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With Economy Slowdown, China’s Local Governments Cut Revenue Targets

Due to the downward pressure on China’s economy in 2019, as well as the central government’s tax cut effort, China’s provinces and cities have lowered their fiscal revenue growth targets. Many places have planned to tighten their belts.

Provinces such as Jiangsu, Beijing, Sichuan, Henan, Hebei, and Fujian have lowered their 2019 revenue growth targets, vis-a-vis the 2018 growth rate.

Sichuan’s budget report states that the economy faces a large downward pressure in 2019, and this makes fiscal revenue growth more difficult. At the same time, with the implementation of a large scale tax cut and fee reduction policy, the public budget of 898.4 billion yuan (US$132 billion) for the whole year still cannot make ends meet. The growth of Sichuan’s public budget revenue in 2018 was 9.3 percent; in 2019 it was down to 7.5 percent.

The growth of Beijing’s 2019 fiscal revenue target was also reduced to 4 percent from 6.5 percent growth last year. 2019 will see a reduction of Beijing’s fiscal income of about 30 billion yuan (US$4.4 billion). With even more aggressive tax cuts and fee reduction measures, pressures will continue on the growth of fiscal revenue.

Jiangsu lowered its revenue growth target from 5.6 percent in 2018 to 4.5 percent in 2019.

In Hubei, the level of three major types of public expenses – buying and using government cars, overseas trips, and official receptions – face a projected reduction of 5.6 percent.

Source: Central News Agency, January 24, 2019
http://https://www.cna.com.tw/news/acn/201901240168.aspx

Briefings | | |   Economy/Resources

China’s Internet Czar Deletes 7 Million “Harmful” Posts

According to the Cyberspace Administration of China (CAC), the central Internet regulator and censorship agency of China, between January 3 and January 23, the Special Action of Internet Ecological Control cleaned a total of more than 7.09 million pieces of harmful information, closed 308,000 illegal accounts, suspended 733 websites, and removed 9,382 mobile applications.

Since 2016, the Chinese authorities have stepped up control of the Internet. In November 2018, in response to a series of “chaotic problems” in self-media accounts, CAC closed more than 9,800 accounts that were “transmitting politically harmful information, maliciously tampering with the history of the party and history of the country, impairing the nation’s image, circulating rumors, and spreading false information”.

Source: Voice of America, January 23, 2019
https://www.voachinese.com/a/china-internet-control-20190123/4755206.html

Briefings | | |   Information/Technology

Former Chinese Official Reveals Predecessor of Thousand Talents Program

At the end of last year, after a famous American Chinese physicist, Zhang Shoucheng, “accidentally passed away,” the Chinese government began to play down the “Thousand Talents Program” in which he had been involved.

Cheng Ganyuan, a former Chinese Communist Party official now living in the United States, said that, as early as 1978, when Zhang was admitted to the Physics Department of Fudan University in Shanghai at the age of 15, he became part of China’s strategy to steal Western technology.

Cheng said that in the late 1970s and early 1980s, Deng Xiaoping started the reform and opening up policy in order to save the autocratic regime and prevent the regime from collapsing. At that time, the regime established a plan to send a group of capable technical talents to study in the West.

He said, “Now we know about the ‘Thousand Talents Program.’ At that time it had no clear name. It was said that we needed to train a group of capable technical personnel and send them to the West to steal technological intelligence.”

Cheng graduated from the Law Department of Fudan University in the 1950s. At that time, Fudan University had a Second Physics Department, which appeared to the outside as a university academic program and was also known as the Nuclear Physics Department. He learned through the school’s internal channels that the intelligence division of the Ministry of Public Security actually headed this department.

At that time, the Second Physics Department enrolled those students who had the highest scores. It was also an honor to study in that department. The Second Physics Department selected from the applicants those who had no problems in their family backgrounds. Many of them were princelings.

