Beijing to Hong Kong: We make the laws

Dear Access member,

I hang my head in shame: Yesterday, I wrote that bubonic plague is caused by a virus. Thanks to Denis Simon for the correction, and some useful information for anyone panicking about it:

Bubonic plague is one of three types of plague caused by bacterium Yersinia pestis… The three types of plague are the result of the route of infection: bubonic plague, septicemic plague, and pneumonic plague. Bubonic plague is mainly spread by infected fleas from small animals. It may also result from exposure to the body fluids from a dead plague-infected animal. In the bubonic form of plague, the bacteria enter through the skin through a flea bite and travel via the lymphatic vessels to a lymph node, causing it to swell. Diagnosis is made by finding the bacteria in the blood, sputum, or fluid from lymph nodes.  

Prevention is through public health measures such as not handling dead animals in areas where plague is common. Vaccines have not been found to be very useful for plague prevention. Several antibiotics are effective for treatment, including streptomycin, gentamicin, and doxycycline. Without treatment, plague results in the death of 30% to 90% of those infected. 

Announcement: We are delighted to partner with Project Pengyou to celebrate the fifth annual National Pengyou Day on November 21.

The goal of Pengyou Day is to inspire friends in the U.S. and China to seek common ground not only across cultures but also within their own communities, as they consider what friendship and bridge-building truly means to them. Join us to build people-to-people ties and spread hope on #PengyouDay.

Our word of the day is: “No other institution has the right to make judgments or decisions” (任何其他机关都无权作出判断和决定 rènhé qítā jīguān dōu wú quán zuòchū pànduàn hé juédìng).

—Jeremy Goldkorn, Editor-in-Chief

Zāng Tiěwěi 臧铁伟, the spokesperson of the Legislative Affairs Commission of the Standing Committee of the National People’s Congress. 

1. Beijing to Hong Kong: We make the laws 

Agence France-Presse reports:  

China insisted Tuesday it alone held the authority to rule on constitutional matters in Hong Kong, as it condemned a decision by the city’s high court to overturn a ban on face masks worn by pro-democracy protesters…

The ban on face-covering came into force in October, when the city’s unelected pro-Beijing leader invoked colonial-era legislation for the first time in more than 50 years…The city’s high court ruled on Monday that the government ban on face masks was unconstitutional. But Beijing said the judicial branch of the special administrative region had overreached.

[National People’s Congress spokesperson] Zāng Tiěwěi 臧铁伟 said only the legislature had the right to rule on whether a law is in accordance with the Basic Law — the city’s mini-constitution. “No other institution has the right to make judgements or decisions,” Zang said, according to a state media report posted on the NPC’s website [in Chinese].

Further justification of the move is gladly furnished by propaganda rag Global Times: Central government final arbiter of Basic Law issues (or here in Chinese).  

“If this is a formal/official position, then this completely and fundamentally alters the landscape of the HK legal system and could quite legitimately be said to mean the end of the rule of law as we know it in HK,” commented corporate lawyer and author Antony Dapiran on Twitter. Or as Dapiran put it in this Financial Times story (paywall): “You either have the rule of law or you don’t.”

If there was any doubt as to the Party’s resolve, its official People’s Daily newspaper sent one of its strongest signals yet that the leadership is not prepared to acknowledge the demands of Hong Kong protesters, or to reach any sort of compromise in a front-page commentary today (in Chinese), per China Media Project. Excerpt: 

“On this question concerning national sovereignty, concerning the fate of Hong Kong,” says the editorial, “there is no middle ground, there is not the least bit of margin for compromise.”

The Hong Kong Bar Association does not agree with Beijing. RTHK reports: 

The Bar Association on Tuesday sternly repudiated comments by China’s top legislative affairs body that Hong Kong courts have no power to decide whether local laws are constitutional, saying this suggestion is legally incorrect, restricts the power of local courts, is contrary to the Basic Law, and undermines the high degree of autonomy granted to the territory under the mini-constitution.

