May 31, 2018

SupChina: Latest updates on Trade and Tech

Wednesday, May 30, 2018

Talking trade and tech with Yasheng Huang

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GIF by Lucas Niewenhuis. View pronunciation video from Jia.

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Dearest reader,

We’ve got a grab bag of six stories for you at the top today, and the usual links below.

As always, hit “reply” to send me feedback, or write to to reach our whole team.

—Jeremy Goldkorn, Editor-in-Chief

1. Three Chinese companies and industries to watch

Western fears about Chinese dominance of technologies have recently focused on artificial intelligence (AI). Yet there are many other industries where China is set to lead, partly because of the sheer numbers of talented and educated people available and entrepreneurial zeal, but also because of government support and light regulation.

Biotech — pharma, healthcare, and medical devices — is one such area. Another is industrial agriculture — from the development of new crops and fertilizers to operating large-scale farms. Electric cars and the batteries that power them are one more space where China is already a dominant player. Today brings news from each of these three industries:

Shenzhen Mindray Bio-Medical Electronics is a medical hardware company that makes everything from ultrasound machines to operating tables for surgery. Caixin reports(paywall) that Mindray has “filed to raise more than 6 billion yuan ($935 million) through a listing on China’s Nasdaq-style ChiNext board.”Longping High-Tech Agriculture is named after Yuan Longping 袁隆平, inventor of the world’s first hybrid rice varieties in the 1970s. Last year, the state-controlled company bought DowDuPont’s Brazilian corn seed operations for $1.1 billion. Reuters reportsthat Longping this week announced plans to build new seed plants in Brazil to boost its market share from “15 percent currently to 30 percent in five years,” and “said a natural second step will be to enter the soy seeds business, which is dominated by U.S.-based Monsanto Inc.”Tianqi Lithium is a company founded in 1995 in Sichuan Province. Quartz reports that Tianqi “recently paid more than $4 billion to become the second-largest shareholder in Sociedad Química y Minera (SQM), a Chilean mining company.” The deal means that Tianqi now controls more than half of the current global production of lithium. Lithium is the key ingredient in almost all of the world’s smartphone and electric-car batteries.

2. Visa restrictions and the Chinese Exclusion Act

The Associated Press reports that the Trump administration “plans to shorten the length of validity for some visas issued to Chinese citizens” as part of a campaign “to counter alleged theft of U.S. intellectual property by Beijing.”

“Chinese graduate students will be limited to one-year visas if they are studying in fields like robotics, aviation and high-tech manufacturing,” according to an unnamed U.S. official.Those areas are priorities in the government’s Made in China 2025 manufacturing plan.On the subject of keeping Chinese people out of AmericaThe Chinese Exclusion Act, a documentary film about the 1882 law that made it illegal for Chinese workers to come to America and for Chinese nationals to become U.S. citizens, is now available free online. It’s really worth your time.

—Jeremy Goldkorn

3. Mattis signals U.S. will challenge Beijing in South China Sea

The usually mild-mannered U.S. Defense Secretary Jim Mattis had strong words for Beijing in response to a recent confrontation in the South China Sea, as reported by the Wall Street Journal(paywall), calling China “out of step with international law” in its militarization of claimed islands.

Mattis also “recalled Chinese President Xi Jinping’s 2015 pledge not to militarize” disputed South China Sea islands, and said, “We have seen in the last month, they have done exactly that, moving weaponry in that was never there before.” Mattis’s remarks come after multiple confrontations between Beijing and other countries:

In April, China sent ships and aircraft to confront three Australian naval vessels headed for Vietnamese ports, the New York Times reports (paywall).Beijing also sent ships to confront U.S. vessels conducting “freedom of navigation operations” within 12 miles of the Chinese-claimed Paracel Islands, the Times says. This action prompted Washington to withdraw its invitation to China to participate in Rimpac, a biennial joint military exercise.A Chinese H-6K bomber landed on Woody Island in the Paracels earlier this month, at the same time that missiles and radar equipment were sent to other islands in the region, according to the Wall Street Journal (paywall).On May 11, a Chinese helicopter flew “dangerously close” to a Philippine naval vessel that was delivering supplies to Filipino Marines in contested territory, the Associated Press reports.

The United States claims that it has a right to conduct “freedom of navigation operations” under international law. Mattis underscored that, although the United States is conducting these operations, the U.S. is not their sole beneficiary, stating, “A lot of nations want to see freedom of navigation. So we will continue that.”

—Lucy Best

4. Trade war update: ‘An unfortunate sound bite’

Peter “Death by China” Navarro, director of the White House National Trade Council, talked to NPR this morning. He remains unabashed in his China-bashing, although he calls his mission a "trade dispute," not a “trade war.” The trade war, he says, was lost a long time ago by former presidents Obama, Bush, and Clinton.

