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Subsidy-free renewable energy goes big


Dear Access members,

We’re very happy to publish today a list of the best of China-focused Twitter in English: 100 accounts you should follow. If you have feedback on the list, get in touch at editors@supchina.com.

In the news today: A full roundup of the latest on deepening distrust and economic decoupling between the U.S. and China is included right below our top story.

Before the news, however, here are a few pieces of recommended analysis on the trade and tech cold war:

An interview with Victor Shih, including smart commentary on the bounds of Xi Jinping’s knowledge and power, and an interesting perspective on the role of corruption in the Xinjiang crackdown.

Elsa B. Kania writes, “The latest salvos in the Trump administration’s campaign against Huawei may prove, at best, to be a Pyrrhic victory—or, at worst, directly undermine U.S. interests and objectives…It is not too late for U.S. President Donald Trump to recalibrate toward the smarter approach needed for such a complex challenge.”

Kania adds, “A decision to deny outright American companies the ability to do business with Huawei could prove quite costly if implemented without concern for the potential externalities, potentially resulting in losses in the neighborhood of $11 billion based on past purchases.”

Samm Sacks and Graham Webster write, “The U.S. has long criticized China for using ‘national security’ as an excuse for trade protectionism. Now the U.S. might be playing the same game.”

The Times suggests that rare earths may not be as likely as some thought to be where China strikes back at the U.S.:

China’s command of the rare-earth market could give Beijing a way to strike back at Mr. Trump as he raises tariffs and deprives Chinese companies of the technology they need to survive. A similar move by China nine years ago, against Japan over a territorial dispute, shocked manufacturers around the world, sent prices soaring and revealed Beijing’s control of an essential part of the global supply chain.

This time, however, the impact of any block on rare earths may be far less clear cut. It could undermine China’s reputation as a manufacturing hub. Other trading partners, notably Japan and South Korea, could become collateral damage. And in an odd turnabout, China’s own needs have made it somewhat dependent on ore from the United States.

—Lucas Niewenhuis, Associate Editor


1. Subsidy-free renewable energy goes big

In the 2019 Q1 Red Paper (available for free for Access members here), we made this note on renewable energy:

Solar panel subsidies are being phased out, as the industry is maturing and consolidating and prices recover from a crash last year. Solar energy capacity rose 44 GW in China in 2018, down 18 percent from 2017.

Today, Caixin Live reports:

The training wheels are finally coming off China’s renewable energy industry, with the government announcing 20.8 gigawatts of projects that will compete with coal and other forms of generation without subsidies for the first time.

The country will build 20.8 gigawatts (GW) of clean energy projects across 16 provinces, the National Development and Reform Commission (NDRC) and the National Energy Administration said Wednesday.

Solar power projects will account for the bulk — 14.8 GW — of projects, while wind will make 4.51 GW. Project owners will only profit from selling the electricity they generate at prices equal to or less than coal power, and will not receive a boost from the government, as they had before.

More on the current state of renewable energy in China:

  • “A total of 56 wind power projects, 168 solar power projects and 26 pilot distributed renewable projects in 16 cities and regions in China” are among the just-approved projects, according to Reuters.

  • Curtailment, or wasted energy, is decreasing, largely because of “better infrastructure and competitive costs compared with coal,” Caixin reported via Sixth Tone.

  • To further reduce curtailment, Beijing “told local energy authorities to come up with a plan for maximizing the share of renewable electricity they consume, based on their current resources,” Caixin later reported.

As is typically the case, though, the latest environmental news from China is mixed.

  • Coal consumption increased 13 percent in the region around Beijing this past winter, even as PM2.5 concentrations nationwide decreased by 9.2 percent, according to a Greenpeace analysis.

  • Another study has confirmed what was first suspected last summer — that the ozone-layer-killing chemical CFC-11 is being illegally used in Chinese factories.

  • CFC-11 was banned under the 1987 Montreal Protocol, but has made a comeback in the atmosphere in recent years.

  • The new study, with a lead author from the University of Bristol, “seems to confirm beyond any reasonable doubt that some 40–60% of the increase in emissions [since 2012] is coming from provinces in eastern China,” the BBC reports.

  • Sales of gas-burning vehicles should peak in 2025, and Beijing could “steer Chinese cities toward clean air by banning the sale of new fossil fuel-powered vehicles by 2030,” the Innovation Center for Energy and Transportation said in a report, according to Caixin.

—Lucas Niewenhuis

2. Huawei, Hikvision, and the tech cold war

The latest in the deepening cleavages between the American and Chinese technology worlds:

  • “Shenzhen-listed shares in Chinese video surveillance firm Hikvision Digital Technology Co Ltd opened 10% lower on Wednesday after reports that the U.S. may blacklist the firm,” per Reuters.