Other news from the City of Protest:  

Today was relatively quiet in Hong Kong. But, “No resolution to the bitter stand-off at Hong Kong Polytechnic University appeared to be in sight on Tuesday night as 60 to 100 protesters remained on campus, determined to resist capture and not join the 1,000 who had so far either surrendered or been arrested,” reports the South China Morning Post. Away from Hong Kong Polytechnic, “Tuesday night offered a respite of sorts for police, with only about 100 protesters active in Mong Kok.”

Other reports: 

• Parents of besieged Hong Kong protesters come to the front lines / NYT (porous paywall) 

• Former Hong Kong lawmaker Albert Ho attacked / HKFP

• Wife of Hong Kong man set on fire after row with vandals tells Chinese state television of heartbreak at injuries / SCMP

• Pro-democracy activist Joshua Wong banned by Hong Kong court from traveling to London to receive human rights award from British parliament / SCMP

2. Expect new tariffs on December 15 

Wall Street’s main stock indexes, those crazy things, “opened at record highs on Tuesday on continued optimism that the United States and China would put an end to their damaging trade war,” per Reuters. There must be something in the water supply on Wall Street because no one who listens to what the two sides are actually saying could remain optimistic:

Today, “President Donald Trump threatened higher tariffs on Chinese goods if that country does not make a deal on trade,” reports CNBC. “The comments came during a meeting with the president’s Cabinet on Tuesday.”  

“Former White House chief economic advisor Gary Cohn said Monday that he believes President Donald Trump will go forward with the December 15 tariffs if the U.S. and China haven’t agreed to a trade deal,” says CNBC:

“I think he thinks that that’s a forcing function and if he keeps blinking, he loses credibility in the Chinese eyes,” Cohn said… Treasury Secretary Steven Mnuchin has also said he expects the mid-December round of tariffs on Chinese goods if there’s no deal.

Other reports of the U.S.-China techno-trade war, day 502:

“The U.S. is failing to respond to China’s efforts to lure talent and appropriate industrial secrets from American universities, according to a report from a US Senate subcommittee published Monday which took aim at federal agencies and research institutions,” according to TechNode. 

“A U.S. chipmaker’s attempt to acquire a peer with a valuable Chinese affiliate has spurred concern in Beijing,” reports Bloomberg (porous paywall):

China’s antitrust regulator is closely monitoring Diodes Inc.’s proposed $428 million takeover of Taiwan’s Lite-On Semiconductor Corp., responding to complaints a deal will deliver the Taiwanese company’s Shanghai-based affiliate On-Bright Electronics Inc. into American hands, according to a person familiar with the matter…

Regulators may be responding to a string of rejections that have foiled Chinese efforts to acquire U.S. companies because of national security concerns, including Tsinghua Unigroup’s abortive effort to lead a buyout of Western Digital Corp. in 2016. 

“A bill introduced to the U.S. Senate on Monday could make it illegal for internet companies to transfer American user data and encryption keys to China, in an effort to prevent user data leaks to the Chinese government,” says TechNode:

If passed, the bill introduced by Republican Senator Josh Hawley would be the first to ban tech companies from storing US user data in China citing national security concerns.

In a statement announcing the bill, Hawley singled out Apple and TikTok, two companies which only two weeks ago declined to testify at a Congressional hearing on their data transfer practices to China.

3. What is to be done about China? 

The China Project was media partner for this year’s annual CHINA Town Hall from the National Committee on U.S.-China Relations, an hour-long discussion that took place yesterday in New York. The moderator was TV anchor George Stephanopoulos and the panelists were Stephen Orlins, Melanie Hart, Yasheng Huang, and Ely Ratner.

The panel discussed a range of topics, from how the U.S. should deal with China to Xinjiang and Kong Kong. You can watch the whole thing here.

There was some disagreement among the panelists, and quite a lot of heated discussion online in reaction. 

