked out. Reuters reports: 

A meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday.

The official, who spoke on condition of anonymity, said it was still possible the “phase one” agreement aimed at ending a damaging trade war would not be reached, but a deal was more likely than not.

The South China Morning Post offers confirmation, based on different sources, that the deal is not ready to be signed: 

Next week’s trip to Brazil by Chinese President Xí Jìnpíng 习近平 may come too soon for him to sign a “phase one” trade deal with the United States, sources have said, with work continuing on the details of the agreement…

A person familiar with internal government discussions told the Post previously that there were also concerns that China might have made too many concessions while the US should have been more responsive to its key concerns.

News from other fronts of the U.S.-China techno-trade war, day 489:

At least the defense chiefs are talking: “The defense ministers of China and the United States have pledged to maintain a stable military-to-military relationship and improve cooperation, despite Beijing being ‘upset’ by the departure of the U.S. defense secretary’s predecessor,” reports the South China Morning Post:

The commitment came in a video conference on Tuesday between General Wèi Fènghé 魏凤和, a State Councillor and China’s defense minister, and Mark Esper, who took over as U.S. defence secretary in July.

In the first direct conversation between the two defense chiefs, Wei repeated China’s positions on Hong Kong, Xinjiang, Taiwan and the South China Sea, according to state news agency Xinhua.

The Chinese defense ministry said the talks were part of a push for a stable relationship between the two militaries based on a consensus reached between Chinese President Xi Jinping and his American counterpart Donald Trump in Osaka in June.

“U.S. imports from China have fallen a sharp $53 billion through the first nine months of the year, compared with the same time period last year,” reports CNBC, while “U.S. exports to China are down just $14.5 billion over the same time frame.”

But on a relative basis, the U.S. losses look more severe: U.S. exports to China are down 15.5 percent compared with the same period a year ago, a bigger drop than the 13.5 percent fall for Chinese imports.

Taiwan has been the biggest beneficiary of the U.S.-China trade war, while both the U.S. and China are hurting, the Taipei Times reports. The UN Conference on Trade and Development (UNCTAD) published a report that says Taiwan, Mexico, the EU, and Vietnam — in that order — have done best from “trade diversion effects.” The report also says that American consumers are paying for the tariffs. 

“China’s prominence in next-generation 5G wireless technology not only threatens US security but could lead to a ‘dangerous’ U.S.-China internet split,” said Ajit Pai, chairman of the U.S. Federal Communications Commission, according to the South China Morning Post.

“You don’t need to look hard to find evidence that the Chinese government is willing and able to use its growing influence in global commerce to advance its own interest,” said at the Council on Foreign Relations (CFR) in New York on Tuesday.

Echoing a growing US concern, he said he worries “that the end result [of China’s technological advances] is essentially to create two different internets”, with a version built by the Chinese government being heavily censored.

A former CIA China analyst and senior fellow at the Center for Strategic and International Studies, Chris Johnson appears on this Intelligence Matters podcast discussing a wide range of topics from the trade war and Chinese views of the Trump impeachment inquiry to Hong Kong and what drives Xí Jìnpíng 习近平. The link above includes a transcript if you’d rather read than listen. 

Artificial intelligence: The subject of a four-part series by the South China Morning Post is “the brewing U.S.-China war over the development and deployment of artificial intelligence technology.” Part one is: How AI and human rights have been dragged into the U.S.-China tech war, threatening wider split.

—Jeremy Goldkorn

BUSINESS AND TECHNOLOGY:

• Sexism and ride sharing
  Didi is relaunching its pool service with a curfew for female passengers / Quartz

China’s largest ride-hailing firm Didi Chuxing announced today (Nov. 6) a trial re-launch of its popular hitchhiking service scheduled for later this month, more than a year after the company suspended it following the murder of two female passengers.

According to a statement, the trial starts with trips under 50 kilometers (31 miles) in metro areas between 5am and 8pm for female users, and until 11pm for male users. The trial will be rolled out in seven cities in China, including Beijing and Shenyang. 

• Dutch semiconductors
  ASML awaiting Dutch approval for advanced machine export to China / Reuters
  “ASML Holding NV, an equipment supplier to major semiconductor manufacturers, said its license to export one of its most advanced machines to a Chinese customer had expired and it was awaiting approval for a new one from the Dutch government.”
  Dutch company caught up in US-China tech war / FT (paywall)
  “ASML is the only company in the world that can supply the…so-called extreme ultraviolet lithography chip tool that is needed to produce the latest, high-speed chips. But according to three people close to the situation, the shipment to SMIC, China’s biggest chipmaker, is now ‘pending later notice,’ dealing a blow to Beijing’s aspirations to achieve self-sufficiency in chip manufacturing.”

• Property market
  China’s housing market is finally cooling. Some homeowners are furious. / WSJ (paywall)

In recent years, Chinese officials have tightened financing to developers and rules on lending for home buyers in an effort to cool a buying frenzy and runaway prices… 

Price increases across the country have slowed and at least in some large cities, prices have even dropped.

