Media instructions for a trade war

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  • There’s a grab bag of news at the top — five stories — and the usual links and summaries below.

—Jeremy Goldkorn, Editor-in-Chief, and team


1. Media instructions for a trade war

China Digital Times has an ongoing series of censorship instructions called Directives from the Ministry of Truth. The latest installment is mostly about the U.S.-China trade conflict. Key instructions (quoted directly) are:

  • Don’t relay comments from Trump, from U.S. government spokespersons, or from U.S. officials. Don’t relay U.S. news reports or commentary on the trade conflict without waiting for response from the Ministry of Commerce.

  • We stop negotiation for now, acting tit for tat, roll out corresponding policies, hold public opinion at a good level without escalating it, limit scope, and strike accurately and carefully, splitting apart different domestic groups in the U.S. The trade conflict is really a war against China’s rise, to see who has the greater stamina. This is absolutely no time for irresolution or reticence.

  • Don’t attack Trump’s vulgarity; don’t make this a war of insults.

  • All media should prepare well for protracted conflict. Don’t follow the American sides’ fluctuating declarations. Play down the correlations between the stock market and trade conflict.

  • To re-emphasize: Do not make further use of Made in China 2025, or there will be consequences.  

Other gloom, doom, trade, and boom news from the various fronts of the trade war:

  • “China will open up several industries to greater foreign investment, including airplane design and manufacturing, railway construction and agriculture,” according to Caixin (paywall), but of course “48 sectors remain on the ‘negative list,’ including entertainment, internet publications and law firms.” The full list is here (in Chinese).

  • “China fulfilled a pledge to slash tariffs on imported cars Sunday,” says the Wall Street Journal (paywall), “but the respite for auto makers who export to China from the U.S. will be brief as Beijing prepares to slap an additional 25% tariff on U.S. auto imports this Friday.”

  • The Sanmen nuclear power plant, designed by Westinghouse, is “at the centre of an $8 billion US-Chinese partnership and technology transfer agreement.” The Financial Times reports (paywall) that it “has delivered its first electricity to the Chinese grid, even as the countries square off in a looming trade war that threatens to derail future cooperation and stall US efforts to reboot its nuclear industry.”

  • “Chinese venture capital investment into US biotech companies in the first half has already surpassed the record set for the whole of last year, underlining Beijing’s focus on medicine as a strategic sector — a development that has flown under the radar of regulators in Washington,” according to the Financial Times (paywall).

  • “Donald Trump’s assault on trade with China is moving from tweeted threats and abortive talks to the real-world,” says Bloomberg (paywall), noting that “purchasing manager index readings for June released on Saturday showed a gauge of export orders tumbling into contraction, the clearest sign yet that the oncoming trade war is having a real, negative impact on growth.”

—Jeremy Goldkorn

2. Beyond Trumpism: What is the ‘smart’ direction for U.S.-China relations?

Are the U.S. and China headed into a “Cold War 2.0”? Some object to the very question.

Michael Swaine, a senior associate at the Carnegie Endowment for International Peace, balks at what he describes on Twitter as the “wholly overblown effort underway to redefine the US-China relationship as one of near Cold War adversaries.” His piece in Foreign Policy, titled “The U.S. can’t afford to demonize China,” argues:

  • Washington, under Trump, has embraced a conspiratorial mindset that sees China and the U.S. as a zero-sum global power competition.

  • This mindset has supported “hugely distorted” assumptions that often go unchallenged, including the myth that the U.S. ever explicitly sought democratization as the end goal of engagement, the unproven claim that China “seeks to eject the United States from Asia and subjugate the region,” and the questionable line of thought that “Beijing is committed to overturning the global order.”

  • For more on Washington’s myth making about China, former diplomat Evan Feigenbaum recently wrote on the futility of American whining about China.

  • A “major correction by both sides” is needed in the relationship, Swaine argues, because “hostile words and actions completely overshadow the obvious and pressing need for continued cooperation between Washington and Beijing in addressing common problems and concerns, including climate change, weapon of mass destruction proliferation, pandemics, the state of the global economic system, and stability in Asia.”

  • Contrary to claims that China is a global-order wrecker, “Beijing supports many elements of the existing order, including some that the current U.S. administration rejects or undermines, such as the fight against climate change and the value of multilateral economic agreements.”

  • Trump’s America, in fact, seems to be the only country with major economic interests in the Asia-Pacific that isn’t negotiating a major trade deal there at the moment:

    • “Ministers from the 16-nation Regional Comprehensive Economic Partnership, which includes China, Japan and India but not the U.S., met in Tokyo on Sunday to try and thrash out remaining differences,” Bloomberg reports (paywall).

    • “The 11-member Trans-Pacific Partnership trade pact, which does not include the U.S., will prepare for its next stage of expansion when chief negotiators meet in Japan in mid-July to discuss how to usher new members in,” according to Nikkei (paywall).

But what would a better relationship with China, particularly in economic ties between the two countries’ technology sectors, actually look like? A collection of experts on China’s economy and rising technological capabilities have weighed in via a ChinaFile discussion titled, “Should the U.S. start a trade war with China over tech?

