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News roundup: Is China militarizing the South China Sea or just building ‘necessary defensive facilities’?

T
op China news for December 15, 2016. Get this daily digest delivered to your inbox by signing up at supchina.com/subscribe.
9 months ago
The editors

TODAY’S TOP STORIES

South China Sea tensions ratchet up after the release of photos of weapons systems

Yesterday we linked to a Reuters story on a speech given by Admiral Harry Harris, head of the U.S. Pacific Command, who said that the United States is “ready to confront” China if its actions in the South China Sea result in denial of access to a “shared domain.” At around the same time Admiral Harris was making his speech, the Asia Maritime Transparency Initiative (AMTI) published a series of photos and a report that says “China appears to have built significant point-defense capabilities, in the form of large anti-aircraft guns and probable close-in weapons systems” at seven artificial islands it has built up in the South China Sea.

In comments reported by Reuters, AMTI director Greg Poling said, “This is militarization. The Chinese can argue that it's only for defensive purposes, but if you are building giant anti-aircraft gun and close-in weapons systems emplacements, it means that you are prepping for a future conflict.” Chinese foreign ministry spokesperson Geng Shuang’s response to the AMTI report  was that “deployment of necessary defensive facilities on some islands in the South China Sea is legitimate and normal,” according to the China Daily. The Chinese Ministry of Defense issued a similar statement on its social media account (in Chinese) but added a more aggressive tone with a concluding sentence: “If someone is making threatening moves at your doorstep, would you not get a slingshot ready?”

Sinica Podcast: John Pomfret on the history of the American-Chinese relationship

With the rising tensions in the South China Sea and the uncertainty of president-elect Donald Trump’s intentions with regard to China, John Pomfret’s newly published book The Beautiful Country and the Middle Kingdom could not be more timely. This week’s Sinica Podcast is the first of a two-part interview with the author on the complex ties that bind the U.S. and China and some of the fascinating characters who have played a role in that story.

How WeChat helped a 28-year-old make millions through cartoons

Tech in Asia reports on a young artist who started a company called “Uncle Tongdao” to post his cartoons about astrology on the popular social media and messaging app WeChat. He recently sold a majority share of the company for US$31 million. The article notes that WeChat’s “wide range of functionality — mobile payments, advertising, ecommerce, and more — means that content, like Uncle Tongdao’s astrological cartoons, can easily funnel into various revenue channels, such as merchandise, emojis, offline events, and even brick-and-mortar shops.”

Chinese bank card association begins using QR codes to process payments

Tech Node reports that China’s state-backed bank card association China UnionPay says “it will start using QR codes to process payments.” QR codes, the square blocks of pixels that function like barcodes that can be scanned by smartphones, are very popular in China, mainly because the WeChat app made them very easy to use. The WeChat payment system and the similar service offered by Alibaba’s Alipay have utilized QR codes for more than two years. UnionPay’s adoption of the technology is yet another sign that the payment systems in China will diverge from established global models, leaving little opportunity in the domestic market for Visa, Mastercard, and even Internet-based U.S. companies like PayPal and Square.

More China stories — with the most essential at the top of each section — are curated below.

BUSINESS AND TECHNOLOGY:

  • China’s economic policy under pressure after Fed flags new era / Financial Times
    “This week the U.S. central bank not only raised rates again but also hinted at three more increases next year, adding to pressure on Chinese officials already struggling to contain capital flight,” the Financial Times reported. For more on how the yuan’s depreciation may affect other emerging currencies, including South Korea’s won and India’s rupee, see this Bloomberg article titled “After Fed, eyes turn to China for emerging-market currency fate.”
  • Opinion: Managing the inevitable decline of the renminbi / Financial Times
    “The priority must be to address the underlying problems that deter inflows,” writes the author. “Indebted and uncompetitive state-owned enterprises, a fragile banking sector, volatile property markets and a policy of economic nationalism.”
  • U.S. security panel clears Chinese takeover of Chicago Stock Exchange / Reuters
    “The move by CFIUS, which scrutinizes deals for potential national security concerns, comes despite many U.S. lawmakers having voiced concerns about the level of influence the Chinese state might gain over one of the oldest U.S. exchanges.”
  • China halts trading in key bond futures as panicky investors sell securities / WSJ
    China’s authorities on Thursday took the unprecedented step of halting trade in 10-year and 5-year Treasury bond futures, a response to investors panicking “amid slowing growth, capital outflows and heightened government concern about asset bubbles.” The temporary measure was lifted “only after China’s central bank injected around $22 billion into the short-term money market.”
  • James Packer retreats from China with sell-off of Crown’s overseas casinos / The Guardian
    “Crown Resorts, which is controlled by Packer, announced on Thursday that it has dumped plans to spin off his international assets and has halved his stake in the venture’s troublesome Chinese business,” Martin Farrer reports. In October, 18 Crown employees were detained in China, where gambling is illegal.
  • China’s Meitu, an aspirational beauty app, goes public / NYT
    The company “hopes its app will have appeal elsewhere,” Amie Tsang and Emily Feng write. “This week it completed a $629 million initial public offering in Hong Kong, long a gateway for Chinese companies seeking foreign money, and is exploring taking its selfie apps to other parts of the world.”
  • China extends tax break for small cars / WSJ
    “The Ministry of Finance said Thursday it would levy a 7.5 percent purchase tax on vehicles with engines up to 1.6 liters from January 1, an increase from the current rate of 5 percent but below the normal 10 percent.”

