“We don’t need China”

Dear Access member,

Our word of the day is “the Hong Kong Way”: 香港之路 xiāng gǎng zhī lù. That’s the name protesters gave to today’s demonstration, inspired by the Baltic Way protests of 1989. 

The statement in the subject line of this email is from a Trump tweet. Read on for details. 

Interested in censorship? On The China Project this week: Inside China’s ever-evolving censorship apparatus and Kuora: Chinese web censorship works. Unfortunately, it’s never going away. 

—Jeremy Goldkorn, Editor-in-Chief

The human chain forming in Hong Kong (see story #2). Image from BBC reporter Stephen McDonell’s Twitter feed. 

1. Multiple tariff escalations and Twitter tirades 

On day 414 of the U.S.-China techno-trade war, there were multiple tariff escalations, and two Twitter tirades. 

The first tariff escalation was a countermeasure to Trump’s upcoming tariffs, announced by China via Xinhua:

China will impose additional tariffs on U.S. imports worth about 75 billion U.S. dollars in response to the newly announced U.S. tariff hikes on Chinese goods, the Customs Tariff Commission of the State Council announced Friday.

Based on laws and approved by the State Council, a total of 5,078 U.S. products, including crude oil, soybeans, peanuts, seafood, chicken, fruit and vegetables, and animal fur, will be subject to additional tariffs of 10 percent or 5 percent.

The tariff hikes will be implemented in two batches and take effect at 12:01 p.m. Beijing time on Sept. 1 and at 12:01 p.m. on Dec. 15, respectively, the commission said in a statement.

Auto tariffs will also go up: “China will resume imposing additional tariffs of 25 percent or 5 percent on American-made vehicles and auto parts starting from 12:01 p.m. on Dec. 15,” Xinhua reported, also citing the Customs Tariff Commission. 

Trump launched into a fury on Twitter, in response to China but also apparently in response to the U.S. Federal Reserve’s unwillingness to do his bidding. A few excerpts from the 4-tweet thread:

• “We don’t need China and, frankly, would be far better off without them.” 

• “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

• “I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE all deliveries of Fentanyl from China.”

Six hours later, Trump fired off another 4-tweet thread, this time announcing a countermeasure to China’s countermeasure:

Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%

Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%

What became fairly clear at the beginning of this month — that the trade war is spinning out of control — is truer than ever now. 

Other reporting and analysis related to the techno-trade war:

The Amazon rainforest is burning: Humans are responsible for the fires, says WIRED, and Bloomberg writer David Fickling argues that the trade war is only making it worse by increasing the demand for Brazilian farmland. “China’s most pointed action on trade has arguably been ceasing imports of American soy. It’s by far the biggest soybean importer and the U.S. and Brazil are by far the biggest exporters. With Chinese imports from the U.S. drying up, and the prospect of more crops damaged by the midwest floods this year, demand from Brazil is soaring.”

Stocks are falling: Per CNBC: “The Dow Jones Industrial Average closed 623.34 points lower, or 2.4 percent at 25,628.90. The S&P 500 slid 2.6 percent to close at 2,847.11. The Nasdaq Composite dropped 3 percent to end the day at 7,751.77. The losses brought the Dow’s decline for August to more than 4 percent.”

China’s growth will dip below 6 percent, once the effects of the Trump’s previously announced tariffs have gone into effect (not counting the additional tariffs announced today), according to a survey of 14 economists surveyed by Bloomberg. 

—Lucas Niewenhuis

2. Human chain in Hong Kong, airport protests planned for weekend

On Friday evening in Hong Kong, tens of thousands of protesters formed a human chain “snaking nearly 30 miles through Hong Kong Island, Kowloon and the New Territories,” reports the Guardian. 

Friday night’s protest was unauthorised but peaceful…

Protesters cited the Baltic human chain as inspiration. “In that place, at that time, people tried to use this form of expression to express their wish for freedom from the Soviet state,” said a protester named Kay, who declined to give her surname for fear she might be penalised at work for joining the protests.

“In very similar terms, the Hong Kong people are trying to express themselves and express their yearning for freedom and basic human rights,” she said.

