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SCHWEIZER BOTSCHAFT IN BEIJING
EMBASSY OF SWITZERLAND IN BEIJING
AMBASSADE DE SUISSE EN CHINE

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
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  27-31.8.18, No. 732  
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Foreign Policy

Donald Trump wants new tariffs on US$200 billion in Chinese imports 'as early as next week' (SCMP)
2018-08-31
President Donald Trump wants to move ahead with a plan to impose tariffs on US$200 billion in Chinese imports as soon as a public-comment period concludes next week, according to six people familiar with the matter. Companies and members of the public have until September 6 to submit comments on the proposed duties, which cover everything from selfie sticks to semiconductors. The president plans to impose the tariffs once that deadline passes, according to the people familiar with the matter, who spoke on condition of anonymity because the discussions aren't public. Stocks fell on the news, with the S&P 500 testing the key 2,900 level. The offshore yuan dropped to the day's low, while the dollar and the yen gained amid a flight to safety. The tariff news exacerbated already fragile market sentiment amid currency routs in Argentina and Turkey. Some of the people cautioned that Trump has not made his final decision, and it's possible the administration may enact the duties in instalments. The US has so far imposed levies on US$50 billion in Chinese goods, with Beijing retaliating in kind. It is also possible the president could announce the tariffs next week, but say they will take effect at a later date. The Trump administration waited about three weeks after announcing in mid-June that it was imposing tariffs on US$34 billion of Chinese goods before they were implemented. The next stage of tariffs on US$16 billion of goods took hold in August. The imposition of the US$200 billion tranche would be the biggest so far and would mark a major escalation in the trade war between the world's two largest economies. It is likely to further unnerve financial markets that have been concerned about the growing tensions. China has threatened to retaliate by slapping duties on US$60 billion of US goods. The Trump administration is finalising the list of Chinese targets and tariff rate, which could range from 10 per cent to 25 per cent, following six days of public hearings earlier this month. Trump's plan to bring down his biggest hit yet on China comes as two-way trade talks show little signs of progress. Discussions between US and Chinese officials last week in Washington yielded few results, thwarting hopes for a quick deal. The move comes as China hawks have been on the ascendancy in the Trump administration. One of them – US Trade Representative Robert Lighthizer – has been responsible for one of the president's biggest trade victories so far by forging a bilateral trade deal to replace Nafta with Mexico. The deal was announced on Monday and Canada is now negotiating to join. The latest China tariff decision is causing heated debate within the administration, with Lighthizer and White House trade adviser Peter Navarro pushing for quick action, and Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow arguing for more time, according to people familiar with the matter. Trump cut off negotiations with China because of what he perceives as Beijing's lack of cooperation in nuclear talks with North Korea, one of the people said. The president wants to squeeze China, believing the US has leverage over Beijing, that person said. Trump on Wednesday accused China of pressuring North Korea not to bend in nuclear negotiations with the US. But he insisted that the trade differences would be resolved. "As for the US-China trade disputes, and other differences, they will be resolved in time by President Trump and China's great President Xi Jinping. Their relationship and bond remain very strong," Trump said on Twitter. Edward Alden, a senior fellow at the Council on Foreign Relations in Washington, said that Lighthizer's Nafta successes were strengthening his hand with the president. That raised the possibility that after months of being passed around various figures in the administration, the talks with China could finally end in the hands of one of its most able negotiators and influential China hawks. If the president "hands the China file to Lighthizer, there's a chance of real progress", Alden said. Nafta "is clearly a personal triumph for Lighthizer. He did this deal." Putting him in charge of China talks, were it to happen, "at least opens the door to a serious negotiation with China which we have not seen yet", Alden added. ^ top ^

Beijing, Europe shouldn't engage in 'big power' game in relations with African countries (Global Times)
2018-08-30
British Prime Minister Theresa May's trip to Africa has generated vigorous debate, as she said the UK intends to be the continent's largest foreign investor within four years. Some countries have recently been giving greater importance to their relationships with Africa, putting the emerging continent under the in-ternational spotlight. This is essentially the first time that Africa has played a central role in diplomatic affairs since African countries declared independence from their European colonizers. Some factors, such as China's growing presence in the continent, have given a new dimension to relationships between European countries and Africa. China is a latecomer among big powers - including the UK - in terms of developing economic ties with Africa, but Beijing is Africa's largest trading partner. Chinese investment has become an engine of growth that is strengthening Africa's economy through revitalization. However, there are challenges ahead, as debt steadily climbs in some African countries. The upcoming Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) will be a chance to further strengthen cooperation between China and Africa. China's growing economic presence in Africa has become a controversial topic in European countries, which is fueling the relationship between Europe and Africa. China is pleased to see European countries engage themselves more in economic development in Africa. There are many potential cooperation opportunities for China and Europe in Africa, which will help African countries overcome contemporary challenges such as debt problems. Africa is a key area along the Belt and Road (B&R) initiative's routes. European companies are welcome to join projects under the B&R framework, which is an open initiative that welcomes everyone to join on the principles of equality and voluntary participation. It doesn't matter if European countries decline to work with China in Africa affairs and instead enhance relations with Africa through bilateral channels. But we don't want cooperation with Africa by China on the one hand and Europe on the other to evolve into a "big power" game. China and Europe can learn from each other in African affairs and enhance mutual understanding. ^ top ^

Expo shows BRI is China-Eurasia trade driver (China Daily)
2018-08-31
China will continue to work with Eurasian economies in building the Belt and Road Initiative for more shared benefits, Vice-Minister of Commerce Fu Ziying said on Thursday. "Eurasia is an important driver of world economic growth and is a major area in building the Belt and Road Initiative. Cooperation with Eurasia is important more than ever," Fu said at the 6th China-Eurasia Expo, a three-day event that began on Thursday in Urumqi, capital of the Xinjiang Uygur autonomous region in Northwest China. Fu said China will work together with Eurasian economies for more cooperation in infrastructure, e-commerce and free trade areas. The annual expo, which was held for the first time in 2011, is an important platform for promoting trade along the Silk Road Economic Belt, one of the two wings of the BRI. More than 35 countries and regions, including Georgia, Turkmenistan and Pakistan, are participating in this year's event. The expo has attracted over 700 Chinese and foreign companies, including world's leading companies and China's corporate stars. Maia Tskitishvili, vice-prime minister of Georgia, said: "The expo will be another step forward, contributing to achieve Belt and Road Initiative's goals and bringing specific outcomes and broader regional benefits. "This is an excellent opportunity to further enhance trade connectivity, people-to-people contacts and business relations, and also highlight our expectations and priorities in relation to the initiative. Events like the expo will help the BRI to attain its goals and address any imbalances in trade between China and the Eurasian region," she said. Latest data from China's Ministry of Commerce showed that trade between China and countries and regions participating in the BRI exceeded $5 trillion recently, growing at 1.1 percent annually on average over the past five years. Chinese overseas direct investment or ODI in BRI participants was more than $70 billion, and has been growing at 7.2 percent annually on average. The organizing committee of the expo said earlier that the event has emerged as an important platform for exchanges and cooperation between China and Eurasian countries. This year's edition has also helped showcase Xinjiang's rapid development, the committee said. The previous five editions saw nearly 35 heads of state and directors of international organizations deliberate with more than 1,100 ministerial-level guests to forge cooperation and trade initiatives. ^ top ^

Tax cuts to support tech upgrades (China Daily)
2018-08-31
China has made overseas outsourcing research and development expenditure available to additional tax deduction, as part of its continuous efforts to ease tax burdens on enterprises and promote technology upgrades, said the State Administration of Taxation on Thursday. From this year, 80 percent of the expenditure incurred by companies on overseas outsourcing R&D will be eligible for further deductions before tax. This will help lower their tax burden and encourage more investment in technological innovation, said Liu Baozhu, deputy director of the department of income tax at the SAT. The new policy virtually gives tax breaks to enterprises outsourcing R&D activities to overseas institutions, aiming to encourage enterprises to "take advantage of global technology resources" to promote high-tech and industrial upgrades, Liu said. Before this policy, only R&D expenditure incurring within the country could receive an additional deduction. Overseas R&D expenditure, which is available for additional deduction, shall be no more than two-thirds of an enterprise's domestic R&D expenditure, the official said. That will push companies to invest more into independent projects, instead of simply importing technology from overseas, and that could improve their research ability. Apart from reducing taxes, the country is putting in place many other measures to help enterprises reduce costs and enhance efficiencies, such as changing separate provincial e-taxation offices into a nationwide unified "e-taxation system" by the end of this year, said Fu Shulin, deputy head of the general office of the SAT. Besides making it much easier for taxpayers to deal with cross-provincial tax affairs, "the new e-taxation system will offer more comprehensive functions and more convenient services", Fu said. Those new measures are in line with China's efforts to reduce tax burden on enterprises and individuals. On Aug 20, the SAT released 10 measures to be implemented in the third quarter to optimize the business environment for enterprises. ^ top ^