Jiang Mianheng, the eldest son of former head of the Chinese Communist Party Jiang Zemin, graduated from the Second Physics Department of Fudan University in 1977. After that, he went to the United States to obtain a doctoral degree. After returning to China, he became the vice president of the Chinese Academy of Sciences. One year later, in 1978, 15-year-old junior high school graduate Zhang Shoucheng was admitted to the Second Physics Department. The school selected him to study in Germany. Zhang later became a tenured professor of physics at Stanford University. Tsinghua University’s Institute of Advanced Studies employed him a few years ago. Every year he spent a long time in China to conduct research and to teach students.

Cheng added that most of the people who came to study in the United States in the 1980s later received a Ph.D. in physics. Most of them have been connected with Chinese science and technology units and universities. They gradually brought Western technology to China and China also provided them with many benefits.

Cheng said that, for many years, stealing Western technology has been a clear goal of the Communist Party. It is only in recent years that the government has opened it up as the “Thousand Talents Program” and believes that it can be publicized in a high profile.

Source: Voice of America, January 22, 2019
https://www.voachinese.com/a/thousand-talents-program-goes-way-back-20190122/4754883.html

Briefings | | |   US-China Relations

Facing Fluid Domestic and International Situations, Xi Jinping Spoke about Maintaining Overall Stability

At the opening ceremony of a meeting with provincial leading officials, Chinese president Xi Jinping gave an important speech, which Xinhua News Agency reported on January 21. The report highlighted two key points: improving the ability to prevent and control, with a focus on major risks, and maintaining a stable and healthy economic development.

In his speech, Xi “made a profound analyses and proposed clear requirements” for preventing major risks in politics, ideology, the economy, science and technology, social affairs, the external environment, and party development.

In the political arena, Xi stressed that, in the face of the turbulent international situation; the complex and sensitive surrounding environment; and arduous tasks of reform, development, and stability; one must always maintain a high degree of vigilance.

Xi emphasized that the economic operations are stable but changing. It is necessary to maintain composure and promote China’s economic development in the right direction. It is also necessary to enhance the sense of urgency, plan ahead, and accurately respond to possible problems in the economic field.

In the judgment of the external environment, he said that China’s external environment is complex and severe. It is necessary to coordinate both domestic and international situations, effectively preventing chain reactions emanating from all kinds of risks. He asked to improve the “One Belt, One Road” security system and safeguard sovereignty and security.

Source: Central News Agency, January 21, 2019
https://www.cna.com.tw/news/acn/201901210276.aspx

Briefings | | |   Government/Politics

China’s Attempt to Relaunch Myitsone Dam Project Met with Strong Opposition from Myanmar Local Political Parties

A recent statement from the Chinese Embassy in Myanmar has caused great controversy. Leaders of several political parties in the Kachin State of north Myanmar expressed strong opposition. Some observers believe that if the confrontational situation continues to expand, it is possible to reignite the wave of anti-Chinese investment that was sweeping across Myanmar a few years ago.

Hong Liang, the Chinese Ambassador to Myanmar visited Kachin State at the end of 2018. Hong met with the heads of the local five political parties and a religious organization. Topics discussed included the peace process in Myanmar, the resettlement of refugees, drug control, and the economic and trade cooperation with China.

Hong’s meeting was not well received. Gumgrawng Awng Hkam, leader of Kachin Democratic Party (KDP), and Rev. Hkalam Samson, pastor from Kachin Baptist Churches, said in an interview that the attitude of the Chinese ambassador at the meeting was somewhat arrogant. Hong warned these leaders not to establish friendship with Western diplomats and not to oppose China’s investment projects in Kachin State, including the Myitsone hydropower station that has been on hold for more than seven years.

A week before the Chinese ambassador’s visit, the US and British ambassadors also visited Kachin. They also met with leaders of local political parties and discussed the peace processes, refugee resettlement, education and medical care, and fair and free elections. Kachin’s political leaders suggested that the two ambassadors set up liaison offices in the state capital of Myitkyina to strengthen their ties.

More than 90 percent of the Kachin people believe in Christianity. Local religious groups and political parties have maintained close ties with Western churches and political circles. Gumgrawng Awng Hkam believes that the warning that the Chinese ambassador made to the Kachin people “felt like a threat.”

