Here comes Chinese 5G

Dear Access member,

• Here is an excellent take on the U.S.-China trade war: a Q&A with businessman, China media veteran, and author James McGregor in New York magazine.

• This is very China 2019: The People’s Daily has published a photo showing government workers using radio equipment to test for illegal transmissions near high school examination sites in Qinhuangdao, Hebei Province. They hope to “prevent and combat cheating by using radio equipment” during the gāokǎo 高考, the college entrance exams that take place June 6–9.   

• New on The China Project:

  • ‘We are Filipinos, and we hate China’ — China’s influence in the Philippines, and the backlash against Tsinoys, by Nick Aspinwall.

  • This week on the Sinica Podcast, Kaiser sits down with Jude Blanchette to talk about his new book, China’s New Red Guards: The Return of Radicalism and the Rebirth of Mao Zedong, which just came out on June 3.

—Jeremy Goldkorn, Editor-in-Chief

1. 5G — the next national project?

Building a domestic 5G network is now an urgent national priority for China, one to be achieved by any means necessary, and possibly at great cost.

THE NEWS

Green light for 5G rollout

“China has given the go ahead for its major state-owned mobile carries to start rolling out next generation networks known as 5G, a move experts said was partly a response to the ongoing trade war with the U.S.,” reports CNBC (or see the Xinhua report in Chinese, with a flashy infographic).

Another sign of the vocal enthusiasm for 5G at the highest levels of the Chinese government: The word “5G” appears 14 times on state-owned news agency Xinhua’s homepage as I write this; Party newspaper People’s Daily uses it nine times (both links in Chinese).

Support for 5G part of new stimulus

The National Development and Reform Commission (NDRC) and the ministries of Commerce and of Ecology and Environment jointly released a two-year plan (in Chinese) to promote consumption, especially of electronics and vehicles that depend on 5G and new energy technologies.

Huawei working 24/7

Bloomberg News Network reports:

Huawei has assigned as many as 10,000 of its developers to work across three shifts a day in offices in Shanghai, Shenzhen, and Xi’an to try to eliminate the need for American software and circuitry, according to people familiar with the matter. From janitors to drivers, everyone has been drafted into the struggle and told to brace for escalating political and market pressure. Huawei has declined to comment beyond saying it’s had contingency plans in place for just such an occasion…

Engineers in some groups haven’t gone home for several days.

WHAT IT MEANS

The People’s Republic of China has a long history of trajectory-changing national projects focused on infrastructure. Some of these, of course, like the Great Leap Forward, were misguided disasters that killed millions. However, in 1964, only a few years after the Great Leap Forward, an impoverished and isolated China successfully tested its first atomic bomb.

In the 21st century, China’s arguably largest national project — and certainly the one that has received the most admiration from foreigners, even if some grumble about stolen intellectual property — has been the breakneck construction of its 20,000-mile-and-growing high-speed rail network.

The threat of an American cutoff of technologies vital to 5G has galvanized the Chinese government and public as well as the country’s hungry entrepreneurs. American sanctions on Huawei have hastened what may have been inevitable. Building a domestic, independent fifth-generation (5G) telecom is now an urgent national priority for China, one to be achieved by any means necessary, and possibly at great cost.

Other Huawei news

• Mark Liu (劉德音 Liú Déyīn), chairperson of Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chipmaker, yesterday warned that Huawei had cut orders, “likely because of flagging demand for premium smartphones and higher inventory,” reports Taiwan Times.

• “Suppliers around the world are reaffirming their support for” Huawei, says the China Daily, in a short article noting that “German chipmaker Infineon said it is continuing most shipments to Huawei, given that the majority of products it delivers to the Chinese firm are not subject to US export control law restrictions.”

