Whiskey from Sichuan

Access Archive

Dear Access member,

Forgive the lengthy introductory note: If it does not interest you, please scroll down to get straight to the news!

Our word of the day is long-winded (啰嗦 luōsuo).

Voices From China 

Thanks to many of you for your emails about Voices From China, our attempt to offer Chinese perspectives that may not be represented in the Anglophone media. Your emails have helped me a great deal to clarify what I would like to do with this feature, which I try to articulate below. 

But first let me answer one reader’s question: No investor asked me to do this, nor have we had any pressure or inducement from the Chinese Communist Party. I want to do this because I want our newsletter — and you, dear reader — to be better informed. So here are a few draft rules for Voices From China: 

Our aim is not to make China look good. That is the job of Xinhua, China Daily, Global Times, and CGTN. But part of our job is to understand why such propaganda organizations make certain decisions, and to understand the effect of state propaganda on Chinese society. 

Our aim is to better understand what is going on in China, what the Chinese government is planning, and what Chinese people are thinking.  

We will include voices from China that are in no way official. In yesterday’s newsletter, “Voices from scary China” featured the latest issue of the Chinese Storytellers email. It is produced by a group of excellent Chinese nonfiction writers and journalists who write in English. The issue we linked to yesterday was edited by Yáng Yuán 杨缘, aka Yuan Yang, a Beijing-based tech correspondent for the Financial Times, which is about as “Western” a Western news media organization as one could find.

We will also include official reports, and articles and opinion pieces by pro-Beijing voices, but as I said initially, we will not link to mere propaganda, outright falsehoods, or ridiculous conspiracy theories. 

As part of our effort to expand the range of opinions that we present, we have also added an OPINION PIECES, OP-EDS, AND RANTS section at the bottom of this email. This will include opinion pieces of all kinds, from the New York Times to the Global Times, from Caixin to Fox News.

Please keep the feedback coming. I can be slow to answer emails, but I will answer each one individually eventually! 

Alipay and WeChat payment difficulties

A request to readers for information. On November 5, we said: 

Tencent’s WeChat Pay, one of the two popular mobile payment systems, already supports credit cards issued by foreign providers, but the functionality of the payment service is limited compared to what local users get. Now TechNode reports that Alibaba-affiliated fintech giant Ant Financial “has introduced an international version of its mobile payment app, Alipay, allowing travelers to link foreign bank cards to the service for use in China.” 

In response, one Access member wrote: 

For several weeks, WeChat stopped allowing me to receive funds, even though I added a foreign card and completed their ID verification with my passport, though I’d used it successfully for years in both the U.S. and China.

Perhaps AliPay is timing this partially due to WeChat’s recent crackdown. I’m even having difficulties recently signing up non-Chinese for WeChat, even with friend verification.

Let me know if you have any experience with using Alipay and WeChat payments using a foreign ID — are they working? 

How fast does your website load in China?

If you need to know how fast your website loads in China, here’s a new tool. It’s also a way to check if your website is blocked — it just won’t load. See also GreatFire.org’s analyzer for real-time data on blocked websites. 

—Jeremy Goldkorn, Editor-in-Chief 


Rendering of tourism facilities at Pernod Ricard’s new whiskey distillery at Emeishan, Sichuan Province — see story 2 below. Image source

1. Tariffs to be removed in phases?

The Wall Street Journal reports (paywall):

Optimism that the trade war was finally nearing an end was raised by comments from a Chinese Commerce Ministry spokesman in Beijing on Thursday.

“If the phase-one deal is signed, China and the U.S. should remove the same proportion of tariffs simultaneously based on the content of the deal,” Chinese Commerce Ministry spokesman Gao Feng said [in Chinese] at a regular press briefing. “This is what [the two sides] agreed on following careful and constructive negotiations over the past two weeks,” he said.

However:

Neither the White House nor the U.S. trade representative issued a public response to China’s statement, and there were conflicting reports from within the Trump administration as to whether there was a firm commitment to reduce tariffs.

The New York Times seems more certain that a deal is reaching final stages, headlining its report U.S. and China agree to roll back some tariffs if deal is struck (porous paywall):

The United States and China have agreed that an initial trade deal between the two countries would roll back a portion of the tariffs placed on each other’s products, a significant step toward defusing tensions between the world’s largest economies.

The New York Times also notes that financial markets, “which Mr. Trump pays close attention to, are increasingly optimistic about the chances for a deal and have been rising steadily.” Caixin reports that the yuan “briefly moved back to the psychologically significant exchange rate of 7 per dollar on Tuesday for the first time since August 5…as investors grow increasingly confident that the United States and China are edging closer to a partial deal.”

As we have often commented, markets are fools. Even if this deal is signed, the U.S.-China economic relationship will be unhealthier for both sides than it was before July 6, 2018, when the first Trump tariffs came into effect. 

