1 big thing: "End of engagement"
As I've mentioned before, the U.S.-China relationship has evolved into a new level of rivalry, with both sides dropping engagement policies and instead adopting starkly antagonistic tones.
"America fears that time is on China’s side," The Economist writes in its cover editorial:
- "The Chinese economy is growing more than twice as fast as America’s and the state is pouring money into advanced technology, such as artificial intelligence, quantum computing and biotech."
- "Action that is merely daunting today — to stem the illegal acquisition of intellectual property, say, or to challenge China in the South China Sea — may be impossible tomorrow."
- Why it matters: "Like it or not, the new norms governing how the superpowers will treat each other are being established now. Once expectations have been set, changing them again will be hard. For the sake of mankind, China and America need to come to a peaceful understanding."
The big picture: In the longer article that accompanies the cover editorial, the magazine describes the shift in American views towards China:
The other side: The American shift, long overdue some longtime China watchers believe, finds a welcome audience in part of the PRC leadership:
The big question: Are you ready for the new era of U.S.-China relations?
2. China sees slowest econ growth since 2009
China's economic growth dropped to 6.5% in Q3 — the weakest it's been since the financial crisis, according to the Wall Street Journal.
The big picture: The economy overall is on track to still meet its growth target of 6.5%, WSJ reports, though the drop in numbers could hurt China's ability to negotiate with the U.S. amid the brewing trade war.
The details, per WSJ: The drop was due to growth "in industrial output and consumption."
- Chinese financial officials released statements Friday seeking to ease investors' concerns, with People’s Bank of China Gov. Yi Gang saying the recent “abnormal fluctuations” in the Chinese stock market don’t reflect the country’s “stable financial system.”
What's next: If growth continues to slow, China is "ready to roll out more pro-growth measures," WSJ reports, doing things like giving banks more money to provide loans and increasing government spending.
Meanwhile, Caixin reports that the combination of slowing GDP growth and the fact the stock markets are deep in bear market territory is making regulators very concerned:
3. Trump and Xi may still meet at G20
The South China Morning Post reported Friday that:
My thought bubble: I am hearing from various sources that the Chinese side at least is hoping for some sort of Trump-Xi framework deal to cool trade tensions while setting a schedule to come to a detailed agreement.
I am skeptical as this sounds more like the usual Chinese approach to negotiating with the U.S., something the Trump administration has criticized repeatedly.
Plus, as I wrote in last week's newsletter:
- Even if there's a deal that mitigates some of the short-term tensions, the broader security and strategic issues remain. Vice President Mike Pence's speech [a couple weeks ago] made very clear there are many more problems than just trade in the relationship.
- The last few months of dealing with the Trump administration have made it clear to the Chinese that the U.S. view towards the PRC has shifted fundamentally and so any trade deal would at best be a useful delaying action to give China time to prepare for much more difficult longer-term relations with the U.S.
4. #MeToo and China's feminist awakening
China's #MeToo movement may be fledgling, but it's starting to rise, according to American author Leta Hong Fincher, who recently authored "Betraying Big Brother: The Feminist Awakening in China."
Why it matters: The U.S. recently had its 1-year-anniversary of the start of #MeToo, but the global momentum of the movement has had mixed results. China — considered one of the most authoritarian regimes resistant to feminist ideologies — is facing a growing number of women coming forward with stories of abuse or injustice, Hong Fincher tells me.
Here are some excerpts from my interview with her...
Why does the Communist Party see activists for women's rights as threats?
The #MeToo movement has come to China, but so far no one too powerful seems to have been affected. Why is that, and do you think that might change?
What do you see as the prospects for advancing women's rights and equality on China?
- Read my full interview with her
- Watch Hong Fincher discuss her book at CSIS
- #MeToo is back with a vengeance in China
- #MeToo hashtag used over 19 million times on Twitter
5. Corruption with Chinese characteristics
Earlier this year the Communist Party placed Lai Xiaomin, then chairman of state-owned China Huarong Asset Management Co., under investigation for disciplinary violations.
What's new: This week Caixin reported on some of the more salacious details of his alleged transgressions, including:
- He had 3 tons of cash worth 270 million RMB (roughly $39 million) stored at some his more than 100 properties.
- He had over 100 mistresses.
- There was 300 million RMB in his mother's bank account.
My thought bubble: While the allegations are impossible to verify independently, Caixin has a pattern of obtaining exclusive, salacious details about a fallen official, especially when that person may be linked to a much larger corruption case involving more senior officials.
Go deeper: Hong Kong stock market analyst and corporate governance activist David Webb has been digging into the web of relationships Huarong has. His post earlier today concludes with a tantalizing thread:
6. House Dems denounce China meddling claims
Democrats on several House committees said in a joint statement Wednesday that a Department of Homeland Security briefing last week does not support statements by Trump and Pence that Chinese interference in U.S. elections surpasses that of Russia, Axios' Shannon Vavra reports.
