Links for Monday, June 1, 2020

BUSINESS AND TECHNOLOGY:

• China’s unsteady economic recovery
  China factories recover slowly from coronavirus but export orders keep shrinking / SCMP

Export orders for Chinese manufacturers kept shrinking and the data suggests factory jobs may also continue to fall.

The National Bureau of Statistics’ (NBS) manufacturing purchasing managers’ index (PMI), an indicator of morale among the nation’s larger factories, stood at 50.6 in May, a slight drop from 50.8 in April.

• China’s barely begun economic recovery shows signs of stalling / WSJ (paywall)
  “More factories are reopening, but they face falling orders from overseas customers.”
• 40% of China’s cinemas may go bust
  Nearly half of China’s cinemas in danger of permanently closing due to pandemic / SCMP
  70% of fans believe China’s cinemas safe if they reopen in June / Caixin
  See also on The China Project: China issues new guidelines to reopen movie theaters, hotels, and sports venues, but uncertainty remains.
• Luckin founder to sell Car Inc. stock  
  Luckin founder to cash out of rental car unit / Caixin (paywall)

A company controlled by the founder of scandal-plagued Luckin Coffee Inc. has agreed to sell its 21.26% stake in one of China’s leading car rental firms, potentially raising $100 million or more for Lù Zhēngyào 陆正耀 as his business empire comes under growing financial stress.

The Monday announcement, which would mark an end to Lu’s financial relationship with Car Inc., sparked a major rally for the company’s shares, which ended nearly 24% higher on the day. But even after the rally, the stock still trades at about half of what it did in early April before Luckin first admitted to massive revenue inflation in the final three quarters of last year.

• See also on The China Project: Luckin to be delisted from Nasdaq after fraud scandal.
• KFC and Pizza Hut to sell plant-based meat…
  Beyond Meat announces new deals with KFC and Pizza Hut in China / Bloomberg (porous paywall)
  “The Pizza Hut partnership begins on Monday and KFC will launch its new products in June. Details on products and locations haven’t yet been announced.”
  Why plant-based meat options aren’t ready for their close-up / Sixth Tone

[A]s heartening as it is to see major companies embrace plant-based alternatives, the fact remains that KFC and Starbucks’ ventures are small fries in the Chinese meat world. And they’re likely to remain so as long as plant-based meat alternatives cost more and taste worse than conventional meat.

• …As African swine fever breaks out in Gansu Province  
  China reports African swine fever outbreak in Gansu province / CNBC
  “China’s Ministry of Agriculture and Rural Affairs said on Friday it had found a new outbreak of African swine fever near the city of Lanzhou in northwestern Gansu province.”
• Electric car investment
  Volkswagen doubles down on EV push in China with checks worth $2.3 billion / TechNode
  “Shares in Chinese automaker JAC Motors and battery supplier Gotion High-tech surged around 10% on Friday, after Volkswagen announced to invest a combined €2.1 billion ($2.3 billion) in the two electric vehicle partners.”
• Future uncertain for U.S. businesses in Hong Kong
  U.S. businesses brace for damage as tensions grow over Hong Kong / WSJ (paywall)
  “Companies fear fight could disrupt their operations after tough year as it also casts doubt over their long-term future in city.”
• Fossil fuel projects to be made ineligible for green financing
  China to make fossil fuel projects ineligible for green bond financing / Caixin
  “China plans to make fossil fuel projects ineligible for financing via green bonds, as Beijing tightens up standards for such investment to follow international practices and push its domestic clean energy strategy forward.”
• Disgraced investor’s frozen assets may soon be returned
  Frozen assets of ‘China’s Carl Icahn’ may soon be returned / Caixin (paywall)

Some frozen assets linked to disgraced former star fund manager Xú Xiáng 徐翔 may soon be returned by judicial authorities. Xu, who was sentenced to five and a half years in prison in 2017 for market manipulation following a 2015 stock market crash, had his assets frozen as part of the criminal investigation.

• Credit Suisse takes majority stake in joint venture
  Credit Suisse wins control over Chinese securities joint venture / FT (paywall)
  “Credit Suisse has taken a majority stake in its Chinese securities joint venture, granting it control for the first time over its business with the troubled Founder Group conglomerate.”
• Game developer begins Hong Kong stock sale
  Nasdaq-listed NetEase kicks off Hong Kong stock sale of up to $3 billion / Nikkei Asian Review 
• Xiaomi continues to dominate India’s smartphone market
  Xiaomi maintains lead in India’s smartphone market, but Chinese peers catch up / Caixin

Four Chinese firms made up India’s top five smartphone vendors in the first quarter of 2020, according to research firm CyberMedia Research (CMR). Although Xiaomi maintained its top spot, other Chinese companies showed signs of catching up, with Realme more than doubling its market share.