Some of those who have pooled their life savings to become homeowners are now finding it wasn’t the sure-bet investment they thought.

• Dodgy reputation management internet
  PR firms’ staff jailed for online post deletion racket / Caixin Global
  “In the case heard by the Shashi District Court in Hubei province’s Jingzhou city, four PR firms’ Beijing branches, including specific staff, were accused of deleting, blocking or suppressing negative information about big-name clients such as Amway China, Buchang Pharmaceuticals and Furen Pharmaceuticals Group.”

• Ecommerce
  China regulator warns e-commerce platforms to stop monopolistic practices / Reuters
  “China’s State Administration for Market Regulation (SAMR) called more than 20 platforms to a meeting and urged them to stop a practice that requires merchants to sign exclusive cooperation agreements preventing them from selling products on rival platforms.”

• The useless scion of Wang Jianlin
  Beijing court finds son of China’s richest man in default / Global Times
  Wáng Sīcōng 王思聪, the son of real estate and film tycoon Wáng Jiànlín 王健林, was “listed on Monday by the second Beijing Intermediate People’s Court as failing to repay a debt of 150 million yuan ($21.4 million).”

• Domestic infant formula
  Baby-formula billionaire emerges as China plans to curb imports / Bloomberg (porous paywall)

More than a decade after China reeled from a scandal over tainted infant formula, the world’s most populous country is seeking to reduce its reliance on imports with a plan to boost output locally.

China Feihe, the nation’s biggest producer of baby milk, stands to be the biggest winner from the policy announced in June, and Chief Executive Officer Leng Youbin is set to become a multibillionaire as the firm prepares for an initial public offering in Hong Kong.

• Economic signs and winners
  China’s smog gauge is signaling trouble / WSJ (paywall)
  “On a three-month moving average basis, the concentration of fine particulate matter in Beijing’s air has fallen sharply from a year earlier since April. That is the month after heavy-industry output growth peaked.”
  China’s consumption downgrade tastes good for fermented tofu makers / SCMP
  “According to Luo [the owner of a tofu shop in Jiangxi province], business has been growing steadily over the past three years thanks to the quality of his product in a highly competitive market, as well as the general trend of consumption downgrading, namely consumers preferring affordable items over spending on luxurious products.”

• Beijing still has beef with Canada but also needs beef
  China to resume imports of Canadian beef and pork / Reuters
  “China will resume imports of Canadian beef and pork, Prime Minister Justin Trudeau said on Tuesday, some four months after Beijing blocked shipments amid an escalating diplomatic feud between the two countries.”
  Beijing lifts ban on Canadian beef and pork as swine fever devastates China’s hog farms / Globe and Mail

• AI
  China’s Megvii considers IPO delay on blacklist concerns / Bloomberg (porous paywall)
  “China’s Megvii Technology Ltd. is considering whether to delay its initial public offering [in Hong Kong] given uncertainty over whether it can secure its existing $4 billion valuation while on an American blacklist, according to people familiar with the matter.”

• BeiDou
  BeiDou, China’s GPS, ‘six months ahead of schedule’ after satellite launch / SCMP
  “China has launched the 29th of its BeiDou navigation system’s satellites, state media reported, saying that the system — intended to rival the US-developed GPS — would be completed next year, six months ahead of schedule.”

• Tesla
  Tesla plans after-sales network expansion in China as Shanghai factory spins up / Reuters
  “Tesla Inc plans to double the number of repair and maintenance shops, add about 100 charging stations and revamp showrooms in China as the electric vehicle maker gears up to open its Shanghai plant.”

• Facial recognition in Taiwan
  Criticism leads to TRA U-turn on facial recognition / Taipei Times
  “The Taiwan Railways Administration (TRA) yesterday said that it would not activate the facial-recognition feature of its new smart surveillance system after lawmakers voiced their concerns over privacy issues.”

• PBoC crypto
  China’s digital currency will kick off ‘horse race’: central bank official / Reuters

The People’s Bank of China will adopt a two-tier approach with its project, Mu Changchun, the head of the central bank’s digital currency research institute, told a forum in Hong Kong. It will first issue the currency to commercial banks and other institutions, who will then resend it to the general public.

“During the research period, and also the issuance period there will be a horse race approach,” Mu said.

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Endangered wildlife — pangolins
  Trafficked to extinction / The Pangolin Reports
  “The Global Environmental Reporting Collective, formed in early 2019, chose the pangolin trade as its first focus for in-depth investigation. More than 30 journalists from 14 newsrooms reported in Africa and Asia, conducting dozens of exclusive interviews and even going undercover. The results are being published here as The Pangolin Reports.”

POLITICS AND CURRENT AFFAIRS:

• Junius Ho stabbed in Hong Kong
  Pro-Beijing lawmaker stabbed in Hong Kong / NYT (porous paywall)

A pro-Beijing lawmaker was stabbed in Hong Kong while canvassing for votes on Wednesday, the latest incident of political violence in a city convulsed by months of antigovernment protests.