Why it matters: This provides insight into the kinds of information the White House has access to on Chinese interference, which the administration has been publicly discussing since Trump claimed China was meddling in U.S. elections without offering evidence.
The Democrats — Reps. Bennie Thompson, Elijah Cummings, Jerrold Nadler, Adam Smith and Robert Brady — claim the White House is "driven by partisan politics" in pushing this narrative forward "rather than the facts."
My thought bubble: So far the Trump administration has not provided evidence of nefarious interference. Meanwhile, Canada and New Zealand are dealing with reports of far more serious interference efforts:
- The Canada Wenzhou Friendship Society is under investigation for offering cash over WeChat in exchange for voting for certain candidates of Chinese descent, per TheStar.
- Allegations that a leader of New Zealand's National party tried to hide a NZ $100,000 ($65,900) from a Chinese businessman, according to Newsroom.NZ.
7. U.S. aims to match China's ante
The Atlantic Council's Aubrey Hruby writes for Axios ... Earlier this month, Trump signed the BUILD Act, establishing a new $60 billion development finance agency to invest in less developed countries.
Details: The U.S. International Development Finance Corporation (USIDFC) will replace the Overseas Private Investment Corporation (OPIC), and in doing so will double its funding and enhance its capabilities.
Why it matters: Growing economic competition from China in emerging markets has finally shaken the U.S. out of its complacency toward development finance. With new and more efficient investment capabilities, the USIDFC has the potential to re-establish the U.S. as a global leader in commercial diplomacy.
China has over the past two decades transformed its formerly negligible economic ties to other developing countries.
- It is now the biggest financier in Africa, where it has supported 3,000 infrastructure projects.
- In September, it committed another $60 billion over three years to the continent.
Meanwhile, OPIC has not innovated or expanded for decades and mainly measured its performance vis-à-vis European development finance entities.
- Despite consistently returning money to the U.S. Treasury, OPIC has faced criticism, especially from Republicans who view its investment as "corporate welfare," and was initially zeroed out in Trump's 2018 budget.
- But over the past year, OPIC president Ray Washburne has stressed that an increased focus on development finance is critical to countering China’s "Belt and Road Initiative" and protecting U.S. strategic interests abroad.
The details: The BUILD Act was passed by the House and Senate with broad bipartisan support. By combining OPIC with several funds at the U.S. Agency for International Development, the new USIDFC will streamline U.S. development finance
The bottom line: The USIDFC presents a once-in-a-generation opportunity for the U.S. to double down on its market-driven approach to commercial diplomacy, enhance American competitiveness and advance economic development in emerging markets.
Go deeper: Read her full piece.
8. Google CEO discusses China search engine
Google CEO Sundar Pichai has, for the first time, publicly acknowledged that Google has considered relaunching its search engine in China, earlier this week. He stated that the reason is the company's mission "is to provide information to everyone," Axios' Kia Kokalitcheva reports.
Why it matters: Since leaks of Google's Project Dragonfly, an internal project prototyping a potential search engine for China, the company has faced criticism for wanting to enter a market that would require it play by the government's censorship rules.
Quoted: Pichai, speaking at Wired's 25th anniversary conference Monday, noted that 20% of the world's population lives in China. Though this fits nicely with the company's mission to offer everyone access to information, it's difficult to ignore what it also means — a huge business opportunity for Google. He said:
Meanwhile, Bai Tongdong, a professor of philosophy at Fudan University in China and a global professor of law at NYU’s Law School, argues in an op-ed in SCMP that For China, even a censored Google search engine would be better than Baidu:
Bonus: Worthy of your time
Bloomberg — Trump's China Battles Give Taiwan Supporters New Influence
Nikkei Asian Review — Beijing sweats over date of Shinzo Abe visit
China Media Project — Mapping Xi Jinping News Thought
What's on Weibo — CCTV Airs Program on Xinjiang's 'Vocational Training Centers': Criticism & Weibo Responses
The Guardian — China’s new diplomacy in Europe has a name: broken porcelain (David Bandurski)
Foreign Affairs — Why a U.S.-Chinese War Could Spiral Out of Control
Mercator Institute for China Studies — Serve the people. Innovation and IT in China’s social development agenda
China Change — Chinese Students at Bard College Offended By Art Exhibit
SCMP — No longer welcome: how, under Trump, the American dream is now out of reach for Chinese immigrants
The Verge — How China rips off the iPhone and reinvents Android
This week's issues of my Sinocism China Newsletter, now with a special 20% discount for Axios readers.