The underwhelming new foreign investment law

Access Archive

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Now on with the news.

—Jeremy Goldkorn, Editor-in-Chief

1. New foreign investment law approved

The National People’s Congress gave its (rubber)stamp of approval to the Foreign Investment Law of the People’s Republic of China on March 15, and the new regulations will come into effect on January 1, 2020.

  • The law was fast-tracked in the past three months, the BBC noted, and Beijing “appears to have rushed through the investment law as an olive branch to the US amid trade war negotiations.”  

  • There were last-minute amendments: The Wall Street Journal says that the “language in the final draft speaks more directly to transgressions by Chinese officials,” which Jacob Parker, Beijing-based vice president at the U.S.-China Business Council, called a “very positive” development.

  • It “attempts to address outstanding concerns from foreign investors, such as unfair treatment in terms of market access and government procurement, forced technology transfer to Chinese partners and the theft of commercial secrets from foreign businesses in China,” the SCMP says.

  • But “at the same time, the wording of the law…is quite general, leaving many details to be addressed in other regulations and implementation procedures.” The New York Times, the South China Morning Post, and Lawfare have previously reported in more detail on the wary foreign reaction to the law as it formed.

China Law Translate has a full translation of the law’s text.

—Lucas Niewenhuis

2. Xi heads to Europe

Xinhua reports that Xí Jìnpíng 习近平 will “pay state visits to Italy, Monaco and France from March 21 to 26.”

With 53.9 percent and 42.9 percent of respondents viewing the American and Chinese tariffs respectively in a negative light, it is clear that disruptions are far-reaching… Interestingly, while many had speculated that European firms might find new oppor­tunities as a result of the conflict, only 4.2 percent reported any positive views of the situation.

—Jeremy Goldkorn

3. Europe asks Trump administration: Where are the ‘actual facts’ on Huawei?

The New York Times published a story over the weekend titled “U.S. campaign to ban Huawei overseas stumbles as allies resist.” It is the latest of many reports in the past month to show signs of strain in the American campaign against Huawei, since the U.K. and Germany signaled that they were leaning toward mitigating, rather than eliminating through a total ban, any security risk from the company’s telecommunications equipment.

  • A key quote from the NYT story: “European and Asian officials have complained privately that recent American intelligence briefings for allies did not share any sort of classified information that clearly demonstrated how the Chinese government used Huawei to steal information, according to people familiar with the discussions.”

  • One “senior European telecommunications executive” went further, and indicated that “no American officials had presented ‘actual facts’ about China’s abuse of Huawei networks,” the Times reports.

  • American tactics against Huawei are becoming more extreme: Last week, the Wall Street Journal reported that the Trump administration told Germany that if it went ahead with using Huawei equipment, intelligence sharing would be “pared back.” And in the NYT story, there is a hint that export controls of the kind imposed on ZTE last year are being considered:

American government officials are now looking for other ways to curb Huawei’s global rise without the cooperation of overseas allies, including possibly restricting American companies from supplying Huawei with key components that it needs to build 5G networks across the world.

These kinds of restrictions, which crippled ZTE last year, were of course reversed by Trump after a direct phone call from Xi Jinping. After that debacle, the Times reports that the current campaign against Huawei is understandably “hampered by a perception among European and Asian officials that President Trump may not be fully committed to the fight.”

Other news from the front lines of the fight over Huawei, and the never-ending trade war (currently on day 256):

—Lucas Niewenhuis

4. A propaganda pushback in Xinjiang

The latest news about China’s far-western gulags:

On Monday China’s state council released a white paper on “the fight against terrorism and extremism” and “human rights protection in Xinjiang,” in which Beijing attempted to quantify the campaign…
…Over the last few weeks Chinese state media have released a steady stream of reports and slickly produced videos [that appear] to be aimed at foreign audiences… China’s accounts contrast sharply with satellite imagery that shows prison-like facilities surrounded by barbed wire and watchtowers, and testimonies by former and current residents, as well as ex-detainees of the camps.

But there is one topic in the Islamic world that remains taboo — China’s incarceration of an estimated 1 million Muslims in the western territory of Xinjiang… In an interview with the Financial Times, the president, popularly known as Jokowi, rebuffed several questions on the restive Chinese region, claiming he had no knowledge of the situation there and was unable to comment.

  • There is a new direct flight between Chengdu and Istanbul, according to Xinhua News Agency. This news comes after a series of critical remarks from Turkish officials on treatment of Uyghurs, to which China has responded by threatening that economic ties with Turkey could be put at risk by “irresponsible and bad remarks.”

—Jeremy Goldkorn

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:

Prada SpA shares fell to the lowest close since 2016 as slower Chinese spending contributed to an unexpected drop in the Italian fashion house’s annual profit.