Hong Kong Free Press has photos. Other news about Hong Kong:

If you’re flying to or from Hong Kong this weekend, you might want to change your ticket to next week. “Hong Kong’s ardent pro-democracy protesters are attempting a ‘stress test’ of the city’s international airport this weekend as local and mainland authorities harden their resolve to quash the months-long unrest,” according to the Australian Broadcasting Corporation: 

The city’s High Court on Friday said it was extending an order requiring public demonstrations to have the permission of authorities, with an aim to ban “those who want to deliberately obstruct or interfere with the normal use of the airport”.

So in response, activists plan to disrupt transport to the international airport this weekend by all heading there at the same time

“Airline Cathay Dragon has fired the chair of its flight attendant union Rebecca Sy after she allegedly posted messages of support for Hong Kong protesters on Facebook,” reports the Hong Kong Free Press.

“As big companies in Hong Kong squirm under pressure to denounce the continuing antigovernment protests in the territory or risk angering China, some of their employees are speaking out, raising the prospect of escalating labor tensions in the Asian financial capital,” says the New York Times (porous paywall).

Donald Trump “has shifted his stance on the unrest in Hong Kong in recent days to show greater solidarity with the pro-democracy protesters after coming to view the issue as a point of leverage in trade negotiations with China,” according to the New York Times (porous paywall). 

The British Foreign Office has warned citizens that their phones may be checked at Chinese border crossings, according to the Guardian, noting: “You should be aware that the thresholds for detention and prosecution in China differ from those in Hong Kong.”

Pop star and activist Denise Ho (何韻詩 Hé Yùnshī) is the subject of a profile in the Sydney Morning Herald:

The Canto-pop star, a household name here for her music and film roles, has become a target of Beijing’s wrath because her latest gutsy performance was on the world stage – at the United Nations Human Rights Council.

Ho had 90 seconds to make her plea for the UNHRC to call an urgent session “to protect the people of Hong Kong”. She was interrupted twice by angry Chinese officials.

Media mogul Jimmy Lai 黎智英 Lí Zhìyīng) is perhaps Beijing’s public enemy number one in Hong Kong, and the subject of a New York Times profile (porous paywall). 

—Jeremy Goldkorn

3. Cracks in the Belt and Road

It’s no secret to close observers that China’s Belt and Road initiative suffers from a lack of clearly defined strategic vision — at least judging by public records. The blog Panda Paw Dragon Claw highlights two recent pieces in Chinese media that investigate core challenges for the coherence and success of the Belt and Road. 

China is sending empty freight trains to Europe through one of its key Belt and Road Initiative (BRI) projects: the China-Europe Railway Express. The bizarre phenomenon caught the attention of Depth Paper (等深线 děng shēn xiàn), a Chinese online news platform. In a rare move by a Chinese media outlet in today’s media environment, Depth Paper probed critically into one of the BRI’s most visible “connectivity” projects, uncovering the perverse incentives that are luring China’s local governments and companies to create huge “bubbles” of ostensibly flourishing rail routes that run tens of thousands of kilometers across the vast landmass of Eurasia…

In another example of Chinese media exposing the “underbelly of BRI,” on August 3, Caixin Media published a frontpage story about the corrupt deeds of China Development Bank’s former President Hú Huáibāng 胡怀邦, who was recently investigated by the disciplinary arm of the Communist Party. The report, which has since been taken down from Caixin’s website, contains jaw-dropping, mind-boggling details of how recklessly senior officials of China’s largest policy bank (and a major instrument of the BRI) pursued their own interests at the expense of the bank’s financial health.

—Lucas Niewenhuis

Here are the stories that caught our eye this week:

• Twitter and Facebook banned Beijing-controlled bots that they said were spreading coordinated disinformation about the Hong Kong protests. Twitter went a step further and released data on 936 of the accounts it suspended, and also banned state-owned media companies from buying ads. Youtube later also suspended over 200 accounts that it said “behaved in a coordinated manner while uploading videos related to the ongoing protests in Hong Kong.” 

• 1.7 million people peacefully protested in Hong Kong on August 18, a day after a much smaller counterprotest to support the police. 

• An employee of the British consulate in Hong Kong was detained in China without explanation. The Chinese foreign ministry later said that Simon Cheng Man-kit (郑文杰 Zhèng Wénjié) had violated unspecified “public security management regulations,” and the editor of the Global Times then dubiously alleged that he was “detained in Shenzhen for visiting [a] prostitute.”

