Trade war: Will it ever end?

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—Jeremy Goldkorn, Editor-in-Chief

1. The never-ending trade war, day 266

Another round of trade talks has “hit the ground running,” the South China Morning Post reports, as the American delegation, led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, sat down for a working dinner with their counterparts in Beijing on Thursday. If that sounds familiar to you, it probably feels even more familiar to Mnuchin — as indicated in the images above, he has been going on high-stakes delegations to Beijing to avert trade war escalations for nearly a year now.

As is customary, the negotiations are being accompanied by confusing signals about whether there has been, or will be, much progress:

• “They’re talking about forced technology transfer in a way that they’ve never wanted to talk about before — both in terms of scope and specifics… If you looked at the texts a month ago compared to today, we have moved forward in all areas,” one anonymous senior official optimistically told Reuters.

• “This is not time-dependent. This is policy- and enforcement-dependent. If it takes a few more weeks, or if it takes months, so be it. We have to get a great deal, as the president says, that works for the United States. That’s our principal interest,” Trump economic adviser Larry Kudlow told Bloomberg (porous paywall).

• Kudlow’s comments are “the latest indication of a slowdown in the negotiations,” the Financial Times interpreted (paywall), concluding that “even the prospects of a final handshake in late April, the earliest possible timeframe, seems optimistic.”

• But at least there are more soybean purchases: “Chinese state-owned firms bought about 1.5 million tonnes of U.S. soybeans on Thursday for shipment in July and August, in their second major purchase of U.S. supplies this month,” Reuters reports.

• Premier Lǐ Kèqiáng 李克强 also, unsurprisingly, promised further financial opening and a reduction in the “negative list” of areas of investment restriction, and stated, “We need to prevent a trust deficit from occurring,” implying that he believes there is currently no trust deficit.

• Li also “disclosed the proposal to allow trial operations for foreign cloud-service providers at a Monday meeting with about three dozen corporate chieftains, including those from IBM Corp., Pfizer Inc., Rio Tinto PLC, BMW AG and Daimler AG,” according to the Wall Street Journal (paywall).

Meanwhile, there is the always-present risk that geopolitical and technology tensions will overshadow agreements on economic exchange.

For the United States…

Bloomberg writes (porous paywall):

Even as the U.S. and China near a deal on trade, the Trump administration is becoming increasingly assertive in challenging Beijing on its geopolitical red lines.

Since Sunday alone, the U.S. has sailed a warship through the Taiwan Strait, released a report criticizing travel restrictions in Tibet and hosted Uyghur exiles at the State Department. The moves — all of them defying China’s warnings against meddling in what it views as its internal affairs — came ahead the arrival of Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing for trade talks.

…for Britain…

The Guardian reports:

The Huawei oversight board, which is chaired by the head of GCHQ’s National Cyber Security Centre (NCSC), said it had found further “significant technical issues in Huawei’s engineering processes leading to new risks in the UK telecommunications networks.”

The watchdog said in its annual report on Huawei that the company had made “no material progress” in addressing existing security flaws identified in last year’s assessment and raised serious doubts about the Chinese company’s ability to deliver a $2bn (£1.5bn) programme to address concerns previously raised by the UK oversight board.

…and for Canada.

“Canada on Thursday took a notably tougher line with China over its ban on Canadian imports of canola seed, saying Beijing had provided no scientific evidence to justify the move and was hurting its own reputation,” according to Reuters. See yesterday on The China Project: China admits canola oil block is connected to Huawei.

—Lucas Niewenhuis

2. Female wealth managers

Bloomberg reports (porous paywall):

Wealth management is a business area where global banks including UBS, JPMorgan Chase & Co. and HSBC Holding Plc, facing greater scrutiny as to gender diversity, have added more women. And the banks have recognized that in this market local language skills and local knowledge regarding taxation, transfer of wealth and related issues make them more valuable to clients than someone flown in from headquarters…

…While this shift partly stems from a desire to meet diversity goals, it’s also a response to the astounding wealth in the region and the need for wealth managers that make Chinese clients — and increasingly Chinese women clients — feel comfortable.

