Trade talks end with a whimper

Dear Access member,

Three things:

“90 million people are officially members of the Chinese Communist Party. Why have they chosen to take the pledge? And what about those who don’t?” That’s the question at the start of the latest The China Project column by particle physicist Yangyang Cheng: ‘Communism is a faith.’

China’s gaming industry, explained: With nearly 620 million players who spent over $37 billion on mobile and PC games in 2018, China currently boasts the world’s largest gaming market. Jiayun Feng gets you up to speed on China’s gaming industry in our latest explainer, a weekly feature that we are now calling The China Project Signal. 

Join us this Friday, August 2 on Slack, for an interactive Q&A with Maria Repnikova. This conversation only for Access members will happen at 10 a.m. EST (10 p.m. in Beijing). Maria is a professor at Georgia State University, and her new project is on China’s global nation-branding. Specifically, she examines how China expresses and transmits its values, norms, and cultural practices through the prism of its engagement in Ethiopia. She also occasionally digs into China-Russia issues and comparative non-democratic governance. Before the chat:

• Listen to Maria on the Sinica Podcast discussing her 2017 book on media politics in China: ‘Critical’ journalism in China, explained by Maria Repnikova.

• Watch a short video about her experience in Addis Ababa on MacroPolo. 

To join the Slack channel, if you haven’t already, click here. We hope to see you there on Friday!

—Jeremy Goldkorn, Editor-in-Chief

1. Trade talks end with a whimper

After the 12th round of trade talks since the tariff war began 391 days ago, the American and Chinese teams have agreed…to keep talking. Reuters reports:

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin left China with little in hand save a pledge to keep talking, following a half-day meeting and a working dinner at Shanghai’s historic Fairmont Peace Hotel.

A White House statement added:

The two sides discussed topics such as forced technology transfer, intellectual property rights, services, non-tariff barriers, and agriculture. The Chinese side confirmed their commitment to increase purchases of United States agricultural exports. The meetings were constructive, and we expect negotiations on an enforceable trade deal to continue in Washington, D.C., in early September.

“Both sides appear to be settling in for a lengthy economic conflict,” the New York Times says. “Beijing, while wanting to appear willing to negotiate, thinks it can extract better terms by not hurrying into concessions, according to Chinese experts and others briefed on the talks,” the Wall Street Journal reported. 

Other reports related to the ongoing techno-trade tumult:

“While an export report this week gives some indication China is coming back into the market, a longer term data view shows purchases of U.S. soybeans have languished,” according to Bloomberg. The outlet’s columnist David Fickling warns, “Beijing has already started sourcing agricultural products from other countries. Temporary measures like this can end up sticking.” 

“With or without retaliatory tariffs, Chinese companies will probably show little interest in buying U.S. corn because the jump in Chicago benchmark futures since May has wiped out the price advantage over domestic supplies, according to Yigu Info Consulting Ltd,” per Bloomberg via Yahoo Finance. 

—Lucas Niewenhuis

2. Are Chinese troops headed for Hong Kong?

Some updates from and about the ongoing protests in Hong Kong: 

Is China sending troops to the border with Hong Kong? “The White House is monitoring what a senior administration official called a congregation of Chinese forces on Hong Kong’s border,” according to Bloomberg (porous paywall):

The nature of the Chinese buildup wasn’t clear; the official said that units of the Chinese military or armed police had gathered at the border with Hong Kong. The official briefed reporters on a range of issues on condition he not be identified.

“Westerners living in Hong Kong are being targeted online by China’s state-owned media and local pro-Beijing politicians who have accused them of stoking demonstrations that have now run into their eighth week,” according to the Guardian. 

The online tactic reinforces the assertion by Beijing that “foreign forces” are behind the protests. On Monday, the People’s Daily, the official mouthpiece of the Chinese Communist party, published an editorial warning citizens against “provoking external forces” that “lead the wolves into your home and hurt the country.” 

“U.S. Secretary of State Mike Pompeo has said it is ‘ludicrous’ for China to claim the United States is behind the escalating protests in Hong Kong,” reports the South China Morning Post. 

