100,000 robots a year from Shanghai

Dear Access member,

We’ve got six things at the top for you today.

And, in case I have not banged on about this enough already, we are redesigning our website and would love to hear what you want and need. Please take this five-minute survey — we would really appreciate it. Today is the last day the survey will be open.

—Jeremy Goldkorn and team

1. 100,000 robots a year from Shanghai

ABB is a Swedish-Swiss Fortune 500 engineering company, the world’s largest manufacturer of electric grids, and a leading maker of automation equipment. If you’re not an engineer or an investor, you may never have heard of it, but keep an eye out for its distinctive, minimalist logo and you’ll start seeing it everywhere, from apartment switch boxes to billboards to nuclear power stations.

(My first job in China was teaching English to engineers at an ABB factory on the outskirts of Beijing, which is how I first got to know the Zurich-based company. It had around 20 joint-venture factories in China in 1995.)

ABB has announced plans to build a $150 million, 75,000-square-foot robot factory in Shanghai, which will open in 2020 and produce robots for China as well as for export elsewhere in Asia, according to Reuters (and ABB’s press release).

• ABB is already China’s largest industrial robot maker, and China is ABB’s second-largest robot market after the U.S.

• As China ages and labor costs rise, companies — with government encouragement — are investing in automation. “In 2017, one of every three robots sold in the world went to China, which purchased nearly 138,000 units,” according to ABB stats cited by Reuters.

• 100,000 robots a year will come off the Shanghai production line, or one quarter of ABB’s global demand last year, according to Bloomberg (porous paywall). The Shanghai plant will include an artificial intelligence research lab and become “the company’s single largest robotics facility around the world, producing the full range of ABB’s products from small payload robots to large ones that can lift an entire car.”

• Kukua, the German robotics firm acquired by China’s Midea in 2016, is also expanding in China, says Reuters, “including by building a robot park in Shunde near Hong Kong.”

About robots in China

In a five-year plan announced in 2016, the government said it aims to increase its annual production of industrial robots in China to 100,000 by 2020, so the ABB plant alone would meet the target if production begins according to plans.

• The output growth of industrial robots outperformed all other categories such as motor vehicles and mobile phones in 2016, according to official Chinese statistics, reaching a production volume of more than 72,000 units, an increase of 30.4 percent from 2015.

• In 2016, China installed 90,000 new robots, or one-third of the world’s total, and by 2017 had around 800 robotics companies, according to Bloomberg. Robot Report, an industry news website, has a lower figure for the number of companies — 500 by 2017, up from 194 in 2015.

• U.S. Secretary of Commerce Wilbur Ross “attacked China’s fast-growing robotics industry, warning that big subsidies risk compounding the overcapacity caused by Chinese state support for traditional industries such as steel,” reported the Financial Times (porous paywall) in September 2017.

• Made in China 2025, the government plan to leapfrog China up the technology value chain that is frightening American lawmakers right now, targets robotics as one of 10 industries where the government wants domestic components and materials to comprise 70 percent by 2025.

• See also: China underwater robot sets depth record on the Shanghai Daily today.

2. State media smiles at Japan

After Japanese prime minister Shinzo Abe’s successful visit to Beijing last week, Chinese state media has been mostly smiles in Tokyo’s direction:

• Ctrip fans travelers’ love for Nippon by forming local partnerships / China Daily
  “China’s online travel service platform Ctrip is expanding its presence in the Japanese tourism market, considering the rapid growth in the number of Chinese visitors to Japan in recent years. Japan is a key market for Ctrip’s destination development strategy. Ctrip established its Japanese arm in 2014 and has been working to expand its operations in Japan.”

• China-Japan ties: future more important than history / China.org.cn

The top story on most central state media organs is a version of this: Xi urges breaking new ground in workers’ movement, trade unions’ work.

3. Cornell ends partnership with Renmin University

Inside Higher Ed reports:

Cornell University has suspended a partnership with a Chinese university because of academic freedom concerns.

Eli Friedman, director of international programs for Cornell’s School of Industrial and Labor Relations, said that the ILR School had suspended two exchange programs because of concerns that its Chinese partner institution, Renmin University of China, had punished, surveilled or suppressed students who supported workers’ rights in a labor conflict that erupted this past summer involving workers trying to unionize at Jasic Technology in Shenzhen — or who have otherwise been supportive of workers’ rights. Students who traveled to Shenzhen to support the workers have reported facing pressures from their various universities.

