Trump gets ‘some purchases and a bunch of fluff’

Access Archive

Dear Access member,

As we’ve been predicting, results of the U.S.-China trade talks of the last two days are distinctly underwhelming. So our word of the day is a translation I just made up for nothingburger: 空汉堡 kōng hànbǎo, literally, “empty hamburger.” 

On Tuesday, October 15, at 8 p.m. EST, you’re invited to the latest in our series of conference calls. We’ll be talking to Rob Petty, co-CEO of Clearwater Capital Partners, a $5 billion Hong Kong–based investment fund. Our topic: “China’s new foreign investment law, Hong Kong unrest, & more: Which way is the wind blowing?”

Access members can dial in for free. Click here for more information and to reserve your place.

On Wednesday, October 16, we’re recording a Sinica Podcast with a live studio audience in New York. Our guest is Professor Jerome A. Cohen, perhaps the world’s most respected and experienced scholar of P.R.C. law, and still a firebrand. The event is free for Access members. Click here for details.  

—Jeremy Goldkorn, Editor-in-Chief


The infographic above, tweeted by scholar Ankit Panda, accurately describes some of the events of the week in Washington, D.C. 

1. A tentative, partial, ‘phase one’ trade truce 

The Wall Street Journal reports that the U.S. and China have reached a “Tentative ‘Phase One’ Trade Pact.” The very few details we have so far:

The agreement includes China’s agreement to purchase $40 billion to $50 billion in U.S. agricultural products and a commitment to open itself further to international financial services, Mr. Trump said. The pact that officials are calling a first phase will be finalized in three to five weeks, Mr. Trump said after a meeting with Mr. Liu in the White House.

They cited progress on several other matters, without offering specific details, including the potential for agreement on intellectual property protections and currency manipulation. Mr. Trump’s trade adviser, Robert Lighthizer, also said the president hadn’t decided yet on whether to follow through on additional tariffs set to be imposed in December.

The countries were unable to finish a planned pact to curb currency manipulation, but Treasury Secretary Steven Mnuchin said discussions were “almost complete.” Mr. Trump also cited “good progress” on discussions to prevent the forcible transfer of technology in China.

The most immediate practical impact of the tentative, partial truce is that tariffs will not go up on October 15, as had been scheduled, CNBC reports. The Washington Post says that “Trump and Chinese President Xi Jinping could meet to finalize such an agreement in Chile at an Asian-Pacific leaders summit in mid-November.” However:

Some China hawks were unimpressed by the agreement.

“It’s basically some purchases and a bunch of fluff because no one in the administration really wants to go through with the tariffs anyway,” said Derek Scissors, a China expert at the American Enterprise Institute… 

Friday’s announcement leaves the toughest U.S.-China issues for future negotiations, including Trump’s demands for far-reaching structural changes in the state-directed Chinese economy. 

Also left undecided is “whether [the U.S.] will extend a license allowing Chinese telecommunications company Huawei to continue buying American parts when it expires Nov. 18.” 

Nevertheless, the slight lessening of tensions and delay of tariffs was cheered by financial markets, as the Dow Jones rose over 300 points, CNBC notes.

Other news related to U.S.-China trade and technology tensions:

“China has announced a timetable for lifting limits on foreign ownership of some finance businesses, starting with futures traders on Jan. 1, as Beijing tries to make its slowing economy more competitive and efficient,” the AP reports.

“Vietnam has emerged as one of the largest beneficiaries of the trade dispute between Washington and Beijing. Exports to the United States were up 21.5 percent in the first eight months of this year, and several companies including Google parent Alphabet Inc and Nintendo have announced new plans to open facilities in the country,” according to Reuters.

“Global prosperity and peace are at risk if Beijing and Washington do not resolve their conflict soon,” write Kevin Rudd, Helen Clark, and Carl Bildt, the former prime ministers of Australia, New Zealand, and Sweden, in a New York Times op-ed. The authors say their view is shared by former prime ministers and presidents in France, Canada, Italy, the Netherlands, Mexico, and South Korea. 

—Lucas Niewenhuis

2. An awkward weekend in India for Xi Jinping

“At the invitation of Indian Prime Minister Narendra Modi, Chinese President Xí Jìnpíng 习近平 arrived in the southern Indian city of Chennai on Friday afternoon for the second informal meeting with Modi,” according to state news agency Xinhua (in Chinese here). The visit is being billed as a follow-up to the informal meeting between the two leaders in Wuhan in April 2018.

