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5G launches as Party plenary ends


Dear Access member,

If you’re in New York in November, check out these two SupChina events:

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—Jeremy Goldkorn and team


The flag of the Communist Party of China. One of the key messages of the fourth plenary session in Beijing this week was a reaffirmation that the “Communist Party leads everything” in Chinese society. 

1. China launches 5G mobile ahead of schedule

Around the time we’re sending this email, Chinese mobile operators will begin selling their first 5G accounts to consumers, ahead of schedule. The launch was originally scheduled for 2020. Reuters reports

China Mobile’s, China Unicom and China Telecom’s said on their websites and online stores that 5G plans, which start from as low as 128 yuan a month, will be available from Friday, allowing Chinese consumers nationwide to use the ultra-fast mobile internet service…

Authorities have said that they plan to install over 50,000 5G base stations across 50 Chinese cities in the country by the end of this year, and that big cities, including Beijing, Shanghai, Guangzhou, and Hangzhou, are already covered by the 5G network.

Reuters connects the accelerated launch to “tensions with the United States, especially over its boycott of telecom giant Huawei Technologies.” The timing does indeed seem to be a message. This is how nationalist rag Global Times sees it: 

U.S. lags behind 5G race because of mind-set

[America’s] narrow-minded zero sum thinking conflicts with the inherent open nature of 5G technology. As a result, China is leading in 5G development. If the U.S. always opts for dirty tricks against China instead of how to conduct healthy competition with China and develop its own 5G based on the technological achievements China has made, this will lead to nothing but a larger gap between China and the U.S.  

The Wall Street Journal notes that the U.S. and South Korea were first to operate 5G telecom networks on small commercial scales, but that China will very soon have over 10 times as many cell towers capable of beaming 5G signals than the U.S.:

China already has more than 80,000 5G macro base stations, typically cellular towers with antennas and other hardware that beam wireless signals over wide areas, government officials said. They said China will end the year with about 130,000, while Bernstein Research estimates South Korea will be in second place with 75,000, followed by the U.S. with 10,000.

2. Party plenary closes with a vague message on Hong Kong 

Xinhua reports: “The 19th Central Committee of the Communist Party of China (CPC) concluded its fourth plenary session in Beijing on Thursday with the release of a communiqué” (in Chinese). 

These plenary sessions are “four-day meeting of the party’s Central Committee, which brings together about 370 senior officials to decide the direction of party policy around once a year,” according to Chris Buckley of the New York Times (porous paywall). Aside from the communiqué, we know almost nothing about what was said and decided in Beijing this week. However, Buckley is one of the more perspicacious observers of senior Party leadership, and this is how he reads the document (in summary): 

Hints of a new plan to quell the Hong Kong protests.

The most eye-catching language was about Hong Kong… China would “build and improve a legal system and enforcement mechanism to defend national security in the special administrative regions,” the meeting summary said…

The vague language leaves plenty of guesswork about what the Chinese leaders may have in mind. 

A fresh focus on ‘clearly increasing’ risks.

Xí Jìnpíng 习近平 and his Party see growing risks both abroad and at home and are preparing to deal with them. 

Extending the Communist Party’s leadership even further.

The Central Committee echoed Mr. Xi’s frequent demands that the “Communist Party leads everything,” and that the authority of central leaders, like himself, be fiercely protected. And it hinted that there may be more changes to bolster Mr. Xi and the party, while also trying to improve coordination in policymaking.

—Jeremy Goldkorn

3. Hong Kong falls into a recession as protests continue

CNN reports

Hong Kong plunged into recession in the third quarter, according to official data released Thursday. The economy shrank 3.2 percent during the three months to September, compared to the previous quarter. That’s a sharp slowdown from the 0.5 percent contraction recorded in the second quarter, and much worse than economists had expected…Economists are now predicting that for the whole year, Hong Kong will miss its earlier target of between 0 and 1 percent growth.

However, the “city’s financial markets are largely holding up” despite the protests. 

The Hang Seng Index (HSI) is still up 4 percent for the year, and the political crisis hasn’t been a deal breaker for investors yet, many of whom still see the city as an important gateway to Asia.

The IPO market is also proving resilient: In September Anheuser-Busch InBev (BUD) listed its Asia business on the Hong Kong Stock Exchange (HKXCF) raising $5 billion in the second biggest IPO of the year after Uber (UBER).

