Two Sessions reports, and Tesla’s coming suffering in China
1. Tesla gets the first of a thousand cuts from China
“Tesla Inc said on Tuesday that China’s customs authorities have accepted the electric carmaker’s plan to resolve problems with the clearance of its Model 3 sedans that centered around misprinting of labels,” reports Reuters via Channel NewsAsia:
Shares in Silicon Valley billionaire Elon Musk’s company fell more than 5 percent in early trading after Chinese media reported Shanghai customs had suspended clearance for a batch of Tesla’s cars. They were last down 1.3 percent at $281.73.
“We have already reached a resolution with Chinese customs, and we are working closely with them to resume clearance procedures on these vehicles,” a Tesla spokesperson said in a statement.
“Sales of Model 3 in the country are not impacted, and we continue to deliver Model 3 vehicles that have already been processed.”
Making inroads into China, the world’s largest electric vehicle market, is crucial for the Tesla as it seeks to offset softening demand in the United States and convince investors of its ability to become consistently profitable.
The markets are, of course, idiots, which is why very few people can emulate Warren Buffett or George Soros. But the markets are right this time to respond negatively to this news about Tesla:
A customs holdup is relatively insignificant. But it’s just the first of a thousand cuts that Elon Musk will have to endure as he seeks to make his new Shanghai Gigafactory profitable.
2. Tax cuts and defense spending — NPC announcements
China’s premier, Lǐ Kèqiáng 李克强 (who is nominally second-in-command but practically impotent), gave the annual work report at the annual event when China showcases its legislative achievements: the National People’s Congress (NPC) a.k.a. Two Sessions.
Keith Bradsher and Chris Buckley of the New York Times focused (porous paywall) on economic commitments in Li’s speech:
China’s premier said on Tuesday that his government would respond to an economic slowdown by cutting taxes, easing burdens on the private sector and giving markets a bigger role — diluting the heavily pro-state pronouncements and policies that critics have warned were scaring investors.
Calling 2019 a “crucial year” for China’s economy, Premier Li Keqiang, the second-ranking official in China after President Xi Jinping, laid out measures long supported by private businesses. Mr. Li’s annual report to the national legislature revived rhetoric about market solutions after the government faced growing criticism for favoring government initiatives and state-owned companies, squeezing out private enterprise.
Other news from the NPC:
Energy
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Why China’s putting all its oil pipes in one company / Bloomberg (porous paywall)
Chinese President Xi Jinping has a plan to help meet the country’s growing energy needs and clear its dirty air: Spin off the tens of thousands of miles of pipelines held by three state-owned oil and gas giants and merge the networks into a new company. The resulting “China Pipelines Corp.” would aim to attract private investors to help expand the $74 billion network and ease supply crunches in some parts of the country. Such an overhaul, announced at the National People’s Congress in Beijing on Tuesday, would radically reshape China’s energy sector although it leaves central planning power in a single, albeit different, pair of hands.
The official take
The budget: Defense and tax cuts
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China defense spending to rise 7.5 percent this year / AFP via Taipei Times
“China yesterday announced a 7.5 percent increase in military spending for this year, lower than last year as the nation faces an economic slowdown, but still likely to make Asian neighbors nervous.” -
China economy: Beijing unveils $298 billion tax cuts to boost growth / BBC
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China cuts taxes as it warns of ‘a hard struggle’ ahead / CNN
Locking up the few remaining activists still at large
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Calls for change spark disappearance as China reaffirms president’s grip on power / Radio Free Asia
“Authorities in the northern Chinese province of Hebei have apparently detained a prominent rights lawyer after hundreds signed his online petition calling for constitutional change ahead of the annual session of the National People’s Congress (NPC), which opened Tuesday in Beijing.”
3. Huawei, and Trump’s failing trade war
“The pain of President Trump’s trade war with China may soon be over, but American businesses and farmers are left wondering whether it was worth the trouble,” says the New York Times (porous paywall). See also “Why investors shouldn’t get too elated about a U.S.-China trade deal” on MarketWatch.
But even if Trump’s bravado ends with a whimper not a bang, tensions between the U.S. and many other Western countries remain. Huawei is at the center of those tensions. Here is the latest from the various fronts of the tech and trade cold war:
Trade war cease-fire
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U.S. confirms it’s delaying China tariff increase indefinitely / Bloomberg (porous paywall)
“The U.S. has confirmed the country is postponing ‘until further notice’ a scheduled tariff increase on Chinese goods, the latest sign that the world’s two largest economies could be headed toward a de-escalation of their trade dispute.” -
China and US still have work to do but both ‘certain’ deal on opening financial sector can be achieved / SCMP
“China and the United States are ‘certain’ to reach an agreement on opening up the financial sector, China’s top banking regulator said on Tuesday.”