Further reporting:

• Cornell cuts ties with Chinese school after crackdown on students / NYT (porous paywall)

• Cornell decision adds to growing climate of fear on Chinese campuses / SCMP

—Jeremy Goldkorn

4. The public shaming of Han Han and other stories from the Chinese internet

It’s been a busy weekend on the Chinese internet. These are are some of the stories that are captivating Chinese eyeballs right now:

• In the latest Chinese Corner, our weekly review of Chinese online non-fiction, we look at a TV show that set out to shame (then) bad-boy novelist Han Han for dropping out of high school, suspicions about government promotion of traditional ethnic minority medicines, and efforts to improve Sino-Japanese relations in 1984. Please click through to The China Project to read.   

• An unpleasant piece of news on the Chinese internet over the weekend:  The Nanchang railway police in Jiangxi Province have launched a hunt for a man who was captured in a viral video molesting an underage girl who appears to be his own daughter on a high-speed train on October 27. Click here for the story.

• Two Japanese artists found that a Chinese company has been raking in the cash organizing a touring exhibition of their “works.” Except every single piece on display is a fake. Click here for the story.

—Jiayun Feng

5. Did I greatly exaggerate the death of Peking University?

Access members have complained to me that the subject line of Friday’s newsletter — The death of Peking University — was an overreaction to the appointment of the new Party secretary, who happens to have a history in the Ministry of State Security (MSS).

Sometimes it’s hard to keep a balance between enticing the reader to open the email and not sensationalizing the subject matter. I think I failed to keep the balance with that subject line.

But I stand by everything in the text of the email. Before I wrote it, I looked up every single Party secretary of Beijing’s famous university since 1949 (see the list in Chinese): I cannot find a single one with a background in the MSS — this is a new, and troubling development.

—Jeremy Goldkorn

6. Trade war, day 116: More companies prepare to shift supply chains

The American Chamber of Commerce in South China surveyed a broad sample of 219 companies from September 21 to October 10 about the impact of the trade war on their bottom lines. The resulting report is titled, Special Report on the Impact of U.S. and Chinese Tariffs. A press release accompanying the report can be found at PR Newswire.

Southern China, of course, is where the export manufacturing capacity of China is concentrated, and the majority of companies surveyed of all ownerships — American, Chinese, European, and others — reported an impact on their profits from tariffs. A few highlights of the report, per Reuters:

• “Sixty-four percent of the companies said they were considering relocating production lines to outside of China, but only 1 percent said they had any plans to establish manufacturing bases in North America.” Southeast Asia is the primary prospective “winner” of the supply chain shift. (This is also what Bloomberg found last week when it listened in to multinational companies’ earnings calls.)

• “Around 85 percent of U.S. companies said they have suffered from the combined tariffs, compared with around 70 percent of their Chinese counterparts.”

• “Nearly half the companies surveyed also said there had been an increase in non-tariff barriers” — a.k.a. qualitative measures.

Trade tensions weighed on stock markets today. CNBC reports:

“The Dow Jones Industrial Average traded 550 points lower, erasing a 352-point gain, as Boeing dropped 8.4 percent. The 30-stock index also dipped into correction territory, down 10 percent from a record high reached earlier this month.”

Meanwhile, former U.S. Treasury official Brad Setser writes on Twitter that the trade war’s effect on American manufacturers based in the U.S. is nearly negligible — at least so far. It is “pretty clear that stimulus and a strong dollar has had a bigger effect” than tariffs, Setser writes. “Need to see q4, perhaps q1 [of 2019] to have a clear idea” of the total impact of tariffs, he adds.

Another interesting development in the politics of the trade war: Peking University economist Zhang Weiying has attracted attention by claiming that the current trade tensions are largely a result of China boasting too loudly about its “China model.” The SCMP reports:

• Though Zhang is in a minority of liberal economists in China, his remarks from an October 14 lecture are notable for their rarity in public discourse. An “edited version of his speech was published on the university’s website” last week, though it is now censored.

