How Does Centrally Planned China Raise Capital?-Answer, Hong Kong



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How Does Centrally Planned China Raise Capital?

I write financial newsletters for investors on how to profit in Asia.  Opinions expressed by Forbes Contributors are their own.

A general view from Victoria Peak shows Victoria Harbour and the skylines of the Kowloon district (background) and Hong Kong island (foreground) on July 3, 2017. (ANTHONY WALLACE/AFP/Getty Images)

Through careful planning and strategic economic policy reforms, mainland China has evolved from a country struck by poverty to the world’s second largest economy. But don’t think this was solely the Chinese bureaucrats’ doing.  The U.K.’s special “present” to China proved to be essential to the story of China’s miraculous development.

In 1997, Tony Blair, who was U.K.’s prime minister at the time, went to Hong Kong to give the city back to Beijing. 156 years of colonial rule had completely transformed the city.

What was once a backwards fishing village, was now one of the worlds’ most important financial hubs.

Hong Kong currently has the highest concentration of international banks in the world. The 71 largest international banks and almost 300 international fund management companies are housed in Hong Kong. The island also has most beneficial legal regulations for both residents and companies.

China basically saw Hong Kong attending a 150 yearlong financial course. The financial powerhouse now belongs back to the Middle Kingdom that uses it to funnel foreign capital into its centrally planned economy. Something the mainland wasn’t able to do by itself.

Never before has a centrally planned economy ever received such a precious gift as Hong Kong.

How Hong Kong feeds China

Companies in planned economies – like China’s – typically have a hard time raising capital. That makes Hong Kong a key factor in China’s economic development.

With its leading financial institutions in place, Hong Kong is able to raise capital unhindered by political or economic instability. A problem free market economies like in the U.S. generally have to deal with.

Four years before Hong Kong was given back to China, it was responsible for 27% of China’s GDP. Let’s put this in perspective. At the time, only 6.5 million people lived in Hong Kong while mainland China had a population of 1 billion people. It’s easy to see that Hong Kong’s impact on China’s economic growth was tremendous.

The mainland did catch up over time as the graph below clearly illustrates. By 2017, Hong Kong accounted for merely 3% of the GDP.

One Road Research

Hong Kong’s Share of China’s GDP

Hong Kong’s return in 1997 coincided with the dramatic rise of China’s GDP.

One Road Research

China’s GDP in Current US$

China’s economic growth was partially due to twenty years of export-oriented policies from Beijing. But without Hong Kong’s well-established financial markets, necessary funds couldn’t have been raised.

With China: You Had Better Look The Gift Horse In The Mouth; Or Die



The Guardian view on China’s spreading influence: look in the gift horse’s mouth

There is growing concern about Beijing’s attempts to shape the thinking of politicians and the public overseas
Donald Trump meets the Chinese president, Xi Jinping in Florida in April last year

The arrest of a former CIA agent this week is the stuff of a classic murky spy tale. Though he is charged with unlawfully retaining national defence information, the US reportedly suspects that he leaked the names of informants. An earlier report alleged that China imprisoned or killed multiple US sources between 2010 and 2012. Both countries have plans for tackling espionage. But analysts, intelligence agencies and politicians are now debating how to handle the subtler challenge of Chinese influence activities: a “magic weapon” neither cloak-and-dagger nor transparent.

China says it does not interfere in other countries’ domestic affairs. Yet all nations seek to sway foreign governments and citizens towards their own priorities, interests and perspectives. The question is how they do so, and how far they go. (No one should pretend that western nations always act above board.)

China’s influence work is strategic and multifaceted. Some of it is distinctive mainly for lavish resourcing. The National Endowment for Democracy recently described other aspects as “sharp power”: the effort by authoritarian states not just to attract support but to determine and control attitudes abroad. It seeks to “guide” the diaspora and enlist it for political activity. It embraces foreigners, appointing those with political influence to high-profile roles in Chinese companies. Chinese-language media overseas have been bought by entrepreneurs with ties to Beijing. Partnerships with universities shape research and limit debate.

Last month, Australia’s prime minister, Malcolm Turnbull, introduced a bill banning foreign donations as he warned of “unprecedented and increasingly sophisticated” attempts to influence politics. It follows a senator’s resignation after allegations that he tipped off a Chinese donor that his phone was probably tapped by security agencies; the case has reportedly prompted the Trump administration to open an investigation into Beijing’s covert influence operations in the US. In New Zealand, a Chinese-born MP denied being a spy after it emerged that he had spent years at top Chinese military colleges. A leading scholar on China has alleged that its “covert, corrupting and coercive political influence activities in New Zealand are now at a critical level”.

