A second subdued Xi-Trump phone call – China news from April 24, 2017

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Dear reader,

Over the weekend, I talked to On the Media, an NPR radio show, about Chinese perceptions of the dangers of North Korea and why the Chinese media has been so muted in its criticism of Donald Trump. And then…

No news is good news: Xi-Trump phone call number two

On Monday, April 24, news broke of a second presidential phone call between Trump and Xi Jinping.

Nothing new was talked about.

The White House has published a terse readout of the call, which reads like a Xinhua News Agency announcement — this is the entire text:

President Donald J. Trump spoke yesterday with President Xi Jinping of China to address issues regarding North Korea. President Trump criticized North Korea’s continued belligerence and emphasized that Pyongyang’s actions are destabilizing the Korean Peninsula. The two leaders reaffirmed the urgency of the threat posed by North Korea’s missile and nuclear programs, and committed to strengthen coordination in achieving the denuclearization of the Korean Peninsula.

Xinhua News Agency’s report on the call is somewhat wordier than the White House’s and includes a message from Xi for “the parties concerned [to] shoulder their due responsibilities and meet each other halfway.” It also states that he had “reached important consensus with Trump during a meeting at the latter’s Mar-a-Lago estate in Florida earlier this month, and that they had very good communication recently.” A similar version of that report in Chinese was April 24’s top story in the People’s Daily and other central state news media.

Sometime after the call with Xi, Reuters reports, Trump told a meeting “with the 15 U.N. Security Council ambassadors, including China and Russia, at the White House” that “the status quo in North Korea is also unacceptable,” and that the Security Council must be prepared to impose new sanctions on the Hermit Kingdom.

Other stories worth reading for a variety of opinions on the Xi-Trump call and the situation in the Korean peninsula include:

  • The South China Morning Post asks if the Trump-Xi call revealed a subtle shift in China’s stance on the North Korean nuclear crisis. See also John Pomfret’s piece from about two weeks ago in the Washington Post titled “China is suddenly leaning on North Korea — and it might be thanks to Trump.”
  • In the Washington Post, David S. Cohen, the former deputy director of the CIA, calls for secondary sanctions targeting Chinese banks that support the North Korean economy.
  • Hugh White, professor of strategic studies at the Australian National University and an influential voice in foreign affairs — especially when it comes to the divergence of the interests of the U.S. and Australia and other middle and small powers — says that “Washington’s ‘all options are on the table’ is a transparent and pointless bluff.”
  • “We are sending an armada, very powerful,” said Trump to Fox News on April 10, as a U.S. Navy carrier group headed to Australia, not North Korea as the president had announced. The Navy Times has a detailed report on the “series of gaffes and missteps throughout the entire national security structure to its highest levels [that] would raise the specter of a nuclear showdown, send the U.S. and Chinese governments into crisis mode, and expose alarming communication deficiencies within the American military at large.” It’s called “Carried away: The inside story of how the Carl Vinson’s canceled port visit sparked a global crisis.”

Burmese days for UnionPay

Visa and MasterCard still dominate the credit card and payments systems used by consumers in developed markets, but they face formidable competition from China: Tencent’s WeChat Pay, Alibaba’s Alipay, and the Chinese bank card group UnionPay. The Financial Times has a report (paywall) on UnionPay’s well-funded efforts in emerging markets, including Myanmar, Indonesia, Malaysia, Kazakhstan, and the Democratic Republic of Congo. In Myanmar, FT says, “UnionPay’s rapid push into the frontier market will make its red, blue and green logo one of the first that Burmese youth see when opening an account or applying for a credit card at a local bank.”

—Jeremy Goldkorn, Editor-in-Chief

This issue of the SupChina newsletter was produced by Sky Canaves, Lucas Niewenhuis, Jia Guo, and Jiayun Feng. More China stories worth your time are curated below, with the most important ones at the top of each section.



Stocks tumble amid tightening regulation

Chinese stocks on April 24 registered their biggest one-day loss — the Shanghai Composite Index fell 1.6 percent, while the CSI 300 index fell 1.3 percent — since mid-December last year, amid expectations of tighter regulation from both the insurance and banking sectors, CNBC reports. Bloomberg explains that “China’s authorities are taking advantage of an improving economy to reduce financial-system risk by tightening the screws on leverage, while the banking regulator said it will crack down on irregularities in the financial sector.”

Recently, the increased visibility of so-called shadow banking and the $436 million fraud case at Minsheng Bank in Beijing have raised concerns about financial risk. One analyst said on April 23 that even if the Minsheng Bank case does not forecast a collapse of more wealth management products, it may indicate larger systemic risk and a pressing need for more transparency in financial transactions.



Turning all of Tibet into a national park

China “is considering turning the entire Tibetan plateau and surrounding mountains into a huge national park,” the South China Morning Post reports. A government survey is set to be conducted this summer using advanced equipment, including drones and satellites, to determine the boundaries of what would be by far the world’s largest preserved natural area. At 2.5 million square kilometers, the prospective “Third Pole National Park” would dwarf even the autonomous province of Tibet itself (only 1.2 million square kilometers), leading to contrasting results: On the one hand, the vast natural resources of Tibet would be totally cut off from development, and worries about the integrity of water supplied from the plateau to the entire region would be assuaged. However, an undetermined number of people may need to be relocated, and there is potential for the new park to include land also claimed by India, heightening territorial and ethnic conflict.

“It is too big for a park,” said one scientist of the plan to protect a “last piece of pure land,” as a directive from President Xi Jinping referred to it. A park of 2.5 million square kilometers would be more than 250 times the size of Yellowstone Park, and over 2.5 times the size of the existing world’s largest park, in Greenland. It would be difficult to manage such a large public space, yet some officials seem keen to make this a Chinese park with Yellowstone’s global stature, as one noted that only 1.5 percent of tourists to Tibet are foreign and “the European and American markets…have huge potential.”



A $72,000 ticket into a top Chinese college

An increasing number of Chinese parents are paying unscrupulous education agents to prepare their children, who were born and raised in China, to take a special college entrance exam designed for overseas students, China Education Newspaper reports (in Chinese). The strategy is an attempt to find a way for students with average or poor grades to gain admittance to top universities in China, as the exam for overseas students is easier than the usual one that Chinese students have to take and admission thresholds are lower.

Liu Haifeng 刘海峰, dean of the Education Research Institute at Xiamen University, told the newspaper that these “bogus” overseas students are gradually squeezing out “real” foreign students who have spent most of their lives overseas, as the former ones are poised to perform better on Chinese exams.

To qualify for the special exam, students must have permanent residency in a foreign country (including Hong Kong, Taiwan, and Macau), and have lived in that country for at least two of the four years before they apply for the exam.

To tap into the booming demand, many shady education agents are offering desperate parents packages that include preparatory training before studying abroad, assistance with immigration applications, consulting, and enrollment for clients’ children at overseas international high schools. According to the newspaper’s investigation, the total charge for such a package ranges from 320,000 to 500,000 yuan ($46,470 to $72,610). The article also found that top destinations for this type of overseas study are Malaysia and the Philippines, which offer lower costs than Western countries and easier procedures for visas and immigration.

On the social media platform Weibo, many internet users said the report speaks to a broad problem of education inequality in China. “The wealthiest people send their kids abroad. Now students from rich families who have poor grades are knocking good students from poor families out of the competition. This is so frustrating,” one commenter wrote (in Chinese).