Wilbur Ross confirms U.S. firms can sell to Huawei

Dear Access member,

Two events in New York: 

• We’re recording a Sinica Podcast with a live studio audience at Lair East in Manhattan on July 17. In this show, Kaiser will interview me, and you will be welcome to ask questions or throw rotten tomatoes. Bring your own. It’s free for Access members, but $20 for everyone else: Please email events@thechinaproject.com to register.

• She Loves Tech is partnering with The China Project to host the U.S. round of the world’s largest tech startup competition for women on August 5. There are just four days left to apply. She Loves Tech’s website is here, you can read more about the New York pitch event here, and you can apply to participate here. 

—Jeremy Goldkorn, Editor-in-Chief

1. Wilbur Ross confirms U.S. firms can sell to Huawei 

“The United States and China are set to relaunch trade talks this week after a two-month hiatus, but a year after their trade war began there is little sign their differences have narrowed,” says Reuters. The view from Beijing is similarly gloomy, according to Bloomberg (porous paywall), which states that “few in Beijing see a clear pathway to a lasting deal. Pessimism dominated in conversations last week with about a dozen bureaucrats, government advisers and researchers in China’s capital.”

However, U.S. Commerce Secretary Wilbur Ross today confirmed that “the U.S. would grant licenses to U.S. companies that want to sell technology to Huawei Technologies Co. as long as the sales wouldn’t put national security at risk, expanding on a pledge made last month by President Trump to Chinese President Xi Jinping,” according to the Wall Street Journal (paywall): 

Huawei will remain, however, on the Commerce Department’s “entity list,” Mr. Ross said Tuesday, meaning that companies that want to sell U.S.-sourced technology to Huawei must first apply for a license. The department will continue to review such licenses with a “presumption of denial,” he said.

Mr. Ross didn’t issue any timeline for when such licenses might be granted. A Huawei spokesman didn’t immediately respond to a request for comment.

Here are other reports from the front lines:

• “It’s open season if you’re a Chinese-American scientist. They’ve got a target on their back.” That’s the view of Peter Zeidenberg, “a former federal prosecutor who has represented several Chinese-American professors and researchers in these espionage-related cases,” according to the Boston Globe. Zeidenberg added, “They are extremely alarmed and afraid.” See also on The China Project: Sinophobia Tracker, The new Yellow Peril?

• The Chinese ambassador to the U.S., Cuī Tiānkǎi 崔天凯, has joined Twitter. His only tweet so far: “I’m pleased to join Twitter and look forward to engaging with more American people. Feel free to follow me and @ChineseEmbinUS to stay looped in.” Cui has not yet followed anyone, so it looks like his account will be a one-way channel of communication. 

• “Chinese venture capital investment in U.S. biotech companies fell by more than half in the first half of the year as Washington tightened scrutiny of funding from overseas, raising fears that U.S. start-ups will struggle to raise funds and access the large Chinese market,” reports the Financial Times (paywall). 

• New duties on Chinese and Mexican steel are in the works, CNN reports: 

The U.S. Department of Commerce said Monday that exporters of fabricated structural steel in China benefited from subsidies ranging between about 30 and 177 percent, while those in Mexico received subsidies of up to 74 percent.

The department said it will instruct U.S. Customs and Border Protection to start collecting cash deposits from importers of the steel products from both countries. It noted that the decision is preliminary, and final determinations will be announced around November 19.

In 2018, the US imported $897.5 million worth of fabricated structured steel from China, and $622.4 million worth from Mexico, according to the Commerce Department.

• Trump’s tariffs could cause a Bible shortage in the U.S., according to the Associated Press: “That’s because millions of Bibles — some estimates put it at 150 million or more — are printed in China each year… Critics of a proposed tariff say it would make the Bible more expensive for consumers and hurt the evangelism efforts of Christian organizations that give away Bibles as part of their ministry.” 

