The Frankenstein cruise, and the never ending techno-trade war

Access Archive

Dear Access member,

Quick reminder about two SupChina events in New York: 

—Jeremy Goldkorn, Editor-in-Chief


1. No end in sight for the techno-trade war 

The U.S.-China techno-trade war drags on and on and on in this petty pace from day to day. Here are the latest developments: 

  • The department of gee, ya think? “The Trump administration is increasingly concerned about prospects for a trade deal with China, amid an unexpected reshuffling of the Chinese negotiating team and a lack of progress on core issues since the Group of 20 summit in Japan, according to U.S. officials and senior Republicans,” says the Washington Post. However, the South China Morning Post reports that Beijing is “playing down” the significance of the personnel changes. 

  • Are Chinese students choosing the U.K. over the U.S.? “Applications from Chinese students to study at U.K. universities have gone up 30 percent since last year,” according to the South China Morning Post

  • “U.S. Republican Senator Marco Rubio introduced a bill in Congress Thursday to boost the country’s rare-earth industry, in an effort to break American advanced manufacturing’s reliance on importing key metals and compounds from China,” according to Nikkei Asian Review (porous paywall).

2. The Frankenstein cruise?

In 2016, Foreign Affairs magazine published a story titled The cruise that changed China (porous paywall): 

On September 2, 1985, the SS Bashan cruised through the green-leaved gorges of the Yangtze River, its prow breaking the waters along its 259-foot length…The cruise ship was hosting a weeklong meeting of some of the world’s most brilliant economists, who had assembled to figure out a plan for China’s troubled economy. The gathering came at the zenith of an era when officials under Dèng Xiǎopíng 邓小平 were scouring the globe for fresh ideas that would set China on the path to prosperity and global economic power.

One of those “brilliant economists” was the Hungarian Janos Kornai, who China-focused economist Andrew Batson tweeted “arguably had more influence on China in the 1980s than any other foreign economist.” In the same tweet, Batson describes a recent opinion piece by Kornai in the Financial Times (paywall) as an “extraordinary, and indeed historically significant, op-ed.” 

Kornai writes that “chilling changes are taking place inside China” under Xí Jìnpíng 习近平 and he partly blames himself:

Are not western intellectuals also responsible for this nightmare? We not only watched China’s transformation with approval but actively contributed to these changes. We are the modern version of Mary Shelley’s Frankenstein, the 19th-century tale of an experimenting scientist who brought a dead body to life using that era’s technology: the electric shock. The resurrected creature became a murderous monster.

3. IBM and China’s surveillance state

The Intercept reports

The OpenPower Foundation — a nonprofit led by Google and IBM executives with the aim of trying to “drive innovation” — has set up a collaboration between IBM, Chinese company Semptian, and U.S. chip manufacturer Xilinx. Together, they have worked to advance a breed of microprocessors that enable computers to analyze vast amounts of data more efficiently.

Shenzhen-based Semptian is using the devices to enhance the capabilities of internet surveillance and censorship technology it provides to human rights-abusing security agencies in China

This is not IBM’s first questionable collaboration: “IBM’s technology helped facilitate Nazi genocide through generation and tabulation of punch cards based upon national census data,” according to investigative journalist Edwin Black

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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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BUSINESS AND TECHNOLOGY:

For the executives at Citic’s CLSA unit who sat listening to [Citic Securities Co. and its Chairman Zhāng Yòujūn 张佑君] in silence, it also marked the end of a tumultuous three-year relationship. 

Nearly all of them would quit over the next few weeks, kicking off a wave of more than 50 resignations that now threatens to upend China’s push to create a global investment-banking powerhouse.

The story behind the exodus — pieced together from interviews with almost a dozen current and former executives who asked not to be named so they could speak freely — illustrates the difficulties China faces as it tries to project its financial might abroad. It involves bruised egos, lost bonuses and a culture clash that some say was inevitable after Citic Securities bought CLSA six years ago, putting the free-wheeling Hong Kong institution in the hands of a state-owned giant that ultimately answers to China’s Communist Party.

China was the world’s largest buyer of industrial robots for the sixth straight year in 2018, despite a dip in purchases from the previous year. The country bought 135,000 robots used across industries such as electronics and automobiles, down 3.8% from 2017, according to a report released by the China Robot Industry Alliance (CRIA) on Tuesday. 

China’s insurance regulator said Thursday that the newly created Dajia Insurance Group will take over several of Anbang Insurance Group Co. Ltd. ’s subsidiaries, the latest move in restructuring the fallen financial star since it was seized by the government. 

Auto suppliers Johnson Electric Holdings and Sensirion slashed their earnings forecasts on Thursday, blaming a slowdown in car sales and pessimism about the prospects of a Chinese car sector recovery.

The news is the latest to signal weaker global industrial activity and ripples from a trade war that has already forced China’s Geely, Swiss engineering company ABB, Germany’s Aumann, and chemicals giant BASF, to warn of turbulence ahead. 

Seres, the Chinese EV startup formerly known as SF Motors, is laying off 90 people in its Silicon Valley office, the company announced in a staff meeting held earlier today. The US launch of its first electric SUV, the SF5, is also now on hold…[the news coming] at a time when some of the most high profile Chinese and Chinese-American EV startups are struggling. 

  • Bye-bye, battery subsidies, hello, red ink
    Electric-vehicle battery makers under pressure as prices, subsidies fall / Caixin Global (paywall)
    “The Shenzhen-listed Sichuan Chengfei Integration Tech Corp…initially saw strong profits from its electric battery businesses thanks in part to generous government subsidies offered to help spur the development of China’s electric-vehicle industry.”

  • Didi gets into Brazilian banking
    Chinese ride-hailing app Didi offers banking services as it moves into Brazil and Mexico / SCMP
    “Didi Chuxing, the Chinese ride-hailing giant, has launched new financial services in Brazil and Mexico, in an expansion plan that will again see it go up against Uber Technologies.”

  • China still good for Uniqlo
    Uniqlo owner’s profit falls short despite China gains / Bloomberg (porous paywall)
    “Fast Retailing Co.’s profit fell short of analyst estimates as weakness in the Uniqlo owner’s home market of Japan overshadowed a strong showing in overseas markets, particularly China.”

  • Deflation fears
    China’s looming deflation fears strengthen policy easing case / Bloomberg (porous paywall)
    “Growth in China’s producer price index slowed to zero in June from a year earlier, the weakest reading in almost three years. Prices fell 0.3% from May. The downward trend accentuates fears of a return of deflation for manufacturing, which would erode company profits and increase debt repayment pressures.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

Local officials were apparently surprised by the scale and size of the protests, which came after several similar waste plants were reportedly found to be giving off dangerous emissions. Photos and videos shared on social media showed large crowds marching in the streets near where the plant was to be built, and police arresting numerous protesters.

The government has since suspended building of the plant, which locals said had halted protests, but a heavy police presence remains in the city where the situation is tense.

POLITICS AND CURRENT AFFAIRS:

SOCIETY AND CULTURE:

As the owner of Shanghai-based vintage brand Lucky Forces, Shen is one of a growing number of Chinese entrepreneurs faithfully re-creating Western items from the 1930s to 1960s. He sells to a burgeoning community of newly minted vintage fans in the country — typically men in their 30s and 40s — who see in the objects a timeless aesthetic, an air of prestige, and an escape from the pressures of work.


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