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UDN: Jack Ma not Allowed to Leave China

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that Jack Ma, the founder of the Chinese online giant Alibaba, has not been allowed to leave the country. The Chinese authorities are currently investigating how Alibaba’s Ant Group, formerly known as Ant Financial and Alipay, received IPO approval so rapidly. The IPO was originally set to be the largest IPO in the world, but was later called off unexpectedly. Alibaba was fined RMB 18.2 billion (around US$2.8 billion) by the Chinese government on April 10, because of its market monopoly tactics. Two days later, the Ant Group was ordered to reform. The current round of investigation is focusing on the relationship between Jack Ma and important government officials. Ma is banned from leaving China until the investigation concludes. This is the first sign that indicates the investigation is spreading into government agencies. One of the key targets for this new investigation is the Shanghai Stock Exchange STAR Market, officially known as the Shanghai Stock Exchange Science and Technology Innovation Board. It is a Chinese science and technology focused equities market established on July 22, 2019, with strong support from Chinese Communist Party Secretary General Xi Jinping. Jack Ma originally planned to list Ant Group there, and on the Hong Kong Stock Exchange at the same time. This new round of investigation also includes some of China’s sovereign wealth funds.

Source: UDN, April 29, 2021
https://money.udn.com/money/story/12926/5421151

Huawei Set to Make Electric Vehicles

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, ever since the last batch of a shipments of 120 million high-end chips from Taiwan last December, Huawei’s mobile phone sales have been in freefall, income growth reached a record low and cash flow reached a seven-year low. Huawei’s board changed its strategy from “technology orientation” to “survival orientation.” In addition to getting into the cloud computing business, Huawei is partnering with Chinese-owner Seres, an electric vehicle and component manufacturer headquartered in Santa Clara, California, to make electric vehicles (EVs). Huawei’s online shopping site recently presold 3,000 Seres EVs in two days, while Tesla China was combating questionable consumer complaints. Starting in June 2020, Huawei conducted a re-organization and established the structure of an EV branch. The Huawei Smart Car Solutions Business Unit (BU) now has nine departments, including Architecture and Integration; Strategy and Development; Policy, Standards and Patents; Marketing; MDC (Mobile Data Computing); Quality Control and Operations. The BU branch plans to have three product lines: Smart Driving, Smart Cabin, and Smart Automobile Cloud. All heads of the departments of this BU come from Huawei’s top leadership team. The initial BU has around one thousand staff members and the goal is to expand to five to six thousand. Huawei also aims to produce a world-leading car operating system to compete against Tesla, Apple and Google. However, the company is facing a difficulty in finding manufacturing partners in the EV industry.

Source: Sina, April 30, 2021
http://finance.sina.com.cn/tech/csj/2021-04-30/doc-ikmxzfmk9802173.shtml

Global Times: Reviewers Thought Biden’s First Congressional Speech Was “Boring”

Global Times recently published a report after Biden’s first televised congressional speech. With data aggregated from the U.S. and British media, it appears the speech suffered from a very poor performance and it had only around 22.6 million viewers. That was not even half of Trumps equivalent speeches. Trump’s 2017 February speech to Congress attracted over 48 million viewers. Even his lowest viewership, for the 2020 February State of the Union Address, had over 37 million viewers. Obama’s first congressional speech in February 2009 had 52.3 million viewers. The low-profile Biden speech received reviews like “boring,” “socialist dream,” “dividing the country,” and “full of empty clichés.” The speech did touch on topics related to his “blue-collar blueprint” government investment plans, gun control, police reform and immigration, as well as his China policies. Global Times also mentioned that Biden’s speech was not the only event seeing a dramatic decline in viewership. The Oscar ceremony in the same week also set a record low viewership of around 10 million, which was a freefall of 58 percent from last year’s number.

Source: Global Times, April 30, 2021
https://world.huanqiu.com/article/42vtGLIjmeV

State Owned Banking Regulatory Agencies Summoned 13 Top Online Financing Companies

Xinhua reported that, on April 29, four financial regulatory agencies including the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the Administration of Foreign Exchange summoned 13 top online financing companies including Tencent and Meituan Finance.