  • Yesterday, a high school in Chennai organized a very weird welcome for Xi: About 2,000 students wore masks of Xi’s face while waving Indian and Chinese flags. NDTV has photos

  • Xi and Modi will spend about six hours together on Friday and Saturday. The visit began with a tour of “a temple complex dating back to the 8th century in Tamil Nadu’s Mamallapuram,” reports the Hindustan Times, and dinner at a private table, “accompanied only by translators, while their eight-member delegations will be at other tables.”

  • Chinese state media is giving the same message as sources cited by the Hindustan Times, stating that “both sides are looking to the summit to produce ‘some new directions from the top’ that will build on the strategic guidance that flowed from the Wuhan summit.”

  • But Xi met Pakistani Prime Minister Imran Khan on October 9, when he promised to “support Pakistan in protecting its core interests.” One of these is the disputed territory of Kashmir, perhaps the biggest source of tension between India and Pakistan. 

  • Indian National Congress spokesperson Manish Tewari has words for Modi on Twitter:

Xi Jinping says he is watching Kashmir but why does [Modi] not say 

1) We are watching pro-democracy protests muzzled in Hong Kong
2) We are watching human rights violations in Xinjiang 
3) We are watching continued oppression in Tibet 
4) We are watching South China Sea

  • Tewari also dared India to ask China about Aksai Chin which has been “illegally ceded” by Pakistan to the country.

  • “They run the world’s biggest countries. Their talk won’t be easy.” That’s how the New York Times summarized prospects for Xi’s time with Modi (porous paywall), noting that the trade imbalance between the two countries is another irritant in the relationship. 

—Jeremy Goldkorn

3. Tencent, censorship, and the CEO of Epic games 

American news outlets today continued to cover censorship and self-censorship by American entertainment and tech companies that fear upsetting Beijing. Here are some of the latest reports: 

Gamers are mad, and some of them are not taking it anymore. I’m a Blizzard gamer. I am boycotting them over their Hong Kong censorship is an essay by Dylan Curran in the Guardian. He argues: “The company won’t change unless we make them. We have to speak in the only language it knows: money.” (The essay explains what the fuss is about if you have not been following.)

Tencent has a 5 percent stake in Activision Blizzard, and Blizzard’s Hong Kong censorship won kudos on Chinese social media. But Tencent also owns 40 percent of rival gaming studio Epic. Yesterday, the founder and CEO of Epic, Tim Sweeney, tweeted the following: “Epic supports the rights of Fortnite players and creators to speak about politics and human rights.” 

In answer to a question about the influence Tencent would have over such decisions, Sweeney said: “Epic is a U.S. company and I’m the controlling shareholder. Tencent is an approximately 40 percent shareholder, and there are many other shareholders including employees and investors.” He added that he would never do what Blizzard has done: “That will never happen on my watch as the founder, CEO, and controlling shareholder.”

Sweeney may have put Tencent in an awkward position. Bloomberg reports (porous paywall):

His statement earned accolades in the U.S., but was shunned in China. “Tencent why are you not holding your dog on a leash? They are biting you in your face,” one person wrote on Weibo. Tencent spokeswoman Jane Yip didn’t respond to a request for comment.

Meanwhile, at Apple: “In a leaked memo to Apple staff, chief executive Tim Cook defended the removal of the HKmap.live app, which crowd sources police locations around Hong Kong, saying it was being used ‘maliciously’ to target police officers and commit vandalism,” reports the South China Morning Post.

But “few are convinced” by Apple’s explanation, says the BBC. “Long-time Apple commentator John Gruber wrote of Mr Cook’s email: “I can’t recall an Apple memo or statement that crumbles so quickly under scrutiny.”

Back on the basketball court, or rather off it, the NBA “continued to dig deeper into a public relations hole today, as an executive shut down a question from a CNN anchor on the league’s China problem,” reports Deadline:

CNN’s Christina Macfarlane was cut off at a Japan press conference after an exhibition game between the Houston Rockets and Toronto Raptors… The incident was yet another stain on the league’s effort to find a balance between placating China and avoiding further outraging those who feel the league has been somewhat mealy-mouthed in its defense of free speech.

NBA officials and players currently on tour in China are shtum: The Washington Post reports:

Saturday’s game between the Los Angeles Lakers and the Brooklyn Nets to end this year’s NBA China Games series will be played as scheduled in Shenzhen, though there will be no news conferences for players or coaches before or after that contest.  