3. A second Tsinghua University professor is investigated

The suspension and investigation of Tsinghua University law professor and liberal intellectual, Xǔ Zhāngrùn 许章润, was sudden but not unexpected. His controversial essay, titled “Imminent Fears, Immediate Hopes,” which attacked the scrapping of presidential term limits by Xí Jìnpíng 习近平, went viral over half a year ago — but 2019 is not a year like any other. This year is chock-full of sensitive anniversaries for the Chinese Communist Party, and the two of utmost importance, the 100th anniversary of the May Fourth Movement and the 30th anniversary of the Tiananmen Square protests, are just around the corner.

Indeed, as The China Project previously reported, there are already signs that the Youth League committees of institutions that played a crucial role in these landmark events, such as Peking University, have begun scoping out the political inclinations of their classmates in order to ensure nothing out of the ordinary happens in the near future.

However, an investigation of another Tsinghua University professor —  Lǚ Jiā 吕嘉, an associate professor at the School of Marxism — parallel to the one being conducted on Xu but virtually unnoticed by media outlets, once again shows that political censorship in 2019 is not a simple case of Communist Party top brass ordering university minions to check their faculty. Rather, patriotic leftist students also play a crucial role in transforming spaces where liberal ideas could find a safe haven into political straightjackets, or even traps.

For details, please click through to The China Project.

4. Xinjiang update

• Pakistan Prime Minister Imran Khan told the Financial Times that he does “not know much” about the internment camps in Xinjiang or China’s treatment of Muslim minorities. You can see the video here. Given Pakistan’s financial dependence on China, it’s unlikely that Khan will be motivated to learn any more about what is going on in Xinjiang.

• Two new pieces by Sophia Yan in the Daily Telegraph: ‘One minute felt like one year’: A day in the life of inmates in the Xinjiang internment camps and How Kazakhs are lured to China and imprisoned as crackdown on Muslim minorities reaches across border.

• James Kynge and Demetri Sevastopulo of the Financial Times report (paywall):

Two of America’s biggest public pension funds own stakes in Hikvision, a Chinese company that supplies surveillance technology to detention camps in Xinjiang where Muslims are held. The California State Teachers’ Retirement System, or Calstrs, and the New York State Teachers’ Retirement System continue to hold investments in Hikvision despite a crackdown by Washington over the way western capital markets have funded mass detention in China.

Hikvision, which is the world’s biggest surveillance company, supplies systems to facilities that Beijing describes as “education centres,” where an estimated 1m Uighurs are being held, according to human rights groups…

…[But] funds including Fidelity Emerging Markets, Goldman Sachs EM Equity, Fullerton Global Emerging Markets Equities and RWC Global Emerging Equity plus three other US funds have all closed their positions in recent months, according to Copley Fund Research, a consultancy. All of the funds declined to comment.

• Writing from Istanbul, Megha Rajagopalan and K. Murat Yildiz report:

Turkey is one of the few Muslim-majority countries to call out China’s crackdown on Uyghur Muslims. A BuzzFeed News investigation finds that several Turkish nationals have also disappeared, something that has never been publicly acknowledged by Turkey.

—Jeremy Goldkorn

—–

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—Jeremy Goldkorn, Editor-in-Chief

BUSINESS AND TECHNOLOGY:

• Economic slowdown
  China March factory activity seen contracting for fourth month / Reuters
  “Factory activity in China likely contracted for a fourth straight month in March, a Reuters poll showed, suggesting the economy is still losing steam and adding to worries about faltering global growth.”

• Google’s AI research in China
  Google ‘President’ Sundar Pichai met with Trump, U.S. military to discuss AI and China / 9to5Google
  Donald J. Trump on Twitter: “Just met with @SundarPichai, President of @Google, who is obviously doing quite well. He stated strongly that he is totally committed to the U.S. Military, not the Chinese Military….”
  Top US general to meet with Google over China security worries / The Hill
  Joint Chiefs of Staff Chairman Gen. Joseph Dunford gave remarks at the Atlantic Council a week ago. He said, “If a company does business in China, they are automatically going to be required to have a cell of the Communist Party in that company. That is going to lead to that intellectual property from that company finding its way to the Chinese military…[Helping China improve artificial intelligence will] help an authoritarian government assert control over its own population.”
  For more, see our note on “Google in China” last week.