3. Is WeChat about to get Huaweid? 

In our Q1 2019 Red Paper (free for Access members at this link), we painted a scenario of heightened scrutiny of Tencent in the United States. If this article on D.C. insider website The Hill is anything to go by, we are about to see calls by legislators in Washington to investigate Tencent and especially its hit product, the chat-and-everything-else app WeChat. Here is the opening paragraph:

The Faustian bargain of WeChat: China shackles the world

WeChat, the popular social media app owned by China’s tech giant Tencent, has registered more than 1.1 billion global users, including from the United States. But this app has become a cybersecurity risk to its users — there is growing evidence that it is a tool of oppression, the eyes, ears and fists of the communist regime.

4. Beijing forces restaurants to remove Arabic script

Reuters reports, via Al Jazeera:

Authorities in the Chinese capital ordered halal restaurants and food stalls to remove Arabic script and symbols associated with Islam from their signs, part of an expanding national effort to “Sinicize” its Muslim population.

Employees at 11 restaurants and shops in Beijing selling halal products said officials told them to remove images associated with Islam, such as the crescent moon and the word “halal” written in Arabic, from their signs.

Government workers from various offices told one manager of a Beijing noodle shop to cover up the “halal” in Arabic on his shop’s sign and then watched him do it.

“They said this is foreign culture and you should use more Chinese culture,” said the manager, who, like all restaurant owners and employees, declined to give his name because of the sensitivity of the issue.

The campaign against Arabic script and Islamic images marks a new phase of a drive that has gained momentum since 2016, aimed at ensuring religions conform to mainstream Chinese culture.

In other news of repression of Muslims: 

• The new story from Beijing that 90 percent of Muslims locked up in Xinjiang concentration camps have been released has been reported, but not believed, by Slate, Al Jazeera, and the Guardian. 

• “My brush with surveillance in Xinjiang” is the title of a piece (paywall) by Yuan Yang in the Financial Times. Snippet: 

Immediately, three women’s faces came up on her screen. The top one was an old visa-application photo of mine that I could barely remember having been taken. Clicking through to it showed her my full passport information. The officer was pleased with the result, remarking on how quick it was.

5. China stops individual travel to Taiwan

The BBC reports:

The country’s tourism ministry said its decision, in effect from Thursday, was spurred by “the current cross-strait situation.”

Solo travellers from 47 cities — including Beijing and Shanghai — have been able to visit since 2011. But tensions have been rising with Beijing, which considers the island territory to be part of China.

The latest travel ban does not apply to groups of tourists.

6. The Chinese name of Xi Jinping’s dodgy cousin

On Monday, we linked to a bunch of articles and TV reports from a team of Australian investigative journalists about their country’s Crown Casino, and its sketchy business luring Chinese high rollers to gamble. One of the high rollers of questionable integrity was a man identified as Ming Chai, cousin of the president of China and general secretary of its Communist Party, Xí Jìnpíng 习近平. 

Today, thanks to overseas Chinese website Mingjing, we know the Chinese characters of Ming Chai’s name: 齐明 Qí Míng. You can watch Mingjing’s video about Qi Ming here (in Chinese). 

In case you missed them yesterday, here is the package of stories about Crown Casino:

• Xi Jinping’s cousin a high roller as Crown comes under pressure over crime, influence / The Age 

• Crown Casino exposed. Sex trafficking, drugs, money laundering / 60 Minutes Australia on YouTube

• Crown’s unsavory business links: How Australia’s casino got tied up with criminals / The Age 

• Gangsters, gamblers and Crown casino: How it all went wrong / The Age 

• Ex-Crown employee breaks silence on what really happened during Chinese police raids / 9News 

—–

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:

• Top shopping app taken down
  Xiaohongshu shopping app pulled from China app stores / Quartz

Xiaohongshu, a product-review site with a loyal user community…was taken down from several Android app stores starting July 29, according to reports in Chinese media. It remains unclear which authority ordered the move or for what reasons, with some Chinese media outlets speculating that it might have to do with the app having too many “fake reviews”: posts from bloggers that pretend to be genuine recommendations of products but are actually content paid by brands.

