Google invests half a billion in Chinese ecommerce

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• If you’re in New York, come to our live Sinica Podcast recording tomorrow all about Chinese hacking. Details here.

—Jeremy Goldkorn and team

1. JD.com: Google puts $550 million into China’s No. 2 ecommerce player

Google’s sneak back into China, which has been going on for months, lurched forward today with a remarkably large deal. The New York Times reports (paywall):

Google will invest $550 million in the Chinese online retailer JD.com, the two companies said on Monday. In return, JD.com will join the Google Shopping advertising platform, and will work with the Silicon Valley company on other e-commerce projects in Europe, Southeast Asia and the United States.

The Silicon Valley giant never truly left China after the 2010 pullout of its search function from the country, but substantial activity beyond ad sales didn’t pick up until December last year, when Google opened an AI research center in Beijing. The Times surmises that in the event Google is indeed seeking to bring back some form of its major products to China, the “half a billion dollars’ worth of good will” from the JD.com deal “couldn’t hurt.”

—Lucas Niewenhuis

2. Trade war update: The $50 billion fallout

The U.S. finally imposed its much-anticipated tariffs on $50 billion in Chinese goods on June 15. China retaliated in kind (here are lists — in Chinese — of U.S. goods China will tax: 1, 2). CNBC reports that the markets were not happy: The Dow Jones dropped 157 points on June 18, and stocks of the “bellwether” companies, Caterpillar and Boeing, each dropped 0.8 percent. But, Reuters reports, investors are developing an “immunity” to the fiery trade war rhetoric, and increasingly treating the tariffs the way Trump does — as “a first foray and negotiating tool.”

• Meanwhile, the fiery rhetoric continues, with China issuing some of its starkest condemnations of the Trump administration yet.

• “Rude and unreasonable, selfish and headstrong” (蛮横无理、自私任性 mánhèngwúlǐ, zìsī rènxìng) is how the Chinese government now sees its American counterpart, according to a People’s Daily editorial (in Chinese).

• “The wise build bridges, and the fools build walls” (智者筑桥，愚者筑墙 zhìzhě zhù qiáo, yúzhě zhù qiáng), Xinhua declared (in Chinese) in a commentary.

• China’s new tariffs “hit Trump heartland where it hurts — in American agriculture and energy” is how the SCMP reheadlined an article from Bloomberg (paywall) that pointed out, “As recently as May, Beijing said it would seek to buy more U.S. agricultural and energy products as part of a tentative trade truce between the two countries.”

• Oil in particular was rattled by the retaliation, with share prices for ExxonMobil and Chevron down “by 1 to 2 percent since Friday,” while U.S. crude oil prices have fallen by “around 5 percent,” Reuters reports. “The potential drop-off in American oil exports to China would benefit other producers, especially from OPEC and Russia,” the newswire notes.

• Soybean futures, meanwhile, dropped to their lowest level since March 2016, according to (paywall) the Financial Times.

• If you’re a business owner caught in the middle of all this, the China Law Blog has published a guide on how to apply for tariff exemptions in the U.S.

But the overall economic effect of the tariffs on China remains limited. The New York Times reports (paywall) that “China’s exports could grow in other areas to offset any drop. Its exports to the United States are already increasing by more than $50 billion each year, and more than 90 percent of China’s exports to the United States are not covered by the tariffs” — at least so far.

More trade war twists:

• Afraid to anger Trump, Canada stays fickle about China trade / SCMP
  Canada had shown signs of wanting to reduce its reliance on the U.S. by reaching out to China, its third-largest trading partner, but analysts now say it must tread carefully or risk further damage to its already strained relations with the U.S.

• America’s booming bourbon business caught in the crosshairs of Trump’s trade war / CNBC
  “In a collective strategic political punch, China, Mexico, Canada and the European Union have all slapped tariffs on America’s booming bourbon industry. The duties came in reaction to the Trump administration’s move to impose tariffs on steel and aluminum.”

