Mild retaliation from Beijing, and an enormous pipeline from Siberia

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Facing History is a nonprofit organization that runs programs to help “secondary school teachers to promote students’ historical understanding, critical thinking, and social-emotional learning.” On December 11 at 6 p.m. EST, it will host a webinar titled WWII in Asia: Between History & Memory, featuring Dr. Zhèng Hóng 郑洪, author of Nanjing Never Cries

Our word of the day is China-Russia east-route natural gas pipeline (中俄东线天然气管道  zhōng é dōng xiàn tiānránqì guǎndào).

Don’t get enough trade war news from SupChina? You might like this new, free newsletter from veteran China business reporter Dexter Roberts. 

—Jeremy Goldkorn, Editor-in-Chief


Photo credit: SupChina illustration by Derek Zheng

1. Mild retaliation from Beijing after Trump signs Hong Kong bill into law  

Despite his best efforts, U.S. President Donald Trump has not been able to ignore the Hong Kong protests as he desperately seeks a trade deal with China. As we noted last week, Trump’s hand was forced by the U.S. Congress, which passed the Hong Kong Human Rights and Democracy Act of 2019 (HKHRDA) unanimously in the Senate, and nearly unanimously in the House of Representatives. 

Trump signed the veto-proof bill into law on November 27, and also signed a second measure that “bars the sale of tear gas and rubber bullets to the Hong Kong police,” according to CNBC. The HKHRDA “orders an annual review to check if Hong Kong has enough autonomy to justify special trading status with the U.S.,” among other provisions, according to the BBC.

China fumed at the news and issued several harsh statements. The promised retaliatory actions are, however, largely symbolic: 

  • The Foreign Ministry blasted the law as a “stark hegemonic practice, and…a severe interference in Hong Kong affairs, which are China’s internal affairs.” 

  • Party paper the People’s Daily published a spittle-flecked front-page commentary today (in Chinese) accusing the law of “disregarding the facts, reversing black and white, and blatantly supporting violent criminals.”

  • China banned U.S. military vessels from visiting Hong Kong, and the Foreign Ministry stated, “As for how long the suspension will last, it depends on how the U.S. acts.” 

  • Five American NGOs were sanctioned by China: The National Endowment for Democracy, the National Democratic Institute for International Affairs, the International Republican Institute, Human Rights Watch, and Freedom House. The Foreign Ministry claimed, without citing evidence, that they are “much to blame for the chaos in Hong Kong.” 

—Jeremy Goldkorn and Lucas Niewenhuis

2. Russia and China launch Power of Siberia gas pipeline 

Reuters reports

Russian President Vladimir Putin and his Chinese counterpart Xí Jìnpíng 习近平 on Monday oversaw the launch of a landmark pipeline that will transport natural gas from Siberia to northeast China, an economic and political boost to ties between Moscow and Beijing.

The move cements China’s spot as Russia’s top export market and gives Russia a potentially enormous new market outside Europe… The 3,000-km-long (1,865 mile) Power of Siberia pipeline will transport gas from the Chayandinskoye and Kovytka fields in eastern Siberia, a project expected to last for three decades and to generate $400 billion for Russian state coffers…

The new pipeline emerges in Heilongjiang, which borders Russia, and goes onto Jilin and Liaoning, China’s top grain hub… Flows via the pipeline are expected to gradually rise to 38 billion cubic meters (bcm) per year in 2025, possibly making China Russia’s second-largest gas customer after Germany, which bought 58.50 bcm of gas from Russia last year… 

The price China is paying for Russian gas in the new pipeline remains a closely kept secret with various industry sources saying it is tied to the price of an oil products basket.

The “strong strategic support between China and Russia” is part of the official rhetoric about the pipeline launch: See Xinhua News Agency and RT for more official messaging. 

Some see a danger to the West in the growing coziness between Beijing and Moscow. The Australian Strategic Policy Institute just last week published a report called How the geopolitical partnership between China and Russia threatens the West

3. Chinese Big Brother in Africa  

Chinese technology companies, including ZTE, Dahua, and China Telecom, are trying to shape global standards for facial recognition and surveillance at the UN’s International Telecommunication Union (ITU), according to Financial Times reporting (paywall) based on leaked documents: 

Standards ratified in the ITU, which comprises nearly 200 member states, are commonly adopted as policy by developing nations in Africa, the Middle East and Asia [although developed countries tend to stick to their own standards].

