News roundup: Rocky times ahead for China-U.S. business

TODAY’S TOP STORIES

Dread ahead for U.S.-China trade?

Fear and uncertainty about trade and investment between China and the U.S. among businesspeople, journalists and financiers have reached levels not seen for almost two decades. Some of the worries are caused by months of mixed signals from China’s economy and the perception of growing Chinese protectionism, but in the last two weeks, statements — mostly on Twitter — from president-elect Donald Trump have turned up the trepidation dial. A small selection from today’s news shows the diverse range of the anxieties:

Bloomberg published an opinion piece by Noah Smith on Chinese real estate that says that “even if…the housing market isn’t a true bubble, a downturn could still wreak a lot of damage on the Chinese economy — and on all the economies around the world that are dependent on China.” Reuters notes that “Bitcoin surged to its highest level in nearly three years on Tuesday as a result of volatility in Chinese stock markets ahead of an expected interest rate increase by the U.S. Federal Reserve.” Last week, The China Project published a Q&A with a Chinese Bitcoin miner who predicts that the digital currency has “a good chance to exceed the USD1,000 mark once again.”

Peter Fuhrman, the CEO of a “Greater China-focused specialist international investment bank and advisory firm,” writes in the Financial Times that “2017 is shaping up to be a highly eventful, taut and precarious year for China-U.S. relations.” Bloomberg says that General Motors’ joint venture with SAIC Motor Corp. is being investigated, following a report in the state-run China Daily that authorities were planning to penalize an unnamed U.S. automaker for price fixing.

Meanwhile, the chairman of Wanda Group — and China’s richest man — Wang Jianlin (pictured above) issued a stark warning to Donald Trump at a press conference and published his answers on his company’s website:

• Yesterday, I met with the president of Motion Picture Association of America, who said he wants to meet with Mr. Trump and asked me what message I would like delivered. I told him to tell Mr. Trump that I have ten billion dollars of investments in the United States and more than 20,000 employees there who wouldn’t have anything to eat should things be handled poorly, and nothing else mattered.

Henry Kissinger on China-U.S. relations in the age of Trump

This morning, Henry Kissinger spoke at an event in New York on the subject “U.S.-China Relations in the Trump-Xi Era.” The China Project was one of a handful of media organizations in attendance. We’ll publish a full review of the event later this week, but for now, we thought it newsworthy enough to highlight some of Kissinger’s more notable remarks.

Health care: China faces a huge problem with strokes and diabetes

Today on The China Project, we publish a Q&A with Dr. Jeffrey Drazen, editor-in-chief of the New England Journal of Medicine, the world’s oldest continuously published medical publication, which recently launched a Chinese website. Dr. Drazen tells us about the unique problems China has dealing with strokes and diabetes.

More China stories worth your time are summarized below.

BUSINESS AND TECHNOLOGY:

• China credit expands most since March on robust mortgage lending / Bloomberg
  “China’s broadest measure of new lending jumped the most since March, boosted by borrowing for home loans and a resurgence of shadow-banking activity,” reports Bloomberg, with analysts noting that government measures to rein in lending appear to be failing and that further tightening measures may be expected.
• Why is China so afraid of U.S. Fed’s looming interest rate increase? / SCMP
  “Beijing has a good reason to be nervous because of what happened to China after the Fed’s last interest rate rise on December 16, 2015 — its first increase for nine years.”
• Developers, funds target China demand for co-working space amid startup boom / Reuters
  “Co-working’s popularity is helping developers and financial investors tap new revenue sources in China and cushion the impact of the softening retail and office property sectors as the world’s second-largest economy slows,” writes Clare Jim. “But the highly cyclical nature of the startups’ business model also exposes them to new risks.”
• Wanda’s $150 million ‘Great Wall’ to test China’s film boom / Bloomberg
  The film’s debut in China this week will be “a test of blockbuster demand in a cinema market that’s slipped from boom to bust,” Bloomberg reports. “Prospects that the movie will draw audiences across continents have also raised expectations that it will be the new model for China-Hollywood collaboration.”
• What gas stations in China offer investors / WSJ
  “China’s largest refiner, Sinopec, is considering hitting up Hong Kong investors for another cool $10 billion, this time in the form of an initial public offering for its retail gas-station business.”