• Sluggish economy
  China data suggest economy is still weak, boosting case for Beijing support / WSJ (paywall)

The manufacturing purchasing managers index edged up to 49.7 in July from 49.4 in June, the National Bureau of Statistics said Wednesday. July’s reading was better than market expectations, suggesting a trade cease-fire between China and the U.S. and previous policy-easing measures had boosted confidence among factory owners, economists said.

Still, the index has been stuck below the 50 threshold that separates expansion from contraction for three months, underscoring persistent challenges.

• Chemical crackdown
  China’s chemical crackdown ‘having more impact on business than US trade war’ / Reuters

China has launched a series of inspection campaigns aimed at tackling illegal or irregular chemical production after a lethal explosion at an industrial park in Jiangsu province killed 78 people and injured dozens more in March… 

But the inspections have already disrupted the flow of key chemical ingredients, and forced international suppliers to look elsewhere or even consider moving their businesses abroad.

• Apple doing OK in China
  Apple’s performance recovers in China as global iPhone sales fall / SCMP
  “U.S. technology giant Apple saw an improvement in its China business in the past quarter even though global iPhone sales fell to less than 50 per cent of total revenue for the first time in seven years.”

• Banking woes
  UBS analyst who predicted China bank woes sees $349 billion hole / Bloomberg (porous paywall)
  “Jason Bedford might be the only person on Earth who reads every line of every financial statement issued by nearly 250 Chinese banks. His conclusion after completing the ritual for the umpteenth time: the industry needs capital, and lots of it.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Gene-editing wonders
  China’s CRISPR push in animals promises better meat, novel therapies, and pig organs for people / Science Magazine

China now has at least four groups of CRISPR researchers doing gene editing with large colonies of monkeys. “The most startling part of what is coming out of China is seeing how they have just a brute-force approach,” says reproductive biologist Jon Hennebold at the Oregon National Primate Research Center in Hillsboro. “The level of animal support they have to do those experiments is really astounding.”

It’s not just monkeys. China’s researchers have racked up a long list of CRISPR firsts in dogs, mice, rats, pigs, and rabbits. That research promises higher quality meats, disease-resistant livestock, and new medical treatments and organs for human transplantation. So far, many of the animals are simply proofs of concept. Despite the multitude of CRISPR-altered monkeys, for example, Chinese teams have published “very little follow-up in terms of characterizing what these mutations mean from a [disease] model or a treatment perspective,” Hennebold says.

• Healthcare system
  Crowdfunding can’t cure China’s health care / Foreign Policy (porous paywall)
  “China’s public systems are usually grossly inadequate to cover actual needs, leaving patients paying the bulk of bills themselves or without coverage at all if they seek better medical care in the cities.”
  See also: What ails China’s healthcare system? Roberta Lipson has a detailed diagnosis, on The China Project.

• China and the environment: A reading list
  Top 10 summer reads on China and the environment / China Dialogue
  A selection of relevant books published this year, chosen and described by China Dialogue writers.

POLITICS AND CURRENT AFFAIRS:

• Chinese nationalism Down Under
  Chinese nationalists bring threat of violence to Australia universities / NYT (porous paywall)
  “The Chinese nationalists disrupting pro-Hong Kong democracy rallies at the University of Queensland arrived 300 strong, with a speaker to blast China’s national anthem. They deferred to a leader in a pink shirt. And their tactics included violence.”

• People’s Republic 70th anniversary stress
  China mobilises 190,000 police officers for 70th anniversary celebrations / SCMP
  “Beijing mobilised about 190,000 police officers in a drill for the 70th anniversary of the founding of the People’s Republic of China, state media reported.”

• Propaganda
  A provocateur on the front lines of China’s war of words with the U.S. / NYT (porous paywall)
  A profile of the mouth-frothing editor of state-owned nationalist tabloid the Global Times. 

