Weekly Briefing: Hong Kong’s ‘hard hat revolution’; a Chinese SpaceX?; Shanghai’s falling STAR

Hello, readers! The China Project Weekly Briefing is our newest feature, detailing the most important China news from the past week. It also comes in the form of a newsletter — sign up using the box at the top of our homepage.

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U.S.-China techno-trade war talks resume this week in Shanghai, on July 30–31. Expectations are low: It is the 12th round of talks in as many months, and the two sides are farther away from a deal now than they appeared this spring. But the past year of U.S.-China relations in the Trump era has taught us to expect dramatic twists.

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1. Hong Kong’s ‘hard hat revolution’

Photo credit: Tyrone Siu via Reuters

UMBRELLA MOVEMENT TO HARD HAT REVOLUTION

In 2014, when hundreds of thousands of Hong Kongers took to the streets to protest for more open and direct elections of the city’s Chief Executive, the umbrellas they wielded against rain and police tear gas quickly gave their name to the movement.

This year, after nearly two months of even larger demonstrations sparked by concerns about the future of Hong Kong’s independent judiciary, a new symbol is emerging. As Mary Hui writes in Quartz:

The sturdy hardhat is fast becoming the symbol of the ongoing wave of protests…

While helmets and hardhats were also used during the Umbrella Movement, they have taken on a much more central role this time around. Just like umbrellas, the hardhats serve both functional and symbolic purposes: they protect protesters’ heads in potentially violent situations, but also send a message of steely resolve as protesters buckle in for the long haul.

Antony Dapiran, a Hong Kong-based lawyer and historian of modern Hong Kong protests, who was interviewed on the Sinica Podcast about the current upheaval on June 27 and July 18, has also commented on Twitter that “perhaps we should call these protests the ‘Hardhat Revolution.’”

IS A CRACKDOWN BEGINNING?

Signs began to build last week that Beijing is losing its patience with protestors.

• At the same time that organized thugs attacked protestors and bystanders in Hong Kong’s Yuen Long neighborhood, Beijing began a coordinated propaganda offensive that called for the “rule of law,” and decried the protestors as anarchist Hong Kong elements (乱港分子 luàn gǎng fēnzǐ).
• Beijing made clear that military force is an option in Hong Kong, because the “behavior of some radical protesters challenges the central government’s authority” and “absolutely cannot be tolerated.”
• Most analysts still think that option is “highly unlikely,” because of the huge political cost associated with it, according to the South China Morning Post.
• But Beijing is pushing the Hong Kong government to take a harder line, as the State Council’s Hong Kong and Macau Affairs Office made a rare press conference today to call for the punishment of “radical protestors,” and emphasize that the “central government supports the relevant government departments and police to protect the rule of law.”

2. A Chinese SpaceX?

Photo credit: i-Space

On July 25, a three-year-old Beijing-based startup called Interstellar Glory Space Technology, or i-Space, announced (in Chinese) that it had successfully launched a rocket into space, and delivered two satellites to near-Earth orbits.

The success of i-Space follows two failures by competitors:

• OneSpace, in March 2019
• Land Space, in October 2018

A CHINESE SPACEX?

Unlike its competitor, OneSpace, i-Space is shy about SpaceX comparisons. “We’re still young, and we have a long way to go,” an i-Space company spokesperson told Sixth Tone.

• But i-Space may have a better claim to the title of China’s private space industry leader. In addition to the first-to-orbit milestone, i-Space was also the first Chinese private company to launch a space rocket without a payload last April.
• i-Space has some catching up to do: SpaceX first launched a rocket to orbit in 2008.
• A key difference with the U.S. is that China’s private space industry is only five years old, as before 2014 the government did not allow private investment in the industry.

CHINESE GOVERNMENT GOALS

The state-owned side of Chinese space exploration is expanding rapidly and has very ambitious goals. As we’re previously written in the Weekly Briefing, these goals include a mission to Mars next year, and a fully operational China Space Station (CSS) by 2022.

3. Shanghai’s falling STAR

Photo credit:  The China Project illustration

On July 22, Shanghai opened the doors of a long-awaited new stock market tailored for domestic technology companies: the Science and Technology Innovation Board, also known as the STAR market.

A STAR RISES, A STAR FALLS

• Investors were enthusiastic about the first batch of 25 companies to list on the exchange, with stocks surging an average of 140 percent on the first day, per Reuters.
• But that bubble popped right away, as on the second day all but four of those companies saw their share prices fall, losing an average of 9 percent of their value.
• Still, the market opening created three new billionaires in China, Bloomberg reported.

NOT CHINA’S FIRST STOCK MARKET RODEO

China’s domestic stock markets are famously volatile, and Chinese regulators are notoriously liable to intervene in the markets to freeze trading or adjust rules on the fly.

• The regulatory uncertainty, and comparative newness of the two main markets in China — the Shanghai Stock Exchange and the Shenzhen Stock Exchange were both founded in 1990 — leads most successful Chinese companies to list abroad.
• Beijing has been trying for years to get companies to dual-list at home, but those plans have been put on hold.

Shanghai’s STAR market is called “Nasdaq-style” because like the market in New York, it is tailored to technology startups by having relatively quick registration, and not requiring companies to be profitable.

• This isn’t the first time Chinese regulators have tried to set up a Nasdaq-style market, but the two previous attempts are not regarded as striking the right balance between ease of listing and quality of listings.
• To learn more about China’s stock market landscape and where the STAR market fits in, listen to this episode of TechBuzz China.

4. Juul-style e-cigarettes come to China

Photo credit: Myst Labs

It will be interesting — or mildly horrifying, depending on your view of the product — to see how popular the slick Juul style of miniature e-cigarette becomes in China. Bloomberg reports (porous paywall):

• One of the top scientists behind electronic cigarette leader Juul Labs Inc., Xíng Chényuè 刑晨悦, has returned to China to launch Myst Labs, which “has developed a slick silver device called the Myst P Series.” The product debuted at the Global Mobile Internet Conference in Guangzhou on July 27.
• The e-cigarette device resembles a USB flash drive, costs 399 RMB ($58), and “was designed to solve some of the challenges facing Juul… the P Series has lower nicotine levels than Juul products and was formulated to appeal to current smokers — avoiding the fruity flavors that might lure in teenage newbies.”
• There are already dozens of e-cigarette startups that “have collectively raised tens of millions of dollars in an attempt to profit from the world’s largest tobacco market.”
• “This initial land grab is so important,” veteran angel investor and The China Project tech podcaster Rui Ma told Bloomberg. “For tobacco and other hedonistic products, most people are loyal to one brand.”

To learn more about the e-cigarette industry in China, listen to Rui Ma and Ying-Ying Lu in their episode of TechBuzz China on the subject.

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