Der wöchentliche Presserückblick der Schweizer Botschaft in der VR China
The Weekly Press Review of the Swiss Embassy in the People's Republic of China
La revue de presse hebdomadaire de l'Ambassade de Suisse en RP de Chine
  23-27.7.2018, No. 727  
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Foreign Policy

China has no idea how to play Trump, and is doing what it always does when it smells trouble (SCMP)
Thanks to US President Donald Trump and his "America first" policy, the global economic and trade outlook perhaps has never been so uncertain. Nowhere are these economic and policy shock waves being felt more than in China. And, Beijing is responding the same way it does every time it anticipates trouble – by pumping cash into its system. It has already used targeted reserve requirement cuts for select banks. This week the People's Bank of China (PBOC) pushed US$74 billion into the system to get funds to the small-business sector. The State Council also announced US$200 billion of infrastructure spending to boost what were weak infrastructure numbers, while the currency fell to 6.8 to the dollar to take the edge off tariffs. It's a playbook we have seen before. A delegate holds up a sign at the Republican National Convention in 2016. Photo: AFP Following the global shock in 2008 due to the financial crisis, Beijing panicked when a reported 20 million migrant workers had or were at risk of losing their jobs. After years of trying to bring financial discipline to the banks, they opened the credit spigot and let the money flow. That stimulus, hailed at the time as the saviour of global growth, is now one of the main causes of the debt dependency which Beijing still struggles to rein in. To some, Beijing's rapid fiscal and monetary moves may seem like strength: it is proactive, decisive and has the financial capacity to act to avert the worst. But in reality, it is a sign of utter confusion. Trump has clearly thrown China off kilter. In the past few years, Beijing has understood the threats to the economy and has started to clamp down on risks in the financial sector, cross-border flows and the shadow banks. There have been successes, and many traditional metrics of credit growth or shadow-banking balances did slow or fall, but often the lending merely rebranded itself under a different name. A container ship in the East Lamma Channel on the way to Hong Kong. Photo: EPA Now the calculus has changed again. Trump went lightly on China in his first year, and was best friends with President Xi Jinping. This gave the Chinese a false sense of security when dealing with the Donald. A focus on North Korea, not trade, didn't prepare Beijing for what came next. Trump has for years talked tough when it comes to China and trade. His basic metric to measure the relationship, the deficit, is a poor one. But that debate has brought into the open the unfairness and unlevel playing field for foreign businesses in China. Western policy for 30 years has been one of engagement with the hope for change in China. Trump rejects that; you can be a foe on Monday and best friends by Tuesday. Deals are the worst ever or the best ever. Everything is fluid for Trump, everything is in play. Chinese leadership find themselves in a bind. Xi and the official media have been remarkably restrained in their pushback against the trade war. Touchy-feely statements on fighting protectionism sounds hollow on the lips of Chinese leaders. They are able to try and boost the economy domestically, but Trump is too unpredictable to formulate a long-term policy. The Chinese aren't even clear what Trump wants, so how can they respond? Chinese employees sew US flags at a factory in Fuyang in China's eastern Anhui province. The trade war has now started, and could well escalate within weeks. What the long-term impacts of a trade war is, no one knows. There hasn't been one for decades and certainly not one in an era of global supply chains. It's a trade war Beijing didn't even think would happen at the start of the year. Beijing is acting fast to try and dampen the coming shocks, yet the formal banking sector is very bad at getting money to small businesses; it is good getting it to local governments and state-owned enterprises. That's partly why the shadow banking sector developed. As for infrastructure spending, whether it is at home or abroad under the Belt and Road Initiative, Beijing has without doubt wasted vast quantities of money on vanity projects which have very little financial return. If economic numbers and pain on the ground increase, then only expect more support from the PBOC. It isn't an independent bank and, especially in times of crisis, it is the political leadership which is in charge. Good financial housekeeping can wait, keep the growth going and the money flowing – the mess can be cleaned up later. A man waits for the goods to be loaded on his tricycle at a dealer selling imported seafoods at the Jingshen seafood market in Beijing. Photo: AP Beijing maybe shocked by how things have played out for the moment, but they haven't lost control of levers of power in the economy, nor are they going to stand by as pressure mounts. A coordinated monetary and fiscal policy can indeed avert short-term impacts, but China hasn't even cleaned up the post-financial crisis stimulus and is now embarking on another as the outlook becomes ever more complicated. Yet again, China is facing a very delicate balancing act. In November, America will see midterm elections which could change the dynamic again, but the possibility of a second term for Trump should not be discounted. China will continue to be in Trump's crosshairs. Pumping more money into an already bloated economy may have worked in the past, but the Chinese may find out that indeed this time really is different. ^ top ^

Chinese ambassador says China, U.S. "still in the same boat" (Xinhua)
Chinese Ambassador to the United States Cui Tiankai has said that China and the United States are "still in the same boat" despite multiple challenges. Cui made the remarks on Wednesday at the 8th U.S.-China Civil Dialogue hosted by the Carnegie Endowment for International Peace, a U.S. think tank. The theme of this year's dialogue is "Navigating Through the Uncertainties in U.S.-China Relations." SAME BOAT Saying that the two nations are still faced with "fierce wind and huge waves," Cui said that "I believe we are still in the same boat. We still live in this small global village, this planet of ours, unless someday we find a way to send people onto Mars." "The common challenge is to navigate this boat through the uncertainties or uncharted waters, for the benefits of both our countries, and for the entire world," he said. "Hopefully dialogues like what we have today will help the two governments to develop policies that are pragmatic, constructive, and beneficial for both countries," the Chinese envoy said. "For those arguments that we are in different boats, should ride in different boats, or even have a head-on collision, they are not supported by facts. It does not serve the good of anyone," he said. "Unfortunately, there are those who are trying to rock the boat. For instance, they are painting a distorted picture of our economic and trade relations. Some of them have even gone further by playing fire on issues of Taiwan and others that concern China's territorial integrity. These are very dangerous developments. We have to be very careful about it," Cui added. MUTUALLY BENEFICIAL There are also those in the United States who believe that over the years in China-U.S. economic and trade relations, Washington has got all losses while China got all gains, Cui said. This is, once again, not in line with realities, he said. "Our economic and trade relations are interdependent and mutually beneficial." "We should not focus so much on the trade deficit, because there are a lot of structural reasons behind this deficit. Moreover, trade deficit does not mean all losses to the country that has deficit. And surplus does not mean all gains to the country that has surplus," he explained. Over the last 20 years, there are groups of people in both nations whose lives are not better off, he said. "But this is not an issue of foreign trade, but rather an issue of domestic economic and social policy, including the distribution of wealth," he said. "How can we take care of these vulnerable groups? It will not help anybody to put the blame on other countries or on foreign trade." NOT FOR DOMINANCE For those who said the two nations should not be in the same boat, because as China develops, it will try to challenge the U.S. position and dominance in the world, Cui said this is a wrong interpretation. Some are worried about what China is saying, such as China entering a new era of development, Cui said. "There are many misunderstandings and misinterpretations about China's goals and intentions. What we mean by this new era is that China has entered a new stage of development, with the major challenge being to meet the people's ever-growing needs for a better life and address unbalanced and inadequate development." "Of course, China will have to develop itself in an open environment. We cannot close our door," he said. "But this new era is mainly for China's own development, not for global dominance," he added. ^ top ^

Xi, Putin exchange views on current int'l situation (Xinhua)
Chinese President Xi Jinping and his Russian counterpart, Vladimir Putin, met here on Thursday and exchanged in-depth views on current international situation. The two heads of state held a meeting and also had dinner together on the sidelines of the 10th BRICS summit in Johannesburg, South Africa. During the meeting, they also touched upon major issues of common concern. The 10th BRICS summit is running from Wednesday to Friday under the theme of "BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the Fourth Industrial Revolution." ^ top ^

