Criminal charges against Huawei

Dear Access member,

News from China is slowing down with the annual lurch into Chinese New Year. But things won’t slow down too much this year. The top stories today:

• The U.S. announced a new set of criminal charges against Huawei.

• Canada’s ambassador to Beijing was fired after making remarks out of line with Ottawa’s official position on the Mèng Wǎnzhōu 孟晚舟 case. Beijing continues to direct its rage at Canada and its citizens rather than at the U.S.

The Year of the Pig is going to be interesting.  

—Jeremy Goldkorn, Editor-in-Chief

1. Criminal charges against Huawei as China fumes at Canada

CBS News reports:

The Department of Justice unveiled criminal charges against Huawei Technologies Co., accusing one of the largest telecommunications firms in China of stealing trade secrets, breaking confidentiality agreements and violating sanctions against Iran…

…Acting Attorney General Matthew Whitaker was joined by Department of Homeland (DHS) Secretary Kirstjen Nielsen, FBI Director Christopher Wray, Commerce Secretary Wilbur Ross and several U.S. attorneys for the announcement at DOJ headquarters on Monday.

The Chinese government had not reacted by the time we completed this newsletter. Meanwhile, over the weekend, Star Vancouver deputy bureau chief Joanna Chiu reported remarks by Canada’s ambassador to China that “it would be ‘great for Canada’ if the U.S. dropped its extradition request for Huawei CFO Mèng Wǎnzhōu 孟晚舟.”

• This was the second time in the last week that the ambassador, John McCallum, had made remarks that appeared contrary to Canadian government messaging. This time, he was fired by Prime Minister Justin Trudeau.

• “Speaking at a regular press briefing Monday, Chinese Foreign Ministry spokesman Gěng Shuǎng 耿爽 declined to comment on McCallum’s dismissal, calling it ‘an internal matter for Canada,’” reports CNN, but state media felt no such restraint.

• “Removal of envoy part of ‘immoral’ practices” is how the state-owned China Daily headlined a brief note on McCallum’s sacking, while nationalistic rag Global Times went with more salty language:

As a Chinese folk saying goes, “You cannot live the life of a whore and expect a monument to your chastity.” Canada is a country worthy of respect, but some Canadians must be reminded that they are now refusing to face up to the moral predicament. They are against moral righteousness while deceiving themselves to believe that they can be honored as moral models.

• The Chinese saying is “当婊子立牌坊 dāng biǎo zi lì páifāng,” which I would translate less literally as “acting shamelessly and then erecting a monument to your virtue.” This is in fact a specialty of the Global Times, a newspaper that regularly publishes articles containing distortions and made-up quotes, and had the gall to call out Joanna Chiu for her “professional ethics” in reporting the story.

• Further signs of the chilling effects of China’s treatment of Canadians and others: China scholar Geremie Barmé gave an interview to Radio New Zealand, which it published with the title: China tensions: ‘I wouldn’t be rushing to Beijing.’ See also: No longer safe: Researcher harassed by China in her own country, in the Sydney Morning Herald, about the ongoing harassment of scholar Anne-Marie Brady.

2. The Pacific Reset — trade and tech war, day 207

We’re considering renaming our daily trade war update: Does “The Pacific Reset” make sense as a way to talk about the tensions and — hoped for by some — decoupling of the Chinese and American economies? Let us know by email at editors@thechinaproject.com.

Today’s news in brief:

• China releases footage of ‘Guam killer’ missile in ‘clear message to US’ / SCMP
  “Adam Ni, a China researcher at Macquarie University in Sydney, said the latest exercise sent ‘a clear message to the US about China’s growing missile capability, and that it can hold at risk US strategic assets, such as carriers and bases.’”

• A tiny screw shows why iPhones won’t be ‘assembled in U.S.A.’ / NYT (porous paywall)
  “But when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws… In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not.”

• Trade war shutters Chinese chipmaker Fujian Jinhua / FT (paywall)
  “U.S. sanctions against Fujian Jinhua will force the Chinese state-owned company accused of stealing trade secrets from American memory chipmaker Micron to stop production by March.”

