China Week in Review
Week of Oct. 22, 2018
China and the world
- The CCP hastened to deepen bilateral relations with Israel and Japan as the United States steps up military and economic pressure on China. We believe that the CCP’s diplomatic efforts are a case of “too little, too late,” and cannot change the relationship between America and its allies. Instead, the CCP is showing weakness.
- Wang Qishan’s trip to Israel suggests that China may be seeking to distance itself from Iran, Palestine, and Syria, who are hostile to the United States.
Oct. 22:
The U.S. sailed two warships, the USS Antietam and the USS Curtis Wilbur, through the Taiwan Strait.
Chinese vice president Wang Qishan visited Israel on a three-day trip, the most senior CCP official to travel to the country in 18 years. Wang visited the Western Wall, and placed a note with a prayer for peace inside its crevices, according to news reports.
Oct. 23:
- The U.S. Council of Economic Advisers publishes a report outlining the opportunity costs of socialism on the macroeconomy.
- Japanese Foreign Minister Taro Kono announces that prime minister Shinzo Abe will propose discontinuing development aid to China when he travels to Beijing on Oct. 25. Such aid “is not needed when you think about China’s current economic level,” Kono said. Japan and China are looking to form a partnership to collaborate in infrastructure assistance and other projects in developing countries.
- French newspaper Le Figaro released the first of a series of articles about PRC spies attempting to recruit “hundreds” of French civil servants and executives on LinkedIn and other social networks.
Oct. 24:
- According to the South China Morning Post, U.S. Secretary of State Mike Pompeo was given “frosty treatment” when he visited China on Oct. 8. Pompeo’s request to meet with Xi Jinping was turned down; Chinese foreign minister Wang Yi, who met with Pompeo for less than an hour, constantly lectured him for “ceaseless escalating” trade tensions”; and Wang and his team did not take Pompeo for a meal after the meeting.
- In a speech at the U.S. Naval Academy, Christopher Ashley Ford, the Assistant Secretary of State for International Security and Non-Proliferation, described Xi Jinping’s approach to competition between systems as “Cold War with Chinese characteristics.” Ford also said that America’s goal “is not to ‘contain’ China or thwart its development, and we do not want another ‘cold war’,” but a “constructive relationship with Beijing where our prosperity and security grow together, not apart.”
Oct. 25:
- Japanese prime minister Shinzo Abe arrived in Beijing for a three-day trip. He received a ceremonial welcome with a cannon salute and a review of troops, and the Japanese flag was flown on Tiananmen Square.
- President Donald Trump signs a presidential memorandum directing the U.S. Commerce Department to develop a National Spectrum Strategy to advance America’s development of 5G.
- The U.S.-China Economic and Security Review Commission releases a 212-page report on the PRC’s attempt to control the Internet of Things for intelligence-gathering, sabotage, and business purposes.
- A bipartisan group of U.S. senators introduces a resolution condemning violence against religious minorities in China and reaffirming America’s commitment to promoting religious freedom. The resolution also urges the Trump administration to take actions to promote religious freedom through the International Religious Freedom Act of 1988, the Frank R. Wolf International Religious Freedom Act, and the Global Magnitsky Act.
- North and South Korea agree to dismantle 22 guard posts (11 each) near the Demilitarized Zone separating the two countries by the end of November.
Oct. 26:
- In an interview with Hugh Hewitt, Secretary of State Pompeo said that “China has taken actions that have provided risk to the American people” and the U.S. has met each of those actions “with a strong and vigorous response” and will continue doing so. He added that the Trump administration “has recognized the difference in China’s behavior and the requirement for an American response to that changed behavior.”
Oct. 28:
- Shinzo Abe hosts Indian prime minister Narendra Modi at his villa near Mount Fuji for a private dinner. Modi is in Japan for a summit to discuss economic and military cooperation in the Indo-Pacific. India and Japan will hold their first-ever joint military drill in November.
- Jair Bolsonaro wins the Brazilian presidential election by a landslide. On the campaign trail, Bolsonaro had criticized China repeatedly and said that the PRC should not be allowed to control key industries or own Brazilian land. In February, Bolsonaro became the first Brazilian presidential candidate to visit Taiwan since the 1970s when Brazil recognized Beijing under the One China policy.
Sino-U.S. trade war
- The effects of the Sino-U.S. trade war expands beyond the bilateral relationship as countries choose whether to side with America or China.