• Beijing blamed Hong Kong protests on a new “Gang of Four,” harkening back to Cultural Revolution-era rhetoric. It’s hard to see how this, or many other aspects of Beijing’s communications on Hong Kong, are doing any favors for its international soft power. 

• Beijing called up sycophants to praise its Xinjiang white paper, even as Uyghur Chinese citizens appeared in a New York Times video op-ed to appeal to China to “Free our parents from concentration camps.” 

• Qatar revoked its support for Beijing’s Xinjiang policies, withdrawing from a letter that it and many other Muslim-majority countries had signed in July. 

• Trump dialed up the megalomania by declaring himself the “Chosen One” who has to “take China on,” regardless of pain to the U.S. in the short term. Meanwhile, tariffs will cost American households an average of $1,000 a year, according to JP Morgan, and companies aren’t even relocating back to the U.S. from China — Thailand seems to be the primary winner from company relocation. Nicholas Lardy of the Peterson Institute for International Economics argues that China’s growth is slowing, but not because of the trade war. Huawei received another 90-day reprieve from the impending U.S. ban on sales to the telecom company. 

• Heightened policing of China-connected research in the U.S. continues, as a University of Kansas chemical engineer was accused of hiding his additional affiliation with a Chinese university. About 150 prominent biomedical scientists and pharmaceutical industry leaders in the U.S. signed a letter opposing recent government actions that have contributed to “a climate of fear and uncertainty” amongst Chinese and Chinese-Americans in the biomedical research community. 

• China will not legalize same-sex marriage, a spokesperson for the legal affairs commission of the National People’s Congress confirmed. But the government is taking sexual harassment seriously: An update to China’s Civil Code will no longer limit provisions covering sexual harassment to places of employment, and the topic was the subject of the top opinion piece (in Chinese) on the People’s Daily website.

• Hindu nationalists in India called for a boycott of Chinese goods, and also tariffs of up to 500 percent, fter China backed Pakistan at the UN Security Council over India’s decision to scrap autonomous rule in the disputed territory of Jammu and Kashmir. 

• The sketchy journalistic standards of College Daily, a widely read publication marketed towards Chinese students in the U.S., were exposed by an illuminating profile in the New Yorker by Han Zhang. College Daily later fired back at the New Yorker, accusing it of bias and fabrication. 

• The Epoch Times is all-in for Trump. The Falungong-affiliated media outlet spent more than any organization other than the Trump campaign to promote propaganda supporting the president in the past six months. 

• Bringing dead bodies to school grounds is now an officially prohibited activity, one of eight types of “xiàonào” (校闹) — violence against school staff and other behavior from parents who feel their children have been mistreated — that the Ministry of Education and other departments have identified. 

• Beijing raised its minimum wage to 2,200 yuan ($311) a month, joining several cities and provinces that have recently increased minimum wages. 

BUSINESS AND TECHNOLOGY:

• Autonomous vehicles
  Professor X readies self-drive cars for China’s busy streets / Nikkei Asian Review (porous paywall)
  A profile of Auto X, a California-based company with 130 employees — including scientists who previously worked at places like MIT, IMB, and Facebook — founded by Xiào Jiànxióng 肖健雄, who took the name “Professor X” when his colleagues at Princeton had trouble pronouncing his full name. 

• Huawei’s AI aspirations
  Facing US sanctions, Huawei unveils world’s fastest AI chip / Sixth Tone
  Huawei’s rotating chairman Eric Xu (徐勇 Xú Yǒng) held a press conference on Friday, announcing the launch of what Huawei calls the “world’s highest-performing AI processor” — the Ascend 910. Developing Huawei’s own high-quality chips is crucial to developing its AI capabilities. 

• AI startup to IPO
  China AI startup to file for Hong Kong IPO soon despite protests / Bloomberg (porous paywall)

Chinese artificial intelligence startup Megvii is filing documents soon for a Hong Kong initial public offering that could raise as much as $1 billion, people familiar with the matter said, proceeding despite a market downturn spurred by pro-democracy protests across the financial hub.