• Google’s censored search engine project
  Google is conducting a secret ‘performance review’ of its censored China search project / The Intercept
  On The China Project earlier this month: Is Google still developing a censored search engine for China?

• Electric vehicles
  China’s green-vehicle makers feel the blues as subsidies ebb / Nikkei Asian Review
  “Beijing’s phaseout of subsidies for new-energy vehicles has put pressure on earnings, BYD said. Net profit fell 31.6 percent to 2.78 billion yuan ($414 million), even as revenue surged 22.8 percent to over 130 billion yuan and electric-car unit sales roughly doubled to nearly 248,000.”
  Daimler, Geely deepen bond with electric city-car venture / WSJ (paywall)
  “Daimler AG and Chinese auto maker Zhejiang Geely Holding Group have agreed to create a joint venture in China to transform Daimler’s struggling Smart compact city car into a global all-electric brand, the companies said Thursday.”

• LinkedIn and the Chinese state security services
  LinkedIn is becoming China’s go-to platform for recruiting foreign spies / CyberSnoop
  “Buried in the 41-page felony complaint charging a former U.S. intelligence operative of spying for the Chinese, FBI investigators declare that the suspect, Ron Rockwell Hansen, had been printing information from his colleagues’ LinkedIn pages.”

• Wind energy
  The promise of China’s wind farms upended by a blow-out in costs / Bloomberg (porous paywall)
  “China’s wind farm operators are racing to install as much capacity as they can before subsidies disappear. The price is a blow-out in costs, which is eating into earnings and weighing on valuations.”

• African swine fever hits Cargill
  Swine fever and trade tensions knock earnings at Cargill / FT (paywall)
  “Food commodities group hit as reduction in Chinese pig numbers cuts feed demand.”

• JD and Minecraft in China
  JD Cloud lands exclusive rights to ‘Minecraft: Education Edition’ in China / TechNode
  “JD.com’s cloud service JD Cloud has gained the exclusive rights to ‘Minecraft: Education Edition’ in China, according to a joint announcement released Wednesday by JD.com and Microsoft. The move is part of JD Cloud’s foray into the education sector.”

• Food delivery
  Meituan and Alibaba have reshaped food delivery in China / Bloomberg (porous paywall)
  “Across the country, millions of people like Lin are ordering in two or three meals a day, as well as groceries, office supplies, haircuts, massages, and whatever else they might want. Behind this $35 billion delivery market isn’t exactly efficiency, though — it’s a fight between Meituan and Alibaba Group Holding Ltd., China’s most valuable company.”

• Consolidation in cement sector
  Pollution crackdown sends cement sector profits skyward / Caixin (paywall)
  “A national crackdown on polluting industries has reduced supply in the cement industry, which has boosted both prices and the profits of major producers as the sector goes through a period of consolidation. One beneficiary has been industry leader Anhui Conch Cement Co. Ltd., which reported an 88.05% jump in its net profit last year to 29.8 billion yuan ($4.43 billion).”

• Biometrics — privacy concerns in Shenzhen
  Elementary school’s fingerprint collecting raises privacy concerns / Sixth Tone
  “A Shenzhen school did not seek parental consent before taking students’ fingerprints as part of an ‘intelligence test.’”

SCIENCE, HEALTH, AND THE ENVIRONMENT:

• Is the U.S. going to drive Chinese scientists away?
  The man who took China to space / Foreign Policy (porous paywall)
  “Hsue-Shen Tsien [錢學森 Qián Xuésēn] was driven out of the United States by political paranoia. Will the same happen to a new generation of Chinese talent?”

• Coal and climate change
  Push for more coal power in China imperils efforts to fight climate change, researchers say / AFP
  “Even as the number of coal-fired power plants under development worldwide declines, increased coal use in China and a proposal to boost capacity could imperil global climate change goals.”
  China’s carbon emissions could peak before 2030 / MIT Technology Review
  “In addition to leveling out carbon pollution by 2030, China’s Paris commitments also include raising the share of clean sources in its energy mix to 20 percent over that same period.”

