Chinascope – Page 435

Duowei News: The Political Danger of Pushing Companies to Establish Communist Party Branches

Duowei News, a pro-Beijing media, published an article commenting on the Chinese Communist Party’s (CCP’s) push for all companies in China to establish party branches. Recently, the CCP published “The Regulations on the Party Branch Work of the CCP (Trial Version).” It required that all businesses (including privately owned and foreign companies), executive offices, social organizations, neighborhood communities, schools, research institutions, and military units must establish party branches.

The article commented that, last year, there was some talk of “eliminating private ownership” in China. Also, China’s economy is sliding downhill, creating a tough environment for mid-level and small privately-owned companies. The South China Morning Post suggested that, for recent private companies, establishing a party branch and company owners’ joining the CCP do not reflect political loyalty but rather the companies’ attempt at self-protection by reducing political risk and showing good will to the authorities.

The article also mentioned that, since 2012, Beijing has carried out a campaign to establish party branches (in all companies in China). Many foreign companies, such as Nokia, Carrefour, Wal-Mart, Standard Chartered Bank (China), PricewaterhouseCoopers, Beijing Hyundai, and Alcatel-Lucent Shanghai Bell Co., all established a party branch. According to the CCP Central Organization Department, by end of 2016, 70 percent of foreign companies in China had a party branch.

The article pointed out that, since the start of the Sino-U.S. trade war, Beijing has faced an extremely challenging task trying to attract foreign investment and restore private companies’ economic vitality. Imposing party branch requirements may have caused more negative publicity and resulted in reduced confidence in doing business in China.

Source: Duowei News, January 28, 2019
http://news.dwnews.com/china/news/2019-01-28/60115317_all.html

Briefings | | February 10, 2019 | Government/Politics

China Strikes Hard on “Underground Banks” to Curb Capital Outflow

In order to prevent the illegal outflow of capital, the China’s Supreme Court and the Supreme Procuratorate recently issued a judicial interpretation that if an underground bank conducts illegal trading of foreign exchanges and the amount is more than 5 million yuan (US$ 0.8 million), or the illegal income is more than 100,000 yuan (US$ 14,800), the crime will be punished under the charge of illegal business acts and the “circumstances are serious.”

According to the official media, in practice, the underground banks’ illegally trading in foreign exchanges mainly takes the traditional form of direct transactions within borders. The current, more popular and disguised ways of trading in foreign exchanges are across borders.

The disguised trading of foreign exchanges is not a direct exchange between the yuan and the foreign exchange, but an act of repaying the yuan-denominated debt in foreign exchange, or repaying foreign exchange-denominated debt in yuan, or the swap of foreign exchange and the yuan to fulfill the trading. According to the report, the cross-border payment is a typical disguised trading of foreign exchange. Underground bank criminals would collude with foreign individuals, enterprises, and institutions, or make use of overseas bank accounts for the purpose of cross-border remittances and transfer of funds. At present, the main business of most underground banks is the cross-border payment, which leads to huge capital outflows.

According to the judicial interpretation, engaging in illegal payment settlement business or illegal trading of foreign exchange, if falling into one of the following two circumstances, should be regarded as illegal business acts and the “circumstances are serious.” One, the illegal business amount is more than 5 million yuan (US$ 0.8 million). Two, the amount of illegal income is more than 100,000 yuan (US$ 14,800). The interpretation of illegal business acts and “circumstances are particularly serious” is either the illegal business amount is more than 25 million yuan (US$ 3.7 million) or the amount of illegal income is more than 500,000 yuan (US$ 74,000).

Article 225 of the Chinese Criminal Law stipulates that those who commit the illegal business acts, and when the circumstances are serious, are to be sentenced to not more than five years of fixed-term imprisonment in criminal detention, and may, in addition, or exclusively, be sentenced to a fine not less than 100 percent and not more than 500 percent of their illegal income and, where the circumstances are particularly serious, be sentenced to not less than five years of fixed-term imprisonment and a fine of not less than 100 percent and not more than 500 percent of their illegal income or the confiscation of their property.

Source: Central News Agency, February 9, 2019
http://https://www.cna.com.tw/news/acn/201902090145.aspx

Briefings | | February 10, 2019 | Economy/Resources

Why Do the Chinese Like President Trump?

President Trump took a tough stance against Beijing last year, demanding fair trade and an end to forced technology transfer and technology theft. Continue reading →

Analyses | | February 8, 2019 | Government/Politics Opinion US-China Relations

Beijing’s Intensified Control over China’s Higher Education

A Duowei News article put together information about the Chinese Communist Party’s (CCP’s) practices of tightened control over the nation’s higher education.

At the beginning of 2019, for the first time, the Chinese media reported a case of the CCP Central Disciplinary Committee intervening in the personnel appointment at a Chinese university. Observers believe that this is a new signal that the CCP is strengthening its discipline and supervision of its universities. Days later, at a Provincial and Ministerial Leadership Seminar on January 21, 2019, Xi Jinping emphasized ideological risk when talking about the “seven major risks.” The two incidents point to the same group in the population – China’s youth. The article gave a list of CCP actions at China’s universities.

