The Sinocism China Newsletter - February 17, 2015

Bill Bishop February 18, 2015 8:14am

Thanks to the handful of you who got into the Chinese New Year spirit and sent me a Red Envelope, much appreciated. I am going to enjoy the CNY holiday and so the next issue will be in a week or so, though I will be on Twitter and you can follow me for China-related updates in the interim.

Happy Year of the Sheep!

Today’s Links:

THE ESSENTIAL EIGHT

1. President Xi extends festival greetings, stresses family bonds – Xinhua In a speech to a gathering at the Great Hall of the People on Tuesday morning, Xi expressed appreciation for efforts in deepening reform, development and advancing rule of law in the past year. “We are proud of our great country and we are proud of our great people,” Xi said. “We must give our respect to the work of the industrious and courageous Chinese people and their extraordinary innovative spirit and achievements.” “This year, we are facing situations no less challenging and complicated, and we must stay close to the people and promote reform, innovation, justice and a better standard of living with more vigorous efforts,” said Xi, also general secretary of the Communist Party of China (CPC). He pledged more work on improving work styles in the Party and government and creating more wealth, more benefit for the people and more glory for the nation. // video of his comments [视频]中共中央国务院举行春节团拜会 习近平发表重要讲话, top 11 minutes of Tuesday CCTV Evening News

2. Corruption in China’s Military: One of Many Problems–Dennis J. Blasko Granted, graft and corruption undermine discipline and morale in any military and must be weeded out for the good of military forces in China and elsewhere. However, from the evidence available, the vast majority of corruption in the PLA is found within the political officer system (mostly involving promotions and assignments), the logistics and armaments systems (among those who handle official funds and property and are involved in the procurement of supplies and equipment), and potentially in low-level local headquarters responsible for conscription/recruitment (but likely involving relatively small sums of money). There is little indication that the PLA’s frontline operational leaders, those in command of the units tasked to do the fighting, have been smitten by the scourge of corruption to the degree that some rear area personnel have been.

Related: Xi Jinping boards new bomber during NW China tour – Xinhua President Xi Jinping got into the cockpit of a new bomber during his inspection of the armed forces in Xi’an, capital city of northwest China’s Shaanxi Province. Xi, also chairman of the Central Military Commission, visited the training center and the tarmac of a bomber squadron on Monday. Xi inspected various aircraft and entered the cockpit of a new bomber. He asked about the capabilities and features of the aircraft, and told the pilots to improve their combat skills to ensure that “battles can be won at crucial moments.” // CCTV evening News report of his visit 习近平春节前夕视察看望驻西安部队 向人民解放军全军指战员全体武警官兵民兵预备役人员致以新春祝福 video of him in the plane starts at about 5:00

3. U.S. Embedded Spyware Overseas, Report Claims – NYTimes.com In many cases, it also allows the American intelligence agencies to grab the encryption keys off a machine, unnoticed, and unlock scrambled contents. Moreover, many of the tools are designed to run on computers that are disconnected from the Internet, which was the case in the computers controlling Iran’s nuclear enrichment plants. // A big problem for US tech firms in China is that Beijing is totally justified in not trusting any of their products, especially now. Can you really blame Beijing, even if in this case there is no indication the tech firms were complicit? Makes it hard to see a happy resolution in the future…

Related: President Barack Obama Speaks with Kara Swisher (Full Transcript) | Re/code We have owned the Internet. Our companies have created it, expanded it, perfected it in ways that they can’t compete. And oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests.

4. So you still yuan out? | FT Alphaville As mentioned before, the support by the PBoC that Goldman note is probably a key reason for the RRR cut we saw earlier in the month. Don’t be surprised to see more of the same. Do though, we would still argue, be surprised to see any real depreciation move by China — we might be wrong about the tradeoffs, but the argument that such a move would result in “a self-perpetuating cycle of depreciation expectation and further capital flight” seems to be tough to get past.

Related: Yuan Nears Weak End of Trading Band on Capital Outflow Signs – Bloomberg Business Yuan positions for foreign-exchange purchases at Chinese financial institutions fell 108.3 billion yuan ($17.3 billion) to 29.3 trillion yuan in January, the lowest in a year, according to People’s Bank of China figures released Tuesday. The data showed persistent weakness in the demand for yuan and suggested that the PBOC probably supported the currency by buying it in the market, Goldman Sachs economists MK Tang, Yu Song and Maggie Wei wrote in a note Tuesday. Domestic markets will be shut Feb. 18 through Feb. 24 for the Lunar New Year.

