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Facebook Is Trying Everything to Re-Enter China—and It’s Not Working

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Since regulators blocked the service in 2009, CEO Mark Zuckerberg has hired well-connected executives, developed censorship tools and taken a ‘smog jog’ in Beijing—but the company has made no visible headway.

Such permits typically give Western firms an initial China beachhead. This one, which Facebook won in late 2015, could have been a sign Beijing was ready to give the company another chance to connect with China’s roughly 700 million internet users, reopening the market as the social-media giant’s U.S.-growth prospects dimmed.

 Facebook CEO Mark Zuckerberg’s 2016 ‘smog jog’ in Tiananmen Square. Photo: Facebook

Facebook CEO Mark Zuckerberg’s 2016 ‘smog jog’ in Tiananmen Square. Photo: Facebook

There was a catch. Facebook’s license was for three months, unusually short. Facebook executives found the limitation unexpected and frustrating, people familiar with the episode said.

Facebook never opened the office. The official posting disappeared and now exists as a ghost in cached versions of the government website. “We did, at one point in time, plan to have an office,” said Facebook spokeswoman Charlene Chian, “but we don’t today.”

[Read the full story here, at WSJ]

The episode is part of Facebook’s running tale of woe in China, where it has been trying to set the stage for a return. Blocked on China’s internet since 2009, Facebook has courted Chinese officials, made Chief Executive Mark Zuckerberg more visible in China, hired a well-connected China-policy chief and begun developing technology that could cull content the Communist Party deems unacceptable.

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*Facebook-like social media arenas inside the broader messaging apps Note: Usage rate figures don’t add up to 100% because a person can use multiple apps.
Sources: Facebook; eMarketer (social network users); China Internet Network Information Center (social network leaders)

It has made no visible headway. And as time passes, Facebook is watching from the outside as Chinese social-media giants mop up the market that might have been its own. Weibo, along with Tencent Holdings Ltd.’s WeChat and QQ, are now dominant in China, and it may be too late for Facebook, said industry executives including Kai-Fu Lee, Google’s former China head and now CEO of Innovation Works, a Chinese incubator.

“At this stage and time with WeChat, Weibo and other products, it’s hopeless,” Mr. Lee said.

Facebook also faces a wary central government, which blamed social media for stirring ethnic unrest in 2009 and remains uneasy with Facebook’s ability to be a dissidents’ megaphone, said industry executives and others who deal with Beijing regulators. And government censorship would be a prerequisite, under Chinese law, for Facebook to re-enter China.

“It’s important for Facebook to respect the laws and regulations of China,” said Guo Weimin, vice minister of the State Council Information Office. “The Chinese government has always had an open approach to social-media networks. Cooperation with new media is welcome on our side.”

Mr. Zuckerberg, who declined to be interviewed for this article, has said he considers China crucial to Facebook’s future. “Obviously you can’t have a mission of wanting to connect everyone in the world and leave out the biggest country,” he told analysts in 2015. “Over the long term, that is a situation we will need to figure out a way forward on.”

His drive has had fits and starts. He scored a high-profile board seat at one of China’s top universities to build inroads with Chinese officials but didn’t attend the body’s meeting last year. Read the rest of this entry »

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[VIDEO] Why China And Taiwan Hate Each Other

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The Chairmen, Trump and Mao

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The January 13, 1967 issue of TIME magazine featured Mao Zedong on its cover with the headline “China in Chaos.” Fifty years later, TIME made U.S. President-elect Donald Trump its Man of The Year. With a groundswell of mass support, both men rebelled against the established order in their respective countries and set about throwing the world into confusion. Both share an autocratic mind set, Mao Zedong as Chairman of the Chinese Communist Party, Donald Trump as Chairman of the Board. As Jiaying Fan noted in May 2016, both also share a taste for “polemical 51gkpencml-_sl250_excess and xenophobic paranoia.” For his part, Mao’s rebellion led to national catastrophe and untold human misery.

[Order Peter Navarro’s book “Death by China: Confronting the Dragon – A Global Call to Action” from Amazon.com]

On January 20, 2017, Donald Trump was inaugurated as the 45th president of the United States of America. Although some of China’s New Leftists hailed Trump’s November 2016 win as a validation of ever-victorious Mao Zedong Thought, there is little reason to think that a Trump-led America will give much succor to China’s ideologues. In the two months since the U.S. election, through a phone call to Taiwanese leader Tsai Ing-wen, repeated comments on China’s currency manipulation, the appointment of Peter Navarro (an economic hawk and author, among other things, of the 2011 book Death by China: Confronting the Dragon—A Global Call to Action) as director of the National Trade Council, and his intervention in a dispute over an underwater U.S. drone waylaid by the Chinese navy in the South China Sea, Trump has indicated that he is taking an unpredictable approach to the most important global bilateral relationship. Even long-standing friends and allies of the U.S. have been thrown off guard as they learn how to live with the Great Disrupter.

The Chinese Communist Party under its Chairman of Everything, Xi Jinping, hasn’t had to confront such an erratic and populist leader since Mao Zedong launched the Cultural Revolutionary 50 years ago.

Uproar in Heaven

In Official China, the anniversary of the Cultural Revolution passed in silence, even though today’s People’s Republic, whether in terms of its achievements or of its egregious failures, continues to live in the shadow of that political maelstrom.

[Read more here, at ChinaFile]

In 1966, Mao observed that his personality was a mixture of contradictory elements. There was the self-assured sense of destiny and confidence that led him to challenge and overturn earlier leaders of the Communist Party, confront Chiang Kai-shek, and lead the Chinese revolution. This was, he said, an expression of his “Tiger Spirit,” something that was in constant interplay with his “Monkey Spirit,” one that was skittish, paranoid, and unpredictable. The Monkey was always ready to take on the Tiger with devilish glee. In the last two decades of his life, Mao’s China reflected this deep-seated contradiction as the country lurched between authoritarian control and anarchic confusion. What for the Great Helmsman was his life force writ large would rend the fabric of the society he ruled and threatened everything he had worked to achieve.

Archive/Getty Images

Archive/Getty Images

At the time of the Sino-Soviet split in 1961, Mao wrote a poem in praise of China’s most famous monkey, Sun Wukong, the hero of the popular late-Ming novel Journey to the West by Wu Cheng’en. The international order established following WWII was under increasing pressure, and the Socialist Bloc, led by the Soviet Union, was riven by rebellion and disquiet as a result both of repressive Soviet expansionism in Europe and the ideological uncertainty generated by Nikita Khrushchev’s secret denunciation of Joseph Stalin in 1956. Mao, giving vent to his Tiger Spirit, would now lay claim to the mantle of world revolution.ObaMao

A thunderstorm burst over the earth,
So a devil rose from a heap of white bones.
The deluded monk was not beyond the light,
But the malignant demon must wreak havoc.
The Golden Monkey wrathfully swung his massive cudgel,
And the jade-like firmament was cleared of dust.
Today, a miasmal mist once more rising,
We hail Sun Wu-kung, the wonder-worker.

Having delivered this challenge, Mao’s unpredictable Monkey Spirit would attempt to turn the world upside down. His poem and Uproar in Heaven, a 1964 film adaptation of Wu Cheng’en’s novel, struck a cord with the restive youth of China, many of whom closely followed China’s ideological contest with the Soviet Union. Like Mao, they too felt that their country was being stymied by a hidebound Soviet-style bureaucracy; the normalization of the revolutionary ardor of the past was frustrating China’s ability to lead history and achieve greatness. They related to Mao as he portrayed himself as an outsider who championed an uprising of the masses against a sclerotic system.

Chairman Mao Tse-tung, left, welcomes US President Richard Nixon at his house in Beijing (AFP)

Chairman Mao Tse-tung, left, welcomes US President Richard Nixon at his house in Beijing (AFP)

When, in 1966, Mao both engineered and supported a grassroots youthful rebellion against the very party-state he had created, a group of middle-school students in Beijing responded by composing a series of manifestos declaring that they, like Monkey, would support the Chairman, create an uproar in heaven, and smash the old world to pieces. In particular, they proclaimed “Rebellion is Justified” and quoted a line from Mao’s 1961 poem:

The Golden Monkey wrathfully swung his massive cudgel,
And the jade-like firmament was cleared of dust.

Mao responded to the young rebels and, to use today’s parlance, an alt-left movement of radicalism was born. The students called themselves Red Guards.