“They run up a $370 billion trade surplus with us, which costs us over a million in factory jobs a year” is still the core of Navarro’s argument."That was an unfortunate sound bite," said Navarro of U.S. Treasury Secretary Steven Mnuchin’s comment last week that the trade war with China was "on hold," because it’s not a war and it’s not on hold.Navarro refused to answer questions about the Trump family receiving favors from the Chinese government such as trademarks, and he refused to comment on Trump’s apparent caving in to China on ZTE, saying that it was a “law enforcement matter.”

Latest trade war twist: China will cut import tariffs “on a range of consumer items, including apparel, cosmetics, home appliances, and fitness products, starting from July 1,” reports Reuters. On the other hand, Reuters also notes that “China’s state media has lashed into a U.S. announcement that it would press ahead with restrictions on investment by Chinese companies, saying Beijing was ready to fight back if Washington was looking to ignite a trade war.”

—Jeremy Goldkorn

5. ‘Say no to homosexuality’ says Hunan school

May 17 was International Day Against Homophobia, Transphobia, and Biphobia. In China, groups of college and high school studentsorganized a series of activities to raise awareness of LGBT rights violations. Their message apparently did not reach the Xiangtan Technical Secondary School of Industry and Commerce in Hunan, a vocational school with more than 4,000 students and around 300 staff members.

Comrade’s Voice (同志之声 tóngzhì zhīshēng) is a Weibo account dedicated to empowering the LGBT community in China — “comrade” is Chinese slang for “gay.”Today, the account posted a photo of a digital billboard (in Chinese) at the Xiangtan school displaying the following message: “Say no to homosexuality, create a bright and harmonious campus.”“The failure of sex education and backward ideas have resulted in the long-standing violence and discrimination against the gay community on campus,” Comrade’s Voice commented (in Chinese).Many internet users pointed out that the school’s hostility against homosexuality is at odds with the Chinese government’s stance, given that the People’s Daily argued in an April commentary that “homosexuality is not a mental illness.”

—Jiayun Feng

6. Will Chinese economic growth doom the planet?

new analysis from Greenpeace suggests that the answer is, unfortunately, yes.

Based on the Chinese government’s own data on coal, oil, and natural gas demand, as well as cement production, Greenpeace researchers concluded that “China’s CO2 emissions went up 4.0% on the first quarter, after a 2% increase in 2017.” The authors write:

“If China’s emissions are indeed going back to rapid growth, it means that the rest of the world would have to run just to stay in place — keep global emissions from increasing. The task of achieving a rapid and sustained decline in global emissions would become essentially impossible.”

For some depressing details of this report, please click through to SupChina.

—Lucas Niewenhuis


Viral on Weibo: World’s highest commercial bungee jump platform

Some fearless bungee jump enthusiasts leaped from the world’s highest platform — 260 meters above the ground — in Zhangjiajie, Hunan Province, on May 26.  


China Unsolved: The Black Dahlia of Nanjing

More than 20 years later, police still claim to have no idea what happened to 19-year-old Diao Aiqing, whose body was chopped into more than 2,000 pieces and distributed around her Nanjing campus. China Unsolved is a SupChina weekly series profiling China’s most notorious unsolved mysteries.

Democracy-bashing Chinese writer enrolls her kid at American school

Yuan Xiaoliang 袁小靓 made a name for herself by bashing democracy. Her pro-China stances on social media have been widely cited by Chinese state media. But on May 22, she posted to Sina Weibo, where she has 400,000 followers, a note of praise for the American education system that announced she was trying to send her child abroad for school. Chinese netizens were not happy.



Tycoons in trouble: Wu Xiaohui 
Tycoon in China fights fraud verdict, but odds are long / NYT (paywall)
A lawyer representing Wu Xiaohui 吴小晖, former head of Anbang, the gray rhinocompany that bought the Waldorf Astoria hotel in New York, said Wu “would appeal a lengthy prison sentence for bilking investors.”Drone delivery starts using drones to cut delivery costs and time / TechNode
“There are 17 routes in total, all located in Jinshan Industrial Park in the Shanghai suburbs. With three to four flights on each route, these drones connect around 100 food vendors.”Big Brother’s helpers — has a Chinese company hacked the iPhone?
At Beijing security fair, an arms race for surveillance tech / Reuters
“Beijing-based Hisign Technology said its desktop and portable phone scanners can retrieve even deleted data from over 90 mobile applications on smartphones, including overseas platforms like Facebook and Twitter. A big selling point of the technology, according to one policeman from the restive far western region of Xinjiang who was eyeing a Hisign scanner, was its claimed ability to get data from Apple Inc’s iOS operating system.”Skiing in Hebei 
China's Hebei Province targets $23 billion 'ice and snow' industry by 2025 / Reuters
“Smog-prone” Hebei is building winter sports and tourism facilities for the 2022 Winter Olympic Games and in the hope of finding “sustainable sources of economic growth to reduce its dependence on polluting heavy industries like steel and chemicals.”Xi Jinping jumps on the blockchain bandwagon
Chinese President Xi Jinping calls blockchain a 'breakthrough' technology / CNBC
"A new generation of technology represented by artificial intelligence, quantum information, mobile communications, internet of things and blockchain is accelerating breakthrough applications," said Xi.World Cup dreams
China won’t play in this World Cup. It still hopes to profit. / NYT (paywall)
“The tournament host, Russia, and the sport’s governing body, FIFA, are beset by scandals and controversies that have cast a shadow over the event — and made it a struggle to attract corporate sponsors.” As traditional sponsors pull out, they leave a void China is happy to fill.