Alibaba could be the next big listing, perhaps as soon as November. The ecommerce giant has been considering, and repeatedly delaying, a dual listing in Hong Kong for many months now, but Reuters reports that the company “eyeing a listing in Hong Kong as early as November to raise up to $15 billion, after political unrest put the move on ice earlier this year.”

Meanwhile, the protests and political turmoil in the city continue. Here’s the latest:

“More than 70 people have been arrested in Tuen Mun on Wednesday night following a protest over an irritating tear gas smell emanating from a police base,” according to the Hong Kong Free Press

“Justice Russell Coleman of the High Court issued [an] order to restrain members of the public from ‘wilfully disseminating, circulating, publishing or republishing’ any material on platforms online such as popular Reddit-like forum LIHKG and messaging app Telegram that ‘promotes, encourages or incites the use or threat of violence,’” the South China Morning Post reports.

“Ocean Park has canceled its annual Halloween Fest — one of its key tourist events — citing safety concerns. Meanwhile, police have warned that an unauthorized march is set to take place in the Central area on Thursday,” per the HKFP

One pro-Beijing lawmaker, Abraham Shek, criticized Chief Executive Carrie Lam’s focus on housing as a solution to the protests. “You cannot buy dignity. Their five demands did not mention that they want a house. The five demands of young people are that they want justice, fairness and transparency,” he said, per the Hong Kong Free Press

A group of lawmakers are challenging the mask ban, and are raising $5 million Hong Kong dollars ($638,000) to do so. A legal sector lawmaker “said the costs were high because the case is expected to go to the Court of Appeal or even the Court of Final Appeal,” per the HKFP.

Former Chief Executive CY Leung is offering more bounties for anyone who reports “sightings of ‘offensive weapons’ and ‘defensive gear’ including petrol bombs, slingshots, batons, helmets, gas masks and goggles in their residences,” the HKFP says. He had earlier in August offered cash prizes for information leading to the arrest of certain Hong Kong protesters. 

4. U.S. government grounds Chinese drones. Trade talks aren’t exactly taking off, either.

The U.S. Interior Department, which uses drones for a variety of purposes like fighting wildfires, search and rescue operations, and geological surveys, has said that “all drones in its fleet that were manufactured in China or contained Chinese-made parts would be grounded as part of a review of the department’s drone program,” per the New York Times

It is unknown what percentage of the department’s drone fleet is affected. The NYT points out that because “the Interior Department uses drones to survey a variety of critical infrastructure, including mines and dams, as well as to study rapid response situations and emergency routes, the information they collect has at least some potential for abuse.”

China called on the U.S. to “stop abusing the concept of national security” after the ban, and “Chinese drone maker DJI said it was aware of the reports but could not confirm them,” according to Reuters

Meanwhile, U.S. Secretary of State Mike Pompeo has started “a series of speeches…on the competing ideologies and values, including on global influence campaigns by the Chinese Communist Party’s intelligence agencies and ‘unfair and predatory’ economic practices by Beijing,” Reuters says. The full text of his first speech, which confronted the Chinese Communist Party on its “truly hostile” values and said it seeks “international domination,” but also claimed, “We don’t want a confrontation with the People’s Republic of China,” can be read here

Despite the cancellation of the APEC summit in Chile, both Washington and Beijing are making positive noises about the “Phase One” trade deal being signed. Those noises come from the commerce ministry in China, and the treasury secretary in the U.S. Donald Trump also tweeted that a “new location will be announced soon” for signing a deal. 

However, “Chinese officials have warned they won’t budge on the thorniest issues,” per Bloomberg, and they “remain concerned about President Donald Trump’s impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.” 

—Lucas Niewenhuis


BUSINESS AND TECHNOLOGY:

Britain is set to delay a decision on the role of Huawei Technologies in the UK’s fifth-generation mobile network until after the general election, according to two people familiar with the plans.

With a national vote due on December 12, and the possibility of coalition negotiations before a government is formed, a decision on the Chinese technology company is now unlikely before 2020, according to the people, who were speaking on condition of anonymity because the plans are private.