• In 5G race with China, U.S. pushes allies to fight Huawei / NYT (porous paywall)
  “Over the past year, the United States has embarked on a stealthy, occasionally threatening, global campaign to prevent Huawei and other Chinese firms from participating in the most dramatic remaking of the plumbing that controls the internet since it sputtered into being, in pieces, 35 years ago.”

—Jeremy Goldkorn

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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:

• Startup companies
  China created 97 new unicorns in 2018 / TechNode
  In China, a new unicorn — a startup valued at over $1 billion — was born every 3.8 days in 2018.

• The stuff that makes electric vehicles go
  In the new lithium ‘Great Game,’ Germany edges out China in Bolivia / Reuters via Channel NewsAsia
  “When Germany signed a deal last month to help Bolivia exploit its huge lithium reserves, it hailed the venture as a deepening of economic ties with the South American country. But it also gives Germany entry into the new ‘Great Game,’ in which big powers like China are jostling across the globe for access to the prized electric battery metal.”

• Electric vehicle infrastructure
  China powering up efforts to build car-charging poles / China Daily
  “China is stepping up efforts to build charging poles and thereby foster its new energy car sector, as the nation is phasing out the decade-long subsidies on such vehicles’ production and sales, according to officials.”

• WeChat knows what you did at your company — or outside it — last summer
  Dangers of WeChat for China employers and employees / China Law Blog
  “With widespread use of WeChat in China (it is China’s leading multi-purpose messaging, social media and mobile payment app by far), both employers and employees need to be careful with what they do and say on there. Put simply, what you say or write on WeChat may be used against you in an employment dispute.”

• Opening the domestic bond market
  S&P Global gets green light to rate domestic bonds in China / Financial Times (paywall)
  “S&P Global has won approval from Beijing to start scoring domestic bonds, becoming the first foreign credit-ratings agency to gain entry into the fast-developing Chinese market… Under the terms of its licence, S&P is authorized to rate issuers and issuances from financial institutions and corporates, structured finance bonds and renminbi-denominated bonds from foreign issuers, sometimes known as Panda bonds.”

• The chicken feet trade
  Why China and America fight over chicken feet / Atlas Obscura
  “Today, the Chinese market is still shut to American chicken imports. But that may change soon. In the flurry of negotiations surrounding the current trade war, the poultry industry has been pushing hard for Beijing to lift the current ban.”

• Movie business
  A look at Chinese capital behind the Oscar nominees / China Film Insider
  A short summary of recent Chinese financing of Hollywood movies.  

• Wind and solar power
  China powers up renewable energy but some wind farms still struggle to plug into grid / SCMP
  “China’s renewable power capacity rose 12 percent in 2018 compared to a year earlier, official data showed on Monday, with the country still rolling out new projects despite transmission capacity concerns and a growing subsidy payment backlog.”

• Negative economic signals
  China’s industrial profits shrink again in Dec on weak prices, demand / Reuters via Channel NewsAsia
  “Earnings at China’s industrial firms shrank for a second straight month in December on slowing prices and sluggish factory activity, piling more pressure on an economy in the grips of its slowest growth in nearly three decades.”
  As demand stagnates, China LED lighting giant feels the heat / Bloomberg (porous paywall)
  “Driven by concern about weakening demand for light-emitting diodes from the domestic property and automotive sectors, Sanan’s Shanghai-listed stock has lost more than half of its value in the past 12 months and seen its valuation decline to record lows.”

POLITICS AND CURRENT AFFAIRS:

• The confessions of China Central TV
  Activists urge UK regulator to punish Chinese state TV over airing of detained bookseller ‘confessions’ / Hong Kong Free Press  
  “Activists have filed complaints with a British telecommunications regulator against Chinese state television China Global Television Network (CGTN) for airing the ‘forced confessions’ of detained booksellers Guì Mǐnhǎi 桂敏海 and Lam Wing-kee [林榮基 Lín Róngjī].”

• Malaysia confirms China rail project is canceled
  Malaysia scraps multibillion-dollar China-backed project / Economic Times of India
  “A multibillion-dollar China-backed rail project in Malaysia has been scrapped, government officials said Saturday, adding that the cost of building it was too high.”

