Trump is the Grinch who stole Christmas

Dear Access member,

Our word of the day is Michelin (米其林 mǐ qí lín, see item five below). 

China-focused think tank MacroPolo is looking to recruit students for its Summer Associate Program. Spread the word if you know of suitable candidates.  

—Jeremy Goldkorn, Editor-in-Chief 

1. Trump says trade deal may wait till after 2020 election

As we’ve been saying all along, there is no “phase-one trade deal.” Donald Trump once again disappointed global stock markets by casually mentioning that “a trade deal with China might have to wait until after the U.S. presidential election in November 2020,” per Reuters:

“I have no deadline, no,” Trump told reporters in London, where he was due to attend a meeting of NATO leaders.

“In some ways, I like the idea of waiting until after the election for the China deal. But they want to make a deal now, and we’ll see whether or not the deal’s going to be right; it’s got to be right.”

Trump’s remarks sent stock prices tumbling and triggered a rush into safe assets such as U.S. Treasury debt… Trump’s comments came as sources in Beijing and Washington familiar with the talks said that the two countries have made progress, but are still wrangling over whether existing U.S. tariffs will be removed and over specific levels of Chinese purchases of U.S. agricultural products as part of a “phase one” trade deal.

Does this mean new tariffs kick in on December 15?

It would seem so. From Fox Business: 

Time is running out for the U.S. and China to make a trade deal before the U.S. increases tariffs on Chinese goods.

“Well, you have a logical deadline Dec. 15,” Commerce Secretary Wilbur Ross told FOX Business’ Stuart Varney in an exclusive interview. “If nothing happens between now and then, the president has made quite clear he’ll put the tariffs in – the increased tariffs.”

If you watch the whole interview, Ross seems overconfident that China is desperate for a deal.

The Grinch that stole Christmas

Want some gloom and doom? Vanity Fair has some: Merry Christmas: Trump announces tariffs that will screw U.S. companies. Or take this, from Bloomberg (porous paywall):

President Donald Trump’s latest missives on trade are a wake-up call to markets close to record highs that a major deadline is looming with China.

The Dec. 15 flashpoint on tariffs was thrown into sharp relief Tuesday when Trump said he sees no urgency to complete a deal, right after he threatened an assortment of trading partners with levies.

“If tariffs scheduled for December 15 are implemented it would be a huge shock to the market consensus,” said Sue Trinh, managing director for global macro strategy at Manulife Investment Management in Hong Kong. “Trump would be the Grinch that stole Christmas,” she said.

Meanwhile, in the Americas, Reuters reports:

U.S. President Donald Trump ambushed Brazil and Argentina on Monday, announcing tariffs on U.S. steel and aluminum imports from the two countries in a measure that shocked South American officials and left them scrambling for answers. 

As Bloomberg puts it (porous paywall): “Trump finds a novel way to worsen the trade war — Tariffs on Brazil and Argentina don’t and won’t help the situation.”

Other news from various fronts of the U.S.-China techno-trade war, day 515:  

Huawei and ZTE are the targets of a new U.S. government fund, reports Bloomerg (porous paywall):

A new agency, called the U.S. International Development Finance Corporation, plans to tap some of its $60 billion budget to help developing countries and businesses purchase equipment from other companies.

“The U.S. is very focused on ensuring there’s a viable alternative to Huawei and ZTE. We don’t want to be out there saying no. We want to be out there saying yes,” Adam Boehler, the first chief executive officer of the DFC, said in a recent interview.

“The U.S., China, and Pluralism in International Affairs” is the title of a speech given on December 2 by David R. Stilwell, assistant secretary of the Bureau of East Asian and Pacific Affairs at the State Department. Stilwell makes an eloquent case for a moral American foreign policy based on pluralistic values and tolerance, although it is undermined on a daily basis by the current American president’s words and actions. 

2. Invasive science in Xinjiang

The New York Times reports that “Chinese scientists are trying to find a way to use a DNA sample to create an image of a person’s face.”

The technology “can produce rough pictures good enough only to narrow a manhunt or perhaps eliminate suspects.” Similar technology is being developed “in the United States and elsewhere.”    

In China, labs run by China’s Ministry of Public Security are running some of the research. Some of the work is based on DNA samples collected from Uyghurs, probably without their consent.  

“Respected institutions in Europe” have funded work by at least two Chinese scientists working with the Ministry of Public Security. “International scientific journals have published their findings without examining the origin of the DNA used in the studies or vetting the ethical questions raised by collecting such samples in Xinjiang.”