2. Sea launchpad for rockets, brought to you by Great Wall Motor

The China Academy of Launch Vehicle Technology (CALT), or “Rocket Academy” (火箭院 huǒjiàn yuàn) for short, is the country’s major space liftoff provider. On June 5, in collaboration with the Hong Kong–listed Great Wall Motors, CALT conducted China’s “first orbital sea launch on Wednesday, with a Long March 11 rocket lifting off from a floating platform in the Yellow Sea off the eastern province of Shandong,” reports Satellite Pro Me.

• The launch makes China the first nation “to fully own and operate a floating sea launch platform, a technology expected to significantly reduce the cost and risk of space missions,” according to the South China Morning Post.

• The rocket was named WEY, after a new SUV model produced by Great Wall Motor (see WEY website). Great Wall Motor and CALT have opened an “innovation hub,” and say that “some cutting-edge car technology, such as new paint materials,” will go into space for testing.

3. Trade and tech war update

U.S.-China tensions drag on, and each day is a war of words in the news media. Aside from the Huawei news above, here is what you need to know:

Taiwan arms sales — “The United States is pursuing the sale of more than $2 billion worth of tanks and weapons to Taiwan,” reports Reuters.

Donald Trump threatened tariffs on another $300 billion in Chinese goods, but said he would decide only after the G20 meeting in Osaka, June 28–29, according to Reuters.

Boeing is “in talks to sell 100 jets to China” despite the growing tensions between the U.S. and China, reports Bloomberg, via the L.A. Times.

—–

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:

• Audit for big pharma kickbacks
  China to audit 77 drugmakers in fight against health care kickbacks / Caixin (paywall)
  With many hospitals still depending on drug sales for revenue, kickbacks from drug firms remain a problem. Caixin reports:

China is intensifying scrutiny of illegal kickbacks paid by pharmaceutical companies as part of efforts to drive down drug prices, analysts say, as it rolls out a plan to audit 77 drugmakers across the country.

The Ministry of Finance announced (in Chinese) Tuesday a list of 77 drugmakers that had been “randomly selected” for auditing in June and July. The list includes the local arms of three multinationals: Sanofi, Eli Lilly & Co. and Bristol-Myers Squibb Co. Also listed are some of China’s biggest domestic players, including Shanghai Fosun Pharmaceutical Group Co. Ltd., Jiangsu Hengrui Medicine Co. Ltd. and Shanghai Pharmaceuticals Holding Co. Ltd.

• China’s new Nasdaq-style market
  Shanghai bourse clears first high-tech board listings / Caixin (paywall)

China flashed the first green light to three companies to proceed with listing on the new Nasdaq-style high-tech board in Shanghai, according to a statement [in Chinese] published Wednesday by the Shanghai Stock Exchange.

The Shanghai exchange, the operator of the new board, reviewed listing applications Wednesday of Shenzhen Chipscreen Biosciences Co., Suzhou TZTEK Technology Co. and Anji Microelectronics Technology (Shanghai) Co.

• Capital outflow controls — practical business advice
  Getting your money out of China and the importance of getting cash repatriation requests done right the first time / China Law Blog
  “In 2016, we did a six part series on legally getting money out of China. We wrote that series during a time when China was hyper concerned about foreign currency leaving China. China is about ten times more concerned with that now than then.”

• Labor market — alternative economic signals
  In China, searches to ‘find a job’ hit a record / Bloomberg(porous paywall)
  “Pressure is mounting in China’s labor market, at least if you go by how often people are looking for jobs online. Frequency of searches for the term ‘find a job’ surged to the highest ever in April, according to an index compiled by the nation’s dominant search engine Baidu.”

• Luxury product sales
  Louis Vuitton sees demand in mainland China picking up steam / Reuters
  “Demand for Vuitton products within mainland China was still at ‘unheard of’ levels, its CEO Michael Burke was quoted as saying.”

