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US-China Relations - 3. page

Huawei Warns to “Prepare for Bitter Days”

Recently, Ren Zhifei, the founder of Huawei, issued two letters to Huawei employees. He warned not to be too optimistic about the prospects for Huawei and that people should prepare for bitter days.

Ren stated that, if they make an assessment that certain business units are not providing much value, they should be cut or the work reduced so as to focus on (more valuable portions). He also said that Huawei should give up some mediocre employees so as to reduce the cost of human resources.

“In the next few years, the whole environment (for Huawei) will not be as promising as we imagined. We should prepare for bitter days.”

He said that, unlike the 4G business that flourished for Huawei, the 5G business may just bloom in some spots, but not on a widespread scale. However, Huawei has 180,000 employees and it pays over US$30 billion in salaries and stock distributions each year. “If we can’t produce as much, how can we get the money to share?”

Source: Sina, January 21, 2019

CNA: The U.S. House Unanimously Supported Taiwan’s Return to WHO

The primary Taiwanese news agency CNA (The Central News Agency) recently reported that the U.S. House of Representatives just passed a resolution unanimously supporting Taiwan’s return to the World Health Organization (WHO). The resolution is still pending in the Senate. The resolution asked the Secretary of State to assist Taiwan to regain its observer status with the WHO. Since 2017, Taiwan has not been invited to the World Health Assembly (WHA) as an observer. The resolution required the Secretary of State to explain the reason if Taiwan is not invited. The U.S. Department of State has been sticking to the principle of supporting Taiwan’s effort to participate in international organizations. Last year when the U.S Secretary of Health and Human Services, Alex Azar, attended the WHA, he pointed out that Taiwan should not be excluded from WHO and he also expressed his disappointment.

Source: CNA, January 23, 2019

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

VOA Chinese: Mayor of Quebec City Cancelled Trip to China

Voice of America (VOA) Chinese recently reported that Régis Labeaume, the mayor of Quebec City, cancelled his trip to China originally planned for March. The mayor explained that he cancelled the scheduled trip due to the political tension between China and Canada. The Canadian government recently and repeatedly has issued travel warnings asking travelers to China to use extreme caution. The government warning indicated that travelers may face arbitrary enforcement of local laws and other culture related punishments on issues concerning death penalties and drug dealing. The mayor originally planned to visit Shanghai and Xi’an. Quebec City became a sister city with Xi’an in 2001. Ever since Canada arrested Huawei’s CFO last December based on a U.S. request, the Canada-China relationship has suffered a free fall. China has thus far arrested multiple Canadian citizens travelling or working in China.

Source: VOA Chinese, January 20, 2019

Xinhua Finance: Chinese Acquisitions in the U.S. Saw Sharp Decline

Xinhua Finance, a Hong Kong financial news branch of the Xinhua News Agency, recently reported that the market research institute, Mergermarket, just released its report on global mergers in 2018. The report showed that 2018 had a decline in the number of mergers in the global market and that this was the first decline since 2010. The research found that geopolitical tension has started demonstrating its impact. A noticeable example is that the Chinese acquisition activities in the U.S. suffered a dramatic year over year decline in 2018 of 94.6 percent. The Chinese acquisition volume (in the U.S.) had a free fall from the US$55.3 billion peak in 2016 to US$3 billion in 2018. Data also showed that the Chinese shifted their focus to Europe and the acquisitions increased by 81.7 percent to US$60.4 billion. Global mergers in 2018 mainly occurred in the areas of energy, mining, construction, and defense.

Source: Xinhua Finance, January 4, 2019

PLA Strategist: What Is the Sino-US Trade War?

Luo Yuan, a Rear Admiral and military strategist for the People’s Liberation Army (PLA), gave a speech recently on the Sino-US Trade War, analyzing it from the angle of China’s national strategy, why it happened, and how China should respond to it.

Luo’s speech was in three parts: What is it, why did it happen, and how to deal with it? The following are his main points:

What is it?

The U.S. has recently made six strategy changes: One, “America First” is officially a part of its national security strategy. Two, the U.S. has taken China as its number one threat and main competitor. Three, the Trump administration has adopted a “competition strategy” instead of Obama’s “engagement strategy.” Four, the U.S. has been following the “Indo-Pacific” strategy instead of the “Asia-Pacific Rebalance” strategy. Five, the Trump administration uses “Rebuilding America’s Military” strategy to replace the automatic reduction approach. Six, the U.S. has changed its nuclear weapons strategy.

Therefore, the trade war between China and U.S. is not a simple trade conflict but rather a major strategic issue, due to the U.S. national strategy change.

Why did it happen?

Luo said that he has had many discussions with other Chinese experts and concluded that the entire U.S., from top to bottom, has some strategic worries about China: One, China is likely to surpass the U.S. in GDP output someday. Two, China’s socialist model will surpass the U.S. model which is based on free, capitalist-styled competition. Thus, the Americans are concerned about the ideology and system rules. The Sino-U.S. trade war is the competition for national interest, system structure, and ideology.

How to respond?

One school of thought is for China to go back to the previous taking-a-low-profile approach. However, Luo argued that this won’t work any longer. The U.S. is demanding a full opening up, including the Internet. Luo warned that the communist party won’t be able to protect its ideology if the Internet is fully open.

The second school of though is to fight back. Luo argued that the symmetric counterattack approach (if the U.S. imposes tariffs on US $50 Billion worth of goods and if China imposes tariffs on an equal amount) will not work for China. He advocated the asymmetric counterattack, that is, to attack the enemy’s weak points.

Luo further stated that it may not be easy to find the U.S.’ weak points, but it can start from the U.S.’ strong points. Once China breaks the U.S.’ strong areas, the U.S.’s weak areas will be exposed. Luo listed the five strong areas of the U.S. and China’s counter measures:

  • One, a strong military power. China can increase military spending and develop its own killer weapons. The U.S. has 11 aircraft carriers. China does not need to match that number to compete with it. Instead, China can use its missiles to sink one or two, which will totally change the game play.
  • Two, the US dollar’s dominance in international trading. China should make the renminbi an international currency.
  • Three, a great pool of talent. China should develop its own high-tech industries.
  • Four, a vote-based system. China can target U.S. politicians’ voter bases by restricting the import of certain goods produced in some particular regions. There are three product lines in which China can have a good leverage: soil beans, cars, and airplanes.
  • Five, creating an enemy to keep itself strong. Since the U.S. takes China as its enemy, China can just be an “enemy” that it cannot defeat. China should also make more and more friends so as to leave the U.S. with fewer and fewer allies.

Source:, December 24, 2018