Xi says China to boost closer development partnership with India (Xinhua)
Chinese President Xi Jinping said here Thursday that China is willing to consolidate and develop a closer development partnership with India. Xi made the remarks while meeting with Indian Prime Minister Narendra Modi on the sidelines of the 10th BRICS summit in Johannesburg, South Africa. It is their third meeting in three months. "We have provided a top-level design for bilateral ties in a macroscopic perspective and a timely fashion, which is conducive to mobilizing the positive elements of all sectors in both countries and uniting the wills of the 2.6 billion people of the two countries, so as to form a force that would push bilateral ties into the future," he said. Xi said the Chinese side is ready to work with the Indian side to carry forward the fresh impetus of bilateral relations since their informal meeting in China's central city of Wuhan in April. The Chinese leader called on the two sides to implement the important consensus reached by the two leaders at the Wuhan meeting. He called on the two sides to strengthen strategic communication, increase mutual trust, promote practical cooperation, as well as cultural and people-to-people exchanges, strengthen dialogue and properly manage differences. Both China and India are countries of ancient civilizations, and have made important contributions to the advancement of human civilization, said Xi. Today, as major emerging market economies, as well as vindicators and contributors of the current international order, China and India should strengthen bilateral cooperation, while exploring a new model for regional cooperation, upholding multilateralism, championing economic globalization and striving for a more just and rational international order. Modi said he and Xi had met three times in three months, and that can fully display the two countries enjoy a high-level bilateral relationship. The Wuhan meeting is of milestone significance in the history of India-China relations, which has greatly increased their mutual trust, and will bring new impetus and opportunities to the long-term development of bilateral relations, he said. The Indian side is ready to keep close dialogue and communication with the Chinese side, deepen cooperation in various fields, properly address differences, strengthen cooperation within a multilateral framework, and jointly handle such challenges facing developing countries and emerging market countries as protectionism and global market fluctuations to advance their closer development partnership, Modi said. ^ top ^

South Korea scrambles jets to intercept Chinese warplane in its air defence territory (SCMP)
South Korea said on Friday it had scrambled military jets to intercept a Chinese military aircraft that entered the South's air defence territory. The Chinese plane spent more than four hours in the Korea Air Defence Identification Zone (ADIZ) after flying near a submerged rock in the area controlled by Seoul but claimed by Beijing, the South Korean Joint Chiefs of Staff said in a statement. South Korea's Air Force deployed more than one fighter jet to track and blare warnings to the Chinese aircraft to leave, the statement said. There was no immediate comment from China. The ADIZs are not legally binding agreements under international treaties, but Seoul extended its own territory in 2013 to partially overlap with a zone newly declared by China. China's expansion included the submerged rock named Ieodo, which Seoul controls with a research station platform built on top of it. Chinese warplanes made a similar flight over the South Korean zone in February and April, the joint chiefs said, while at least two similar instances were observed last year. In February, Seoul summoned the Chinese ambassador to lodge a complaint, and Beijing said then the aircraft was conducting a training flight in line with international law and practice. ^ top ^

Premier Li calls for healthy, stable China-Japan ties (Xinhua)
Chinese Premier Li Keqiang on Tuesday met with Tadamori Oshima, speaker of the House of Representatives of the Japanese parliament, calling for a healthy and stable bilateral relationship. "Healthy and stable China-Japan ties are beneficial to the two countries and their peoples, as well as regional and global peace, stability and prosperity," Li said. This year marks the 40th anniversary of the signing of China-Japan Treaty of Peace and Friendship. Li said both sides should follow the four political documents signed between the two countries and implement their consensus to promote bilateral ties along the right track. As major economies in the world, China and Japan are also the beneficiaries of free trade. The two countries should safeguard multilateralism, and advocate rules-based international order and free trade system, he said. "China will continue its opening-up, relax market access and welcome foreign companies, including Japanese companies to expand their cooperation with China," Li said, adding that China is willing to work with Japan to strengthen cooperation in innovation-driven development and third-party markets. He also called for more parliamentary exchanges to enhance understanding and mutual trust. Oshima said Japan is willing to promote bilateral ties by "following the four political documents signed between the two countries and in the spirit of taking history as a mirror to guide the future." "The Japanese side is willing to work with China to strengthen exchanges between legislative bodies to promote a steady development of bilateral ties," Oshima said. Wang Chen, vice chairman of the Standing Committee of the National People's Congress (NPC), also met with Oshima on Tuesday. Wang said the legislative organs of the two countries could deepen cooperation to facilitate culture, youth and people-to-people exchanges in order to consolidate public support for bilateral ties. Oshima said the House of Representatives of the Japanese parliament is ready to work with the NPC to play a role in developing Japan-China relations. ^ top ^

Good neighborliness serves fundamental interests of China, the Philippines: FM (Xinhua)
China's Foreign Ministry on Tuesday highlighted the value of cooperation between China and the Philippines. "Cooperation between the two countries over the recent two years has shown that good neighborliness is the only choice serving the interests of the two countries and the two peoples," Foreign Ministry spokesperson Geng Shuang said at a regular press conference. Philippine President Rodrigo Duterte spoke highly of cooperation with China in the battle against transnational crimes and drug control at his annual State of the Union address on Monday. He also said an improved relationship with China did not mean the Philippines would waver in its commitment to defend its interests in the South China Sea and that the Philippines was trying to resolve disputes through bilateral and multilateral platforms. Geng said that China had noticed Duterte's positive remarks on bilateral relations and cooperation in the past two years. "China appreciates the Philippine government's independent foreign policy under the leadership of President Duterte, as well as the development of normal relations and mutually beneficial cooperation by the Philippines with other countries based on equal and mutual respect," Geng said. Geng said, since the improvement of bilateral relations in 2016, the two sides have resumed cooperation in various fields and achieved marked progress, bringing tangible benefits to the two peoples. Security cooperation is a focus of bilateral cooperation, Geng said. "China firmly supports President Duterte's efforts in drug control, fight against terrorism and transnational crimes, and help the Philippine government maintain the peace and tranquility of the country." "Bilateral cooperation practice in recent years have shown that good neighborliness is the only choice that serves the interests of the two countries and the two peoples, and is the right direction that the two countries should always stick to," Geng said. He said, since President Duterte assumed office, China and the Philippines have maintained smooth and effective communication on the South China Sea issue, positively held dialogues and cooperation that safeguarded the overall stability in the area. "China stands ready to work with the Philippines to properly manage disputes, focus on pragmatic cooperation and jointly maintain the peace and stability in the South China Sea," Geng said. "We will also continue to jointly build regional rules with ASEAN countries including the Philippines, and promote the 'the Code of Conduct in the South China Sea' to achieve more positive progress." ^ top ^