• Import now to beat tariffs on goods from China? It will cost / Washington Post
  “There will be a surge in exports from China and from the U.S. as the date approaches,” said John Manners-Bell, CEO of U.K. research firm Transport Intelligence. “We have certainly seen that in the past with these sorts of impositions of tariffs and quotas.”

• Trump’s tariffs aren’t the biggest trade problem. Will China step up to protect the WTO? / Washington Post
  “Most Chinese scholars echoed Communist Party views that WTO membership has been key to China’s economic boom, that Beijing does not want the WTO to fail and that China constructively engages WTO procedures and initiatives.”

• Tariffs chip away at semiconductor boom / WSJ (paywall)
  The Trump administration’s new tariffs pose a notable risk to the American semiconductor industry, which relies on a global manufacturing network for production.

—Lucas Niewenhuis

3. Wine, 5G, and Australia’s complicated relationship with China

The once-happy trading relationship of Australia and China continues to deteriorate. See, for example: ‘Beijing is livid’ over ‘racist’ criticism from Australia, The growing Australian backlash against Chinese influence, and Tensions with China simmer Down Under.

Today’s news brings no respite:

• Australian wine imports have been delayed at Chinese ports due to new “verification” requirements, according to the South China Morning Post. Such non-tariff hindrances, often not even announced formally, are a common tactic of the Chinese government to  shape both political and economic behavior of other countries.

• The delay is widely considered to be linked to Beijing and Canberra’s souring relations. The two countries have clashed over what Beijing calls “politically motivated” attacks on ethnic Chinese in Australia, as well as Australian concerns over Chinese influence operations and encroachment.

• Another source of discontent in China is the belief that “the Oz gov’t can’t in some way quell critical stories” about China in its own media, according to Australian Broadcasting Corporation correspondent Bill Birtles.

• Huawei issued a statement criticizing Australia’s expected ban on the company’s participation in bidding for Australia’s 5G mobile phone network due to national security concerns, the Sydney Morning Herald reports. According to the statement, “[Huawei is] a private company, owned by our employees with no other shareholders. In each of the 170 countries where we operate, we abide by the national laws and guidelines. To do otherwise would end our business overnight.”

• Huawei also began appealing to MPs based on the company’s ability to bring consumers considerably lower prices, saying, “Increased competition not only means cheaper prices but most importantly better access to the latest technologies and innovation.”

—Lucy Best

4. 1.9 million user accounts hacked at 51Job.com  

Private data of more than 1.9 million users of 51Job.com, one of the largest recruitment platforms in China, were reportedly found for sale on the dark web, according to (in Chinese) The Paper.

Judging from sample information provided by the hackers, the breach gave hackers access to usernames, passwords, email addresses, real names, and identity card numbers. The whole package of data from 1.95 million users could be purchased for 12 bitcoin (around $80,600 at today’s rates).

On June 15, 51Job.com confirmed the leak, but said that its database had not been hacked but rather that the hackers stole the information from other sources and then “tested” them on its platform — click through to The China Project for more on 51Job’s explanation.

—Jiayun Feng

5. Belt and Road propaganda gets the John Oliver twist

As far as mainstream American parodies of the Chinese government go, this one is pretty good: HBO’s John Oliver devoted 20 minutes on the most recent episode of Last Week Tonight to skewering the ham-fisted attempts of Chinese state media to promote the Belt and Road, Xi Jinping’s notorious aversion to being compared with Winnie the Pooh, and more.

Meanwhile, another popular American comedy show is making its way to China this week: SNL China will launch on June 23, Radii China reports, with two male comedians, Chen He 陈赫 and Yue Yunpeng 岳云鹏, as hosts. The show, which is produced by NBC Universal and Youku, is expected to stick to mainstream formats and, of course, avoid any of the irreverent caricatures of political figures that its American original is known for.

—Lucas Niewenhuis

6. ‘All I want is for China to be a normal country.’