[Read the full story here, at ChinaFile]

In August 1966, Mao and his deputy, Lin Biao, encouraged the Red Guards to Destroy the Four Olds and a wave of iconoclasm swept the country while the violence against people victimized as representing the old order were denounced, attacked, beaten, and even killed. During what would be known as Bloody August, Mao is said to have written to Jiang Qing, his wife and partner in revolutionary extremism, declaring that “Once heaven is in great disorder a new kind of order can emerge.” He believed that throwing the political establishment and social order into confusion would liberate the true potential of people to achieve what was otherwise seemingly impossible. A high-tide of revolutionary enthusiasm would allow people to cast aside the deadening bureaucracy and revitalize industry, agriculture, research, and society itself. Under the guidance of Mao Zedong Thought, the goal of making China great again could be realized on the world stage.

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The Instincts of an Autocrat

The similarities between Mao Zedong and Donald Trump don’t end with the autocrat’s mindset touched on in the opening paragraph of this essay, or with the clash between tiger-like brio and the dyspathy of the monkey. The will to autocracy means that both figures share (with elected or self-appointed strong men historically and worldwide) some disturbing parallels:

Quotations Vs. Tweets: In the Mao era, the mysterious, contradictory, and yet powerfully inciting utterances of the Chairman were conveyed not by Twitter, but through quotations broadcast over national radio and carried in the newspapers. In the print media, Mao’s gnomic utterances were always highlighted by being printed in bold, while on radio they were recited in the stentorian voice of authority. A daily quotation called “The Highest Directive” featured in the top right-hand corner of the People’s Daily and was mimicked by every paper across the land. The quotations demanded a response and action and sent the country lurching in different directions while confusion reigned supreme in Beijing.

Progadanda Vs. the Lying Media: Like Mao, Trump has trouble sleeping, and his early morning Tweets reveal whatever has caught the leader’s flickering attention, alerting the world to some new twist or turn in his feverish thinking. With Twitter, Trump bypasses both the formal bureaucracy of Washington and what he and his followers dub “The Lying Media.”

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Mao too distrusted the state media based in the capital, Beijing, and with the support of his wife, Jiang Qing, and her Shanghai comrades he got his message of rebellion out in other cities. He extolled The Right to Rebel and, in essence, he launched the Cultural Revolution to “drain the swamp” of the Chinese Communist Party bureaucracy. He called enemies within the Party nomenklatura “Capitalist Roaders,” the permanent political class, that is men and women who were pursuing policies that undermined his ideas and which, he believe, held back China’s productive capacity and frustrated the country’s global revolutionary preeminence.

[Read the full text here, at ChinaFile]

Climate Change Vs. Human Will: The effects of climate change and the mismanagement of natural resources were evident in Mao’s China. There was a profligate depletion of water resources; increasing desertification starting from Outer Mongolia; unmodulated industrial pollution from the Great Leap Forward era onwards; denial of contaminants in food and water supplies. . . the list goes on. Mao believed that “man can conquer heaven,” that human will could triumph over nature. China now faces the challenge of climate change and environmental degradation with sober clarity; Trump’s America will be led by climate skeptics, deniers, and those who would sign up for Mao’s axiom.

The Smartest Men in the Room: Like Trump, Mao thought he was “smart,” and he distrusted experts and the educated. An autodidact, he believed that he did not need to rely on others to understand complex issues and resolve problems. He declared that the more education you have, the more dangerous you may be. Read the rest of this entry »


Lunar New Year Celebrated with Prayers, Fireworks 

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BEIJING (AP) — Chinese are heading to temples and fairs to wish for an auspicious start to the Lunar New Year.

Thousands gathered at Beijing’s major temples on Saturday, the first day of the Year of the Rooster. Wearing heavy winter coats, they lit incense sticks and bowed as they prayed for good fortune and health. As many as 80,000 people were expected at the Lama Temple in central Beijing, state television reported.

Beijing’s sprawling spring festival temple fair opened at Ditan Park, where empty tree branches were festooned with red lanterns and traditional goods and foods were for sale. Read the rest of this entry »


In Era of Journalism Cutbacks, a Chinese ‘Robot Reporter’ 

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More Chinese newsrooms are starting to use so-called “robot reporters,” but developers say their capabilities remain limited.

Te-Ping Chen reports: China has found itself in the midst of a full-blown robot obsession in recent years, with everything from robot monks to robot waiters grabbing headlines.

Now, the robots are writing the actual headlines, too — in certain newsrooms, anyway.

Last week, the Southern Metropolis Daily published its first-ever report written by what the newspaper describes as a “robot reporter.” The story, clocking in at just over 300 words, summarizes what train tickets are most in demand bn-rt602_robot_cv_20170124041448over the Lunar New Year holiday, during which millions of Chinese workers travel home to see their families. It discusses which routes are selling out fast and advises travelers to buy tickets soon, cautioning that for certain routes, all seats are sold out.

“You’ll have to stand the whole way, the route will be more exhausting,” it advises. The Southern Metropolis Daily story is bylined “Xiao Nan Robot,” or ‘Little South’ robot and accompanied with a picture of a white, rotund robot riding atop a thick black pen.

So far, though, the scope of robot reporters is limited, says Wan Xiaojun, a computer-science professor at Peking University who worked to develop the newspaper’s program.

Mr. Wan explains that Xiao Nan is currently programmed only to analyze train-ticket sales, which accounts for the somewhat monotonous nature of its reporting. “There Are Still High-Speed Rail Tickets From Guangzhou to Numerous Destinations for Lunar New Year’s Eve,” ran one robot-produced headline today. “Hard-Seat Tickets on the 26th From Guangzhou to Zhengzhou Are Still Available,” ran another yesterday.

[Read the full story here, at China Real Time Report – WSJ]

Sports are another fertile area for robot coverage: another robot-reporter program Mr. Wan worked on was used by news publisher Toutiao during the Rio Olympics last year, producing more than 400 news briefs, he said. Those briefs were built off published game statistics or summarized the transcribed narration of sports broadcasters, seeking out keywords such as “goal,” “red card” and more. Read the rest of this entry »


Happy Birthday Hong Kong: 176 Years Old Today

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It is an event that neither Hong Kong, China nor Britain are likely to be celebrating. Nevertheless, on this day – January 26 – in 1841, the British flag was first unfurled at Possession Point by Royal Navy sailors.

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Photo: Chris Needos.

At the time, Hong Kong was a sleepy backwater, though it would prove to be a handy trading outpost. “Albert is so amused at my having got the island of Hong Kong”,wrote Queen Victoria in 1841.

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First Opium War, via Wikicommons

The Convention of Chuenpee ceded Hong Kong to the British after the First Opium War in which 600 Chinese soldiers died.

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Within five months, British officials began selling land in Hong Kong and the territory formally became a British possession a year later.

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Map of Hong Kong, 1841 – surveyed by Captain Edward Belcher. Belcher began surveying the islands a year earlier.

Possession Point was originally named Tai Hang Hau, or “Big Puddle”. The area was redeveloped into a Chinese-style garden which is today known as Hollywood Road park.

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Possession Point in the early 20th century.

Read the rest of this entry »


[VIDEO] China Rebukes White House Over South China Sea

In this Tuesday, Nov. 26, 2013 photo, a crew member of Chinese People's Liberation Army (PLA) Navy monitors on the deck of the China's aircraft carrier, the Liaoning, sailing on the East China Sea for sea trials. The Liaoning departed for its first-ever sea trials in the South China Sea, a mission likely to draw scrutiny amid Beijing's drive to assert its claims to those waters and their island groups. (AP Photo) CHINA OUT

 


Donald Trump and Kim Jong-un Impersonators Give Hongkongers a Fright


China Cracks Down on Unauthorized Internet Connections 

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Sijia Jiang | HONG KONG – China is reinforcing its censorship of the internet with a campaign to crack down on unauthorized connections, including virtual private network (VPN) services, that allow users to bypass restrictions known as the Great Firewall.

The Ministry of Industry and Information Technology said in a notice on its website on Sunday that it is launching a nationwide clean-up campaign aimed at internet service provider (ISP), internet data centrer (IDC), and content delivery network (CDN) companies.

It ordered checks for companies operating without government licenses or beyond the scope of licenses.

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The ministry said it was forbidden to create or rent communication channels, including VPNs, without governmental approval, to run cross-border operations.

VPNs can be used to gain access to blocked websites.

China has the world’s largest population of internet users – now at 731 million people – and is home to some of the biggest internet firms such as Tencent Holdings, Baidu Inc and Alibaba Group Holding. Read the rest of this entry »


Chinese Media Warns of ‘Dramatic Changes’ and ‘Fires Being Lit’ as President Takes Office

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‘Beijing should make some worst-case scenario planning, even though the development may not be as bad as we have expected.’