Sino-Russian drill set to guard regional peace (China Daily)
2018-08-31
The upcoming joint military exercise between China and Russia, dubbed Vostok-2018 or East-2018, will strengthen their abilities to jointly deal with different types of security threats and safeguard regional peace and security, China's Ministry of National Defense said on Thursday. Experts said the joint exercise reflects the deep strategic mutual trust and practical cooperation between the two militaries, but it does not mean the two sides have formed a defense alliance that excludes or targets other countries. Senior Colonel Wu Qian, a spokesman for the ministry, said at a regular monthly news briefing that most of the 3,200 Chinese troops, along with more than 900 pieces of weaponry and 30 fixed-wing aircraft and helicopters, have entered Russia to take part in the exercise. The two militaries will hold joint operation exercises at the Tsugol training range in the Russia's far eastern Trans-Baikal region from Sept 11 to 15. They will primarily practice mechanized defense, fire strikes, counterattacks and other training, Wu said. "The drill does not target any third party, nor is it related to any regional situation," he said. It will be Russia's largest military exercise since 1981, involving around 300,000 Russian troops, 900 tanks, and 1,000 aircraft, as well as troops from China and Mongolia, according to Russian military authorities. It is China's first time participating in an exercise of this kind. It is also the largest Chinese military delegation to join a military exercise in a foreign country. "The drills are aimed at consolidating and developing the China-Russia comprehensive strategic partnership of coordination," Wu said. The exercise will "further strengthen both sides' ability to jointly deal with varied security threats, which is conducive to safeguarding regional peace and security", he said. When asked whether China will be invited to similar future exercises by Russia, Wu said it will depend on the consultation and agreement by both countries, and relevant information will be released in due course. Wu said Chinese and Russian militaries are also in close communication regarding the "Joint Sea-2018" naval exercises, which are scheduled to take place later this year. The Russian Ministry of Defense confirmed in late August that it will deliver 10 Russian Su-35 multirole fighters to China by year's end, and "relevant work regarding Sino-Russian cooperation in military technology is going according to plan," Wu said. Feng Shaolei, the director of Russian studies at East China Normal University, said joint military exercises are a good way of enhancing mutual understanding and trust between China and Russia, and not a means to create a military alliance. "China and the Soviet Union had a defense pact during the Cold War, and it brought a lot of unnecessary pressure to China," he said. "China is now upholding a new form of security relations based on mutual benefits, respect and cooperation," Feng said. "It is not based on ideologies, excluding or targeting adversaries, or placing a country's own security interests above others like the United States." ^ top ^

2018 FOCAC Beijing Summit: What to expect (Xinhua)
2018-08-30
A current roadmap for China-Africa cooperation in the new era is one eagerly awaited outcome of the 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC), which will begin on Sept 3. Themed "China and Africa: Toward an Even Stronger Community with a Shared Future through Win-Win Cooperation," the summit will be a significant diplomatic event hosted by China this year and attended by the largest number of foreign leaders to date. Here's what to expect from the summit: XI JINPING'S SPEECH Chinese President Xi Jinping will deliver a keynote speech at the opening ceremony of the summit, attend and deliver a speech during the opening ceremony of the High-Level Dialogue of China-Africa Leaders and Business Representatives, and the 6th China-Africa Business Forum. He is expected to propose new ideas to strengthen relations with Africa and announce new measures for pragmatic cooperation. Xi and South African President Cyril Ramaphosa will both chair a roundtable discussion, where Chinese and African leaders will discuss China-Africa relations as well as international and regional issues of common concern. There will also be bilateral meetings on the sidelines of the summit. "President Xi attaches great importance to the China-Africa relationship. These activities will help promote political mutual trust and mutually beneficial cooperation between China and Africa," said Zhou Yuxiao, China's ambassador for FOCAC affairs. REUNION This year is the third time the summit has convened, following the inaugural 2006 summit in Beijing and the 2015 summit in Johannesburg, said Chinese State Councilor and Foreign Minister Wang Yi. African leaders and the chairman of the African Union (AU) will be in attendance, and the United Nations (UN) Secretary-General will be the esteemed guest, joined by 27 international and African groups as observers. The interest in the forum is a result of China's growing influence on the African continent and proves the FOCAC has been pragmatic and efficient, analysts said. "Established 18 years ago, FOCAC has led international cooperation with Africa and has become a significant marker of South-South cooperation," said Li Dan, director of Africa Studies Center of China Foreign Affairs University. TWO DOCUMENTS The summit will conclude with the signing of a declaration and an action plan, providing guidelines for China-Africa cooperation for the next three years. The documents are expected to build on the outcomes of the Johannesburg summit, during which Xi announced 10 major cooperation plans to promote industrialization and agricultural modernization in Africa. Most of the plans have been implemented. "For three years, cooperation between China and Africa has deepened and political mutual trust promoted," said Li Dan. "It is expected that the Beijing summit will offer a more comprehensive plan that reflects the new situation." "The fundamental goal of China-Africa cooperation is building a closer China-Africa community with a shared future. This will be a priority in the next phase of cooperation," Zhou Yuxiao said. FUTURE COOPERATION The summit aims to build a closer China-Africa community with a shared future, further dovetail China's Belt and Road Initiative with African development, set a new path for a higher level of China-Africa cooperation and deepen people-to-people exchanges. Li Dan said cooperation would not only be enhanced in traditional areas but also expanded to the environment, peace and security. By promoting innovation, coordination and sub-regional cooperation, all members will benefit from the outcomes of the summit. The summit will link the Belt and Road Initiative with the UN 2030 Agenda for Sustainable Development, the African Union's Agenda 2063 and individual countries' development plans to explore new territory for Africa's revival. "African countries have been positive about the Belt and Road Initiative," Li Dan said. "Clearer answers as to how and where they can participate are also expected from the summit." FOCAC is a proven, effective platform for pragmatic China-Africa cooperation, and the Belt and Road Initiative is an important public good China is offering to the world. Combining the two will help the China-Africa relationship take a major leap forward and elevate cooperation, Zhou Yuxiao said. "Given the complex and changing international situation and the development of individual countries, China-Africa wisdom and solutions that can be helpful to global governance are expected from the summit," Li Dan said. ^ top ^

China not building military base in Afghanistan: defense, foreign ministries (Global Times)
2018-08-31
China is actively taking part in the peace process in Afghanistan and fully supports potential political reconciliation over military action, Chinese analysts stressed on Thursday after China's foreign and defense ministries denied reports of the People's Liberation Army (PLA) base being built in the region. A report published in the South China Morning Post on Tuesday said China had started building a training camp in the Wakhan corridor of Afghanistan and would send a PLA unit there. The report was "inconsistent with facts," defense ministry spokesman Wu Qian said at a briefing on Thursday. The report was also denied by foreign ministry spokesperson Hua Chunying at a daily briefing on Wednesday, without elaboration. China will likely provide counter-terrorism training to Afghan counter-terrorism forces and police, but only within the Chinese border, Li Wei, a counter-terrorism expert at the China Institute of Contemporary International Relations in Beijing, told the Global Times on Thursday. "China will not build a military base in Afghanistan," he said. Yin Gang, a research fellow at the Beijing-based Institute of West Asian and African Studies at the Chinese Academy of Social Sciences, told the Global Times on Thursday that "China always supports talks that promote the peace process in Afghanistan, while the Chinese government and scholars have long understood that the problems in Afghanistan cannot be solved by military actions." China, Iran and Pakistan, which border Afghanistan, will take part in Afghan peace talks scheduled for September 4, the Washington Post reported. Afghanistan's Taliban confirmed on Wednesday that they would join the peace talks in Russia, the New York Times reported. The multilateral peace talks with the Taliban were postponed after Afghan President Ashraf Ghani said they must be led by Afghanistan, Reuters reported on Monday. If Afghanistan becomes peaceful, the country's rebuilding will require social and economic development in tandem with the China-proposed Belt and Road initiative, Li said. "As a neighboring country, Afghanistan's situation in terms of peace and stability is closely related to China, especially its northwest region," he said. China insists that problems in Afghanistan must be solved by the Afghan people, Li said. "Political reconciliation is the only future Afghanistan will see, but it will not go smoothly. It will prove a long and difficult process," Li said. ^ top ^

