Four Italian ports to join Belt and Road?

Access Archive

1. Italy embraces Belt and Road as EU pushes back against Beijing

The Italian government intends to sign on to the Belt and Road Initiative (BRI). The country signaled early this month that it plans to formally endorse Xi’s signature project (see paywalled Financial Times report), and Prime Minister Giuseppe Conte said he plans to attend the Belt and Road Forum in Beijing in April. Italy may be ready to open up four ports to Chinese Belt and Road investment, says the South China Morning Post:

The northwestern city of Genoa, Italy’s biggest seaport, said it would sign cooperation agreements with China, while in the south the Sicilian port of Palermo — which Xi is expected to visit this weekend — is the focus of Rome’s efforts to attract Chinese shipping operators. Two ports in the northern Adriatic Sea, Trieste and Ravenna, might also be part of Italy’s memorandum of understanding with Xi as part of a plan to compete with major European ports, the sources said.

The White House furiously pushed back, saying, “We view BRI as a ‘made by China, for China’ initiative” that will not bring benefits to Italy. China responded, “This position taken by the US side is laughable,” and urged Italy to make its own independent decisions.

Meanwhile, “Europe is moving unexpectedly quickly to restrict Chinese access to big public projects ranging from railways to telecoms,” reports Politico via the South China Morning Post.

Only a week after Brussels branded Beijing as a “systemic rival,” EU leaders attending a summit on Thursday are expected to yield to pressure from Berlin and Paris and “endorse” a law that will restrict the access of Chinese companies to the EU’s €2.4 trillion-per-year public procurement market.

Many industrial EU countries are increasingly frustrated that their leading businesses were excluded from Chinese projects such as the country’s 10,000 kilometre high-speed rail network and the Olympic facilities in 2008, while the EU opened domestic markets to Chinese bidders in tenders.

See also: A forgotten Italian port could become a Chinese gateway to Europe (porous paywall) in the New York Times. Trieste is the “forgotten” port.

Further reporting

—Jeremy Goldkorn

2. Are trade talks reaching their conclusion, or sputtering out?

The Wall Street Journal reports that “U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to fly to Beijing next week to meet with Chinese Vice Premier” Liú Hè 刘鹤. Liu is then expected “to continue talks in Washington” the following week.

Depending on how you read the tea leaves, this is either the closing chapter of a negotiation process that is going “very well” (Trump’s words), or a mission to salvage talks that are actively falling apart before our eyes. Bloomberg reports on some warning signs:

Chinese officials have shifted their stance because after agreeing to changes to their intellectual-property policies, they haven’t received assurances from the Trump administration that tariffs imposed on their exports would be lifted, two of the people said on condition of anonymity.

Beijing has also stepped back from its initial promises over data protection of pharmaceuticals, didn’t offer details on plans to improve patent linkages, and refused to give ground on data-service issues, one person familiar with the U.S.’s views said.

  • But Bloomberg also got a few denials from sources that anything was amiss: “A person close to Lighthizer denied that Chinese officials have backed away from previous pledges. A Chinese official briefed on the talks said that the negotiations are still ongoing and that a back-and-forth is to be expected in such circumstances.”

  • Separately, Bloomberg says that Boeing 737 Max 8 planes could be excluded from a final deal to increase purchases to reduce the trade deficit.

  • And “U.S. semiconductor companies want no part of any trade deal that calls for stepped-up purchases from China, worried that would give Beijing more control over their industry,” the WSJ adds.

  • U.S. Agriculture Secretary Sonny Perdue is one of few officials who can be confidently optimistic: He said that a trade deal could see a “doubling or tripling” of Chinese purchases of American farm products versus 2017 numbers over a span of two to five years.

