1 big thing: 40 years of reform and opening
2018 is the 40th anniversary of the launch of China's reform and opening policy. Chinese President Xi Jinping and the Communist Party are making a very big deal of the anniversary.
What we're hearing: I spoke with Julian Gewirtz, an expert in modern Chinese history and author of a book on China called "Unlikely Partners," on the current state of China's market and Xi's plan for “the great rejuvenation of the Chinese nation.”
My interview, lightly edited for space:
1. What is reform and opening and how is has it changed over the last 40 years?
2. What is Xi's vision for China, and if he is successful what will China look like in the next 10-20 years?
3. Some experts now say that [economic] reform is dead under Xi. He and the Party of course say both reform and opening are moving forward with urgency. Who is right?
4. What are the politics around planning celebrations in this anniversary year?
Go deeper: Read the full interview.
2. How Beijing misread Donald Trump
The South China Morning Post examines Beijing's misreading of President Trump, where they look at "how Beijing got it wrong."
What they're saying: Interestingly SCMP cites the crackdown on corruption as one of the contributing factors:
The ideological crackdown has also exacerbated things:
My thought bubble: I had many conversations with Chinese interlocutors who really did not understand how the attitude towards China in D.C. and the U.S. business community had hardened so much. An earlier realization may not have altered the outcome much given the structural problems in the relationship, but when the stakes are so high, ignorance and surprise can be very dangerous.
Go deeper: Mark Leonard, director of the European Council on Foreign Relations, wrote an OpEd in the Financial Times earlier this week in which he says the Chinese are wary of Trump's "creative destruction":
3. U.S. to WTO: China is the "most protectionist"
The Trump administration is also taking its trade fight with China to the halls of the World Trade Organization. At a meeting of the general council of the WTO Thursday, U.S. Ambassador Dennis Shea presented the paper “China’s trade-disruptive economic model.”
The U.S. position, according to Reuters:
The Chinese side, of course, disagrees:
My thought bubble: That last claim about the state-owned enterprises and technology transfers will likely not help the PRC's argument at the WTO.
Go deeper: Read the full U.S. paper presented to WTO.
4. Xi goes to the 10th BRICS summit
Xi is on a trip to the United Arab Emirates, Senegal, Rwanda, South Africa and Mauritius. The highlight of the trip is the 10th BRICS (Brazil, Russia, India, China and South Africa) Summit in Johannesburg.
What's happening: In his address to the summit Xi reiterated his themes about technology, the changing world and the need for China and other countries to protect the global trading system:
During the summit Xi and Russian President Vladimir Putin had dinner and, according to Xinhua, "exchanged in-depth views on current international situation."
My thought bubble: The Chinese leadership is working hard to win friends and reshape the global order in China's favor. BRICS and Xi's trip is part of that.
- Quartz's Kemi Lijadu writes on how China's top leaders have made 79 visits to 43 African countries over the past 10 years.
- SAIS' Deborah Bräutigam discusses why China is such a popular development partner, in the Washington Post.
- WSJ's Matina Stevis-Gridneff reports on how Xi signed a slate of investment deals during his Africa tour and writes China is now Africa's biggest trading partner and biggest creditor.
5. How U.S. tech powers China's surveillance state
Axios' Erica Pandey writes ... American companies eager to enter China’s massive market brace themselves for potential intellectual property theft or forced technology transfers. But there’s another threat at play: Their technology is being used for surveillance.
Companies doing business in China often get caught in a web: Beijing uses its economic leverage to draw them in and then uses their technology for police-state tactics. As a result, "there are American companies enabling or complicit in major human rights abuses," says Elsa Kania, a technology and national security expert at the Center for a New American Security.
Companies often take on projects for the Chinese government in the name of curbing crime, according to Scott Kennedy of the Center for Strategic and International Studies, but "the boundary between promoting public safety and protecting the state is increasingly blurred with these types of technologies."
"A lot of people wanted very much to believe that once China had exposure to the outside world, political liberalization would come with economic liberalization," Sophie Richardson, China director at Human Rights Watch, tells Axios."They're getting a lot richer and a lot more powerful and no more politically liberal."
The big picture: China has sophisticated systems of state surveillance, and elements of these systems have long been powered by technologies developed by American companies. Beijing has used U.S. tech to surveil its citizens, violate human rights and even modernize its military.
Go deeper: Read Erica's full story here.
6. Nasdaq mints another China billionaire
PRC e-commerce Pinduoduo raised $1.6 billion in a Nasdaq IPO this week. Founder Colin Huang is now the 12th richest person in China, according to Bloomberg:
The details: PDD uses a "team purchase" model that relies heavily on WeChat. WeChat's owner Tencent is a large shareholder of PDD. According to an excellent overview presentation from GGV Capital:
- 60% of users are in third-tier cities or below
- 70% are women
- 57% are between 25–35 years old
- The average order value is $6
The chart below, from the GGV Capital presentation, shows its rise compared with Taobao and JD:
Why it matters: PDD was founded barely three years ago. Its meteoric rise shows the growing online spending power of the people living outside of China's largest cities. And in spite of U.S.-China tensions, the U.S. capital markets are still a preferred exit for many Chinese companies and investors.
7. #MeToo is back with a vengeance in China
An outpouring of #MeToo exposures of sexual assault and harassment by powerful Chinese men earlier this year had appeared to be squelched by the efforts of government censors.
What's new: Over the last few days, a fresh round of allegations have been made against well-known journalists, professors and NGO workers via open letters posted on social media sites. The New York Times reports:
My thought bubble: The censors are again working hard to control the outpouring and it's very unlikely it will be allowed to target anyone with real power.
Go deeper: Muyi's #MeToo Story, an essay by journalist Xiao Muyi about her experiences with rape and harassment.
8. 1 happy thing: a new Faye Wong video
Faye Wong is back with a new music video:
Watch the video on YouTube.
Bonus: Worthy of your time
Reuters — Exclusive: China eyes infrastructure boost to cushion growth as trade war escalates, according to sources
SCMP — China’s vaccination system has been crippled by corruption, weak regulations and staff shortages
China Media Project— Impatient China
China Heritage — It’s Time to Talk About ‘Evening Talks at Yanshan’
Bloomberg — Inside Tencent's Gambit to Dominate a $13 Billion Esports Arena
The Washington Post — China takes its political censorship global
MacroPolo — Returning to Its Roots: The Role of Taobao Auctions in Resolving Delinquent Loans
Sino-NK — From New York to Dandong: Maximum Pressure
Wall Street Journal — American Professor Cites Academic Intolerance as Reason for Leaving China
New York Times — NXP’s Chief Criticizes China After Qualcomm Deal Collapses
Washington Examiner — House Republican warns John Boehner not to lobby for China
Sinica Podcast — Australia’s Beijing problem