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China’s Reaction to Trump’s Election Win

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Xinhua Commentary Series: Spotlight on the U.S. Presidential Election

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Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

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Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

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China’s New Policies to Support Domestic Chip-Making

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, as a result of  the heavy U.S. pounding on China’s chip supply chains, China just announced major policies to support the Chinese integrated circuit Industry. The Chinese State Council released its comprehensive policies for the chip industry and the development of the software industry. These include strategic policies on financial and tax support, investment support, research and development support, and import/export support, as well as talent pooling support. This new strategic policy document is a natural extension of the No. 18 document in 2000, and the No. 4 document in 2011. The new policy document focuses on core technologies with tangible plans, like a 10-year tax free incentive for chip-making processes below 28 nano-meters. The new policies also recognize the need for more government subsidies.

Source: Sina, August 7, 2020
https://news.sina.com.cn/c/2020-08-07/doc-iivhvpwx9814916.shtml

Briefings | | |   Economy/Resources Information/Technology

Global Times: Trump’s “Black Hand” on WeChat Now Worries Apple

Global Times recently reported that the U.S. presidential order to ban TikTok and WeChat in 45 days has triggered U.S. domestic concerns on damages it can cause to U.S. product sales in the Chinese market. For example, Bloomberg had a report expressing the worry that the Trump ban on all transactions related to WeChat may disallow Apple from offering WeChat in its AppStore. As most people know, WeChat has penetrated very deeply into the day-to-day life of the Chinese population. It is the top app that over one billion people use widely for shopping, payments, and other daily activities in commerce and gaming. Without being able to download WeChat from its AppStore, Chinese consumers may not want to buy an iPhone any more. The Chinese market takes 20 percent of the iPhone’s total sales. Losing WeChat can be a big obstacle for Apple to sell iPhones. Additionally, Trump’s order may cause retaliation from the Chinese government on the sides of manufacturing capacity and raw material supply (like rare earth metals). Huawei cellphones may turn out to benefit from this new ban.

Source: Global Times, August 8, 2020
https://world.huanqiu.com/article/3zNvyYZpKNx

Briefings | | |   Information/Technology US-China Relations

Major Chinese Banks Conduct Internal Testing of Digital Currency App

The 21st Century Business Herald reported that China is conducting large-scale internal testing of a digital wallet application at four major state-run commercial banks: the Industrial and Commercial Bank of China, the Bank of Agriculture, the Bank of China, and China Construction Bank.

Banking sources said that, in early August, employees at these banks in Shenzhen started internally testing the app to transfer money and make payments.  Other banking sources said that tests involve payments of CCP membership dues, union fees, and other expenses. Tests are being conducted at their institutions. While tests are primarily conducted in Shenzhen, the app is not available for public download.

To register the app, one needs to open a digital wallet in the four major banks. The digital wallets are linked to the individual’s bank accounts and one can recharge funds into the wallet using online banking or credit cards.

On August 3, 2020, the central bank, the People’s Bank of China (PBOC), said the country should actively and steadily promote the development of a state digital currency. PBOC has led the development of the digital currency in an effort to promote the RMB as an international currency and to reduce dependence on the U.S. dollar. The digital currency is still in the internal R&D and testing stage under high confidentiality.  There is little information about a launch timetable.

Source: Sina.com, August 5, 2020
https://tech.sina.com.cn/i/2020-08-05/doc-iivhuipn7039456.shtml

 

Briefings | | |   Economy/Resources

U.S. Embassy in Beijing Offers Reward for Information on Interference in U.S. Elections

On August 5, 2020, the U.S. Embassy in Beijing posted a media notice on its websites in both Chinese and English.

The Chinese media notice mentioned the U.S. Department of State’s Rewards for Justice (RFJ) program, which the Diplomatic Security Service administers. It is offering a reward of up to $10 million for information leading to the identification or location of any person who works with or for a foreign government who uses certain illegal cyber activities for the purpose of interfering with U.S. elections.

The Chinese media notice provides a link to the English media notice which contains more details.

Source:
U.S. Embassy in Beijing, August 5, 2020
https://china.usembassy-china.org.cn/zh/reward-offer-for-information-on-foreign-interference-in-u-s-elections-zh/;
https://china.usembassy-china.org.cn/reward-offer-for-information-on-foreign-interference-in-u-s-elections/

Briefings | | |   US-China Relations

Tencent’s Stock Tumbled after Trump Banned WeChat

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, as soon as U.S. President Trump officially signed the executive order to ban WeChat (in 45 days), the stock price of WeChat’s owner, Tencent, instantly suffered a free fall of 10 percent on the Hong Kong Stock Exchange (HKSE). The loss of market value was the equivalent of HK$500 billion (around US$64.5 billion). In the meantime, the bad news also brought down SMIC (China’s largest chip maker) by over ten percent, Alibaba by six percent, and Xiaomi by five percent. These were all happening with the background of Mike Pompeo’s repetitive mention of the so-called Clean 5G Network plan on August 5. This is part of the U.S. effort to remove Chinese-made “untrusted” apps from the U.S. digital networks. The Chinese Ministry of Foreign Affairs expressed its strong opposition to these unfair political moves designed solely to sustain the U.S. monopoly in the high-tech industry. The new U.S. executive orders are directly against market rules and are a threat to the safety of the global supply chain.

Source: Sina, August 7, 2020
https://finance.sina.com.cn/stock/hkstock/marketalerts/2020-08-07/doc-iivhuipn7334222.shtml

Briefings | | |   Information/Technology US-China Relations

China Encourages College Graduates to Join the Army

In July, China’s Ministry of Education issued a notice requiring students at local schools and colleges to watch a promotional video and a mini film that the Recruitment Office of the Defense Ministry produced.