Over the past few years, Chinese surveillance infrastructure has swept across regions from Angola to Zimbabwe. For example, earlier this year South African company Vumacam installed 15,000 surveillance cameras with facial recognition capabilities in Johannesburg, supplied by Hikvision. In August, Uganda confirmed the nationwide installation of Huawei surveillance cameras with face recognition capabilities…

Data from African markets is of particular interest to Chinese companies, who are looking to improve the accuracy of their facial recognition algorithms, particularly to identify people of colour. For instance, a deal between Chinese facial recognition company CloudWalk and the government of Zimbabwe means the latter will send data on millions of African faces to the Chinese company to help train the technology.

Related:

China is mandating facial recognition verification for all new mobile phone numbers. “Facial recognition checks are about to become even more ubiquitous in China, as rules [in Chinese] come into force requiring anyone registering a new mobile phone number to submit to facial scans,” reports CNN, or see this Reuters report: China’s facial recognition rollout reaches into mobile phones, shops and homes

4. Diplomats and state media screech on Twitter as China loses friends

As far back as 2009, it has been noticeable that Chinese diplomats and government spokespeople have taken a more aggressive line against international criticism. Two recent examples:

Zhào Lìjiān 赵立坚, a diplomat who cut his Twitter teeth as the second-ranking official at China’s Pakistan mission, was rewarded for his diatribes with a promotion (although this weekend, even he felt it necessary to delete a tweet saying China would “win” against the U.S.).  

Kǒng Línlín 孔琳琳, an employee of state broadcaster CGTN in London, was supported by state media for exercising her “freedom of expression” after she was convicted of common assault there for slapping a Conservative delegate at a political conference. 

There are dozens of similar examples of China’s new, in-your-face style of diplomacy, from the frequent remarks of the undiplomatic Chinese ambassador to Sweden to envoys from Beijing storming out of a forum for Pacific islands. But if the idea is to win friends and influence people, the strategy seems to be failing. Some of the evidence of that failure from today’s news: 

In Australia, from the Sydney Morning Herald:

A year ago, most Australians trusted China to act responsibly. No longer. The proportion of people trusting in China fell from 52 percent to 32 in a year, according to the annual Lowy survey.

More specifically, seven in 10 people say there is too much Chinese investment in Australia. That Australia is too dependent economically on China. That Australia should do more to restrict China’s military activities in the region — even if it comes at an economic cost. Six in 10 say they favour Australia’s navy conducting freedom-of-navigation exercises in the South China Sea.

See also:

In Canada, a November survey from the University of British Columbia (UBC) showed that China is now viewed favorably by only 29 percent of Canadians, down from 36 percent two years ago.

See also:  

In Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan, anti-China sentiment “is emerging in anger, protest — and violence,” according to Alexander Kruglov

Angst is fueled by multiple issues: unfulfilled hopes, debt traps, excessive deployment of Chinese capital and labor and a belief that Beijing is prioritizing its own interests.

Yet another bone of contention was Beijing’s treatment of its Muslim minority in Xinjiang — a minority many Central Asians feel an ethnic and religious kinship with.

—Jeremy Goldkorn


BUSINESS AND TECHNOLOGY:

It’s been nearly a year and a half since the German auto giant announced plans to co-produce new energy vehicles with China partner Great Wall Motor through new joint venture called Spotlight Automotive. Great Wall announced on Friday that the project has received the official green light from the local branch of China’s state planner in Jiangsu Province, an important step before work can begin.

Construction of the facility, which will produce both traditional gas-powered cars for export as well as electric vehicles, is set to start next year and wrap up by 2022, according to the announcement. The project will have total investment of 5.1 billion yuan ($725 million).

American tech companies are getting the go-ahead to resume business with Chinese smartphone giant Huawei Technologies Co., but it may be too late: It is now building smartphones without U.S. chips.

Huawei’s latest phone, which it unveiled in September—the Mate 30 with a curved display and wide-angle cameras that competes with Apple Inc.’s iPhone 11—contained no U.S. parts, according to an analysis by UBS and Fomalhaut Techno Solutions, a Japanese technology lab that took the device apart to inspect its insides.

The Chinese telecom corporation Huawei has come under fire in its own country as members of the public rallied behind a former employee detained for eight months after demanding severance pay from the company.