Pleasing Trump’s base
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U.S., China ‘on the cusp’ of possible end to trade war: Pompeo / Reuters
“We’re trying to get that rectified, get that fixed, make it fair and reciprocal and I think we’re on the cusp of doing that and I hope all those tariffs will go away, all those barriers,” Pompeo told KCCI in Des Moines, where he was attending a farmers conference. -
Cheniere deal with China signals country’s key role in LNG exports / WSJ (paywall)
“Cheniere Energy Inc.’s expected $18 billion deal to supply natural gas to China signals the company’s growing bet on the country, and China’s emergence as a top market for the U.S.”
Huawei
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Huawei calls for common cybersecurity standards amidst concerns / Reuters via Channel NewsAsia
“Huawei, in the spotlight over the security risks of its telecom equipment gear, urged governments, the telecoms industry and regulators on Tuesday to work together to create a common set of cybersecurity standards.” -
China’s tech titans bring AI, 5G to the table at ‘Two Sessions’ / Sixth Tone
This article shows why Chinese tech companies will always struggle to win trust abroad: The Party spends a great deal of energy co-opting them. -
China halts canola shipments from major Canadian supplier / CBC News
“A major Canadian canola exporter has had its registration to ship the oil to China revoked, apparently the latest flare-up in a diplomatic and trade dispute between the two countries.” -
Huawei says it would never hand data to China’s government. Experts say it wouldn’t have a choice / CNBC
4. Xinjiang detention camps — the latest reports
The latest reporting on the ongoing horrors in Xinjiang:
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UN religious freedom expert seeks visit to China’s Xinjiang / Reuters via Channel NewsAsia
“I have requested for a visit to go there, because this is a priority for me in terms of looking at what is happening there. There is reason to be seriously concerned about reports coming out of the Xinjiang region,” UN special rapporteur Ahmed Shaheed told a news briefing in response to a Reuters query.
China has not yet replied to his February request, he said.
Shaheed, a former Maldives minister, disclosed he was among several UN rights experts to write to China last November voicing anxiety at its anti-extremism programme.
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US lawmakers complain Trump taken ‘no meaningful action’ on China’s abuses of Muslims / Reuters via Channel NewsAsia
“A bipartisan group of U.S. lawmakers complained to the Trump administration on Monday that its response to rights abuses against China’s Muslim minority was inadequate months after saying it was looking into imposing sanctions.” -
Radio Free Asia’s Uyghur journalists’ work is personal / The Atlantic
“Radio Free Asia’s Uighur journalists report on China’s internment of hundreds of thousands of members of the country’s Muslim minority — including, in many cases, their families and friends.” -
China turns Muslim ‘re-education’ camp detainees into cheap labor force, human rights group claims / SCMP
“Beijing denies Xinjiang training centers feed factories with low-paid workers.” But a “former inmate from Kazakhstan says she was told she would be put to work.” -
He needed a job. China gave him one: locking up his fellow Muslims. / NYT (porous paywall)
“Baimurat, who lives in Kazakhstan, says he helped deliver hundreds of fellow Muslims to an indoctrination camp in China’s Xinjiang region.” -
Xinjiang authorities grant 24-hour releases to Uyghur detainees for ‘good behavior’ / Radio Free Asia
“Authorities in northwest China’s Xinjiang Uyghur Autonomous Region (XUAR) are temporarily releasing Uyghurs and other Muslim minorities from political ‘re-education camps’ who have demonstrated ‘good behavior’ in detention, according to sources.” -
No let-up in China’s push to ‘Sinicise religion’ despite global outcry over crackdown / SCMP
—Jeremy Goldkorn
5. Ride hailing is dangerous for unaccompanied minors. Is there a fix?
Chinese ride-hailing giant Didi Chuxing recently conducted a WeChat poll to gauge the public’s thoughts about minors using ride-hailing services alone. The poll ended on March 3 with an aggregation of over 4.2 million votes, with 57 percent of the voters expressing approval.
The results (in Chinese) have prompted intense debates on the Chinese internet, where voters on both sides listed their arguments and cited past cases to defend their choices.
Click through to The China Project for details.
—Chelsea Cheng
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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:
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Weibo is making a comeback — social media is not all about WeChat
Weibo sees jump in revenues, users thanks to broadcasting, more ads / Jing Daily
Matthew Lubin writes:
China’s microblogging platform Weibo broke through the 200 million daily active users mark in December, which now gives the company a significant base to monetize. The company also reported 462 million monthly active users, of which 93 percent are mobile users of the platform.
Those numbers may sound impressive, but they are still much lower than the billion active users its rival WeChat boasts. But Weibo does have some interesting advantages over WeChat. For one, it has a younger user base, so it has great growth potential among the massive Gen Z and millennial markets in China, plus, it attracts a strong travel-related following, which can benefit niche influencers and brands that want to connect with ever-more-mobile users.
Based on its user data, Weibo got a big boost from advertisers in the final quarter of 2018, thanks to value-added services like its live broadcasting function.