Ian Johnson, author of The Souls of China: The Return of Religion After Mao and a Sinica Podcast guest, interviewed Tsinghua University professor Guo Yuhua 郭于华, “one of China’s best-known sociologists and most incisive government critics.” Guo discusses the growing difficulties liberal intellectuals face when speaking out in Xi’s China, and her notion that “the entire structure of Chinese society consists of political and revolutionary rituals replacing original folk rituals.”

Read the whole thing, ‘Ruling through ritual’: An interview with Guo Yuhua, in the New York Review of Books.

—Jeremy Goldkorn

—–

Our whole team really appreciates your support as Access members. Please chat with us on our Slack channel or contact me anytime at jeremy@thechinaproject.com.

—Jeremy Goldkorn, Editor-in-Chief

BUSINESS AND TECHNOLOGY:

• Electric cars
  Magna strikes deal to build electric vehicles in China with BJEV / Bloomberg (paywall)
  “Magna International Inc. plans to engineer and build electric vehicles in China, marking the first time North America’s largest auto supplier is expanding its car manufacturing capabilities beyond its 20-year-old Steyr venture.”

• Malaysia-China tensions do not deter Jack Ma
  Alibaba’s Jack Ma reassures investors China-Malaysia business ties are strong, despite government reviews / SCMP
  Brushing aside uncertainty, Alibaba Group co-founder Jack Ma exuded confidence, stating, “I am very confident in Malaysia and China’s relationship, and I am confident in the China business community that comes to Malaysia to invest.”

• China’s role in Zimbabwe’s tech sector
  Zimbabwe is trying to transform itself into a leading tech hub with China’s help / Quartz
  “The southern African country, which has one of the highest literacy rates in Africa, is looking to China to help building capacity and technological know-how to build one of the continent’s biggest IT hubs underpinned by big data and artificial intelligence.”

• World Cup branding for Chinese companies
  China’s most popular TV brand is hoping to score a goal with high-profile World Cup deal / Abacus
  Hisense, the world’s third-largest TV producer, is hoping to buck its “budget brand” reputation with lavish World Cup sponsorships.

• Incentives for tech companies to list at home
  Mainland bourses announce detailed CDR rules clearing hurdles for China tech firm issuance / Caixin Global
  “Mainland China’s stock exchanges have issued detailed rules for the trading of China depositary receipts (CDRs), including capping the voting rights of special shares, clearing the way for foreign-listed Chinese tech titans like JD.com to list at home.”

• Tutoring services
  Education firm Puxin plans major expansion push after U.S. IPO / Caixin Global
  “Puxin Ltd., the third Chinese education company to float shares in the U.S. this year, plans to use the bulk of its initial public offering proceeds to aggressively expand by buying up dozens of smaller rivals in the country.”

• DJI gets its own building
  Drone giant DJI is building a new headquarters as a ‘floating community’ with a giant sky bridge to test drones / CNBC
  “The building was designed to resemble a ‘floating community in the sky,’ and will feature twin towers connected by a sky bridge. DJI plans to show off new drone technology from that bridge, while also holding formal product launches in a new theater.”

• Traffic surveillance
  Traffic police in southern Chinese city target drivers with hi-tech cameras / SCMP
  “Guangzhou Daily reported that the 23 high-definition cameras, using sonar detection, underwent a fortnight of tests before going into full operation in Zhuhai on Friday. In all, 3,924 drivers were picked up by the cameras.”

POLITICS AND CURRENT AFFAIRS:

• Trumpworld
  Complex with new Trump golf club will get Chinese help / NYT (paywall)
  “The Dubai partner of President Trump’s real-estate company said this week that it had awarded China State Construction Engineering Corporation a $20 million contract to develop part of the 55 million square foot property.”

• Taiwan
  Beijing looks for clues on US-Taiwan ties as Washington set to name new ‘ambassador’ to Taipei / SCMP
  “Beijing will be looking for clues to any possible changes in Washington’s policy on Taiwan – one of the most sensitive issues in their bilateral relationship – when the US appoints a new head of its de facto embassy in Taipei, analysts said.”