Which suits the Party censors, who have instructed Chinese news media to tone down coverage of the NBA kerfuffle, perhaps fearing that nationalistic impulses could get out of hand. China Digital Times yesterday published this censor’s instruction: 

All websites: Remove all reports related to the NBA from the dual homepages [site-wide and news] (including [social media] clients), and move articles to the backend of the site. Cool down and do not hype related topics.  

Perhaps all is not lost in China for the NBA. Inkstone reports that although Chinese NBA fans “feel torn between their favorite sport and expressing loyalty to their country,” many of them are refusing to sever ties to the league. So far. 

4. Australia and Canada

Australian ABC reports

Home Affairs Minister Peter Dutton warned Australia would “call out” foreign interference in universities, as well as cyber hacks and theft of intellectual property (IP), insisting it was the right thing to do.

It represents some of the strongest language yet from a Federal Government minister on the threat posed by China.

“Our issue is not with the Chinese people, not with the amazing Chinese diaspora community we have here in Australia, my issue is with the Communist Party of China and their policies to the extent that they’re inconsistent with our own values,” Mr Dutton said.

Perhaps because they are under no illusions that they can decouple from China, Australian scholars and journalists are producing some of the best studies of how a liberal democracy should deal with Beijing when it comes to influence operations, espionage and hacking, as well as political and economic strategy.

Here’s a new and timely one from think tank China Matters that addresses questions relevant to any other country that cooperates with China on scholarly and scientific research: What should Australia do about…research collaboration with the PRC? Author Dirk van der Kley makes policy recommendations with the aim of encouraging fruitful collaboration — such as the development of cervical cancer vaccine Gardasil by Australian and Chinese scientists, while avoiding contributing technologies for military purposes or to perpetuate human rights abuses, like the arbitrary detention of over a million Muslims in Xinjiang.

Meanwhile, in Canada, the National Post reports that a group called Canadian Friends of Hong Kong, founded by Chinese-Canadians, has “launched an online guide for voters Thursday, to help them identify candidates who may be too closely allied with Beijing and raise the topic’s profile with the public and politicians.”

The guide is a primer on Beijing-directed influence campaigns in Canada, and offers a series of questions that voters can ask a politician to evaluate whether they have been compromised or not. 

5. New China rich list is tech heavy  

Caixin reports: “Four of the 10 richest Chinese this year came from the high-tech realm, followed by three tycoons from real estate, one from manufacturing and three from other areas, according to the latest edition of the Hurun Report’s rich list.” The top 10 are:

$39 billion: Jack Ma (马云 Mǎ Yún) and family 
$37 billion: Pony Ma (马化腾 Mǎ Huàténg)
$30 billion: Xǔ Jiāyìn 许家印
$26 billion: Hé Xiǎngjiàn 何享健, Hé Jiànfēng 何剑锋 (father and son)
$25 billion: Sūn Piāoyáng 孙飘扬, Zhōng Huìjuān 钟慧娟 (husband and wife)
$25 billion: Elizabeth Yáng Huìyán 杨惠妍 and family 
$19 billion: Colin Huáng Zhēng 黄峥
$18 billion: William Dīng Lěi 丁磊
$17 billion: Wáng Jiànlín 王健林 and family
$17 billion: Yán Hào 严昊

6. Hong Kong readies for another weekend of protests 

“Hundreds of mask-wearing protesters marched through Hong Kong’s central business district at lunchtime on Friday October 11, occupying a main thoroughfare and disrupting traffic as the city braced for another weekend of turmoil,” reports Reuters. Several demonstrations are planned through the weekend.

Other news from the City of Protest: 

“Resentment of Beijing has spilled over towards mainlanders, Mandarin speakers, and mainland-linked business,” says Audrey Jiajia Li in the South China Morning Post: “Shops are trashed, people are attacked and xenophobic slurs are becoming common. Hong Kong is succumbing to a wave of hate crimes.” Also in the SCMP, Kristin Huang says: “In a city where Cantonese is the local language, Mandarin speakers say they are keeping quiet in public and even telling their children to speak English to avoid being targeted.

