Biden’s new ban

• The long-awaited order will ban private equity and venture capital investments in AI, quantum computing and advanced semiconductor companies.
• The measure targets investments that bring with them “intangible benefits” like access to talent networks and business knowhow, leaving untouched the vast amounts of public U.S. money going to Chinese firms listed in New York and in China.

This measure is not likely to please anyone — hawks in Washington will say it’s too weak, while Chinese officials will complain that it is just another example of U.S. efforts to contain the rising power.

• Congressional China-hawk-in-chief Rep. Mike Gallagher (R-TX) said in a statement this morning that the order’s loopholes are “big enough to sail the PLA navy through.”
• Spokesperson for China’s embassy in Washington Liú Péngyǔ 刘鹏宇 said the move would “undermine the interests of Chinese and American companies and investors.”

But this is just the beginning: observers predict more investment barriers will go up in the coming years as competition between the two countries heats up.

Eduardo Jaramillo

China finally lifted its ban on group travel to 78 countries effective immediately, including key markets such as the U.S., U.K., South Korea, and Japan, the Ministry of Culture and Tourism announced today (in Chinese).

The move comes more than three years after the rules were imposed to limit the spread of COVID, fanning hopes for a boost in the global tourism industry. Prior to the pandemic, Chinese tourists spent more than any of their counterparts from other countries when traveling abroad: Of the $255 billion they spent in 2019, group tours are estimated to account for roughly 60%. Luxury shares in Europe gained as much as 2.6% as of this morning.

Hong Kong national security police arrested 10 people for “conspiracy to [collude] with a foreign country or with external elements to endanger national security,” according to a statement released today.

The four men and six women, aged between 26 and 43, are suspected of conspiring with the 612 Humanitarian Relief Fund, which was established in 2019 to provide assistance to thousands of protestors during the city’s pro-democracy movement. The 10 stand accused of trying to solicit donations from various overseas organizations to support those who fled abroad, or to groups that call for sanctions against Hong Kong.

China will require all mobile app developers in the country to register with the government or risk being removed from app stores and banned from providing services to users, the Ministry of Industry and Information Technology (MIIT) announced on August 8. Those without proper filings will be punished after the grace period that will end in March 2024, in a move that may hurt Apple given its large presence of unregistered foreign apps in the China App Store, as well as weigh on small developers.

Notable read: When multinationals start de-risking, how will Beijing know? Logan Wright, Agatha Kratz, and Armand Meyer of the Rhodium Group, a research firm, write: “Most MNCs — either surveyed by business associations or as stated within their annual reports—are making clear they are actively considering diversification away from China—for sourcing, manufacturing, or R&D purposes. However, actually tracking changes in firms’ China exposure can be tricky.”

Chinese state media: “General Secretary Xí Jìnpíng 习近平 and the Party Central Committee have always attached great importance to flood prevention and disaster relief” is the opening of the People’s Daily’s main front page story today, a long piece on Party officials’ sterling work during last week’s floods in China.

Xinhua News Agency today leads with a piece titled “The wind blows and the East renews itself every day — Looking at Shanghai from the perspective of humanity and the economy,” which liberally quotes Xi’s bons mots, such as “Culture is the soul of a city.”

• It’s a story of separation all too familiar to many Uyghur families experiencing ongoing repression at the hands of Chinese authorities.
• Adalet Sabit, a naturalized U.S. citizen, described many fearful, sleepless and teary nights wondering if she would ever see Abliz again.

Sabit and the couple’s daughter aren’t giving up: They’ve spent the last several years attending protests in Washington, meeting with lawmakers on Capitol Hill, and applying for a visa for Abliz.

• But so far, although China has become a political football in the U.S., none of the American politicians offering help have produced any results.
• After Abliz went radio silent for a year beginning in 2022, he began to discourage Sabit from attending protests and advocating publicly on his behalf, but Sabit is still working toward her husband’s freedom.

Our columnist Ruth Ingram has the whole story.

Ruth Ingram

• “And if they fail, and the people of Hong Kong remain to the end powerless to govern their own affairs, vulnerable to anything that may come out of China? Then the British will leave behind them, if not a sense of betrayal, at least a sense of disappointment.”

Written with her trademark elegance and panache, Morris depicts a city suspended between a colonial past and the uncertainties of China’s future. Why should this book be on your Ultimate China Bookshelf?

• As with all Morris’s work, Hong Kong is highly literary and beautifully crafted. She was fascinated with British Imperialism — the “Pax Britannica” — and Hong Kong represented one of the empire’s final colonies.
• Hong Kong is part-history and part-travelog. Later histories of Hong Kong have come and gone — the most recent, Vaudine England’s Fortune’s Bazaar (2023), is highly recommended — but still, Morris’s rapid overview is highly useful.

Click through to read Paul French’s latest.