5. 任志强炮轰党中央,凸显中共新危机_观点-多维新闻网 Ren Zhiqiang was very critical of current policies at a forum and on his Weibo, leading to attacks on him by state media. Quite remarkable, given his relationship with at least one of China’s top leaders, and a sign of the waning confidence some of the elite have towards current policies, both economic and political // 而为什么民间资本出现如此大规模的外流?任志强并不认为是“调结构”造成的,而是“政府没有信誉,违约和占用了民间资产的比例很大”。 紧接着,任志强又将炮火对准了意识形态甚至中共的理论根基,一面指出当下的中国“文革之风又起”,一面批中国“政府根本就不想保护私有财产”,公有制思维与当下社会的矛盾再次走到台前。任志强称:“另外是政府过度强调了枪杆子和刀把子,反对西方的价值观,文革之风又起来了。还有就是对于私有产权的保护,说是法治,但是实际上在强调了法治的时候是政府强势。我们可以看看最大的违约和最大的破产,在公和私之间有一个巨大的差,凡是反腐反到公的,银行不管企业要贷款,比如华润,其他所有的中央企业都是这样。但是如果是私有企业完了,这个老总要被抓起来或者有点什么事,所有银行就先让你把贷款还上,政府就可以强制的把他的财产收了,打黑的时候就有这个事

Related: 党媒与任志强论战“价值观”文章被删 – BBC Chinese 中共中央机关报《人民日报》旗下的《环球时报》周一(16日)发表评论文章,点名批评网络名人任志强日前有关“价值观”的言论,但有关文章发表后不久就被删除了。 《环球时报》发表的文章标题是《任志强扯出文革来说事是欲盖弥彰》。文章指任志强批评政府“过度强调了枪杆子和刀把子,反对西方的价值观,文革之风又起来了”是“语不惊人誓不休”。 有关文章还指责任志强用长微博刊发“什么是西方价值观”是为“西方价值观”站台。

Related: 环球时报:任志强扯出文革来说事是欲盖弥彰|西方| 价值观_凤凰资讯 中国是不以西方并不认可的模式迅速崛起的。但有一些人以“大国小民”的心态窥视这个世界,跪拜西方价值观,连抬起关来正视西方的勇气都没有。中国是世界上最没有理由对自已国家的前途感到悲观的。 不接受西方的政治体制,反对西方强行推销的价值观,打击贪污腐败,怎么就成了文革之风了?“反腐反到私有企业”,“民营企业没有腐败”,难道反腐反到私有企业都是冤假错案?不违法又怕什么枪杆子和刀把子?扯出文革来说事儿是欲盖弥彰。

6. Great Wall Stall Frustrates Apple Pay in China – Caixin The central bank, UnionPay bank card service and e-commerce giant Alibaba Group Holding Ltd. are standing up to Apple Inc.’s effort to bring the Apple Pay no-card, no-cash payment system to iPhone users in China. “Apple is seeking to cooperate with Chinese financial institutions” including banks for the use of Apple Pay, a People’s Bank of China (PBOC) official said. At the same time, the American company has not yet “acknowledged regulators” and as a result “it’s unclear whether the product meets the government’s requirements” for a commercial operation. Apple is also struggling with its relationship with UnionPay, China’s state-owned credit and debit card system operator. Sources close to the companies said that talks aimed at an agreement that would open China to Apple Pay have stalled.

Related: PBOC: China’s M-payment Turnover Reaches US$3.6T in 2014 – TechNode With the rise of smartphone penetration and 4G networks, China’s mobile payment has recorded exponential growth both in terms of value of transactions and the sectors covered. The latest statistics released by the People’s Bank of China have shed some light on the development of this booming industry in the past year. In 2014, the central bank has proceeded over 4.52 billion mobile payment transactions, up 170.25% year-on-year from 1.67 billion in 2013. The transaction volume surged 134.30% year-over-year to RMB22.59 trillion (US$3.61 trillion) from RMB9.64 trillion in 2013.

Related: Apple Pay现身建行 或将入华要闻一财网 China Construction Bank supporting Apple Pay? // 上周,苹果向开发者推送了iOS8.3系统测试版,其中最引人关注的莫过于移动支付服务ApplePay对中国银联的支持。虽然上述说明短暂出现后被移除,但是从网友近日拍摄的一张图片来看,ApplePay入华指日可待。

7. Suicide Bomber Kills Up to 8 in Xinjiang, Radio Free Asia Reports – NYTimes if this report is accurate, this attack looks to be a worrying upgrade in capabilities. So far the explosive devices have been quite weak // A suicide bomber in the volatile Chinese region of Xinjiang killed as many as eight people last Friday when he grabbed a police officer and set off an explosive device attached to his body, according to a report by Radio Free Asia. The young man, a member of the Uighur ethnic group, set off the device in Hotan Prefecture

8. Lu Wei on the “dream of the web” – China Media Project On February 9, 2015, China’s internet czar, Lu Wei (鲁炜), the director of the Cyberspace Administration of China, hosted a Chinese New Year banquet at the Diaoyutai State Guesthouse. At the event, attended by foreign dignitaries and representatives from internet companies, Director Lu delivered an address in which he reiterated the need for global internet governance that respects the “internet sovereignty” of various countries. // with full translation

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Bill Bishop

Author and curator of the daily Sinocism newsletter.