Was Lou Jiwei sacked for speaking out?

Jeremy Goldkorn Published April 6, 2019

Dear Access members,

We are happy to announce the second in our new series of conference calls with leading China experts, which we call our Dialogue Series.

Paul Triolo, a frequent adviser to presidents and current head of a geotechnology consulting practice, will lead an in-depth, prescient analysis of what’s really going on with 5G in China, and what it may (or may not) portend for Western businesses at home and abroad.

Think of it as a live, two-way podcast where listeners get to ask questions and engage with our experts directly.

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—Jeremy Goldkorn and team

1. Was Lou Jiwei sacked for speaking out?

The Nikkei Asian Review reports:

Lóu Jìwěi 楼继伟 has been replaced as head of China’s national social security fund after criticizing the country’s flagship industrial policy as having “wasted taxpayers’ money,” in a sign of Beijing’s waning tolerance for dissent on economic issues.

Lou, a prominent reformer, spent less than two and a half years as chairman of the National Council for Social Security Fund — the shortest stint by far in a job whose holders usually stay on for four or five years.

He is replaced by Liú Wěi 刘伟, a vice minister of finance, China’s State Council announced Thursday. Liu is an unusual choice for a role whose occupants usually have cabinet-level experience. Four of his five predecessors — including Lou himself — were finance ministers, while the other previously served as governor of the People’s Bank of China.

A diplomatic source [in Beijing] cited a South China Morning Post interview on the sidelines of the National People’s Congress in March as the trigger for Lou’s departure.

Here is that South China Morning Post interview, from March 7. If you need a refresher on Made in China 2025, we have an explainer on The China Project.

Caixin first reported on March 26 that Lou Jiwei was “retiring,” but made no mention of his high-profile criticism of Made in China 2025. Nikkei is the first to report that the two are connected.

—Lucas Niewenhuis

2. Bytedance now has more employees than Facebook

The incredible rise of Bytedance, the company behind news app Toutiao and short-video app Douyin (抖音 dǒuyīn), known as TikTok overseas, was one of the top business stories we highlighted in our 2018–2019 Red Paper (free for members at this link). In 2018, it eclipsed Uber to become the most valuable startup in the world, with a valuation of $75 billion.

The Information now reports on “The people behind ByteDance’s app factory,” (paywall) and reveals that the total number of those people has “roughly doubled to 40,000 — more than Facebook, which had 35,600 at Dec. 31.”

Only 5,000 of those employees are software engineers. The largest numbers of jobs are in ad sales and content moderation:

“About 10,000 employees work on the ad sales side, trying to sell ad space in ByteDance apps to China’s small, medium and large enterprises. Many are employed in call centers, focused on recruiting new advertisers and trying to draw away advertisers from rival platforms like Baidu.”
“Another 10,000 employees, spread across different products, monitor the content on ByteDance apps.” You could think of them as censors, which they are (and The Information says that a recent hiring spree of 2,000 employees prioritized Communist Party members), but content moderation is also a big chunk of what thousands of Facebook employees do — though Facebook appears to contract out moderation work more than Bytedance.

Much of Bytedance’s focus recently has been on an “aggressive overseas expansion”:

In India, content app Helo has taken off along with video app TikTok. Elsewhere it has TopBuzz, News Republic, BuzzVideo and BaBe. BaBe is successful in Indonesia, while News Republic has traction in Europe. ByteDance has hired large teams across the world to support its growth, including in India, the U.S. and Europe. The company’s revenue, mostly advertising, more than tripled to about $7.2 billion last year, The Information has previously reported, although ByteDance lost $1.2 billion.

—Lucas Niewenhuis

3. Chinese parents want students to wear dystopian brainwave-detecting headbands

In today’s dystopian news: An elite primary school in Hangzhou, Zhejiang Province, is making its students wear brainwave-reading headbands that can supposedly detect their attention levels in the classroom.

The practice was exposed in a series of photos that are now going viral on the Chinese internet. In two pictures, students at Jiangnan Experimental School can be seen wearing black electronic headbands while in class.

Click through to The China Project for more details.