• “In the eyes of Westerners, the so-called ‘China model’ is equal to ‘state capitalism’, which is incompatible with fair trade and world peace, and therefore must be contained,” Zhang said.

• “Blindly emphasising the ‘China model’ would lead us onto a path of strengthening state-owned enterprises, expansion of state power and overly relying on industrial policy, which would lead to a reversal of reform progress, wasting previous reform efforts, and the eventual stagnation of economic growth,” he added.

• Zhang’s line of thought is shared by Sheng Hong, the executive director of the under-siege Unirule Institute, writes Andrew Batson.

Other stories related to U.S.-China relations and the trade war:

• “Strategic competition does not imply hostility,” says Mattis
  Chinese defense minister to visit Washington next week: Mattis / Reuters

• Financial market opening
  China takes another big step to open its financial markets / CNN
  “Standard Chartered (SCBFF) said Monday that it is the first foreign lender to receive permission to hold and safeguard the assets of local investors in China.”
  StanChart gains China’s first foreign custody services license / FT (paywall)

• Made in China 2025
  China 2025 Plan Remains a Stumbling Block as Trump Meeting Looms / Bloomberg (porous paywall)
  As the trade war heats up, Beijing looks to make its aerospace less reliant on other countries / SCMP
  “Under the ‘Made in China 2025’ industrial plan, Beijing is looking to create a domestic commercial aircraft industry which can develop, manufacture and export its own products thereby reducing its dependence on foreign suppliers.”
  China’s aviation industry has a steep climb to ‘Made in China 2025’ goals / SCMP
  China rattles Washington’s tech debates / Politico
  Chipmaking
  Shenzhen government takes control of China’s leading chip maker Tsinghua Unigroup / SCMP

• Commentary
  China’s future rests on ‘mending fences with the United States’ / SCMP
  So was the message from Chinese and American participants at a “seminar co-organised by the Office of the Commissioner of the Ministry of Foreign Affairs in Hong Kong and the Better Hong Kong Foundation.”
  Opinion: China should thank Trump and stop using trade war excuse for confused economic signals / by Wang Xiangwei in SCMP
  “The country’s leaders need to remove the dark cloud of uncertainty over where it is headed. Mixed signals over the private sector and a mixed reaction to its ‘self-reliance’ message emphasise a need for action.”
  Opinion: With Trump in Mind, China Realigns / by Stuart Lau in The Interpreter
  Opinion: How China’s rampant intellectual property theft, long overlooked by US, sparked trade war / by Robert Boxwell in SCMP

• South China Sea
  US to press patrols in disputed sea, China warns ‘meddlers’ / AP
  “The U.S. Navy will continue patrolling the disputed South China Sea, a top Navy official said Monday, after a Chinese destroyer came dangerously close to an American Navy ship during a ‘freedom of navigation’ sail-by near a Chinese-occupied reef.”
  Chinese foreign minister Wang Yi warns US against ‘interference’ in South China Sea / SCMP

• China International Import Expo
  Beijing praises its own ‘import expo’ despite snub from US / SCMP
  “Politicians and business executives from about 150 countries have signed up for Shanghai’s international import fair next month, despite the US refusing to send any senior government officials.”

• Soybeans — price the real problem?
  China says new animal feed standards will cut chunk out of appetite for soy / Reuters
  “Oilseed traders in China on Monday played down the potential impact on soy consumption of new government guidelines to lower the protein content of animal feed, saying that rising soymeal and soybean prices would be a far bigger curb on appetite.”

• Ties with Taiwan
  US, Taiwan military ties closer than ever as Donald Trump challenges Beijing / SCMP
  “Washington has been approving arms deals with Taipei at a much faster pace than under Barack Obama and George W Bush, while the self-ruled island has been making public US military movements near the Taiwan Strait – information that would not have been released under previous US administrations.”