Last January, Lǐ Hóngyuán 李洪元, a Huawei employee of 13 years, was arrested on extortion charges and detained until August, when he was released because of “unclear criminal facts and insufficient evidence”, according to court documents posted online by Li.

Chinese stocks may be struggling overseas, but some companies are still trying to open up new investment channels. One of the latest is gaming company XD, which on Friday filed an IPO prospectus to the Hong Kong Stock Exchange.

XD is hoping to raise up to HK$1 billion ($127.7 million)…

Internet behemoth Bytedance is one of XD’s cornerstone investors and will invest a total of $10 million, the prospectus showed.

Zijin Mining, China’s No.1 gold producer, is buying Canadian miner Continental Gold for almost C$1.4 billion ($1 billion), in a move aimed at increasing the company’s bullion reserves and boosting cash flow as well as profit…

The friendly deal [gives] it access to Continental’s main asset — the Buriticá gold project in Colombia.

Fadi Wazni, the chairman of SMB-Winning, the consortium, said it was already “advancing” discussions with partners interested in backing its ambitious plan to build a 110m-tonne-a-year iron ore mine in the west African country at an estimated cost of $15bn. These include China Railway Construction Corporation (CRCC), China’s state-owned railway constructor, and large steel mills. 

Now, new research and previously unseen data show that the Manukai, and thousands of other vessels in Shanghai over the last year, are falling victim to a mysterious new weapon that is able to spoof GPS systems in a way never seen before.

Nobody knows who is behind this spoofing, or what its ultimate purpose might be. These ships could be unwilling test subjects for a sophisticated electronic warfare system, or collateral damage in a conflict between environmental criminals and the Chinese state that has already claimed dozens of ships and lives. But one thing is for certain: there is an invisible electronic war over the future of navigation in Shanghai, and GPS is losing.

—Alipay and WeChat Pay say they have opened up their vast ecosystems to foreigners, but access to functions is limited…

—Cash is no longer king, as life runs through screens and mobile payments platforms.

After months of slowdown, China’s economy showed signs of stabilizing, while Beijing said it won’t compete with other nations in easing policy.

Surveys of manufacturers point to improving confidence and demand last month.  

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

POLITICS AND CURRENT AFFAIRS:

China has appointed a slate of new officials to head the world’s top gambling hub of Macau, changing key roles including the city’s economy and justice secretaries…

Macau, which neighbors China’s other special administrative region, Hong Kong, announced the changes on a government website late on Sunday [in English, Chinese]. They followed nominations by soon-to-be Macau chief executive Ho Iat Seng [賀一誠 Hè Yīchéng], who will be formally sworn in on December 20…

Macau-born Ho, the sole candidate approved to run for leader, was chosen by a 400-member pro-Beijing committee to lead the enclave for the next five years.

He has no ties to the casino industry, in contrast to previous leaders, and his new cabinet will play a key role in determining what will happen to the six casino operators when their licenses expire in 2022.

Fujian-born Lei Wai Nong [李偉農 Lǐ Wěinóng] will replace Lionel Leong [梁維特 Liáng Wéitè], currently the secretary for economy and finance, who has been in the post since 2014.

He will be the first economy secretary since Macau’s handover from Portugal in 1999 not to have worked in relevant private sector businesses, a move several industry analysts said was surprising.

—More than 1,000 attend rally to kick off week-long strike.

—Those in attendance vow to use the time to spread the word about the “yellow economy” of pro-democracy shops and restaurants.

Hong Kong is set to record its first budget deficit in 15 years, the city’s finance chief warned Monday, as the business hub reels from the twin shocks of the trade war and seething democracy protests.

There might come a time when the worst fears about Hong Kong are realised, and when things happen that cause this Special Administrative Region to no longer fully fulfill its unique role in China’s development. But that time hasn’t come yet.

—Yangtze blueprint to integrate Shanghai and the three neighboring provinces of Jiangsu, Zhejiang and Anhui, but little word on how it will be achieved.

—Scheme’s fate hinges on getting rival centers and officials to work together to reduce urban-rural divide, analyst says.

—NATO’s secretary general insisted that the military alliance did not want to “create new adversaries.”

—Jens Stoltenberg said that “as long as NATO allies stand together, we are strong and we are safe.”

—The South China Sea is an area that is subject to various territorial disputes between China and other nations who claim sovereignty to some or all of the islands in the region.

SOCIETY AND CULTURE:


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