Oct. 22:
- According to the South China Morning Post, “domestic think tanks Beijing has called on for guidance have provided ‘filtered information’ to avoid offending supervisors.” A SCMP source said that “the biggest disappointment came from some think tanks who did not tell the truth.”
- Taiwan’s Ministry of Finance Custom Administration reported that it had found a “suspected shipment” of 2,319 items with FOB value of 54.46 million yuan in the first half of September. The shipment originated from mainland China and was bound to the U.S. via Taiwan.
Oct. 24:
- Australia abandoned plans for a free-trade agreement with Taiwan after warnings from Beijing, according to The Sydney Morning Herald.
Oct. 26:
- John McCallum, Canada’s ambassador to China, said that Canada won’t reach a trade agreement with China until the PRC behaves “in what we would regard as the more reasonable way.”
- Victoria signs a memorandum of understanding to join China’s Belt and Road initiative, the first and only Australian state to do so.
Politics
- Xi Jinping’s trip to Guangdong, the first time since 2012, appears to be an effort to signal his intention to reform, and not close up, China. The trip also reveals that the CCP factional struggle is again in a critical phase. (See here)
Oct. 22:
- Xi Jinping embarks on a “southern tour” in Guangdong Province. In Zhuhai City, Xi said that China must be “self-reliant,” and later opened the new Hong Kong-Zhuhai-Macau Bridge. In the afternoon of Oct. 23, Xi visited the cities of Qingyuan and Yingde. On Oct. 24, Xi toured Shenzhen and Guangzhou.
Oct. 23:
- Deng Pufeng had reportedly promoted his father Deng Xiaoping’s reform and opening up move during a speech given at the closing of a National People’s Congress meeting for the handicap on Sept. 16, according to overseas Chinese language press. The younger Deng called for “clear-headedness” and “knowing one’s own strength,” comments that appear to be aimed at Xi Jinping.
Oct. 24:
- State-owned dairy producer Yili Group publishes a long essay about the corruption of its former chairman Zheng Junhuai. The essay claims that Zheng had conspired with former national-level, provincial-level, and bureau-level officials to embezzle state-owned assets.
Economy
- Recently released economic data shows that China’s economy is weakening further. Capital outflows and reduced exports will make China’s foreign reserves shortage become more obvious.
Oct. 22:
- Premier Li Keqiang led a State Council executive meeting to discuss the improvement of the business environment in China. The State Council is also planning to provide credit support for debt sales by private enterprises to ease corporate financing.
Oct. 25:
- According to data, China’s settlement and sales deficit in September was 120.2 billion yuan, while the accumulated settlement and sales deficit of banks from January to September was 196.9 billion yuan. In other words, September’s deficit was 62 percent of the total accumulated deficit of the first nine months of 2018.
Oct. 26:
- The offshore renminbi exchange rate fell below the 6.97 mark, while the onshore RMB rate broke the 6.96 level. Both rates hit a new low since January 2017.
- Pan Gongsheng, the deputy governor of the People’s Bank of China, warned against shorting the yuan. “As for those forces trying to short the yuan, we have engaged directly a few years ago and we know each other very well,” he said. “I think our memories should still be fresh.”
- Hurun Research Institute releases its 2018 China rich list. Top of the profits list is Jack Ma and his family (11 billion yuan). Meanwhile, 30 mainland entrepreneurs cashed in 83.8 billion yuan in the past year, an increase of 4 percent from 2017 and the second highest in a decade.
Oct. 27:
- Twenty-five provinces announced their third-quarter GDP figures. Of the 25, 15 provinces had better GDP than then national figure (6.7 percent), while the GDP of Beijing and Jiangsu matched the national figure.
Society
Oct. 23:
- Tens of thousands from Xingtan Town in Guangdong’s Foshan City carried out a protest march to protest the construction of an environmentally hazardous garbage disposal center in the nearby Mai Village. The protest lasted two days.
Oct. 25:
- Forced demolitions in the Luqiao District of Taizhou City in Zhejiang led a homeowner to ram his car into the demolition squad. Several people were killed as a result of the action, including the homeowner.
- Many victims of P2P failure in Hangzhou journeyed to the Zhejiang provincial government offices to launch a protest. A large police force outside the offices intercepted the P2P victims and escorted them up buses that took them to the city’s Yellow Dragon Sports Center.
Oct. 10:
- In Chongqing, a knife-wielding woman rushed into a kindergarten and began slashing at people indiscriminately. More than 10 teachers and students were injured in the knife attack. An eyewitness who claimed to have subdued the woman said that she yelled “the government is not treating me fairly” as she was escorted away by the police.