China, South Africa agree to carry forward traditional friendship, achieve greater results in ties (Xinhua)
China and South Africa on Tuesday pledged to carry forward their traditional friendly relations and advance their comprehensive strategic partnership in the new era. During the talks between visiting Chinese President Xi Jinping and his South African counterpart Cyril Ramaphosa, the two leaders agreed to strengthen high-level exchanges, deepen political mutual trust, align their development strategies, promote practical cooperation and increase people-to-people exchanges, thus enabling the two peoples to enjoy more fruits of the bilateral cooperation. Xi expressed appreciation to Ramaphosa for his important contributions to the establishment of diplomatic ties between the two countries and to the development of bilateral relations. Noting that China and South Africa are both major developing countries and emerging-market countries with important influence, Xi said that since the forging of diplomatic relations 20 years ago, the two sides have been committed to mutually-beneficial cooperation and common development, stood together through thick and thin, shared weal and woe, and established a "comrade plus brother" relationship featuring sincere friendship, mutual trust and close bond. He said that China-South Africa relations have leapt from a partnership to a strategic partnership and then to a comprehensive strategic partnership over the past years, bringing tangible benefits to the two peoples. "Taking the opportunity of the 20th anniversary of diplomatic ties, China stands ready to work with South Africa on supporting each other in hosting this year's BRICS summit in Johannesburg and the Beijing summit of the Forum on China-Africa Cooperation (FOCAC), inheriting the past and ushering in the future, and pushing for more outcomes from the bilateral comprehensive strategic partnership, so as to bring greater benefits to our two peoples," Xi said. Noting that China-South Africa relations are now standing at a new historical point, the Chinese president proposed the two sides to focus on the following areas to advance the bilateral relations:
-- The two sides should strengthen high-level exchanges, deepen political mutual trust, support each other in independently choosing the development path that suits their own national conditions, continue to understand and support each other on issues involving respective core interests and major concerns, increase exchanges between the governments, legislative bodies and various other areas, and deepen the inter-party exchanges and cooperation.
-- The two sides should enhance cooperation within the frameworks of the Belt and Road Initiative and the FOCAC, align their development strategies, deepen exchanges and cooperation in new economy sectors and sunrise industries, and share the development opportunities brought by the fourth industrial revolution. The Chinese side is willing to focus on promoting cooperation in such areas as infrastructure construction, trade and investment, scientific and technological innovation, and finance, and supports the endeavors made by the South African government to develop the economy, create jobs, improve people's livelihood and promote social transformation.
-- The two sides should deepen people-to-people bonds, implement the consensus the two sides have reached on facilitating personnel exchanges and strengthening cultural and educational exchanges, and consolidate cooperation in human resources development and tourism.
-- The two sides should promote security and law-enforcement cooperation. The Chinese side is willing to strengthen cooperation with South Africa on law-enforcement capacity building.
-- The two sides should increase coordination within multilateral frameworks including the UN, G20, BRICS and BASIC (Brazil, India, South Africa and China), jointly safeguard multilateralism, oppose unilateralism and protectionism, and promote a more just and equitable international order.
For his part, Ramaphosa said that South African and Chinese peoples enjoy traditional friendship, and the two countries have constantly consolidated and developed their relations since the establishment of diplomatic ties 20 years ago. The relations have gone beyond the bilateral scope with important strategic significance, and the two countries have carried out fruitful cooperation on regional and multilateral levels, he said, noting that the special friendly ties have brought substantial benefits to the two peoples. Ramaphosa said that it is in the fundamental and long-term interests of South Africa to continue to strengthen political mutual trust, expand practical cooperation, enhance scientific, technological and people-to-people exchanges with China, and promote their comprehensive strategic partnership. He pledged that South Africa will continue to firmly adhere to the one-China policy, push for positive progress in cooperation within the framework of the Belt and Road Initiative, increase communication and coordination with China on major international and regional issues, oppose unilateralism, strengthen multilateralism, and safeguard the common interests of developing countries. On the 10th BRICS summit in Johannesburg on July 25-27, Xi said that it is the first one to be held in the second "golden decade" of BRICS cooperation and has a special significance. BRICS gathers the world's five major emerging economies -- Brazil, Russia, India, China and South Africa. "We should bear in mind the big picture of BRICS cooperation, constantly cement our strategic partnerships, make a loud and clear voice on upholding multilateralism, and jointly build an open world economy," Xi said, while pledging to coordinate with and support South Africa for a successful BRICS summit. Xi and Ramaphosa will co-chair the FOCAC Beijing summit in September. Hailing the contributions that South Africa has made for the institutionalization of the FOCAC and friendly cooperation between China and Africa as co-chair of the forum, Xi said that China looks forward to discussing with African countries on plans to promote China-Africa friendly cooperation in the new era and jointly build a closer China-Africa community with a shared future. "It is China's long-term and firm strategic choice to strengthen solidarity and cooperation with African countries," he said. Ramaphosa expressed gratitude for China's support in the 10th BRICS summit in Johannesburg. He told Xi that he looks forward to attending the FOCAC Beijing summit and will coordinate with China to ensure the success of the two major events. After the talks, the two heads of state witnessed the signing of a series of bilateral cooperation documents and met with the press.Ramaphosa held a grand welcome ceremony for Xi prior to the talks.Xi arrived in Pretoria on Monday to pay his third state visit to the "rainbow nation."South Africa is the fourth stop of Xi's five-nation Middle East and Africa tour, which has taken him to the United Arab Emirates, Senegal and Rwanda. He will also visit Mauritius during a stopover. ^ top ^

China, Sri Lanka vow to strengthen defense ties (Global Times)
Sri Lanka and China have vowed to strengthen defense ties at a reception held Colombo at the Chinese Embassy to celebrate the 91st founding anniversary of the Chinese People's Liberation Army. Sri Lanka's Defense Secretary, Kapila Waidyaratne, who was the chief guest at the Monday evening event, said China had always been a valuable partner of Sri Lanka and the two nations had enjoyed diplomatic relations for 61 years, supporting each other in the regional and international sphere while making efforts to deepen pragmatic cooperation. Waidyaratne said China's assistance in providing military equipment and technology to Sri Lanka indicated the success of the bilateral military relationship between the two nations. He further said Sri Lanka was grateful to China for all the aid it had provided and the unconditional and open-ended support it had provided for strengthening Sri Lanka's security forces. Senior Colonel at the Chinese Embassy in Colombo, Xu Jianwei, said the Chinese military attaches great importance to improving relations with the Sri Lankan military and in the past few years, the two militaries had witnessed the deepening communication and cooperation in the areas of personnel training, joint training and maritime security. He said China adheres to an independent foreign policy of peace and development. Xu further said China's armed forces advocate a common, comprehensive, cooperative and sustainable security concept, and will continue to develop military-to-military relations that are non-aligned, non-confrontational and not against a third party. "China is willing to enhance mutual strategic trust and is keen to see both countries continue supporting each other on issues of core interest." "China wishes to boost the development of the Belt and Road Initiative to strengthen the pragmatic cooperation between the two countries and the two militaries," Xu said. ^ top ^

Xinhua Headlines: American farmers, businesses bruised in Trump's trade battle (Xinhua)
Farmers and businesses across the United States have begun to feel the pain, as its major trading partners, including China, Canada, Mexico and the European Union (EU), retaliate against a wide range of American products, in response to Washington's ill-advised tariffs. Under the "America First" protectionist policies, the Trump administration has slapped high tariffs on imported steel and aluminum, as well as 34 billion U.S. dollars of Chinese products, escalating trade tensions with its major trading partners. For the United States, "that's not a good strategy. There'll be enough pushback from U.S. manufacturers, who will actually be harmed by these strategies," said Dennis Chookaszian, an adjunct professor at the University of Chicago Booth School of Business. It's not clear how these trade disputes will end, but American farmers and businesses are going to pay a very high price. Here are several American products being affected by retaliatory measures from those trading partners. The U.S. dairy industry, which has been increasingly dependent on foreign markets after years of shrinking domestic consumption, has been stung by the trade disputes provoked by Washington. The Trump administration's new tariffs on many countries, including Mexico, Canada and China, which are major destinations for U.S. milk products, have prompted retaliatory actions. According to the U.S. Chamber of Commerce, the Mexican tariffs could affect as much as 578 million dollars' U.S. dairy goods and China's tariffs could influence 408 million dollars' cheese, whey and other products. "We are calculating that farmers may be losing between 1-2 billion dollars just in the next few months," Jaime Castaneda, senior vice president of the U.S. Dairy Export Council, told Xinhua. "At this very moment, I don't think we're going to lose a lot of exports, but what we are going to lose are a lot of farmers," he said. Don Lutz is getting more and more nervous after spraying soybean at his farm in Scandinavia, Wisconsin, as U.S. soybean futures have already fallen by nearly 20 percent since April. "Things have escalated into different and broader areas... It doesn't look like we're going to get these tariff issues resolved by the time you go to harvest," Lutz told Xinhua during a recent trip to Washington to voice his concern before lawmakers. "To make things worse, most farms are heavily in debt," said Brad Kremer, a soybean farmer in Pittville, Wisconsin with about 3 million dollars worth of idle equipment. "I'm already looking at a loss this year." "If somebody were to lose 20 percent of their income, that hurts," said Ryan Findlay, chief executive officer of the American Soybean Association (ASA). "Farmers see that pain right now. They see that in the prices. That is the immediate impact," he said. China is the top importer for U.S. soybeans, accounting for almost 14 billion dollars in sales, or nearly a third of total U.S. soybean production and two thirds of total U.S. exports, according to the ASA. John Heisdorffer, president of the ASA and a soybean farmer in the state of Iowa, said last week that the U.S. threat to impose additional tariffs on China was "a move in the opposite direction." "Our message to the administration and lawmakers remains the same: these tariffs needlessly hurt soy growers and rural communities," he said. "I don't favor protectionism or tariffs as a way to negotiate a 'better trade deal'," Lutz echoed. "From my perspective, tariffs on steel and aluminum and counter tariffs on agricultural commodities, is a lose-lose relationship for not only American agriculture, but both countries' overall economies," he said. On average, a third of all pecans grown in the United States are sold in China. For Randy Hudson, a farmer in the leading pecan producing state of Georgia, the amount is much more: practically all of his crop goes across the Pacific. "I can tell you this, 99 percent of our production goes to China," said Hudson, who has gradually expanded his pecan farm acreage from a few hundred to 2,500 to meet the growing demand of pecans in China. "I've just begun a project to expand my storage room and pecan processing power three-fold last year," Hudson told Xinhua. However, China's retaliatory tariffs on U.S. pecans make Hudson's business vulnerable, as the 10-million-dollar project was financed by loans and is dependent on stable sales revenues. Hudson estimated that 30-40 percent of his sales will evaporate, registering a loss of 6-8 million dollars, significantly higher than his profit margin. In addition, imported parts that are crucial to farming may also become more costly, further squeezing Hudson's margin. "We're the collateral damage of a much bigger fight," Hudson said. "Mr. Trump understands the art of deal in North America... but I'm not sure he understands the art of deal in Asia and our good friends in China." Tom Adams, owner of Maine Coast Company, sees a huge market potential for Maine lobsters in China, especially when its second-tier cities started to show a great appetite for seafood. He is expanding the company's facilities and hoping to ship more to the world's fastest expanding lobster market. But the Trump administration's tariff scheme against China may well ruin his plan. With China's retaliatory tariffs, the U.S. lobster industry will further lose its edge over its archrivals, such as Canada, Annie Tselikis, executive director of the Maine Lobster Dealers' Association, told Xinhua. "That's frustrating for us because competing in a disadvantaged market will be challenging," she said. China's tariff on Canadian lobsters dropped to 7 percent at the beginning of this month, while the tariff on U.S. lobsters has risen to 40 percent. "The tariffs will impact almost everybody in Maine as people in the state are more or less involved in the industry," Tselikis said, noting that China accounts for 15-20 percent of the export value of U.S. lobsters. The congressional delegation in Maine has warned that the trade conflict with China would jeopardize the state's lobster industry. "To save our state's economy from further hardship and uncertainty, I urge the administration to pursue a more coherent and methodical trade strategy and to weigh the potential repercussions carefully before taking further action," said Congresswoman Chellie Pingree. To meet the booming demand for American whiskey, particularly from Europe and Asia, distilleries that make Bourbon have mushroomed in recent years. Amir Peay is one of those distillers lured into the industry, investing several millions of dollars to refurbish an evolutionary war-era whiskey brand in Lexington, the state of Kentucky. However, retaliatory tariffs from the EU and China on American whiskey have pushed up the prices of the signature U.S. liquor and cast a shadow over Peay's promising business. While the uniqueness of U.S. whiskey has won loyal consumers who are willing to pay the extra money, higher prices could very well "put the brakes" on a promising growth momentum the industry is seeing, Peay told Xinhua. "Basically the whole world put a 25 percent tariff on our industry, where we are collateral damage in this, it's very disappointing," he said. Peay said bigger names in the industry can store their inventory for a possibly better time in the future, but his small distillery is more vulnerable in any disruptive trade environment. Eric Gregory, president of Kentucky Distiller's Association, told Xinhua that he hoped Washington and Beijing would solve their disputes through negotiations, as there are no winners in a trade war. "We would just like to see everybody sit down. If they need to sit down over a glass of Bourbon and work this out, we'll provide the whiskey," he said. ^ top ^