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Biotech: Another victim of U.S. foreign investment reviews
China’s biotech investors have caught a chill / Bloomberg
“If CFIUS starts holding up Chinese biotech deals, that would leave a lot of Chinese money with few places to go, especially because Europe has grown more concerned with privacy protections and thus warier about foreign tech investments… That’s a problem for U.S. companies but perhaps a bigger one for China, whose biotech industry remains less than one-10th the size of that of the U.S.” -
Drone taxi company to IPO
Chinese drone maker EHang plans US IPO: Sources / Reuters via Channel NewsAsia
“Chinese drone maker EHang is planning a US initial public offering (IPO) this year, according to two people with direct knowledge of the matter, with one saying it could raise between $400 and $500 million… Founded in 2014 and headquartered in Guangzhou Province, EHang first made headlines in 2016 when it unveiled a passenger drone concept which it said would retail at up to $300,000.”
POLITICS AND CURRENT AFFAIRS:
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Solar energy in Argentina
China builds Latin America’s largest solar plant / China Dialogue
“Chinese banks and companies have developed coal-fired power plants worldwide. Now they are making the foray into cross-border solar energy development,” say Fermín Koop and Lili Pike. They ask but don’t quite answer — despite some hopefuls signs — whether projects such as a new China-financed, 500 megawatt solar energy field in northern Argentina are “exceptional or a sign of a broader shift towards China developing clean energy overseas”? -
The disappearing fish of the East China Sea
East China Sea fish stocks hit hard by global warming / China Dialogue
“Warming oceans have caused a slump of up to 35 percent in some global fish populations, with over-exploitation of stocks exacerbating the problem, a new study has found… The worst-affected ocean was the Sea of Japan, with a 34.7 percent reduction in fishery size. The East China Sea saw a drop of 8.3 percent.” -
Did Pakistan use its Chinese JF-17 jets to shoot down Indian planes?
Indian media: In love with the military, blind to the truth of Pakistan conflict? / SCMP
An interesting detail in this article by Sohini C:
Beijing has refused to confirm a former Pakistani air force officer’s claim that China-made JF-17 fighters were used by the Pakistan Air Force to shoot down Indian military aircraft…
“Proud to announce, I was project director for JF-17 Thunder programme jointly produced by Pakistan and China during the [2001-2008] tenure of general Pervez Musharraf,” retired PAF air marshal Shahid Latif tweeted early Wednesday morning.
“Today, same jets targeted and shot down Indian jets which entered Pakistani airspace.”
When trading opened less than two hours later in China, shares in Shenzhen-listed Sichuan Chengfei Integration Technology (CAC-SCIT), a sister company of JF-17 maker Chengdu Aircraft Corporation (CAC), rose 10 percent in five minutes — hitting the maximum daily rise allowed on the Chinese stock market.
SOCIETY AND CULTURE:
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LGBT visibility
Opinion: Bohemian Rhapsody’s release in China is a victory, despite the cuts / Guardian
“In a country where gay scenes are banned on TV, the fact that Freddie Mercury’s story is being shown at all is a breakthrough.” -
Harbin: Portrait of a city
China in unfamiliar territory as rust belt cities flatline / Guardian
The socioeconomics of Harbin, a city whose economy was based on heavy industry but that is now “struggling to keep up as China’s economy shifts towards services and consumption.” -
Eccentric architectural projects
China’s replica of the Titanic taking shape / Asia Times
“Building the Titanic II on the bank of a tributary of the Yangtze River in the western landlocked province of Sichuan has not been all plain sailing, however, after the project was hit by a financial dispute which delayed the inauguration for several years.”
FEATURED ON SUPCHINA
How WeChat’s new ‘Wow’ and ‘Top Stories’ features have made the app worse
WeChat’s pursuit of traffic with two new features, “Wow” and “Top Stories,” rolled out in its most recent update in December, are altering the way users use the platform. In particular, self-publishers such as corporate accounts and individual content creators find themselves facing both opportunities and pitfalls. With that, there is risk that these features will only further amplify the platform’s problems of misinformation and “click farming.”
Chinese Corner: The unapologetic patriotism of Wu Jing, the Wolf Warrior
Wu Jing, who directed and starred in Wolf Warrior 2, is unstoppable at the moment. He is bound to make more commercially successful, and probably critically acclaimed, movies in the future. But on his path to becoming a true movie legend, one label he’s struggled to shrug off is “patriotic.” Also in this week’s Chinese Corner: male makeup, Math Olympiad, and Chinese parents’ greatest fear.
SINICA PODCAST NETWORK
Middle Earth: China’s soft power with Anthony Kuhn
Today, we are trying another format of the show, a “case study episode” where one guest will go over a specific project or a theme in China’s culture industry. And to kick off this new format, we start with Anthony Kuhn, who works at NPR.
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Subscribe to Middle Earth on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.
PHOTO OF THE DAY
Art glass
An artist makes glass items at the Slender West Lake tourist attraction in Yangzhou during the 2019 Lunar New Year celebration. Photo by Jia Guo.