  • Other surveillance companies in D.C.’s crosshairs include Megvii, Meiya Pico, Iflytek, and Dahua, according to Bloomberg reporter Jenny Leonard.

  • Panasonic will stop supplying some components to Huawei, while “companies across Japan’s tech sector including SoftBank, Toshiba and Murata Manufacturing are still scrambling to assess the impact of the US ban,” the FT reports (paywall).

  • “Taiwan chipmaker TSMC says it will continue supplies” to Huawei despite the U.S. ban, the FT added.

  • “Europe has become a central battlefield in the fight between the U.S.” and Huawei, the Wall Street Journal says (paywall), noting that the company followed Beijing’s lead and accused Washington of “bullying.” Huawei has also “discussed the no-spy accord [that the company is willing to sign no-spy agreements] in recent weeks with several EU governments.”

Two other notable stories about Chinese technology today:

Developed and sold by the China Electronics Technology Corporation, a state-run defense manufacturer, the system in Kashgar is on the cutting edge of what has become a flourishing new market for technology that the government can use to monitor and subdue millions of Uighurs and members of other Muslim ethnic groups in Xinjiang…

The system taps into networks of neighborhood informants; tracks individuals and analyzes their behavior; tries to anticipate potential crime, protest or violence; and then recommends which security forces to deploy, the company said…

The technology has some way to go. Dust and bad lighting can hobble facial recognition on security cameras, which struggle to track large numbers of people simultaneously. Even the best systems can be accurate in less than 20 percent of cases, according to one study published by a journal linked to the Ministry of Public Security.

Early last year, Grindr LLC’s Chinese owner gave some Beijing-based engineers access to personal information of millions of Americans such as private messages and HIV status, according to eight former employees, prompting U.S. officials to ask it to sell the dating app for the gay community.

3. The forever trade war

Prospects for further trade talks appear very low, but at this point it is difficult to tell how much of that is due to the impending Huawei export ban, and how much of it is due to a basic mismatch of negotiation positions. It’s probably a lot of both.

The Ministry of Commerce today, per Reuters:

If the United States wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect.

U.S. Treasury Secretary Steven Mnuchin, also per Reuters:

If China wants to come back to the table and move forward on the basis we were, we’re open for conversations.

Other trade war and tariff news:

Current and potential future Chinese retaliation:

Other news in U.S.-China relations:

—Lucas Niewenhuis

—–

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:

  • Meituan
    China’s Meituan Dianping posts narrower 1Q loss / Nikkei Asian Review
    “China’s Meituan Dianping on Thursday reported a narrower loss in the first quarter, as the Chinese food-delivery company’s revenue jumped on higher orders and improvement in average value per order.”

  • WeChat voice command features
    WeChat to launch entirely voice-enabled services for drivers this year / TechNode
    “The planned features include only chat, calls, and GPS navigation for now. All aspects will be voice command-enabled, purportedly to reduce driver distraction and risk of accidents.”

  • Inflation
    Simon Rabinovitch on Twitter: “What’s notable is that things have basically stopped improving over the last three years. Not an inflationary spiral. But a good example of what the end of China’s long boom feels like: no matter how hard you work, you still only get so much banana for your buck. (3/)”

  • Coffee chain wars
    Starbucks will license Thai operations to focus on China / Bloomberg (porous paywall)
    “Starbucks Corp. agreed to license its Thailand operations to a partner, in the latest sign that the coffee behemoth is sharpening its focus on its key markets of China and the U.S.”

  • Tencent sets sights on online travel industry
    Tencent leads $250 million round in Chinese travel site Mafengwo / Bloomberg (porous paywall)
    “Nine-year-old Mafengwo — which means ‘hornets’ nest’ — helps Chinese travelers seeking destination and sight-seeing recommendations from fellow globetrotters. Operating a model akin to TripAdvisor, it’s competing for the world’s largest population of tourists, and travel operators who want to reach a fast-growing domestic audience.”

  • African swine fever
    African swine fever virus is now ‘endemic’ in China’s Tibet and Xinjiang regions, making its eradication harder, UN says / SCMP
    “China’s pig production will drop by 134 million heads, or 20 percent, in 2019, the US Department of Agriculture said last month.”

SCIENCE, HEALTH, AND THE ENVIRONMENT:

  • Shingles vaccine approved
    GSK’s shingles vaccine approved for use in China in adults aged 50 and above / Reuters
    “GlaxoSmithKline Plc said on Thursday its shingles vaccine had been approved for use in China in adults aged 50 and above. Shingrix was launched in 2017 and has witnessed robust growth, with the British drugmaker predicting the sale of the vaccine to be ‘significantly’ more than 1 billion pounds in 2019.”