Chinese money pours into Brazil as US trade war bites, with US$54 billion across 100 projects (SCMP)
As China and the United States – the world's top two economies – battle over trade, Beijing has increasingly turned to Brazil to fill the void, pouring money into a diversified portfolio of investments. Before 2010, Chinese funds flowing into Brazil were primarily focused on assuring food and energy supplies for the Asian giant. But in recent years, that strategy has expanded to include the telecommunications, automotive, renewable energy and the financial services sectors. Before 2010, Chinese funds flowing into Brazil were primarily focused on assuring food and energy supplies for the Asian giant. But in recent years, that strategy has expanded to include the telecommunications, automotive, renewable energy and the financial services sectors. China is Brazil's biggest trading partner. From 2003 to June this year, Chinese firms have invested almost US$54 billion in around 100 projects in Brazil, according to figures from Brazil's planning ministry. In 2017 alone, the figure nearly hit US$11 billion. That is good news for Brazil – Latin America's biggest economy has emerged slowly, with a high and rising public debt, from its worst recession in history, which extended through 2015 and 2016. "China can play a very important role to help the Brazilian economy recover from stagnation," said Luiz Augusto de Castro Neves, president of the China-Brazil Business Council. From 2005 through 2017, Brazil has been the recipient of 55 per cent of all investments made by Chinese businesses in Latin America, according to the UN Economic Commission for Latin America and the Caribbean. And that money is going to an ever-wider selection of industries. "China can play a very important role to help the Brazilian economy recover from stagnation," said Luiz Augusto de Castro Neves, president of the China-Brazil Business Council. From 2005 through 2017, Brazil has been the recipient of 55 per cent of all investments made by Chinese businesses in Latin America, according to the UN Economic Commission for Latin America and the Caribbean. And that money is going to an ever-wider selection of industries. Despite its economic challenges, Brazil maintains a favourable trade balance with China, thanks to record surpluses (it exceeded US$20 billion in 2017). Brazilian exports to China, which were two per cent of the total in 2000, have climbed over nearly two decades to reach 26 per cent in the first quarter of 2018, according to official figures. Some analysts nevertheless point to a strong imbalance in trade, since raw materials including iron and soybeans make up 86 per cent of exports. But Castro Neves says the agro-food sector is increasingly a "value-added" one. "These days, the production of soybeans uses more and more high technology and stimulates other activities," he said. Castro Neves says he regrets the lack of a broader Brazilian strategy to benefit from this massive influx of capital. "Latin American countries, including Brazil, have a passive attitude towards China," he explained. "The Chinese know exactly what they want from us. "But do we know what we are looking for from them, other than selling more?" ^ top ^


Domestic Policy

Equipment failure to blame for substandard vaccine (China Daily)
Equipment failure caused the production of substandard vaccine by Wuhan Institute of Biological Products Co, the Hubei province Food and Drug Administration revealed on Friday. The vaccine packing equipment experienced a temporary fault that led to the uneven distribution of effective elements in the vaccine suspension, it said in a statement. Wuhan Institute of Biological Products, based in Hubei, produced a batch of 400,520 doses of substandard diphtheria, tetanus and whooping cough vaccine (DTaP) for infants. Another manufacturer, Changchun Changsheng Bio-tech Co in Jilin province, produced 252,600 substandard doses. The 400,520 doses of substandard vaccine produced by Wuhan Institute of Biological Products were sold to Chongqing municipality and Hebei province, the administration said. The number of children vaccinated with them has not been revealed, but the administration said the remaining substandard doses had been recalled and destroyed by the manufacturer. It said health departments in Hebei and Chongqing had arranged since February for children given the substandard vaccine to be revaccinated. The 252,600 doses of vaccine produced by Changchun Changsheng Bio-tech Co were all sold in Shandong province, with 215,184 children being vaccinated, according to the Center for Disease Control and Prevention in Shandong. The China Center for Disease Control and Prevention said the substandard DTaP vaccines are not harmful to the human body, but could lead to poor immunity from the diseases targeted. ^ top ^