SCIENCE, HEALTH, AND THE ENVIRONMENT:

• Hospital violence
  Chinese govt unveils blacklist for people who assault doctors / Sixth Tone
  In China’s stressed health care system, violence against doctors and other healthcare workers is common enough that there is a word for it: 医闹 yī nào.
  Sixth Tone reports that China’s National Health Commission and 27 other government departments have now “issued a joint statement [in Chinese] Wednesday blacklisting 177 people with a history of yinao… The blacklisted individuals will be flagged in a nationwide social credit system.”
  

POLITICS AND CURRENT AFFAIRS:

• India’s difficult balancing act
  Wary of China, India draws closer to the US just not too close, as the loss of its special trade status shows / SCMP
  “United States President Donald Trump has opened up a new front in his ongoing trade wars by stripping India of its preferential trade status from June 5, after deciding that Delhi was not playing ball in providing market access to American products.”

• Australia — hacking accusations
  China ‘behind’ huge ANU hack amid fears government employees could be compromised / Sydney Morning Herald

China is the key suspect in the theft of huge volumes of highly sensitive personal data from the Australian National University, which intelligence officials now fear could be used to “groom” students as informants before they move into the Australian public service…

…While it is understood there is no clear evidence yet that Beijing is behind the attack, sources said China was one of only a handful of countries able to carry out such a breach while remaining undetected.

• Xi in Russia signals mutual support
  Stronger China-Russia partnership key to global peace, stability: Xi / Xinhua

• Censorship  
  30 years since Tiananmen Square: The state of Chinese censorship and digital surveillance / Electronic Frontiers Foundation
  A new report from the international speech- and internet-freedom advocacy group.

• Taiwan — Beijing influence
  MAC slams youth corps’ educational tours to China / Focus Taiwan
  “Summer educational tours to China organized by Taiwan’s China Youth Corps (CYC) are being conducted in collaboration with China’s propaganda units, the Taiwan government agency that handles cross-strait affairs said Thursday.”

SOCIETY AND CULTURE:

• Rape culture, the internet, and Richard Liu
  In China, a viral video sets off a challenge to rape culture / NYT (porous paywall)
  A new piece by Li Yuan about the social fallout of the Richard Liu (刘强东 Liú Qiángdōng) case:
  “The images were meant to exonerate Richard Liu, the e-commerce mogul. They have also helped fuel a nascent #NoPerfectVictim movement.”

• College entrance exam
  Crunch time as exam season starts for China’s university hopefuls / SCMP
  Summer does not mean vacation for Chinese high school seniors, it means it’s time for the gāokǎo 高考, or college entrance exam.

  • —Annual tests still an academic pressure cooker for students wanting to get into the nation’s top universities, despite efforts to change the system

  • —The grueling exam is the sole criteria for admission to university in China

  52-year-old to take 23rd gaokao / China Daily
  “A 52-year-old man from Southwest China’s Sichuan Province will sit for the national college entrance examination, or gaokao, on Friday for the 23rd time.”

FEATURED ON SUPCHINA

‘We are Filipinos, and we hate China’: China’s influence in the Philippines, and backlash against Tsinoys

The Philippines, under President Rodrigo Duterte, has opened its arms to China, which has alarmed Filipinos, who are fearful that China will trample their country’s sovereignty in the disputed South China Sea and handicap the archipelago with burdensome “debt trap” Belt and Road projects. Recent anger directed toward China has inflicted what experts call “collateral damage” upon the Tsinoys, i.e., Filipino Chinese, who historically have persisted through discrimination.

SINICA PODCAST NETWORK

Sinica Podcast: China’s New Red Guards: Jude Blanchette on China’s Far Left

This week, Kaiser sits down with Jude Blanchette in the Sinica South Studio in Durham, North Carolina, to talk about Jude’s new book, China’s New Red Guards: The Return of Radicalism and the Rebirth of Mao Zedong, which just came out on June 3. Jude explains the origins of the neo-Maoists and others on the left opposition, and how overlooking the conservative reaction to reform and opening impoverishes our understanding of China and its politics.

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