• Fintech future mapped by central bank
  China’s central bank releases 3-year fintech development plan / TechNode
  The People’s Bank of China has released its three-year Fintech Development Plan (in Chinese). Fintech — short for Financial Technology — is an emerging industry that focuses on the application of big data, blockchain, and other software to delivering financial services. TechNode explains why this plan matters:

The rapidly expanding fintech sector has been outpacing the central government’s capacity to establish a comprehensive legal and regulatory framework, leading to consumer fraud and the quick rise and fall of the peer-to-peer lending segment.

• Deutsche Bank’s ties to corruption in China
  U.S. fines Deutsche Bank $16 million to settle China, Russia corruption charges / Reuters

The Securities and Exchange Commission (SEC) alleged that Germany’s largest lender hired poorly qualified or unqualified relatives of officials in Asia and Russia at their request, in violation of the Foreign Corrupt Practices Act.

Between at least 2006 and 2014, it said Deutsche employed relatives of executives working at state-owned enterprises in China and Russia with the “primary goal” of generating business for the company such as initial public offerings.

• Burger King IPO
  Burger King’s $1 billion China franchisee considers Hong Kong IPO / Bloomberg (porous paywall)
  TAB Food Investments, which handles Burger King’s franchise in China is seeking a Hong Kong IPO despite the protests, hoping for a $1 billion valuation. 

• Pinduoduo’s good year
  Pinduoduo’s annual active buyers exceeded 483 mn, ranking second in Q2 2019 / China Internet Watch
  Ecommerce platform Pinduoduo reported great figures in Q2 2019, including revenues of nearly 7.3 billion yuan (a little more than $1 billion). It also boasted having 483 million active buyers over the last 12 months, behind Alibaba (674 million) and ahead of JD (321 million). 

• Meituan is in the black
  Chinese food delivery firm Meituan posts first quarterly profit since listing / Reuters
  “China’s Meituan Dianping… posted its first quarterly profit as a listed firm as a surge in summer food delivery orders helped it beat competition from rivals including Alibaba-backed Ele.me.”
  Dianping and other food delivery apps owe their success to high demand from China’s huge middle class, but also to the largely uneducated delivery workers who “rage against the algorithms.”

• Coming rate cuts?
  China likely to hold MLF rate on Monday, cut seen by mid-Sept before Fed / Reuters
  China’s slowing economy continues to keep analysts guessing about what Chinese authorities will or won’t do to stimulate. Now, according to Reuters:

Analysts say a cut in the People’s Bank of China’s (PBOC) medium-term lending facility (MLF), which reflects commercial banks’ long-term liability cost, will likely signal a reduction in the new revamped Loan Prime Rate (LPR), launched this week. However, they don’t expect a cut in the MLF rate on Monday when the next batch of loans mature. 

• How China deals with VPNs
  Fortifying the Great Firewall: The criminalization of VPNs, part II / Dui Hua
  The Dui Hua foundation provides an in-depth look into the criminalization of VPNs in China. Following up on Part 1, which focused on cases of individuals being punished, Part 2 focuses on the crackdown on providers themselves.

• Beef over pork
  China is eating more beef than ever now that pork is so expensive / Bloomberg (porous paywall)
  “China’s beef imports soared to a record last month as a surge in pork prices because of African swine fever spurs consumers to look for alternative meats.”

• Tesla’s supply chain takes shape
  Tesla to agree to buy batteries from LG for China factory / Bloomberg (porous paywall)
  “Tesla Inc. agreed to buy batteries from South Korea’s LG Chem Ltd. to be used in electric vehicles produced out in China, according to people familiar with the matter.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Coal use
  China’s coal demand to peak around 2025, global usage to follow: report / Reuters
  “The world’s biggest coal consumer is expected to see total consumption fall 18 percent from 2018 to 2035, and by 39 percent from 2018 to 2050, the CNPC Economics and Technology Research Institute, run by the state-owned China National Petroleum Corp (CNPC), forecast in a report on Thursday.”

• Cloned dogs
  China’s first cloned police dog ready for duty / That’s Magazine
  “Born in December of last year, Kunxun was cloned from a 7-year-old police dog, Huahuangma, stationed at the Pu’er police detachment in Yunnan province.”

POLITICS AND CURRENT AFFAIRS:

• Europe’s plan to counter Chinese companies
  European officials draft radical plan to take on US and Chinese tech companies / Politico via SCMP
  An “aggressive 173-page plan” written by EU officials was leaked to media, and identifies “Chinese rivals such as Baidu, Alibaba and Tencent as firms that Europe needs to rival.” The document also “seeks more stringent measures to block Chinese companies from taking part in tenders in Europe to penalise them for the level of subsidies that they receive from the government in Beijing.”

