Boss Ren comes out of his cave

Access Archive

Dear Access member,

In a rush? These are the China stories you need to know today. Scroll down for details.

  1. The secretive founder of Huawei gave the third on-the-record media appearance of his life to deny that Huawei gives “improper information” to the Chinese government. He also flattered Donald Trump.

  2. Plants on the Moon: China’s far-side lunar mission has succeeded in sprouting seeds in a capsule.

  3. China is responding to its economic slowdown with its traditional tool: stimulus.

  4. Dueling travel warnings: Canada and China have both issued alerts to their citizens about the dangers of arbitrary detention.

  5. U.S. Trade Representative Robert Lighthizer doesn’t see “any progress” on the most important issues in economic relations with China, and Liu He is confirmed to be scheduled for a visit to Washington, D.C., on January 30-31.

  6. China’s TV regulators seem to have begun a stealth campaign to censor earrings from the earlobes of male entertainers.

—Jeremy Goldkorn and team


1. Huawei denies giving ‘improper information’ to government

Rén Zhèngfēi 任正非, the secretive founder of Huawei and father of its CFO, Mèng Wǎnzhōu 孟晚舟, who was arrested at the U.S.’s request by Canada in December, has come out of his cave to speak to the media in public for only the third time in his company’s life.

  • Ren said that Huawei had “never received any request from any government to provide improper information,” and that “no law requires any company in China to install mandatory back doors.” He also asserted that Huawei has never been part of a “serious security incident.”

  • “The trade war so far has not affected us in a major way. Our expected growth in 2019 is not greater than 20 percent,” he said. He added that because it is not a public company, “we don’t need a beautiful income statement. If some countries don’t buy our products, we can scale down. So long as we can feed ourselves we’ll always have a future.”

  • Close and not close to his daughter: Ren said he kissed his daughter Meng, but that they were not close because he spent her childhood in the military, and then working 16-hour days at Huawei.

  • “I trust the legal systems of Canada and the United States are open, just, and fair,” said Ren, adding some flattery for Trump for good measure, calling him a “great president,” and praising his tax cuts.

Perhaps the Trump flattery will have some effect, but otherwise it seems unlikely that this press event will sway public opinion outside of China.

Yuan Yang and Louise Lucas at the Financial Times have the best coverage of Ren’s speech: Reclusive Huawei founder: We don’t spy for China, and Huawei founder Ren Zhengfei in his own words (paywall). Coverage elsewhere:  

2. China grows plants on the Moon

The BBC reports:

Seeds taken up to the Moon by China’s Chang’e-4 mission have sprouted, says China National Space Administration.

It marks the first time any biological matter has grown on the Moon, and is being seen as a significant step towards long-term space exploration…

…The ability to grow plants on the Moon will be integral for long-term space missions, like a trip to Mars which would take about two-and-a-half years.

What’s next? According to Caixin (paywall), China has “laid out plans for four additional moon missions including one later this year to collect and return samples to Earth for analysis, and reiterated its aim to reach Mars by next year.”

—Jeremy Goldkorn

3. Economic stimulus update

As the bad economic news keeps rolling in — today, the official growth rate of manufacturing powerhouse province Guangzhou was reported to be 6.5 percent in 2018, a fair bit short of its 7.5 percent goal — economists widely expect Beijing to roll out more stimulus measures.

  • The reserve requirement ratio for banks was dropped today, and will be dropped further on January 25, in line with an announcement on January 4. More drops are expected. This comes as the People’s Bank of China (PBoC) reported that banks “extended a record 16.17 trillion yuan (US$2.4 trillion) in net new loans last year…well above the previous record of 13.53 trillion yuan in 2017,” according to the SCMP.  

  • PBoC officials promised tax cuts “on a larger scale” today, Bloomberg reports (porous paywall), possibly a reaction to news that small and medium-sized businesses contracted in the last quarter of 2018, per Caixin (paywall).

  • “Some analysts believe China could deliver 2 trillion yuan ($296.21 billion) worth of cuts in taxes and fees, and allow local governments to issue another 2 trillion yuan in special bonds largely used to fund key projects,” Reuters says.