• Healthcare companies on Shanghai’s new NASDAQ-style board
  Five health sector firms apply to list on new high-tech board / Caixin (paywall)
  “Nearly a third of applicants to list on the Shanghai Stock Exchange’s new Science and Technology Innovation Board are biotech or pharmaceutical companies, information published by the board shows.”

POLITICS AND CURRENT AFFAIRS:

• Pakistan and terrorism — China stands by Jaish-e-Mohammed  
  China asks US to act ‘cautiously’ after its push to ban Masood Azhar at UN / Hindustan Times

China on Thursday accused the US of undermining the authority of the UN anti-terrorism committee by “forcefully moving” a resolution in the UNSC to list Pakistan-based Jaish-e-Mohammed chief Masood Azhar as a global terrorist, saying America’s move only “complicates” the issue. The US, supported by France and the UK, has moved a draft resolution in the UN Security Council to blacklist the Pakistan-based terror group’s chief.

• Former Interpol president expelled from Party
  China expels former Interpol chief from Communist Party for ‘extravagant’ spending / NYT (porous paywall)

China’s ruling Communist Party expelled the former chief of Interpol on Wednesday, accusing him of abusing his power to finance an extravagant lifestyle and committing ‘serious’ violations of the law. The disappearance of the former Interpol chief, Mèng Hóngwěi 孟宏伟, during a trip to China last fall drew global attention and highlighted the perils of being on the wrong side of China’s opaque, highly politicized legal system.

• Xi ends Europe trip
  Unity, reality and reciprocity: Europe brings down the barriers for Xi Jinping in Paris / SCMP
  “Chinese President Xí Jìnpíng’s 习近平 week-long Europe tour ended on a surprisingly positive note in Paris on Tuesday, with a rare show of unity between Beijing and Brussels despite a gathering storm in China-EU relations and pressure from the United States.”
  Luxembourg signs accord with China on Belt and Road Initiative / Bloomberg (porous paywall)

• Human rights lawyers
  Chinese human rights lawyer Wang Yu released after being detained outside US embassy / SCMP

Wáng Yǔ 王宇, the Chinese human rights lawyer who was detained by police outside the US embassy in Beijing on Wednesday night, was released less than 24 hours after she was held… On July 9, 2015, Wang became the first lawyer to be swept up by the nationwide “709” clampdown on lawyers and campaigners launched in what critics of the government said was an attempt to stymie China’s emerging human rights defense movement.

• Pacific Islands and recognition of Taiwan
  Chinese deal with former MPs to switch recognition after elections exposed / Solomon Times Online (Solomon Islands)
  “The Island Sun has reported that a major political party is negotiating secretly with China to switch recognition from Taiwan following the elections in April in return for money in the pockets of candidates.”
  Nauru parliament rejects ‘one China’ principle, recognizes Taiwan as independent nation / Taiwan News
  “During a visit by Taiwan President Tsai Ing-wen (蔡英文 Cài Yīngwén), the Parliament of Nauru on Monday March 25 passed a resolution which rejected Beijing’s ‘one China principle’ and ‘one country, two systems’ framework, and recognized Taiwan as an independent country.”

• Chinese official influence in Canada
  Chinese officials pressured Canadian university to cancel event with Uighur activist / Radio Canada International

Chinese officials pressured a Montreal-based human rights research institute affiliated with Concordia University to cancel a conference featuring a prominent exiled Uyghur leader, says one of the organizers of the event… While he chose to ignore the request and went ahead with the conference on Tuesday as planned, Matthews said he later found out that the consul general was also putting pressure on different people in Montreal to get Concordia University to annul the event.

• The full story on the Swedish ambassador case
  How China used the Swedish ambassador to threaten Angela Gui / The Diplomat (porous paywall)
  Jojje Olsson on Twitter: “Today I write at length how Sweden’s ambassador to China was manipulated into assisting Beijing with threatening Angela Gui. Should be some details in the text never reported in English before.”