Other news from various fronts of the U.S.-China techno-trade war: 

A fentanyl bust comes through as reported: “A court in northern China has sentenced one fentanyl trafficker to death and eight others to jail in the first big joint drug bust between China and the United States,” reports the South China Morning Post:

The nine were sentenced after pleading guilty to manufacturing and trafficking the opioid to the U.S. in a public trial in Xingtai Intermediate People’s Court, Hebei province, in September last year.

The trial was witnessed by the media and American law enforcement officials and follows tensions between the two countries over regulation of fentanyl and other synthetic opioids, which have been blamed for tens of thousands of overdose deaths in the U.S.

“U.S. federal prosecutors have filed criminal charges against a New York company and seven current and former employees, accusing them of illegally importing and selling Chinese surveillance and security equipment to the U.S. government and private customers,” says the South China Morning Post.

The charges against Aventura Technologies, which is based in Commack, New York, and seven current and former employees were made public on Thursday in the federal court in Brooklyn…

Prosecutors said the defendants falsely told customers that Aventura’s products were made in the United States rather than imported, mainly from China, in a scheme that ran from 2006 until this month. Some of those products carried known cybersecurity risks, according to prosecutors.

2. Whiskey from Sichuan

Barron’s reports that global spirits producer Pernod Ricard “has broken ground on a whiskey distillery in Emeishan in Sichuan Province. The US$150 million project is set to debut in 2021, and hopes to begin releasing products in 2023.”

The decision to develop a new brand in China rather than market imported products is partly to avoid “all the costs of shipping, importation fees, and taxes.” But Pernod Ricard also wants to build an Asian whiskey brand, as many Taiwanese and Japanese distillers have done. Barron’s quotes Jean-Etienne Gourgues, the managing director of Pernod Ricard China:

“We have seen a rising trend in appreciation for Asian whiskey around the world, and we think a lot of the Asian countries have been successful with their own interpretations of what whiskey means to their whiskey drinkers.” 

Emeishan is one of China’s four sacred Buddhist mountains, and this was part of the rationale for the location. From an in-depth Scotchwhisky.com article that cites the Pernod Ricard China chief: 

Why Emeishan? Four main factors: 

—A history of alcohol production (many leading producers of Chinese spirit baijiu are located in Sichuan); 

—A pristine natural water source — “There is a very high level of minerals in the water, which is a great asset in terms of fermentation,” says Gourgues;

—The landscape and its UNESCO protected status; 

—The local people, who, he says, are already taking great pride in the project.

The tourism factor is another plus.

Pernod Ricard is not alone among European booze producers in creating a brand in China. French winemaker Château Lafite Rothschild has a vineyard in Shandong Province. The 2017 vintage of its Long Dai wine is now on the market. 

3. Huawei aims to shape AI regulations in Europe

Caixin reports:

Amid embargos on tech sales and purchases in the U.S., Huawei Technologies is moving to capitalize on sustained European goodwill.

The Chinese tech giant announced an investment of 100 million euros ($111 million) over five years in artificial intelligence (AI) to expand its role in shaping the region’s AI regulations, inject courses and events that center on its products into universities and developer communities, and sell more of its technology through third-party vendors.

In AI regulation, ethics and security, Huawei wants to work with the European AI Alliance and European Telecommunications Standards Institute, the company said in a statement. It also wants to partner with the Big Data Value Association, an industry body that lobbies the European Commission on AI, to work on public-private partnership and vertical industry development using the technology.

4. Meatless meat hype?

“Beyond Meat aims to start production in Asia before the end of next year, as it gets closer to selling its popular plant-based meat products in China,” Chairman Seth Goldman told Reuters.

Rival Impossible Foods is also gearing up to enter China, and it wants to lead with fake pork instead of beef. In a Bloomberg TV interview at the China International Import Expo in Shanghai yesterday, Impossible CEO Pat Brown told cameras that the company has “a very good prototype” of plant-based pork. 

This type of talk reminds me of spin from American internet and tech companies in the late 1990s and early 2000s, as they salivated over the potential of the China market. While food does not have the political problems associated with internet services, I believe these companies will face an enormous cultural obstacle: Can they convince consumers that an American technology can top the fake meat that Chinese people have been eating for thousands of years

See also: Our earlier story on The future of fake meat in China

—Jeremy Goldkorn


BUSINESS AND TECHNOLOGY

The Chinese government has released new rules aimed at curbing video game addiction among young people, a problem that top officials believe is to blame for a rise in nearsightedness and poor academic performance across a broad swath of society.

The regulations [in Chinese], announced by the National Press and Publication Administration on Tuesday, ban users younger than 18 from playing games between 10 p.m. and 8 a.m. They are not permitted to play more than 90 minutes on weekdays and three hours on weekends and holidays.

Chinese ride-hailing firm Didi Chuxing, which plans to relaunch its carpool service suspended after a woman was murdered by her driver last year, reversed a decision on Thursday to allow late rides for male passengers only. Didi’s Hitch carpool service, which will relaunch in several Chinese cities on Nov 20, will operate for all passengers daily until 8:00 p.m., it said. 