U.S.-China espionage
Trial begins for ex-CIA man accused of espionage for China / AP
“Kevin Mallory of Leesburg, Virginia, was charged last year under federal espionage statutes with delivering defense information to a foreign government. Prosecutors say they caught Mallory last year after he returned to the U.S. on a flight from Shanghai with more than $16,000 in undeclared cash.”U.S.-China relations
In a first, Hong Kong refused U.S. extradition bid following Beijing request, State Department report says / SCMP
Despite providing no information on its own case against Macau-based hacker Iat Hong, Hong Kong officials have released him to “central government custody.”Australia-China espionage
Australia launches biggest spy agency review in decades amid China concerns / AFP via SCMP
“‘This will be the most comprehensive review of intelligence legislation in Australia since the Royal Commission on Intelligence and Security in the 1970s,’ Attorney General Christian Porter said.”Israel and industrial safety
Not safe for Chinese: Israel's poor record on construction sites irks Beijing / Haaretz
“An agreement signed 18 months ago to bring some 20,000 Chinese construction workers to Israel is floundering amid Chinese concerns over safety, prompting Beijing to veto participation of its citizens in 36 building projects.” The irony is rich.North Korea
Former spy chief, now top diplomat: Meet North Korea’s man in New York / Inkstone
“Kim will be the first senior North Korean official to visit the United States in almost 20 years. The White House said Kim is scheduled to meet Secretary of State Mike Pompeo, who recently twice visited Pyongyang.”Wildlife trafficking
Shark fins found in Singapore Airlines shipment to Hong Kong despite ban – activists / AFP via HKFP
“US environmental group Sea Shepherd said the 989 kilogram (2,180 lbs) shipment had arrived in Hong Kong earlier this month from Colombo in Sri Lanka, via Singapore.”Uyghurs in Xinjiang
Uyghur student missing, believed detained after return from Malaysia University / RFA
“A young Uyghur woman has gone missing after returning to her home in northwest China’s Xinjiang Uyghur Autonomous Region (XUAR) from studying abroad in Malaysia, and is believed to be detained in a “political re-education camp,” according to her Germany-based sister.”Trumpworld
The White House official Trump says doesn’t exist / Politico
A profile of Matthew Pottinger, former Beijing correspondent for the Wall Street Journal and now “the president’s top Asia hand.”


On-demand sexual harassment 
Sexist comments flourish on Airbnb in China / Bloomberg
“Once regarded as a fun social aspect of online services in China, the proliferation of reviews talking about women’s looks — from guests being called ‘a babe’ to comments on a host’s sex appeal — is now drawing fire as a potential safety hazard.”
See also: Police hunt for Didi driver suspected of raping and murdering a female passengerand Safety tips are the last things that Chinese women need after Didi murder case on SupChina.On-demand divorce
WeChat launches convenient divorce registration feature / The Beijinger
“With a few convenient, cold-hearted taps of the finger, past-their-best couples can now use WeChat to begin their very own ‘conscious uncoupling,’ in a process akin to ordering food or hailing a Didi.”Naming crackdown
Proper nouns must be proper Chinese, say authorities / Sixth Tone
“Ministry mandates that housing developments with names like ‘California Town’ and ‘Norwegian Wood’ must find Mandarin monikers.”Fiction
Lu Yang on growing up and writing in China / The New Yorker
A Q&A with author Lu Yang 鲁羊, whose first story published in English — “Silver Fish” — appeared in the New Yorker (paywall) this month.Educating rural youth
Left-field careers for farmers’ kids / Sixth Tone
An NGO in Yunnan hopes to “inspire students to continue their studies beyond middle school, the end of China’s compulsory education period.”Coffee shops
Chinese café culture / The World of Chinese
Cafés are growing in popularity all over the country “as Chinese youths seek homes away from home,” or what Starbucks CEO Howard Schultz calls the “third place.”Life expectancy and health
Chinese babies will live healthier, but not longer, lives than those born in United States, WHO says / Reuters via SCMP
“In terms of overall life expectancy China is also catching up with the United States, which Reuters calculations suggest it is on course to overtake about 2027.”


Going home

A young couple rides the subway home from Xi’erqi Station in Beijing.  

Jia Guo

View on SupChina | View all photos

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