Chinese state media has complained of “hysterical paranoia” with racist undertones in Australia. In an era of populism, there is good reason to worry that members of the diaspora, in particular, could face unfair suspicion. Citizens have the right to listen to the views of a foreign government, be persuaded and share them. But to speak for them, on their order, is different. Is someone acting spontaneously, or have they been prodded, coerced or bought? What links or leverage does Beijing enjoy? Establishing the answers is hard – and proving self-censorship even tougher. But it is essential to at least attempt to distinguish between legitimate, improper and illegal activities.

Casting light on the issue is by far the most important step. Democracies must delve into areas that may prove embarrassing. They need the capability to do so – starting with language skills. Working together would help. In places, laws may need to be tightened, though with care: banning foreign political donations is a basic step. For this issue says as much about the west as China. Beijing’s keenness to control speech is manifest, while influential figures and institutions in democracies proclaim lofty ideals – then fall prey to gullibility or greed. China’s influence would not go very far without the western hunger for its cash.

US-China Contingency Plans On North Korea



[News Focus] US-China contingency plans on NK: what do they mean for South Korea?

By Yeo Jun-suk

  • Published : Dec 21, 2017 – 18:41
  • Updated : Dec 21, 2017 – 18:41

 In November 1950, the United States and China went to war. It was five months into the Korean War when US troops crossed the 38th parallel, marched toward North Korea and clashed with the Chinese troops coming to the rescue of their communist ally.

The war continued for about three years, costing the lives of 36,000 American troops and more than a quarter of a million Chinese troops. The Korean War came to an end when the two sides agreed to an armistice. South Korea opposed the peace talks and refused to sign the armistice agreement.

With North Korea’s relentless pursuit of a nuclear weapons program raising fear of another major armed conflict on the Korean Peninsula, the two powers appear to be bracing for a possible contingency, but this time the focus is on how to work together in the event of a sudden collapse of the North Korean regime.

US State Secretary Rex Tillerson. Yonhap

US Secretary of State Rex Tillerson recently offered a glimpse into the secret contingency plan. He revealed that the Trump administration had assured China’s leadership that if US forces crossed into North Korea to seize nuclear weapons, the troops would do their work and then retreat to the South.

“We have had conversations that if something happened and we had to go across a line, we have given the Chinese assurances we would go back and retreat back to the south of the 38th parallel,” Tillerson said in remarks at the Atlantic Council on Dec. 12.

The South Korea-US wartime scheme, Operations Plan 5015, includes military campaigns to address North Korea’s weapons of mass destruction. The plan calls for the allies’ Special Forces to penetrate into North Korean territory to secure its nuclear weapons before they became operational.

OPLAN 5015, whose operational details are classified, reportedly does not spell out exactly who would control the North Korean territory after the mission is completed in a situation where the Chinese troops would most likely march into the North.

Hence, Tillerson’s discussion on contingency plans with the Chinese government is causing jitters among South Korean policymakers and military planners, experts said, rekindling deep-rooted worries that the two superpowers might determine Korea’s fate once again.

“We believe it is inappropriate for us to discuss or assess the remarks by the US secretary of state,” Choi Hyun-soo, a spokesperson of the Ministry of National Defense, said in response to a question about whether the South Korean military had consulted with the US government on the matter.

South Korea’s Constitution declares North Korea a part of its territory that needs to be reclaimed eventually, but most analysts doubt whether such a position would be recognized by the international community and neighboring countries, who view North Korea as a sovereign state.

Some experts said that Tillerson’s idea is part of a “grand deal” between the US and China, which involves a scenario where the US may cede North Korean territory to the Chinese military if they help the US remove North Korea’s weapons of mass destruction.

In his column on the Wall Street Journal in August, Henry Kissinger said that “understanding” between Washington and Beijing is a prerequisite to resolving the nuclear standoff. Before the publication of the article, he had reportedly suggested to Tillerson that the US could make a pledge to Beijing that it would withdraw its troops from South Korea after the collapse of North Korea.

“My impression is that the US appears to be floating the idea of a grand bargain by Kissinger to the Chinese government,” said Yun Duk-min, former chancellor of the Seoul-based security think tank Korea National Diplomatic Academy.

There is no indication that China has responded to Tillerson’s proposal, or that military officials have met to discuss the idea, a taboo subject for Beijing, which has refused to discuss the idea out of concern that it would worsen the already tense relationship with North Korea

However, calls for developing contingency plans appear to be gaining ground among Chinese security and military experts, as they have publicly urged the country to prepare for any eventuality amid growing frustration with its wayward ally’s relentless nuclear ambition.

Retired Chinese Army Lt. Gen. Wang Hongguang called for mobilizing troops along the border with North Korea to prevent conflicts in the region, warning that a war could break out on the Korean Peninsula at “any time,” even within the next several months.