Are Western elites impeding Google's path to China? (Global Times)
2018-08-30
According to US media reports, more than a dozen Western human rights groups have sent a letter to Google, urging it to abandon its Project Dragonfly initiative, which would see the search giant launch a censored search engine in China. The letter describes this plan as representing "an alarming capitulation by Google on human rights," which would lead the company into "actively participating in violations [of the rights to freedom of expression and privacy] for millions of internet users in China." News that Google might return to China has constantly made headlines. In early August, a US media outlet revealed that Google was launching a censored search engine in China, creating waves across the US. Google has been facing immense scrutiny because of this news. In fact, China and Google have never said that the company is returning. In the past two years, Google expressed willingness several times to return to China, and it may have been making arrangements for it. A market as vast as China's is attractive to every transnational tech company, and it is eternal business logic that drives such attraction. The sensitivity toward Google's return and the fierce reaction to its censored search engine have exposed the twisted mentality of some Westerners. They want to impose Western values above Chinese laws and make Chinese laws subject to Western ideologies, which China will never accept. No matter in which country Google operates, it needs to abide by local laws and regulations. Some Westerners still hold a prejudice toward China's internet regulation. As the internet originated in the West, some Western factors have been enshrined in it. But when it enters China, Google must adapt to the features of Chinese society. Western internet companies doing business in China can't defy China's system. Many Westerners have gradually understood this, while others are still bloated with pride. When Google impulsively left China in 2010, it was dictated by ideological sentiments and deviated from the principle that commercial companies should distance themselves from politics. Some Western elites advocate that big American internet companies should act as pioneers to transform China. They pressure these companies, urging them to challenge China's internet regulation. These pressures have impeded the companies' path to China. It has been eight years since Google left China. China's internet development has continued and prospered, and Google's departure had little impact on Chinese society. China welcomes every international tech enterprise to do business here, but China is no longer dependent on a certain company. Whether Google left or not eight years ago and whether it will return is more important for Google than for China. China has become the world's largest internet market which is open to all. It stands on an equal footing with other markets in the world. ^ top ^

After Huawei setback, China should not give up efforts to improve Australia ties (Global Times)
2018-08-29
The Australian government on August 23 blocked Chinese telecoms equipment makers Huawei from providing equipment to Australia's 5G mobile phone networks. It claimed in a statement that it barred the involvement of any firm "likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law," as that may result in failure to adequately protect the 5G network from unauthorized access or interference. The ban has cast a shadow over China-Australia relations. Just over one month ago on July 19, Australian think tank, the Australia-China Relations Institute, released a report calling on the Australian government to attach more importance to the Belt and Road initiative and "develop a coherent policy" regarding engagement with Asia-Pacific infrastructure projects. It's in the interest of neither side to mess up China-Australia relations. The reasons behind the ban on Huawei are worth pondering. Australia has long been suspicious of Huawei. In 2012, the company was blocked from supplying equipment to Australia's National Broadband Network. In order to forestall Huawei's plan to lay the underwater internet cables for the Solomon Islands, Canberra forked out millions of dollars to fund the project in June this year. Now, the telecoms giant has been targeted again. Some Australian politicians wanted to solicit political support by playing the China card. One day after Huawei was blocked from rolling out 5G technology in Australia, former treasurer Scott Morrison replaced Malcolm Turnbull to become Australia's new prime minister after winning a three-way battle for the leadership of the Liberal party. Morrison defeated key challenger Peter Dutton, a former cabinet minister, by a 45-40 vote. Reports suggested that Morrison played an active role in excluding Huawei from Australia's 5G network in a bid to bolster his own credentials for the top job. Australia has harbored a complicated attitude toward China. On the one hand, it has now gone 27 years without experiencing a recession, and developing relations with China, its biggest trading partner, is essential for Australia to further boost economic growth. On the other hand, facing China's growing national strength, Australia hopes to strengthen its alliance with the US to hedge Beijing's influence. Just as Morrison said, the Australian government's first priority is always "the safety and security of Australians." The recent years have witnessed increasing engagement between China and Australia. While it helps promote the interest of both sides, anti-China sentiments have also spread among some Australians. Politicians either used the sentiments to woo public support or were forced to change their attitude toward China. Being tough with China to some extent has become political correctness. Huawei and even the China-Australian relationship have become the scapegoat for Australia's domestic problems. The Australian government's ban on Huawei is detrimental to the long-term development of relations, which should be opposed. Meanwhile we shouldn't push Australia too hard to make it confrontational. Our enterprises and country will encounter setbacks and hurdles in the process of going global. We should draw lessons from it, accumulate experiences and ensure bilateral relations develop in keeping with mutual benefits. ^ top ^

What Malaysia's Mahathir really plans for China-backed projects (but can't admit to in public) (SCMP)
2018-08-29
Cancelled, deferred, or postponed indefinitely? The knives appear to be out for Malaysian Prime Minister Mahathir Mohamad over what critics see as his "flip-flopping" on the fate of controversial multibillion-dollar Chinese-backed projects in his country. But sources close to 93-year-old Mahathir say that while in public he may have been vague about the fate of the projects, in private he is crystal clear. The sources – directly involved in talks over the future of the Chinese-backed projects – say Mahathir is absolutely firm on permanently cancelling the US$20 billion East Coast Rail Link and two natural gas pipelines worth US$2.3 billion, even though he continued to suggest they may be deferred. Meanwhile, the high-speed rail project between Kuala Lumpur and Singapore – a multibillion-dollar project still to be awarded that has attracted interest from Chinese enterprises – will be deferred for two years rather than cancelled, as Mahathir had claimed, the sources say. Chinese State Councillor Wang Yong and Malaysia's then prime minister, Najib Razak, at the ground-breaking ceremony of the East Coast Rail Link in Kuantan, Malaysia, in August 2017. The project's fate is no longer clear. Minister Azmin Ali will be in Singapore on Wednesday and Thursday for final talks before signing an agreement on deferring the rail project. Malaysia faces a hefty reimbursement fee if it terminates the deal with its closest neighbour. Projects such as the US$100 billion Forest City and the US$10.5 billion Melaka Gateway are likely to be allowed to continue because they involve private funds and are not "government-to-government" projects like the railways and gas pipeline, the sources say. They suggest Mahathir has been deliberately vague about some of the deals to spare the Chinese from "losing face" over the cancellation of projects at a time when Beijing is facing suspicion that its "Belt and Road Initiative" to open trade with Eurasian countries was a type of debt-trap diplomacy. The Malaysian government's efforts to blame scandal-tainted former premier Najib Razak, and not China, for agreeing to contracts deemed lopsided against Malaysian interests was also a "face-saving" strategy, according to the sources. And in some instances, Mahathir's off-the-cuff remarks should not be taken as firm government policy, they say. This week's kerfuffle over his remarks on refusing visas to foreigners who have bought units in the China-backed Forest City development – may be one such instance. Concerns about Mahathir's stance on the projects rose again this week when the government was forced to clarify his comment on Monday that authorities would not be issuing visas for foreign buyers of housing units in the Forest City project being built by China's Country Garden Holdings. A bulk of the buyers are mainland Chinese who hope to qualify as Malaysian residents under a scheme called "Malaysia My Second Home". Mahathir's housing minister later said the matter would be reviewed by a committee. Observers had been expecting clarity on the future of the projects following Mahathir's return from China last week. He is thought to have discussed his plans for the projects during meetings with President Xi Jinping and Premier Li Keqiang. Instead, Mahathir would say only that he had the assent of the Chinese leaders to negotiate terms for the cancellation of the East Coast Rail Link and gas pipeline projects. He left open the possibility the projects could still go ahead. The rail link was to have been built by China Communication Construction Company, while the pipeline projects in the east Malaysian state of Sabah were awarded to China Petroleum Pipeline Bureau. Mahathir suspended work on both projects in early July. Government sources told This Week in Asia that for now Mahathir was unlikely to cancel outright the two projects to "make sure the Chinese do not lose face". "As we all know, face is very important for the Chinese … but there is agreement on both sides that the projects have to be cancelled because of Malaysia's financial position," said a source who dealt directly with Chinese negotiators. Workers brought in from China to work on the East Coast Rail Link had returned home because of the confirmed move towards cancelling the project, the source said. Officials in the new administration say large portions of government-backed loans for the projects have been drawn down even though only a fraction of the work has been completed. "Tough talks" were now ongoing to pay only for work done, the source said. "As far as the Chinese are concerned … if there is outright cancellation, the whole world will know. Nobody will want to do business with them. Already there are problems in Sri Lanka, Pakistan in Africa and so on," the source said. "This is why we keep saying it's on Najib, it's on Najib, it's on Najib, and not China … we don't want to embarrass you but you must protect our interests as well." Despite the delicate public relations exercise, three sources – all in contract negotiations involving the East Coast Rail Link, the gas pipelines and the Singapore-Kuala Lumpur high-speed rail – said they were satisfied with the progress made since the May 9 election. One source said there had recently been talks with one Chinese company – unnamed – to undertake the East Coast Rail Link project on a "build, operate, transfer" (BOT) model for just US$2.4 billion, or 12 per cent of the original cost. "We told them: you want it, you can do it. We don't think it's viable. If the line was viable the British would have built it. They were here for so long. They didn't build this line," the source said, referring to Malaysia's former colonial rulers. The rail link and pipeline project were both awarded without tender to the Chinese companies in November 2016 after direct negotiations between Beijing and Najib's government. Najib, now in opposition, in recent weeks has challenged Mahathir to make public the contracts, claiming that the terms were not unfavourable to Malaysia, as claimed by Mahathir. In a Facebook post last week, he said the terms offered by the Export-Import Bank of China – the main financier of the rail project – was highly competitive, with an interest rate of 3.25 per cent that was protected from exchange rate fluctuations and with a seven-year deferment on payments. The former prime minister has asked Mahathir to call a royal commission of enquiry to ascertain the facts about the projects. Mahathir's Pakatan Harapan bloc believes Najib endorsed these Chinese-backed projects despite their inflated price tags because of his enthusiasm to bring the country closer to Beijing. Criticism of China by Malaysia's Mahathir resonates around East Asia, and with Beijing Hasanah Abdul Hamid, Malaysia's ex-spy chief and Najib ally, arrested for theft of election cash There's no place for Chinese belt, road or three-bedroom flats in the new Malaysia under Mahathir Malaysian housing minister walks back Mahathir's talk of banning foreign buyers in Country Garden project Criticism of China by Malaysia's Mahathir resonates around East Asia, and with Beijing Hasanah Abdul Hamid, Malaysia's ex-spy chief and Najib ally, arrested for theft of election Reviewing the projects was one of 10 things the bloc promised to do within the first 100 days of its administration. ^ top ^