SCIENCE, HEALTH, AND THE ENVIRONMENT:

• How green is China’s economic recovery plan?
  Environmentalists cautiously optimistic about China’s economic policy plan / Bloomberg (porous paywall)

To the surprise of many, China announced [porous paywall] it will not set an annual GDP target this year for the first time in decades. Instead, it will prioritize employment and poverty alleviation. Climate experts say the change could help the nation abandon its traditional approach of recovering the economy at steep environmental costs.

• Solar panel maker begins expansion, but demand drops
  Biggest solar panel maker doubles capacity with new plant / Bloomberg (porous paywall)
  “JinkoSolar Holding Co., the world’s biggest solar panel maker, started operations at the first phase of a massive 11 billion yuan ($1.6 billion) factory in China’s eastern Zhejiang province that will eventually double its manufacturing capacity.”
  China’s solar giants forced to cut prices as virus curbs demand / Bloomberg (porous paywall)
  “Costs for components like wafers and cells have fallen by as much as 20% since the start of the year. They likely haven’t bottomed out yet, either, as the outlook for demand remains uncertain and new mega-factories threatens to add supply.”
• Shop fined after breaking ecigarette rules
  Shenzhen shop gets China’s first fine for flouting e-cigarette rules / Sixth Tone
  “In a first for China, a store owner in the southern city of Shenzhen has been fined 2,000 yuan ($280) for failing to display required warnings against smoking, according [in Chinese] to local news outlet Yangcheng Evening News.”
• Facilities being built to produce COVID-19 vaccines  
  China building secure facilities to fast track coronavirus vaccine production / SCMP
  “Although the five drugs being developed by the country’s scientists are still months away from a full evaluation, secure facilities are already being built.”
• Imported COVID-19 cases spike in Sichuan
  China reports 16 new COVID-19 cases, highest in nearly three weeks / Reuters
• Wuhan reports no new asymptomatic cases, but scientists want more data
  Wuhan reports no asymptomatic cases for first time / Guardian
  ‘More details needed’ on Wuhan’s mass coronavirus tests / SCMP
  “Mandatory screening of millions of people a shot in the arm for city but authorities need to give more information about how the programme was conducted, scientists say.”
• Virus origin remains unclear
  So where did the virus come from? / WSJ (paywall)

New research has deepened, rather than dispelled, the mystery surrounding the origin of the coronavirus responsible for COVID-19. Bats, wildlife markets, possibly pangolins and perhaps laboratories may all have played some role, but the simple story of an animal in a market infected by a bat that then infected several human beings no longer looks credible.

POLITICS AND CURRENT AFFAIRS:

• Uyghur arrests and fasting ban denied by state media
  ‘Two-faced’ former Uyghur forestry official sentenced to life in prison in Xinjiang / Radio Free Asia
  “RFA’s Uyghur Service reported in late 2018 on Memet Abdulla’s April 29, 2017 detention and charges the following month for being ‘two-faced’—a term regularly used by authorities to refer to Uyghur cadres who they say pay lip service to Communist Party rule in the XUAR, but secretly chafe against state repression of members of their ethnic group.”
  Residents of Uyghur-majority county in Xinjiang ordered to report others fasting during Ramadan / Radio Free Asia
  “Residents of the mostly Uyghur-populated Makit (in Chinese, Maigaiti) county in northwest China’s Xinjiang Uyghur Autonomous Region (XUAR) have been ordered to report anyone discovered to be fasting in observance of the Muslim holy month of Ramadan, according to sources.”
  Xinjiang spokesperson rejects rumor former official imprisoned for being ‘two-faced person’ / Global Times
  Xinjiang ‘fasting ban’ sheer nonsense made up by overseas separatists: senior official / Global Times
• China clamps down on Hong Kong
  In Hong Kong, China threatens businesses and workers / NYT (porous paywall)
  Tom Lasseter summarizes on Twitter: “Lawyers, bankers, professors and other professionals interviewed by The New York Times described a growing culture of fear in offices across the city.”
  Alexandra Stevenson adds on Twitter: “Read more from lawyers, bankers, professors and others who describe a growing culture of fear in offices here. Reporting it took months handholding and many passes from interviewees too scared to talk on the record. It is a warning of what is to come.”
  Does Hong Kong have a fighting chance against China? / NYT (porous paywall)
  Hong Kong tycoon Jimmy Lai 黎智英 (Lí Zhìyīng) writes:

I am the chairman and majority owner of Apple Daily, one of Hong Kong’s largest newspapers, and since the city’s return to China in 1997, I have feared that one day the Chinese Communist Party would grow tired not only of Hong Kong’s free press but also of its free people. That day has come.