4. Beloved panda leaves Washington, D.C. 

Today, Bei Bei the panda — born at the National Zoo in Washington, D.C., four years ago — travels to Chengdu, China, where he will stay. As per China’s agreement with all foreign zoos that host pandas, any cubs produced must be returned to China when they reach the age of four.  

USA Today has more on Bei Bei leaving the National Zoo and why it “hits so hard for so many.” 

5. A million yuan for a hole-in-the-wall in Beijing

A tiny house about a 10-minute drive from Tiananmen Square in Beijing “changed hands on November 11 for 1.28 million yuan ($182,400) after 136 rounds of furious bidding during an auction in Beijing,” reports the South China Morning Post:

For 230,000 yuan per square meter [$3,040.51 per square foot], the new owner bought a 5.6-square meter (72 square feet) cubicle covered in bathroom tiles large enough to fit a bunk bed, with standing room only…

What the dilapidated space does have is an address that entitles its owner to a hukou, the household registration that is the prerequisite for access to schools, homes, civil service jobs, public health care and almost every aspect of daily life in the Chinese capital. 

—Jeremy Goldkorn

BUSINESS AND TECHNOLOGY:

• Huawei in Europe
  EU says politics matter for 5G suppliers in message to China / Bloomberg (porous paywall)

The European Union is poised to say potential 5G suppliers will be evaluated based on their home country’s laws, a stance that could exclude Chinese businesses from some lucrative contracts for the advanced telecommunications networks.

“Factors, such as the legal and policy framework to which suppliers may be subject to in third countries, should be considered,” according to a draft of a joint statement obtained by Bloomberg and planned for release next month. The document is due to be approved on an informal basis this week by government envoys with formal sign off by ministers due in December, and the wording is subject to changes.

• Merkel chooses China over her own party, Huawei policy shows / Bloomberg (porous paywall)

Chancellor Angela Merkel has gotten a lot of advice on why not to allow Chinese equipment supplier Huawei Technologies Co. into Germany’s 5G network. After the U.S. and Germany’s intelligence services, it’s her own party that’s pressuring her for an outright ban.

But Merkel is sticking to her guns, determined to let Huawei participate as long as the Chinese company fulfills certain security standards.

• China’s smartphone market is saturated
  Even 5G can’t reverse China smartphone slump / Caixin

China’s mobile phone sales continued their prolonged slump in October despite healthy early interest in next-generation 5G handsets.

The country shipped 35.97 million phones last month [in Chinese], a 0.7 percent decrease from the previous month and a 6.7% drop year-on-year.

• An enormous new fund to invest in manufacturing
  China sets up massive new fund to transform manufacturing / Caixin 

China has established a multibillion-dollar fund with the aim of transforming and upgrading the country’s manufacturing sector, according to a stock filing by state-owned rolling stock company CRRC. 

The Thursday filing [in Chinese] to the Shanghai Stock Exchange does not specify how much capital the fund intends to raise. However, it reveals that the fund’s registration capital is 147.2 billion yuan ($21 billion), making it larger than that of the state-owned China Integrated Circuit Industry Investment Fund (CICF) set up in 2014 to revolutionize the country’s chip industry.

• Large Chinese companies doing just fine?
  What trade war? Chinese companies wow with third-quarter report card / Reuters 

The top 200 Chinese companies spanning consumer, technology, industrial, property and financial industries reported September quarter earnings well ahead of market expectations, setting them up for a strong showing next year, analysts said.

• IPO for Xinjiang-linked AI company
  China’s Megvii seeks approval for Hong Kong IPO despite US blacklist – sources / Reuters via CNA 

Chinese artificial intelligence (AI) firm Megvii Technology plans to seek listing approval on Thursday for a Hong Kong initial public offering (IPO) of at least US$500 million, people with direct knowledge of the matter said. 

However, Beijing-based Megvii, which is backed by ecommerce giant Alibaba Group and is widely known for its facial recognition platform Face++, has yet to decide whether to carry out a roadshow once approval is granted, one of the people said.