Other economy-related links:

  • Beijing tightens its belt
    Beijing mayor calls for belt-tightening amid ‘external uncertainties’, revenue squeeze / SCMP
    “Beijing city will slash its general expenditure by at least 5 percent for 2019, its mayor said on Monday, citing tough fiscal challenges from ‘growing external economic uncertainties,’ tax cuts and commitments like the Winter Olympics.”

  • Hebei to give workers Friday afternoons off?
    China province looks to boost shopping with longer weekend / BBC
    “Hebei Province is considering extending the weekend ‘in areas where conditions allow,’ according to a government proposal. Other provincial governments in the country have experimented with similar schemes… In 2015, China’s cabinet suggested adding Friday afternoon to the weekend. Since then, more than 10 provincial governments have reportedly announced plans to ‘explore’ extending the weekend.”

  • Yuan rallies despite economic downturn
    China’s yuan defies dismal economy to head for six-month high / Bloomberg (porous paywall)
    “The currency rose as much as 0.42 percent to 6.7383 per dollar Tuesday, in line for its highest close since July.”

  • Global economic slowdown: Signal from Germany
    Germany’s sharp slowdown fans fears that China woes are spreading / WSJ (paywall)
    “The economic outlook for Europe and the world darkened after growth in Germany slowed sharply last year, hit by weaker exports to China and elsewhere, and softer demand at home… The [German] statistics agency said Tuesday that the nation’s gross domestic product grew 1.5% in 2018 from a year earlier, down from 2.2% the previous year and the slowest annual rate since 2013.”

  • Commentary
    Opinion: Xi Jinping’s turn away from the market puts Chinese growth at risk / FT (paywall)
    Nicholas Lardy, a Senior Fellow at the Peterson Institute for International Economics, points out that “credit is flowing to state-owned companies, not more productive private ones.”
    Opinion: Will China’s economy hit a great wall? / by Paul Krugman in NYT (porous paywall)
    “The case for crisis seems compelling – but I said that in 2011, too.”

—Lucas Niewenhuis

4. Death-threat diplomacy

The South China Morning Post reports that Canada has warned its citizens of “the risk of arbitrary enforcement of local laws” if they travel to China, echoing a similar advisory from the U.S. government earlier this month. The advice from Ottawa comes after yesterday’s resentencing, to death, of a Canadian man convicted for drug trafficking. Not to be outdone, Beijing has issued a similar alert warning Chinese citizens they could be “arbitrarily detained at the request of a third nation” in Canada.

See also: China’s death-threat diplomacy: Law scholar Donald Clarke writes:

Assuming that the High Court upholds the death sentence, the next stage is mandatory review by the Supreme People’s Court. This review procedure carries no mandatory or even advisory time limits; the court can take as long as it wishes… My prediction is that the Supreme People’s Court will sit on the review decision for as long as Meng’s fate remains undetermined.

—Jeremy Goldkorn

5. Trade war, day 194: Lighthizer doesn’t see ‘any progress,’ but will meet Liu He on January 30-31

We have now crossed into the second half of the 90-day negotiating period, and continue to barrel on toward a deal that falls far short of what U.S. Trade Representative Robert Lighthizer and other American hardliners want, but is also quite possibly enough for Trump to accept as a win.

  • Liú Hè 刘鹤 is confirmed to visit Washington, D.C., with a delegation on January 30-31, several days in advance of the weeklong Lunar New Year holiday in China (春节 chūnjié) from February 4 to 8, according to the South China Morning Post.

  • Lighthizer is confirmed to be disappointed with the lack of “any progress” on “structural issues,” such as intellectual property, economic espionage, and technology transfer in joint ventures, according to Republican Senator Chuck Grassley, quoted in Reuters.

  • But he “commented positively on China’s soybean purchases,” apparently, which have resumed but not yet reached anywhere close to pre-trade-war levels.

  • Oil purchases may also have resumed: “Three cargoes of U.S. crude are heading to China from the U.S. Gulf Coast, trade sources said on Monday, the first departures since late September,” Reuters separately reports.

  • Lighthizer’s office is operating with just 30 percent of its staff during the current U.S. government shutdown, CNBC reports.