The politician, Junius Ho [何君堯 Hé Jūnyáo], who many protesters accuse of supporting mob attacks on demonstrators, did not appear to be seriously injured. He helped subdue the attacker, according to video of the incident, and was conscious when he was taken to a hospital.

Several political figures have been assaulted in recent weeks in Hong Kong, including three pro-democracy candidates for upcoming district council elections.

• Vice-Premier says Beijing supports Hong Kong authorities, as leader Carrie Lam ‘saddened’ by 3,000 arrests during protests / HKFP

Chinese Vice-Premier Hán Zhèng 韩正 has said the central government fully acknowledges and supports the work of the Hong Kong government and police force.

Han, who oversees Hong Kong affairs, was meeting with Chief Executive Carrie Lam (林鄭月娥 Lín Zhèng Yuè’é) at Diaoyutai State Guest House in Beijing on Wednesday. It came after Lam’s meeting with Chinese President Xi Jinping in Shanghai ahead of the China International Import Expo earlier this week. 

• Today, in hurt feelings and apologies 
  UK baking contest organizer disappoints netizens over HK riot-themed cake / Global Times

Chinese netizens said they are disappointed with the organizer of a UK baking competition who did not remove two cakes from the event which allegedly professed support for the Hong Kong riots, saying the move has hit China’s bottom line.  

• Pop star Joey Yung Cho-yee apologizes for ‘supporting’ Hong Kong protests / SCMP

Hong Kong pop star Joey Yung Cho-yee [容祖兒 róngzǔ’er] has apologized for a social media post that some people in mainland China said was evidence of her supporting the anti-government protests in the city.

Yung, 39, apologized on Tuesday for a now-deleted Facebook photo of herself wearing a surgical face mask while on a plane, along with a lyric about flying taken from her song Airport, which she posted on Sunday.

• The UN Insecurity Council
  Three troubling trends at the UN Security Council / Crisis Group

The potentially most significant of these shifts concerns the West’s relationship with China…

This year…Western diplomats have edged toward a harder line with China in the Council — and the Chinese have in turn become more assertive. 

This trend is symptomatic of a broader deterioration in relations between China, on the one hand, and the U.S. and most Europeans, on the other, driven by differences over trade, technological competition and the balance of power in the Asia-Pacific…

The situations in China’s Xinjiang region and Kashmir have been the main points of Sino-Western friction in the Council. 

• Macron in China and the Pompidou Center in Shanghai
  ‘Museum diplomacy’ as New Pompidou Center opens in Shanghai / NYT (porous paywall)
  “The French museum will curate the exhibitions and provide works from its collection. But Chinese officials are keeping a close eye on what gets shown.”
  China and France sign deals worth $15 billion during Macron’s visit / Reuters
  France and China reassert mutual support for the ‘irreversible’ Paris climate agreement / Euronews
  Ganbei! Trade goes wild for Xi, Macron drinking wine in Shanghai / Grape Wall of China

• Xinjiang: Harassment of relatives of Uyghurs who speak out 
  U.S. condemns reports of China harassing relatives of interned Uyghurs who speak out / Radio Free Asia

U.S. Secretary of State Mike Pompeo Tuesday urged Beijing to end harassment of Uyghurs living outside of China, saying Washington was troubled by reports that the government has “harassed, imprisoned, or arbitrarily detained” family members of Uyghur activists and survivors of Xinjiang internment camps. 

“In some cases, these abuses occurred shortly after meetings with senior State Department officials,” Pompeo said in a statement, reiterating Washington’s call for Beijing to release those detained in internment camps in the Xinjiang Uyghur Autonomous Region. 

• Harassment of the family members of Uyghur activists and survivors in Xinjiang, China / United States Department of State

• Racism on social media
  Chinese Academy of Sciences suspends foreign worker over racist social media comments / SCMP
  “Mark Kolars describes colleagues on LinkedIn as ‘dirty yellow guys, talking trash all day long.’”

• Paranoia over foreign spies?
  State TV unveils espionage cases, alerting people to watch out for foreign spies / Global Times
  “Foreign intelligence agencies sometimes use job recruitment, academic research, and transnational marriage as covers and threaten people to steal national secrets or sell them.” 

SOCIETY AND CULTURE:

• Sichuan cuisine
  Video: Why it’s so hard to find Sichuan peppercorns in America / Goldthread on YouTube
  “Peppercorns are the hallmark of Sichuan’s fiery hot cuisine. The spice is known for its tongue-numbing, tingly sensation, and it can be found sprinkled on tofu or boiled in hot pot. But they’re also really difficult to find in America.”  

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Ilham Tohti’s Sakharov Prize and the desecration of Uyghur society

Darren Byler writes: “Ilham Tohti was famous for pushing back against the material and social dispossession of Uyghurs and other Turkic Muslims. When even this moderate scholar was silenced five years ago, it signaled that there was no more space to publicly suggest ways to oppose the elimination of Uyghur culture. The Sakharov Prize honors the dignity of Uyghur social life and the way Ilham Tohti strove to protect it.”