Dear Access member,
We’re publishing a regular explainer-type feature every week on our website. Here are the first few:
China vs. the U.S. Treasury: Why Beijing won’t use the ‘nuclear option’ of selling American debt (published today)
The U.S. Sinophobia Tracker: How America is becoming unfriendly to Chinese students, scientists, and scholars
2020 Presidential Election China Tracker: Where do the Democratic candidates for president stand on China?
Let me know what you think of them, or if you have ideas for future explainers: Reply to this email to get in my inbox.
—Jeremy Goldkorn, Editor-in-Chief
1. Peking University scientists develop new gene-editing technology
Scientists at Peking University have developed a gene-editing technique “that they say could have profound effects on the treatment of certain diseases,” and “could also give CRISPR a run for its money,” reports Caixin (paywall). Their findings were published this week in British peer-reviewed journal Nature Biotechnology. More from Caixin:
LEAPER…is said to avoid several of the pitfalls of CRISPR-Cas13, the cousin of the well-known DNA-editing technique CRISPR-Cas9… Like Cas13, LEAPER targets strands of RNA — molecules in cells that like DNA carry inheritable genetic information, but also play a vital role in its replication. The technique makes use of engineered strands of RNA that “recruit” another type of enzyme, ADAR, to exchange one compound found in RNA for another. The researchers say this avoids some of the problems of existing gene-editing techniques, which include immune responses and unwanted side-effects.
LEAPER, which is short for “leveraging endogenous ADAR for programmable editing of RNA,” is efficient, rarely misses its targets, and can be used on a number of different cell types, the researchers found.
2. China’s T-bills and the techno-trade war
“China’s holdings of U.S. Treasury securities dipped in May to the lowest in two years” from $2.8 billion to $1.11 trillion, in the third straight month of declines, reports Bloomberg (porous paywall).
What does this mean? Probably not a lot. Despite the frequent media mentions of the threat of China dumping its U.S. Treasury holdings, no serious analyst — as far as we can tell — believes this to be a real possibility. Just today, we published an explainer on this very subject on SupChina: China vs. the U.S. Treasury: Why Beijing won’t use the ‘nuclear option’ of selling American debt.
Note, in apology for the headline: China holds not only T-bills (which mature within a year), but also Treasury notes (two to 10 years) and Treasury bonds (longer than 10 years) as well as other instruments of U.S. government debt.
3. A blow to DJI — techno-trade war news
It’s day 377 of the U.S.-China techno-trade war by our count. Here is the latest:
A blow to dronemaker DJI: Cape, a California-based startup that is “a supplier of drone technology to dozens of state and local law enforcement and public safety agencies…will stop working with Chinese drone manufacturers, citing security concerns,” reports Bloomberg (porous paywall).
“Apple is about to start trial production of its popular AirPods wireless earphones in Vietnam as the company accelerates plans to diversify manufacturing of its consumer electronics lineup beyond China,” says the Nikkei Asian Review (porous paywall).
“The ‘Defending America’s 5G Future Act’ was introduced in the Senate by Republicans Cotton, Marco Rubio and Mitt Romney and Democrats Chris Van Hollen, Mark Warner and Richard Blumenthal,” reports Reuters, noting that the Act is intended “to keep tight restrictions on Huawei Technologies Co Ltd, amid concern about President Donald Trump’s easing of curbs on the Chinese firm.”
“How has Duke Kunshan University been affected by the U.S.-China trade war?” asks the Duke Chronicle:
Duke Kunshan University has managed to stay out of the cross fire — at least for now… As far as operations and the general situation of the school, we’ve been fairly immune from the impact of difficult relations,” said Denis Simon, executive vice chancellor of DKU.
4. What is Google actually doing in China?
After Trump-supporting billionaire and Facebook investor Peter Thiel insinuated that Google was working with the Chinese military (see Modern-day ‘Yellow Peril’ of Google’s Chinese links is just the same old racism in the Guardian), CNBC takes a look at what Google is currently doing in China based on actual facts. In summary:
Project Dragonfly: Google says the controversial censored search engine for China is “terminated.”