Paul French

• Will my husband notice this trash on the floor? A tissue saga chronicled by a Chinese wife who’s fed up with her lazy husband has gone viral on lifestyle app Xiaohongshu, sparking a lively discussion about a gendered division of chores in Chinese households.

Below are links from our NewsBase to other noteworthy reports published in the last 24 hours from and about China.

BUSINESS AND TECHNOLOGY:

U.S. bans tech investments in China
Biden orders ban on certain U.S. tech investments in China / Reuters
America’s new China curbs eschew scale for smarts / Reuters
Analysis: Biden’s China tech curbs to keep investors sidelined, fearing more steps / Reuters
Biden issues an executive order restricting U.S. investments in Chinese technology / AP
New U.S. investment curbs to have limited impact on China’s targeted semiconductors, quantum computing and AI sectors, analysts say / SCMP (paywall)
U.S. chip industry calls for ‘vital’ access to Chinese market hours after Joe Biden announces curbs / SCMP (paywall)
Biden orders ban on new investments in China’s sensitive high-tech industries / NYT (paywall)
U.S. and China poised to drift further apart after investment ban / WSJ (paywall)

European reaction to U.S. tech curbs
U.K. considers response to U.S. ban on tech investments in China / Reuters
“Britain said on Thursday it was weighing how to respond to a decision by U.S. President Joe Biden to prohibit some tech investments in China, adding it was continuing to assess potential national security risks.”
Rishi Sunak weighs following Joe Biden on curbing tech investment in China / FT (paywall)
EU to analyze U.S. tech curbs in China, says issue also key to Europe / Reuters
“The European Commission will analyze the U.S. ban on new U.S. investment in China in sensitive technologies as the issue is also important to the European Union’s economic security, the EU executive said on Thursday.”

Electric vehicles
Chinese, South Korean EV makers push on in Indonesia / Nikkei Asia (paywall)
“Chinese automakers are showing off their latest electric vehicle models at an Indonesian motor show that started on Thursday. They are aiming to lift sales in Southeast Asia’s biggest economy, where Japanese manufacturers’ largely gasoline-powered offerings dominate the market.”

Lithium mining
Lithium mine auctions in China’s Sichuan draw thousands of high bids / Reuters
“Two lithium mine auctions in China’s southwestern Sichuan province that began this week have received nearly 7,000 bids, with prices hundreds of times higher than starting levels and rising as of Thursday, a provincial government body said.”

AI and semiconductors
China’s internet giants order $5 billion of Nvidia chips to power AI ambitions / Nikkei Asia (paywall)
“China’s internet giants are rushing to acquire high-performance Nvidia chips vital for building generative artificial intelligence systems, making orders worth $5 billion in a buying frenzy fueled by fears the U.S. will impose new export controls.”
Opinion: ChatGPT-like tools are key to China’s future as a manufacturing power / Caixin (paywall)
Zhu Min writes: “China is the world’s largest manufacturing power, generating more than 30% of global manufacturing value-added in 2021, roughly equal to the U.S., Japan, Germany and South Korea combined.”

China’s dependence on U.S. products
China relies on U.S., allies for hundreds of products / WSJ (paywall)
“China has at least a 70% dependence on the U.S. and its allies for more than 400 items, ranging from luxury goods to raw materials needed for Chinese industries, a new analysis of trade data has found.”

Real estate trouble
Another Chinese developer teeters, raising worries about the economy / NYT (paywall)
“Country Garden, China’s last real estate giant to avoid default, has spooked investors after missing key debt payments, rekindling memories of China Evergrande.”

Tourism
China lifts bans on group tours to U.S., Japan and other key markets / Reuters
“China has lifted pandemic-era restrictions on group tours for more countries, including key markets such as the United States, Japan, South Korea and Australia in a potential boon for their tourism industries.”
China group tourism revival clouded by weak economy / Nikkei Asia (paywall)
“China’s move to lift a ban on group travel to Japan, the U.S., South Korea and scores of other countries around the world sent shares in Asia tourism-related companies higher on Thursday on hopes for an inbound travel boom, even as economists say a slowdown in the world’s No. 2 economy is suppressing consumer spending there.”
Japan, Korea tourism stocks rise on prospect of Chinese visitors / Caixin (paywall)
“Optimism that China will reopen the door for group tours to Japan and South Korea sparked a flurry of buying Thursday in retail, cosmetics and travel stocks in Tokyo and Seoul.”
China approves Japan, U.S., other destinations for group tourism / Nikkei Asia (paywall)
China lifts ban on group tours to U.S. and other countries, in boost to global travel industry / WSJ (paywall)

Banking
Chinese banks balk at regulatory support for rate cuts to existing mortgages / Caixin (paywall)
“The Chinese central bank’s recent support for commercial lenders to reduce rates on existing residential mortgages has been met with foot-dragging from banks, despite the potential benefits that the cuts could offer China’s faltering economic recovery.”