—–

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:

• Private space industry growing pains
  China suffers a setback in the private space race / CNN
  “LandSpace, a three-year-old company based in Beijing, said ‘something abnormal occurred’ in the third phase of the launch Saturday that was meant to send a satellite into orbit for CCTV, China’s state-run television network.”
  China’s first attempt to reach orbit with a private space company failed / The Verge

• Cathay Pacific data breach
  Hong Kong police visit Cathay Pacific HQ to investigate major data breach that hit 9.4 million customers / SCMP
  No law to force firms to reveal data leaks, says Hong Kong privacy chief amid Cathay scandal / Hong Kong Free Press

• Amazon pulls ads from Bloomberg over chip-hacking story
  Amazon has pulled its ads from Bloomberg over China hack story / Buzzfeed
  Read on The China Project: Experts doubt Chinese chip-hacking story

• Artificial intelligence and autonomous vehicles
  Talent poaching and a Chinese self-driving car startup to watch / ChinAI
  Latest installment of useful weekly newsletter on AI in China.  

• Stock market woes
  China turns to share buybacks as latest weapon to rescue market / Bloomberg (porous paywall)
  China shares slide as profits weaken despite support measures / Reuters
  China’s growth woes weigh on Asian shares, US equity futures turn red / Reuters

• Who are the new Chinese billionaires?
  China’s new billionaires are young, fast workers with an appetite for rnew billionaires are young, fast workers with an appetite for risk / NYT (porous paywall)
  “China’s billionaires differ markedly from their global peers. With an average age of 55 years, they are almost a decade younger. They create wealth faster and take their companies public earlier; 17 percent of China’s new billionaires founded their businesses within the last ten years, more than twice as many as in the United States.”

• Apple’s supply chain — more labor allegations
  Briefing: Apple investigates illegal student labour at supplier’s Chongqing plant / TechNode
  “Apple has launched an investigation after a workers’ rights group alleged that one of Apple’s suppliers, Taiwan-based Quanta Computer, was illegally employing students to assemble Apple Watches at its Chongqing factory.”

• Natural gas in Turkmenistan
  China may face competition for Turkmen Gas / Radio Free Asia
  “Russia has picked a curious time to restart natural gas imports from Turkmenistan, a year before it plans to open a giant pipeline to China that would compete with Central Asian supplies.”

• Car purchase tax cut?
  China regulator to propose 50% cut to car purchase tax / Bloomberg (porous paywall)

• Drone show gone wrong
  HK$1 million in damage caused by GPS jamming that caused 46 drones to plummet during Hong Kong show / SCMP
  “The GPS jamming that caused 46 drones to plummet during a display over Victoria Harbour during the weekend caused at least HK$1.3 million (US$166,000) in damage, according to a senior official from the Hong Kong Tourism Board.”

POLITICS AND CURRENT AFFAIRS:

• An airfield in Antarctica
  China to begin building first permanent airfield in Antarctica / SCMP
  “China will soon begin building its first permanent airfield in Antarctica, according to state media, as Beijing tries to expand its influence in the polar region. The 1,500-metre airstrip will be located on an ice cap in the continent’s east, 28km from the country’s Zhongshan Station in the Larsemann Hills by Prydz Bay, the official Science and Technology Daily reported on Sunday.”

• More moolah for Pakistan  
  China to give Pakistan ‘grant’ as UAE mulls $6B in aid / Voice of America
  “China plans to provide an unspecified financial ‘grant’ to Pakistan while the United Arab Emirates is actively considering Islamabad’s request for a fiscal relief package of up to $6 billion to help the country deal with a looming balance-of-payments crisis, Chinese and Pakistani officials say.”

• Military researchers in Five Eyes countries
  Chinese military researchers exploit western universities / FT (paywall)
  “About 2,500 researchers from Chinese military universities spent time at foreign universities — led by the US and UK — over the past decade, and many hid their military affiliations, according to a new report from the Australian Strategic Policy Institute (ASPI), a think-tank partly funded by Australia’s department of defence.”
  China’s military sends more scholars abroad, at times without schools’ knowledge / WSJ (paywall)
  Picking flowers, making honey. / Australian Strategic Policy Institute

  “The activities discussed in this paper, described by the PLA as a process of ‘picking flowers in foreign lands to make honey in China’ (异国采花，中华酿蜜 yìguó cǎihuā, zhōnghuá niàngmì), risk harming the West’s strategic advantage.”