On January 13, the Chinese Embassy in Myanmar issued a statement. The statement said that the Myitsone hydropower project has been put on hold for seven years and is one of the difficulties that China-Myanmar cooperation faces. If this problem cannot be resolved after a long delay, it will seriously damage the confidence of Chinese entrepreneurs in investing in Myanmar. The economic and social development of Myanmar and the construction of the China-Myanmar Economic Corridor require an adequate electricity supply. To this end, China and Myanmar have conducted close consultations on the Myitsone hydropower project in an effort to find a solution acceptable to both parties as soon as possible. The support of the Kachin State people will be highly valued.

The statement also said, “The people of Kachin State did not oppose the Myitsone project. It is some individuals and some foreign organizations that opposed the project.”

In response to the statement from the Chinese Embassy, on January 14, Kachin State’s three main political parties – the Kachin National Congress (KNC), the Kachin State Democratic Party (KSDP), and the Kachin Democratic Party (KDP) issued a joint statement. The statement declared that the Kachin people represented by the three political parties have the same desire, which is to completely stop the construction of the Myitsone hydropower project.

The three political parties, which all attended the meeting with Chinese Ambassador Hong in December, are applying to form a unified political party to participate in the 2020 Myanmar election.

After the publication of the joint statement, Gumgrawng Awng Hkam showed a strong attitude in the interview. “From the beginning, we have been against the project of Myitsone. Our people disagree with it and our political parties also oppose it. However, China refuses to give up and continues to work hard to advance it. They said that due to the failure of Mysone Chinese investors are hesitant to make new investments in Myanmar. I want to tell the Chinese ambassador and China again that our party and I totally disagree with this project.”

The Myitsone Hydropower Project, with a planned total investment of US$3.6 billion, was launched in 2009, but the local people and people in other parts of Myanmart quickly opposed it. Then President of Myanmar, Thein Sein, stopped the project in September 2011. After Aung San Suu Kyi’s National League for Democracy (NLD) government took office, an investigation team was formed to investigate the feasibility, environmental impact and immigration issues of the Myitsone project. The team has completed two investigation reports so far, but the NLD government has not made the reports public.

The project’s investor, China’s State Power Investment Corporation (SPIC), has not given up the project. In September 2018, media reported that the SPIC project leader organized meetings in the villages of Kachin to promote the project to the local people. According to SPIC, due to the shelving of the project, the Myanmar government has to pay the Chinese side US$50 million in compensation every year. Once the project is completely cancelled, Myanmar is facing a payment of up to US$800 million for breaching the contract.

Sweden’s Burmese expert Bertil Lintner wrote in the Asia Times that Aung San Suu Kyi had to seek more support from China because of the pressure and sanctions imposed by the Europeans and Americans on the Rohingya refugee issue. At that point, China intensified its efforts to lobby Myanmar to restart the Myitsone hydropower station, and it asked for a high return from Myanmar. He believes: “China’s new push for the Myitsone dam represents a gamble, one that could reignite the popular anti-China movement that swept the country in 2011, and one that even Suu Kyi would be hard-pressed to stop once started.”

Source: Voice of America, January 17, 2019
https://www.voachinese.com/a/china-push-to-restart-myisone-dam-faces-strong-local-objections-20190117/4747785.html

Briefings | | |   Geo-Strategic Trend

Chinese Minister of Public Security Emphasizes “Preventing a Color Revolution”

On January 17, China’s provincial level police chiefs gathered together in Beijing where State Councilor and Minister of Public Security Zhao Kezhi delivered a speech. According to official reports, Zhao proposed to create a safe and stable political and social environment for the 70th anniversary of the founding of the People’s Republic of China as a major political task for the nationwide police forces.

On 21 September 1949, then Communist Party Chairman Mao Zedong proclaimed the establishment of the People’s Republic of China. 2019 is also the 30th anniversary of the June 4th incident in 1989 and 20th anniversary of the persecution of Falun Gong which began in 1999. China is also facing a series of challenges such as trade negotiations with the U.S. and a slowing domestic economy. It has been reported that Zhao also mentioned in his speech to senior officials of the Ministry of Public Security that it is necessary to guard against a “color revolution” and to battle for political security.