—China’s growth will likely remain stable through 4Q2019, with minimal risk of the growth rate dipping below 6 percent.

—Looking beyond 4Q2019, however, the growth picture becomes muddier because of a series of headwinds, ranging from property sector slowdown to softness in the global economy.

—Beijing will likely again refrain from major stimulus for the rest of the year, while at the same time prepare for the anticipated growth slowdown. If there is the possibility of any major stimulus, it will likely only come at the very end of the year to pave the way for 2020.

China is making a fresh attempt to attract technology listings, after previous plans to connect overseas-traded behemoths including Alibaba Group Holding Ltd. with mainland investors fizzled. The move revives a project to entice some of China’s most innovative companies to list domestically.  

French President Emmanuel Macron has decided to scrap a 3 billion euro ($3.32 billion) shopping and leisure complex project that French retail group Auchan and [troubled] Chinese conglomerate Dalian Wanda planned to build just outside Paris.

China’s delivery companies have hired around 400,000 extra staff as they step up preparations for the country’s massive Double 11 shopping festival…

The industry expects to deliver 2.8 billion parcels both domestically and internationally during the festival’s peak period, which runs from November 11 to 18.

WeWork, the cash-strapped co-working company whose IPO failed, is weighing giving up office floors in at least half a dozen locations in Hong Kong, one of the world’s most expensive property markets.

In early September, Shutterstock engineers were given a new goal: The creation of a search blacklist that would wipe from query results images associated with keywords forbidden by the Chinese government. Under the new system, which The Intercept is told went into effect last month, anyone with a mainland Chinese IP address searching Shutterstock for “President Xi,” “Chairman Mao,” “Taiwan flag,” “dictator,” “yellow umbrella,” or “Chinese flag” will receive no results at all. Variations of these terms, including “umbrella movement” — the precursor to the mass pro-democracy protests currently gripping Hong Kong — are also banned.

SCIENCE, HEALTH, AND THE ENVIRONMENT 

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POLITICS AND CURRENT AFFAIRS

Beijing has promised to make it easier for Hongkongers to buy a home and send their children to local schools in the nine Guangdong cities under the Greater Bay Area integration plan, as Hong Kong’s embattled leader announced a raft of measures on Wednesday to push forward the scheme.

Residents of Hong Kong and Macau will be allowed to join the civil service on mainland China for the first time as Beijing steps up efforts to further integrate the two special administrative regions into the Greater Bay Area. 

French President Emmanuel Macron said on Wednesday that he told Chinese leader Xí Jìnpíng 习近平 that dialogue, restraint and a “de-escalation” were needed in Hong Kong after months of pro-democracy protests.  

Lam Wing-kee [ 林榮基 Lín Róngjī], the Hong Kong bookseller who moved to Taiwan in April — three years after claiming he had been kidnapped by Chinese agents for selling books banned across the border — says he plans to reopen his store, Causeway Bay Books, in Taipei early next year. 

The Philippines will resume stamping Chinese passports featuring a map of the heavily disputed nine-dash line within the South China Sea, the country’s Bureau of Immigration said.

Refusing to endorse the passport, customs officials were [seven years ago] instead ordered to stamp a separate sheet of paper inserted into passports.

The Bureau of Immigration said Wednesday it had now reversed the policy. We have “expressed security concerns over the old practice because sheets of papers can easily be lost,” the bureau’s commissioner, Jaime Morente, said in a statement.

To quell international anxieties about Xinjiang, one of China’s most important assets has been government loyalists who have defended the indoctrination centres and, according to multiple people interviewed by The Globe and Mail, have staged intricately managed scenes filled with pedestrians, street vendors and drivers played by people — police officers, teachers, retirees — who have been screened by the authorities and assigned roles.

An incredible scene of Han state workers invading a Uyghur home. Uyghur boy asks his mother: “Will he (the Han ‘big brother’) leave if my dad comes home? When will my dad come home?” Mom replies: “I don’t know.” Clearly the Han man doesn’t understand Uyghur. 

SOCIETY AND CULTURE

OPINION PIECES, OP-EDS, AND RANTS

Under Xi’s predecessor Hú Jǐntāo 胡锦涛, China displayed some sensitivity to Taiwan’s internal politics and kept a relatively low profile in Hong Kong. Under Xi, the opposite is the case. Far from finessing China’s position to reassure disillusioned Hong Kongers and influence Taiwanese voters, all the incentives in Beijing are pulling in the direction of being as tough as possible. 

From diplomatic hysterics to displays of Chinese patriotism on foreign soil, China’s influence campaign has turned public opinion and forced governments to defend their values and readjust relations.

The wish for Western-style liberal democracy is a malignant virus that infects places with weakened ideological immune systems. Countries like China, Russia, Iran, Cuba and a few others have shown the ability to withstand the disease and the demise such an infection often leads to. Others, like Venezuela or those caught in color revolutions and the Arab Spring, have not been so fortunate…

The Hong Kong Special Administrative Region is vulnerable, as the escalating protests this year have shown.


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