Chinese President Xi Jinping orders crackdown over 'appalling' vaccine scandal (SCMP)
Chinese President Xi Jinping has described the country's latest vaccine scandal as "appalling", pledging a thorough investigation into China's worst public health crisis in years. Taking time out from his trip to Africa, Xi said China was determined to clean up the scandal-ridden industry, ordering local authorities to conduct an investigation immediately and release the findings to the public "on time" to ensure social stability. "The violations by Changchun Changsheng Bio-technology are serious and appalling," state broadcaster CCTV quoted Xi as saying, as police in Changchun took the company's chairwoman Gao Junfang and four senior executives away for questioning. Xi also ordered the authorities to use severe punishment "to cure the chronic disease [of corruption] and scratch poison from one's bones". He told the authorities to resolutely "improve the supervision of vaccines and guard the bottom line of safety in order to safeguard public interest and social security". The orders echoed zero-tolerance directives by Chinese Premier Li Keqiang on the weekend in response to revelations that Changsheng Bio-tech had produced inferior DPT (diphtheria, whooping cough and tetanus) vaccines for children as young as three months old. "No matter what companies or people are involved, severe punishment would be meted to all who [violated the safety standards] and there would be no tolerance," CCTV quoted Li as saying. Li said the incident crossed a "moral bottom line" and ordered an investigation into the "complete production and sale processes" of the vaccines. Meanwhile, officials in the east Chinese province of Shandong said there had been no reports of any children sickened by the inferior vaccines. In a report on Monday, newspaper Dazhong Daily quoted the Shandong Centre for Disease Control and Prevention as saying that while the DPT vaccines were ineffective they were not thought to be harmful. It said also it had records for all 215,184 children who were given the shots. As new vaccine scandal grips China, parents say they've lost faith in the system. It is not the first time the Chinese leader has vowed to clean up the vaccine industry. Li made much the same pledge more than two years ago in response to a similar scandal. According to a statement on the government's website, Li said in March 2016 that China "must fix" the loopholes in the supervision of vaccine production and distribution after it was revealed that a total of 570 million yuan worth of improperly stored or expired drugs had been sold across the country over several years. Experts insist flu vaccines are '66 per cent effective' amid doubts cast by Hong Kong celebrity. In the latest scandal it is thought that hundreds of thousands, if not millions, of Chinese children might have been injected with ineffective vaccines, made by the country's largest producers, under a compulsory government health care system. Fury and fear filled China's social media over the weekend as parents questioned how such a scandal could have been allowed to happen. On WeChat, the country's most popular messaging service, the Chinese word for vaccine appeared in 321 million articles and searches, 80 times the number of times it appeared on Friday. China reports outbreak of highly contagious H5N1 bird flu at chicken farm The Jilin Food and Drug Administration, where Changsheng Bio-tech is based, said on its website on Friday that the company sold about 252,600 substandard DPT vaccines to the Shandong Centre for Disease Control and Prevention, the agency in charge of public health in a province of about 100 million people. For that offence Changsheng Bio-tech was fined 3.4 million yuan, but it was also revealed that the company had been guilty of another serious violation over the manufacture of rabies vaccines. The State Drug Administration said on July 15 that during an unannounced inspection of the listed company, officials discovered forged data relating to about 113,000 rabies vaccines. The watchdog revoked the company's licence to produce the drug and said it might launch a criminal investigation. Changsheng Bio-tech issued a statement via the Shenzhen Stock Exchange on Sunday saying it was "deeply sorry", and had stopped production of DPT. The company's share price has nearly halved in the past week, and trading in the stock was suspended on Monday. In November, China's national drug watchdog announced that Wuhan Institute of Biological Products, another major vaccine producer, had sold 400,520 inferior DPT vaccines to Chongqing and Hebei. Rabies vaccine maker to stop output in China's latest drug safety scandal. A father in Guangzhou, whose daughter was given four doses of DPT produced by Changsheng and the Wuhan Institute in 2015 and 2017, told the South China Morning Post on Sunday that he no longer had any faith in vaccines made in China. The man, surnamed Lin, said he planned to take his daughter to Hong Kong for vaccinations in the future. "I [and my family] will not be having any more vaccinations on the mainland until the government takes real and serious steps to resolve this issue," he said. ^ top ^

China cracks down on illegal publications, Internet services (Xinhua)
As part of its fight against pornography and illegal publications, China confiscated more than 9.8 million illegal publications and dealt with 5,500 cases in the first half of this year. According to an Office of the Fight Against Pornography and Illegal Publications statement on Tuesday, the relevant authorities also deleted more than 27 million harmful and pornographic online posts, and shut down over 62,000 websites and applications for publishing vulgar content. A total of 565 of the cases were criminal ones, according to the statement. "Notable progress was made in cleaning up the cultural market, protecting juveniles from harmful information and establishing a long-term supervisory mechanism," the statement said. One of the highlights was a joint operation by authorities, including the agencies of culture, public security, and industry and information technology, to clean up online services such as live streaming, short video clips, microblogs, WeChat accounts, e-commerce platforms, online games and digital literature. In two major cases in central China's Hunan Province and east China's Zhejiang Province, 163 and 200 suspects were respectively detained for distributing pornography through webcasting software. Efforts were also made to crack down on child pornography. In a joint operation in January, the authorities deleted more than 370,000 posts containing child pornography and required major websites to conduct internal inspections, leading to the removal of more than 1.3 million suspicious links. ^ top ^

Swept up in China's anti-corruption campaign, and forsaken by a secretive, suspect legal system (SCMP)
[…] Sun was among 12 officials above deputy ministerial level found guilty of corruption eight years ago. That number climbed to 40 convictions last year, when the trials of a vast number of disgraced officials in Chinese President Xi Jinping's far-reaching anti-corruption campaign ended. The campaign, which has swept up more than 1.5 million officials across the country, was seen as highly effective in boosting the party's legitimacy within China as it cracked down on the pervasive culture of corruption. Yet the drive has had problems of legitimacy, as a number of investigations were widely seen as tools to punish political opponents and the legal system used to authorise a flawed process. Despite Beijing's claim to "rule the country by law", scholars inside and outside China have long questioned the fairness of the nation's legal system, as courts generally are given little authority and almost everyone who is charged is found guilty. Corruption cases are further complicated by secrecy, as suspects must first endure covert investigations while they are detained incommunicado, with no access to lawyers, before they are handed to prosecutors. Courts in corruption trials barely challenge the legality of evidence presented by prosecutors, which defendants commonly claim are confessions extracted through force. After the conviction, verdicts in a vast majority of cases are kept secret from the public, unlike those of other criminal cases, though only a tiny proportion actually involve state secrets. "These corruption cases are plainly politically sensitive and involve often influential defendants as well as accusers," said Jerome Cohen, director of the US-Asia Law Institute at New York University. Chinese courts were weak and could hardly overcome pressure from anti-corruption offices, he said. The party's anti-corruption force, or discipline inspection committees, was in charge of originating most corruption cases involving members of the ruling Communist Party before a March overhaul that merged it with the new supervisory commissions as part of the party-state reorganisation. The new commissions are considered more powerful, as they cover officials as well as hospital, university and media executives who are not party members. Both the party's anti-corruption force and the supervisory commissions outrank the prosecutors office and courts on the same level. "It is much harder to vindicate rights in corruption cases than ordinary criminal cases, even if the case really involves only corruption rather than the political struggle, local or national," Cohen said. […] Sun's case is not unusual. The same patterns can be seen in a collection of 27 corruption convictions, all of which the country's supreme prosecutors office ordered lower-level branches to review in 2016. The office's mouthpiece newspaper said all could be below judicial standard. Eleven provincial prosecutors offices were told to review the cases and were given deadlines, the report said. Two years after the directive, there has been one retrial, with a six-month reduction of the sentence, and most of the cases have yet to be touched by prosecutors or courts. Most of the cases were handed to prosecutors after 2013. Legal scholars and lawyers have long decried that trials in China's judicial system, with its long-time conviction rate of over 99.9 per cent, have been overshadowed by appraisals of judges, police chiefs and prosecutors, making vindication of the accused notoriously difficult. The challenge is greater in corruption cases, which are staged to highlight the government's achievements in clean politics and pushed by the party's anti-corruption watchdog, who outranks local prosecutors offices and courts. In most of the 27 cases, convicted officials and their lawyers told of cases built on forced confessions, many coerced by threatening the safety of family members, according to verdicts and legal petitions seen by the Post. Relatives provided evidence that the accused had been briefly moved from detention centres to locations with no video surveillance where, they said, torture took place. Almost all of the legal petitions described torture to extract confessions, sleep deprivation, and incoherence or contradictions in evidence, with some attaching a diagnosis of physical disabilities sustained during detention. "Ordering a mandate itself underlines that the authorities have looked through the cases and found them very questionable," said Zhang Yansheng, a Beijing-based criminal lawyer who first flagged the cases to the top prosecutor's office. "Similar convictions are still taking place in China, and the old ones have remained unsolved." […]. ^ top ^



Tibet underage students banned from religious activities in accordance with law (Global Times)
Underage students in Southwest China's Tibet Autonomous Region must not take part in religious activities during the summer vacation, according to school regulations, with experts saying that the education law separates education from religious influences. "We have sent notices to both students and their parents, and have had students sign an agreement that they will not take part in any form of religious activity during the summer vacation," Choephel, the head of the political education department at Lhasa Middle School, told the Global Times on Monday. The school reiterates the regulation every time in class meetings and parent-teacher meetings, not only before a vacation, he said. The students are following the regulation under the guidance of their parents and teachers, Choephel said, adding that the regulation was established under a guideline sent to primary and middle schools by Tibet's education department. Other schools in Tibet also have similar regulations under the guideline. "China's education law separates education from religion, and that is the legal basis for the move," Xiong Kunxin, an ethnic studies professor at Tibet University, told the Global Times on Monday. "The State separates education from religion. No organization or individual may make use of religion to conduct activities that interfere with the educational system of the State," China's Education Law states. Northwest China's Xinjiang Uyghur Autonomous Region also disallows underage students from taking part in religious activities, according to a document released by the State Council Information Office in 2016. Schools in Xinjiang reiterate the regulation throughout the year via notices and class meetings, Zhang Lijuan, a professor at Xinjiang Normal University's School of Marxism, told the Global Times on Monday. "It is important to help young people set up a scientific outlook on the world and life," Zhang said. ^ top ^