—Jiayun Feng

—–

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:

China announced that it would expand restrictions on fentanyl export to all “fentanyl-related substances” starting on May 1, fulfilling a pledge made to Donald Trump in early December. The new regulations will, in theory, dramatically slow down the transpacific trade of dangerous opioids.
U.S.-China trade talks continued, and both sides chose to continue to delay tariff hikes. Trump announced, after meeting with Vice Premier Liú Hè 刘鹤 in the Oval Office, that a deal could be ready “over the next four weeks.” But he did not announce a date for a summit with General Secretary Xí Jìnpíng 习近平, and instead stated, “If we have a deal then we’ll have a summit.” Meanwhile, Bloomberg reported that the Trump administration is considering making a major concession and allowing China nearly six years, or “by 2025,” to fulfill some of its pledges in the upcoming trade deal.
Two Chinese air force jets crossed the Taiwan Strait median line on March 31, the first such maneuver in likely 20 years. American and Taiwanese officials strongly condemned the move.
Taiwan is worried about political propaganda from Beijing, and is “likely to ban Baidu’s popular iQiyi platform, and block Tencent’s plan to bring its streaming service to the island later this year,” the Nikkei Asian Review reported. Is this the first time a democracy will try to block Chinese online media for purely political reasons?
Smartphone maker Xiaomi has formed a semiconductor company, Dayu, as part of a 10 billion yuan ($1.5 billion) artificial intelligence of things (AIoT) initiative.
Filipino officials dialed up the rhetoric over the presence of Chinese vessels near and around Pag-asa Island. Philippines president Rodrigo Duterte even told China to “lay off the Pagasa,” and threatened, “If you touch it…I will tell the soldiers ‘prepare for suicide mission.’”
A Chinese trespasser named Yujing Zhang was arrested at Mar-a-Lago this past weekend. Reporting indicates that she was attracted to the club by the promotion of an associate of Cindy Yang’s, the massage parlor owner who was recently revealed to be selling Chinese executives access to Trump via Mar-a-Lago. The FBI is now investigating Zhang, Yang, and other potential actors in Chinese intelligence operations at Mar-a-Lago.
New Zealand Prime Minister Jacinda Ardern wrapped up her visit to Beijing, and both sides largely made friendly noises — though Ardern also reportedly privately “raised her concerns” about the treatment of Uyghurs in Xinjiang. Ardern told Caixin in an interview “that Huawei is not banned from New Zealand, and that the country was looking forward to seeing how it can work with China in the Belt and Road Initiative and on climate change. And she also described her eagerness to upgrade the China-New Zealand Free Trade Agreement.”
At least 35 ethnic Kyrgyz students are confirmed to have disappeared in Xinjiang upon returning from their studies at universities in Bishkek, the capital of Kyrgyzstan, according to one of several recent reports on the crisis in Xinjiang.
The Baloch Liberation Army attacked Chinese facilities in Pakistan on April 1, for the third time since August 2018. The insurgent group claimed to have killed “several Chinese engineers and workers.”
Street cleaners in Nanjing, Jiangsu Province, were shown in a disturbing video being forced to wear wristbands that track their precise locations and send warnings if they remain in one place for more than 20 minutes during working hours. A day after the program was made public, the company in charge backed down and disabled the movement reminder function.
A specialized traditional Chinese medicine (TCM) hospital, which is calling itself China’s first “pure” TCM medical facility, has opened its doors in the hustling and bustling city of Shenzhen, Guangdong Province.
China controls 61 percent of global li-ion battery production capacity, according to numbers compiled by MacroPolo. Tesla, meanwhile, is “America’s only hope” to build supply chains for this essential technology, write Damien Ma and Neil Thomas. Coincidentally, today, Reuters reports that “U.S. government officials plan to meet with executives from automakers and lithium miners in early May as part of a first-of-its-kind effort to launch a national electric vehicle supply chain strategy.”
The global market for gene-altered mice is “predicted to expand 7.5 percent a year to top $1.59 billion by 2022,” according to Bloomberg, which reported that one Chinese company is selling the animals for $17,000 a pair.

BUSINESS AND TECHNOLOGY:

5G and Huawei in Korea
K-pop stars and Huawei help South Korea win global 5G race, as Chinese trade trumps US fears / SCMP
“South Korea on Friday became the world’s first country to roll out nationwide 5G networks, with one of its three telcos using Huawei technology.”
The business of weed
Industrial cannabis is booming in China / The Economist (porous paywall)

Industrial-use hemp — a variety of cannabis that contains trivial amounts of weed’s mind-altering substance, THC — is flourishing in a country that until a few years ago banned its cultivation outright and where cannabis traffickers can face the death penalty.

China grows nearly half the world’s legal hemp. In 2018 sales, mostly of textile fibre made from the plant’s stalk, totalled $1.2bn. Now global demand for its seeds, leaves and flowers is surging. Packed with fulsome fatty acids, seeds go into snacks and oil. Leaves and flowers contain cannabidiol (CBD), a non-intoxicating compound that reduces anxiety and inflammation. It is being added as a supplement to food, drinks and cosmetics across the West. In June America approved the first cbd medicine, for epilepsy.