• Anti-corruption campaign
  China’s ex-‘super bank’ chief faces probe as Beijing’s financial sector corruption crackdown continues / SCMP
  “The former chairman of a state lender known as ‘Beijing’s super bank’ is being investigated for ‘a serious disciplinary violation,’ according to a statement from the Communist Party’s enforcement agency on Wednesday.” 

• Friendship and surveillance
  Czech-Chinese “friendship” extends to social credit / China Digital Times
  “A secretive meeting between Czech and Chinese officials illustrates the links between the CCP’s Soviet-inspired system of ‘friendship’ associations and the Czech business and political élite. A topic of the talks: ‘building the social credit system.’”

• Grinding down human rights lawyers
  Wife of jailed Chinese rights lawyer says he needs medical treatment / Radio Free Asia
  “The wife of jailed Chinese rights attorney Wáng Quánzhāng 王全璋 has applied for his release on medical parole after visiting him for the second time in three years.”

• Geopolitics in Southeast Asia
  China and US court Asean members to strengthen Indo-Pacific ties as trade war enters second year / SCMP
  “U.S. Secretary of State Mike Pompeo arrived for a meeting of the Association of Southeast Asian Nations (Asean) in Bangkok on Wednesday to promote the US-led Indo-Pacific strategy, while Chinese Foreign Minister Wáng Yì 王毅 touched down a day earlier to advance Beijing’s Belt and Road Initiative.”

• African strategies for actually winning with China
  The avocado strategy: How Africa aims to rebalance trade with China / SCMP
  “From Ethiopia to Namibia, countries on the continent are trying to expand the focus from just natural resources to include value-added products in the drive to narrow their trading gap with the Asian giant. But there are barriers to overcome to get goods from African farms to Chinese tables.”

• China squeezes Fiji on Taiwan
  Beijing pressures Fiji into renaming office, MOFA says / Taipei Times
  “Taiwan’s representative office in Fiji has changed its name due to pressure from the Chinese government, the [Taiwan] Ministry of Foreign Affairs said yesterday. Using its political and economic advantage, Beijing pressured the Fijian government to change the name of the office, the ministry said, adding that it strongly condemns this behavior.”

SOCIETY AND CULTURE:

• Internships
  China bans irrelevant ‘internships’ to curb student exploitation / Sixth Tone
  “In a bid to end exploitation by employers, a new guideline prohibits schools from assigning internships that are unrelated to students’ majors.”

• China and Hollywood
  Quentin Tarantino’s depiction of Bruce Lee as “arrogant a-hole” enrages Chinese social media / Radii China
  “The Chinese internet has flipped into outrage mode after Bruce Lee’s daughter voiced concerns over how her father was portrayed in Once Upon a Time…in Hollywood.”

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‘Communism is a faith’: Notes on the Chinese Communist Party

The Chinese Communist Party was established in 1921, with the first of July designated as its official birthday. Today, 90 million people are officially members. But, Yangyang Cheng writes in her most recent column, no one in China exists free from the Party, regardless of their membership status. For the average Chinese citizen, life inside the Party is a constant tug-of-war between convenience and compromise. They face a complex reality, victimized by an oppressive system but also contributing to their own oppression by becoming part of the system.

China’s gaming industry, explained

With nearly 620 million players who spent over $37 billion on mobile and PC games in 2018, China currently boasts the world’s largest gaming market. To put that in perspective, the number of Chinese people who played video games last year was almost twice the size of the U.S. population.

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This week, Jordan speaks with Graham Webster, a China digital economy fellow and coordinating editor of the DigiChina project at New America. He was previously a senior fellow and lecturer at Yale Law School’s Paul Tsai China Center. The two talked about Graham’s work at DigiChina, artificial intelligence in China and its complex legal infrastructure, the facts (and fiction) behind China’s controversial social credit system, and the potential for a new cold war between the U.S. and China.

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

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In this episode, the Middle Earth Podcast invites podcast hosts to talk about their favorite subject: themselves. Podcasting is rapidly becoming the next boom industry in China, with approximately 80 million daily downloads of podcasts and a projected audience of 486 million total.

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