Putonghua classes lift Tibetan inmates out of illiteracy (Global Times)
Prison in Southwest China's Tibet Autonomous Region has been teaching Putonghua to inmates and helping them escape illiteracy. Prisoners under the age of 45 are encouraged to receive education in literacy and math in both Putonghua and Tibetan languages for three hours every day, and Tibetan prisoners under the age of 35 are required to learn Putonghua, according to a statement the region's Department of Justice sent to the Global Times Thursday. A prisoner surnamed Mao said after receiving literacy certificate on July 20 that he was illiterate before being locked in the prison, but he is able to write letters to his families and communicate in Putonghua after attending classes organized by the prison, according to the statement. The region's prison has also organized classes in calligraphy, painting, music, computer skills, English and driving, and distributed 430 textbooks on primary school education to prisoners, according to the department. The prison also encourages prisoners to apply for universities. More than 100 prisoners applied for adult higher education examinations this April. The Tibet prison also offers Tibetan language training every year for ethnic Han police officers, said the statement. The Tibetan prison's move came after a notice issued jointly by the region's education and justice department this year, which ordered the inclusion of prisoners' cultural education into the region's national education plan. Xiong Kunxin, a professor on ethnic studies at Minzu University of China in Beijing, told the Global Times on Thursday that study is a reform touching on a prisoners' soul, which could help prisoners better understand the country's laws and reflect on their criminal activities. "Acquiring Putonghua helps minority prisoners blend into mainstream culture through accessing advanced science and cultural knowledge, and their sense of national identity would be reinforced through communicating with other ethnic groups," Xiong said. There are no regulations on the languages prisoners must use during visiting hours, said the department. The prison will arrange for Tibetan police for prisoners who cannot speak Putonghua during visiting hours, according to the region's Department of Justice. ^ top ^



All Hong Kong airlines change Taiwan's destination name to 'Taiwan, China' on deadline set by Beijing (HKFP)
All commercial airlines in Hong Kong have changed the destination name for Taiwan to "Taiwan, China" on Wednesday – the deadline set by the Civil Aviation Administration of China (CAAC).The airlines include Hong Kong Airlines, HK Express, Cathay Pacific and its subsidiary Cathay Dragon, previously known as Dragonair. Cathay Pacific Airways Ltd was the territory's last commercial airline to comply with the CAAC's demands. The company told HKFP: "HKSAR is also where our operations are based. We must comply with the regulations and requirements of the relevant civil aviation authorities." Wednesday 10am screenshot (top), 12pm screenshot (bottom). Photo: Cathay Pacific screenshot. The CAAC sent letters to 44 international airlines in April asking them to remove references to Taiwan, Macau and Hong Kong as independent regions. It said it violated the government's One China policy. The CAAC warned that potential repercussions could include blocking airline websites in China and losing access to the Chinese aviation market. In a letter published by the Washington Post, Chinese authorities asked that references to Taiwan be changed to "Taiwan, China" or "Taiwan, Province of China." Beijing claims that the island nation – officially known as the Republic of China – is a province of China. It does not recognise it as an independent country, though the island has been self-ruled since its split from the mainland after the 1949 civil war.HK Express. Photo: Wikicommons. When asked about US airlines' failure to alter the destination name, Ministry of Foreign Affairs of China spokesperson Geng Shuang said on Tuesday: "The One China principle is the universal consensus of the international community. Adhering to the One China principle is the political foundation of the steady development of China-US relations, and the US side is well aware of this. The One China principle is un-negotiable." The US government called the demands "Orwellian nonsense" in May, despite warnings from Chinese officials that their refusal to comply could damage Sino-American relations. ^ top ^



Is Taiwan warming to mainland China as Beijing turns up the heat? (SCMP)
There's an old slogan from a shampoo ad in Taiwan that has struck a chord with residents for more than 30 years: having your hair permanently waved is like love – you long for it but are afraid to get hurt at the same time. It is so popular that it can be heard repeatedly on the streets on any given day, possibly because it sums up how many people here feel towards the mainland: they hope to benefit from China's economic rise, yet they have no plan to return to the mainland's fold, at least for now, fearing that could sacrifice the democracy and freedom they have long held. This sentiment has grown stronger since the beginning of the year after Beijing reacted angrily over US President Donald Trump signing the Taiwan Travel Act, non-binding legislation that encourages diplomatic exchanges between senior US and Taiwanese officials. Top officials in Beijing, already irked by Trump's approval of the National Defence Authorisation Act (inset) in December to allow high-level military exchanges with Taiwan, chastised Washington and warned Taipei against harbouring any illusion of declaring independence. Stridency over Taiwan has since hardened on the mainland, with talks of reunifying Taiwan by force if necessary. Retired General Wang Hongguang told the state-run Global Times that the People's Liberation Army has six effective ways to "unify" Taiwan within 100 hours. Beijing suspended talks and exchanges with the island after Tsai Ing-wen, of the independence-leaning Democratic Progressive Party (DPP), became president in 2016 and refused to accept the one-China principle. Voices such as General Wang's usually fan the flames of resentment towards the mainland as most opinion polls often show whenever Beijing raises its pitch against the island, support for Taiwan's independence rises in step. But an opinion poll by the pro-DPP Taiwan Public Opinion Research Foundation in March – after Wang's comments – showed the number of people who support Taiwan independence had dropped to 38 per cent from 51.2 per cent in 2016. People who identified as Taiwanese, rather than Chinese, rose 3.2 per cent to 75.2 per cent over the same period last year as those who identified as Chinese dropped 0.9 per cent to 9.7 per cent, however, 20.1 per cent of respondents said they believed it would be better off for Taiwan to reunify with the mainland. That 20.1 per cent figure was almost the same as those who supported maintaining the status quo, indicating a gradual change of mindset in Taiwan, observers said. Another opinion poll in April showed 67 per cent of respondents would fight for Taiwan should Beijing attack the island, but the percentage dropped to 55 per cent if the attack was caused by a declaration of independence. Wu Nai-te, a researcher of the social science institute of the Academia Sinica, noted that the 67 per cent was part of a gradual decrease from 75.9 per cent in 2016 and 69.1 per cent in 2017. The same foundation found in June that 49 per cent of Taiwanese adults had an overall good impression of the mainland, against 44 per cent who said they had a negative view, marking the first time the survey recorded a greater percentage of people who said they liked the mainland versus those who said they disliked it. Analysts say the mainland's soft power was playing a role. The growing popularity of mainland television programmes, as well as rising demand for mainland smartphones and other IT products, plus economic sweeteners from Beijing have greatly reduced resentment. "Many young people, who used to chase Japanese or Korean entertainment programmes, have now shifted to blockbuster TV dramas and talent shows from the mainland and buy things from the Tao Bao shopping website (owned by Alibaba, which owns the South China Morning Post)," said Chuang Chia-yin, associate professor of National Taiwan Normal University. In February, Beijing introduced 31 measures that it said were designed to give Taiwanese companies and individuals more access to benefits and opportunities on the mainland. The sweeteners have allowed residents to start businesses and take up professional posts on the mainland, said Liu Meng-chun,of the Chung Hua Institution of Economic Research. As the impression of the mainland improves in Taiwan, more people find it harder to believe Beijing would actually use force against it. "The mainland has always said Taiwan is a Chinese province. So it would be impossible for it to send forces to attack Taiwan and kill its people," said Bruce Chiu, operator of Hercules Supplements and Sportswear. […] ^ top ^