Chinese economists and scholars told Radio Free Asia that these online financial companies bypassed China’s banking system to serve small to mid-size customers and self-employed individuals and have become a threat to traditional banking financing channels. The meeting was meant to warn these companies that Beijing has formed a plan to take over these private online financing companies. Other internet companies like Taobao, We Chat and QQ are not only a trading platform but they also draw large numbers of users. Therefore they would be the next target. One commentator told RFA, “Beijing will be very nervous and vigilant about such a platform and force that can connect with or and even unite the people. So, it needs to have a more a comprehensive and thorough control.”  These take-overs will not only benefit the state-owned banks but also control public opinion and limit the development of the private economy.

According to official statistics, WeChat users now exceed 1.2 billion, Taobao has over 800 million, and QQ has close to 600 million. After Beijing issued an antitrust fine of more than 18 billion (US$2.78 billion) against Alibaba not long ago, it immediately demanded that, within a specified time limit, 34 online companies including Tencent, JD.com, ByteDance, Baidu, and Meituan conduct an internal restructuring.

Source: Radio Free Asia, April 30, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-04302021044205.html

Chinese Phone Makers and House Builders Leap into Electric Vehicle Market

Baidu, Xiaomi, Huawei, OPPO, Evergrande and other Chinese companies have recently announced their commitment to doing electric vehicle research and development. These companies are not car makers: Xiaomi, Huawei and OPPO are phone makers; Baidu, which has already invested in driverless vehicles, is in Internet-related services; and Evergrande started out as a real estate developer.

At the Shanghai Auto Show in April, while Tesla was under the spotlight because of a consumer dispute, the electric cars that local automakers presented and also the aforementioned companies attracted a lot of attention.

As Chinese financial media and Radio Free Asia reported, Evergrande launched nine new electric car models at the Shanghai Auto Show using the brand name “Hengchi.” Evergrande boasted that they were developed in cooperation with car manufacturers such as Swedish supercar producer Koenigsegg. The nine models that Evergrand launched were later found to be “model cars” which had only a shell and no brakes or suspension system. For this reason, Evergrande sent an army of security personnel to guard the stage and wouldn’t allow the audience to  take pictures of the chassis of the display cars.

It was widely believed that China’s manufacturing sector still has great difficult in achieving self-sufficiency in the area of critical parts and components, as well as in the core technologies such as auto chips. Making a car is a much more complex business than making a smartphone. The “great-leap-forward” model of investing in electric vehicles cannot last long.

Some argue that China’s domestic demand has not yet recovered, and that it is a question whether most people can afford an electric vehicle. One cannot rule out the possibility that some companies and local governments are making the initial investment in order to solicit financial subsidies from the central government.

Source: Central News Agency, May 2, 2021
https://www.cna.com.tw/news/acn/202105020185.aspx

China’s Newly Amended Maritime Traffic Safety Law Raises Concerns

On Thursday April 29, China passed a newly amended Maritime Traffic Safety Law, over which a Taiwanese scholar expressed the concerns that Beijing is using the law to expand the gray zone of potential conflicts.

The National People’s Congress (NPC), China’s rubberstamp parliament, announced that the law will come into force on September 1.

Under Article 53 and Article 54, foreign vessels are required to report to the maritime authorities if they are submersible, nuclear powered, carry radioactive or poisonous materials or may in any other way endanger safety in navigation.

Article 92 stipulates that if a foreign ship may threaten the safety of China’s internal waters and territorial waters, the maritime authorities have the right to order it to leave. If a foreign ship violates Chinese laws and regulations on maritime traffic safety or prevention of pollution, the maritime authority may exercise the “right of hot pursuit.” The “right of hot pursuit” refers to the right of the authority of the coastal state to chase a foreign ship to the high seas, arrest those on board and bring the ship back to its port so they can face a trial. It can do this if it has sufficient reason to believe that the foreign ship has violated the laws and regulations of the state.