2. Dueling letters to Trump about China 

Last week, China scholars and former diplomats M. Taylor Fravel, J. Stapleton Roy, Michael D. Swaine, Susan A. Thornton, and Ezra Vogel published an open letter to Donald Trump and members of Congress titled China is not an enemy. The letter was also signed by dozens of other prominent businesspeople, scholars, and think tank/government types, some of whom are by no means panda huggers. This is how it begins:

We are deeply concerned about the growing deterioration in U.S. relations with China, which we believe does not serve American or global interests. Although we are very troubled by Beijing’s recent behavior, which requires a strong response, we also believe that many U.S. actions are contributing directly to the downward spiral in relations.

Of course there was backlash. These days, you can’t suggest any kind of softening to China in D.C. or on Twitter without being accused of being on the Chinese Communist Party payroll. 

Some of the criticism is more thoughtful: This Twitter thread by Tianjin resident American Matthew Stinson is fair. Although many of the signatories of the letter may disagree with some of his arguments, his thinking is highly representative of a significant proportion of the younger people in the China-watching community. Here’s an argument on a similar theme, written before the open letter was published, from millennial American essayist Tanner Greer.

The Neanderthals of Washington, D.C., are also fighting back. There’s another open letter that is right now gathering signatures that advises Trump to “stay the course.” You can understand the type of thinking behind this letter from this excerpt:

An inspiration for this letter was the palpable surge of pride in America evident in your celebration of the 4th of July at the memorial to a president, Abraham Lincoln, who saved our country from a previous, existential peril. 

3. Auto sales up in June, but gloom is not gone

After a year of gloomy news for the auto industry in China, the Wall Street Journal reports (paywall) that “retail sales of passenger cars in China rose 4.9 percent in June from a year ago — the first increase since May last year, according to the China Passenger Car Association.”

• However, the uptick in sales seems largely due to dealers offering discounts to clear inventory before July 1, when China began enforcing new emissions standards. (See also this Bloomberg article via SCMP for more.) 

• Meanwhile, Hangzhou-based Geely, “controlled by Volvo Cars owner Lǐ Shūfú 李书福, issued a profit warning that drove down its shares and those of other Chinese automakers as it sparked concern investors are underestimating the depths of the industry’s slump,” according to Bloomberg (porous paywall). 

4. The hopes of a bygone era for rule of law 

From the YouTube channel of activist website ChinaChange:

In 2008, encouraged by a sense that China was opening up to more democratic norms, a group of lawyers in Beijing sought to directly elect the Beijing Lawyers Association, which was controlled by the government and did not serve lawyers’ genuine interests. In this exclusive interview, eight lawyers tell the story of their endeavor, the government’s response, and how the lawyers and law firms that participated were punished for their roles in the effort. 

5. Xinjiang propaganda uptick

The Chinese government is stepping up its propaganda campaign to paint Xinjiang as a “model of human rights protection.” Interestingly, the effort seems to also have a domestic component.

• “When I visited the Xinjiang Vocational Skills Education and Training Center a few months ago, the modern facilities and professional teachers there gave me a very deep impression,” said Vadim Pisarevich, Deputy Permanent Representative of Belarus to the United Nations Office at Geneva, according to this Xinhua article published in Chinese today. It is similar to an English language article on Xinhua that was published on June 26.

• Nationalistic rag the Global Times has produced a special section of its English website called Exploring a real Xinjiang, which gives you the Party line on how wonderful life is for Uyghurs.  

• “Are you forcibly separating parents from their children?” The BBC asked Liú Xiǎomíng 刘晓明, China’s ambassador to the U.K., this question. His response, on this one-minute video clip on Twitter: “There is no separation…not at all.”