Disappeared banker Bao Fan
China Renaissance founder Bao Fan remains in custody / Caixin (paywall)
Bāo Fán 包凡, “the billionaire founder and chairman of private investment bank China Renaissance Holdings Ltd., remains in the custody of authorities for an investigation, six months after his disappearance sent jitters through the country’s financial market and corporate scene.”

Alibaba
Alibaba’s quarterly revenue beats despite China’s sputtering economy / Reuters
“China’s Alibaba Group Holding reported its strongest quarterly revenue growth in almost two years on Thursday, boosted by a mid-year shopping festival that attracted bargain hunting consumers amid a sober economic environment.”
Alibaba posts 14% Q1 revenue growth, buoyed by retail business / Nikkei Asia (paywall)

SCIENCE, HEALTH, AND ENVIRONMENT:

Anger at government flood response
“They disappeared”: China flood victims criticize government response / Reuters
“Last week, the city of Zhuozhou was devastated by the worst floods to hit northern China in living memory. Today, residents are asking why the local government didn’t do more to help them.”

Cockroach sightings lead to memes but also point to climate concerns
Netizens go crazy for cockroaches’ northern expedition / Sixth Tone
“As temperatures rise across the country, northern residents are reporting increased cockroach sightings. Unable to deal with their new reality, some are turning to spiritual solutions.”

POLITICS AND FOREIGN AFFAIRS:

Tibet and environmental activism
UN experts seek clarification about nine imprisoned Tibetan human rights defenders / UN / OHCHR
“The Chinese government must provide information about nine Tibetan environmental human rights defenders serving prison sentences of up to 11 years, UN experts said today. Between 2010 and 2019, nine Tibetan human rights defenders were imprisoned in the course of their peaceful work to protect the area’s fragile environment.”

The Communist Party, elite politics, and government
Analysis: Xi opens Beidaihe with no elders but plenty of challenges / Nikkei Asia (paywall)
“China’s summer political season has arrived. Chinese Communist Party leaders — retired and incumbent — have gathered at the seaside resort town of Beidaihe in Hebei province to hold their annual, but informal and secretive, discussions on the state of the nation.”

Pharma corruption
China’s regulators flag ‘systemic corruption’ risk in drugs sector / Caixin (paywall)
“Chinese authorities have uncovered the risk of ‘systemic corruption’ in Guangdong province’s pharmaceutical sector, including misconduct by drugmakers in sales and promotion activities, medical equipment procurement in local hospitals, and ethical concerns involving partnering health institutions, an official audit report obtained by Caixin has revealed.”
Health care conferences canceled as anti-corruption campaign intensifies / Sixth Tone
“In recent years, conferences have emerged as an alternative method for kickbacks to be made in the healthcare industry through speakers’ fees and stipends”

Islam in Hong Kong
Hong Kong’s chief imam urges teachers to attend training after 13-year-old boy undergoes 6-hour eye surgery following alleged assault at religious learning center / SCMP (paywall)
“Hong Kong’s chief imam has called for a meeting with teachers of the Islamic faith after a 13-year-old boy was allegedly beaten at a religious learning center, resulting in an eye injury that required six hours of surgery.”

Military pressure on Taiwan
China sends ships and fighter jets toward Taiwan in new show of force / AP
“China sent navy ships and a large group of fighter jets toward Taiwan, continuing its military pressure on the island, Taiwan’s defense ministry said Thursday.”

U.S.-China competition and tensions
Opinion: U.S.-China rivalry has upsides for the world / Nikkei Asia (paywall)
Charles Ormiston writes: “Competition will drive technological innovation to higher levels.”

Japan
China slams Fukushima water release plans in scorching UN paper. But will Japan be swayed by criticism? / SCMP (paywall)
“Beijing submitted a searing working paper to the United Nations opposing Tokyo’s plans to release treated radioactive water from the Fukushima nuclear plant into the Pacific Ocean, which could begin as soon as the end of August.”

SOCIETY AND CULTURE:

Religion
Man sought in alleged misuse of over $30 million intended for Christian ministry in China / AP
“Federal prosecutors are seeking a man charged in the misuse of more than $30 million donated by religious groups and individuals for Christian ministry in China, including an Ohio-based group receiving donations from Amish and Mennonite communities.”

China’s ‘full-time kids’
With graduate jobs scarce, young Chinese are becoming ‘full-time kids’ / Sixth Tone
“As China’s youth unemployment rate soars, parents are hiring their own adult children as ‘full-time kids’ — paying them a monthly wage to clean, run errands, and take care of elderly relatives.”

• On The China Project: Boomerang kids: Why China’s young professionals are moving back with mom and pop