May 03, 2022
Welcome back to Axios China. Today we're looking at possible relief for China's embattled tech companies, new data on Americans' views of China, why we should all be reading Chinese fiction, and lots more.
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Today's newsletter is 1,710 words, a 6½-minute read.
1 big thing: China's top leaders signal reprieve for tech companies
Chinese regulators are signaling they may ease a year-long crackdown on Chinese tech giants as the country's leaders prioritize shoring up a flagging economy.
Why it matters: Loosening restrictions on one of China's most vibrant sectors could remove one source of downward pressure on an economy gutted by COVID lockdowns. But it could also slow progress toward Chinese President Xi Jinping's goal of restructuring a major sector of the economy.
- China's manufacturing output plummeted in April, and consumer demand fell as COVID restrictions impacted 373 million Chinese residents — more than a quarter of the population.
- Internet companies, which have faced the lion's share of China's regulatory campaigns, are a key source of employment in the country and rake in 20% of the aggregate net profits of China's top 500 companies.
- The crackdown has forced major companies to cut jobs, with e-commerce giant Alibaba projected to reduce its workforce by up to 15% this year. Internet company Tencent is also looking at significant layoffs.
- Loosening some restrictions could save jobs and protect revenues.
What's happening: Xi said the country would pursue "healthy development" of internet platforms after a meeting of top party leaders last week, fueling expectations that the end of the tech crackdown may be in sight.
- Chinese tech stocks surged after the announcement. Hong Kong's Hang Seng Tech Index rose 10%, while shares of tech giants Alibaba and Tencent rose 15% and 11%, respectively.
- Xi and other top leaders are expected to meet with top tech company executives this week, Reuters reports.
- Regulators may promise to no longer levy unexpected huge fines on internet companies or demand sweeping corporate restructuring, the South China Morning Post reports.
Background: For more than a year, Chinese regulators have targeted some of China's biggest tech firms — including food delivery giant Meituan, ride-hailing app Didi and Alibaba's finance arm ANT Group — as Xi has pursued policies to fix what he calls the "disorderly expansion of capital."
- China's tech industry had been trending toward the creation of monopolies that hinder domestic innovation and put more economic power in the hands of companies while threatening the Chinese Communist Party's ability to control a massive political and geopolitical lever.
The big picture: The regulatory crackdown represents a "dramatic clash between public and private power," analysts at Lawfare wrote earlier this year.
- Some analysts have criticized the crackdown as a sign of the excesses of China's party-state capitalism, needlessly crushing a vibrant industry for primarily political reasons.
- But the regulations also target monopolistic behavior, a widely acknowledged problem in the tech industries in both China and the U.S., and aim to address corporate policies that squeeze money from employees and consumers.
- The measures also redirect capital to strategic industries Chinese leaders have identified as key to China's future economic competitiveness, including semiconductors, batteries and biotechnology, the U.S. Chamber of Commerce wrote in a February 2022 report.
What to watch: The Chinese government is expected to take a 1% stake in more of China's top tech companies, the Wall Street Journal reports, and insist on more sway in company decisions, while easing the regulatory environment.
2. U.S. ambassador to UN vows to raise Uyghur's case with China
U.S. Ambassador to the United Nations Linda Thomas-Greenfield told the relatives of a Uyghur detained in Xinjiang that she will bring up the woman's detention with her Chinese counterparts.
Why it matters: Raising individual cases with Chinese authorities in some cases results in "proof of life" contact between the detainee and their family members outside China, and it communicates to Beijing that its actions in Xinjiang are under scrutiny.
Driving the news: UN High Commissioner for Human Rights Michelle Bachelet will be traveling to China and Xinjiang in May, in the first visit to China by the top UN human rights official since 2005.
- Human rights activists are calling for her office to release its delayed report, promised in December, on Chinese government abuses in Xinjiang.
- "We continue to press for the release of high commissioner Bachelet’s report on human rights issues in Xinjiang," a spokesperson from Thomas-Greenfield's office told Axios. "We have urged the high commissioner to ask for truly unhindered and unfettered access while on her planned visit to China."
Details: Gulshan Abbas, a retired doctor, was detained in Xinjiang just days after her sister Rushan, a U.S. citizen, spoke on a panel at Hudson Institute in Washington in September 2018 about the Chinese government's mistreatment of Uyghurs in Xinjiang.
- In an April 20 phone call facilitated by Rep. Tom Suozzi (D-N.Y.), a commissioner on the Congressional-Executive Commission on China, Thomas-Greenfield told Rushan Abbas and several other relatives living in the U.S. that she would bring up Gulshan Abbas' case with her Chinese counterparts at the UN.
- Thomas-Greenfield's office confirmed this conversation and told Axios, "We are increasing our efforts to combat this transnational repression and PRC actions to coerce Uyghur Americans into silence by wrongfully detaining their family members."