• Xinjiang internment camps and Uyghur repression
  Opinion: How Beijing is using the Nazi propaganda playbook to justify its concentration camps to the world / by Magnus Fiskesjö in Hong Kong Free Press
  They escaped China’s crackdown, but now wait in limbo / NYT (porous paywall)
  China’s anti-terrorism tactics should not be seen as targeting Uygurs, says ‘Eastern Nato’ / SCMP
  “Rashid Alimov, secretary general of the China-Russia led Shanghai Cooperation Organisation (SCO), said: ‘We don’t divide terrorists in terms of their nationalities, their geographical adherence or religion. Because terrorism does not have any of that.’”

• Climate change co-op with France
  China, France launch satellite to study climate change / AFP
  “China sent its first ever satellite built in partnership with another country into space on Monday (Oct 29), a device tasked with helping scientists better predict dangerous cyclones and climate change by monitoring ocean surface winds and waves.”

• African sand  
  China’s search for sand is destroying Mozambique’s pristine beaches / Quartz Africa

• Thugs for hire and other methods of government control
  Outsourcing coercion and social control / Chinoiresie
  Lynette H. Ong writes, “Why does the Chinese government—which is known for its strong-arm tactics—need or desire to use non-state actors to carry out coercion and social control? In this piece, I argue the government seeks to deploy non-state actors to perform coercive acts or exercise social control for a wide range of reasons, such as reducing the cost of repression and evading responsibility. These non-state actors range from ‘thugs-for-hire’, to profit-seeking brokers and even commercial enterprises.”

• Macau official who fell to his death
  China praises Macau official who fell to his death, calling Zheng Xiaosong a man ‘of integrity’/ SCMP
  “China has moved to squash rumours surrounding the death of its top official in Macau, Zheng Xiaosong, calling him ‘clean, and of integrity’ in a statement on Sunday.”

• Sri Lanka political turmoil
  China keeps close watch on Sri Lankan crisis but won’t interfere / SCMP
  “Foreign Ministry spokesman Lu Kang said China was paying close attention to the situation in Sri Lanka after its president sacked the prime minister and replaced him with a former leader close to Beijing.”
  Sri Lanka’s crisis reflects battle for influence between India and China / NDTV
  Shifting toward China, Sri Lanka’s political crisis deepens / Bloomberg (porous paywall)

• Brazil’s Trumpian new president
  China trade vs economic growth: the dilemma for Brazil’s new Trump-style president / SCMP
  “Brazil’s far-right president-elect could struggle with his twin commitments to cut Chinese investment in his country and accelerate its economic development, given that China is – and is likely to remain – Brazil’s biggest trading partner, diplomatic observers said.”
  From China to crime, Jair Bolsonaro plots radical new course for Brazil / SCMP
  “China has emerged as Brazil’s largest trading partner in recent years — with US$75 billion in bilateral trade last year — yet Bolsonaro has depicted Beijing as a predator looking to dominate key economic areas. Bolsonaro is content with China purchasing Brazil’s commodities, like soy. But the 63-year-old has pledged to halt China’s recent shopping spree in Brazil’s energy and infrastructure sectors.”
  China offers congratulations to new Brazil president / Reuters

• Interpol president debacle
  Wife of missing ex-Interpol chief Meng Hongwei hires lawyers to track him down / Reuters
  “The wife of former Interpol chief Mèng Hóngwěi 孟宏伟 has hired two law firms to help track down her husband, who has been missing since travelling back to his native China more than a month ago.”

• Taiwan’s search for international recognition
  Taiwan looking to build health ties in Asia-Pacific: Chen / Taipei Times
  “The annual Global Health Forum in Taiwan opened yesterday in Taipei, with Vice President Chen Chien-jen (陈建仁 Chén Jiànrén) saying that the nation is looking forward to strengthening Asia-Pacific ties to increase cooperation in the areas of medicine and health, and promoting health-related industrial links.”

• Underreporting crime?
  The puzzle of China’s low crime rates / WORLD Magazine
  “What makes China a much safer country than the United States? An authoritarian government? A shame-based culture? According to China criminology expert Børge Bakken, the answer is nothing. China isn’t actually safer, he says: Instead, Chinese police underreport crime stats, and a lack of government transparency means fabricated numbers are accepted as fact.”
  Also links to an interview with Bakken on The Little Red Podcast: Lies, Damned Lies and Police Statistics: Crime and the Chinese Dream

• Anti-corruption campaign and land sales
  Busting the ‘Princelings’: The campaign against corruption in China’s primary land market / Oxford Academic
  Ting Chen and James Kai-sing Kung find that from 2004-2016, “firms linked to members of China’s supreme political elites —the Politburo—obtained a price discount ranging from 55.4% to 59.9% compared to those without the same connections” — but the anti-corruption campaign has also had a massive impact on the provinces it targeted.