A Chinese University of Hong Kong student “has accused the police of ‘sexual violence’ when she was arrested and detained at a police station,” reports the Hong Kong Free Press. “More than 8,000 Chinese University teachers, staff, students and alumni have signed a petition expressing support.” Hundreds of masked protesters also marched in support of her today

“Hong Kong police have bought new tear gas canisters which are the same model used by the Chinese army’s anti-terrorism squad,” reports the South China Morning Post

Chinese embassies in Thailand and Singapore have “lashed out at a Thai opposition politician and a Singapore newspaper over their contact with and coverage of Hong Kong political activist Joshua Wong [黄之锋 Huáng Zhīfēng],” reports the South China Morning Post

7. Science magazine reports on Xinjiang internment camps 

“At last, the Trump administration has placed sanctions on some of the most significant government and business organizations enabling and executing China’s campaign to eradicate the culture and language of more than 1 million Uyghurs and other Turkic Muslims in Xinjiang,” writes the Editorial Board of the Washington Post. 

Meanwhile, reporting on the Xinjiang internment camp system has made it to Science magazine, a publication that does not usually cover human rights stories:

‘There’s no hope for the rest of us.’ Uyghur scientists swept up in China’s massive detentions

No one outside the Chinese government knows where Tashpolat Tiyip is. No one knows exactly what charges have been filed against him. The only thing that anyone really knows is that in April 2017, as the geographer and former president of Xinjiang University in Ürümqi prepared to fly from Beijing to Berlin for a scientific conference and the launch of a research center, he disappeared without even a phone call to colleagues or family.

Six months later, a Chinese propaganda video emerged saying Tiyip was one of 88 scholars who had “deeply poisoned the minds” of students by approving textbooks with too much content from Uyghur sources — the ethnic group that makes up about half of Xinjiang province’s 24 million people. The video calls Tiyip and three other Uyghurs “two-faced” separatists before announcing their sentence: death, with a 2-year reprieve.

“It just doesn’t make any sense to anybody,” says Gary Langham, executive director of the American Association of Geographers (AAG), which last week sent Chinese president Xi Jinping a letter asking him to halt the execution and release Tiyip unless there is evidence he committed actual crimes. It was signed by more than 1300 researchers from 50 countries. (AAG took action after Amnesty International warned that Tiyip’s execution could be imminent.)

—Jeremy Goldkorn


Here are the stories that caught our eye this week: 

  • The U.S. government finally issued sanctions for abuses in Xinjiang. Twenty-eight Chinese companies and public security bureaus are now on the U.S. Commerce Department’s Entity List, and the State Department announced visa restrictions for Chinese officials “who are believed to be responsible for, or complicit in, the detention and abuse of Uyghurs, Kazakhs, or other members of Muslim minority groups.” Though these sanctions were not as sweeping as some activists had hoped, as they did not invoke the Magnitsky Act, their timing only two days before the 13th round of U.S.-China trade talks was seen to ratchet up tension in the relationship even higher. 

  • The NBA suddenly found itself in the doghouse after an October 4 tweet by Houston Rockets General Manager Daryl Morey supporting protesters in Hong Kong sparked outrage on Chinese social media, encouraged by internet bots and state media. The Chinese consulate in Houston even issued a statement calling on the Rockets to “correct the error” of the tweet. Alibaba’s Joseph Tsai (蔡崇信 Cài Chóngxìn), co-founder and executive vice chairman of the Chinese internet giant and owner of the Brooklyn Nets, chimed in with a statement on Facebook that reads like Party propaganda. The NBA groveled for forgiveness, issuing a statement in Chinese on October 6 that said Morey “has undoubtedly severely hurt the feelings of Chinese fans.”  

  • CCTV and Tencent suspended all preseason broadcast arrangements with the NBA, with CCTV declaring on October 8 that “any speech that challenges national sovereignty and social stability is not within the scope of freedom of speech.” Only after that extreme punishment did the league seem to find its spine, with commissioner Adam Silver insisting that “the NBA will not put itself in a position of regulating what players, employees and team owners say or will not say on these issues.” 

  • China let up on the pressure on October 10, issuing a censorship directive to cool the public anger. The Los Angeles Lakers and Brooklyn Nets played their previously scheduled preseason game in Shanghai to a packed audience, but not before all 11 of the NBA’s official Chinese sponsors had suspended ties with the league. 

  • A separate huge controversy also erupted in esports, as Chung “Blitzchung” Ng Wai, a pro Hearthstone player from Hong Kong, was suspended for a year and denied a reported $10,000 in prize money after donning a gas mask and shouting, “Liberate Hong Kong. Revolution of our age!” in a post-match interview. 