• Cyber risk
  U.S. cyber agency says reducing risks from China top priority / Bloomberg (porous paywall)

A newly created U.S. cybersecurity agency said Thursday that China represents the greatest strategic risk to the U.S., and as a result, the agency’s top operational priority is reducing the risks from Chinese compromises to the global supply chain, including emerging 5G technology.

The statement was part of a report outlining the Cybersecurity and Infrastructure Security Agency’s strategic intent for the next five years.

• China in Africa
  Kenya sells its first oil to China / Business Daily (Kenya)

The maiden shipment of 200,000 barrels of crude from Mombasa is scheduled for next month.

Petroleum principal secretary Andrew Kamau Thursday revealed that ChemChina (UK) Ltd won the bid to lift the Turkana oil, in what marks Kenya’s entry into the league of oil exporting countries.

The Chinese firm, which is the oil trading arm of ChemChina Petrochemical, is engaged in crude oil trading, storage and procurement for ChemChina’s refinery companies.

• No pot of gold for locals as China mines Sierra Leone / Reuters

Like many African countries, Sierra Leone has courted foreign companies which pay governments big fees for mining rights, while locals often feel they have no say nor benefit.

China is by far the biggest importer of minerals from sub-Saharan Africa; it invested about $30 billion in metals mining on the continent in the last decade, nearly 15 percent of it in Sierra Leone.

• Maritime disputes with Vietnam: U.S. and Australia stances
  China escalates coercion against vietnam’s longstanding oil and gas activity in the South China Sea / United States Department of State
  “The United States is deeply concerned that China is continuing its interference with Vietnam’s longstanding oil and gas activities in Vietnam’s Exclusive Economic Zone (EEZ) claim. This calls into serious question China’s commitment, including in the ASEAN-China Declaration on the Conduct of Parties in the South China Sea, to the peaceful resolution of maritime disputes.”
  Morrison discusses Chinese expansion in South China Sea with Vietnamese PM / Australian ABC
  “The Prime Minister has declared he’s standing up for the principle of international law, after taking a thinly veiled swipe at China during a visit to Vietnam.”

• Confucius Classroom closed in New South Wales, Australia
  NSW schools to scrap Confucius Classroom program after review / Sydney Morning Herald
  “A Chinese government-funded language and culture program will be removed from NSW public schools and replaced with one run by the NSW Department of Education.”

• East Timor — the mouse that roars?
  East Timor’s China friendship won’t compromise its national interests: foreign minister / SCMP

Sceptics of East Timor’s relations with China should know it is not a “new, fragile country” that can be easily swayed by others, its foreign minister said, citing how the nation handled its border dispute with larger neighbour Australia.

• Brexit blowout sale
  Asian billionaires embark on UK spending spree as pound nosedives / Guardian
  The Guardian says that there is a huge amount of “cash flooding to the UK from China and Hong Kong, as the Chinese state and the region’s super-rich take advantage of the collapse in the value of pound to buy up everything from luxury homes, skyscrapers such as London’s Walkie Talkie and Cheesegrater, a third of Hinkley Point C nuclear power station, private schools and Pizza Express.”

SOCIETY AND CULTURE:

• LGBT-themed films
  Rainbow screens / World of Chinese
  A list of “the six highest-rated LGBTQ films on Douban from the Chinese mainland, Hong Kong, Macau, and Taiwan.”

• Schooling in Shanghai
  Randomized school admissions rattle Shanghai’s rat race / Sixth Tone

The government’s latest move — made public on July 8 by China’s Cabinet, the State Council — requires private institutions that cover the compulsory education period of primary and middle school to select applicants at random whenever their number exceeds admission quotas, which is virtually always the case. Shanghai has said it will formulate specific local rules around the year’s end, but the policy change promises to make intake interviews a thing of the past — and extra classes irrelevant.

• Folk religions as documented by foreign missionaries
  The story of an American missionary and her ‘paper gods’ / Sixth Tone
  “Anne Swann Goodrich’s collection provides a comprehensive window into early 20th century Beijing folk religion.”

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