POLITICS AND CURRENT AFFAIRS:

• ‘Friends forever?’ China wary of Rex Tillerson wooing away Russia / The Guardian
  Trump’s nomination of the ExxonMobil chief as secretary of state is “fueling fears that the president-elect’s courtship of the Kremlin could be part of a bold strategic bid to isolate China.”
• For China’s state media, Trump victory is a symptom of the ‘American disease’ / NYT
  “A flow of articles in Communist Party publications in recent weeks has argued that the United States’ tumultuous past year showed it to be dysfunctional and dissolute, and blighted by corruption, social and political polarization, reckless debt and an enfeebled news media.”
• Too big to fail: China maps out its Trump strategy / Reuters
  Despite recent tensions over Taiwan, China “expects a transactional relationship with the deal-making Trump, especially on trade.” A source connected to the Chinese leadership told Reuters, “Trump is a businessman. He wants a deal… He wants the biggest benefit at the smallest cost.”
• Don’t spread ‘straight-man cancer,’ China feminist warns Trump / The Guardian
  Zheng Churan, a Chinese activist, wrote, “Even across the Pacific, in the faraway land of China, there are constantly reports of you and your government’s involvement in sexual discrimination. We wish you to watch out, the feminists worldwide are speaking, and we are watching you.”
• Popular Chinese Muslim website down after posting letter critical of Xi / Reuters
  “Users of China Muslim Net, one of China’s main websites carrying material by and about the Hui, a large and relatively well-assimilated community of China’s Muslims, say they have been unable to access the website since Saturday.”
• Opinion: China next crackdown target: Universities / Washington Post
  “Mr. Xi is demanding loyalty to an ideology that has been abandoned for some time by most Chinese, who thrive in a system of vigorous if imperfect capitalism,” writes the editorial board. “No amount of indoctrination is going to change that.”
• Communist Party mouthpiece quotes China Daily as ‘foreign media’ to reassure public over slowing economy / SCMP
  “Wednesday’s front page of the top party mouthpiece People’s Daily quoted ‘foreign media’ to help boost confidence in the ‘new normal’ of China’s slower economic growth, but the line was actually taken from China Daily, an official English-language state-run newspaper.”
• U.S. ready to confront Beijing on South China Sea: admiral / Reuters
  “We will not allow a shared domain to be closed down unilaterally no matter how many bases are built on artificial features in the South China Sea,” said Admiral Harry Harris, head of the U.S. Pacific Command. “We will cooperate when we can, but we will be ready to confront when we must.”
• China military tells Myanmar to ensure border stability / Reuters
  “China is concerned at the armed clashes in northern Myanmar injuring Chinese border residents, and hopes Myanmar can strengthen border management, prevent stray bullets entering into China and maintain the peace and tranquility of the border,” China’s Defense Ministry said in a statement.
• Pageant silences beauty queen, a critic of China, at U.S. contest / NYT
  The organizers of the Miss World pageant have barred Anastasia Lin, a Chinese-born Canadian citizen who has been an outspoken critic of human rights abuses in China, from speaking to the media and from attending the American premiere of a documentary she appears in if she wishes to compete in their event.

SOCIETY AND CULTURE:

• Lost lives: The battle of China’s invisible children to recover missed years / Reuters
  For second children born during the years of China’s one-child policy who were denied social welfare benefits such as free education, its end means “scrambling to make up for lost years, resentful as they fear this recognition may have come too late and unsure what the government is going to do to help them make up for those years.”
• Expensive foreign degrees lose edge in competitive Chinese job market, study finds / Caixin
  “Nearly 70 percent of Chinese students who returned after studying abroad said they were ‘unsatisfied’ with job opportunities at home because an overseas degree no longer guarantees them better pay than those who studied in China,” a survey by the Center for China & Globalization found.
• China plans for a series of disappearing bridges / Architectural Digest
  A $5 million project designed by French-born architect Martin Duplantier at the UNESCO World Heritage Site of Wulingyuan will rely on materials such as mirrored stainless steel and black stone to create optical illusions of invisible footbridges amid the dramatic forests and rock formations of the area.
• ‘People hope my book will be China’s Star Wars’: Liu Cixin on China’s exploding sci-fi scene / The Guardian
  “Chinese sci-fi does have its own unique themes as well, such as the attempt to re-deduce and re-display the ancient history of China from a sci-fi angle,” says Liu Cixin, author of the Hugo Award–winning Three-Body Problem.
• China’s huge, eerie tower blocks that will soon house millions / Wired
  Since 2012, photographer Aurelien Marechal has been documenting the construction of high-rise housing that will accommodate rural Chinese on the outskirts of cities — and are still without residents. “They look like ghost towns,” he says. “They’re suburbs in the middle of nowhere.”