• China builds a “squid surveillance network”
  How China’s squid fishing programme is squeezing its neighbours and creating global sea change / SCMP
  “China has been accused of using its dominance of the world’s supply of squid to provide low-quality seafood to other countries and intimidate their ships in neutral waters.”

• The South Pacific
  China’s Pacific Islands push has the U.S. worried / Bloomberg (paywall)
  “In the gritty, steamy streets of Papua New Guinea’s capital Port Moresby, signs of China’s push into the Pacific island nation are inescapable.… ‘Little by little they are taking slices of our businesses,’ said Martyn Namorong, who campaigns to protect local jobs and communities as China ramps up infrastructure spending in the resource-rich nation, often bringing its own workforce. ‘My people feel we can’t compete.’”

• Vietnam
  China’s potential control over economic zones leads to more protests in Vietnam / SCMP
  “Vietnamese police have arrested eight more people after protests a week ago over a proposed law on special economic zones that protesters fear would fall into the hands of Chinese investors.”

• Nepal
  As Oli comes calling, what does Nepal want from China? / SCMP
  Nepal’s Prime Minister Khadga Prasad Sharma Oli’s successful negotiations in India “give him the elbow room he needs to rev up relations with China, which were once on the upswing but have slackened of late.”

• Resources in the Himalayas
  The tussle between China and India will destroy the Himalayas / Quartz
  Despite the focus on geopolitics in the Himalayas, Chinese and Indian competition’s most disastrous effects could be its impact on water, glacial reserves, and other resources in the region.

• Negotiating with the Vatican
  Vatican and China in new talks over thorny issue of appointment of bishops / SCMP
  “The Vatican and China have held new talks on the naming of bishops, and the Holy See has raised concerns over a tightening of restrictions on religious practice.”

• Spying on Tibetan refugees in Sweden
  ‘He put them at significant risk’: Chinese man jailed for spying on Sweden’s Tibetan refugees for Beijing / SCMP
  “Dorjee Gyantsan, 49, was found guilty of infiltrating the Tibetan community to pass on information about their personal and political activities to Chinese intelligence officers in exchange for money.”

• North Korea
  How China is using North Korea in its long game against America / SCMP
  “Despite Pyongyang’s record of using diplomacy to manipulate major powers, analysts say Beijing may have few good options other than to throw its weight behind another round of denuclearization talks to maintain ties with its communist neighbour and secure its regional influence.”
  China sounds out Japan and South Korea for another summit about North Korea this year, sources say / SCMP
  “By organizing a second trilateral summit this year, China may want to demonstrate the partnership between the three Northeast Asian countries to the United States, as Beijing and Washington have been increasingly mired in a trade dispute.”

• Seeking asylum in the U.S.
  Chinese man arrested when he shows up to U.S. immigration interview, fears deportation / SCMP
  Xiu Qing You, a Chinese immigrant who originally requested asylum based on his Catholic faith and later reapplied for permanent residency, was arrested at his Green Card interview and is being held at a facility in Queens.
  ICE drops deportation threat against Chinese student joining U.S. Army / NPR
  According to immigration lawyer and retired lieutenant colonel Margaret Stock, Mr. Luo “signed an oath to the United States, the standard enlistment oath, and that’s an expression of a pro-American political opinion for which he would be persecuted.”

• Americans detained in China
  Beijing is holding U.S. citizens ‘hostage’ in China / Daily Beast
  “Chinese authorities typically target U.S. citizens of Chinese heritage for exit bans, usually in connection with an investigation. Sometimes, Beijing uses American citizens to try to coerce family members residing in the United States to return to China or to cooperate with Chinese authorities in investigations.”

• Disrupting Hong Kong and Taiwan
  Nice democracy you’ve got there. Be a shame if something happened to it. / Foreign Policy (paywall)
  Criminal triads have managed to remain present outside of mainland China for a very particular reason. “The party has found them a very useful tool to disrupt and frustrate opponents in societies such as Taiwan and Hong Kong, where resistance to the party runs high.”