  • Greener maritime trade
    China uniquely placed to ‘green’ shipping / Chinadialogue
    “If Chinese shipbuilders don’t keep up with the decarbonization demanded by the shipping industry, they risk losing top spot.”

  • Overfishing in Sierra Leone
    Sierra Leone takes steps to tackle overfishing / Chinadialogue
    “It is estimated that Sierra Leone has the potential to earn more than US$50 million a year from its fisheries, yet it ends up with less than $18 million because of illegal fishing and lack of policing. China’s fishing fleets are taking advantage of weak enforcement in Sierra Leone with devastating effect.”

POLITICS AND CURRENT AFFAIRS:

“The conditions that they have given us are commercially unviable. We said no, let’s meet halfway,” Deusdedit Kakoko, director general of the state-run Tanzania Ports Authority (TPA) told Reuters.

“It would have been a loss…they shouldn’t treat us like schoolkids and act like our teachers.”

As Jude Blanchette details in China’s New Red Guards, contemporary China is undergoing a revival of an unapologetic embrace of extreme authoritarianism that draws direct inspiration from the Mao era. Under current Chinese leader Xi Jinping, state control over the economy is increasing, civil society is under sustained attack, and the Chinese Communist Party is expanding its reach in unprecedented new ways. As Xi declared in late 2017, “Government, military, society, and schools, north, south, east and west—the Party is the leader of all.”

SOCIETY AND CULTURE:

  • Genetic investigation of Han Chinese
    Beyond the Yellow River: DNA tells new story of origins of Han Chinese / SCMP
    “Research published in the online journal Molecular Biology and Evolution on Wednesday said the lower reaches of the Yangtze and Pearl rivers — as well as the Yellow River — gave rise to genetically separate groups about 10,000 years ago. Those ancestors then mingled to become the largest ethnic group in the world today, it said.”

  • Music conservatories and China’s piano prodigies
    Why China is gripped by piano mania / FT (paywall)

China is seeking to shift the classical music industry’s epicenter into home territory. Impressive new concert halls in Harbin, Shanghai and Beijing mean that it has the infrastructure. Now, top-flight educational institutions are required. China’s 11 conservatories, founded mostly in the 1950s, are not yet world-class. Not coincidentally, the best of Lang Lang’s generation pursued postgraduate studies in America and Europe…

Competitions are springing up all over China, many of them organised by conservatories. Their aim is to raise quality and prestige by drawing students hungry for solo careers. The rivalry is intense. Beijing’s Central Conservatory of Music launched a version of Warsaw’s International Chopin Piano Competition following President Xi Jinping’s state visit to Poland in 2016. The response of the China Conservatory, its main local competitor, was to create the CIMC.

Such events are lavishly funded by the government, demonstrating that classical music is now back in official favor.


FEATURED ON SUPCHINA

China Twitter: 100 accounts you should follow

The China Twitter community is one of the more constructive and informed groups on the platform. But don’t take our word for it, see for yourself: We’ve selected 100 of the top China-focused accounts on Twitter, comprising journalists, scholars, activists, observers, and everyday people who provide unique insight and facilitate a nuanced understanding of the country. Think we missed someone? Let us know: email editors@supchina.com.


SINICA PODCAST NETWORK

Sinica Podcast: Chinese Investment: Beyond the USA

This week’s podcast was recorded at the Caixin “Talking China’s Economy: 2019 Forecasts and Strategies” conference in Chengdu in April. Kaiser spoke with Professor Hé Fān 何帆 of the Antai College of Economics and Management at Shanghai Jiaotong University, and Michael Anti, CEO of Caixin Globus, which tracks Chinese global investment. They chat about how “globalization,” which once meant “Americanization” to many Chinese, has taken on a much broader meaning as SAFE concerns over capital flight have reeled in the “gray rhinos” after an investment spree, and as a stricter CFIUS regime has made U.S. investments more difficult.

Ta for Ta, Episode 19: Heather White

This week on Ta for Ta, Juliana speaks with Heather White, the director of the documentary film Complicit and the founder and former executive director of Verité, a nonprofit that advocates for labor rights and partners with entities in both the public and private sector.

Subscribe to Ta for Ta on Apple Podcasts, Overcast, or Stitcher, or plug the RSS feed into your favorite podcast app.

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Jeremy Goldkorn

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of SupChina, and co-founder of the Sinica Podcast.