The world’s most dangerous place just got more dangerous

Access Archive
Jeremy Goldkorn

Dear Access member,

Maria Repnikova’s Slack Q&A from August 2 is now archived on the #access_qa_archive channel. Let us know whom you would like us to invite to our next Slack chat! 

—Jeremy Goldkorn, Editor-in-Chief

1. Kashmir — the world’s ‘most dangerous place’ just got more dangerous

Yesterday, India unilaterally revoked the autonomous status of Jammu and Kashmir, the Indian-contolled section of disputed territory that borders Pakistan-controlled Gilgit-Baltistan. Jammu and Kashmir will be incorporated into India proper. Narendra Modi’s government also announced that the Buddhist area of Ladakh will be separately administered from the rest of Jammu Kashmir, which is majority Muslim. Ladakh happens to share a disputed border with China. 

China is not pleased. “Beijing…criticized the announcement…as part of a wider policy shift that also ended Jammu and Kashmir’s right to set its own laws [and] said the decision was unacceptable and undermined its territorial sovereignty,” reports Reuters: 

China and India still claim vast swathes of each other’s territory along their 3,500 km (2,173 mile) Himalayan border. The Asian rivals had a two-month standoff on Ladakh’s Doklam plateau in 2017.

“The fact that India took this move…can be seen as one way that India is trying to counter growing Chinese influence in the region,” said Sameer Patil, a Mumbai-based fellow in international security studies at the Gateway House think-tank.

In a statement, Chinese Foreign Ministry spokeswoman Huà Chūnyíng 华春莹 said China contests the inclusion of what it regards as its territory on the Indian side of the western section of the China-India border.

Pakistan is not pleased, either. “Pakistan’s military will ‘go to any extent’ to support Kashmiris, the army chief has said, while Imran Khan predicted new suicide bombings in Indian-administered Kashmir after Delhi revoked the region’s self-rule,” according to the Telegraph (porous paywall). 

This is not ideal. Former U.S. President Bill Clinton once called Kashmir “the most dangerous place in the world.” As Bloomberg puts it in a headline from today (porous paywall): “Two nuclear-armed states have accused India of harming their sovereignty.” 

In our January Red Paper (free for Access members at this link), we sketched out 10 scenarios that could either take place in China or be connected to China in the coming year. One of these was “Terrorism or war in Pakistan or Kashmir.” I hope this does not turn out to be accurate, but the signs are not looking good. 

Further reporting and context:   

2. China condemns ‘manipulator’ designation as American farmers feel the pain 

“Wall Street notched its worst day of 2019 on Monday. In late afternoon trading on Tuesday, major U.S. stock indexes clawed back some of Monday’s losses,” reports Reuters. But today’s news does not bring any reasons for investor optimism. 

CHINA DENIES MANIPULATING CURRENCY

A few minutes before we sent yesterday’s newsletter, the U.S. Treasury designated China as a currency manipulator. The practical effects of the designation do not seem significant. 

  • The Treasury’s action “is more symbolic than anything at this point and aimed at Trump’s hard core political base that he will need to shore up now that the economy is broadly decelerating in part due to the trade conflict,” according to the chief economist at RSM, cited by Politico. 

  • “Ready to rumble” is how the New York Times characterizes (porous paywall) the mood in China and the U.S. right now: “Whatever happens next — and whether this turns out to be the beginning of a major turning point for the global economy or just one rough day on the markets — it is clear that the trade war is no longer confined to trade.” The Washington Post called the Treasury Department’s designation “a major escalation of the trade war.”

  • China’s central bank denied the designation, “saying the label does not meet the quantitative criteria for the so-called ‘currency manipulator’ set by the U.S. Treasury,” according to Xinhua News Agency, which also said in a headline: Labeling China currency manipulator represents typical U.S. bullying. You can find the People’s Bank of China’s full response here (in Chinese). 

  • “Most experts view China letting the value of the yuan slide not as ‘manipulation,’ as Trump accused Beijing of doing, but rather the lack of any intervention since Beijing had been propping up the value of its currency for years,” says Politico. Yale economist Stephen Roach said that declaring China a currency manipulator is an “empty threat,” according to CNBC.