Bayer hacked by China?
Bayer contains cyber attack it says bore Chinese hallmarks / Reuters
“German drugmaker Bayer has contained a cyber attack it believes was hatched in China, the company said, highlighting the risk of data theft and disruption faced by big business.”
Tech investment in the Middle East and North Africa
Chinese tech investors are turning towards MENA. Here’s why / World Economic Forum

Alibaba has pledged to build a ‘Tech Town’ with Dubai Developer Meraas Holding, which will house over 3,000 high-tech companies, near Dubai’s free port Jebel Ali… Huawei just made an announcement to set up a cloud data centre in Egypt… Chinese e-commerce company JollyChic has managed to become one of the largest e-commerce sites in the region, focusing on cross-border trade only.

Stock market pain
Chinese brokers take a collective pay cut after a miserable 2018 in the world’s worst-performing stock market / SCMP

SCIENCE, HEALTH, AND THE ENVIRONMENT:

Bullet trains and the environment
How green is China’s high-speed rail? / Chinadialogue

China’s economic planning department has recently approved a flurry of new rail projects at a scale that Green New Deal advocates in the United States would envy. A total of 800 billion yuan ($120 billion) will be poured into rail construction in 2019 as part of a plan to stimulate the domestic economy…

…Trains are among the most energy-efficient modes of transport, so new lines could be a major asset to China’s decarbonisation. However, studies show that some of China’s high-speed lines have relatively large carbon footprints and are chronically underutilized.

POLITICS AND CURRENT AFFAIRS:

U.S.-China trade war
The Trump administration is forcing this health start-up that took Chinese money into a fire sale / CNBC
“PatientsLikeMe is being forced to find a buyer after the U.S. government has ordered its majority owner, a Chinese firm, to divest its stake. PatientsLikeMe provides an online service that helps patients find people with similar health conditions. In 2017, the start-up raised $100 million and sold a majority stake to Shenzhen-based iCarbonX.”
One Trump victory: Companies rethink China / NYT (porous paywall)
“The trade war is nearing a possible truce, but global companies are nevertheless moving to reduce their dependence on Chinese factories to make the world’s goods.”
China hails ‘new consensus’ on trade as Trump talks up unfinished deal / Bloomberg (porous paywall)
‘New consensus’ reached on US-China trade, says Chinese Vice Premier Liu He / CNBC
Xi Jinping tells Donald Trump strategic leadership is key to trade deal amid talk of 4-week countdown / SCMP
US-China trade deal could be challenged by other nations, WTO chief says / SCMP
Shenzhen-listed textile firm’s Indonesia investment fuels hopes of silver lining in US-China trade war / SCMP
Senators want sanctions on China over fentanyl / ABC
“Senators Chuck Schumer of New York and Arkansas’ Tom Cotton joined a bipartisan group of senators to introduce legislation that would slap targeted sanctions on China if it fails to live up to a recent promise to regulate fentanyl as a controlled substance.”
China bought lots of Florida lobster despite tariffs. Keys fishermen paid the price / Miami Herald
“Chinese importers bought Florida spiny lobsters in what could be near-record numbers this season, despite a 25 percent tariff their government placed on U.S. seafood last July, according to the leading Florida Keys commercial fishermen’s trade group.”
Belt and Road bumps
Maldives president seeks to investigate China deals that left the country with debts worth US$3 billion / SCMP
“The Maldives heads for a parliamentary election on Saturday with President Ibrahim Mohamed Solih seeking a majority for his party to investigate debts to China, which it fears could run as high as US$3 billion and risk sinking the economy.”
China is becoming an election issue in Asia. And that’s bad news for Beijing / CNN
“The growing skepticism over Xi’s signature Belt and Road Initiative (BRI) risks exacerbating existing tensions many countries in the region have with Beijing over territorial disputes, as both China and the US continue to jockey for power amid a drawn-out trade war.”
The Mar-a-Lago gate-crasher
‘Extreme flight risk’: Zhang Yujing, Chinese woman arrested at Trump’s Mar-a-Lago club, owns US$1.3 million home and BMW, US court is told / SCMP
On The China Project earlier this week: Chinese trespasser at Mar-a-Lago was going to Cindy Yang event.
Wealthy Chinese immigration to Europe
Chinese take a shine to Europe’s investor immigrant schemes, as waiting list for US programme stretches to 10 years / SCMP
“Washington’s EB-5 investment immigration programme last year issued 4,642 visas to those born in the mainland, down from 8,308 in 2014.” One immigration consultant said that “more people are weighing new options in Europe, including the ‘Golden Visa’ programmes introduced by Greece, Spain, Portugal, and Malta.”
Australian coal holdups
Aussie coal’s a bargain, but find buyers brave enough to test China / The Age
“Coal from Australia, which is the world’s second-biggest exporter, has been subject to delays since January, and cargoes are sitting at China’s ports for extended periods as officials slow customs clearance.”
Chinese cities with Dutch disease
These Chinese cities depend on dwindling resources. Can they survive? / National Geographic
A photo essay and article on cities whose “growth was fueled by mining, logging, and other resource-dependent industries,” but face an uncertain future as those resources are exhausted. One noteworthy example: Jingdezhen, the historical heart of China’s porcelain industry, is running out of the type of clay needed for ceramics.
Chemical plant explosion aftermath
Chinese chemical plant to close after fatal explosion / SCMP
“The Yancheng city government in Jiangsu will close down the chemical plant where an explosion killed 78 people on March 21.”
Syria and the Belt and Road?
As the US withdraws from Syria, China may boost its influence in the country / CNBC