Zhao asked that all be on high alert for political security and always make the prevention of political risks a top priority. He demanded they “strictly guard against and resolutely crack down on various invasive and subversive activities of hostile forces at home and abroad, deepen anti-terrorism and anti-secession struggles, firmly defend political security, and resolutely defend the leadership of the Chinese Communist Party and the socialist system of our country.”

Source: Beijing News, January 18, 2019
http://www.bjnews.com.cn/news/2019/01/18/540767.html

Briefings | | |   Government/Politics

Chinese Foreign Ministry on Sino–Russian Relations: “No End to Their Friendship and No Restrictions on Cooperation”

When speaking of Sino-Russian relations at a press conference on January 16, Russian Foreign Minister Sergei Lavrov said that the volume of Russia-China trade reached a new high in 2018. On international affairs, Russia and China supported each other under multilateral frameworks. Russia and China are so friendly because they are neighbors and strategic partners. The two countries share many common interests and both sides believe that the world needs to be more stable and safe.

Hua Chunying, the spokesperson for Chinese Foreign Ministry, said that China highly appreciates Lavrov’s positive comments on Sino-Russian relations. In 2018, under President Xi Jinping and President Putin’s strategic guidance, Sino-Russian relations achieved unprecedented development and have gained fruitful results in every field.

Hua Chunying emphasized that there is no end to the deepening of the friendship between China and Russia and there are no restricted areas for expanding their cooperation. Statistics from the General Administration of Customs of China show that the bilateral trade volume between China and Russia reached a record high of US$107.06 billion in 2018, surpassing US$100 billion for the first time, with a growth rate of 27.1 percent. The main exports to Russia include mechanical and electrical products; the main imports from Russia are concentrated in energy resources such as crude oil, coal and sawn timber.

Source: Sputnik News, January 17, 2019
http://sputniknews.cn/politics/201901171027383157/

Briefings | | |   Geo-Strategic Trend

Leaked Railway Contract with China Poses a Risk to Kenyan Sovereignty

According to Kenya’s largest independent newspaper, the Daily Nation, the Kenyan government is trying to cope with the news that a multi-billion dollar contract with China may jeopardize its sovereignty.

On Sunday, January 13, 2019, the newspaper published part of the details of a contract between the Export-Import Bank of China and the Republic of Kenya, which was generated in  2014. It revealed the details of the Standard Gauge Railway (SGR) loan. SGR is the country’s largest infrastructure project since Kenya’s achieved independence.

A clause in the contract regarding the scope of assets that would be confiscated in the event of a loan default raised the greatest concern. Clause 5.5 of the Preferential Buyer Credit Loan Agreement on the Mombasa-Nairobi SGR reads as follows: “Neither the borrower (Kenya) nor any of its assets is entitled to any right of immunity on the grounds of sovereignty or otherwise from arbitration, suit, execution, or any other legal process with respect to its obligations under this Agreement, as the case may be in any jurisdiction.”

In the deal, Kenya is also compelled to import goods, technology and services from China.

The confidentiality clause reads, “Without the prior written consent of the lender (China), the borrower shall not disclose any information hereunder or in connection with this agreement to any third party unless required by applicable law.”

The disclosure of these details provides the most convincing evidence to date that the Chinese government may adopt “debt-trap diplomacy” to force a country to surrender land, minerals, or strategic assets in the event of a default.

The wording in the document fits well with the contract for the “Belt and Road” project in Serbia, Kyrgyzstan and Guyana, as Voice of America revealed earlier. The “Belt and Road” is China’s multi-trillion dollar global infrastructure project. This suggests that the terms of the Kenyan loan – from asset confiscation and confidentiality provisions to the requirement to use Chinese suppliers – may be a reflection of the Beijing’s model of lending in Africa and in other places.

Another worrisome aspect is a clause that states that any disputes on the loan would only be resolved in Beijing through the China International Economic and Trade Arbitration Commission (Cietac).

The agreement says, “The arbitration award shall be final and binding on both parties. The arbitration shall take place in Beijing.”  This effectively blocks other international commercial dispute resolution avenues.

Source: Voice of America, January 16, 2019
https://www.voachinese.com/a/china-kenya-sgr-contract/4744399.html

Briefings | | |   Geo-Strategic Trend