The government has also recently adjusted its conscription system. Beginning in 2020, China will increase the frequency from “one conscription and one retirement every year” to “two conscriptions and two retirements every year.” The recruitment process, conducted once in each half of the year, will target college graduates.

For quite a long time, China’s troops came mainly from rural areas. After China initiated the recruitment from universities and colleges years ago, more and more students have enlisted in the army. Li Baoyang, a researcher from Sun Yat-sen University in Guangzhou, believes that China’s urbanization process has made college graduates the main source of recruits. “Especially since the start of the 21st century, China’s rural areas have basically been ‘empty nests,’ and there are very few young and middle-aged populations. Now, the rural areas are generally dilapidated, and there are few soldiers to recruit.”

People’ Liberation Army (PLA) Daily, the newspaper for the Chinese military, once reported that Shanghai ranked top in the country in recent years in terms of the proportion of college graduates who enlisted. Nationwide, the percentage of enlisted college students has soared from 17 percent in 2006 to 90 percent in 2018.

A number of incentive policies have also been introduced throughout the country to attract college students to the army. Soldiers receive preferential considerations when applying for government jobs. They also receive a subsidy after two years of service. State-owned enterprises also reserve 15 percent of their positions for retired college student soldiers. In recent years, the authorities have relaxed the recruitment standards. In 2014, the minimum height for male recruits nationwide was reduced from 162 cm to 160 cm, and the weight limit rose from 25 percent to 30 percent exceeding the standard.

In 2020, the population of college graduates will reach 8.74 million, another record high. At the same time, the epidemic and the prolonged economic slowdown have diminished the labor demand. With the serious imbalance in supply and demand, college graduates are facing unprecedented pressure looking for jobs. Joining the army may be an attractive choice. The number of Chinese college students who signed up to join the army last year reached 1.24 million, close to 15 percent of the total graduates.

Source: Radio Free Asia, August 10, 2020
https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/hc-08102020134352.html

Briefings | | |   Defense/Military

Huawei Faces Kirin Chip Reserve Shortage Due to U.S. Sanctions

On August 7, at the “2020 China Info 100 Summit,” Yu Chengdong, CEO of Huawei’s consumer business, admitted that, due to U.S. sanctions, Huawei will not be able to produce new powerful chips. Huawei’s flagship mobile phone Mate40 will be released next month. The Kirin 9000 chip will be the last high-end Kirin chip and Huawei will stop its production after September 15. Chinese media said in May of this year that the key chips that Huawei has stocked could last for two years. However, on August 7, Yu said that, because of the sanctions, the inventory of chips will be insufficient to meet the demand. The sales of Huawei mobile phones this year is therefore expected to be lower than last year. Yu also acknowledged that the upcoming Mate40 will not be accepted in the west because it cannot connect to the Google series of services. That is because of Google’s withdrawal of Huawei’s Android license last year.

In addition, the US, the U.K., and Australia announced sanctions this year; Huawei is prohibited from participating in the 5G networks in their countries. New Zealand also rejected a wireless communications company’s decision to use Huawei equipment. Japan’s Yomiuri Shimbun reported that Japan will follow the U.S. to extend the exclusion of products from Chinese telecommunications equipment manufacturers including Huawei and ZTE.

Source: Epoch Times, August 7, 2020
https://www.epochtimes.com/gb/20/8/7/n12314739.htm

Briefings | | |   Information/Technology

Censorship and Surveillance at Australian Universities

Recently a number of controversial incidents involving restriction on freedom of speech have been reported on Australian university campuses. Scholars have criticized Australian universities for catering to Beijing and for suppressing academic freedom and freedom of speech. The Australian reported on August 7 that the Australian Federal Minister of Education Dan Tehan will launch an investigation into the university’s speech and academic freedom environment.

Below is a list of some recent incidents:
1. On July 31, the University of New South Wales twitter account shared a link to an article that expressed concerns about the human rights situation in Hong Kong. A few hours later, this post was deleted due to pressure from Chinese students. The incident was exposed and drew considerable criticism. On August 5, the President of the University admitted that deleting the tweet was a mistake and that, “There is no excuse for mistakes. … We clearly reaffirm our previous commitment to freedom of speech and academic freedom.” However in a separate university statement published in Chinese, the wording was different. The Chinese statement read, “Due to the misleading content, the school has deleted this tweet. We are deeply disturbed by the trouble this incident has caused to you. Thank you all for your understanding.”

The University of New South Wales has 16,000 foreign students from China. They account for 25 percent of the total students; 68.8 percent of foreign students; and they contribute 22 percent of the university’s income. The University of New South Wales is reported to have launched a “Torch Innovation Precinct” project with China which includes a training program for PLA scientists.

2. On August 5, the Sydney Morning Herald reported that a professor from the School of Engineering at Charles Darwin University used the wording “Chinese Wuhan COVID-19 virus outbreak” in an assignment. It caused dissatisfaction among many Chinese students. After the Chinese students filed complaints, the school apologized and the professor changed the wording of the homework.

3. A Chinese student studying in Melbourne and her family members in China were harassed and the officers from State Security in China warned them against the student’s organizing events on campus and being outspoken about her position on Hong Kong and COVID 19.

4. Another Chinese student, Kevin, who did not want his real name to be used due to security reasons is currently studying for a graduate degree at the University of Sydney. He said that there are roughly three types of surveillance on campus: one is the embassy’s direct surveillance; the second is from fellow students; the third is from the local Chinese media because the CCP has infiltrated them. The media employees would take photos, conduct online searches, and indirectly assist the CCP in conducting overseas surveillance. Kevin said he felt afraid because he has to deal with this kind threat overseas.

Source: Radio Free Asia, August 7, 2020
https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/jt-08072020143222.html

Briefings | | |   Geo-Strategic Trend