More links related to U.S.-China relations and trade:

  • Huawei and U.S.-China relations
    Is Huawei a security threat? Seven experts weigh in / The Verge
    The title is a little deceptive, as two of the seven are politicians — Republican senator Marco Rubio and Democratic senator Mark Warner. But the responses are interesting to read.
    Briefing: US warns Brazil about Huawei equipment for 5G / TechNode

  • Are trains “critical infrastructure” in the U.S.?
    US mulls partial ban on Chinese trains and buses, citing cybersecurity and ‘Made in China 2025’ / SCMP
    The Transit Infrastructure Vehicle Security Act (full text here) is a bipartisan bill that is expected to proceed in the U.S. congress. Tammy Baldwin, a Democratic senator who introduced the bill along with Republican John Cornyn, says, “China has made clear its intent to dismantle US railcar manufacturing in its ‘Made in China 2025’ plan – our economic and national security demands that we address Chinese attempts to dominate industries that build our nation’s critical infrastructure.”
    SCMP notes that “China’s state-owned China Railway Rolling Stock Corporation has won a number of high profile contracts in Boston, Los Angeles and Chicago.”

  • Taiwan as “technology buffer,” and as political fulcrum
    Foxconn looks to move server production back to Taiwan for security / Nikkei Asian Review
    “Island could become a ‘technology buffer’ in US-China trade war, [Foxconn chairman] Terry Gou says.” Gou added “We’ve been asked by many clients to store data in Taiwan … because the government here cannot ask us to share the data.”
    Taiwan and US planning talks counter Beijing’s thrust for unification / AP
    “The talks planned for September in Taipei will include a senior official from Washington, William Brent Christensen, the de facto US ambassador to Taipei, said on Tuesday.”

—Lucas Niewenhuis

3. The Chinese internet is debating the merits of speaking English

A patriotic troll on the Chinese microblogging platform Weibo has almost single-handedly set off a massive debate about whether English skills are useless for most Chinese people.

The now-deleted Weibo post that sent the internet ablaze was published on March 17 by @花千芳 (in Chinese), who described himself as a 41-year-old freelance writer in his Weibo bio. The entire post reads:

“For the vast majority of Chinese citizens, English is a trash skill that wastes numerous people’s money and energy. Learning the language takes up an unnecessary portion of precious childhood years. Those who ferociously defend the merits of learning English are either professionals working in the English-learning industry or self-diminishing slaves. Just have a team of translators to work for you if you need to read English documents or Wikipedia. I see no point of encouraging the whole nation to learn English. And that’s what I call real stress relief.”

The post quickly sparked an intense backlash. Click through to SupChina for more details.

—Jiayun Feng

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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


BUSINESS AND TECHNOLOGY:

  • The booming beauty sector
    Beauty is the new buzzword in China’s tech world / Nikkei Asian Review (paywall)
    “From virtual makeovers to 3D nail polish printers, companies take makeup to the future… Beauty is outperforming many other retail segments in China, and tech companies are keen to cash in.”

  • Pharma price war
    A price war in China’s pharma industry could bring cheaper drugs / Bloomberg (porous paywall)
    “For years, the nation’s largest drugmakers happily sold low-cost generic medicines yielding gross margins of 80 percent to 90 percent without giving much thought to consumer protection or innovation…[but] a price war is brewing. Already, local governments of 11 cities are taking over procurement of drugs for their hospitals. In an early December bidding round, the average tender price was 55 percent lower than the previous auction. The new bidding system will eventually be extended nationwide.”
    For background on China’s complicated health care system see: What ails China’s healthcare system? Roberta Lipson has a detailed diagnosis on SupChina.

  • Chinese do-everything corporations
    China’s Evergrande says to start making electric vehicles in June / Reuters
    “Evergrande, China’s second-largest property developer by sales, has been aggressively expanding into the automotive space in search of new areas of growth as the Chinese property market slows.”
    The Chinese property developer that reckons it can take on Tesla / Bloomberg Quint

  • Purchases of Israeli computer chips skyrocket
    Israel’s chip sales to China jump as Intel expands / Reuters
    “An official at the Israel Export Institute told Reuters that new data showed semiconductor exports to China jumped 80 percent last year to $2.6 billion. An industry source told Reuters that Intel Israel accounted for at least 80 percent of those sales.”

  • Layoffs at Tencent
    Tencent is said to target 10 percent of managers for cuts, demotion / Bloomberg (porous paywall)
    “Tencent Holdings Ltd. is planning to clear out about 10 percent of its existing managers to make room for younger executives as China’s largest gaming and social media company confronts a slowdown in growth, according to people familiar with the matter.”