 

Domestic Policy

China doubles down on Chinese bureaucracy 'paralysed by fear' (SCMP)
2018-08-31
After a relentless anti-corruption crusade spooked many officials into inaction, China's ruling Communist Party is doubling down on efforts to rid the country's vast bureaucracy of its inertia. Updated party rules released this week state that failing to implement policies from the top is now officially a breach of discipline that can see cadres lose their jobs or even be expelled from the party. Those who refuse to implement policy directives from the party's Central Committee, who run their own agenda, or "are not resolute enough, cut corners or make accommodations" in applying them, will be subject to punishment under the new rules, which took effect on August 18. It comes after the cabinet earlier this month announced a series of "targeted inspections" in a bid to ensure central government policies are being properly implemented at the local level – especially on priority issues such as reducing poverty, tackling pollution, promoting innovation and revitalising the rural economy. The party had tried a softer approach in May, seeking to cajole cadres into action with a plan for a system that would offer incentives and tolerate their mistakes during attempts to reform and innovate. But despite the long-touted efficiency of the authoritarian regime, central government policies have often met resistance at the local level when they go against the interests of authorities. That situation has been exacerbated in recent years by President Xi Jinping's sweeping crackdown on corruption, which has snared more than 1.5 million cadres – including some from the highest ranks of the party and the military. Apprehensive about drawing unnecessary attention or suspicion to themselves, many local officials have instead kept their heads down, sitting on projects and business deals that would have previously been keenly sought after in the quest to boost economic growth and create jobs. "They're afraid that they might be reported [to the graft-busters by their political foes] if they take reform and development measures – so they figure they're better off being passive and doing nothing," said Zhuang Deshui, an expert on clean governance at Peking University. That inertia has become so widespread that Minxin Pei, a veteran China watcher at Claremont McKenna College, described the Chinese bureaucracy as "paralysed by fear". But the government is well aware of the problem. Premier Li Keqiang, for one, has repeatedly scolded procrastinating officials for being slack and lazy in implementing Beijing's policy directives. In 2015, 249 officials were punished for laziness, evidenced by their failure to spend government funds, delays to projects and idle land earmarked for development, Xinhua reported at the time. The party's propaganda apparatus also weighed in, calling inaction itself a form of corruption and sternly warning cadres against it. But the inertia has persisted, and it is a problem for the party as the country grapples with a slowing economy at home while fighting an escalating trade war with the United States. The flagging stock market and recurring public health scandals have also fuelled rising dissent from the growing middle class. Having become the most powerful Chinese leader since Mao Zedong, Xi is under increasing pressure to deliver on a series of reforms he has promised, ranging from more sustainable, innovation-driven economic growth and a cleaner environment to better public services such as health care and social welfare – all of which could not be achieved without commitment from local officials. Zhuang from Peking University said many cadres now were no longer willing to be the first to implement reforms. "In the past, officials could use good [growth] data to show off their performance for career advancement. But now, the assessment methods have changed to include all kinds of targets and put them under tremendous pressure – thus many choose to deal with everything passively," he said. Under the revised party discipline rules, officials who fail to take action on development policies to do with innovation, coordination, the environment, openness and sharing will be given a heavier punishment. The regulations also target bureaucratic conduct, such as paying lip service to a policy, or holding meetings and issuing documents that do not translate into action. Apart from cracking down on inaction, the new rules also prohibit party members from speaking out against central party policies or decisions, and they must not spread "political rumours or damage the party's unity". "Two-faced" officials who comply in public but secretly oppose the party's central leadership will also be punished. Xi's name has been written into the revised rules – it is already in the party and country's constitution – with all party members required to steadfastly safeguard his core status. ^ top ^

China regulators plan to restrict number and usage of new games amid concerns over child health (SCMP)
2018-08-31
China's regulators said they plan to limit the number of new online games and the total number of games, while taking steps to restrict the amount of time minors spend playing them. The country's Ministry of Education said the move is part of measures aimed at preventing and controlling myopia in children and teenagers, according to a statement posted on its website. The regulator for press and publications will exert controls over the number of games, it said. The move comes amid questions over China's plans for regulating the games industry. The government has frozen approvals of game licenses during a restructuring of department responsibilities, Bloomberg News reported this month. The halt has hurt the financial results of games companies, including Tencent Holdings Ltd. "Parents should minimise the use of electronic products when they are with their children," the ministry said. "They should consciously control the use of electronic products by their children, especially preschool children. The use of electronic products for non-learning purposes should not exceed 15 minutes and should not be more than one hour per day." Tencent's ADRs fell 7 per cent in US trading after the Education Ministry's statement, while NetEase Inc., its closest competitor, fell 7.2 per cent. The company's shares have fallen 12 per cent in Hong Kong this year. Game makers also fell in Japan, where many depend on the China market for revenue. Capcom Co. tumbled as much as 7.1 per cent, while Nexon Co., which gets about half its revenue from China, fell as much as 5.1 per cent. "The new rules/guidelines will create another overhang for the gaming industry's growth outlook, adding further uncertainty on top of the hold-up of the games approval process," Alicia Yap, an analyst with Citigroup, said in a report. But she said major gaming companies such as Tencent and NetEase that had previously enacted measures to limit gameplay, shouldn't be unduly impacted over the longer term. "The sell-off could prove to be an overreaction, especially for high quality gaming developers." China has the most rigorous game approval process of any major market, an extension of broader restrictions on television, newspapers and the internet. Regulators stopped approving new games several months ago, among a restructuring of ministry responsibilities. The government hasn't given any explanation for the freeze, which has prompted debate over whether it is a temporary halt due to the regulatory reshuffling or whether the government is planning a broader crackdown on games. The industry has been widely criticised in state-owned media. President Xi Jinping has publicly spoken about the need to help children's eyesight. Myopia among students is more common and is affecting children at younger ages, Xi said, according to the Xinhua News Agency this month. He called for the nation to address the problem. ^ top ^