- "We appreciate the attention of Congressman Suozzi and the ambassador for paying attention and calling on the Chinese government to release my sister. That’s the only thing that gives me a hope that my sister will stay safe and we will secure her release someday," Rushan Abbas told Axios.
The big picture: "This particular case is very important symbolically because there are 30 U.S. citizens that are relatives of this women who is in prison," Suozzi, who is co-chair of the Congressional Uyghur Caucus, told Axios in a phone call.
- "It’s also a direct action taken in retaliation for the actions of the American Uyghurs who have been trying to highlight what’s been happening to the Uyghurs."
3. Catch up quick
1. Apple warns of revenue hit amid chip shortages and COVID lockdown-related production issues in China. Go deeper.
2. Beijing is testing millions of people per day in an attempt to prevent a Shanghai-style COVID lockdown, Reuters reports.
3. Argentina's ambassador to China is facing accusations that he helped funnel a lucrative contract to a Chinese construction company, La Nación reports.
4. U.S. solar projects are stalling as the Biden administration probes Chinese imports. Go deeper.
5. Sen. Marco Rubio pressed German carmaker Volkswagen on its joint ventures with Chinese companies linked to forced labor, Bloomberg reports.
6. China detained a member of the EU delegation to Beijing, the Wall Street Journal reports.
4. How Americans view China
The overwhelming majority of both Democrats and Republicans have unfavorable views of China, new data from Pew Research shows.
- But Republicans — and independents who lean Republican — are more likely to call China an enemy than Democrats. They're also more likely to describe China’s power and influence as a major threat to the U.S.
Why it matters: As midterm elections loom, Americans' views of China are becoming more negative overall.
- Both parties began planning as early as June 2021 to lean into competition with China as a midterm issue, Axios' Sarah Mucha writes.
- And both Democratic and Republican candidates are targeting China in ads pitched toward voters whose jobs have been shipped overseas, especially in manufacturing-heavy states like Ohio.
Details: The same dataset from Pew indicates two-thirds of U.S. adults surveyed believe China's influence on the world stage has grown in recent years.
- More Americans also describe China as the world's leading economic power.
- Republicans are more likely to say economic relationships between the U.S. and China are bad. They also believe the U.S. should get tougher on China over economic issues more than worrying about building a strong relationship.
Go deeper: Some lawmakers and advocates are concerned that anti-China rhetoric on the campaign trail will be weaponized against Asian Americans.
5. What I'm reading
Feedback loop: People’s Republic of China efforts to amplify the Kremlin’s voice on Ukraine (State Department Global Engagement Center)
- "PRC and CCP media present unverified information and claims sourced from Russia’s state-run media and officials. In a feedback loop, Russia’s state-run media then cite PRC and CCP media to portray Russia’s position as widely supported."
Iron curtain: Hong Kong, my vanishing city (Financial Times)
- Former NPR China correspondent Louisa Lim, who grew up in Hong Kong, writes in this personal essay about how the very identity of Hong Kongers is at risk, and how Hong Kongers abroad are trying to keep that identity alive.
Online abuse in China: Uncovering and healing the scars of online abuse (Wainao)
- A new survey in China found 40% of respondents had faced online abuse.
- "Young people told us how they refused to be assimilated into a culture of cyberbullying, despite growing up with its noise all around them, and how they feel about the boundaries between online abuse and freedom of expression," the report authors write.
6. 1 book thing: Why Chinese fiction matters
A new book offers a survey of what authors in China are writing, and it urges readers outside China to read this work and take it seriously.
Why it matters: "There is much to learn from Chinese writers who understand and illuminate the complex relationship between art and politics — one that is increasingly shaping Western artistic discourse," writes Megan Walsh, author of "The Subplot: What China is Reading and Why It Matters," published in February.
The big picture: China's "well-documented climate of censorship and propaganda can make foreign readers rather snobby about Chinese literature, often without having read any of it," Walsh writes.
- "But the fact is that most Chinese writers who continue to live and work in mainland China write neither what their government nor foreign readers want or expect."
Details: In this slim 135-page volume, Walsh describes recent trends in several different genres in Chinese literature:
- The meteoric rise of online fiction platforms, which in some cases have developed into social media-like giants. Walsh likens them to "factories," where influencer-like writers work feverishly to keep their audiences, in some cases churning out 10,000 or even 20,000 words per day — making money for the platform but often little for themselves.
- The popularity of novels about ethnic minority groups like Mongols, Tibetans and Kazakhs — but written by Han Chinese and rarely by the ethnic minorities themselves. It's a phenomenon that will sound familiar to Western readers currently grappling with issues of race and representation in art and media.
- Crime writing, which under China's current order-obsessed regime means crime novels must "negotiate the twin forces of commercialism and propaganda, or the public's desire for entertainment and the state's desire to sanitize it," Walsh writes.
A big thanks to Alison Snyder for edits, Sheryl Miller for copy edits, and Sarah Grillo and Jacque Schrag for visuals.