• Will disinformation on WeChat affect elections in Australia and elsewhere?
  Warning WeChat could spread Chinese propaganda during federal election / The Sydney Morning Herald
  WeChat “is facing less government scrutiny than US tech giants such as Facebook and Twitter,” and an Australian think tank “has warned WeChat’s 1.5 million monthly Australian users could be exposed to disinformation, censorship and propaganda on the closely regulated Chinese messaging service.”

• 709 crackdown on lawyers: Mission accomplished
  China jails prominent rights lawyer for 4½ years for subversion / Reuters via Straits Times  
  “A Chinese court on Monday January 28 jailed prominent rights lawyer Wáng Quánzhāng 王全璋 for 4½ years for subversion of state power, it said online, after he was tried in a December hearing that rights groups called a sham.”
  As the South China Morning Post points out, this “was the final case resulting from the 2015 manhunt by Chinese authorities that targeted hundreds of rights lawyers and activists, which became known as the 709 crackdown in reference to the date — July 9 — on which it began.”

• No family visit for jailed Taiwanese activist
  Prison suspends Lee Ching-yu’s visits until April / Taipei Times
  “Chinese prison authorities have barred Lee Ching-yu (李凈瑜 Lǐ Jìngyú), the wife of jailed Taiwanese human rights advocate Lee Ming-che (李明哲 Lǐ Míngzhé), from visiting her husband.”

• South China Sea
  P.R.C. has raised anxiety in area, Australia says / Taipei Times  
  “Australian Minister of Defense Christopher Pyne yesterday urged China to resolve tensions in the South China Sea in accordance with international law. Pyne said the artificial islands Beijing has been building in the disputed waters have ‘increased anxiety’ and ‘not increased regional confidence in China’s strategic intentions.’”

• Chinese presence in Cambodia
  Cambodia’s bid to be ‘New Macau’ stirs old wounds as Chinese cash in / AFP via Channel NewsAsia
  “‘The huge Chinese investment in Preah Sihanouk province has no benefits for the poor,’ said Sun Sophat, a representative of the Spean Chheah community, which has camped out on a roadside refusing to be moved from lands they say have been sold from under them by a local tycoon.”

• Losing the fight against smog
  China regions losing ‘momentum’ in pollution fight: minister / Reuters
  “Some regions in China have lost ‘momentum’ when it comes to tackling pollution, with local officials blaming the country’s economic downturn on overzealous campaigns against smog, the environmental minister said in remarks published on Monday.”

• Mekong River infrastructure
  Chinese company consults locals over Mekong blasting / China Dialogue
  The man-bites-dog headline is belied by the subtitle: “Communities say the company has failed to take into account the huge social and environmental impacts of dredging the river for commercial shipping.”
  Australia urges Beijing to obey international law in South China Sea / Guardian

• Ivory smugglers
  Wildlife smugglers still at large after Hong Kong’s biggest ivory seizure in 30 years results in zero prosecutions / SCMP
  “Investigations into Hong Kong’s largest ivory seizure in 30 years failed to produce a prosecution, meaning the syndicate behind the smuggling operation was still at large, the customs department has confirmed.”

• Censorship
  Minitrue: Do not report on arrests of retired soldier protesters / China Digital Times
  The government does not want you to talk about the 19 people who were arrested last year for their alleged role in protests demanding better treatment of veterans. Leaked censorship instructions:

All websites: The procuratorate arrested a small number of suspects who, under the banner of “retired soldiers,” violated the law and committed serious violent crimes. Use only the People’s Daily, Xinhua News Agency, and CCTV transcripts. Without unified arrangements, do not report or post commentary, do not link it to other incidents related to retired military personnel, do not alter the title or modify excerpts. (January 26, 2019) [Chinese]

SOCIETY AND CULTURE:

• Monolingual America
  Duke professor issues apology to Chinese speakers / SCMP
  “The Duke University professor and administrator who sparked an outcry by admonishing students for speaking Chinese has issued a personal apology amid an internal review by the school.”