In April 2013, the CCP General Office’s “No. 9 Document,” or Bulletin on Current Ideological Situations, issued a warning that there was an ideological crisis in China’s higher education system.

On August 19, 2013, the China National Propaganda and Ideological Work Conference identified Chinese universities as “important areas and as having forefront positions in ideology.”

In October 2014, the CCP General Office issued a document that Chinese universities should “adhere to the core leadership position of the Party committee” and that “the Party committee has the overall leadership of the school’s work.”

In June 2017, the CCP Central Committee inspection teams pointed out problems that existed in 14 Centrally Controlled Universities (CCU’s) including Peking University and Tsinghua University. The problems are that “the Party’s leadership has weakened” and that “the core role of the Party committee is not fully functional.” The Central Committee demanded that a comprehensive rectification occur in order to correct all the universities.

In August 2018, it was reported that the Chinese-foreign joint venture universities would be required to set up a Party branch.

In China the CCP Central Committee directly manages a group of 31 so-called Centrally Controlled Universities (CCUs), or colleges and universities. The CCU’s party secretary and president are directly appointed by the CCP Central Committee, instead of the Ministry of Education, and rank at the deputy minister level. It is generally believed that the 31 CCU’s are the top universities in China, including Tsinghua University and Peking University.

Source: Duowei News, February 1, 2019
http://news.dwnews.com/china/news/2019-02-01/60116265.html

Briefings | | February 7, 2019 | Government/Politics

EU May Ban Huawei Equipment to Please the U.S.

Well-known Chinese news site Sohu recently reported that, according to four European Union officials, the European Commission is considering amending the 2016 network security law in order to stop EU companies from using Huawei’s next generation mobile network equipment. Anonymous sources said this plan is still in an early stage but good enough to demonstrate a “change in the EU position.” Apparently, this will please the United States. However, the new policy will face difficulties in real life even if it gets established, as some of the countries, such as Germany, have already issued their 5G permits. At the moment, most of the EU countries, except Britain, Germany, France, and Poland, do not have a ban on Huawei products. Interestingly, Huawei, Ericsson and Nokia hold the vast majority of the global 5G market. The United States doesn’t even have a presence there.

Source: Sohu, January 31, 2019
http://www.sohu.com/a/292577089_334198?scm=1002.0.0.0

Briefings | | February 7, 2019 | Geo-Strategic Trend Information/Technology US-China Relations

Caixin: Chinese January Manufacturing PMI Reached Three-Year Low

Well-known Chinese financial site Caixin recently released its official Chinese Manufacturing PMI index number for January, which was 48.3. The January PMI number was the lowest for the manufacturing sector since March 2016. The new orders sub-index showed another month of decline, especially on the domestic demand side. Exports saw an increase and experts expressed their belief that the rebound was the direct result of the temporary pause of the China-US trade war. The January number also indicated that the manufacturers have been reducing head counts and unemployment has gotten worse. In the meantime, raw material prices and consumer product prices have both dropped. The Caixin report expected a continued slowdown of the Chinese economy. Caixin PMI is a well-respected economic indicator monitored globally by financial institutions. PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Source: Caixin, February 1, 2019
http://pmi.caixin.com/2019-02-01/101376926.html

Briefings | | February 6, 2019 | Economy/Resources

China Faces Pension Deficit

National Business Daily reported that, according to China’s Social Security Annual Report for 2016, several provinces in China had a negative cash flow in their pension fund accounts (they received lower pension contributions than the amount of pension distributions). Heilongjiang Province not only had a negative cash flow for 2016; it also depleted all of its previous pension fund savings. Its pension fund has a debt of 23.2 billion yuan (US$3.5 billion).

The number of provinces with net negative cash flow increased from six in 2015 to seven in 2016, including Heilongjiang, Liaoning, Hebei, Jilin, Inner Mongolia, Hubei, and Qinghai.

According to the China Pension Actuarial Report 2018-2022, without counting the government’s subsidy, the total of pension contributions for all employees working in companies would be short of 256.2 billion yuan (US$38.4 billion) in 2018 and will be short of 533.6 billion yuan (US$80 billion) in 2022.

Some southern provinces, such as Guangdong Province, still have a huge surplus. Thus, some scholars have suggested using the southern provinces’ surplus to cover the northern provinces’ deficit.

China’s pension system is a pay-as-you-go system, requiring employers to contribute a maximum of 20 percent of employees’ earnings to cover the basic pension while the employees contribute eight percent of their earnings for a second-tier pension.

Source: National Business Daily, January 21, 2019
http://www.nbd.com.cn/articles/2019-01-21/1293179.html

Briefings | | February 6, 2019 | Economy/Resources

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

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

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

The CCP’s Performing Arts Troupes in the U.S.