Paypal enters China, Beijing on lockdown for October 1 parade

Dear Access member,

R.I.P. NAY! Last week, I shed a metaphorical tear for the end of my favorite way to get from Beijing to Chengdu. CNN reports:

The country’s very first airport, Nanyuan Airport, shut its doors for good on September 25, the same date that Beijing’s new $11.5 billion Daxing Airport was opened by President Xi Jinping.

The last flight, China United Airlines KN5830, left at just after 10 p.m., state media said. By Saturday, its doors were firmly shut and the car park mostly deserted.

Nanyuan — the country’s first airport — opened in 1910. It was a short taxi ride from central Beijing. The airport, and its flagship carrier China United, were both owned by the military, meaning that China’s normal flight delays were less common than at other airports. 

Our word of the day is grand military parade: 大阅兵 dà yuèbīng.

—Jeremy Goldkorn, Editor-in-Chief 

1. PayPal gets license for China 

“The People’s Bank of China has approved PayPal’s acquisition of a 70 percent equity state in GoPay (Guofubao Information Technology Co. Ltd.), which will make PayPal the first foreign payment platform to provide online payment services in China,” reports TechCrunch.

• GoPay “mainly provides payment products and industry supporting solutions for ecommerce, cross-border commerce, aviation tourism and other industries,” according to a statement (in Chinese) from the company. PayPal acquired the controlling stake “through the Shanghai-based subsidiary Yinbaobao Information Technology,” but the terms were not disclosed. 

• Growth potential is huge: “On the mobile payments side alone, the market is expected to grow 21.8 percent, from 2017 to $96.73 trillion in 2023, driven partly by increasing demand for e-commerce, a report from Frost & Sullivan found…The market has also seen an increase in cross-border transactions, particularly in sectors like e-commerce, travel and overseas education. These reached $6.66 trillion in 2016.” 

• But PayPal faces two gargantuan competitors: Alipay and WeChat Wallet. Affiliated with China’s two biggest tech firms, Alibaba and Tencent, these services have already captured nearly 100 percent of the payments markets in China. Catching up, or even just finding a niche sector to dominate will not be easy. 

• In 2018, China’s central bank said it would open up further to foreign payment companies, but a cynic might note that China was supposed to open this sector up to foreign investment when it joined the WTO in 2001. As of now, no foreign credit card or payments company has anything beyond a token presence in China. 

2. Beijing on lockdown for October 1 parade

Chinese state media websites are celebrating the People’s Republic’s 70th birthday with an oratorio of praise-songs to the achievements of Party since it took Beijing on October 1, 1949. But the residents of Beijing are not being encouraged to party: The city is virtually under lockdown. 

• The centerpiece of the Party’s party is an enormous military parade in Beijing, set to begin at 10am local time. You can watch a live feed from CGTN here. 

• “The military is expected to show off new weapons, including an intercontinental ballistic missile capable of reaching the United States, supersonic drones along with tanks,” according to this parade day primer from the New York Times (porous paywall). Some of the weapons to be displayed are missiles that are “spooking the U.S.” per Bloomberg (porous paywall). 

Context:

• The China Project’s science columnist Yangyang Chen has written a birthday letter to the People’s Republic, published by ChinaFile. It’s not the kind of letter that would be published in the China Daily. 

• “22 percent of urban Chinese consumers would permanently leave China if they had the means to do so, according to a survey by FT Confidential Research,” according to this tweet by Financial Times correspondent Tom Hancock. The percentage rises to 36 among “high-income consumers.”

3. Trump administration: No limits on investing in Chinese companies, for now 

It’s day 452 of the U.S.-China techno-trade war. 

Surprise surprise, the Trump administration has weaseled away from a story that broke last week that spooked the financial markets. Bloomberg reports (porous paywall):

The Trump administration has issued a partial — and qualified — denial to the revelation that it is discussing imposing limits on U.S. investments in Chinese companies and financial markets as China vowed to continue opening its markets to foreign investment…

“The administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time,” Treasury spokeswoman Monica Crowley said. Crowley did not address any of the other options reported and declined to offer any further details of the discussions.

The response came after Friday’s initial Bloomberg report, which was later matched by other news organizations including the Financial Times and New York Times, unnerved markets in the U.S. and led to a slump in U.S.-listed Chinese firms. 

Chinese companies that were planning to list on U.S. markets are now worried, reports Reuters:

While a U.S. Treasury official has said Trump’s administration was not considering blocking Chinese companies from U.S. listings “at this time”, the possibility it may do so has resulted in much handwringing by mainland firms that had been looking at a U.S. IPO.

