Erik Prince: A shady man involved in shady Xinjiang business

Jeremy Goldkorn Published February 2, 2019

Dear Access member,

News is slow as China snoozes its way into the Year of the Pig, but there’s no rest for China’s leadership as they deal with the uncertainties of the Trump administration.

Have a great weekend. We’ll be back on Monday but are taking Tuesday, February 5, off to celebrate the Chinese New Year.

Jeremy Goldkorn

Editor-in-Chief

1. Erik Prince: A shady man involved in shady Xinjiang business

Erik Prince, the Bond villain and former Navy SEAL who used daddy’s money to found the shady security contractor formerly known as Blackwater, “has made it clear that he considers China a priority,” according to Alexandra Stevenson and Chris Buckley of the New York Times (porous paywall). However:

Mr. Prince scrambled on Friday to distance himself from the latest announcement: that his company, Frontier Services Group, had struck a deal to build a training camp in the northwestern Chinese region of Xinjiang, where hundreds of thousands of Muslims have been detained in indoctrination camps that have drawn condemnation in Washington and abroad.

2. Pacific Reset, day 211: With Trump, trade deficit returns to the forefront of negotiations

Yesterday, we noted that with the tweeter-in-chief’s signal that he is willing to meet directly with Xi Jinping at the close of the 90-day negotiation period, Trump effectively took back the position of chief trade negotiator that he had delegated to Robert Lighthizer.

The White House released a transcript of “Remarks by President Trump in meeting with Vice Premier Liu He of the People’s Republic of China.” It contains many interesting tidbits, including a readout of a letter from Xi to Trump, in which Xi says he hopes to “step up consultations by meeting each other halfway in order to reach an early agreement,” and adds a dash of flattery:

As I often say, I feel we have known each other for a long time, ever since we first met. I cherish the good working relations and personal friendship with you. I enjoy our meetings and phone calls in which we could talk about anything.

The transcript also includes, the SCMP notes, flattery from Trump describing Liú Hè 刘鹤 as “truly one of the most respected men in Asia, one of the most respected men in all of China, and, frankly, one of the most respected men anywhere in the world.” Trump also calls the Chinese purchase of 5 million tons of soybeans a “fantastic sign of faith.” (This is less than a third of the estimated 18 million tons that American soybean farmers missed out on selling to China due to tariffs in 2018.)

Moreover, when asked if the Huawei case was discussed during negotiations, Trump responded, “No, we haven’t discussed that yet. It will be, but it hasn’t been discussed yet.”

In addition, the White House released a “Statement of the United States Regarding China Talks.” This is more substantive. The statement lists seven points of negotiation clearly reflecting the agenda of U.S. Trade Representative Robert Lighthizer. In short:

Technology transfer
Intellectual property
Obstacles for American business in China
Commercial cyber theft
Subsidies for SOEs
Obstacles for American trade to China
Currency concerns

But then the statement separately emphasizes reductions to the trade deficit, reflecting Trump’s focus:

The two sides also discussed the need to reduce the enormous and growing trade deficit that the United States has with China. The purchase of United States products by China from our farmers, ranchers, manufacturers, and businesses is a critical part of the negotiations.

Another sentence in the statement seems to put all seven of Lighthizer’s substantive negotiating points on effectively equal footing with deficit reduction: “The United States is particularly focused on reaching meaningful commitments on structural issues and deficit reduction.”

Xinhua was more than happy to, in its own report on negotiations, refer to the deficit first in its list of issues discussed: “The two sides held candid, specific and constructive discussions about issues of common concern, which included trade balance, technology transfer, protection of intellectual property rights and a two-way enforcement mechanism, as well as other issues of concern to the Chinese side.”

For other news related to the trade war, and broader recalculation of relations with Beijing led by (but by no means limited to) the U.S., which we are terming the Pacific Reset, please click through to The China Project.

—Lucas Niewenhuis

—–

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

Here are the stories that caught our eye this week (other than the Pacific Reset, which we gave brief and largely incremental updates on every day this week: ):

John McCallum, former Canadian ambassador to China, was fired after saying that “it would be ‘great for Canada’ if the U.S. dropped its extradition request for Huawei CFO Mèng Wǎnzhōu 孟晚舟,” the Huawei executive who was detained in Vancouver last month.
The Foreign Correspondents’ Club of China (FCCC) released conclusions drawn from its annual survey, which shows that last year, foreign journalists in China saw the greatest level of surveillance, interference with sources, and visa denial or control in nearly 20 years, with the exception of 2011.
An unmarried woman in Beijing is calling for Chinese lawmakers to remove restrictions on single women shopping in the country’s national sperm bank.
Yǒuzàn 有赞, China’s largest third-party WeChat shop platform, came under fire this week after an employee took to social media to share notes about its annual party, where the company’s CEO, Bái Yā 白鸦, made remarks glamorizing workaholism.