Data theft in Zhejiang yields 3b items of personal info (Global Times)
2018-08-30
After local police in Shaoxing, East China's Zhejiang Province, uncovered China's largest data theft case in which 3 billion pieces of personal information were exploited for profit, a Chinese expert said on Thursday that crackdowns on such activities should be further intensified. Beijing Ruizhi Huasheng Technology Corp illegally obtained 3 billion pieces of personal data from Chinese telecom operators and made a profit via the "eyeball economy" on China's various social media platforms, according to media reports on Thursday, which cited a police announcement. Ruizhi Huasheng is listed on China's National Equities Exchange and Quotations, also known as China New Third Board. Illegal activities engaged in by the company include maliciously gaining users' "likes" and precision marketing. The activities involved 96 internet companies including big names such as Baidu Inc, Tencent, Alibaba and Beijing-based Jinri Toutiao. A police investigation showed that failures in supervision and security regulations by telecom companies provided the loopholes that made such crimes possible, according to media reports. Leading telecom operator China Mobile declined to comment on Thursday, and China Telecom was not available for comment. Experts said the involvement of telecom companies and internet giants showed China's systemic weakness in the protection of user information. Xin Haiguang, a senior IT commentator, told the Global Times on Thursday that more attention should be paid to commercial activities based on personal data, such as bank accounts as well as less vital information including users' browsing habits. "Lawmakers should provide more legal clarity and law enforcement agencies should crack down on all such cases and impose severe punishment," according to Xin. ^ top ^

New scheme unveiled to protect children's eyesight (China Daily)
2018-08-31
China rolled out a new scheme Thursday to curb the rise in nearsightedness - or myopia - among children and teenagers for the sake of their health and the nation's future. The scheme, jointly issued by the Ministry of Education, the National Health Commission and six other departments, aims to keep the myopia rate among 6-year-old kids at around 3 percent by 2030, with the incidence among primary school kids to drop below 38 percent, and the rate among junior and senior high school students to fall below 60 percent and 70 percent respectively. The scheme also said the overall myopia rate of Chinese teenagers should be reduced by over 0.5 percent each year from 2018 to 2023. In high-incidence provinces, the reduction should reach 1 percent each year, the scheme said. Strengthened regulation over production and selling of eyeglasses and limitation of teenagers' online gaming time are required by the scheme. The scheme aims to greatly reduce the myopia rate among the Chinese teenagers to bring children a "bright future," as demanded by President Xi Jinping in a recent instruction. The high incidence of myopia among students, which affects more and more children at a younger age and undermines their health, is a major problem concerning the future of the country and the Chinese nation, Xi instructed after reading a recent media report on the problem. About 36.5 percent of the fourth graders and 65.3 percent of the eighth graders have poor eyesight, according to an MOE report released in July this year. Another report by a health research institution under Peking University showed more than 70 percent of high school and college students were nearsighted, warning China may be short of labor with qualified eyesight in sectors like aerospace, sophisticated manufacturing and the military in the future if myopia worsens. Increased school workloads and heavier use of electronic devices are regarded as major reasons leading to the worsening nearsightedness. According to the MOE report, 14.7 percent of fourth-grade students and 19.2 percent of eighth-grade students on average spend over an hour everyday doing maths homework, while 43.8 percent of the fourth graders and 23.4 percent of the eighth graders take extra maths training outside classes. The scheme encourages children to spend more time outdoors and orders schools not to leave written assignments to first and second graders. Jiao Yahui, an NHC official, said the children and their parents need to raise their awareness to protect the eyesight for the kids. The scheme also introduces indicators to assess the performance of local governments on their measures to control myopia of children under their jurisdictions. ^ top ^

E-commerce draft weighs platforms' liability (China Daily)
2018-08-31
China's top legislature was asked on Thursday to strengthen a liability clause in the latest draft of the e-commerce law to better protect consumers and prevent platform operators from becoming too powerful. The draft, which is being deliberated by the Standing Committee of the National People's Congress, sparked a debate by lawmakers and legal experts over a change in the liability provisions after it was submitted to the top legislative body for the fourth reading on Monday. The latest draft reduces the liability of e-commerce platforms in cases where they fail to properly review the qualifications of those selling goods or providing health or lifestyle services, or if they fail to protect consumers' safety. Some legislators were concerned about the change when reviewing the draft, saying that it would weaken consumer protections and make e-commerce platform operators more powerful. On Thursday, the NPC Constitution and Law Committee suggested that lawmakers should increase operators' responsibility. Xu Xianming, a member of the NPC Standing Committee, said the softer language took the legislation backward and that platforms should face higher standards. The change reduces the liability of e-commerce platforms to what is called "supplementary liability", rather than "joint liability". Joint liability refers to both the product seller and the e-commerce platform. Consumers who suffer damages would be allowed to sue sellers and platforms together. By contrast "supplementary liability" means consumers can only sue the seller of the goods in that situation, Xu said. Cai Fang, another member of the Standing Committee, said adding protection for consumers is a priority. The China Consumers Association also expressed concern about the latest draft, saying e-commerce platform operators' liability would be reduced greatly if the draft passes as written, according to a report in China Consumer News on Thursday. "Joint liability can help fight fake products online, especially food or medicines that harm people's health," an official of the association told the paper. "It can push the platform operators to shoulder their responsibility and adapt to society's demands." Zhu Wei, an associate law professor at China University of Political Science and Law, said awareness about protecting consumers' rights and health shouldn't be weakened, though some e-commerce platforms have complained that they have suffered unfairly in lawsuits brought under joint liability. "When there are difficulties with sellers of goods online, asking the platform operators to pay compensation first is the better way to protect our rights," he said. But Xue Jun, a law professor at Peking University, said the draft does, in fact, highlight protection for consumers. He said liability for e-commerce platform operators should depend on the specific facts of a case, adding that imposing other obligations for online safety protection needs more study. The legislature said on Monday that drafting the e-commerce law aims to protect the interests of all e-commerce participants, regulate conduct to maintain market order and improve the sustainable and sound development of e-commerce. As the world's largest e-commerce market, China saw its online retail sales grow 32.2 percent year-on-year in 2017 to reach 7.18 trillion yuan ($1.05 trillion). ^ top ^

 

Beijing

More trees, more smog? How Beijing's huge planting campaign may be trapping pollution (SCMP)
2018-08-31
Beijing's massive tree planting campaign has worsened air pollution in the city, a new study by Chinese scientists suggests. The "Green Great Wall" prevented dispersion of as much as 15 per cent of PM2.5 – health-damaging fine particulates less than 2.5 micrometres in diameter – during a major smog episode in the capital in January 2014, according to researchers. At its peak during the period studied, the PM2.5 reached 350 micrograms per cubic metre of air – 14 times the safety level recommended by the World Health Organisation. Man-made forest slowed down the winds that otherwise help to disperse smog and turned the city into an enormous trap for air pollutants, according to the scientists. The relationship between tree planting and smog has been debated for years. The Chinese government has repeatedly denied its tree plantation campaigns have contributed to an increase of smog in Beijing and nearby regions, although "more trees, more smog" has become a popular saying among residents. The study – the first so far to support a link – was jointly conducted by researchers from the Institute of Earth Environment at the Chinese Academy of Sciences in Xi'an, the Joint Centre for Global Change Studies in Beijing, and the National Centre for Atmospheric Research in Colorado in the United States. Their paper was published in Atmospheric Chemistry and Physics, an open-access peer-reviewed journal, early this month. Overall, man-made forest can be blamed for up to 6 per cent of the air pollutant increase in the entire 218,000 sq km area studied in north China, the authors said. Compared with other factors such as automobile emission, "the afforestation plays only a marginal role in worsening the haze pollution and does not constitute the main cause of the heavy haze formation", they wrote. But the impact could grow to 15 per cent if remaining unplanted areas were to be filled by trees, according to the researchers' computer simulation. The researchers analysed landscape change over northern China using satellite data from the early 2000s. The area – consisting of Beijing and the nearby province of Hebei and port city of Tianjin – suffers some of the worst air pollution in China, especially in winter when people used heating. In nearly all areas, natural shrub and grassland were disappearing, while forests were advancing aggressively. "The land cover change, particularly the evident forest growth, is primarily attributed to China's national afforestation programmes aiming to increase the forest coverage and to conserve soil and water," they wrote in the paper. China has been conducting what the United Nations has said is the world's largest tree planting crusade, which increased its forest coverage from 8.6 per cent in 1949 to 21.7 per cent last year. By March this year, the total area covered by China's artificial forests reached 69.3 million hectares, larger than the size of France, according to the State Forestry Administration. Some trees were planted on terrain where they would not have grown naturally, such as steppe, desert and high mountains. This year the government plans to create another 84,000 sq km of new forests, about the size of Ireland. A regiment of 60,000 soldiers of the People's Liberation Army is tasked with planting trees in areas north of Beijing, according to state media reports. Several studies in recent years have suggested that trees could remove ozone, nitric oxides, sulphur dioxide and PM2.5 from the lower atmosphere, with their leaves working as an air filter. One study by another team of researchers in Beijing last month showed that air pollutants could stimulate tree growth by increasing the efficiency of photosynthesis, the humidity in the air and the tiny holes on leaves for breathing. In the new study, the researchers used mathematical models to simulate the effect of trees on smog dispersion. The impact is negligible if winds are strong. But since the 1980s, due to a temperature rise in the Arctic, winds in China from the north have become weaker, according to numerous studies. This meant that the drag produced by forests became "appreciable", according to the new study. During the smog of 2014, northerly winds were not strong enough to reach further south after coming down from the highlands in the province of Inner Mongolia. "Intensified northerly wind cleanses the northern BTH (Beijing, Tianjin and Hebei), but the haze pollution is still very severe in the southern BTH. The afforestation considerably elevates the PM2.5 concentration in southeastern BTH, particularly in Beijing and Tianjin, with the PM2.5 contribution exceeding up to 15 per cent [in those areas]," they wrote. "We are not allowed to speak to media (about the paper) without authorisation," said one researcher involved in the new study, who refused to be named due to the sensitivity of the matter. "I don't think we will get a nod from the top." The forestry affairs ministry did not respond to the South China Morning Post's queries about the latest study. "The increase of forest vegetation is conducive to reducing soil erosion and surface dust release, which will decrease the content of dust particles in the atmosphere at a certain level, and weaken the conditions of smog formation," said Zhang Yongli, deputy minister of forestry affairs in a press conference in 2015. Jiang Jingkun, professor at the School of Environment at Tsinghua University, and deputy director of the State Key Joint Laboratory of Environment Simulation and Pollution Control, a major smog research lab, said whether or not the government should plant trees on grassland and other areas where they did not grow naturally is a sophisticated issue requiring thorough scientific investigation. But he said forests would not be chopped down to relieve air pollution. "The trees are planted for many reasons, related to the overall well-being of the environment and people's living standard," he said. "Cooking also produces some air pollutants, but we can't ask people not to cook. "There are many technical and engineering solutions to address the air pollution issue. We don't need to hit the rewind button." ^ top ^