A ‘BODY BLOW’ TO U.S. FARMERS

Bloomberg reports (porous paywall) on the pain inflicted on American farmers after China cut off U.S. agricultural imports: 

Zippy Duvall, president of the American Farm Bureau Federation, the nation’s largest and most influential general farm organization, called China’s import cut-off “a body blow to thousands of farmers and ranchers who are already struggling to get by.”

See also: 

3. ‘Play with fire, you’ll get burned’ — a warning to Hong Kong 

Yáng Guāng 杨光, a spokesperson for the Chinese government’s Hong Kong and Macau Affairs Office, gave a press conference today where he warned Hong Kong protesters: “Play with fire, you’ll get burned” (玩火者必自焚 wánhuǒzhě bì zìfén). He also made frequent references to “black hands” (黑手 hēishǒu) acting behind the scenes to whip up trouble. NPR reports:

[Yang] said China has “tremendous power” to put down the protests and warned that anyone who engages in “violence and crimes…will be held accountable.”

Asked if he could rule out the use of military force in Hong Kong, Yang told journalists: “We will not let any acts attacking the principle of ‘one country, two systems’ go unpunished.”

“I warn all those criminals: Don’t misjudge the situation or take restraint as a sign of weakness,” he said.

See also reports from the BBC and New York Times (porous paywall), or watch a video of the press conference on YouTube. 

Yang also emphasized support for the Hong Kong government and its chief executive, Carrie Lam (林鄭月娥 Lín-Zhèng Yuè’é). Yesterday, we noted that Party mouthpiece the People’s Daily published a front-page editorial (in Chinese) on August 5 expressing support for the Hong Kong police. The newspaper printed another front-page piece (in Chinese) today expressing “firm support for the Chief Executive to lead the Hong Kong SAR Government in accordance with the law.”

In another apparent threat, the Global Times reports that a “total of 12,000 police officers in Shenzhen, South China’s Guangdong Province participated in a drill on Tuesday, attracting online attention as the drill features emergency scenarios that resemble the ongoing riots in adjacent Hong Kong.” The article goes on to claim that: 

The drill attracted unusual attention on social media as many netizens, who hold a grudge against recent riots in Hong Kong Special Administrative Region, said the drill can also call the attention of rioters in Hong Kong, and give Hong Kong police a tip about how to deal with radical protesters.

Global Times also posted a video of the drills to Twitter. It’s worth noting that state media organizations have a habit of calling a piece of propaganda “viral,” as they pump it out through multiple channels online and off. 

The protesters do not seem intimidated. “Some of them are prepared to die for the movement,” said one protester who was interviewed by the Wall Street Journal (paywall). “I am also willing to die for it.” The Guardian also reported that today, “masked protesters staged their first ‘civilian press conference’, in response to government and police press briefings.”

4. China to cut gasoline prices for the fifth time this year

“China will reduce the retail prices of gasoline and diesel starting Wednesday,” reports Ping West. “Based on recent changes in international oil prices, the retail prices of gasoline and diesel will be reduced by 80 yuan (about $11.37) and 70 yuan per tonne respectively,” according to the National Development and Reform Commission (in Chinese).

As this widely reproduced Chinese article points out with great excitement, this is the fifth cut in retail gas prices this year.

In July 2019, gas in China cost around $4 per gallon. This compares with an average of $3 per gallon in the U.S. during the same period. The relatively high cost of petrol is a frequent source of complaint in social media, although Chinese drivers have it easier than their counterparts in Germany who paid around $6 per gallon in July.

5. Uyghur man stuck in Qatar arrives in the U.S. today

On August 3, Megha Rajagopalan of BuzzFeed reported:

Activists are pushing back against the looming deportation of a Uyghur man in Qatar, fearing he could be jailed upon entry or sent to an internment camp in western China.

The man, Ablikim Yusuf, 53, is stuck at the airport in Doha and was originally set to be put on a flight to Beijing on Saturday. Instead, according to a lawyer and activists who have been in touch with him, authorities in Qatar have granted him 24 hours to find another country willing to accept him.