Will Worley reports: China has reacted nervously to Donald Trump’s inauguration, with one state-controlled media outlet warning of “dramatic changes” and “fires” being lit by the new US administration.

International relations experts in China suggested the time had come for Beijing to make preparations for a sharp deterioration in relations with Washington.

Mr Trump frequently hit out at China during his campaigning, branding the Beijing government “currency manipulators” and implicitly threatening a trade war.

His inauguration speech did not directly reference the country, but he spoke about foreign industries being “enriched” at the expense of American jobs.

Trump calls critics ‘enemies’ at inauguration ball as he vows to keep his Twitter account running

Speaking about the inauguration of Mr Trump, China’s Foreign Ministry spokeswoman Hua Chunying said Sino-American ties “have had their ups and downs, but they have continued to move forward”.

She maintained they would “push forward from this new starting point to make greater progress”.

However, other state-sanctioned voices were more damning.

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“Frictions between the US and its allies, and trade tensions between the US and China seem inevitable within the four years ahead,” said an editorial by the Global Times, a pro-government tabloid newspaper with a reputation for populist rhetoric.

Adding that “dramatic changes” were on the way, the newspaper continued: “The Trump administration will be igniting many ‘fires’ on its front door and around the world. Let’s wait and see when it will be China’s turn.”

Chinese experts on their country’s relations with the US appeared equally bleak about the future.

“A trade war between China and the US seems inevitable,” Pang Zhongying, of Renmin University, told the South China Morning Post.

“Beijing should make some worst-case scenario planning, even though the development may not be as bad as we have expected.”

International relations professor Yu Xiang said Mr Trump’s speech was “aggressive” as he urged the Chinese government “not to underestimate the challenges and difficulties we will be facing in Sino-US relations”. Read the rest of this entry »


[VIDEO] Donald Trump Says ‘China’

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[VIDEO] John Bolton: Time to revisit the ‘One China’ policy 

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中国新年: Shanghai Disney Braces for Chinese New Year Holiday

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SHANGHAI – As the Chinese New Year approaches, Shanghai Disney said Wednesday it has started bracing for its first-ever Lunar New Year with spectacular entertainment programs for visitors.

In honor of the holiday for the Year of the Rooster, the resort is presenting a spectacular series of entertainment programs, seasonal food and beverage offerings, lucky bags and holiday-themed shopping experiences, it said.

The Chinese Lunar New Year, or the Spring Festival, falls on Jan. 28. Chinese have a weeklong holiday for the most important festival of the year.

Throughout the Spring Festival season, the highlight in Shanghai Disneyland will be the nightly program, “Ignite the Dream: A Nighttime Spectacular of Magic and Light” followed by a special event featuring new year wishes from tourists. Read the rest of this entry »


U.S. Marines Send F-35 Stealth Fighter Squadron to Japan 

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It marks the first time for that stealth aircraft to be stationed overseas.

The US Marine Corps said it has sent a squadron of F-35B fighter jets to Japan, marking the first operational overseas deployment for the controversial aircraft that is under scrutiny from president-elect Donald Trump.

The deployment of the 10 planes to Marine Corps Air Station Iwakuni on Honshu Island marks a major milestone for the F-35, which has been bedeviled by technical glitches and soaring cost overruns.

With a current development and acquisition price tag already at $379 billion for a total of 2,443 F-35 aircraft, Lockheed Martin’s F-35 is the most expensive plane in history, and costs are set to go higher still.

The Marines’s version of the plane, known as the F-35B, is capable of conducting short takeoffs and vertical landings.

Trump last month sent shockwaves through the aerospace industry when he tweeted that he wanted rival Boeing to price out a possible alternative.

“Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!” Trump tweeted December 22.

The F/A-18 Super Hornet does not have stealth capabilities and has been in use since the late 1990s.

Once servicing, maintenance and other costs for the F-35 are factored in over the aircraft’s lifespan through 2070, overall program costs have been projected to rise to as much as $1.5 trillion.

Proponents of the F-35 tout its speed, close air-support capabilities, airborne agility and a massive array of sensors giving pilots unparalleled access to information. Read the rest of this entry »


Hollywood’s Superheroes, Family Movies Boosted by China in 2016 

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The revenue from the world’s second-largest movie market accounted for 13 percent of the $13.5 billion generated by the top 20 movies from U.S. studios.

Lisa Richwine reports: China’s moviegoers embraced big-screen superheroes, cartoon animals and a video game-turned-action flick in 2016, adding $1.8 billion in ticket sales to Hollywood’s 20 highest-grossing films of the year.

The revenue from the world’s second-largest movie market accounted for 13 percent of the $13.5 billion generated by the top 20 movies from U.S. studios, according to a Reuters analysis of data from tracking firm Box Office Mojo. That was triple the 4 percent level five years ago.

The numbers illustrate China’s growing importance to U.S. studios such as Walt Disney Co’s (DIS.N) Disney Studios, Time Warner Inc‘s (TWX.N) Warner Bros. and Comcast Corp’s (CMCSA.O) Universal Pictures.

While China’s booming box office growth stalled this year in single digits, the country remains vital for Hollywood studios, box office analysts said. In 2016, China overtook the United States as the country with the largest number of movie screens.

Most of the top Hollywood movies would have reached the top of the film charts without China. But the additional revenue is significant, especially for blockbuster films that can cost $200 million or more to make.

“You can grab an extra hundred million (dollars) of revenue from the Chinese market,” said Jonathan Papish, film industry analyst for China Film Insider. “You can’t do that anywhere else in the world.”

Walt Disney Co’s (DIS.N) animated “Zootopia,” known in China as “Crazy Animal City,” was Hollywood’s biggest hit there, with $236 million in ticket sales, and ranked as the third-highest-grossing movie worldwide. China’s film authorities extended the movie’s theatrical run by two weeks beyond the typical 30 days for foreign films. Read the rest of this entry »


Helen Raleigh: 2017 May Be The Year China’s Chickens Come Home To Roost 

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While Americans embrace their reinstated confidence in both economics and international affairs, China seems to be going the opposite direction.

Deng probably hoped future Chinese leaders would be humble and restrained, keep a low profile, and instead of broadcasting China’s ambitions or showing off China’s economic or military muscles, quietly focus on overcoming China’s weaknesses, such as economic development. In international affairs, Deng probably would have liked to see China avoid acting like an aggressor. Instead, he would have preferred China conshun either causing any international conflict or serving as a leader of any faction within an international conflict.

[Check out Helen Raleigh’s book “Confucius Never Said” at Amazon.com]

When Deng passed away in 1997, China was still in its first decade of economic reform and its per-capita gross domestic product was less than $800, so the kind of restrained policy approach he advocated made perfect sense. No one knows how long Deng intended for this policy guidance to last. But Deng’s successors, from Hu Yaobang to Hu Jingtao (they aren’t related), pretty much followed Deng’s policy guidelines until President Xi Jinping assumed power in 2012.

No More Humility and Restraint

It seems President Xi has abandoned Deng’s strategic policy guidelines. On the domestic front, he focused on ensuring his power by purging many political rivals through the anti-graft movement. In October, he was declared the “core” leader of the Chinese Communist Party, a title last used by Chairman Mao.

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[Read the full story here, at The Federalist]

He coined the term “China dream” to counter “American dream.” While “American dream” is about any hard-working individual living to his or her full capacity in a free society, “China dream” means Chinese people can only live a better life by subjecting themselves to the Communist Party’s absolute rule. Under President Xi, the 51hkz5w3lkl-_sl250_Chinese government has ruthlessly cracked down on dissidents, including Chinese nationals and foreigners, and China has become a much less friendly place to foreign investors and companies.

[Check out Helen Raleigh’s other book “The Broken Welcome Mat: America’s un-American immigration policy, and how we should fix it” at Amazon.com]

On the foreign policy front, China doesn’t lay low any longer. President Xi has been very vocal about China’s ambitions. He seems to believe that China’s rise to replace the United States as the next superpower is unstoppable and the time is now.

He sees at least two trends in his favor. First, there’s a consensus within the Chinese leadership and public opinion that the 2008 economic crisis has produced long-lasting devastating effects to the West: most countries in Europe are still struggling economically while the United States has experienced a very timid recovery. Since China emerged from the 2008 economic crisis relatively unscathed, many people, including Xi, believed that free market economics have reached their end and it’s time to adopt the Chinese-style authoritarian mercantile economic model. Thus, China should replace the United States to set a new economic order.