 

Hongkong

Beijing studying possibility of Hongkongers serving in People's Liberation Army (SCMP)
2018-08-31
Authorities in Beijing are considering allowing Hong Kong residents to serve in the national military, the defence ministry has said. The news on Thursday came after China's elite Tsinghua University announced last week – much to the concern of Hong Kong students enrolled there – that it would require first-year students from the city and Macau to go through a mandatory three-week military course previously only compulsory for mainland students. "Some Hong Kong compatriots have expressed their willingness to join the army and contribute to the national defence cause," Ministry of National Defence spokesman Wu Qian said at a routine press briefing. "We welcome the patriotic enthusiasm of the people of Hong Kong, and the relevant bodies are studying the arguments." He was responding to a reporter's question about Tsinghua University's move and whether it would pave the way for Hong Kong and Macau residents to be allowed to join the army voluntarily. Wu did not comment directly on the university's policy change but said that, since returning to Chinese rule in 1997, Hongkongers had developed a "deeper understanding and knowledge" of the country and its military. Pro-Beijing parties and politicians in Hong Kong frequently raise such possibilities. The Democratic Alliance for the Betterment and Progress of Hong Kong conducted a survey last month revealing that about half of respondents were willing to enlist. Among interviewees aged 12 to 39, who accounted for 38 per cent of the 713 residents polled, 48 per cent said they agreed Hongkongers should be allowed to take up military service on a voluntary basis. Party vice-chairman Horace Cheung Kwok-kwan, a lawmaker, said permitting Hongkongers to do so would improve their "sense of national identity". Hongkongers currently do not have to serve in the People's Liberation Army, and there is no policy in place for them to take up military service voluntarily. Under Article 14 of the Basic Law, the city's mini-constitution, the central government is responsible for the defence of Hong Kong. A local garrison has been stationed in Hong Kong for the past 21 years, but it is not allowed to interfere in the city's affairs. ^ top ^

New kidney donation scheme starts in October after change in Hong Kong law allows strangers to donate organs to patients (SCMP)
2018-08-31
From October, kidney transplant patients whose family members are incompatible donors can join a scheme that will speed up the time taken to get a new organ. The paired organ donation arrangement, made legal after Hong Kong passed an amendment to its Human Organ Transplant Ordinance last month, allows a donor-patient pair who may not be a match for each other to donate organs to another donor-patient pair and vice versa, so that patients on both sides get the transplants they need. The scheme will start with kidney donations and surgeries will be carried out at four government hospitals – Prince of Wales, Princess Margaret, Queen Elizabeth and Queen Mary – the Hospital Authority, which manages the city's 43 public hospitals, said on Thursday. The authority's senior manager Dr Sara Ho said patients she spoke to had welcomed the voluntary scheme. "They have requested the programme be implemented as soon as possible, because it will give them an additional chance [to get a donor organ]," she said. There is a huge supply-demand gap for kidney transplants in the city. As of June 30 this year, there were 2,214 patients on the transplant list in Hong Kong but each year there are only about 80 living or deceased donors. Two years ago the average waiting time for a kidney was over four years. Meanwhile, chronic kidney disease is on the rise in the city, partly also due to higher diabetes rates. Dialysis can help patients improve kidney function slightly but a transplant is the only solution to restore the organ's other vital roles, including filtering waste products from the blood. Before the change in the law, strangers could not make live donations to transplant patients. Couples had to be married for more than three years and friends needed to obtain approval from the Department of Health's Human Organ Transplant Board for live donations. Professor Philip Li, the chairman of the authority's Central Renal Committee said in the UK and the Netherlands, the paired kidney donation programme was very mature and they were now having a very large number of successful matchings. "In Hong Kong, we are just starting, it will be quite a while before we actually see a significant effect," Li said. Nephrologist Dr Chau Ka-foon, from the University of Hong Kong, said: "In the medical field, there's no objection at all because this has been done all over the world for many years already." One concern when the paired organ donation arrangement was first considered was whether it could open the door to people selling organs. But the authority said the personal information of both the donors and the recipients would be kept confidential. Their information would be entered into a registry and a computer program would help find suitable matches. Both donor and recipient would then go through a medical and mental assessment and after approval from the Human Organ Transplant Board, their surgeries will take place at the same time. For those in the scheme, the recipients need to cover their own expense while the donors can get their medical and consultation fees waived. The authority said it would consider expanding the programme to private hospitals if the pilot was successful. ^ top ^

 

Taiwan

Beijing unimpressed by United Airlines' 'flexible' approach to Taiwan (SCMP)
2018-08-30
China's foreign ministry on Thursday said no one could violate the "one China" principle, referring to United Airlines listing Taiwan and Hong Kong by their currencies to get around Beijing's demand to identify them as part of China. It came after state-run tabloid Global Times attacked the carrier for "attempting to fool Chinese". United Airlines now lists "New Taiwan Dollar", "Chinese Yuan" and "Hong Kong Dollar" among destination names such as Indonesia, Japan and New Zealand on its website, after the mainland aviation regulator demanded all carriers identify self-ruled Taiwan, as well as semi-autonomous Hong Kong and Macau, as part of China. Responding to a question at a press briefing about the airline's move, which was praised by Taipei, ministry spokeswoman Hua Chunying repeated Beijing's stance that there was only one China, and that Taiwan is part of it. "This is the common consensus in the international community, and all foreign companies in China should stick to that," Hua said. "No one can step away from the basic principle of one China, no matter how hard they try to be flexible." Beijing sees Taiwan as a renegade province subject to eventual reunification, by force if necessary, after the civil war that ended in 1949. In recent years, the mainland has become more sensitive about how international companies handle its "one China" principle as it ramps up pressure on the island. Despite the White House dismissing the Civil Aviation Administration of China's (CAAC) demand as "Orwellian nonsense", major airlines changed their references to Taiwan by the July 25 deadline. But late on Wednesday, nationalist tabloid Global Times published an article – headlined "United Airlines, don't think about outsmarting China on this" – criticising the carrier for its "unwillingness" to make the change and saying it was playing word games. The article came after Taiwan thanked the airline for its "flexibility" in using currency names to obscure its position on "one China" or "Taiwan independence". "Internet users have exposed new evidence of United Airlines' unwillingness [to comply]," the article said, adding that United Airlines was one of the last to take action on the CAAC's demand and it still was not clearly referring to the island as "Taiwan, China" as requested. The day before, the newspaper took aim at Swedish furniture giant Ikea for violating the "one China" principle by treating Taiwan and Hong Kong as countries on its packaging. That report came after images were circulated on social media showing Ikea product labels that gave Taiwan country status by listing it alongside the likes of India, South Korea and the Philippines. Cross-strait ties have been strained since Tsai Ing-wen, from the independence-leaning Democratic Progressive Party, became president in 2016 and refused to accept the "1992 consensus" that there is only one China and that Taiwan is part of it, which Beijing says forms the basis of ties between the two sides. ^ top ^