Artificial intelligence research: “Google says AI research in China is focused on education and so-called natural language understanding — which refers to an AI technique focused on getting machines to understand human language.”
Cloud computing: Google is not competing with Alibaba and Tencent for the local market but rather tries “to sell its cloud products to Chinese firms that have international operations in Southeast Asia and elsewhere.”
Hardware: Some products that may include “smartphones, smart speakers and thermostats” are made in China.
App developers and the Google Play Store: Google’s own Play Store is blocked in China, so “Google is trying to work with app developers in China to help them bring their products onto the Play Store in international markets.”
Advertising: In China, Google “focuses on Chinese businesses looking to advertise on Google platforms abroad.”
Separately, U.S. Senator Mark Warner told Bloomberg (porous paywall) that Google’s chief executive said “the company has ended some partnerships in China.”
5. The hard choices facing Xi Jinping
Here are two different pictures of the world facing Xí Jìnpíng 习近平 by two highly respected analysts of elite Party politics:
Xi is facing unpalatable choices between hardline and conciliatory responses to the U.S. trade war and the Hong Kong protests, argues Minxin Pei in the Nikkei Asian Review (porous paywall). “So far it is hard to tell which direction Xi is leaning. But one thing is sure: he doesn’t have much time.”
“The backlash abroad against President Xi Jinping’s China, at least in developed nations, has spread rapidly in the last year,” argues Richard McGregor on CNN, adding that “Beijing’s opaque internal political system means it is hard to make judgments about domestic Chinese politics, but there can be little doubt that a backlash is underway at home, too.”
6. New head for Xinjiang Small Group, same old body
I once called senior Party leader Wāng Yáng 汪洋 “the most interesting man on the Politburo Standing Committee.” The South China Morning Post says he is “known for his relatively liberal style of governance” and reports that he “attended a high-level three-day conference in Xinjiang as head of the Central Committee’s Xinjiang Work Coordination Small Group.” Here is Xinhua’s Chinese report.
“Small Groups” or Leading Small Groups (LSGs) are Party organizations that coordinate policies and their implementation across different arms of the Party state bureaucracy. As noted in this CSIS paper, their history dates back to the Party’s revolutionary years, but in recent years, “one of the most important innovations” of the leadership of Xí Jìnpíng 习近平 “has been the expansion in number and role of LSGs.”
LSGs have helped Xi to “centralize authority in Beijing and provide greater strategic coordination among the different parts of the national bureaucracy.”
The Xinjiang Work Coordination Small Group was formed in 2000 and “has been instrumental in shaping and implementing Beijing’s Xinjiang policies,” says the SCMP.
The timing of the announcement of Wang’s leadership “suggested it was a calculated move by the leadership to assuage growing international concerns over the detention of an estimated one million or more Uygurs and other Muslim minorities,” according to “analysts” cited by the SCMP. However, Wang’s appointment is “unlikely to mean a softening on Xinjiang from China.”
For more on how Xinjiang policy is made, see this analysis by Jessica Batke.
Opinion: China’s campaign against the Uyghurs demands a response by Eli Lake / Bloomberg (porous paywall)
“The evidence is mounting of China’s despicable strategy of cultural persecution in Xinjiang.”
7. Two signs of the times
Prospect magazine has selected Xǔ Zhāngrùn 許章潤 as one of its “top thinkers” of the world for 2019.
If Xu Zhangrun worried that his essays published earlier this year criticizing China’s repression under Xi Jinping might not cause a stir, the Chinese state helpfully ensured they received the prominence they deserved: Xu was suspended from his post at Beijing’s Tsinghua University and barred from leaving the country. In the past year Xi has entrenched his power, including the scrapping of presidential term limits. Xu warned that Xi’s moves had “nullified more than 30 years of reform and opening up and slapped China back to the scary era of Mao.” Especially after the state’s reaction, Xu’s critique has struck a chord.
For translations of Xu’s work, see China Heritage.
Anders Fogh Rasmussen, prime minister of Denmark from 2001 to 2009 and NATO secretary general from 2009 to 2014, has published an op-ed in the Guardian titled Hong Kong showed China is a threat to democracy. Now Europe must defend Taiwan.