• Anti-corruption efforts
  Man behind China’s new aircraft carrier detained in corruption investigation / SCMP
  “Sun Bo, general manager of China Shipbuilding Industry Corporation (CSIC), is suspected of serious violations of the law and party discipline.”

SOCIETY AND CULTURE:

• FIFA scam hits China
  Thousands of fans from soccer-mad China victims of FIFA World Cup scam / SCMP
  “More than 3,500 of the more than 10,000 counterfeit 2018 World Cup tickets available globally have been sold to Chinese soccer fans, according to Chinese media.”

• New dating standards
  What young, educated Chinese women want in a man today: A clingy “little puppy” / Quartz
  “In China, ‘little puppy,’ or 小奶狗 (xiǎo nǎigǒu), refers to a man who is younger than his girlfriend, whose qualities in the eyes of his lover include being simple, naive, considerate, and caring — and most importantly, loyal and clingy, just like a pet.”

• How rural Yunnan sees China’s rise and the trade war
  Tea and tariffs in rural Yunnan / New Republic
  “‘Your president is not good,’ said a man in a cockeyed Mao cap. ‘Why does he want to hurt us common folk?’”

• Cultural hazards
  Why are people still dying in China’s dragon boat races? / Sixth Tone
  “Dragon boats are slender vessels that are difficult to turn and capsize easily… Although they are all good swimmers, swimming skills alone are sometimes not enough to save one from drowning.”

• Child marriage
  Sold to China: Vietnam’s 6,000 child brides / Inkstone
  “Official statistics from Vietnam’s Department of General Police show that between 2011 and 2017, there were 2,700 reported cases of human trafficking, involving nearly 6,000 victims mainly from poor families in rural areas, with little access to education or economic opportunities.”

• Discrimination at top Chinese universities
  Our own Harvards discriminate too, say Chinese social media users / Inkstone
  In mainland China, high school graduates take the national college entrance exam, called the gaokao. It is the sole criterion for college admission. But that doesn’t mean it’s necessarily fair, according to commenters.

VIDEO OF THE DAY

Click HereAll the different zongzi one can eat during the Dragon Boat Festival

Today is Duanwujie 端午节 — the fifth day of the fifth month on the lunar calendar — known to English speakers as the holiday called the Dragon Boat Festival. It’s a day for racing dragon boats and eating zongzi — glutinous rice cakes — which these days come in all shapes and sizes, colors and textures. Take a look for yourself.

ON SUPCHINA

Inside the Chinese censorship rabbit hole

On Chinese social media, Xi Jinping, ejaculation jokes, and the Relevant Organs parody Twitter account are among the subjects that are no-gos. But what occasionally does get past the censors might surprise you.

Kuora: Mao Zedong and the archetype of the ruthless Chinese uniter

Mao Zedong takes his place in Chinese history as a ruthless uniter, alongside characters like Ying Zheng 嬴政 — better known as Qin Shi Huang 秦始皇, the first emperor of the Qin dynasty — and Cao Cao 曹操, the ruler of Wei during the Three Kingdoms period that followed the collapse of the Han Dynasty. All three are viewed generally with the same mixture of admiration and contempt.

‘Jurassic World: Fallen Kingdom’ resuscitates China’s box office

Jurassic World: Fallen Kingdom raked in a healthy $117 million in China in its opening weekend, rescuing an otherwise tepid week for the country’s box office. Analysts have pointed out that in the last few years, the Dragon Boat Festival holiday has been dominated by Hollywood blockbusters, with domestic productions having a hard time battling imported films.

The Caixin-Sinica Business Brief, episode 52

This week on the Caixin-Sinica Business Brief: Additional duty imposed on Chinese imports by the Trump administration, China’s economic growth in May, Didi Chuxing’s new policy of “same-sex rides,” Doug Young on the evolving story of ZTE, and more.

• Subscribe to the Business Brief on Apple Podcasts, Overcast, or Stitcher.

PHOTO FROM MICHAEL YAMASHITA

Transporting cardboard

A man rides a bike loaded with cardboard in Beijing in 2017.

—Jia Guo