 

Economy

China's investment overseas grows steadily despite trade tensions: report (Global Times)
2018-08-30
China's investment in overseas destinations posted steady growth in the first seven months of 2018 despite increasing restrictions imposed by US and EU regulators on Chinese investors amid escalating trade tensions, a report showed on Thursday. From January to July, China's non-financial foreign direct investment (FDI) expanded 14.1 percent year-on-year to $65.27 billion, according to a report issued by the China Council for the Promotion of International Trade (CCPIT). As of the end of 2017, China's cumulative FDI was $1.482 trillion, ranking No.8 in the global market, the report showed. "China's investment outflow is now at its peak, and the growing limits Chinese companies faced in overseas mergers and acquisitions (M&A) have not affected the steady growth momentum of FDI," Zhao Ping, the director of the international trade department at CCPIT, was quoted as saying in the report. Zhao also forecast that China's FDI will continue to post high-speed growth despite some negative impact from rising trade friction with the US. In the first half of 2018, China's investment experienced a sharp decline in the US, while the EU jumped to become the top destination for domestic investors' overseas M&A, according to another report by research firm PwC. ^ top ^

China rolls out further tax cuts in support of real economy (Xinhua)
2018-08-31
China is unveiling new tax cuts to boost the real economy while working to ensure full implementation of all existing tax reduction measures, a State Council's executive meeting presided over by Premier Li Keqiang decided on Thursday. The Chinese government places high importance on cutting taxes and non-tax fees. President Xi Jinping emphasized the need to stick with the proactive fiscal policy and prudent monetary policy, and called for the fiscal policy to play a bigger role in boosting domestic demand and economic restructuring. Premier Li Keqiang laid out clear targets for tax and fee reduction in this year's Government Work Report, and underlined on multiple occasions the need for a more proactive fiscal policy. The Thursday meeting was the ninth time for the issue of tax and fee cuts to be included on the agenda of the State Council's weekly executive meetings since the new government took office last March. Measures introduced on tax and fee cuts since earlier this year have kicked in to support the micro and small businesses and spur innovation. "In the context of new developments both at home and abroad, tax and fee cuts are important for sustaining the positive momentum of steady economic growth. More tax incentives should be rolled out and all measures introduced fully delivered," Li said, "Tax and fee reduction is part and parcel of the proactive fiscal policy, and something that we are capable to do now." It was decided at the Thursday meeting that more steps will be taken to support the real economy while all existing measures are fully implemented. Enterprises whose production is halted or business suspended due to the required cutting of overcapacity or restructuring will see their real estate tax and urban land-use tax reduced or exempted. The investment businesses of social security funds and basic pension insurance funds will enjoy a tax break. The meeting also decided to expand value-added tax exemption on lenders' interest income for loans to those micro and small businesses with a credit quota of up to 10 million yuan, up from the previous credit quota of five million yuan, between Sept. 1 to the end of 2020. Corporate income tax and value-added tax on foreign institutions' interest gains from onshore bond market investments will be exempted for three years as an effort for greater opening up and further attract overseas capital, the meeting decided. Export rebate rates for some products will also be improved. The above-mentioned incentives are expected to cut corporate tax burden by 45 billion-plus yuan this year. "A thriving business community is vital for creating jobs, sustaining growth, increasing fiscal revenues and anchoring market expectations. Tax and fee reduction shall send a positive signal. All new measures in tax and fee cuts must be implemented without delay," Li said. He called for working out additional steps for tax and fee reduction to bring benefits to enterprises and families. ^ top ^

 

DPRK

US can't shift blame on China for N.Korea policy setback (Global Times)
2018-08-30
US President Donald Trump tweeted a White House statement on Wednesday that he "feels strongly that North Korea is under tremendous pressure from China because of our major trade disputes with the Chinese government." The statement also said China's aid to North Korea was "not helpful." According to the statement, "The President believes that his relationship with Kim Jong-un is a very good and warm one, and that there is no reason at this time to be spending large amounts of money on joint US-South Korea war games." But the statement also said, "The President can instantly start the joint exercises again with South Korea and Japan if he so chooses. If he does, they will be far bigger than ever before. As for US-China trade disputes and other differences, they will be resolved in time by Trump and China's great President Xi Jinping. Their relationship and bond remain very strong." A Chinese scholar told Global Times that Trump's Twitter statement shows he is anxious about the upcoming mid-term elections. Trump was optimistic about resolving the North Korean nuclear issue, but now he worries that the current situation will affect the Republican Party race. If it loses the mid-term elections, Trump's aggressive policies will face obstruction and the impeachment campaign against him will gain new momentum. The US shouldn't willfully shift the blame on China. The White House has directly or indirectly accused China of hindering the denuclearization of the peninsula several times. Whenever US-North Korea relations go smoothly, the US thinks it is Washington's credit. Whenever the situation goes to south, it's China's fault. If that's how Washington judges China's role in solving the North Korea nuclear issue, what's the point of China continuing with cooperation? The US has been constantly irritating China on the Taiwan question. Is the US trying to exert more pressure on China's trade by sending a B-52 bombers to the South China Sea? Washington has no right to assert that Beijing is sabotaging US-North Korea talks to serve China's interests in the trade war. Washington's politicians should ask themselves: Are they confident about US North Korea policy? If the answer is yes, the US should not blame everyone but itself when the policy encounters a few bumps on the road, as if everyone else is opposing the US. If Washington is aware that its own plans for the peninsula are delicate, it should not frame others for the diplomatic fallout. China is more than willing to push forward with denuclearization of the peninsula. Given its geographic proximity, China's northeast region has long been concerned about the nuclear and missile activities in North Korea. When the situation on the peninsula showed signs of easing, people there felt relieved. No one wants the peninsula to return to a state of confrontation. To ease Washington's unwarranted anxieties that China is sabotaging its Pyongyang policies, the fundamental solution is that the US acts as a fair player and does not go against international norms and interfere in China's affairs. That way, Washington won't suspect China so easily. The world has been thrown into chaos by the trade war launched by the US. If the US makes it more chaotic, will the US be the only winner? Hardly. Beijing and Washington should both make a rule in their trade war: Neither should resort to other means to secure a victory and neither should suspect the other of doing so. ^ top ^

 

Mongolia

President meets authorities of Government Organizations regarding child safety (Montsame)
2018-08-31
President of Mongolia Khaltmaagiin Battulga received authorities and representatives of some government bodies in the State Palace on August 30. The meeting was held in connection to the beginning of a new academic year, and to address follow-up actions that were taken after the instructions regarding child safety the President gave to government organizations in his speech during the plenary meeting of the State Great Khural on June 28th. In his address to the State Great Khural, President Battulga had mentioned, "In 2017, 1,752 children became victims of 1,692 crimes, whereas, in the first six months of 2018, the number of child victims increased by 40 percent against the same period of the previous year. Last year, 127 children lost their lives untimely, and 187 children became victims of sexual violence, with the age of the victims getting increasingly younger," and outlined urgent measures to be taken by the government organizations. Present at the meeting were more than 30 government officials, including B.Saranchimeg, Member of Parliament and the Parliamentary Standing Committee on Social Policy, Education, Culture, and Science, N.Oyundari, Member of Parliament and Head of the Parliamentary Sub-committee on Human Rights, G.Uyanga, Civil Society and Human Rights Policy Advisor to the President, D.Uuriintuya, Human Development and Social Policy Advisor to the President, R.Bulgamaa, Non-staff Advisor to the President, G.Unurbayar, State Secretary of the Ministry of Labor and Social Protection, N.Lundendorj, Chairman of the Judicial General Council, J.Byambadorj, Chief Commissioner of the National Human Rights Commission, a Head of Department of the Ministry of Education, Culture, Science, and Sport, and authorities of the National Police Agency. Starting the meeting, President Battulga said, "At the initiative of the President, an open discussion themed Improving Implementation of State Policies to Protect Children and Women Against Violence, Public Participation and Control took place in November, 2017, as a result of which the National Police Agency established a Division for Prevention of Crimes Against Children. In April, 2018, a discussion themed Child Protection, Current State, Challenges and Solutions took place. I hope you remember. Although such discussions and meetings are being held, the statistical figures on child accidents caused by the negligence of adults and violence against children haven't lowered. Therefore, I attended the plenary meeting of the State Great Khural in June to give a set of directions, comprising six tasks, to all government organizations responsible for child safety. In particular, I called for taking measures, such as formulating and adopting child protection law and standards, issuing an implementation guideline, and conducting inspection at schools, kindergartens, playgrounds and all other child-involving environments. Of the 11 organizations that received the instructions, eight have sent their reports. I have read each of these reports, and there isn't any report that can satisfy or assure me that viable actions have been taken. The specialized bodies inspected 44 of 798 schools in the country or 18 percent and 60 kindergartens out of 1,416 kindergartens or 23.6 percent. The report doesn't contain the result of inspection in rural schools and kindergartens. As such, these reports only contain information on the violations that were detected, and there is no account of how these violations were corrected and how the corrections were examined in person. I am sure everyone understands that our desired goal isn't integrating data, issuing written orders, and imposing fine." The meeting proceeded with questions directed to the government officials regarding information in the said reports. For instance, President Battulga addressed certain issues, including safety of electrical wires and cables, playgrounds and school environment, nutritional value of food provided to pre-schoolers, child protection standards, risk assessment of day nurseries, lack of professional teachers and educators, and the difference in the working hours of government organizations and kindergartens. In conclusion, President Battulga instructed the concerned government organizations to work together in order to effectively solve the existing problems. The President mentioned the exemplary actions of the National Police Agency, thanks to which child crimes decreased by 30.2 percent, expressing his willingness to cooperate on such preventive measures. After discussing the preparations for the new academic year, the President called a meeting to review the results after a month from August 30. ^ top ^