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Second, based on a misguided belief that the world is a better place when the United States gives up its power and authority in a global system established since World War II, President Obama has been ready and willing to acquiesce America’s leadership in international affairs in the last eight years. President Xi quickly sized up president Obama as a weak leader, and sought to expand China’s influence and challenge America wherever opportunities rise. Read the rest of this entry »


[VIDEO] Chinese Girl Tries American Chinese Food 

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Counterfeit Electronic Products Worth HK$1.3 Million Seized in Hong Kong

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clifford-lo-250Clifford Lo reports: About 200 parcels mailed from the mainland to the United States carrying counterfeit electronic products were intercepted in a three-day joint operation mounted by Hong Kong Customs and United States authorities.

In Hong Kong, about 1,300 fakes including mobile phones, tablet computers and chargers were confiscated in 54 parcels totalling an estimated street value of HK$1.3 million, the Customs and Excise Department said.

The US authorities intercepted 140 shipments and confiscated fake electronic products that could be sold for US$1.1 million there during the operation conducted between November 15 and 17 last year.

It is understood some of the parcels intercepted in the United States were confiscated based on intelligence from Hong Kong customs officials.

Initial investigation showed the fake products were mailed from the mainland and destined for the US via Hong Kong, a source said. Read the rest of this entry »


[VIDEO] Reporter Laughs at State Department Dodge on China’s Influence on North Korea

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China’s Xi Calls for ‘Socialist Family Values’ in 2017 as Anti-Beijing Sentiment Grows

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Chinese President Xi Jinping made statements last month demanding a “new trend toward socialist family values” in China.

Frances Martel reports: The Chinese state news agency Xinhua is promoting statements by President Xi Jinping made last month demanding a “new trend toward socialist family values” in China as the Communist Party faces a 2017 teeming with new challenges from separatist groups, religious minorities, and even Maoists who reject Xi’s autocratic capitalist reforms.

Xi made the comments at a conference “to honor model families” in December, according to Xinhua, defining “socialist family values” as “love for the nation, family and one another, devotion to progress and kindness, and mutual growth and sharing.” His New Year’s Eve address appeared to promote more of the same, demanding the Chinese people “work harder” to aid the Communist Party’s progress both nationally and globally.

“As long as our 1.3 billion-plus people are pulled together for a common cause, as long as the Party stands together with the people and we roll up our sleeves to work harder, we will surely succeed in a Long March of our generation,” Xi reportedly said in his address.

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He made clear that the values he seeks to see Chinese families promote are indivisible from Communist Party edicts, reminding listeners that “law is virtue put down in words, and virtue is law borne in people’s hearts.”

Wu Zhihong Nation of Giant Infants

Xi reportedly urged “fostering a belief in law, the rule of law and rules, and guiding people to voluntarily assume their statutory duties, as well as responsibilities for society and family.”

[Check out Wu Zhihong’s bookThe Giant Baby Nation” (Chinese Edition) at Amazon.com]

The Chinese Communist Party propaganda outlet The People’s Daily reported that Chinese citizens online “responded enthusiastically to President Xi Jinping’s New Year’s address, equally impressed by the content and inspirational phrasing of the speech.”

The Chinese media outlets’ emphasis on family values are contrasted with Western-style popular culture on the pages of the Global Times, another English-language propaganda outlet. While China’s president has repeatedly dwelled on “socialist family values” in recent speeches, the Times has decried reality show participants and celebrity divorcees as indicative of a trend of immaturity among young Chinese people. Read the rest of this entry »


2017: Year of the Rooster

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Ruan Hailin, a craftsman from Jiangsu Province, used paint brush to draw roosters on chicken eggs to welcome the upcoming Chinese lunar New Year, which will falls on January 28 this year. Along with the roosters in different postures, Ruan also inscribed some wishes on the eggs to signify an auspicious year. In Chinese culture, there are 12 zodiac animals to represent a year periodically, and 2017 is the Year of the Rooster.


Xi’s Power Play Foreshadows Historic Transformation of How China Is Ruled

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Party insiders say president wants to remain in office after his second term, breaking succession conventions.

BEIJING— Jeremy Page and Lingling Wei report: China’s Communist Party elite was craving a firm hand on the tiller when it chose Xi Jinping for the nation’s top job in 2012. Over the previous decade, President Hu Jintao’s power-sharing approach had led to policy drift, factional strife and corruption.

The party’s power brokers got what they wanted—and then some.

Four years on, Mr. Xi has taken personal charge of the economy, the armed forces and most other levers of power, overturning a collective-leadership system introduced to protect against one-man rule after the death of Mao Zedong in 1976.

Shattering old taboos, Mr. Xi has targeted party elders and their kin in an antigraft crusade, demanded fealty from all 89 million party members, and honed a paternalistic public image as Xi Dada, or Big Papa Xi.

Now, as he nears the end of his first five-year term, many party insiders say Mr. Xi is trying to block promotion of a potential successor next year, suggesting he wants to remain in office after his second term expires in 2022, when he would be 69 years old.

Mr. Xi, who is president, party chief and military commander, “wants to keep going” after 2022 and to explore a leadership structure “just like the Putin model,” says one party official who meets regularly with top leaders. Several others with access to party leaders and their relatives say similar things. The government’s main press office declined to comment for this article, and Mr. Xi couldn’t be reached for comment.

[Read the full story here, at WSJ]

Mr. Xi’s efforts to secure greater authority may help ensure political stability in the short run, as an era-defining economic boom starts to falter. But they risk upending conventions developed since Mao’s death to allow flexibility in government and ensure a regular and orderly transition of power.

Concern is rising among China’s elite that the nation is shifting toward a rigid form of autocracy ill-suited to managing a complex economy. China’s array of challenges includes weaning the economy off debt-fueled stimulus spending, breaking up state monopolies and cleaning up the environment.

“His dilemma is that he can’t get things done without power,” says Huang Jing, an expert on Chinese politics at the National University of Singapore. “He feels the need to centralize, but then he risks undermining these institutions designed to prevent a very powerful leader becoming a dictator.”

Chinese President Xi Jinping, left, and Premier Li Keqiang arrived for the opening session of the National People's Congress in March.
Chinese President Xi Jinping, left, and Premier Li Keqiang arrived for the opening session of the National People’s Congress in March. Photo: Agence France-Presse/Getty Image

Mr. Xi’s supporters say he still faces resistance within the party, and needs to modernize leadership structures to confront the slowing economy and a hostile West.

At a meeting of 348 party leaders in October that granted Mr. Xi another title—“core” leader—he railed against indiscipline and warned of senior officials who “lusted for power, feigned compliance and formed factions and gangs.”

Since then, many party members have signed written pledges of “absolute loyalty.” In a speech in October, the party chief of Henan province, Xie Fuzhan, hailed Mr. Xi as a “great leader”—words usually reserved for Mao.

[Read the more here, at WSJ]

Hours before Donald Trump’s election victory, China officially launched its own convoluted process for selecting a new national leadership team, to be unveiled at a twice-a-decade party congress next fall. Up to five of the seven members of the Politburo Standing Committee, China’s top leadership body, are due to retire.

Only Mr. Xi and Premier Li Keqiang would remain if the party observes the precedent, established in 2002, that leaders over age 67 step down. Read the rest of this entry »


China’s ‘Social Credit’ System: Turning Big Data Into Mass Surveillance 

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The declared aim of this ambitious plan for a social-credit system is to build a ‘culture of sincerity.’ At this stage in China’s history, it is questionable whether the party-state can build any kind of culture.

Stanley Lubman writes: The Chinese government is taking the first steps in an evolving plan to employ big data to establish a nationwide system of mass surveillance of the entire population. This “social-credit system” would mobilize technology to collect information on all citizens and use that information to rate their behavior, including financial creditworthiness and personal conduct. The local experiments have provoked mixed reactions.

“The Communist Party, since it gained power in 1949, has endeavored to monitor and control the behavior and thoughts of the population. In the era of Mao Zedong it established ‘residents’ committees’ in the cities and ‘village committees’ in the countryside to monitor citizens’ behavior and report to local police. These continue to operate today, if in slightly different forms.”

The declared aim of this ambitious plan for a social-credit system is to build a “culture of sincerity.” At this stage in China’s history, it is questionable whether the party-state can build any kind of culture. The center cannot effectively control local governments, a large share of economic profits is going to the wealthy, corruption remains widespread and neither the economy nor the populace will tolerate the absence of rule of law indefinitely.

The Communist Party, since it gained power in 1949, has endeavored to monitor and control the behavior and thoughts of the population. In the era of Mao Zedong it established “residents’ committees” in the cities and 51p37hyvrll-_sl250_“village committees” in the countryside to monitor citizens’ behavior and report to local police. These continue to operate today, if in slightly different forms.