In addition, in the amended maritime law, China has changed the wording from the phrase “coastal waters” to “jurisdictional waters.

Su Tzu-yun, senior security analyst with Taiwan’s Institute for National Defense and Security Research, considers that both the Maritime Traffic Safety Law and the Maritime Police Law, a new law passed in January, are tools of the Chinese Communist Party (CCP) to claim and protect its national sovereignty and interests. The CCP is using the law to expand the gray area of conflict, and has raised concerns that this could become a loose cannon for maritime conflicts.

Su said that the Chinese government’s “jurisdictional waters” refers to “the internal waters, the territorial sea, the contiguous zone, the exclusive economic zone, the continental shelf, and other waters under the jurisdiction of the People’s Republic of China,” which it defines more broadly than “coastal waters.” However, the CCP has built many artificial islands in the South China Sea and claims that the 12 nautical miles surrounding each of them are all territorial waters, which gives the CCP an excuse to enforce the law when other countries simply carry out free navigation missions.

Source: Central News Agency, April 30, 2021
https://www.cna.com.tw/news/acn/202104300257.aspx

Africa’s Stadiums and China’s Sports Diplomacy

The French newspaper Le Monde recently published two articles that describe how Beijing is actively engaging in sports diplomacy in Switzerland, the headquarters of many international sports organizations. It also describes how the Chinese government is building sports facilities in Africa, especially sports stadiums, to gain control over African heads of government, win local sports markets, and secure access to important sports events in the continent.

The Chinese government is making arrangements in the sports industry to serve its goal of becoming a geopolitical power. One article in Le Monde quotes Carole Gomez, a researcher at the French Institute for International and Strategic Affairs, who commented that, until the 1950s, sports were marginally important for the Chinese government, except for fitness or training soldiers. Learning from the Cold War, the Chinese began to realize that the Olympic Games were not just a sporting event, and that it should not only participate in international sports competitions; China should also produce outstanding results to promote national pride.

Jean-Loup Chappelet, a professor at the University of Lausanne, Switzerland, outlined the strategic pattern of China’s participation in international sports bodies. It started with the participation of athletes. China followed by actively winning competitions. Then the Chinese government started organizing events. Finally, China gained a seat on the international organizing committee of the sport. Beijing began with table tennis and gymnastics and gradually advanced to a few new sports such as climbing and rugby sevens. Beijing used its huge domestic market and the construction of sports facilities as bait to gain a seat in international sports organizations. . . .  Sources familiar with the International Olympic Committee told Le Monde that international sports are in fact a mirror of today’s international community. What’s going on in the IOC is similar to what goes on at the United Nations and at the World Trade Organization. Beijing is actively pursuing control of these international sports organizations just as it is in other international arenas. While Europe and the United States are leaders in most of the international sports organizations, China is closely following in their footsteps.

Another Le Monde article mentioned that in mid-March, Alassane Ouattara, President of the African country Ivory Coast, personally inaugurated a 60,000-seat stadium, a gift from China, in the northern part of the capital Abidjan. The finale of the 2023 African Cup of Nations, the main international men’s soccer competition in the continent, will be held in Ivory Coast, where China will build two more stadiums elsewhere in the country, in addition to the one in Abidjan. The total cost is expected to be more than 200 million euros. Le Monde commented that China has built and renovated nearly 100 stadiums on the continent in recent decades, apparently to strengthen diplomatic relations with African countries, to open access to local markets, and to secure support from African countries in international organizations such as the United Nations.

In recent years, with the number of countries participating in the tournament increasing from 16 to 24, the Africa Cup of Nations could not have been held without China-built stadiums. The organizers lamented that the countries hosting the tournament could not afford to build their own stadiums and had to rely on China. In January, the rights to broadcast the games were sold to a Chinese company, Star Times. According to internal U.S. diplomatic documents, over the last two decades, Star Times, which gathers intelligence for Beijing in Africa, has become a major player in digital media on the continent. In other words, the African Cup of Nations are often played in China-built stadiums and Chinese media broadcast them.

Source: Radio France International, April 29, 2021
https://rfi.my/7Lth.T