4. Hong Kong prepares for October 1 showdown

“Hong Kong is going into lockdown mode on Tuesday to cope with citywide illegal rallies and a slew of activities planned by defiant protesters aiming to pull out all the stops to embarrass Beijing on the 70th anniversary of the republic’s founding,” says the South China Morning Post:

• “Police are deploying about 6,000 officers, as they warned of ‘very, very dangerous’ plans by protesters and described their actions over the weekend as being ‘one step closer to terrorism,’ echoing a reference used by Beijing authorities earlier,” according to the SCMP. 

• Protesters have dismissed the “intelligence presented by the police force claiming that some demonstrators were planning to kill officers, set fires and bomb shopping malls on Tuesday,” reports the Hong Kong Free Press. 

• “The contingent of Chinese military personnel in Hong Kong had more than doubled in size since the protests began,” according to diplomats in the city cited by Reuters: “They estimated the number of military personnel is now between 10,000 and 12,000, up from 3,000 to 5,000 in the months before the reinforcement.”

• An American scholar “said he was denied entry to Hong Kong this week after testifying before a U.S. congressional committee on the city’s ongoing protest crisis,” reports the South China Morning Post: “Dan Garrett, who claimed to have documented more than 600 demonstrations and marches in Hong Kong since 2011, said on Saturday he had been turned away on Thursday over unspecified ‘immigration reasons.’” 

5. Did Transsion rip off Huawei? 

Chinese mobile phone and device maker Transsion has listed in an IPO on Shanghai’s STAR Market,” reports TechCrunch:

Headquartered in Shenzhen, Transsion is a top seller of smartphones in Africa under its Tecno brand. The company has also started to support venture funding of African startups.

Transsion issued 80 million A shares at an opening price of 35.15 yuan ($5.00) to raise 2.8 billion yuan ($394 million).

The IPO prompted Huawei to sue Transsion for intellectual property infringement. Caixin reports:

Last Monday, a local court in the southern Chinese city of Shenzhen accepted the case against Transsion and five of its subsidiaries over alleged intellectual property infringement, a source close to Huawei’s in-house legal officers told Caixin.

Huawei declined to confirm the report. Transsion didn’t immediately respond to a request for comment.

6. Australian writer shackled and interrogated in Beijing

Lily Kuo and Ben Doherty of the Guardian report: 

The Australian political blogger and novelist, Yáng Héngjūn 楊恒均, is being shackled in chains and interrogated inside a Beijing detention centre, and told by authorities he could face the death penalty for espionage.

Detained in China since January, Yang continues to protest his innocence to authorities and says he can clear his name if he is able to speak with senior officials in the Chinese government.

Speaking exclusively to the Guardian, multiple sources have described Yang’s conditions inside the ministry of state security detention centre in Beijing, where he was moved in July before being formally charged

The article describes the conditions of Yang’s imprisonment in some detail. 

7. Uyghur scholar awarded Vaclav Havel Human Rights Prize

Radio Free Asia reports:

The Parliamentary Assembly of the Council of Europe (PACE) has awarded jailed Uyghur scholar Ilham Tohti the 2019 Vaclav Havel Human Rights Prize, named after the Czech playwright and politician who opposed Soviet communism, making him the first dissident from China to receive the prize.

Other news about the global repression of Uyghurs:

• “Uyghurs fleeing persecution in China risk losing family back home,” says Agence France-Presse in an article and video that profiles Uyghur exiles in Turkey.

• “I was shackled and beaten in a Chinese detention camp,” said one Uyghur woman now in Kazakhstan to Sky News.

• “China’s systematic anti-Muslim campaign, and accompanying repression of Christians and Tibetan Buddhists, may represent the largest-scale official attack on religious freedom in the world,” says the Washington Post Editorial Board.

—Jeremy Goldkorn

BUSINESS AND TECHNOLOGY:

• Luxury ecommerce
  Alibaba’s luxury venture With Richemont goes online in China / Bloomberg (porous paywall)

Richemont and Alibaba Group Holding Ltd.’s luxury joint venture has gone live in China, presenting 130 brands in one location on the Tmall e-commerce site. Tom Ford, Brunello Cucinelli and Jimmy Choo join Richemont brands Cartier, Piaget and Vacheron Constantin on the site.

• The state advances
  China’s entrepreneurs turn to state-backed buyers for help / WSJ (paywall)
  “The state advances and the private sector retreats” (国进民退 guó jìn mín tuì) was a phrase first used in the Hú Jǐntāo 胡锦涛 administration (2002-2012) to describe state-owned enterprises taking over or dominating industries to the detriment of private companies. According to the Wall Street Journal, that process has once again accelerated: 

China is snapping up stakes in private companies at a record rate, as the trade war , economic slowdown and credit squeeze heap pressure on entrepreneurs. The investments mark a reversal after decades in which state-owned enterprises have shrunk in importance…

Private enterprises are in a weaker position because they have comparatively poorer access to cheap bank loans and other types of financing, and have also been squeezed by Beijing’s moves to reduce pollution and overproduction.