• Global Times on Twitter: “The words ‘relevant legislation will be accelerated’ have been added to the full text of the Hong Kong affairs section of the Work Report of the Standing Committee of the NPC released by Xinhua on Sunday.”
• Taiwan plans aid for Hong Kong “shelter-seekers”…  
  Taiwan plans aid for Hong Kong “shelter-seekers”; Beijing threatens military action against Taipei / China Digital Times
  “Taiwan’s President Tsai Ing-wen (蔡英文 Cài Yīngwén) visited exiled Hong Kong bookseller Lam Wing-kee [林榮基 Lín Róngjī] on Friday in a show of support for Hongkongers amid Beijing’s plan to introduce a controversial national security law.”
  Taiwan throws its weight behind Hong Kong citizens who want to resettle on the island / CNBC

• On Twitter Wednesday evening, Taiwanese president Tsai Ing-wen 蔡英文 [Cài Yīngwén] said her government is drawing up a rescue plan for Hong Kong citizens that will include “plans for their residence, placement, employment, & life in Taiwan.”
• Beijing slapped down Tsai’s offer to Hong Kong asylum seekers, telling Taiwan’s ruling Democratic Progressive Party’s to stop “looting a burning house,” reported Chinese state news agency Xinhua, which cited a spokesman of the Taiwan Affairs Office.

• …As Hongkongers prepare to flee to other countries
  China’s security law sends Hong Kong residents dashing for exit / Bloomberg (porous paywall)
  “Spurred to action by Beijing’s decision to impose controversial national security legislation on the former British colony, residents have been flooding migration consultants with questions on how to move their families overseas.”
  To stay or go? Meet the Hong Kong protesters who fled to Canada to seek asylum / Hong Kong Free Press
  “Leo Shin, a professor of Asian Studies and History at the University of British Columbia, told HKFP the Canadian government should uphold and provide asylum to those who have a well-founded fear of being persecuted in their home country because of their political opinions.”
  U.K. widens visa rights offer to almost 3 million Hong Kong residents / FT (porous paywall)
• Hong Kong reactions to U.S. policy change
  In Hong Kong, anxiety and defiance over Trump’s move to cut ties / NYT (porous paywall)
  “Hong Kong officials reacted with a mix of anxiety, resignation and defiance to President Trump’s announcement that the United States would end its special relationship with the city, reflecting the semi autonomous territory’s deep political divide over its relationship with mainland China.”
• Britain moves to cut reliance on Huawei 5G
  Britain wants U.S. to form a 10-nation 5G alliance to cut reliance on China’s Huawei / AFP via SCMP
  “Proposed ‘D10’ club of democratic partners would include Australia, South Korea and India. [The issue] is expected to feature at a G7 summit that Donald Trump will host next month.”
• Saber rattling toward Taiwan
  Chinese general says Beijing will ‘resolutely smash’ any separatist moves by Taiwan / SCMP
  “Taking Taiwan by force is an option for Beijing and it will take steps to ‘resolutely smash’ any separatist moves made by the island, a top PLA general said on Friday.”
• Singapore and China agree to allow essential travel
  Singapore, China Agree to allow essential travel from early June / Bloomberg
  “Singapore and China have agreed to allow essential travel for business and official purposes between the two countries in early June, according to a joint emailed statement.”
• Philippine officials crack down on Chinese gambling
  Philippine police arrest 90 Chinese for illegal gambling / AP via Washington Post
  “Philippine police have arrested 90 Chinese for allegedly running an online gambling hub without permits and for violating quarantine restrictions, officials said Sunday.”
• Beijing tightens grip on South China Sea
  Beijing’s plans for South China Sea air defense identification zone cover Pratas, Paracel and Spratly islands, PLA source says / SCMP
  “Beijing has been making plans for an air defense identification zone (ADIZ) in the South China Sea since 2010, the same year it said it was considering the introduction of similar airspace controls over the East China Sea in a move that was widely criticised around the world, a military insider said.”
  Taiwan set to commission its largest patrol ship to strengthen South China Sea claims / SCMP
• China and India border clash still not settled…
  Border skirmish becomes battle of spin as Indian and Chinese soldiers turn to social media / SCMP
  “A post with photos showing several Indian soldiers purportedly brought down by PLA soldiers in a fist and stick fight at the Pangong Lake border area with India was circulated among Chinese military websites on Sunday.”
  China using border tensions to warn India not to side with US: ex-foreign secretary Shyam Saran / SCMP
  “The latest episode in the China-India border dispute, which has seen troops face off in the Ladakh region, could be interpreted as a bid by Beijing to warn New Delhi against aligning with the United States on geopolitical matters, according to Shyam Saran, India’s former foreign secretary and a former head of the National Security Advisory Board.”
  Chinese fighters flying 30-35 kms from Eastern Ladakh, India watching closely / Times of India
  China and India brawl at 14,000 feet along the border / NYT (porous paywall)
• …Indians boycott Chinese apps in response
  Indians have found a way to boycott Chinese products with viral ‘remove China apps’ / News 18
  “In the digital age, there’s an app for everything, including an app to delete other apps. A few days ago, Sonam Wangchuk…posted a video on YouTube saying that Indians should boycott everything Chinese to take revenge for rising tensions between India and China.”
• U.K. ministers advocate for Hong Kong “monitoring group”
  U.K. ministers call for international Hong Kong monitor group / AFP via Hong Kong Free Press
  “Seven former British foreign ministers Monday called on Prime Minister Boris Johnson to push G7 allies to set up an international monitoring group for Hong Kong in response to Beijing’s tightening control over the restless city.”
  UK ex-foreign secretaries urge Hong Kong alliance / BBC
  “In their letter to the prime minister, the cross-party group of former cabinet ministers says the U.K. government must be seen to lead the international response, as many countries take their cue from Britain over its former colony.”
  Seven former foreign secretaries urge U.K. to take lead on Hong Kong / Guardian
• Robot submarines to compete with China
  To compete with China, an internal Pentagon study looks to pour money into robot submarines / DefenseNews
  “An internal study from the Office of the Secretary of Defense is looking to pour money into large robot submarines that the U.S. Navy says will free up its larger manned submarines for more complex missions, according to documents obtained by Defense News.”
• Xi takes bold steps as U.S. wrestles with COVID-19
  Beyond Hong Kong, an emboldened Xi Jinping pushes the boundaries / WSJ (paywall)