“It serves (China’s) interest to first enter Syria economically, and be seen as contributing to the overall economy,” said Bonnie Glaser, a senior Asia advisor at a Washington-based think tank Center for Strategic and International Studies…

Syria could become a crucial player in [Belt and Road]… For one, Syria’s Tartus port is a likely point of interest to China, experts said. In fact, a 2018 statement from the Chinese embassy in Damascus affirmed the importance of the port for economic development.

Confucius Institutes in the U.S.
Opinion: America’s universities are finally waking up to the China threat / Washington Post

America’s universities have been slow in coming to terms with the problems posed by Chinese influence. They are now finally beginning to work with the national security community to respond to China’s attempts to infiltrate the United States’ higher-education system and abuse those relationships to advance Beijing’s strategic agenda.

Are Confucius Institutes good for American universities? / ChinaFile
A conversation with contributors both for and against CIs at U.S. schools.

SOCIETY AND CULTURE:

Film production
Meet the Chinese backer of Ang Lee’s ‘Gemini Man’ / China Film Insider
“Ang Lee’s new sci-fi action movie Gemini Man…is financially backed by a group of entertainment powerhouses, including…Chinese conglomerate and investment company Fosun Group.”
Creative nonfiction
The loneliness of living with hemorrhoids, part 2 / Chinarrative
“We pick up where we left off, with protagonist Jiang Yijun still preparing for her third hemorrhoids surgery while reminiscing about her first and second, in particular her relationship with the doctor who performed the first two procedures.”
Shanghai’s famous homeless sage
Meet China’s latest internet celebrity: The “Vagrant Shanghai Professor” / What’s on Weibo
“Over the past month, the popular short-video app Douyin flooded with videos of the so-called ‘Vagrant Shanghai Professor’ (上海流浪大师 Shànghǎi liúlàng dàshī), who has conquered the hearts of millions of Chinese netizens.”
Cremation and burial
‘Can’t afford to die’: China embraces eco burials as plot prices outstrip housing / Guardian
“Can’t afford to die, can’t afford to be buried.”
See also on The China Project: Too many corpses to bury: China’s new campaign for cremation
Protest art: The Yulin dog meat festival
In pictures: Skeleton reassembled to protest annual Chinese dog meat festival / Hong Kong Free Press
Superstitious air travelers
Yet another Chinese traveler detained for throwing “good luck” coins before boarding flight / Shanghaiist
“This is now at least the sixth time that this kind of thing has happened in China in the past two years. Somehow, it’s only becoming more and more frequent.”

VIDEO ON SUPCHINA

This week’s top news in review: April 1–5

From China’s expanded restrictions on all “fentanyl-related substances” to a looming trade deal after nearly a year of talks between China and the U.S. to a wristband that monitors sanitation workers’ performance in Nanjing, here are some top stories we covered this week.

We also published the following videos this week:

FEATURED ON SUPCHINA

The brief and scandalous film career of Madame Mao

Before she became the most powerful woman in China and imposed her vision of art and culture on the country, inflicting untold violence along the way, Jiang Qing was known as Lan Ping — “Blue Apple” — and was a middling actress whose failures would shape the person she would become. When the Cultural Revolution rolled around, she was determined to erase the past, yet also take revenge.