The trade war helped fuel a 90 percent drop in direct investment from China to the U.S. from 2016 to 2018, data from the Rhodium Group shows. Such investment in 2018 reached just $4.8 billion, whereas it totaled $29 billion in 2017 and $46 billion in 2016, CNBC reports. The effects of the trade war and political tension between the U.S. and China continue:

  • “China asked some state-run enterprises to avoid business trips to the U.S…the State-Owned Assets Supervision and Administration Commission…has told some firms to only take secure, company-issued laptops meant for overseas use if traveling is necessary…the warning extended to the other countries in the Five Eyes intelligence-sharing pact: the U.K., Canada, Australia and New Zealand,” per Bloomberg (porous paywall).

  • “The U.S.-China trade war has delayed but not derailed Chinese automaker GAC Motor’s plans to enter the American market…company president Yu Jun, speaking at Detroit’s North American International Auto Show, said the dispute is a factor in moving its U.S. product launch from the end of this year — as it announced at last year’s show — to June 2020,” the AP says.

That’s it for trade war news today. A few pieces worth reading on U.S.-China relations broadly are listed below:

  • Why Trump’s America is rethinking engagement with China / FT (paywall)
    This piece, by Demetri Sevastopulo, suggests that a lot of it has to do with military supremacy, and China’s militarization of the South China Sea. Xi’s term limit elimination was also a “turning point” for Americans viewing China’s political system as regressive. A few quotes:

Underscoring how the [military technology] gap between the US and China has shrunk, General Paul Selva, vice-chairman of the joint chiefs of staff, warned in June that “if we sit back and don’t react, we will lose our technological superiority in 2020.” The Pentagon is also concerned about the vulnerability of its military supply chains because of components made in China…

Washington is raising red flags about activities aimed at stealing US technology — whether via Chinese nationals working in American university labs or cyber espionage. One person familiar with the situation says US officials realised how much more vigilant they needed to become when they discovered just how much similarity there was between the Chinese J-20 stealth fighter jet and the American F-35…

“People I’ve known for decades have given up on China,” says Susan Shirk, chair of the 21st century China Center at the University of California San Diego. “There’s a widespread view in the academic community that the overreaching China has done both domestically and internationally is hard-baked into the system and that there’s no hope of getting them to adjust their behaviour to our interests and values.”

—Lucas Niewenhuis

6. And then they came for man earrings

For many Chinese people, man earrings are a mainstream fashion, no longer a novel object or a taboo. Earrings, after all, are just accessories that have no gender. But ultra-conservatives at the State Administration of Press, Publication, Radio, Film, and Television of the People’s Republic of China (SAPPRFT), China’s top media regulator, certainly don’t see it this way.

For details, please click through to SupChina.

—Jiayun Feng

—–

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


BUSINESS AND TECHNOLOGY:

  • Artificially cheap Chinese bicycles in Europe
    War on wheels: Europe’s love-hate relationship with cheap Chinese electric bikes / SCMP
    “Following a year-long inquiry, the European Commission (EC) wants to impose duties on Chinese-made electric bicycles it claimed were being sold at heavily discounted prices by manufacturers it said benefited from state subsidies.”

  • Artificial intelligence applications: Coordinating traffic lights, hailing autonomous taxis
    Alibaba’s ‘City Brain’ is slashing congestion in its hometown / CNN
    Alibaba is claiming credit for helping Hangzhou’s congestion ranking drop from number 5 to number 57 in the country. The company’s “City Brain” program “uses artificial intelligence to gather information across Hangzhou, such as video from intersection cameras and GPS data on the locations of cars and buses. The platform analyzes the information in real time as it coordinates more than 1,000 road signals around the city with the aim of preventing or easing gridlock.”
    Pony.ai launches ride-hailing platform for autonomous vehicles / TechNode
    “Chinese autonomous driving startup Pony.ai has launched a WeChat mini-program allowing users in the southern Chinese city of Guangzhou to hail autonomous taxis.”

  • Chinese investment in Rio de Janeiro
    Chinese investment brings hope to a fallen city / Chinadialogue
    “In March last year things started to look up… Petrobras hired a consortium led by Chinese company Kerui Petroleum to build a natural gas processing unit at the site. Slowly, workers returned. Then, in October, Petrobras signed a contract with China National Petroleum Corporation (CNPC) to resume construction of the refinery. Under the deal, CNPC would control 20% of the new facility.”