BUSINESS AND TECHNOLOGY:

Physics research
Advancement in quantum entanglement earns 2018 AAAS Newcomb Cleveland Prize / AAAS
“A team of 34 physicists based at various institutions in China will receive the 2018 Newcomb Cleveland Prize, presented by the American Association for the Advancement of Science, for research that could provide the basis of a next-generation internet.”
The baby poop index
China’s economic slowdown leads to a diaper depression / SCMP
“Not even diapers are safe from China’s economic slowdown. The Asian nation is buying less of the fluff pulp used in baby diapers and adult incontinence products, according to International Paper Co. Sales to China started to soften in the fourth quarter, and it’s unclear whether buyers are using less or trying to draw down existing inventories, said Chief Executive Officer Mark Sutton.”
Lunar missions
China’s Moon lander wakes up from its long, ultra-cold night / Wired
“China’s space agency announced that the frigidity of the lunar night is even more intense than we’d thought: The country’s Chang’e 4 spacecraft recorded an icy low of –310 degrees Fahrenheit (–190 degrees Celsius).”
China’s going back to the Moon and this time it’s bringing back samples / CNET
“The China Aerospace Science and Technology Corporation (CASC) has plans to send more than 50 spacecraft into space with more than 30 launches in 2019.”
Death sentence for Didi driver
China sentences to death driver who killed passenger of ride-hailing firm Didi / Reuters via Channel NewsAsia
“A court in China handed the death sentence on Friday February 1 to a man who raped and killed a passenger of ride-hailing company Didi Chuxing last year, while he was employed as a driver.”
Auto
Chinese automakers snap up British car designers / Bloomberg via Straits Times
“Chinese car companies with global ambitions are hiring designers from some of the most iconic names in the British auto world.”
Tesla begins sales of cheaper Model 3 car variant in China / Reuters
“Electric vehicle maker Tesla Inc said it will start taking orders in China on Friday for a lower-priced version of its Model 3 car, as it seeks to accelerate China sales hit by trade friction between Washington and Beijing.”
Oil and gas
BP makes gas find in China’s Sichuan basin / Upstream Online
“UK supermajor BP is understood to have made a potentially significant shale gas discovery in the Sichuan basin in southwest China.”
The next big threat for oil comes from China / Oil Price
“There is a widespread concern in the world regarding China’s decelerating economic growth.”
Drill, China, drill: State majors step on the gas after Xi calls for energy security / Channel NewsAsia

China’s state energy giants are set to raise spending on domestic drilling this year to the highest levels since 2016, focusing on adding natural gas reserves in a concerted drive to boost local supplies.

Responding to President Xi Jinping’s call last August to boost domestic energy security, China’s trio of oil majors — PetroChina, Sinopec Corp and CNOOC Ltd — are adding thousands of wells at oil basins in the remote deserts of the northwest region of Xinjiang, shale rocks in southwest Sichuan province and deepwater fields of the South China Sea.

POLITICS AND CURRENT AFFAIRS:

Malaysia cannot decide if it wants Chinese rail project
Poser over letter showing Malaysia rejected ‘cheaper ECRL’ offer from China / Free Malaysia Today
“More questions have surfaced on the future of the multi-billion ringgit East Coast Rail Link (ECRL), this time over a letter purportedly informing China Communications Construction Company (CCCC) that the Malaysian government would not take up the company’s offer to reduce the project’s cost.”
Dr M: Malaysia still in talks with China over ECRL, outcome soon / The Star Online (Malaysia)
Cracking down on ‘birth tourism’
US dismantles three Chinese ‘birth tourism’ schemes / Taipei Times
“U.S. prosecutors on Thursday said that they had dismantled three secret ‘birth tourism’ networks that illegally offer Chinese expectant mothers the chance to give birth in California so their children will have US citizenship. In total, 19 people were charged in the schemes, in which families were poised to pay tens of thousands of dollars, California prosecutor Nicola Hanna said in a statement.”
Sri Lanka: Another day older and deeper in debt
Sri Lanka to borrow $1 billion from China for highway project / NDTV (India)
“Sri Lanka, which last year handed over a strategic port to a Chinese firm for a 99-year lease as a debt swap, will soon sign a USD 1 billion concessional loan agreement with Beijing to fund a major highway project linking Colombo to the hill resort of Kandy… Sri Lankan Ambassador to China Karunasena Kodituwakku was quoted by the official media on Friday as saying that the USD one billion will be used for the first stage of the central highway.”
Endangered wildlife trade
9 tons of pangolin scales are seized in Hong Kong / NYT (porous paywall)
“Officials in Hong Kong said on Friday that they had intercepted a shipment of nine tons of scales from pangolins, the largest seizure the city has ever made of products from one of the most frequently trafficked mammals in the world. A thousand elephant tusks were in the same shipment.”
Propaganda
China’s Xi surprises Beijingers with casual pre-New Year visit / Reuters
“Chinese President Xí Jìnpíng 习近平 dropped in on surprised diners at a small Beijing restaurant and chatted with deliverymen on Friday on an apparently unscripted visit ahead of next week’s Lunar New Year holiday.”
Ai Weiwei wades into the China-U.S.-Canada and engagement debate
Ai Weiwei releases statement in response to tensions between Canada and China ahead of exhibition at Gardiner Museum / Gardiner Museum
“The Chinese government’s recent actions are unsurprising. They have been acting in their own way, with their own set of ideologies and practices, for the past 70 years… Though China has quickly developed, the West has also greatly benefited from this partnership through the exploitation of the basic rights of many Chinese in terms of labor, environmental damage, corruption, and other such issues… The West has pretended to not notice or, more insidiously, has been a willing partner. It is the hidden force behind China’s rise.”
Ai concludes, “In the end, nothing will change. China completely ignores so-called universal values… The real problem comes from the West where there is a complete lack of vision and responsibility, and only an interest in profiting from the status quo.”
Yang Hengjun’s reputation in overseas Chinese communities
Yang Hengjun: Controversy surrounds detained Australian-Chinese writer’s relations with Beijing / Australian ABC
“While Dr Yang [Yáng Héngjūn 杨恒均] describes himself as a Chinese ‘nationalist supporting democracy’ in his book titled Family, Country and the World published in 2011, his detractors say he has been flaunting his connections with high-level political leaders on his blog for years.”
Organized crime
China punishes 3,000 in organized crime crackdown – state media / SCMP
“China has punished 3,021 people in a crackdown on organised crime and the local ‘protective umbrellas’ that allow it to operate… Ten regions were ordered to take action against organized crime following a three-month inspection campaign last year. These included northern heavy industrial provinces such as Shanxi and Liaoning, as well as the major manufacturing powerhouse of Guangdong, near Hong Kong.”
Pacific Islands
Old allies notice as China makes a splash in the South Pacific / Radio Free Asia

China’s growing presence among the islands of the South Pacific worries Australia, New Zealand, and the United States. And some island governments are now pushing back against that presence. But when it comes to both island governments and many local citizens, the biggest issue at the moment appears not to be geopolitics but the issue of illegal Chinese fishing.

Chinese fishing trawlers have been scooping up tuna fish, a main source of protein for islanders.

SOCIETY AND CULTURE:

New fiction
‘Bean Paste’ saga goes right to China’s guts / Nikkei Asian Review
“In The Chilli Bean Paste Clan, her first novel translated into English, Chinese author Yán Gē 颜歌 depicts a decidedly capitalist China that Mao might not recognize, peopled not by masses of model workers but by striving, grasping men who are not above cheating on their wives and employers or cursing family pressures and personal predicaments in language as saucy as it is irreverent.”
Sports: Xi Dada hates doping
President Xi ‘hates’ doping, vows tough stance for Beijing 2022 Winter Olympics / Straits Times
“Chinese President Xí Jìnpíng 习近平 has declared that he ‘hates’ doping, laying out a tough stance against cheating at the Beijing 2022 Winter Olympics.”
Sappy New Year’s commercials
Jia Zhangke directs Apple Chinese New Year commercial on an iPhone / Radii China
“This one came out a week ago but is noteworthy for being helmed by famed film director Jiǎ Zhāngkē 贾樟柯, known for his gritty, strikingly true-to-life portraits of contemporary China. It also revolves around the tastes of home — that, and a bucket.”
Controversy over fantasy YA book by Chinese-American author
Blood Heir controversy, explained: Why Amélie Wen Zhao canceled her own YA novel / Slate
“Influencers are saying that the book shows a black girl being rescued from the slave trade and subsequently dying so that the white protagonist can live…[but] we’re really not even really sure that the character in question, May, is black. Huh?”
A personal take on China’s development
Reunited at 40, three pals await first crush / Chinarrative
“In a sweeping yet tightly written essay, author Qin Yong highlights China’s transformation — from southern Guangdong Province’s headstart to hosting the Beijing Olympics to the more recent online shopping boom — by describing the fortunes of himself and two childhood friends. Qin and company hail from a small northern city and more significantly, they were all born in 1978, the year that gave birth to the so-called ‘reform and opening up’ project.”
Betrothal gift guidelines in Puyang, Henan
Chinese city caps ‘bride price’ at US$7,450 to reduce wedding pressure / SCMP

VIDEO ON SUPCHINA

The simple process of making traditional pastries for Chinese New Year!