“With the ability to reconstruct faces, the Chinese police would have yet another genetic tool for social control,” says the New York Times. “The authorities have already gathered millions of DNA samples in Xinjiang. They have also collected data from the hundreds of thousands of Uyghurs and members of other minority groups locked up in detention camps in Xinjiang.”

3. Is Xinhua shifting focus of Hong Kong message to domestic audience?

As far as I know, today was the first time in the last six months that there were more stories about the Hong Kong protests and related events on Xinhua News Agency’s Chinese home page than on its English version:

English: 

• Hong Kong to roll out more relief measures amid economic recession 

Chinese:

• Carrie Lam (林鄭月娥 Lín Zhèng Yuè’é): Hong Kong will cooperate and follow up with the requirements of the central government on foreign affairs in accordance with the law

• People’s Daily commentary: Relying on the motherland, Hong Kong will have a better tomorrow — bringing chaos to Hong Kong will not succeed

• Hundreds of people in Hong Kong rally to protest U.S. interference in the affairs of China’s Hong Kong

A sign that the government is, perhaps for the first time, worried more about domestic perceptions than the response abroad? Or coincidence? 

Other news from the City of Protest: 

A threat from Carrie Lam? The Hong Kong leader warned that Trump’s signature of the Hong Kong Human Rights and Democracy Act of 2019 “risks backfiring on more than 1,300 American firms based in the city,” according to the South China Morning Post. 

“Hong Kong economist says Chinese bank forced him to quit over protests” is the headline of this Financial Times story (paywall):

A former chief economist of Bank of Communications, the Chinese state-owned bank, has alleged he was forced to resign because he was a Hong Konger, highlighting concerns of a purge in the city’s financial services industry following months of pro-democracy protests. 

Also this from Bloomberg (porous paywall):

He said he was asked to leave the bank shortly after he shared with colleagues a link to an outside article critical of China’s firewalls and closed system. He was also asked to refrain from commenting on the Chinese economy, he said.

The Foreign Affairs Committee of the Italian parliament has unanimously approved a resolution “to ask the European Union to launch an investigation into the use of force by the police…support the EU’s initiative to demand the release of protesters…and request the reasons for preventing Joshua Wong from leaving Hong Kong,” according to Affaritaliani (in Italian). 

This is only noteworthy because in recent months, Italy has been one of the few Western countries to make friendly noises about China’s Belt and Road and Huawei.

—Jeremy Goldkorn

4. Huawei in hot water at home for hypocrisy 

The Guardian reported yesterday that Chinese internet users have attacked Huawei for hypocrisy and for its treatment of a former employee. 

The 13-year Huawei veteran Lǐ Hóngyuán 李洪元 was detained for eight months, from January to August 2019, under charges of extortion after he requested termination compensation from Huawei. The company had apparently pressed charges. Li was eventually released due to “unclear criminal facts and insufficient evidence.”

The episode sparked outrage among Chinese internet users, who were quick to point out the hypocrisy of detaining a long-term employee while issuing ongoing calls for the release of its CFO (and founder’s daughter), Mèng Wǎnzhōu 孟晚舟, who remains under house arrest in Canada. The Guardian notes that such criticism is rare for Huawei given its status as “one of the most popular brands within the country and a symbol of national pride.”

Hong Kong was part of the online discussion. Some popular comments about the scandal, translated by Tony Lin on Twitter:

“This is why Hong Kong people are against extradition bill.” 

“Now I understand them.” 

“Thanks to Hong Kong foreign judges.” 

—Alex Smith 

5. Michelin’s failed guide to food in Beijing 

Michelin, the French dining guide, launched its first Beijing edition on November 28, featuring 23 starred restaurants and 77 other recommendations. 

The editors of the Michelin guides have always been utter philistines when it comes to Chinese food, and this year is no different. 

Beijing celebrity chef and founder of the Da Dong restaurant group, Dǒng Zhènxiáng 董振祥, wrote a widely circulated essay titled “Pursuing aroma and expelling stench in food: A reflection of Michelin’s rating of Chinese restaurants” (in Chinese), which slams the guide. Excerpt: 

The sense of cultural superiority communicated in their selection of Beijing dishes creates an illusion that the culinary level of ordinary people in China remains on tripes, offal, and viscera. But these foods obviously do not capture mainstream Chinese culinary culture, let alone the artistic elegance of Chinese cuisine.

For details, click through to The China Project: Chinese celebrity chef roasts Michelin’s Beijing guide.

—Jeremy Goldkorn

BUSINESS AND TECHNOLOGY:

• The next big mobile phone brand from China?
  Realme bets big on China 5G push in hope of repeating India success / Caixin

Chinese budget smartphone-maker Realme will up the ante in its 5G push next year in a move that could please Chinese authorities eager for the country to become the world leader in the new technology.