Sources had previously told Reuters the listing was scheduled for Hong Kong in the fourth quarter and might raise as much as US$1 billion.

The latest move comes weeks after the U.S. government placed Megvii and seven other Chinese companies on a trade blacklist over their alleged involvement in human rights violations related to Beijing’s repression of Muslim minority populations in the Xinjiang Uighur Autonomous Region.

Goldman Sachs, which is a joint sponsor of the Megvii IPO alongside Citigroup and JPMorgan, said of its involvement last month that it was “evaluating in light of the recent developments.”

• Biometric payments
  Forget the QR code. Facial recognition could be the next big thing for payments in China / CNBC 

Scanning a barcode to make payments in China could soon be a thing of the past, as technology giants such as Tencent are now studying the use of facial and fingerprint recognition for such transactions.

• Kingsoft IPO
  Microsoft rival Kingsoft office raises $640 million in Shanghai Star IPO / Caixin

Shares in Beijing Kingsoft Office Software skyrocketed in its trading debut on Shanghai’s Nasdaq-style high-tech STAR board as investors enthusiastically embraced the China rival to U.S. software giant Microsoft. Kingsoft Office raised 4.5 billion yuan ($640 million) on its trading debut on Monday by offering 101 million shares, or 21.9 percent of the company at 45.86 yuan ($6.53) apiece.  

POLITICS AND CURRENT AFFAIRS:

• Arms sales to Thailand
  China gets rolling on military vehicle delivery to Thailand / SCMP

China will deliver $76 million worth of military vehicles to Thailand next week, one of three orders to be filled over the next few years as the two countries forge closer military ties.

The delivery would comprise 34 VN-1 armoured personnel vehicles, 10 VT-4 tanks and five other supporting vehicles.

• U.S. calls for pushback against Beijing in the South China Sea
  U.S. defense chief Mark Esper urges Asean to push back against China’s ‘excessive claim’ in South China Sea / Straits Times  

U.S. Defence Secretary Mark Esper urged nations in South-east Asia on Tuesday November 19 to stand together and push back against China’s “excessive claim” in the South China Sea. 

“I think it’s incumbent upon all of us to take a very public posture and to assert our sovereign rights and to emphasise the importance of law,” Mr Esper told reporters in Manila. Mr Esper swung by the Philippines after attending the annual Asean Defence Ministers’ Meeting-Plus in Bangkok on Monday November 18.

• U.S. to boost military alliance with Philippines as South China Sea tensions grow / SCMP

United States Defense Secretary Mark Esper on Tuesday vowed more support for the Philippines in efforts to modernise the country’s military and improve maritime security as tensions build over the disputed South China Sea…

Esper said the US would continue to conduct freedom-of-navigation operations in the South China Sea, despite warnings by China against such activities, stressing that such acts send a clear message that all countries should abide by international laws.

• U.S. Navy sends littoral combat ships to ‘bolster attack strength in South China Sea’ / SCMP

The U.S. Navy is strengthening its presence in the South China Sea by deploying two Independence-class ships specialising in nearshore operations.This deployment of the littoral combat ships suggested that the US strategy had switched from reconnaissance and deterrence to increasing its attack capability…

• The alt right in China, censorship, and nationalism
  Podcast: Kecheng Fang on China’s domestic censorship, cyber-nationalism and the cross-pollination of the global right / The Arts of Travel podcast
  A wide-ranging interview with one of the most interesting scholars of Chinese politics and media and internet, former journalist Fāng Kěchéng 方可成. 

• Coal mining disaster in Liaoning
  15 killed and 9 injured in China coal mine explosion / LA Times 

SOCIETY AND CULTURE:

• Illegal school buses
  Crackdown on overloaded and illegal school buses / China Daily

China will mete out harsher punishment to operators of illegal school buses and those involved in related violations to guarantee the safe daily commuting of primary and middle school students and preschoolers, the Ministry of Education said in a notice [in Chinese] released on November 11.

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