  • Unsurprisingly, multilateral trade pressure over multiple domains — i.e., the exact opposite of Trump’s unilateral tariff-first tactics — is a widely suggested strategy.

  • Several respondents note that technology transfer is a feature, not a bug, of China-U.S. economic entanglement. Yukon Huang, the China economy contrarian who was interviewed on the Sinica Podcast earlier this year, also pointed to an American Chamber of Commerce in China report that shows 96 percent of respondents think intellectual property rights are improving in China.

  • More investment in science and technology at home, and consistency in limiting Chinese investment only in cases of very obvious national security risk, is another common suggestion. Jack Zhang of Princeton University writes, “Nothing would vindicate Chinese techno-nationalists more than for the U.S. to follow them down the road of state-intervention in the technology sector.”

—Lucas Niewenhuis

3. After banning foreign waste, China moves to expand recycling

China drew international attention earlier this year when it announced it would no longer import other countries’ waste. A few months down the line, authorities are gearing up to bolster the country’s lackluster domestic recycling system.

  • 23 percent of all potentially recyclable materials in China were recycled in 2013, according to the State Council’s National Development and Reform Commission, although experts estimate the total was closer to 30 percent in 2017. Sarah Talaat reports for SupChina that Chinese recycling companies, local governments, and entrepreneurs are now exploring ways to morph China’s haphazard domestic recycling into a successful business model, and to bring recycling awareness into daily public life.

  • The most significant roadblock could be public awareness. Many Chinese people lack knowledge and resources to carry out recycling effectively, but the Ministry of Urban Development aims to have trash classification in “all cities at prefecture-level and above by 2020,” according to Sixth Tone.

  • “The ministry’s target is for 35 percent of urban household waste to be recycled by 2020,” Sixth Tone adds.

  • In other waste-management news, five people have been ordered to pay $1.1 million for industrial dumping in southern China, Caixin reports (paywall). The case is believed to be China’s first public-interest lawsuit against ocean pollution.

—Lucy Best

4. Another rocky anniversary of Hong Kong’s handover to mainland China

July 1 marked the 21st anniversary of Hong Kong’s return to mainland China. As usual, the date did not go without notice or controversy in the city.

  • An annual demonstration centers on supporting democratic values, but participants also take the opportunity to highlight other issues in Hong Kong and in China. This year, protestors called for an end to the new Chinese police presence in a Hong Kong train station and to Liu Xia’s house arrest, and — for the first time — an end to one-party rule in China, the New York Times reports (paywall).

  • There may be a decline in public interest or willingness to participate in this demonstration. According to the Times, organizers said about 50,000 people came out to protest, one of the lowest turnouts since the march’s 2003 inception.

  • The Hong Kong government was not pleased with the demonstrations. “[C]hanting slogans which disrespect ‘one country’ and disregard the constitutional order or which are sensational and misleading was not in line with Hong Kong’s overall interests and would undermine its development,” a government press release declared, according to the Hong Kong Free Press.

  • Police apprehended 20 protestors from getting near a flag-raising ceremony commemorating the handover from Britain to China, the Guardian reports.

  • See pictures of the protest at Hong Kong Free Press.

  • In this week’s Kuora, Kaiser Kuo uses an apt analogy to sum up the Hong Kong-mainland Chinese relationship: They are twins who were separated at birth, now united — and disposed to throwing tantrums at each other. That’s how the two sides see each other, anyway.

—Lucy Best

5. Xiong’an: A waste of resources or urban planning’s future?

With China’s mixed record and lengthy history of urban planning experiments, domestic and international observers alike have expectedly waited for developments from the city of Xiong’an, 100 kilometers southwest of Beijing. The city-by-fiat, announced last year to real estate spectators’ delight, is the latest darling of China’s push for high-quality urbanization in anticipation for rapid economic development.

  • Xiong’an is the work of the central government, unlike many failed locally headed urban experiments, Chinadialogue reports. This quality puts it alongside China’s two greatest urban planning miracles — Shenzhen and Shanghai’s Pudong District. It also provides an extra incentive for success, as it could serve as a civilian gauge on the central leadership’s efficacy.

  • With the aim of establishing Xiong’an as a new model for urban planning, the government wants to create a hub for high-tech industry, innovation, and sustainable financing,” Chinadialogue adds. The city plans to become a testing site for sustainable housing, water purification, and energy systems. If successful, the model could spread throughout China and even gain prominence internationally through the Belt and Road initiative.

  • In addition to the government’s trillion-yuan investment in the city, China Southern recently pledged 10 billion yuan ($1.5 billion), Bloomberg reports (paywall). Other notable private-sector partners are Baidu and Alibaba, which will work in the city’s transportation sector.

  • The challenges of any city persist in Xiong’an, despite its plentiful resources. One example is the limited success of a $15,000 cleanup effort for a pond in Donghegang, Caixin reports (paywall). According to an engineer working on the effort, “Household wastewater continues flowing into the pond through the outfall below,” making permanent pollution mitigation challenging.

—Lucy Best

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Our whole team really appreciates your support as Access members. Please chat with us on our Slack channel or contact me anytime at jeremy@supchina.com.

—Jeremy Goldkorn, Editor-in-Chief


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