Uyghurs don’t need to be saved. Their stories need to be mainstreamed

Uyghurs are a nation of poets. Poets, and the musicians who perform their lyrics, are the leaders of the nation. If they were to be given even limited forms of autonomy in Xinjiang, poetry might bring their traditions into the present and guide them into the future. But the autonomy they desire is not the same kind of freedom that Marco Rubio stands for when he advocates for Uyghur rights — the American right is, in fact, still in favor of saving Muslims from themselves. Uyghurs do not need to be saved, or your pity; they need to be heard, and their voices need to be amplified.

The allure (and hazards) of going international: Higher Brothers’ ‘Five Stars,’ reviewed

Five Stars, the second full-length album from Chengdu’s Higher Brothers, is the album they had to make at some point. They were inevitably going to have to experiment with sacrificing the fluidity of rapping in their native tongue for the flex of doing it in two (or three, if you count their native Sichuan dialect) languages. The result is a fairly uneven effort, but when accounting for the hurdles they had to face linguistically, culturally, and personally, the result is promising nonetheless.

Chinese Corner: China has a betel nut problem

Betel nut, as innocuous as it seems, is, in fact, deadly. Despite its carcinogenic nature, betel nut, which gives consumers a buzz on a par with six cups of coffee, has a massive market in China, where people casually pick up the habit of chewing it at a young age and gradually become reliant on it to stay energetic. Also in this week’s Chinese Corner: The tragic tale of Tao Chongyuan, the future of cross-talk, and the awfulness of driving schools.

Kuora: What if the Chinese, and not Europeans, had colonized the New World?

How would the Chinese have treated the native population if they had colonized the New World before the Europeans? Would the Incan and Aztec empires have survived longer? For starters, the Chinese would have viewed the natives — those who survived the many diseases carried ashore, in any case — as curiosities. They would have believed themselves to be culturally superior, and would have set about trying to instruct the natives in their language and rites. Who knows what the outcome would have been.

Wei Shihao suspended for breaking opponent’s leg in China Cup loss

China finished dead last in the four-team China Cup, having followed up a 1-0 defeat to Thailand last week with another 1-0 loss against Uzbekistan. But that match was most notable for Wei Shihao’s horror tackle against Otabek Shukurov, which has left the Uzbek midfielder sidelined for the rest of the season with a broken leg. Also in this week’s China Sports Column: Ni La, Sun Yang, Fu Yuanhui, and more.

Sinica Podcast: An update on the Xinjiang crisis with Nury Turkel

Kaiser sat down with Nury Turkel, chairman and founder of the Uyghur Human Rights Project, at the recent Association for Asian Studies conference in Denver for an impromptu catch-up on the current crisis in Xinjiang. Nury last appeared on the Sinica Podcast half a year ago. They discussed the policy options available to the U.S. as well as the difficulties of trying to get through to Chinese elites and ordinary Chinese people alike.

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

Ta for Ta, Episode 16: Rebecca Liao

Rebecca Liao is the executive vice president of Skuchain, a blockchain platform that provides an end-to-end solution for the supply chain. She is also a writer and China analyst. Rebecca was a member of Secretary Clinton’s foreign policy team for her 2016 presidential campaign, responsible for Asia trade and economic policy.

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

Middle Earth, Episode 6: Comparing Chinese and Western documentaries

When prodded to think about documentaries at all, most people imagine feature films that are shown in festivals and cinemas. What this picture misses is the fact that the majority of documentary filmmakers make their living producing documentaries for television. Does this mean that documentarians in China are all but guaranteed to make money in the country, with its billion-strong audience?

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

TechBuzz China, Episode 41: IPO is for influencers: The company behind China’s Kylie Jenner is going public

In Episode 41 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Ruhnn (RUHN), a relatively small yet significant company that filed for IPO status a few weeks ago in the U.S. on the Nasdaq. Ruhnn has become the clear leader in China’s fast-growing influencer marketing sector, an area in which — our co-hosts agree — China should be considered world-leading. Lauren Hallahan, a Chinese social media marketing expert focusing on influencer marketing, and a former live-streamer in China with over 400,000 fans, joins us with insightful commentary on Ruhnn and other influencer incubators.

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

The Caixin-Sinica Business Brief, Episode 82

This week on the Caixin-Sinica Business Brief: Some vague progress in the seemingly never-ending U.S.-China trade war, Huawei’s performance last year, China’s 5G wireless communications licenses, and more.

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

PHOTO OF THE DAY

Springtime in Beijing

Spring at Yuyantan Park (Jade Lake Park), which is famous for its cherry blossoms. Photo taken in 2017 on a Leica M6 by Nina Dillenz, whom you can find on Instagram at @sempre.libera.

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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Was Lou Jiwei sacked for speaking out?

1. Was Lou Jiwei sacked for speaking out?

2. Bytedance now has more employees than Facebook