[Order Stanley Lubman’s book “Bird in a Cage: Legal Reform in China after Mao from Amazon.com]

The current effort to expand control of personal conduct is the latest in a series of moves to control behavior that now include campaigns against corrupt officials, rights lawyers and others whose conduct and actions are considered “subversive” both in person and otherwise—such as in social media.

The new social-credit system may include “black marks for infractions such as fare cheating, jaywalking and violating family-planning rules,” according to an article in The Wall Street Journal. The article quotes planning documents stating that the system would “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.” It is no wonder that one Chinese human rights-activist is quoted as saying “Tracking everyone that way, it is just like ‘1984’.” (The famous novel published in 1949 by George Orwell imagines a mythical regime that spies on all of its citizens using omnipresent surveillance.)

[Read the full text here, at WSJ]

Current tentative steps to test the new system have raised questions about its implementation and reach. Obvious issues include defining the criteria that would be applied to rate citizens, the government and social institutions that would perform the ratings, and the impact of those ratings on citizens’ business and professional activities and on their lives in general. A key component of the new system will be taking traditional credit-scoring and adding other data points. Sesame Credit, an affiliate of e-commerce titan Alibaba, currently surveys online shopping habits and, if users consent, posts their education levels and legal records. Businesses and some individuals such as lawyers, accountants, teachers and journalists would receive closer scrutiny of their professional behavior. Read the rest of this entry »


China Criticizes Abe’s Pearl Harbor Visit 

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BEIJING/SEOUL (Jiji Press) — China on Wednesday criticized Prime Minister Shinzo Abe’s visit to Pearl Harbor in Hawaii for his lack of deep reflection on the country’s past.

Noting that Japan waged a war of aggression against China and other Asian countries, Chinese Foreign Ministry spokeswoman Hua Chunying told a press conference, “Reconciliation between the inflicters and victims must and can only be based upon sincere reflection and apology from the inflicters.” This is the only way to realize “a genuine and lasting reconciliation,” she said. For victimized countries in Asia, “one sincere apology” is more important than “dozens of smart shows,” Hua said.

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The People’s Daily newspaper of the Communist Party of China said in its Wednesday edition that the Pearl Harbor visit is criticized both in Japan and the United States because Abe made the trip before apologizing to war victims in Asian countries that Japan invaded during the war.

Meanwhile, a South Korean Foreign Ministry official, touching on Abe’s pledge never to wage war again in the speech, said that Japan, based on a correct understanding of history, should strive further to promote reconciliation and cooperation with neighbors that fell victim to its wartime militarism. Read the rest of this entry »


Chinese Shopping Mall Marks Year of the Rooster with a Giant Statue of the Bird Sporting Donald Trump’s Infamous Hairdo

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China gives Trump the bird

A Chinese shopping mall is ringing in the Year of the Rooster with a giant sculpture of a chicken that looks like US president-elect Donald Trump.

China has gone cuckoo for the cartoonish pastiche — complete with orange pompadour — of the billionaire politician in Taiyuan, capital of the northern province of Shanxi.

The scowling statue is one of many roosters popping up around the country as it prepares to celebrate the lunar new year at the end of January.

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With its tiny wings parroting the distinctive hand gestures of Trump (who is often mocked for his allegedly small digits) replicas of the bird are available on the Chinese shopping site Taobao for as much as 12,000 yuan ($1,700) for a 10-metre version. Read the rest of this entry »


[VIDEO] Chinese Military Rattles Neighbors in South China Sea

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China Auto Glass Tycoon Cao Dewang Moves Jobs to U.S., Citing High Taxes at Home

Cao Dewang, Chairman of Fuyao Glass

Shanghai (AFP) – A Chinese auto glass tycoon has caused a stir by shifting part of his empire to the United States and setting up a factory in Ohio, citing high taxes and soaring labour costs at home.

Cao Dewang’s $600-million investment comes after Donald Trump threatened to declare Beijing a currency manipulator and slap 45 percent punitive tariffs on Chinese imports to protect American jobs.

The 70-year-old tycoon’s decision to open a glass factory in the eastern American state of Ohio in October — a rare case of jobs being exported from China to the US — triggered an outpouring of criticism on social media.

The phrase “Cao Dewang has escaped” became a hot topic, generating nearly 10 million views on the Twitter-like Weibo microblog and many comments urging China to “not let Cao Dewang run away”.

Cao’s Fuyao Glass Industry Group — a supplier to big names including Volkswagen and General Motors — claims to be the biggest exporter of auto glass in the world, reporting 2.6 billion yuan ($370 million) profits last year. Read the rest of this entry »


To Problems With China’s Financial System, Add the Bond Market

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SHANGHAI — Keith Bradsher Chinese officials cheered on the country’s stock market when it reached heady new highs, offering hope that it could become a new source of money to fix China’s economic problems. Then, last year, the market crashed.

“China is struggling with its own balancing act. The Chinese bond slump also stems from Beijing’s efforts to wring excess money from its financial system and to stop potential bubbles that may lurk in shadowy, hard-to-track corners of its economy. Should it continue with those efforts, bonds could fall further.”

Now another fast-growing part of China’s vast and increasingly complicated financial market is showing signs of distress: its $9 trillion bond market.

Prices for government and corporate bonds have tumbled over the past week, a sell-off that continued on Tuesday. The situation has spooked investors, prompting the government to temporarily restrain some trading and to make emergency loans to struggling financial institutions.

“The adjustment has not yet finished. It will continue and normalize until money is put where the government can see it.”

— Miao Zuoxing, a partner at the FXM Brothers Fund

The price drops have resulted in higher borrowing costs at a time when more Chinese companies need the money to cope with slowing economic growth. Yields reached new highs again on Tuesday.

In part, China is reacting to financial shifts across the globe. With the Federal Reserve raising short-term interest rates and many expecting the presidency of Donald J. Trump to lead to heavier government spending, investors worldwide are selling bonds.

“Due to recent, relatively large market fluctuations, our company decided to cancel the issue of the current bond, and will reissue it at a chosen time.”

— Jiangsu Sumec Group

But China is struggling with its own balancing act. The Chinese bond slump also stems from Beijing’s efforts to wring excess money from its financial system and to stop potential bubbles that may lurk in shadowy, hard-to-track corners of its economy. Should it continue with those efforts, bonds could fall further.

“The adjustment has not yet finished,” said Miao Zuoxing, a partner at the FXM Brothers Fund, a Shanghai-based investment fund that trades stocks, bonds and futures. “It will continue and normalize until money is put where the government can see it.”

At least 40 companies have said they would postpone or cancel bond offerings rather than risk being forced to pay high interest rates to sell the bonds — or being unable to sell them at all. Among them was the Jiangsu Sumec Group Corporation, an industrial trading house that exports items as varied as gardening tools and auto parts; the company said on Thursday that it would not go through with the sale of $130 million in short-term bonds.

“Due to recent, relatively large market fluctuations, our company decided to cancel the issue of the current bond,” Jiangsu Sumec Group said in a statement, “and will reissue it at a chosen time.”

China has particular reason to worry. As the world’s second-largest economy, after the United States, it relies on a rickety financial system that is mired in debt and susceptible to hidden stresses. Higher overseas interest rates could also prompt more Chinese investors to move their money out of the country, either to chase higher returns elsewhere or to avoid what some see as China’s growing problems.
Read the rest of this entry »


China Not Following Through on Market Reform Promises, says German Ambassador

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Michael Clauss hits out at lack of progress in market reforms and a reality that contradicts Beijing’s declared intentions.

wendy-wuWendy Wu reports: China isn’t following through on its market reform pledges as quickly as desired, German ambassador to China Michael Clauss said in an interview.

“I regret to note that the reform initiatives taken at the third plenum apparently have lost momentum,” Clauss told the South China Morning Post in Beijing.

The Communist Party, under the leadership of Xi Jinping, pledged three years ago that China would allow the market to play a “decisive” role in resources allocation. But the promises of adopting more market-oriented changes have mostly been shelved as Beijing beefs up intervention in economic activities, from coal mine operations to capital account controls.

“It seems that preserving social stability and discipline are the order of the day much more than implementing the necessary economic reforms,” Clauss said.

“Officially, China propagates a policy of open markets and unfettered access for foreign trade and investment. However, we note that very often [the] reality on the ground does not correspond to the declared intention of the Chinese government to facilitate foreign direct investment.

“On a long-term perspective, we sense a growing tendency in China towards market closure and favouring of indigenous production,” he said.