—Jeremy Goldkorn, Editor-in-Chief
BUSINESS AND TECHNOLOGY:
Camsing contagion spreading?
More financial institutions exposed to Camsing fraud scandal / Caixin (paywall)
“Shockwaves caused by the detention of Camsing Global founder Lo Ching [罗静 Luō Jìng] continued spreading through China’s finance sector as more institutions disclosed exposure to Lo’s alleged supply-chain financing fraud.”
Background: CEO of Chinese company that owns Stan Lee’s POW! Entertainment has been detained. Stock plunges 90 percent / CNN
Good news for electric car infrastructure
State Grid, Evergrande team up to build electric-car charging network / Caixin (paywall)
One of China’s most valuable real estate companies and the state-owned behemoth that has a near-monopoly over electricity distribution in the country are joining forces to create a network of electric-vehicle (EV) charging stations to support the country’s drive towards cleaner transportation.
State Grid Corp. of China announced [in Chinese] that it has set up a 50-50 joint venture with the technology arm of Evergrande Group in a move designed to combine its power resources and the latter’s property management knowledge.
A very bad year for the movie business
For China’s studios, movies have lost their magic / Caixin (paywall)
All but one of the 13 listed Chinese film studios that had released first-half earnings forecasts by Tuesday expect to see either their profits fall or sink into the red amid tighter government scrutiny over the industry.
Among the 13 studios, seven said they expect to report a first-half loss and five expect to see lower profits for the period.
The companies include Shenzhen-listed Huayi Brothers Media Corp., one of the country’s biggest movie studios, which forecast a loss between 325 million and 330 million yuan ($47 to 48 million), compared with a net profit of 277 million yuan ($33 million) in the same period last year.
Niu: Chinese electric scooters in the U.S.
Chinese electric scooter maker Niu pushes forward into US despite imposed tariffs / SCMP
“Niu Technologies, a Chinese electric scooter company, is pushing ahead with its plans to expand in the US despite the trade war and 25 percent tariffs imposed on Chinese goods. US consumers will just have to pay more.”
Renault invests in Chinese electric carmaker
Renault to invest in Jiangling / Bloomberg (porous paywall)
“Renault SA will invest 128.5 million euros ($144 million) for a 50 percent stake in a venture with Jiangling Motors Corp. to develop electric vehicles in China, part of a push by the French company to make further inroads into the world’s biggest car market.”
SCIENCE, HEALTH, AND THE ENVIRONMENT:
The harsh lives of rural doctors
100 rural doctors quit over $2.2 million in unpaid medical subsidies / Caixin (paywall)
“More than 100 rural doctors have resigned in northeastern China’s Heilongjiang Province over unpaid public health subsidies and alleged unfair treatment, with local authorities reportedly detaining at least one participating doctor.”
POLITICS AND CURRENT AFFAIRS:
South China Sea flashpoint — Malaysia and Vietnam
China blocking Malaysian and Vietnamese oil and gas vessels ‘shows greater willingness to use force’, think tank says / SCMP
The risk of collisions between Chinese vessels and those from Malaysia and Vietnam in the South China Sea has been heightened in recent weeks as China has tried to obstruct the two countries’ oil and gas exploration, a Washington-based think tank said on Wednesday.The analysis comes with a stand-off simmering between Chinese and Vietnamese vessels at Vanguard Bank, a reef in the disputed Spratly Islands, risking an escalation of tensions and anti-China protests as it did five years ago.
Djibouti and debt to China
Djibouti’s debt-defying stunt: Taking China’s money without accepting China’s control / Globe and Mail
“Can Djiboutians escape the debt trap?” asks Geoffrey York in this long read on infrastructure and Chinese credit in Djibouti.
Beidaihe meeting begins?
China’s leaders head to secretive summer camp to ponder Trump / Bloomberg (porous paywall)
Beidaihe…China’s so-called summer capital — located on the Yellow Sea, more than 200 kilometers (124 miles) from Beijing — each year plays host to a conclave of Party luminaries including President Xi Jinping, his top aides, as well as retired leaders. While the meeting’s agenda, guest list and exact dates are shrouded in secrecy, there are indications that events are already underway, such as the traffic restrictions that took effect Saturday and last until August 18.