  • Multiple companies engaged in self-censorship to avoid the fate of the NBA, sparking further outrage particularly among Americans, many of whom were seeing Chinese censorship in action for the first time. ESPN told all its shows to avoid political discussions of Hong Kong and China, while Google removed a role-playing mobile game based on the Hong Kong protest movement, and the Quartz mobile app was removed from Apple’s China App Store. In fact, everyone was mad at Apple, as in the span of a little over a week it rejected, then approved, then removed HKmap.live, an app that tracks the location of police patrols in Hong Kong. 

  • Nepal has prepared a draft extradition treaty with China, and may sign it soon during a mid-October visit by Xí Jìnpíng 习近平, according to Khabarhub News of Nepal. Many worry that the treaty could be used mainly to extradite Tibetans engaged in “anti-China” activities. 


BUSINESS AND TECHNOLOGY:

Web International English — one of the first English training companies in China, established in 1998 — is facing bankruptcy and has shut down some of its centers in Beijing and Chengdu, domestic media reported [in Chinese] Thursday.

Though the company’s Shanghai centers are still operating, staff in the city told local outlet Xinmin Weekly [in Chinese] on Wednesday that they’ve not been paid for two months but have continued giving classes for the sake of their students.

Ruhnn Holding closed at $5.79, less than half of its offer price of $12.50 in April when the company was listed on the Nasdaq and raised $125 million. The company has faced dozens of class lawsuits from U.S. law firms over the past month acting on behalf of investors, including at least six filed on Thursday.

Ruhnn operates online stores on third-party e-commerce platforms, mostly under the names of KOLs. The company makes money through online sales of its self-designed products, such as cosmetics and women’s clothing.

Malaysia’s finance minister on Friday announced fresh incentives to lure foreign investors looking for safe havens in Asia amid the U.S.-China trade war, as he unveiled a budget containing “pre-emptive” measures to deal with the gathering economic dark clouds.

Among the plans was a “special channel” to attract investment from China — which in the first half this year was second to the United States as a source of manufacturing foreign direct investments (FDI) to the country.

During the week-long holiday, 12.8 million passenger trips were made, up 5.1 percent year on year, according to the Civil Aviation Administration of China (CAAC).

A total of 114,455 flights served passengers, which stood at 16,351 on average daily, climbing 3.08 percent year on year. The average passenger load factor hit 84.9 percent while the flight punctuality rate reached 92.16 percent.

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

China has begun a new round of audits into environmental compliance in the industrial province of Hebei that surrounds Beijing, as it looks to ensure officials are not dodging efforts to combat pollution, according to an official report published on Friday.

After the central government carried out nationwide audits in 2015 many local authorities were accused of turning a blind eye to pollution to guarantee growth and employment…

The latest audit in Hebei began on Thursday in Baoding and Langfang and will be extended to other cities, including Shijiazhuang and Handan, in mid-November, according to China Environmental News [in Chinese], an environment ministry publication.

POLITICS AND CURRENT AFFAIRS:

The battle for access and influence in the Horn of Africa is intensifying as the Gulf States, Turkey, and China race to secure footholds. At the same time, rivalries between Saudi Arabia, the United Arab Emirates (UAE), Qatar, and Turkey are shaping how these countries interact with state and non-state actors in the Horn. The insertion of the Gulf States’, Turkey’s, and Iran’s regional disputes into the politics of the countries that make up the Horn will exacerbate instability in what are already fragile states.

The firing of a Chinese Facebook coder who accused the social media giant of mistreating foreign employees has provoked an outpouring of outrage on domestic social media.

Software engineer Yi Yin struck a chord when he posted on WeChat that he was forced out for “lack of judgment.”

The 37-year-old said he got an emailed warning the same day he joined a memorial at Facebook’s Menlo Park campus for colleague Chen Qin, also from China, who killed himself by jumping from the fourth floor of a company building last month.

SOCIETY AND CULTURE:

What better way to celebrate the weekend than combining our love for brunch and Hong Kong’s favourite comfort food? Whether you like your dim sum from tried-and-tested classics, or looking for something a bit more modern and refined, here our picks of the most decadent Chinese brunches to indulge in.

  • White lies Chinese parents tell
    26 lies told to Chinese children to make them behave / That’s Guangzhou
    “If you don’t finish the rice in your bowl, you’ll get freckles on your face; if you play with fire, you’ll wet the bed at night; if you don’t spit out melon seeds, a melon will grow in your tummy…”


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