Implications of EU-US trade truce for China (Global Times)
European Commission President Jean-Claude Juncker and US President Donald Trump reached a compromise Wednesday to resolve their trade conflicts. The EU pledged to expand imports of soybeans and liquefied natural gas from the US. Washington agreed to hold off on US tariffs on cars and auto parts from the EU. The two sides also said they would seek to eliminate tariffs, trade barriers and subsidies for non-automotive industrial goods. Wednesday's compromise between Washington and Brussels greatly eased trade tension between the two sides, but did not completely solve their problems. It will be a huge challenge to realize zero tariffs between the two. Consensus will be hard to reach within the EU and Trump will likely break his word again. Yet the possibility exists that the two will turn their compromise into serious negotiations and a final agreement. At least there is the likelihood the US will slow its conflicts with Europe and focus on countering China. Against this backdrop, analyses from the following perspectives are necessary. Has China ever expected Beijing and Brussels to jointly fight the US? Beijing was willing to see the EU opposing US unilateralism, but it did not think China and the EU could become allies against Washington in the trade war. Nor did Beijing count on Brussels to help China in reducing tariff pressure from the US. Both the US and Europe are developed societies, with a similar level of industrial and technological capabilities. They are also more or less of equal strength in dealing with tariff disputes. China is a developing country, which was the legal identity of China in its accession to the WTO. China has a huge GDP, but given its supersized social scale, uneven development and relatively backward development of production in most areas, it is unfair to ask China to assume the full responsibilities of a developed country. Trump's core requirement is that Beijing and Washington must trade with each other under the exact same conditions. This is like making a middleweight boxer fight a heavyweight: China will be at a disadvantage. The EU and Japan recently announced the establishment an open trade zone and that Brussels will abolish tariffs on 99 percent of imports from Japan. If the US and the EU can go toward the same direction, a zero-tariff trade zone will be gradually formed among developed economies. In that case, China will be forced to reduce its import duties. Beijing would find it hard to expand its trade ties with other nations. From the perspective of resolving trade disputes, the further opening-up of China is actually a move made by Beijing to keep itself closer to the trade standards of developed nations. China is moving forward. A series of opening-up measures announced during the 2018 Boao Forum for Asia covered all major areas. But there are indeed certain areas that China cannot realize for now. No matter how much pressure Washington puts on Beijing, it will not give in. ^ top ^

China awaits Washington tariff hearing result (China Daily)
United States' accusations against China of unfair trade practices related to intellectual property protection and technology transfer are unfounded, the Ministry of Commerce said on Thursday. The comment was made after a two-day public hearing by the Office of the US Trade Representative was wrapped up in Washington proposing tariffs on another $16 billion worth of Chinese exports. In hundreds of comments sent by business associations to the US trade authority office, more than 90 percent opposed the newly proposed tariffs, said Gao Feng, the ministry's spokesman. "Since the US conducted a Section 301 investigation, the US has been intensifying trade frictions while blaming China for the negotiations being at a standstill," Gao said. Section 301 deals with intellectual property rights issues. The two countries have not yet been in touch regarding a possible timetable for a resumption of negotiations, Gao said. "China has said many times that it is never eager to take part in a trade war, but it is not afraid to participate if necessary. China will firmly defend its legitimate rights," he said, adding that the country will enhance cooperation with its global trading partners and firmly defend free trade principles and a multilateral trade mechanism. The US trade authority also identified an additional $200 billion in goods slated for a 10 percent duty hike after China recently retaliated amid the escalating trade dispute. US President Donald Trump has said he is "ready to go" with tariffs on $500 billion in imports. Gao said the US, for domestic political agenda purposes, would rather sabotage the current hard-earned global trade system as well as damage the rights and interests of companies along the entire value chain, including the US agricultural sector. "But such blackmailing and threats will not have any impact on China," he stressed. Of the tariffs targeting $50 billion in Chinese goods, $34 billion worth took effect on July 6, and the remainder depends on the outcome of the two-day US Trade Representative hearing, which concluded on Wednesday. "The proposed action is not in the interests of the United States," the China Chamber of Commerce said. "Raising tariffs will not only hurt US importers, retailers and downstream industries, but also result in a higher cost of living for ordinary Americans and put millions of US jobs that are tied to trade with China at risk." Semiconductors are the fourth-largest US export by revenue, with a trade surplus of over $6 billion in 2017, and the US has consistently had a semiconductor trade surplus with China, with a surplus of approximately $2 billion in 2017, according to the US International Trade Commission. On the import side, many Chinese-made semiconductors coming into the US are designed and/or manufactured in the US and shipped to China for the final stage of assembly, testing and packaging, the Semiconductor Industry Association said. "Tariffs on US semiconductor-related imports from China would cause US companies to pay tariffs on their own products," the association said. ^ top ^

End of Qualcomm-NXP deal unrelated to China-US trade dispute, anti-monopoly moves needed (Global Times)
The termination of a deal between leading chipmaker Qualcomm and semiconductor manufacturer NXP is a matter of antitrust regulation and has nothing to do with China-US economic and trade relations, the Ministry of Commerce (MOFCOM) said Thursday. China is likely to show growing scrutiny toward market deals to ensure fair play, and this trend has nothing to do with the China-US relationship, analysts said. MOFCOM spokesman Gao Feng made the comments at a regular press briefing, after Qualcomm Inc announced plans to terminate its $44 billion acquisition bid for Dutch firm NXP Semiconductors on Thursday after the US-based firm failed to meet its own deadline of 12:00 pm Beijing time. Although China's antitrust authorities were reportedly in the advanced stages of the approval process for Qualcomm's bid, no outcome had been reached as of the company's deadline. This means the world's largest chipmaker for mobile phones will now activate its plan to withdraw from the NXP deal, which dates back to 2016, and pay a breakup fee of up to $2 billion. Bai Ming, deputy director of the International Market Research Institute under the Ministry of Commerce, said that the case should be seen as a separate issue from the ongoing trade row between China and the US, in which China has been forced to impose retaliatory tariffs on US imports after the latter first slapped massive tariffs on Chinese goods. "As the initiator, Qualcomm is obliged to provide enough materials to persuade regulators that its proposed merger will not cause market centralization toward monopoly," Bai said, noting that the process has to be repeated until the regulator is completely convinced. "There is nothing abnormal." "The falling apart of the deal is good news for domestic industries that make or use chips, as the situation could have prevented a scenario in which the chips for PCs, mobile phones and Smart Internet-connected devices were all held in the hands of an American company," Xiang Ligang, chief executive of telecom industry news site, told the Global Times on Thursday. While China ramps up efforts to develop homegrown chips, it is best if chips for Smart Internet-connected devices, including low-level applications such as lamps, TVs and cars, remain decentralized, Xiang said. Market demand for such chips will be 10 times that of mobile phones, according to Xiang. However, the development of the Qualcomm-NXP deal also drew concerns. China kept Qualcomm well informed as it conducted antitrust probes into the company's acquisition bid for NXP, Chinese Foreign Ministry spokesman Geng Shuang said on Thursday, refuting allegations of a lack of transparency over the deal's approval process. "In fact, the moves by Chinese regulators to prevent centralization or monopolistic practices are at the core of measures to ensure market fairness, which foreign companies doing business in China greatly desire," Bai told the Global Times on Thursday. "What's important is that the approval process moves at the pace of [Chinese anti-monopoly] law, rather than at the pace of companies' schedules," said Chen Danzhou, an assistant professor at the University of International Business and Economics in Beijing. "In due time, more disclosures will be made to quash any doubts or suspicions about a lack of transparency," Chen told the Global Times on Thursday. "The aim of antitrust review is to ensure consumer rights and ensure an open, fair and free market. Market moves [such as the acquisition bid] in line with this aim will receive increasingly open regulation by regulators, while those against it will face growing scrutiny," Chen said. Xiang said the fallout of the deal is a major loss for Qualcomm, as an acquisition with NXP could have provided a significant boost to the company's business in the coming age of fifth generation (5G) telecommunications technology and the Internet of Things, areas in which the demand for chips has grown exponentially. ^ top ^