Realme will only release 5G smartphones in the Chinese market from 2020, the company’s founder and CEO Lǐ Bǐngzhōng 李炳忠 announced [in Chinese] Monday… 

The announcement came a week after the company officially teased its first 5G smartphone named the X50 that will hit the Chinese market in the next few months.

• TikTok’s troubles
  TikTok accused in California lawsuit of sending user data to China / Reuters 

A California college student has accused popular video-sharing app TikTok in a class-action lawsuit of transferring private user data to servers in China, despite the company’s assurances that it does not store personal data there.

The allegations may deepen legal troubles in the United States for TikTok, which is owned by Beijing ByteDance Technology Co but operates entirely outside of China and has developed an especially devoted fan base among U.S. teenagers.

• TikTok suppressed disabled users’ videos / BBC

“Videos made by disabled users were deliberately prevented from going viral on TikTok by the firm’s moderators, the app has acknowledged.

The social network said the policy was introduced to reduce the amount of cyber-bullying on its platform, but added that it now recognised the approach had been flawed.

The measure was exposed by the German digital rights news site Netzpolitik.

Disability rights campaigners said the strategy had been “bizarre”.

A leaked extract from TikTok’s rulebook gave examples of what its moderators were instructed to be on the lookout for:

• disabled people

• people with facial disfigurements

• people with other “facial problems” such as a birthmark or squint

• Down’s syndrome

• autism

• Fraud at Tencent-backed healthcare crowdfunding website?
  Investigation exposes lies and rule breaking on Tencent-backed platform meant to help sick patients / Caixin

Shuidi Fundraising, a Tencent-backed non-profit online crowdfunding platform allowing patients of serious illnesses to raise money, is in crisis after an investigation exposed serious flaws.

According to a short investigative video [in Chinese] produced by the well-known multimedia platform Pear Video, Shuidi allowed staff to mislead patients, set up fundraising goals and tell patients no one would investigate how any of the money raised was spent, all in an attempt to increase Shuidi’s market share.

• CBD in legal gray area in China
  Overseas marijuana component oil sold on Chinese online sites / Global Times

Cannabidiol (CBD) oil, a main extract of marijuana which is popular in the European and US markets, is being sold as health products on several Chinese e-commerce platforms including Taobao, JD.com and Pinduoduo…

Pinduoduo confirmed with the Global Times on Tuesday that it had removed all CBD products from its platform, but they are still available on Taobao and JD.com…

CBD is not a controlled drug in China because of its lack of psychoactive activity, and it is not included in the international drug control convention schedule or the Chinese list of narcotic drugs, according to the Ministry of Public Security.

There’s no clear guidance on the sale of CBD in the Chinese market, and experts have warned of the problems caused by a lack of regulations, as CBD products in the market are not guaranteed to be free of THC. 

Drug control laws and regulations shall apply to products containing more than 0.3 percent THC in China, according to Chinese law.  

• Failing companies
  Scandal-hit online video service on last legs amid mass staff exodus / Caixin

The fallout from an ill-fated overseas acquisition continues to haunt Chinese online video service provider Baofeng Group with the departures of almost all of its staff and all but one of its senior executives.

The Shenzhen-listed company said in a Monday exchange filing [in Chinese] that all its senior executives have resigned except for Féng Xīn 冯鑫, the company’s founder and legal representative who was detained earlier this year on bribery allegations.

• Third bond default by Chinese electronics firm within a month points to wider corporate governance issues / SCMP

• Tunghsu Optoelectronic Technology missed an interest payment on its 1.7 billion yuan ($241 million) onshore bond on Monday.

• Some of the defaults by Chinese companies have turned out to be corporate fraud, exposing corporate governance issues, said Ivan Chung of Moody’s.

• China on track to launch digital currency
  Digital yuan nears launch as China sweats over Libra / Nikkei Asian review (paywall)

China appears on track to launch a sovereign digital currency next year, becoming the first major country to do so, as Beijing aims to track money flows more closely and combat planned cryptocurrencies such as Facebook’s Libra.

With work completed on conducting research and setting standards for the virtual yuan, the next step involves choosing a region for a test launch, Fàn Yīfēi 范一飞, deputy governor of the People’s Bank of China, said at the end of November. 

• A quarter of new car sales to be new energy vehicles by 2025 — plan
  China wants new energy vehicle sales in 2025 to be 25% of all car sales / Reuters

China hopes new energy vehicle (NEV) sales can reach around a quarter of all car sales in 2025, up from a target of “over 20%” laid out in a 2017 planning document, the industry ministry said on Tuesday in a draft plan [in Chinese] for development of the NEV sector.