Traditionally, no family in China should have the last meal of the year, nián yè fàn 年夜饭, without tasty Chinese pastries. They are often made by grandparents, and the process of making them is very simple. Here’s how!

We also published the following videos this week:

FEATURED ON SUPCHINA

Sino-Black relations and the politics of identity: Q&A with scholar Keisha Brown

To celebrate America’s Black History Month, James Evans of Harvard’s Fairbank Center for Chinese Studies and scholars Keisha A. Brown and Ruodi Duan have compiled a “Reading and teaching guide to the history of Black and African American connections with China.” Brown, who has a special research interest in Sino-Black relations, took time to answer some questions for The China Project.

Chinese swimmer Sun Yang accused of smashing WADA blood vial with hammer

Also in this week’s China Sports Column: China’s injured star striker, Wu Lei, arrives at La Liga club Espanyol, while the Chinese Super League’s Beijing Guoan announces two newly naturalized players in a move with wide ramifications for Chinese sports. Finally, Chinese golfer Li Haotong got the shaft this week at the Omega Dubai Desert Classic for “violating” a rule installed just this year.

The China Project Quiz: 2018 Year of the Dog in review

The Year of the Dog began on February 16, 2018, and will give way to the Year of the Pig on February 5, 2019. The Year of the Dog was incredibly consequential for China, and this quiz will test your knowledge of major events. Also, there will be an actual dog-related question.

For science, or the ‘motherland’? The dilemma facing China’s brightest minds

The fathers of modern Chinese physics survived idealism and endured persecution — they’re exalted now, but at what cost? This story is the inaugural The China Project science column, written by Yangyang Cheng — a postdoctoral research associate at Cornell University and a member of the CMS experiment at the Large Hadron Collider — about Chen-Ning Yang, Tsung-Dao Lee, Deng Jiaxian, Wu Ta-You, Zhu Guangya, Huang Kun, Rao Yutai, and others, some of China’s brightest minds who were faced with personal decisions far harder than what they’d encounter in their work.

Opinion: It’s political: U.S. puts heat on China with Huawei indictment, extradition request

Two new indictments against Huawei detail alleged trade theft, bank fraud, and more. They are part of a broader campaign by U.S. officials to convince the world that China’s largest telecommunications company is not to be trusted, writes Paul Triolo. The onus is now on Xi Jinping to act, or risk looking weak.

Chinese Corner: Parenting with resentment, whistleblowing, and the lifesaver of Nanjing’s suicide bridge

Jiayun Feng’s review of interesting nonfiction from this past week on the Chinese internet: Becoming parents while resenting parents, the toll of whistleblowing, the lifesaver of Nanjing’s suicide bridge, and an embalmer’s criminal past and his endeavor to empower ex-convicts.

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.

SINICA PODCAST NETWORK

Sinica Podcast: 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 P.R.C. 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.

Subscribe to the Sinica Podcast on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.

TechBuzz China: Ep. 37: The WeChat Mini Program — The End of Apps or Not?

In episode 37 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into the world of WeChat Mini Programs. Arguably some of the biggest innovations to come out of the Chinese internet, Mini Programs have no real Western equivalent. Ever since it was launched three years ago on January 9, 2016, the Mini Programs function, which is still in an experimental stage, has been touted as a key direction for WeChat.

Subscribe to TechBuzz China on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.

ChinaEconTalk: A ‘Qianlong’ look back at China’s economic history

How does autocratic repression impact societies? Can the legacy of political repression ripple out across centuries, creating a vicious autocratic cycle? Today, on ChinaEconTalk, we’re going back to the Qing dynasty — the time of the Qianlong Emperor, and before — to find out. Our guest is Melanie Meng Xue, a postdoctoral fellow at the Department of Economics and the Center for Economic History at Northwestern University, whose recent paper on the topic can be found here.

Subscribe to ChinaEconTalk on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed straight into your favorite 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.

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of The China Project, and co-founder of the Sinica Podcast. Read more

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Erik Prince: A shady man involved in shady Xinjiang business

1. Erik Prince: A shady man involved in shady Xinjiang business