MP D.Damba-Ochir meets Ambassador of China (Montsame)
2018-08-31
On August 29, Member of Parliament and Chairman of the Standing Committee on Economy D.Damba-Ochir met with Ambassador Extraordinary and Plenipotentiary from China to Mongolia Xing Haiming at the Ambassador's request. At the beginning of the meeting, Ambassador Xing Haiming pointed out the outcomes of the recent visit of Wang Yi, State Councilor and Minister of Foreign Affairs of the People's Republic of China. Furthermore, he asked a support to implement the major projects agreed during the visit. MP D.Damba-Ochir briefed the Ambassador on current condition of Mongolia's economy. Additionally, they exchanged views on economic relations and cooperation in banking and financial sector between the two countries. ^ top ^

Made in Mongolia Trade Center to be established in Hohhot (Montsame)
2018-08-31
The 4th Meeting of Permanent Consultative Working Group of the Mongolian Ministry of Foreign Affairs and the People's Government of Inner Mongolia Autonomous Region of China was successfully hosted in Ulaanbaatar city on August 29-30. The Mongolian delegation was represented by State Secretary of the Foreign Ministry D.Davaasuren and Chinese part by Vice Chairman of Inner Mongolia Autonomous Region Ai Lihua. At the meeting, the sides exchanged opinions on a wide range of cooperation issues regarding trade, economy, agriculture, infrastructure, border checkpoints, tourism, culture and humanity and established a protocol at the end of the meeting. In particular, both sides agreed to actively collaborate in establishing 'Made in Mongolia' Trade Center in Hohhot and to jointly organize Mongolia-China Expo in 2019 within the goal to bring bilateral trade turnover to USD 10 billion by 2020. The Chinese side expressed to render assistance and facilitation to Mongolian small and medium enterprises to attend forums and fairs, being held by the People's Government of Inner Mongolia Autonomous Region. Furthermore, they agreed to forward bilateral constructional works of projects on railway and auto road, to develop infrastructure of border checkpoints as well as to take measures in improving its entrance capacity in the near future. The next meeting of the Permanent Consultative Working Group is to take place in 2020 in Hohhot. ^ top ^

U.S. Embassy to render support on rebuilding kindergarten in Bayan-Ulgii (Montsame)
2018-08-31
Governor of Bayan-Ulgii aimag A.Gylymkhan met with representatives of the U.S Embassy in Mongolia and shared views on further cooperation opportunities. At the meeting, Governor A.Gylymkhan gave information to guests about baghs (smallest administrative unit) of Ulgii soum that were affected by flooding and asked to render support on rebuilding the kindergarten No.4 of the soum. Expressing its acceptance of the request, the Embassy representatives informed to make related estimations and study.  ^ top ^

The Sultan of Johor of Malaysia on visit to Mongolia (Montsame)
2018-08-30
The Sultan of Johor of Malaysia Ibrahim Almarhum Sultan Iskander is paying an official visit to Mongolia. Yesterday, August 29, the Sultan of Johor of Malaysia paid a courtesy call on the President Kh.Battulga. The visit seeks opportunities to make mutual investment and expand relations between Mongolia and Johor state. According to the Ministry of Foreign Affairs, Mongolia and Malaysia established diplomatic relations in 1971 and bilateral trade turnover reached USD 43.09 million as of 2016. ^ top ^

Foreign Minister meets Special Advisor to Japan's Prime Minister (Montsame)
2018-08-30
Minister of Foreign Affairs D.Tsogtbaatar met with K.Sonoura, Special Advisor to Prime Minister of Japan on August 28. At the meeting, the sides expressed satisfactions with strengthening bilateral talks on politics, security and defense and with successful implementation of strategic and policy consultative meetings. Moreover, they discussed about on current state and perspectives of Mongolia-Japan relations, exchanging views on upcoming high-level visits and activities to be held in the near future. Mr. Sonoura expressed gratitude to Mongolia for its great contribution to ensuring sustainability and security in Northeast Asia through actions such as hosting Ulaanbaatar Dialogue. Moreover, the sides noted that the two countries, as partners that share common democratic values, have been deepening cooperation in regional and international platforms. The Japanese side briefed its policies on foreign relations and security, including Free and Open Indo-Pacific Strategy, and affirmed its stance to support Mongolia's effort on being part of multilateral cooperation mechanism in Asia-Pacific region, especially in East-Asia high-level meeting. ^ top ^

Deputy Prime Minister receives Vice Chairman of Inner Mongolia (Montsame)
2018-08-30
Deputy Prime Minister of Mongolia U.Enkhtuvshin on August 28 met with delegates headed by Ai Lihua, Vice Chairman of Inner Mongolia Autonomous Region of China. Relations and cooperation of Mongolia with China, particularly Inner Mongolia have been deepening and frequency of mutual high-level visits has been increasing. The sides emphasized that Prime Minister U.Khurelsukh's visit to Inner Mongolia last April was a highlight of its role in Mongolia-China relations. Deputy Prime Minister said "The visits of Li Jiheng, Communist Party Secretary of Inner Mongolia in July and You, Ms. Ai Lihua are giving a significant boost to bilateral cooperation. Trade with Inner Mongolia is comprising over 60 percent of China's trade turnover" He then noted willingness to expand trade and economic cooperation in order to achieve the goal of bringing bilateral trade turnover to USD 10 billion by 2020. It is possible for Inner Mongolia to actively participate in further programs to be implemented as it is being a bridge for Mongolia-China relations during the implementation of the program on establishing Mongolia-Russia-China Economic Corridor. In addition, the Inner Mongolia has important part in the establishment of Economic Cooperation Zone in Zamyn-Uud and Erenhot. The sides exchanged views about Inner Mongolia's focus on intensifying bilateral cooperation in agriculture sector and environmental protection as well as increasing the export of meat and meat products. Moreover, Deputy PM expressed hope that the Inner Mongolian authorities will focus on trade facilitation and elimination of non-tariff barriers as its border checkpoints play an important role of main gateway for trade between Mongolia and China. During her visit, Ms. Ai Lihua attended a meeting of the joint working group on Gashuunsukhait-Gantsmod border checkpoint and expressed her hope that PM Khurelsukh's consents during his visit are tenacious. ^ top ^

Mining Minister meets First Vice-President of the Ile-de-France Regional Council (Montsame)
2018-08-30
On August 28, Minister of Mining and Heavy Industry D.Sumiyabazar received Jérôme Chartier, First Vice-President of the Île-de-France Regional Council. Mr. Jérôme Chartier said that the country is willing to broaden cooperation with Mongolia further. He informed that he plans to organize a meeting next year by inviting heads of the biggest French businesses to Mongolia. Expressing his support for his initiation, the Minister noted an important role of sectorial high-level mutual visits and meetings in developing cooperation in the areas of geology and mining, especially cooperation of public and private organizations. The Minister also said that there are ongoing actions in Mongolia to put its largest mining deposits into economic circulation and attract financial sources from domestic and foreign markets. ^ 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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