But a steep cut in subsidies this year has dented NEV sales in recent months. In October, NEV sales fell 45.6% from a year earlier.

China sold a total of 28.1 million cars in 2018, including 1.3 million NEVs, according to the China Association of Automobile Manufacturers, so NEV sales were 4.6% of the overall market.

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Wildlife documentary
  ‘The Hidden Kingdoms of China’: Pandas, Tibetan foxes, flower mantises, oh, my
  The Hidden Kingdoms of China is a blockbuster collaboration between video app Bilibili and National Geographic, whose crews were given unique access to some of China’s most inspiring landscapes — tropical jungles, bamboo forests, mountain peaks, deciduous forests, and great plains. 

• Climate change, coal, and clean energy
  China’s climate paradox: a leader in coal and clean energy / AP

China burns about half the coal used globally each year. Between 2000 and 2018, its annual carbon emissions nearly tripled, and it now accounts for about 30 percent of the world’s total. Yet it’s also the leading market for solar panels, wind turbines and electric vehicles, and it manufactures about two-thirds of solar cells installed worldwide.

POLITICS AND CURRENT AFFAIRS:

• U.S. Navy spends large on submarines
  Keeping up with China: U.S. Navy orders $22 billion worth of submarines / CNN

The US Navy on Monday awarded its most expensive shipbuilding contract ever, more than $22.2 billion worth of the world’s most advanced submarines.

The massive contract for nine nuclear-powered, Virginia class attack submarines comes just months after the head of the U.S. Navy in the Pacific warned of a massive Chinese naval buildup and his trouble in getting enough submarines to counter it.

• Record number of Chinese ships near Diaoyu/Senkaku Islands
  Beijing-Tokyo distrust lingers as record number of Chinese ships seen near Diaoyu Islands / SCMP

  • Experts say Prime Minister Abe and President Xi are carefully handling the situation on the disputed archipelago, known in Japan as the Senkaku Islands.

  • But one side setting foot on the islands, or an accidental collision between the vessels in the waters surround them, are potential flashpoints.

• A think tank paying homage to Xi’s foreign policy
  China gets first “common destiny” center / China Media Project

At a ceremony held in Beijing on November 29, the Communication University of China formally announced [in Chinese] the creation of the “Institute for a Community with Shared Future” — a new think tank paying homage to Xí Jìnpíng’s 习近平 signature foreign policy concept. According to state media [in Chinese] reports, this is the first research center in China devoted to the study of the notion of a “community of common destiny.”

• Indian Navy expels Chinese vessel
  Navy expels suspected Chinese spy vessel from Indian waters / India Today

An Indian Navy warship identified and expelled a Chinese vessel a few weeks ago, which may have been indulging in spying activities against India near the Port Blair region in Andaman and Nicobar Islands.

The Chinese Research Vessel Shi Yan 1 was spotted carrying out research activities near Port Blair when it was asked to leave the Indian waters by an Indian Navy frontline warship, sources told India Today TV.

SOCIETY AND CULTURE:

• Chinese students outperform international peers
  PISA rankings 2019: Four Chinese regions top international student survey / CNN

The 2018 Program International Student Assessment (PISA) — a global yardstick of education systems taken every three years by the Organization for Economic Cooperation and Development (OECD) …found that 15-year-old students from Beijing, Shanghai, and the eastern provinces of Jiangsu and Zhejiang ranked top for all three core subjects, achieving the highest level 4 rating.

Students from the United States were ranked level 3 for reading and science, and level 2 for math, while teens from Britain scored a level 3 ranking in all three categories.

Singapore took top spot in the 2015 survey and placed second this year, though the difference in its score compared to the four regions of China was not considered “statistically significantly different,” according to the study.

China’s success in the survey is likely to come under question due to the fact that only four of the country’s wealthiest areas were surveyed — meaning that the results don’t accurately represent the tens of millions of students living in other parts of the country, especially rural areas.

OPINION PIECES AND RANTS:

• Are China and the U.S. engaged in a new Cold War?
  The New Cold War? It’s with China, and it has already begun / NYT (porous paywall)
  Niall Ferguson writes: “When did Cold War II begin? Future historians will say it was in 2019.”
  China isn’t the Soviet Union. Confusing the two is dangerous. / Atlantic
  Melvyn P. Leffler writes: “An unusual confluence of events [in] World War II led to America’s bitter rivalry with the U.S.S.R. That pattern is not repeating.”