  • The dream of trading with renminbi and ruble
    Why China and Russia are struggling to abandon the US dollar and forge a yuan-ruble deal / SCMP
    “Russia and China plan to ditch the US dollar and switch to local currencies in international trade but yet another delay [by Moscow, for unspecified reasons] to a new system for yuan-ruble settlements shows just how complex it is to develop an alternative to the greenback.”

  • Artificial intelligence funding
    AI startup Horizon Robotics to raise $600 million in Series B funding / TechNode

POLITICS AND CURRENT AFFAIRS:

SOCIETY AND CULTURE:

  • Cantopop
    Denise Ho confronts Hong Kong’s new political reality / New Yorker (porous paywall)
    Jiayang Fan (Fán Jiāyáng 樊嘉扬) on Hong Kong pop star Denise Ho (何韻詩 Hé Yùnshī): “As Beijing chips away at the territory’s freedoms, the Cantopop singer has become its emblematic figure — embattled, emboldened, and unbeholden.”

  • African literature in China
    Chimamanda Adichie leads African literature wave in China / Quartz
    “Dear Ijeawele is a forthright and frank book, a 15-step letter about how to raise a feminist child. But when it’s published in China around April this year, it will garner its author, the celebrated Nigerian writer Chimamanda Ngozi Adichie, a new status: becoming one of few African writers whose body of work has mostly, if not all, been translated to Chinese.”

  • Marijuana bust
    Chinese rich kids caught in rock band drug bust / SCMP
    “Eleven young men, most of them fù èr dài 富二代 — wealthy second-generation millennials — will face court in southeastern China on drug charges, a Chinese newspaper reported on Tuesday. Police in Taizhou, Zhejiang province, said men were all members of two rock bands in the city and tested positive for marijuana after a drug bust late last month.”

  • Tertiary education too easy?
    The problem with Chinese universities? Not enough dropouts / Sixth Tone
    “At many Chinese universities, the graduation rate is over 90 percent, and the guarantee of a degree has led to an epidemic of student slacking.”

  • Education and status
    The Chinese primary school where nearly a sixth of the parents hold PhDs / SCMP
    “A primary school in eastern China is generating interest online because of the high number of its pupils’ parents — 194 mums and dads — with PhDs. The highly educated parents of children at Hanlin Primary School in Suzhou, Jiangsu were first featured on the local government’s official WeChat page.”

  • Hip-hop music
    Higher Brothers drop new video, announce February release of 2nd album “Five Stars” / Radii China
    “After a year spent building their brand overseas, Chengdu rappers Higher Brothers are kicking off 2019 with a brand-new, Made in Chinatown video for ‘Open It Up,’ the second single off their forthcoming album Five Stars.”


VIDEO ON SUPCHINA

China’s first 3D-printed bridge put into use in Shanghai

A bridge was made using 3D-printing technology for 35 days and its service life can last up to 30 years. It was put into use at a park in Shanghai on January 11.

An easy piggy kirigami tutorial to get you prepared for Chinese New Year

If you need decoration inspiration for the upcoming Chinese New Year, which falls on February 5 this year, check out this simple kirigami tutorial.


FEATURED ON SUPCHINA

Chinese Corner: The women who spoke out against sexual misconduct

What happens to a Chinese woman after she speaks out against sexual harassment and assault? This is the question at the center of a recent profile of a cohort of brave women who have come forward as victims of sexual misconduct in support of China’s fledgling #MeToo movement. This and other stories in Chinese Corner, Jiayun Feng’s review of interesting nonfiction from this past week on the Chinese internet.

Flavor is more than skin deep: The many ways in which Chinese eat offal

China and the United States are among the world’s biggest meat consumers, but there’s a big difference in what each country is willing to eat. American meat consumption is limited to skeletal muscle and mostly excludes offal, or the organs (heart, liver, intestines, etc.) and extremities (brain, tongue, feet, etc.). In contrast, Chinese carnivores seem to be enthusiastic about making nose-to-tail use of their livestock. Here are five Chinese preparations of the fattiest type of offal — large pork intestine — spanning across various culinary regions.


PHOTO OF THE DAY

Lunchtime

Children of migrant workers line up for lunch at Chaoyang Laojuntang Elementary School on the edge of Beijing’s Chaoyang District in October 2018. Photo taken by Lavinia Liang.