At a key policy meeting that ended on Friday, the leadership again highlighted “stability” and “financial risk prevention” as priorities for the coming year, sending a clear message that bold moves in market opening or liberalisation were off the table, observers said.

They are worried that Beijing is also unlikely to make painful cuts in the bloated state sector, for fear of possible social unrest, before the top leadership reshuffle at 19th party congress in the autumn.

[It’s time for China to honour its pledge to open up the market and society – and play fair]

Survey results of commerce chambers of China’s major trading partners have underscored the increasing difficulties of doing business in China, including ambiguous security laws, limited market access and an official favouring of domestic technology.

Last year Beijing launched “Made in China 2025” – a campaign to revamp its manufacturing sector, and establish a home-grown hi-tech powerhouse.

“We wonder whether this is what in the end China 2025 is all about: a future Chinese economy relying on its own, leaving no room for exchanges with its partners,” Clauss said, adding that plans for German companies to expand investment in China had fallen to a three-year low.

Since late last year, Beijing has strengthened controls on individuals and companies transferring funds overseas to stem capital outflows and defend the yuan’s exchange rate. Read the rest of this entry »


As Yuan Weakens, Chinese Households Rush to Open Foreign Currency Accounts

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Since October, the government has acted to slow outflows by tightening existing measures, such as approvals for foreign currency transfers, and has leant on banks to be stricter, making it harder for companies and individuals to change money and transfer money abroad.

SHANGHAI: Zhang Yuting lives and works in Shanghai, has only visited the United States once, and rarely needs to use foreign currency. But that hasn’t stopped the 29-year-old accountant from putting a slice of her bank savings into the greenback.

“Expectations of capital flight are clear. I might exchange more yuan early next year, as long as I’ve got money.”

She is not alone. In the first 11 months of 2016, official figures show that foreign currency bank deposits owned by Chinese households rose by almost 32 per cent, propelled by the yuan’s recent fall to eight-year lows against the dollar.

The rapid rise – almost four times the growth rate for total deposits in the yuan and other currencies as recorded in central bank data – comes at a time when the yuan is under intense pressure from capital outflows.

The outflows are partially a result of concerns that the yuan is going to weaken further as US interest rates rise, and because of lingering concerns about the health of the Chinese economy.

US President-elect Donald Trump’s threats to declare China a currency manipulator and to impose punitive tariffs on Chinese imports into the US, as well as tensions over Taiwan and the South China Sea, have only added to the fears.

“Expectations of capital flight are clear,” said Zhang, who used her yuan savings to buy US$10,000 this year. “I might exchange more yuan early next year, as long as I’ve got money.”

Household foreign currency deposits in China are not huge compared to the money that companies, banks and wealthy individuals have been directing into foreign currency accounts and other assets offshore.

All up, households had US$118.72 billion of foreign money in their bank accounts at the end of November, while total foreign currency deposits were US$702.56 billion.

But the high growth rate in the household forex holdings are symbolic of a growing headache for the government as it struggles to counter the yuan’s weakness.

Since October, the government has acted to slow outflows by tightening existing measures, such as approvals for foreign currency transfers, and has leant on banks to be stricter, making it harder for companies and individuals to change money and transfer money abroad. Read the rest of this entry »


‘Show Me on the Drone Doll Where China Touched You’

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China returns seized U.S. drone

Beijing has returned a U.S. underwater drone seized last week in the South China Sea by a Chinese Navy vessel after “friendly” talks between the two countries, China’s Defense Ministry said in a short statement posted to its website Tuesday.

“After friendly consultations between the Chinese and U.S. sides, the handover work for the U.S. underwater drone was smoothly completed in relevant waters in the South China Sea at midday on Dec. 20,” the statement said.

The Pentagon confirmed the handover, but criticized the Chinese Navy over the move.

“The incident was inconsistent with both international law and standards of professionalism for conduct between navies at sea,” Pentagon spokesman Peter Cook said in a statement. “The U.S. has addressed those facts with the Chinese through appropriate military channels, and have called on Chinese authorities to comply with their obligations under international law.”

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The drone was scooped up by the Chinese Navy in the strategic waterway on Thursday in a row that also drew in U.S. President-elect Donald Trump and further stoked tensions between the two rivals.

The U.S. said the unmanned underwater vehicle (UUV) had been operating in international waters.

The Chinese Defense Ministry said Saturday that a Chinese naval lifeboat had taken the drone “in order to prevent the device from causing harm to the safety of navigation and personnel of passing vessels.”

The Chinese side had criticized what it said were U.S. moves to dramatize the seizure and accused the U.S. of “frequently” dispatching vessels and aircraft to carry out “close-in reconnaissance and military surveys within Chinese waters.”

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“China resolutely opposes these activities, and demands that the U.S. side should stop. … China will continue to be vigilant against the relevant activities on the U.S. side, and will take necessary measures in response,” Yang said.

The incident drew criticism from Trump, who takes office Jan. 20, and has vowed to deal with Beijing in a more hard-line manner.

Misspelling “unprecedented,” Trump tweeted Saturday: “China steals United States Navy research drone in international waters — rips it out of water and takes it to China in unpresidented act.”

He later reissued the tweet, correcting the spelling to “unprecedented.”

After China said it would return the drone, Trump spokesman Jason Miller tweeted a link to a news story detailing the announcement, saying: “@realdonaldtrump gets it done.”

Despite the apparent claim that Trump played a role in securing the drone’s return, there has been no evidence that this was the case.

Nearly 11 hours after his first China tweet, Trump delivered another dig at China. Read the rest of this entry »


Capital Crackdown: Companies Face Delays Getting Cash Out of China

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New regulations aimed at slowing the yuan’s decline create confusion for multinationals.

French construction-materials company Cie. de Saint-Gobain SA, is finding it harder to take its money out of China.

“The process of authorization is going to become longer now. The procedures will be controlled more strictly.”

— Javier Gimeno, head of Saint-Gobain’s China operations

The conglomerate—like all multinationals operating there—faces new delays in recent weeks as Chinese regulators impose tougher restrictions on the movement of capital out of the country to slow the yuan’s decline.

“The process of authorization is going to become longer now,” said Javier Gimeno, who heads Saint-Gobain’s China operations. “The procedures will be controlled more strictly.”

Nearly 7% of Saint-Gobain’s world-wide group sales come from Asia and Oceania, a large part of that from China. The new rules are adding confusion and anxiety to a process that had been getting much easier over the past year, he said. The shift could cause some multinationals to rethink future investments in a country where once-sure payoffs are suddenly facing an uncertain return, analysts say.

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As of late November, firms that want to exchange yuan into dollars in China now need approval for any transaction greater than $5 million. They also face tighter limits on amounts they can transfer in and out of bank accounts in China to affiliates in other countries, in a practice known as “cross-border sweeping.”

“We hear a lot questions from corporates about whether they will be able to repatriate their money in the future,” said Alexander Tietze, managing director at Acon Actienbank AG, a German bank that advises companies on Chinese investments. He expects foreign investments in China to slow, and cautioned that foreign takeovers or plans for new joint ventures could fail because of the controls.

With the Chinese economy struggling, multinationals have fewer opportunities to reinvest there, which makes it more difficult for them to do much with money trapped in China.

“A majority of clients are currently consolidating and restructuring their China business,” said Bernd-Uwe Stucken, a lawyer with Pinsent Masons LLP in Shanghai. Some clients are closing down their business, with new investments being the exception to the rule, Mr. Stucken said.

Adding to the confusion: it is unclear where the limits are, because regulators haven’t published official rule changes, but instead have given only informal guidance to banks, according to Daniel Blumen, partner at Treasury Alliance Group, a consulting firm.

Calls to the People’s Bank of China weren’t returned. Read the rest of this entry »


Hong Kong and China Stocks Decline in Monday Morning Trading 

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The Hang Seng Index was down 0.77 per cent or 168.87 points to 21,851.88 on Monday morning session close.

Shares in Hong Kong and mainland China declined at the mi-day trading pause, following retreats in most Asian equity markets as rate increases announced last week by the US Federal Reserve and Hong Kong Monetary Authority lead to capital outflow back to American shores.

The Hang Seng Index fell 168.87 points, or by 0.8 per cent, to 21,851.88, while the Hang Seng China Enterprises Index dropped 1 per cent to 9,374.09. The CSI 300 Index fell 0.2 per cent to 3,339.42.

“With the higher rates in US,Hong Kong stocks could be under pressure as capital could flow out of Hong Kong ,” said Ben Kwong Man-bun, executive director of KGI Asia.