This morning, Australian Uyghur activist Arslan Hidayat tweeted that the U.S. had agreed to take Yusuf: “I can now openly confirm that Ablikim Yusuf will be landing at ‘Dulles International Airport’ in Washington at 3pm local time.” 

In other Xinjiang news: 

  • U.S. “Vice President Mike Pence has signaled that the Trump administration is open to using the Global Magnitsky Act to sanction top officials in Xinjiang, China, where more than 1 million Uighur Muslims are being held in internment camps, according to a Chinese religious freedom advocate who met with Pence at the White House Monday,” reports Axios. 

    Count me skeptical that the current U.S. administration will act on human rights issues. 

  • Is “cultural genocide” the right phrase to describe what is happening in Xinjiang? Scholar James Leibold argues that it is the most accurate description. 

—Jeremy Goldkorn, Editor-in-Chief

BUSINESS AND TECHNOLOGY:

Aldi in early June opened its first two locations in China after selling to the country’s consumers through Alibaba Group Holding’s Tmall Global e-commerce platform since 2017. U.S.-based Costco Wholesale, which has had a Tmall presence since 2014, is set to open its first brick-and-mortar store in China at the end of August.

Netherlands-based grocery chain Spar in May announced plans to expand its Chinese footprint to around 1 million sq. meters…

These moves follow an exodus of Western players from China’s retail market. Britain’s Tesco left in 2013, and Aldi’s German rival Lidl closed its three Chinese e-commerce stores in April after less than two years.

In June, French retailer Carrefour sold 80% of its equity interest in its local unit to Chinese retailer Suning.com for 4.8 billion yuan ($698 million) after several years of losses. German food wholesaler Metro is in the final stages of selling its China stores.

Chinese internet giant Baidu is battling a series of corruption scandals, which were revealed in a leaked internal email saying the company has fired more than a dozen staff members and subjected several to criminal proceedings due to alleged graft and other misdemeanors. 

Fourteen people have been dismissed amid 12 separate investigations that include allegedly accepting bribes, stealing commercial secrets, and submitting fraudulent expenses claims, according to an email [in Chinese] dated July 31 from Baidu’s professional ethics committee that was subsequently verified by Caixin.

In May the government “vowed to eliminate staffed toll booths at provincial borders and to popularize nationwide the use of electronic toll collection (ETC) devices, which can be attached to vehicles and scanned for automatic cashless payment at toll booths.

So far, the plan has been pretty effective. As of August 2, 100 million users have signed up for ETC — a significant increase on September’s figure of approximately 70 million users — and more than 580,000 ETC devices are distributed on average every day…

The ultimate goal is to do away with all manned toll booths on provincial borders by December. 

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

POLITICS AND CURRENT AFFAIRS:

In the midst of [preparations for the 70th anniversary of the founding of the People’s Republic and other significant events], as well as momentous issues such as the trade talks with the United States, CCP General Secretary Xí Jìnpíng 习近平 has called upon members of the Party to embrace the ideals of Party history and Communist practice. In this, the tone that Chairman Xi strikes does not evoke the future: rather, it looks to the past as the 66 year-old princeling underscores the imperative for CCP members to maintain the “original aspirations” (初心, chūxīn) of the Party’s earlier history…

However, the calls for professing allegiance to the Party and reinstating its chuxin may be a cynical way for Xi to demand further loyalty to himself. As Xi stated in a Politburo study session in mid-2018, “[I]n upholding party leadership, the most important thing is to safeguard the authority of the party central authorities (中央, Zhōngyāng) and to concentrate and unify leadership [at the top].”

SOCIETY AND CULTURE:

At a temple here in Hangzhou, China’s e-commerce capital and a place some call the “city of entrepreneurs,” they were learning Sanskrit, the ancient Indian language in which most Hindu and some Buddhist texts are written. 

It’s a pursuit with no practical application — the Chinese equivalent of studying Latin after-hours in Silicon Valley.

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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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