North Koreans frustrated about delay to end-of-war declaration, says son of former South Korean president Kim Dae-jung (SCMP)
North Korean officials are frustrated about the delay of an official declaration ending the Korean war, and China will need to join peace talks to stabilise the denuclearisation process, according to a son of a former South Korean president. Kim Hong-gul, chairman of the Korean Council for Reconciliation and Cooperation and son of the late Kim Dae-jung – who introduced South Korea's "sunshine policy", designed to soften Pyongyang's attitude towards Seoul – told the South China Morning Post that officials in the North had expressed their disappointment during his trip to the reclusive state's capital last week. "North Korean officials said they are frustrated about the delay and asked whether there is a valid reason for such slow progress," Kim said, noting Pyongyang seemed to believe it had made significant concessions and expected reciprocal action. "The North Koreans initially wanted a peace treaty but they are now asking for an end-of-war declaration," he said, adding that they wanted the declaration to come first to speed up the denuclearisation process. China's special representative on the Korean peninsula, Kong Xuanyou, flew to Pyongyang on Wednesday and is expected to exchange views with its officials about talks between the US and North Korea on denuclearisation. The two Koreas pledged in April that they would work together this year to officially end the war, which was halted by an armistice in 1953. The Panmunjom Declaration said the two Koreas would achieve this through either trilateral talks between the North, South and the US, or four-party talks including China. "The North Koreans also complained at how Seoul is being too conscious of the UN sanctions regime and is somewhat passive in reviving inter-Korean economic projects," Kim said. Pyongyang was not happy with Seoul's reluctant attitude towards the easing of economic sanctions, he said. North Korea's economy shrank 3.5 per cent in 2017 from the previous year – the biggest contraction since 1997 and most likely because of the sanctions regime, South Korea's central bank estimated last week. Satellite images released by the North Korea monitoring group 38 North earlier this week also suggested that the restive state appears to have dismantled its key intercontinental ballistic missile facilities at Sohae, its main satellite launching station. "North Korea will give up more only if sanctions are lifted, even partially," Kim said. "A lifting of sanctions would give the regime the legitimacy to persuade its people to completely give up its nuclear capability to accelerate its economic development." At an undisclosed briefing last week, Seoul asked members of the UN Security Council for an exception to the sanctions to speed up inter-Korean economic projects. Kim also acknowledged Beijing's role in the peace process. "Although the North Koreans did not mention anything about China during my last trip, I believe it would be not be sensible to exclude Beijing from the process," he said. "It would make it difficult to proceed to the end-of-war declaration without China's participation. Seoul must put its efforts into including Beijing, and even Tokyo, to seek their support and cooperation in the peace-building process. "The inter-Korean summit and summit of Donald Trump and Kim Jong-un were big diplomatic successes, but what comes next is more important," he said. "We have some homework to do to maintain the peace process." ^ top ^

DPRK top leader pays tribute to martyrs of Chinese People's Volunteers (Xinhua)
Top leader of the Democratic People's Republic of Korea (DPRK) Kim Jong Un paid tribute to martyrs of the Chinese People's Volunteers on the occasion of the 65th anniversary of the armistice of the 1950-53 Korean War, the Korean Central News Agency (KCNA) reported on Friday. Kim visited the Martyrs Cemetery of the Chinese People's Volunteers in Hoechang County, South Phyongan Province in central DPRK, said KCNA. He said with deep emotion that during the last Fatherland Liberation War, the party, government and people of China dispatched their fine sons and daughters to the Korean front without hesitation despite many difficulties in the early period of building a country to help the Korean people in their cause of justice at the cost of blood and made an immortal contribution to the victory in the war, according to KCNA. "The blood of the Chinese comrades permeated the mountains and streams, trees and plants on this land and the soul of the Korean revolutionaries settled on the vast land of China," he was quoted as saying. Kim said the DPRK-China relations are developing into "special and durable friendly relations unprecedented in history," according to the report. The relations were forged in firm militant friendship and genuine trust deepened at the cost of blood and life, not merely for the reason that the two countries are geographically close to each other, Kim said. It is the due responsibility, moral sense of obligation and noble mission of the Korean people to add eternal luster to the exploits performed by the service personnel of the Chinese People's Volunteers who found themselves on the Korean front and displayed matchless bravery and self-sacrificing spirit, Kim underlined. ^ top ^



President receives WHO Regional Director Dr. Shing Young-Soo (Montsame)
With a slogan "Diagnosing and Treating Hepatitis", the Government of Mongolia and the World Health Organization (WHO) are jointly marking the World Hepatitis Day, which falls on July 28th. Today, President of Mongolia Khaltmaagiin Battulga received Dr. Shing Young-soo, WHO Regional Director for the Western Pacific, who is visiting Mongolia in connection to the event. At the beginning of the meeting, Dr. Shing Young-soo thanked President Battulga for the audience, and said that the WHO appreciated the implementation of the Healthy Liver Mongolia Program, which aims to reduce viral hepatitis infection and hepatitis-related mortality in the country. He noted that the program, implemented by the Government of Mongolia, set an example for countries around the world. On this trip to Mongolia, Dr. Shing Young-soo worked in rural areas where he witnessed primary care physicians and nurses working diligently and even resorting to horses as means of transportation to ensure effective implementation of the program. Dr. Shing Young-soo reiterated his satisfaction with the implementation of the program, expressing his thought that this example of primary health care service should be known to the world. Dr. Shing Young-soo also talked about the International Conference on Primary Health Care, which was held in 1978 in Alma-Ata, Kazakhstan, and the importance of Mongolia's participation in this year's conference. For his part, President Battulga elaborated on the goal of the Healthy Liver Mongolia Program and active efforts of the Government and the corresponding Ministry toward fulfilling the objectives set within the program. President Battulga remarked on the high rate of liver disease in Mongolia, saying that it needs to be addressed by everyone, including the head of state. The President also appreciated the WHO's policy and operational support in the development and implementation of health care programs in Mongolia. The sides exchanged views on pressing issues in the health sector. ^ top ^

Civil service salary to be increased in accordance with inflation rate (Montsame)
On July 26, during a press conference on the project 'Increasing workplace in rural areas and encouraging employment of families', Minister of Labor and Social Protection S.Chinzorig answered the journalists question about salary raise and minimum wage. He said "A working group on minimum wage increase was established following to the request by the Confederation of Mongolian Trade Unions on increasing the minimum wage during the tripartite negotiations. The Tripartite National Committee on Labor and Social Consensus will set the minimum wage rate in the near future. The Ministry proposed to set the minimum wage rate at MNT 300 thousand. We will hold further discussions on that matter as there are many influencing factors including inflation and GDP growth and solve it before submission of the next year budget to the Parliament. As budgetary and fiscal condition improves, we are planning to increase salary of civil servants in accordance with the inflation rate in the fourth quarter of this year or at the beginning of next year. We are negotiating on that matter with the International Monetary Fund (IMF). We will also discuss how to allocate current revenue possibilities with the IMF." The Ministry of Labor and Social Protection is pursuing the policy of linking salaries and pensions with the inflation rate and increase salaries of civil servants based on their workload and skills. According to the survey, in the health sector nurses working in surgery and resuscitation wards have the highest workload, while in the education sector, primary school teachers have the highest workload. Therefore, the Ministry intends to change salary scale based on the research. ^ top ^

UNFPA Mongolia renders aid to flood-affected women and girls (Montsame)
As an assistance to flood-affected women and girls of Ulgii soum of Bayan-Ulgii aimag, the UNFPA Mongolia delivered packages of hygiene and sanitation kits together with transportation expenses to the National Emergency Management Agency on July 26. During the event, Naomi Kitahara, UNFPA Mongolia Country Representative, said "In times of emergency and disaster, matters related to food and shelters are greatly focused, but special needs of women and girls are left behind. Giving attention on this issue, UNFPA Mongolia is, therefore, contributing 250 packages of hygiene and sanitation items worth MNT24 million." The hygiene and sanitation kits include feminine hygiene products, soaps, underwears, socks, clothes, towels, toothbrushes and toothpastes. The package was also highlighted with its containing flashlight and whistle so that women and girls can protect themselves from a risk of gender-based and sexual violence during the time of disaster. ^ top ^

Over 500 lives saved this year (Montsame)
The Emergency Management Department of the Capital City (EMDCC) reported today on disasters and accidents happened this year in the capital city and the responsive measures it has conducted. This year, the Department has received 1845 calls of disastrous occurrence, household and industrial accidents in the capital city, 1609 or 87.2 percent out of them were calls about building fires, 235 or 12.7 percent -- search-rescue work, and call of forest and steppe fire. Compared with the same period of previous year, calls regarding search-rescue activity increased by 35 percent but a decrease has been observed in building fire incidents (18.6 percent), disaster and industrial accidents (3.9 percent respectively). Colonel G.Nergui, chairman of Disaster Prevention Division of EMDCC, said "Entire staff of the EMDCC, police organization and rescue unit of the city worked to cope with these calls, saving over 500 lives and properties worth MNT13.4 billion." In connection with recent heavy rainfalls and flooding, the EMDCC is taking intensive actions on prevention of flood danger, distributing information and warnings and placing warning signs on risky sites.  ^ top ^


Yang Xinhui
Embassy of Switzerland

The Press review is a random selection of political and social related news gathered from various media and news services located in the PRC, edited or translated by the Embassy of Switzerland in Beijing and distributed among Swiss Government Offices. The Embassy does not accept responsibility for accuracy of quotes or truthfulness of content. Additionally the contents of the selected news mustn't correspond to the opinion of the Embassy.
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