With Washington and its allies distracted by the pandemic and its economic fallout, Mr. Xi is taking bold steps on issues where he’s often faced international pushback, including Hong Kong, Taiwan, the South China Sea and a disputed border with India.

• U.S. allows Chinese citizens and students to return home
  U.S. approves two Air China flights to take Chinese citizens home / SCMP
  “Hundreds of students and other Chinese citizens stranded in America because of the COVID-19 pandemic will soon be heading home after U.S. authorities gave the green light for two Air China flights to take off in the coming days.”
• Chinese racism toward Nigerians persists
  Chinese racism to Nigerians isn’t likely to end soon / Quartz

A video emerged on April 10 of a Nigerian diplomat in China, Razaq Lawal, publicly criticizing his compatriots’ maltreatment in Guangzhou by Chinese officials. Lawal protested that Nigerians were kept in COVIDovid-19 quarantine beyond the normal 14 days for Chinese citizens. Chinese officials were also seizing their passports. He pointed out that the Nigerian government did not treat Chinese citizens living in Nigeria any differently from its own citizens.

SOCIETY AND CULTURE:

• Backlash to new divorce law
  Pre-divorce ‘cool-off period’ finds scant support in China / Sixth Tone
  “A newly enacted law requiring divorce-seeking couples to wait 30 days before their request is approved has received strong opposition online, with many calling it ‘ridiculous.’”
• Hainan’s illegal lottery
  Betting on pink: The enduring appeal of Hainan’s illegal ‘private lottery’ / Sixth Tone
  “All in all, Hainan’s private lottery has hit on a winning formula, and its popularity has only been invigorated by a hunger for quick money at a time of stress and rising commodity prices.”
• Guangzhou mother fabricates child abuse claim
  Guangzhou mother detained for fabricating child abuse claim / Sixth Tone
  “A woman in the southern Guangdong province has been detained for sharing false information online claiming her daughter suffered health problems after being physically abused by her teacher.”
• Can China’s science fiction foster soft power?
  China’s soft-power hopes for sci-fi / FT (paywall)

As such, China’s sci-fi scene is emerging as an unexpected element in a broader initiative of cultural diplomacy aimed at projecting a positive and engaging impression of the country abroad. Yet unlike Beijing’s “panda” or “ping-pong” initiatives of the past, it is driven by popular grassroots enthusiasm — which has made Chinese officials sit up and take notice.

• Teacher speaks out on homophobia in China
  Teacher reveals high price of coming out as gay in China / SCMP
  “When he came out as gay, teacher Cui Le made local news headlines and was subject to censorship and surveillance by his university in southern China. It took years — and a move to New Zealand — before he felt ready to tell his story.”