• Forbidden City restoration
  World Monuments Fund enlists Selldorf Architects for Forbidden City project / NYT (porous paywall)
  “The World Monuments Fund announced Monday that the New York-based architect Annabelle Selldorf and her firm, Selldorf Architects, will design an interpretation center at the Qianlong Garden in the Forbidden City in Beijing.”

• Going home for the Spring Festival
  Single female blogger dreads parental pressure, collects stories to highlight dangers of rushing into marriage / What’s on Weibo
  “Rushed marriages may not end well, so do not pressure your child to get married — this is the message one so-called ‘leftover woman’ wants to get out there, as she has been collecting the stories of women who rushed into marriage as a result of family pressure. During Chinese New Year, many Chinese single women especially feel this pressure upon reuniting with their families.”

• Bullying in Hong Kong
  Another video of suspected bullying at Hong Kong school emerges – the third case in a week / SCMP
  “A Hong Kong school at the center of a bullying scandal has said it will look into another video clip which shows a teenager being pinned down on the ground by his peers, the third incident in a week thought to involve its students.”

VIDEO ON SUPCHINA

Delicate leaf engraving that will blow your mind

Engraving is difficult, especially on a delicate surface. This talented young artist from Anhui Province, China, engraves portraits on phoenix tree leaves. His subjects include Michael Jackson, Jackie Chan, and other celebrities.

FEATURED ON SUPCHINA

Venezuela-China, explained: How will Venezuela’s political crisis affect China?

Venezuela is in a state of turmoil. But even political crisis is unlikely to undo the wide commercial and geostrategic relationship linking Venezuela and China, which has entered a phase of commercial expansion in Latin America that makes Venezuela an essential source of business, regardless of who’s in charge.

Kuora: China and the U.S. are more alike than you think

There’s much more that unites Chinese and Americans culturally than can divide them politically. Both societies are fairly heterogeneous, and vary widely across geographies and even within individual cities or regions. Both Americans and Chinese have a sense of themselves as exceptional, as singled out, whether by “history,” fate, or divine providence for some special destiny. Both are highly entrepreneurial cultures, and both have this genuine, irrepressible friendliness and decency that, of course, is the loveliest thing.

Friday Song: Carsick Cars — Zhong Nan Hai

Carsick Cars is one of China’s most prominent indie bands, one of the “most admired Chinese bands in the world,” whose sound is heavily influenced by the heavy drones of the Velvet Underground, Suicide, and Sonic Youth. “Zhongnanhai” is the band’s tribute to their favorite brand, the Zhongnanhai cigarette, which has remained a best seller in the Chinese tobacco market ever since its introduction in the 1960s. The lyrics are simple enough that even those hearing Mandarin for the first time can probably keep up!

SINICA PODCAST NETWORK

Sinica Early Access: Mexican and Canadian diplomats in a changing, challenging China

This week on the Sinica Podcast, Kaiser and Jeremy chat with two former ambassadors to the PRC who served during the years marking the transition from the Hu/Wen administration to the rule of Xi Jinping: Jorge Guajardo of Mexico and David Mulroney of Canada. They discuss the significant challenges that they faced, the perceptible changes in China’s diplomatic norms and practices during their tenures as ambassadors, and, finally, the benefits and drawbacks that their countries see from the Trump administration’s more assertive posture toward China.

Note: This show was recorded on December 20, 2018, five weeks before Canadian Prime Minister Justin Trudeau sacked the latest ambassador to China.

• 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 75

This week on the Caixin-Sinica Business Brief: The arrest of Yáng Héngjūn 楊恒均, growth in China’s personal-consumption spending, the rebranding of Chinese bike-rental company Mobike, Doug Young on China’s rapid growth in the retail industry, and more.

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

PHOTO OF THE DAY

Festive spirit

Dancers perform in a talent show in Jinyun Square, Chongqing, as the Spring Festival and the Year of the Pig approaches. Photo by Len Joseph.

Do you have a China-related photo you want to share with the world? Send it, along with a bio and headshot of yourself, to editors@thechinaproject.com, and you may see it posted as our photo of the day!