China bond-market selloff shows risks of Beijing’s efforts to restrain credit

China bond-market selloff shows risks of Beijing’s efforts to restrain credit

Insurers led losses among Chinese companies on the Hang Seng China Enterprises Index, amid concerns that mainland regulators will further place their market investments under scrutiny.

Ping An Insurance Group Co. fell 1.7 per cent to a four-month low of HK$39.75 while AIA Group Ltd fell 1.5 per cent to HK$43.75.

China Vanke Co. fell in Shenzhen and Hong Kong after the country’s largest property developer scrapped a white knight rescue plan involving Shenzhen Metro, which was intended to help defend it from a hostile takeover.

[Read the full story here, at South China Morning Post]

Vanke shares fell by as much as 6.3 per cent, closing 4.5 per cent lower at HK$18.48 during the lunch pause. In Shenzhen, Vanke’s shares fell as much as 5.3 per cent, dropping 4.7 per cent to 21.40 yuan.

The Shanghai Composite Index dropped 0.1 per cent to 3,119.65. The Shenzhen Component index dropped 0.26 to 10,307.48, while the Shenzhen Composite Index declined 0.21 per cent to 1,987.49.

The Nasdaq style ChiNext closed 0.60 per cent lower at 1,986.22.

China’s monetary policy will be pursued in a “neutral” manner in the coming year, a departure from last year’s “flexible” stance, according to an analysis by Macquarie Capital’s Larry Hu, parsing the Communist Party’s Central Economic Work Conference last Friday. Read the rest of this entry »


Chinese Rush to Open Foreign Currency Accounts

A teller counts US dollars and Chinese 100-yuan notes at a bank in Hefei, east China's Anhui province on January 16, 2011

The biggest monthly rise in the foreign currency account deposits so far this year came in January when the annual $50,000 conversion quota was reset and individuals rushed to change yuan into dollars.

SHANGHAI  – Winni Zhou and John Ruwitch report: Zhang Yuting lives and works in Shanghai, has only visited the United States once, and rarely needs to use foreign currency. But that hasn’t stopped the 29-year-old accountant from putting a slice of her bank savings into the greenback.

“Expectations of capital flight are clear. I might exchange more yuan early next year, as long as I’ve got money.”

— Zhang Yuting

She is not alone. In the first 11 months of 2016, official figures show that foreign currency bank deposits owned by Chinese households rose by almost 32 percent, propelled by the yuan’s recent fall to eight-year lows against the dollar.

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“Banks under pressure to minimize outflows are also offering deals and giveaways for people who voluntarily convert their forex savings back into yuan. Bank of Communications is entering any customer who changes more than $1,000 into yuan the chance to be part of a lucky draw, with various prizes, such as portable printers.” 

The rapid rise – almost four times the growth rate for total deposits in the yuan and other currencies as recorded in central bank data – comes at a time when the yuan is under intense pressure from capital outflows. The outflows are partially a result of concerns that the yuan is going to weaken further as U.S. interest rates rise, and because of lingering concerns about the health of the Chinese economy.

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“The more you see people converting, reflected in foreign currency deposits in the banking segment, it means obviously there’s pressure on the local currency.”

— Raymond Yeung, chief economist for Greater China at ANZ

U.S. President-elect Donald Trump’s threats to declare China a currency manipulator and to impose punitive tariffs on Chinese imports into the U.S., as well as tensions over Taiwan and the South China Sea, have only added to the fears.

“Regulators have a lot of control over what happens to those deposits, and they can control the rate of inflows into onshore FX deposits.”

“Expectations of capital flight are clear,” said Zhang, who used her yuan savings to buy $10,000 this year. “I might exchange more yuan early next year, as long as I’ve got money.”

Household foreign currency deposits in China are not huge compared to the money that companies, banks and wealthy individuals have been directing into foreign currency accounts and other assets offshore. All up, households had $118.72 billion of foreign money in their bank accounts at the end of November, while total foreign currency deposits were $702.56 billion.

But the high growth rate in the household forex holdings are symbolic of a growing headache for the government as it struggles to counter the yuan’s weakness.

Since October, the government has acted to slow outflows by tightening existing measures, such as approvals for foreign currency transfers, and has leant on banks to be stricter, making it harder for companies and individuals to change money and transfer money abroad.

More measures may be in the cards. Read the rest of this entry »


Michael Auslin: China Drone Seizure Throws Down Gauntlet to Obama and Trump

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Michael Auslin is the author of The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region,” which will be published by Yale in January. The opinions expressed in this commentary are his.

michael-auslin-headshotMichael Auslin writes: In seizing an unmanned, underwater US Navy drone in international waters off the Philippines on Thursday, China has thrown down a North Korean-style gauntlet to both the outgoing Obama Administration and the incoming Trump team.

While media reports are still sketchy, it appears that a Chinese naval vessel was close enough to a US oceanographic survey ship to launch a small boat to grab the scientific drone as the American vessel was preparing to retrieve it. That would mean a ship-to-ship level of intimidation, and not a snatch-and-grab action in isolated waters.

Like in 2009, when the Chinese harassed the USNS Impeccable in the South China Sea, the latest action comes against a similarly unarmed US research vessel. This time, however, the Chinese flagrantly flouted international law, and unlawfully seized US property while possibly endangering the safety of US military personnel on the high seas.

[Order Michael Auslin’s book “The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region” from Amazon.com]

Such a dramatic upping of the ante is out of character for China, and American officials should understand that Beijing now appears willing to take increasingly risky actions. This latest provocation may well be at least partly in response to President-elect Trump’s recent comments on China, Taiwan and the One-China Policy.

At the same time, the latest challenge comes on the heels of steadily degrading relations between the Obama Administration and China, including news that Beijing is rapidly militarizing its newly built islands located near the Philippines. On these reclaimed shoals, China has emplaced anti-aircraft and anti-missile systems in what can also be a precursor to fielding offensive weapons capabilities.

[Read the full story here, at CNN.com]

In response, senior US military leaders have made forthright statements about America’s national interest in maintaining open and uncontested sea lanes. These comments have put Beijing on notice that Washington will not sit idly by if China appears be upending decades of peaceful development in Asia’s waters. Read the rest of this entry »


Kissinger Dismisses Concerns About Tillerson, One China Policy

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Kissinger himself negotiated the One China policy, which recognizes the Chinese government in Beijing, as opposed to Taiwan. 

Addy Bairdaddy-baird-staff-photo-squarespace reports: Former secretary of state Henry Kissinger dismissed concerns Wednesday about President-elect Donald Trump’s nominee for secretary of state, ExxonMobil CEO Rex Tillerson, who has been criticized for his close ties with Russian President Vladimir Putin.

 “I hope and I am optimistic that the cooperative way will prevail… Keep in mind that if China and America are in conflict, then the whole world will be divided.”

“I pay no attention to this argument that he is too friendly with Russia,” Kissinger said at an event in Manhattan. “He would be useless at the head of Exxon if he was not friendly with Russia… I don’t hear those concerns at all.”

Kissinger was asked about Tillerson at an event put on by the Committee of 100, an organization that works to advance Chinese-American relations, where the former secretary talked about the future of U.S.-Chinese relations under Trump.

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“I pay no attention to this argument that he is too friendly with Russia. He would be useless at the head of Exxon if he was not friendly with Russia… I don’t hear those concerns at all.”

But Kissinger walked a fine line in talking about Tillerson, joking when he was asked about the appointment that he didn’t “come to commit suicide,” but that he “sympathized” with Trump’s decision.

“Nobody can meet every single qualification for secretary of state,” Kissinger said. “I think it’s a good appointment.”

Reflecting on Trump’s developing relationship with China, Kissinger said he is optimistic about the coming administration.

[Read the full story here, at POLITICO]

“[We have to decide] whether to attempt to deal cooperatively or confrontationally” with China, Kissinger said. “I hope and I am optimistic that the cooperative way will prevail… Keep in mind that if China and America are in conflict, then the whole world will be divided.”

Earlier this month, Trump became the first U.S. president or president-elect to speak with the leader of Taiwan since 1979. And he suggested this past weekend that the U.S. shouldn’t have to be “bound” by the “One China” policy that American leaders have stood by for decades. Those comments “seriously concernedChina’s Foreign Ministry, its spokesperson said Monday. Read the rest of this entry »


OH YES THEY DID: As Expected, China Installs Weapons Systems on Artificial Islands

U.S. Navy leadership and senior officers from the Chinese People's Liberation Army (Navy) meet for lunch aboard the Chinese destroyer Harbin (DDG 112) marking the conclusion of a U.S.-China counter piracy exercise between Harbin and the guided-missile destroyer USS Mason (DDG 87). Mason is deployed in support of maritime security operations and theater security cooperation efforts in the U.S. 5th Fleet area of responsibility. (U.S. Navy photo by Mass Communication Specialist 1st Class Gary M. Keen/Released)

The Asia Maritime Transparency Initiative at the Center for Strategic and International Studies said its findings come despite statements by the Chinese leadership that Beijing has no intention to militarize the islands in the strategic trade route, where territory is claimed by several countries.