POLITICS AND CURRENT AFFAIRS:

  • Opinion: Is China the new global champion of openness? / TIME
    “What Xi means when he talks about openness and globalization isn’t the liberal understanding of those terms that has underpinned the U.S.-led economic order,” writes Julian B. Gewirtz.  “China’s economic system remains a ‘socialist market economy.’ Xi is offering up a version of openness and globalization that is maximally beneficial to China, as part of creating an alternative economic order in which China can dominate.”
  • Opinion: China’s digital dictatorship / The Economist
    Recent experiments with a “social credit” system are likely to “mark the beginning of something bigger and more sinister,” the author writes, adding that “instead of rating citizens, the government should be allowing them to assess the way it rules” with more democratic reforms.
  • Opinion: Can Trump get tough with China? / NYT
    Academics Edward Friedman and Charles L. Glaser, author C. Cindy Fan and Daniel Blumenthal of the American Enterprise Institute offer their perspectives in this “Room for Debate” feature that is part of the series “Issues for Trump and America.”
  • Taiwan is both exhilarated and unnerved by Trump’s China remarks / NYT
    The people of Taiwan are “coming to grips with the reality that their most vocal champion on the world stage now is a businessman known for his love of cutting deals and his erratic approach to policy making.”
  • China’s emerging Arctic policy / The Diplomat
    “China now clearly identifies itself as a ‘near-Arctic State’ and a major stakeholder in the Arctic,” writes Nengye Liu. “China believes that the changing environment and resources of the Arctic have a direct impact on China’s climate, environment, agriculture, shipping, and trade as well as its social and economic development.”
  • New Chinese law puts foreign nonprofits in limbo / WSJ
    “On Wednesday, the U.S. Embassy in Beijing sent out a notice warning that U.S. citizens employed by or associated with nonprofits ‘may face special scrutiny and/or penalties for noncompliance’ when the law goes into effect on January 1.”
  • Lawyer: Police confirm they detained Chinese rights activist / NYT
    Jiang Tianyong, who was last heard from on November 21,  was detained for allegedly using someone else’s ID to purchase train tickets, his lawyer said.
  • Miss World contestant who challenged China is allowed to speak once more / NYT
    Anastasia Lin, a Chinese-born Canadian who has been a vocal critic of human rights in China, is now allowed by pageant organizers to speak to the media, “ending a three-week standoff in Washington that had drawn unflattering attention to a storied beauty pageant that has become increasingly dependent on Chinese corporate sponsors.”

SOCIETY AND CULTURE:

  • Smokers chased in Beijing as China considers national law / NYT
    “As China considers a nationwide ban on smoking in public places, the fight is well under way in Beijing, which banned smoking in restaurants and other indoor areas 18 months ago. Zealous volunteers and anti-smoking advocates have made some headway against millions of occasionally intransigent smokers and the state-run cigarette monopoly, a large and powerful force in China’s government and economy.”
  • A Tencent co-founder takes on education full time / WSJ
    Charles Yidan Chen, who established the private Wuhan College with the goal of turning it into China’s answer to Stanford University, announced that “his college-education foundation finished its first round of fundraising for its endowment, the first for a private university in China,” and is establishing a $7.8 million annual prize for two recipients who make outstanding contributions to the field of education research and development.
  • China rescues 36 ‘infants’ from child traffickers / The Telegraph
    In “the latest swoop on a crime that is thought to involve tens of thousands of victims,” more than 157 people were detained in raids that encompassed several Chinese provinces, from Fujian to Yunnan.
  • Can China’s quantum radar become even more powerful? Scientists may have found the key / SCMP
    A recently published paper detailed an emerging quantum measurement technique that could detect previously undetectable signals. However, one quantum physicist stated, “There is still ongoing debate whether the weak measurement is showing us real physical observation or just mathematical illusion.”
  • Opinion: Stop crediting the West for ‘inspiring’ classical Chinese art / Quartz
    “For centuries, archaeologists and art historians have been eager to see the imprint of the Greeks in works of art and architecture throughout the world,” write Brown University professors Johanna Hanink and Felipe Rojas Silva. “But this view rests on a Eurocentric logic that has long assumed other civilizations were fundamentally incapable of creating highly technical, impressive, and aesthetically pleasing works of art.”
  • Chinese imperial seal sold for record $22 million at auction / BBC News
    An 18th-century imperial seal of the Qianlong Emperor was sold to a Chinese collector for more than 20 times its estimated price after a heated bidding war.
  • Pork-and-chive dumplings that offer a taste of home / NYT
    Helen You, the Tianjin-born founder of New York City’s Tianjin Dumpling House and Dumpling Galaxy, shares a classic recipe from her forthcoming cookbook.
By The editors
Jeremy Goldkorn, Lucas Niewenhuis, Jia Guo, Jiayun Feng, and Sky Canaves.
China in 2 minutes a day
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