• Suppression of labor activists
  Beijing ramps up crackdown on labor activists / FT (paywall)
  “Three Chinese activists from a labor news website have been detained in southern China as Beijing ramps up a crackdown on labor activism across the country.”

• Censorship
  Censorship pays: China’s state newspaper expands lucrative online scrubbing business / Reuters
  “People.cn, the online unit of China’s influential People’s Daily, is boosting its numbers of human internet censors backed by artificial intelligence to help firms vet content on apps and adverts, capitalizing on its unmatched Communist Party lineage.”
  The China Project had the scoop on this two days ago: Jinan has become the capital of Chinese internet censorship.

• Hong Kong freedom erosion
  Hong Kong risks China-style ‘interpretation’ of freedoms, says UK, as latest report adopts tougher tone / Hong Kong Free Press

Hong Kong’s expulsion of a British journalist and banning of a pro-independence party has led the United Kingdom to issue a wary assessment of the city on Wednesday. In the UK’s latest Six-Monthly Report on Hong Kong, which covers July 1 to December 31, Foreign Secretary Jeremy Hunt said he was concerned that the former British colony’s high degree of autonomy was “being reduced”’ with regard to civil and political freedoms.

SOCIETY AND CULTURE:

• Child abuse
  Chinese kindergarten staff disciplined for sharing photos of boys’ genitals / SCMP
  “Authorities in Shenzhen sacked two senior staff from a kindergarten, detained three and fined another after they were found to have taken and shared images of boys’ genitals.”

• Dancing aunties
  Sounds of silence: ‘dancing aunties’ use earphones to reduce the noise and increase the peace / SCMP
  “A group of middle-aged women in Chongqing [dancing in formation while wearing earphones] in southwestern China have earned praise online for making sure that their morning dance activities do not disturb passers-by — a departure from China’s usually noisy square dancers, who are commonly viewed as a public nuisance.”

• Odd advertisements
  Video: Tom Hiddleston makes you breakfast in unsettling new Chinese commercial for Centrum / Shanghaiist
  “You wake up and walk downstairs to find [British actor] Tom Hiddleston in a suit making you a breakfast of chopped veggies topped with a heart-shaped sunny-side. Is this a wet dream or a creepy nightmare?”

• Historical costume dramas — no longer OK?
  Costume dramas (almost) banned on the Chinese internet / Radii China
  “Have imperial period costume dramas — once a staple of Chinese prime time TV — joined hip hop, time travel, and Winnie the Pooh in supposedly being banned from China’s entertainment mainstream? That seemed to be the case following an especially terse government proclamation earlier this week, but then the plot thickened…”

VIDEO ON SUPCHINA

The China Project Talks, Episode 1: Chen Man on her photography, life, and entrepreneurship

Chen Man, a superstar photographer and entrepreneur, sits down with The China Project in New York City during Fashion Week to discuss her work, views, and latest projects! This is Episode 1 of our new The China Project Talks series, which features interviews with interesting and notable Chinese individuals.

FEATURED ON SUPCHINA

The Massachusetts train company that China built

Western Massachusetts is likely not the first place that comes to mind when talking about U.S.-China cooperation, particularly amid the current trade war. But it’s here, in Springfield, Massachusetts, that one Chinese company is striving to create a brick-and-mortar identity for itself on American soil, with employees hailing from both sides of the Pacific. CRRC MA has won several contracts to build trains for urban rail lines in the U.S., and along the way, has promoted local initiatives praised by politicians at all levels.

The China Project Quiz: U.S.-China Diplomatic History

How much do you know about the history of U.S.-China relations? Take this 12-question quiz to find out. Let us know how you do — tweet your score @supchinanews.

SINICA PODCAST NETWORK

Sinica Podcast: Samm Sacks on the U.S.-China tech relationship

This live Sinica Podcast recorded in New York on March 6 features Samm Sacks, Cybersecurity Policy and China Digital Economy Fellow at New America. She and Kaiser Kuo discuss the many facets of U.S.-China technology integration and competition, touching on topics such as data security, artificial intelligence, and how to build “a small yard with a high fence.”

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