• Autonomous vehicles in Hunan
  China’s Baidu rolls out self-driving cars for public trial / CNET
  Baidu, China’s biggest search engine, recently dropped out of the top five ranking of Chinese tech companies by market capitalization, but that has not stopped their push into self-driving cars — Baidu’s “first fleet of 45 self-driving cars are being released for public trial” in Changsha, Hunan. These cars “operate at Level 4 autonomy levels,” which means that the car should be able to pilot itself without human intervention, although during the trials there will always be a human operator will be onboard at all times, just in case. 

• Nasdaq to limit small Chinese company IPOs
  Nasdaq cracks down on IPOs of small Chinese companies that trade thinly and are controlled by a few insiders / Reuters via SCMP

• A growing number of these flotations end up raising most of the capital in their IPO from Chinese sources, rather than from U.S. investors.

• Their low liquidity makes them unattractive to many large institutional investors, to whom Nasdaq is seeking to cater.

• Fosun burned by Thomas Cook
  Thomas Cook collapse tarnishes aura of China’s ‘Warren Buffett’ / Nikkei Asian Review (porous paywall)

The collapse of Thomas Cook Group on Monday not only left 600,000 stranded holidaymakers feeling miserable, it also damaged the reputation of “China’s Warren Buffett.” Guō Guǎngchāng 郭广昌 chairs Fosun International , which together with its subsidiary is the largest shareholder in Thomas Cook…Fosun and its Hong Kong-listed travel subsidiary Fosun Tourism Group have seen their combined 18% stake wiped out.

• Spending big on gene and cell therapy research
  China’s pharmaceuticals industry is growing up / Economist (porous paywall)
  “Signs of expansion are all around — especially for research on cutting-edge treatments that include gene and cell therapies.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• New coal shutdown plan
  China aims to shut 8.7 GW of coal power by year-end — regulator / Reuters

China will aim to shut a total of 8.66 gigawatts (GW) of obsolete coal-fired power capacity by the end of this year, its energy regulator said, part of its efforts to curb smog and greenhouse gas emissions.

The National Energy Administration didn’t say how much of the target, equal to just under one percent of total capacity, had already been met.

• A Ming Dynasty cure for hemorrhoids
  Bottoms up / The World of Chinese
  “‘The person who created this stuff should receive a Nobel Prize, an exemption from China’s one-child policy, front row seats at the Olympics, an entire stable of miniature giraffes, and free Ivy League education for their children,’ raves one top-rated Amazon review.”

POLITICS AND CURRENT AFFAIRS:

• Forgetting the past
  Xi extols China’s ‘Red’ heritage in a land haunted by famine under Mao / NYT (porous paywall)
  “Xí Jìnpíng 习近平 bowed in tribute at a memorial for 130,000 fighters from this area in central China who gave their lives for the Communist cause,” reports Chris Buckley. However, “the estimated one million peasants who starved to death in Xinyang, after Mao’s Great Leap Forward spawned the biggest famine in modern times, went unnoted in official reports about the visit.” 

• Scatterlings of the Chinese civil war
  They were CIA-backed Chinese rebels. Now you’re invited to their once-secret hideaway. / Public Radio International 
  “Former CIA-backed guerrillas — rivals of Chairman Máo Zédōng 毛泽东 — are now embracing the tourism industry, years after setting up the arteries and networks that sustain the Golden Triangle drug trade to this day.”

SOCIETY AND CULTURE:

• New architecture
  ‘Post-weird’: How Chinese architecture evolved in the Xi Jinping era / CNN

Today, in a country once seen as an architects’ playground, there are growing signs that planners are no longer beholden to Western design. And architects — whether influenced by Xi’s position or the inspiration behind it — are increasingly looking to the country’s own history and culture for expressions of modernity.

• Taking advantage of family values
  Are China’s grandparents reaching their limits on free childcare? / SCMP

A woman in Mianyang, in the southwestern province of Sichuan, was awarded more than 68,000 yuan ($9,500) by a local court after she sued her son and daughter-in-law for the costs of raising her nine-year-old grandchild…

In another case, three months ago, a Beijing court supported a woman’s demand for compensation for helping to raise her granddaughter since her birth in 2002.

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Sinica Early Access: Is China the Enemy? Featuring Ezra Vogel and Orville Schell

The Sinica Podcast this week features an exclusive recording of a China Institute event in New York on September 17 that sought to answer this question: How can the United States live with a rising China, an ideologically different country that is home to one-fifth of humanity? Joe Kahn, managing editor of the New York Times and the paper’s former Beijing bureau chief, moderates the discussion with Ezra Vogel, the eminent Harvard University professor and author, and Orville Schell, author and director of the Center on U.S.-China Relations at the Asia Society. 

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