Xinhu Zhongbao Co. holds nearly half of a firm whose chairman briefed Xi and other top officials about the technology last week. The property developer has risen the 10% daily limit four straight days after ending last week near 2019’s multi-year low. This week’s jump, which has added $1.7 billion to Xinhu’s market value, has shares again up 46% for the year and near 2019’s high. Volume on Thursday was nearly triple the daily average of the past three months.

Taylor Swift has been big in China for years, but she’s never commanded a stage as large as the one she’ll have on Nov. 10 in Shanghai. That night she’ll headline a gala countdown to Singles Day, a decade-old manufactured holiday that’s now the world’s biggest single-day shopping spree… 

For Swift, it promises to be a massive Chinese payday. That’s perhaps not surprising for a superstar of her stature. But it wasn’t that long ago that foreign recording artists of all kinds struggled to make money in China, thanks to rampant piracy and an official unwillingness to tackle it. Fortunately, that’s changed in recent years, and recording artists are finally getting their due from Chinese audiences.

  • Soho China considering major sale
    Soho China considers $8 billion office tower sales / Bloomberg (porous paywall)
    “Soho China Ltd. is considering selling a majority of its commercial property holdings in deals that may fetch as much as $8 billion, people familiar with the matter said, sending the shares up the most on record. At least eight office towers in Beijing and Shanghai are being discussed as part of the planned sales.”

  • Facial recognition and profiling
    Beijing to use facial recognition technology in metro security checks – state media / AFP
    “Beijing will use facial recognition tools to speed up security checks in the city’s overcrowded metro, using a ‘credit system’ to sort passengers into different channels, state-run media reported on Wednesday.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

Young European eels — called “glass eels” because of their transparent bodies — can fetch around €5,000 (US$5,600) a kilogram in China and a local prosecutor said the case was part of a “new form of trafficking that is exploding”… 

The court in Bobigny near Paris sentenced the pair to a 10-month suspended prison sentence and a fine of €7,000 (US$7,800) each for smuggling and crimes against biodiversity.

POLITICS AND CURRENT AFFAIRS:

India engaged in a diplomatic war of words with China over Kashmir on Thursday as it formally revoked the disputed state’s constitutional autonomy and split it into two federal territories in a bid to integrate it fully into India… 

“The Indian government officially announced the establishment of so called Jammu Kashmir territory and Ladakh Union territory which included some of China’s territory into its administrative jurisdiction,” [the Chinese foreign ministry spokesperson said].

“China deplores and firmly opposed that. India unilaterally changes its domestic law and administrative divisions, challenging China’s sovereignty and interests. This is awful and void, and this is not effective in any way and will not change the fact that the area is under China’s actual control.”… 

“We do not expect other countries, including China, to comment on the matters which are internal to India, just as India refrains from commenting on internal issues of other countries,” [the Indian foreign ministry spokesperson said].

Police in Mongolia arrested some 800 Chinese men during an anti-money laundering operation, authorities said on Thursday.

The operation targeted four locations across the Mongolian capital Ulan Bator. More than 10,000 mobile phone SIM cards were confiscated along with over 1,000 computers.

Authorities said the suspects were part of a cybercrime ring that likely revolved around online gambling.

SOCIETY AND CULTURE:

For many young Chinese, October is filled with Halloween celebrations such as dress-up parties — even as anti-Western holiday rhetoric crops up every year, with some saying dressing up as ghosts is “inauspicious” and some subway stations banning Halloween make-up… 

However, partygoers may have to watch their behavior in public, because the Guangzhou police issued a statement on Wednesday night, banning those dressed up as ghosts or “wearing scary make-up” from the subway and from doing performance arts.

  • Two artist obituaries
    Huang Yong Ping, 65, dies; his art saw a world of power struggles / NYT (porous paywall)
    “Huang Yong Ping, a Conceptual artist and pioneering figure of China’s post-Cultural Revolution avant-garde, whose controversial work often depicted the world as a Darwinian power struggle, died on Oct. 19 at his home in Paris. He was 65.”
    Chou Wen-chung, composer and calligrapher in sound, dies at 96 / NYT (porous paywall)
    “Chou Wen-chung, a composer, teacher and cultural diplomat who taught a coterie of celebrated and award-winning Chinese composers and who tended to the legacy of Edgard Varèse, the linchpin of American modernism, died on Friday at his home in Manhattan. He was 96.”


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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.