—–

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:

• Gloom and doom
  China sheds millionaires as slowdown shaves fortunes / WSJ (paywall)
  China’s cooling economy shrank the ranks of the country’s millionaires last year, according to a consulting firm report, weighing on the total value of assets held by the rich globally.
  Why China’s debt defaults look set to pick up again / Bloomberg (porous paywall)
  China’s efforts to deleverage the economy and crack down on “shadow banks” have led to defaults throughout the country, and despite easing up a bit in 2019, slowing economic growth will likely cause more defaults to rise.
  Heavy debt humbles China’s business champions, including the Jewelry Queen / WSJ (paywall)
  An article about Chinese corporate debt and the burden on China’s largest and most notable businesspeople — including Zhōu Xiǎoguāng 周晓光, “Jewelry Queen” and creator of the world’s largest costume jeweler, Neoglory Holdings Group Co. 

• Video streaming
  Chinese streaming site DouYu seeks up to $944m in US IPO / Financial Times (paywall)
  “Tencent-backed company pushes ahead with listing even as other start-ups hold off.”

• English lessons from Bytedance
  Bytedance tests online learning app ‘Tangyuan English’ / TechNode
  Bytedance, one of China’s most valuable start-ups and maker of TikTok and Toutiao, is testing a short-video-based English-learning app named “Tangyuan English.” 

• Huawei in Cambodia
  Cambodia’s Smart Axiata tests 5G network with China’s Huawei / Reuters

Cambodia’s Smart Axiata said it had begun 5G trials in partnership with China’s Huawei Technologies on Monday and could start rolling out the mobile network by this year.

“It will not be a nationwide coverage from day one, it will be hot spot first, it will be an urban areas first and then we will gradually expand,” Smart Axiata’s chief executive Thomas Hundt told reporters after the trial. 

• Shorting ANTA
  China’s ANTA Sports rejects Muddy Waters allegation as ‘incorrect’ / Reuters
  “ANTA Sports Products Ltd. on Tuesday rejected an allegation by U.S. shortseller Muddy Waters that the Chinese sports brand had manipulated financial information.”

• Cooking the books
  Watchdog probes auditor after massive fraud at Kangde Xin / Caixin Global
  “The auditor of scandal-ridden Kangde Xin Composite Material Group Co. Ltd. has been placed under investigation for failing to perform its duties, an official with China’s securities regulator said Monday, after an inquiry into the listed company uncovered a massive fraud.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Three Gorges Dam
  ‘No problem at all’ with China’s Three Gorges Dam as warping rumors denied / SCMP
  Officials who oversee China’s Three Gorges Dam — the world’s largest dam in terms of electricity generation — hoped to quash online rumors that the mammoth dam is beginning to warp, saying it was running “safely and reliably.”

• Dirty air makes solar power less efficient
  Cleaning up China’s dirty air would give solar energy a huge boost / New Scientist News
  China’s solar panels would work a lot better if only something could be done about China’s notorious air pollution, according to a new analysis. From the article:

Bart Sweerts of the Swiss Federal Institute of Technology in Zurich took solar radiation data from 119 stations across China between 1960 and 2015, combining it with data on emissions of sulphur dioxide and black carbon to pinpoint how much human-caused aerosols had dimmed the maximum output from solar panels. He and his colleagues found air pollution had decreased the potential solar generation by 13 percent over the period. 

• Badly paid doctors
  Chinese rural doctors threaten mass resignations for being overworked and underpaid / SCMP

A group of rural doctors in [Henan] attempted to resign en masse complaining that they were overworked and underpaid… However, it remained unclear whether the doctors had actually been able to resign.

POLITICS AND CURRENT AFFAIRS:

• Hong Kong’s summer of discontent
  Hong Kong’s summer of discontent is far from over / New Statesman
  Antony Dapiran, who recently spoke to the Sinica Podcast about the Hong Kong protests, predicts “a long hot summer of discontent” for Hong Kong.
  Hong Kong leader says China extradition bill is ‘dead’ but declines to withdraw it / Washington Post
  Carrie Lam (林鄭月娥 Lín Zhèng Yuè’é) “declined to formally withdraw the bill from the legislative agenda or meet protesters’ other demands, such as an independent inquiry into police use of force in quelling demonstrations.”
  Hong Kong protesters vow new rallies, reject Carrie Lam’s comments on extradition bill / CNA
  “If our five demands are still not heard by Carrie Lam and her government, the Civil Human Rights Forum will continue to hold protests and assemblies,” said the group’s spokesperson.
  China interrupts Hong Kong pop star during UN speech / CNN
  “Chinese diplomats repeatedly interrupted a Hong Kong pop star and activist as she accused Beijing of ‘preventing our democracy at all costs’ in a speech to the United Nations on Monday.”
  In Pictures: ‘Lennon Wall’ message boards appear across Hong Kong districts in support of anti-extradition bill protesters / HKFP 

• Military drones
  The treaty behind China’s drone edge / WSJ (paywall)
  Defense consultant Arthur Herman writes that “thanks to a single outdated provision of an obscure international agreement formed in 1987 — the Missile Technology Control Regime, or MTCR — the U.S. may lose leadership to China and Iran of the large-drone market, which is expected to grow to $32 billion in 10 years.”

• The end of the Tomorrow Group
  Former top aide to Xiao Jianhua released without trial, sources say / SCMP
  Billionaire tycoon Xiào Jiànhuá 肖建华 was snatched by Chinese security agents from his luxury Hong Kong apartment in April 2017. Three years on, the breakup and investigation of his business empire, the Tomorrow Group, continues. One of his former top aides, Wēn Yīngjié 温英杰, “was released after charges of embezzlement were dropped, according to the three sources, who all spoke on condition of anonymity because of the sensitivity of the case.”

SOCIETY AND CULTURE:

• 20th-century Chinese artist abroad
  Chinese artist Chiang Yee honored with blue plaque in Oxford / That’s Magazine
  Paul French writes: 

He was a Chinese man who came to Britain in 1933 and stayed for the next 18 years living in London’s literary and artistic enclave of Hampstead and, for most of his sojourn, the university town of Oxford. During those nearly two decades, that spanned WW2, Chiang Yee (蒋彝 Jiǎng Yí) became the author of the Silent Traveller series of books, much loved for their Chinese perspective on Britain’s landscapes and people. 

• The uneven progress of the #MeToo movement 
  Unfinished business: Campus sexual harassment in China / Sixth Tone
  As Chinese continue to speak out against sexual harassment and assault on China’s campuses, Sixth Tone provides an infographic of both resolved and unresolved cases of accusations made against faculty and staff over the years, illustrating that “some cases are closed within days. Others drag on for years,” and punishments have varied between universities. 

• Contraception and sexism
  Chinese women bear the major burden of contraception / Sixth Tone
  Another infographic by Sixth Tone shows the divergent rates of sterilization between males and females in China, and that “even though health professionals consider male sterilization as safer, or at least, just as risky, it is still not widely accepted in the country.”

• Architecture
  14 stand-out China entries on the World Architecture Festival 2019 Awards shortlist / RADII China
  With renderings and photos.

• Cinema
  ‘Made in China’ Review / Hollywood Reporter
  A review of Made in China, a Chinese-focused spin-off of a French comedy franchise called Serial (Bad) Weddings.

• Work and screen time
  #10years challenge of how Chinese spend their time / Sixth Tone
  The National Bureau of Statistics published the results of a second “time use survey” recently. The first was conducted in 2008. The results: “Chinese people spend more time working and on the Internet compared with ten years ago.”

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Middle Earth #14: Art from the edges: LGBT and feminist contributions to contemporary Chinese culture

Voices from China’s large but marginalized LGBTQ and feminist communities are increasingly making themselves heard in contemporary culture. In particular, artists and activists from these groups are creating content around the idea of “nontraditional love,” which is resonating strongly even with mainstream Chinese audiences. So how have the stories of creators from historically silenced and censored groups found footholds in contemporary culture? In this episode, Aladin speaks with three representatives from LGBTQ and feminist organizations to find out.

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