The Hong Kong-listed luxury group attributed a slump in Asia mostly to Chinese tourists reining in spending in Hong Kong and Macau because of the weakness in the yuan. Other luxury brands, including Kering SA’s Gucci, have seen the impact of softer buying by Chinese tourists offset by increased spending on the mainland, but Prada failed to get a similar boost from Chinese spending at home, said Citigroup analysts led by Thomas Chauvet.

BMW AG and Mercedes-Benz said on Saturday they will lower their prices in China, after the government announced it will reduce the country’s value-added tax (VAT) starting on April 1.

The German automobile companies each published posts on Chinese social media announcing immediate price cuts for several models. The discounts come as China endures a shrinking market for automobiles as the economy slows.

POLITICS AND CURRENT AFFAIRS:

She was known as China’s clickbait queen, an irreverent blogger who prescribed shopping to combat sadness (“better than sex, orgasms, strawberry cake”) and makeovers to win back cheating husbands (“men are visual animals”).

But late last month, Mǎ Líng马凌 [online name: Mī Méng 咪蒙], a blogger who commanded an audience of more than 16 million people, went conspicuously silent.

In the battle for control of the Chinese internet, the authorities had designated Ms. Ma a threat to social stability, pointing to an article she published about a young man with cancer whose talent and virtue were not enough to overcome problems like corruption and inequality.

  • Transpacific sleaze
    She extols Trump, guns and the Chinese Communist Party line / NYT (porous paywall)
    “Ms. Yang was little known outside southern Florida until her name became associated with the arrest last month of Robert K. Kraft, the owner of the New England Patriots, in a prostitution sting at a Jupiter massage parlor…Though she was not charged or implicated in the sting, her other business efforts have since come under public scrutiny. One promised rich Chinese clients access to the social scene around Mr. Trump.”
    On SupChina Access last week: An unhappy ending for Cindy Yang’s influence-massaging business

SOCIETY AND CULTURE:

  • Lifestyles of the obscenely rich
    Chinese buyer pays €1.25m for racing pigeon / BBC  
    Two buyers from China ended up in a bidding war in an auction for a prize racing pigeon, “escalating from €532,000 [$600,000] up to €1.25 million [$1.42 m] in just over an hour. To put it all in perspective…the usual price for a racing pigeon is around €2,500 [$2,835].”

  • Elementary school students to learn about financial markets
    China’s primary school students to learn how to avoid stock market pitfalls / Guardian  
    “China’s ministry of education and the country’s securities regulator said they would be working together to ‘increase financial literacy’ among China’s youth…the campaign to improve understanding of the country’s securities and futures markets would begin with textbooks for primary and middle schools.”

  • 11-year-old math whizzes
    China’s ‘human abacuses’ get their sums right and beat mental agility challenge on national TV / SCMP
    “Two Chinese school pupils made waves on national television with their mental arithmetic skills, adding up 100 three-digit numbers within 45 seconds.”


VIDEO ON SUPCHINA

A robber in southern China has second thoughts

Just after a robber stole money from Ms. Li in front of an ATM machine in Heyuan, Guangdong Province, on February 16, the suspect returned all the money, with a smile on his face, and walked away. He was still arrested and detained for his act.


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SINICA PODCAST NETWORK

Sinica Early Access: China, the U.S., and Kenya

This week on the Sinica Podcast, Kaiser and Jeremy are joined by Eric Olander, host of the China in Africa Podcast from the China Africa Project, and by Anzetse Were, a developmental economist based in Nairobi. They explore questions related to Kenyan debt and development, as well as Sino-American competition in East Africa.

  • Sinica Early Access is an ad-free, full-length preview of this week’s Sinica Podcast, exclusively for SupChina Access members. Listen by plugging this RSS feed directly into your podcast app.

Ta for Ta episode 15: Sarah Keenlyside

Sarah Keenlyside began her career as an investigative journalist at the Sunday Times newspaper in London before moving to China in 2005 to set up Time Out’s first English-language publication. After seeing a number of visitors struggle to navigate Beijing during the 2008 Olympics, she was inspired to launch the Bespoke Travel Company, which quickly grew from a one-woman outfit to the tour service of choice for high-profile clients, including Matt Damon, Metallica, Apple, and Warner Bros. Passionate about entrepreneurship, women in the workplace, and mental health issues, Sarah has given talks on all of these topics to a wide variety of groups. She was also a finalist for the “Inspiring Woman Award” in the 2018 British Business Awards hosted by the British Chamber of Commerce.

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This week on the Caixin-Sinica Business Brief: the new Foreign Investment Law passed by China, a new food safety scandal at a private school in Chengdu, some controversial remarks by a spokesman for the National Bureau of Statistics, and more.