CCP influence operations in Singapore
A preliminary survey of CCP influence operations in Singapore / Jamestown Foundation
“Singapore presents a valuable case study for understanding the means by which the CCP engages in influence operations that target a majority ethnic-Chinese state.”
Hong Kong protests
Elderly take to the streets in support of Hong Kong’s young extradition bill protesters, saying they understand where anger stems from / SCMP
“An estimated 9,000 people, mostly elderly citizens, took to the streets of Hong Kong on Wednesday evening to show their support for the youths who have been at the forefront of protests against the extradition bill, the organizer said.”
Photos: Seniors rally against extradition bill in solidarity with young protesters / HKFP
Hong Kong protests continue, expand to oppose China / AFP
“‘Hong Kong is not China’ has become a refrain of the movement.”
Extradition protests hammer Hong Kong economy as experts report drops in air travel, retail sales and hotel revenue / SCMP
“Flight bookings from Asian countries to Hong Kong have dropped 5.4 percent in the past month, as waves of extradition protests rocked the city and gave potential visitors reason for concern.”
SOCIETY AND CULTURE:
Patriarchy fights back
A prosperous China says ‘men preferred,’ and women lose / NYT (porous paywall)
Amy Qin writes:
From the womb to the workplace, from the political arena to the home, women in China are losing ground at every turn.
Driving this regression in women’s status is a looming aging crisis, and the relaxing of the draconian “one-child” birth restrictions that contributed to the graying population. The Communist Party now wants to try to stimulate a baby boom.
But instead of making it easier for women to both work and have children, China’s leader, Xí Jìnpíng 习近平, has led a resurgence in traditional gender roles that has increasingly pushed women back into the home.
Chinese couturier Guo Pei will curate Sotheby’s ‘Midas Touch’ sale in London / HK Tatler
Sotheby’s has chosen Beijing-based couturier Guō Péi 郭培 to curate the famed auction house’s second edition of its Gold: The Midas Touch sale in London, in October this year. The sale will feature four couture gowns designed by Guo and a range of other gold and gold-themed clothing and artworks.
No home for artists in Beijing
Why is Beijing’s arts community struggling to stay afloat? / Hyperallergic
“Galleries are exiting the market and studios are being demolished in what the government is referring to as their actions against organized crime.”
Behind closed doors at the K-TV
Inside Beijing’s illegal karaoke sex clubs / Vice
“Photographer Valya Lee spent two months working undercover and taking photos on her phone.”
FEATURED ON SUPCHINA
China vs. the U.S. Treasury: Why Beijing won’t use the ‘nuclear option’ of selling American debt
China is America’s largest foreign creditor, holding $1.1 trillion in U.S. Treasury bonds. Why won’t China “weaponize” these holdings, even with the trade war in its second year? We explain, plus give context on the related issue of Chinese currency depreciation.
After latest Baidu scandal, Chinese internet users quote CEO Robin Li: ‘What’s your problem?’
Chinese search engine giant Baidu, which has been a hot mess for the last few years, continues to find ways to shoot itself in the foot. The latest example involves a now-fired editor at Baidu News who “hijacked” the account of a bereaved father who had just lost his daughter, and posted a message that was roundly derided by the Chinese public.
SINICA PODCAST NETWORK
ChinaEconTalk: Little Red Book, Big Red Ideas: A Global History of Maoism
This week, in part 1 of a special two-part edition of ChinaEconTalk, Jordan interviews Professor Julia Lovell, author of the recently published book on Mao’s international legacy entitled Maoism: A Global History. In this episode, Lovell introduces the core tenets of Maoist thought and its complex impact on both the Chinese Communist Party and other, offshoot devotees around the world. She outlines the key events in Mao’s life, the events that helped shaped his ideology, his idea of “violent, tumultuous world revolution,” and the friction during the Cold War that eventually culminated in the Sino-Soviet split.