  • Xiaomi global expansion
    China smartphone maker Xiaomi beats profit view, sees more global expansion / Reuters
    “Xiaomi CFO…said that sales from outside of China made up 40 percent of the company’s revenue in the fourth quarter of 2018, adding that global expansion would be a priority for 2019.”

  • Go slow on Australian coal imports
    Coal exporters forced to divert ships as China port delays intensify / Sydney Morning Herald
    “Questions are also being asked in Australia about reports that customs officials at the port of Fangcheng in southern China are conducting ‘radioactive tests’ of Australian coal.”

  • Supercomputing
    China plans multibillion-dollar investment to knock US from top spot in fastest supercomputer ranking / SCMP
    “China is aiming for its newest Shuguang supercomputers to operate at about 50 per cent faster than the current best US machines, which assuming all goes to plan should help China wrest the title back from the US in this year’s rankings of the world’s fastest machines.”
    Racing against China, U.S. reveals details of $500 million supercomputer / NYT (porous paywall)
    “The Department of Energy disclosed details on Monday of one of the most expensive computers being built: a $500 million machine based on Intel and Cray technology that may become crucial in a high-stakes technology race between the United States and China.
    The supercomputer, called Aurora, is a retooling of a development effort first announced in 2015 and is scheduled to be delivered to the Argonne National Laboratory near Chicago in 2021.”

  • Canadian pension fund in China
    CPPIB mulls opening first office in China / Bloomberg News Network
    “The Canada Pension Plan Investment Board, which manages around C$368.5 billion ($277 billion), is considering opening its first office in China as it seeks greater exposure to the world’s second-largest economy.”

  • Cloned dogs
    China’s first cloned police dog reports for duty / SCMP
    “A cloned puppy, which was bred using DNA from an award-winning police sniffer dog, has started training with a force…at Kunming Police Dog Base in Yunnan province.”

  • Electric buses — diesel be gone
    Forget Tesla, It’s China’s e-buses that are denting oil demand / Bloomberg (porous paywall)
    “By the end of this year, a cumulative 270,000 barrels a day of diesel demand will have been displaced by electric buses, most of it in China…That’s more than three times the displacement by all the world’s passenger electric vehicles (a market where Tesla has a share of about 12 percent.).”

POLITICS AND CURRENT AFFAIRS:

SOCIETY AND CULTURE:

Long in the dark side of the public consciousness, China’s goth community (if there is one) recently found itself at the center of attention after a woman in full gothic attire was barred from taking the subway in Guangzhou because of her “horrifying” look.


VIDEO ON SUPCHINA

Woman asked to remove heavy makeup by subway security in Guangzhou

A female college student was asked to remove her Goth-style heavy makeup by subway security guards before being allowed to board the train at Xiaogang Station on the Guangzhou Metro on March 10 so that her makeup wouldn’t scare other passengers.


FEATURED ON SUPCHINA

Chinese Corner: Why Chinese women don’t use tampons

In the past few years, big firms like Procter & Gamble and domestic startups like Femme 非秘 have been working hard to advertise tampons to Chinese women. But the efforts haven’t really paid off. Today, tampons remain a hard sell in the Chinese market. Why? Also in this week’s Chinese Corner: the aftermath of the closing of the Internet Addiction Treatment Center in Linyi, an independent bookstore in Beijing bucking trends, and China’s middle-aged actresses speak out against both sexism and age discrimination.


SINICA PODCAST NETWORK

Middle Earth: Episode #5: Video Games with Chinese Characteristics

This edition of the Middle Earth podcast takes a look at China’s video-game industry — a hugely popular business in a nation where over half the population regularly plays. In 2015, the size of the video-game market in China officially surpassed that of the U.S., making the Chinese video-game industry the biggest and most profitable in the world. Listen in as experts discuss the unique features of Chinese video-gaming culture and their implications for this constantly evolving market. Featuring: Ava Deng – translation manager; Sebastien Francois – overseas operations manager; Max Wang – narrative designer; and, as usual, your host, Aladin Farre.


PHOTO OF THE DAY

Tea picking in Hangzhou

A farmer picks tea in a tea garden in Hangzhou, Zhejiang Province, where the famous Longjing tea (or Dragon Well tea 龙井茶 lóngjǐngchá) is originally from. Photo by Michael Yamashita.