WASHINGTON (Reuters) –David Brunnstrom reports: China appears to have installed weapons, including anti-aircraft and anti-missile systems, on all seven of the artificial islands it has built in the South China Sea, a U.S. think tank reported on Wednesday, citing new satellite imagery.

“It now seems that these structures are an evolution of point-defense fortifications already constructed at China’s smaller facilities on Gaven, Hughes, Johnson, and Cuarteron reefs.”

The Asia Maritime Transparency Initiative (AMTI) at the Center for Strategic and International Studies said its findings come despite statements by the Chinese leadership that Beijing has no intention to militarize the islands in the strategic trade route, where territory is claimed by several countries.

DigitalGlobe overview imagery from June 3rd, 2016 of the Fiery Cross Reef located in the South China Sea. Fiery Cross is located in the western part of the Spratly Islands group. Photo DigitalGlobe via Getty Images.

“These gun and probable CIWS emplacements show that Beijing is serious about defense of its artificial islands in case of an armed contingency in the South China Sea. Among other things, they would be the last line of defense against cruise missiles launched by the United States or others against these soon-to-be-operational air bases.”

AMTI said it had been tracking construction of hexagonal structures on Fiery Cross, Mischief and Subi reefs in the Spratly Islands since June and July. China has already built military length airstrips on these islands.

“This is the first time that we’re confident in saying they are anti-aircraft and CIWS emplacements. We did not know that they had systems this big and this advanced there. This is militarization. The Chinese can argue that it’s only for defensive purposes, but if you are building giant anti-aircraft gun and CIWS emplacements, it means that you are prepping for a future conflict.”

“It now seems that these structures are an evolution of point-defense fortifications already constructed at China’s smaller facilities on Gaven, Hughes, Johnson, and Cuarteron reefs,” it said citing images taken in November and made available to Reuters.

“This model has gone through another evolution at (the) much-larger bases on Fiery Cross, Subi and Mischief reefs.”

Satellite images of Hughes and Gaven reefs showed what appeared to be anti-aircraft guns and what were likely to be close-in weapons systems (CIWS) to protect against cruise missile strikes, it said.

Images from Fiery Cross Reef showed towers that likely contained targeting radar, it said.

AMTI said covers had been installed on the towers at Fiery Cross, but the size of platforms on these and the covers suggested they concealed defense systems similar to those at the smaller reefs.

“These gun and probable CIWS emplacements show that Beijing is serious about defense of its artificial islands in case of an armed contingency in the South China Sea,” it said. Read the rest of this entry »


More and More American Companies Think Their Big China Opportunity is Over 

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’We have seen a significant drop of U.S. companies going to China…On the contrary, they are coming back here,’ says market expert.

For a long time, a lot of American companies saw China as the world’s biggest business opportunity. But that time may be over.

“If you’re waiting for the booming Chinese consumer…it’s just not on the way. The upside is just not what some consumer firms were hoping for.”

— Derek Scissors, chief economist at China Beige Book International, which regularly surveys Chinese businesses

This week, McDonald’s was reportedly in talks to sell its China unit and license its name to a Chinese company instead, following Yum Brands ‘ decision to do something similar and spin off its China operations into a new firm called Yum China last month.

“The trend is that opening retail business on the ground in China as a foreigner is difficult and expensive.”

Coca-Cola announced plans to sell its China bottling business in November, and International Paper said in March that it’s spinning off its China and Southeast Asia corrugated packaging business.

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“We have for years tried to push a lot of our clients not to do that, but instead do what McDonald’s and Yum Brands are doing, which is…monetise your name and your knowledge without actually being the one who does all the work to make it work in China. China is a tough, tough market.”

— Dan Harris, lawyer at Harris Bricken and author of the China Law Blog

“The trend is that opening retail business on the ground in China as a foreigner is difficult and expensive,” said Dan Harris, lawyer at Harris Bricken and author of the China Law Blog.

“We have for years tried to push a lot of our clients not to do that, but instead do what McDonald’s and Yum Brands are doing, which is … monetise your name and your knowledge without actually being the one who does all the work to make it work in China,” Harris said. “China is a tough, tough market.”

McDonald’s said in March it was looking for “strategic partners” for key Asia markets. Last year, Yum Brands said its decision to spin off its China unit followed a “rigorous review of strategic options.”

fastfood-china

Fast food companies were early major entrants to China nearly three decades ago. As individual Chinese grew wealthier, the opportunities for tapping the Chinese consumer market appeared to grow exponentially. But roadblocks appeared: U.S. fast food chains struggled with food safety scandals in China, and other companies have had intellectual property such as trademarks stolen.

[Read the full story here, at South China Morning Post]

“We have seen a lot of U.S companies struggling [with] their China” operations, said Siva Yam, president of the Chicago-based U.S.-China Chamber of Commerce. “The market is much more mature. We have seen a significant drop of U.S. companies going to China. … On the contrary, they are coming back here.”

An annual report from the American Chamber of Commerce in China found last year that 32 per cent of member companies surveyed do not plan to expand investments in China, a percentage that’s higher than during the financial crisis in 2009. Read the rest of this entry »


[VIDEO] Jewel-Encrusted Wealth: World’s Priciest Clothes Hits Hong Kong Runway

Dolce & Gabbana held its first fashion show outside Italy in Hong Kong to showcase some of the world’s most expensive clothing, betting that there is still demand from the ultrawealthy for jewel-encrusted tiaras and glittery dresses. Photo/Video: Eva Tam.

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China Complains After President-Elect Trump Speaks to Taiwan Leader Tsai Ing-wen

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Beijing (AFP) – China protested to Washington Saturday after US President-elect Donald Trump broke with decades of foreign policy and spoke with the president of Taiwan.

“It was not immediately clear whether Trump’s telephone call with Tsai Ing-wen marked a deliberate pivot away from Washington’s official ‘One China’ stance, but it fuelled fears he is improvising on international affairs.”

It was not immediately clear whether Trump’s telephone call with Tsai Ing-wen marked a deliberate pivot away from Washington’s official “One China” stance, but it fuelled fears he is improvising on international affairs.

xmubuilding

Xiamen University

Zhang Wensheng, of Xiamen University, was more circumspect, dismissing Trump’s use of the term ‘president’ as ‘personal greetings’ that ‘do not reflect a political position whatsoever’.

China regards self-ruling Taiwan as part of its own territory awaiting reunification under Beijing’s rule, and any US move that would imply support for independence would likely trigger fury.

[ALSO SEE – Commentary: Trump, Taiwan and China – punditfromanotherplanet]

During Friday’s discussion, Trump and Tsai noted “the close economic, political and security ties” between Taiwan and the United States, according to the president-elect’s office.

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Even before the call with Taiwan, Trump’s unorthodox diplomatic outreach had raised eyebrows, and, for some critics, in extending his hand to Taiwan, Trump crossed a dangerous line.

“President-elect Trump also congratulated President Tsai on becoming President of Taiwan earlier this year,” it said.

Beijing on Saturday offered a robust response.

“We have already made solemn representations about it to the relevant US side,” the Chinese foreign ministry said.

“There is no change to our longstanding policy on cross-Strait issues. We remain firmly committed to our ‘One China’ policy,” she added. “Our fundamental interest is in peaceful and stable cross-Strait relations.”

— National Security Council spokeswoman Emily Horne

“It must be pointed out that there is only one China in the world. Taiwan is an inalienable part of China’s territory,”ObaMao

China also urged “relevant parties in the US… to handle Taiwan-related issues with caution and care to avoid unnecessarily interfering with the overall situation of Sino-US relations.”

Trump, who had come under fire for the telephone call, hit back — on Twitter.

“Interesting how the U.S. sells Taiwan billions of dollars of military equipment but I should not accept a congratulatory call,” Trump tweeted.

– ‘How wars start’ –

President Barack Obama’s White House said the outgoing US administration had not changed its stance on China-Taiwan issues.

“There is no change to our longstanding policy on cross-Strait issues,” National Security Council spokeswoman Emily Horne told reporters. Read the rest of this entry »