• Internet access for the elderly
  No WeChat, no access – how China’s digital revolution is leaving behind its elderly population / What’s on Weibo

• Tourists trapped in Saipan return home
  Some 1,500 Chinese tourists trapped in Saipan to return home Sunday / ecns.cn

• Gangs of Hong Kong
  Guns, gangs and bombs: Hong Kong police arrest three in series of triad raids, and find firearms, ammunition and bomb parts / SCMP

• Mining and traffic accidents
  Bus plunges off bridge into China’s Yangtze River, killing 2 / AP via Washington Post
  19 dead in east China mining accident, two still missing / AFP via HKFP

SOCIETY AND CULTURE:

• Photography and film
  The missing images of Chinese immigrants / The Paris Review
  May-Lee Chai looks at the history of Chinese representation — and exotification — in early American photography and film.
  My mission to record the history of China’s leper colonies / Sixth Tone
  Still taboo in mainland China: The Cultural Revolution as seen through the lens of Li Zhensheng / SCMP

• Canadian cannabis
  China warns its citizens against marijuana after Canada legalizes it / SCMP
  “Chinese diplomats in Canada have issued a public letter to Chinese citizens calling people, especially students, to avoid contact with marijuana, after Canada legalized the recreational use of the drug this month.”
  Read on The China Project: ‘Who on earth adds marijuana into maple syrup?’ Chinese consumers panic over Canadian legalization.

• Marathons
  It won’t be long before China becomes a regular stop for world’s top runners / China Daily
  “According to the Chinese Athletics Association, nearly 5 million people took part in 1,102 registered running events in China last year — nearly 20 times the 2014 number.”

• Ài Wèiwèi 艾未未
  The conditions of empathy — Ai Weiwei interview part 5 / China Heritage

VIDEO ON SUPCHINA

Beloved TV host Li Yong dies at 50

Li Yong, China’s famous former CCTV presenter, passed away on October 25, 2018, in the U.S. at the age of 50. He had been battling a type of undisclosed cancer for 17 months. Who is he?

FEATURED ON SUPCHINA

Kuora: Mao Zedong’s legacy — and Deng Xiaoping’s role in preserving it

This month’s Kuora columns were in the subject of modern Chinese history. To wrap up this mini-series, we’re going to take a look at Mao Zedong’s legacy, and why Deng Xiaoping chose to preserve it — calling him “70 percent good, 30 percent bad” — and not denounce him in much the same way that Khrushchev denounced Stalin.

SINICA PODCAST NETWORK

Sinica Early Access: Kevin Rudd on Xi Jinping’s worldview

This week on Sinica, Kaiser speaks with the Honorable Kevin Rudd, the 26th prime minister of Australia and the inaugural president of the Asia Society Policy Institute. He is also a doctoral student at Jesus College, University of Oxford, who, through his studies, hopes to provide an explanation as to how Xi Jinping constructs his worldview. Rudd elaborates on the extent to which the Chinese government’s worldview has changed, the current direction of that worldview, and how much of that can be owed to Xi Jinping and domestic political maneuvering.

• Sinica Early Access is an ad-free, full-length preview of this week’s Sinica Podcast, exclusively for The China Project Access members. Listen by plugging this RSS feed directly into your podcast app.

The Caixin-Sinica Business Brief, episode 67

This week on the Caixin-Sinica Business Brief: The opening of the Hong Kong-Zhuhai-Macau Bridge, Bytedance’s new fundraising round, Haidilao’s first “smart” concept restaurant, Doug Young on Malaysia and its reevaluation of some of the deals that the previous administration had made, and more.

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

PHOTO FROM MICHAEL YAMASHITA

Harvest season

This 2010 photo shows local farmers shucking dried corn in Dezhou, Shandong Province.

—Jia Guo