“China should be psychologically prepared for a potential Korean war, and the northeast China regions should be mobilized for that. … Such mobilization is not to launch a war, but for defensive purposes,” Wang told an annual forum hosted by the Chinese Global Times newspaper Saturday.

A South Korean newspaper reported Monday that China last year conducted a simulated military drill aimed at taking control of nuclear facilities similar to the Yongbyon nuclear reactor. China’s Defense Ministry has yet to issue any public statements.

South Korea’s Defense Ministry declined to confirm the report, saying it is not a matter that the South Korean government can discuss, while highlighting that the government is preparing for “various eventualities” on the Korean Peninsula.

China has also been quietly building a network of refugee camps along its border with North Korea — at least five in Jilin province — as it braces for a human exodus in the event of the regime’s sudden collapse, according to a leaked internal document from a state-run telecoms giant China Mobile.

David Straub, a former US diplomat, said China has shown more willingness to discuss a possible contingency in North Korea, though the issue is still too sensitive for Beijing to raise first.

“It seems pretty clear that the Chinese security experts and analysts are becoming more concerned that there might be a real possibility of unexpected developments,” said Straub, a Sejong-LS fellow at the Sejong Institute.

“In the past, the Chinese were reluctant even to listen to Americans talking about the conditions. Now I think the Chinese are quite happy to listen to what the Americans have to say and probably take careful notes. … But I am still skeptical they have volunteered much to the US,” said Straub.

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Artist Who Filmed Beijing Crackdown Is Reportedly Freed on Bail




The painter Hua Yong in one of his videos documenting the evictions from migrant neighborhoods in Beijing.

An artist who was detained by the police after documenting mass expulsion of migrant workers from the Chinese capital was released Monday on bail, a friend said.

The artist, Hua Yong, posted dozens of short videos in recent weeks recording how the authorities had forced tens of thousands of people to leave Beijing and demolished vast swaths of neighborhoods.

The police came for him after he filmed residents protesting by blocking a roadway in the Daxing district of Beijing, and he fled the city. He was detained late Friday in Tianjin.

Ji Feng, a friend, said Mr. Hua had been held on suspicion of “gathering the masses to disturb traffic order.” He was released on a form of bail known as “qubao houshen,” which allows the police to continue investigating for up to a year. Often the suspect won’t face charges, but can be monitored and face restrictions on his ability to travel and speak publicly.

Mr. Hua was allowed to travel to Chengdu, where his daughter lives, Mr. Ji said.

Before he was detained Friday, Mr. Hua posted a series of short videos that he said were filmed in an apartment in Tianjin, a large city near Beijing. In some of the videos, someone can be heard pounding on the apartment’s door and telling him to come out.

Continue reading the main story

Mr. Hua, 48, who had shaved his beard and shorn his dreadlocks, said his arrest was imminent. As he waited, he recorded himself singing “Happy Birthday” to his daughter, who turns 3 this month.

“Everything I do is so your generation won’t have to go through what I and your grandfathers’ generation experienced,” he said in the video to his daughter. “I want to make our country better. To be just, fair, free, democratic and have freedom of speech.”

Reached by phone, the police in the Daxing district declined to answer questions about Mr. Hua.

Mr. Hua’s work documenting the evictions of migrant workers touched a nerve with the authorities, said Patrick Poon, a Hong Kong-based researcher for Amnesty International.

“His videos became important evidence about the human rights violations during the evictions,” Mr. Poon said. “His detention makes him become like a symbol about how grass-roots people are treated by the Chinese government.”

Mr. Hua has been incarcerated over speech issues in China before. In 2012, he was sentenced to 15 months in a labor camp after a performance in Tiananmen Square in which he punched himself in the face, then used his blood to write the date of the 1989 massacre of pro-democracy protesters.

In the videos recorded Friday, Mr. Hua repeated his desire to remain in China rather than leave for someplace where he would be able to speak more freely about political issues.

“The People’s Republic of China constitution provides for freedom of speech, freedom of the press,” he said. “All I did was take and post a few videos online. There’s nothing wrong with this. So I will stay in China. Even if I die, I die in my country.”

China warns its nationals of imminent attacks by ‘terrorists’ in Pakistan



China warns its nationals of imminent attacks by ‘terrorists’ in Pakistan

The alert comes as thousands of Chinese are in Pakistan working on projects in President Xi Jinping’s signature Belt and Road development plan, which aims to link China with the Middle East and Europe.

WORLD Updated: Dec 08, 2017 16:11 IST

Reuters, Beijing
File photo of Pakistan police officers in Islamabad. The Chinese embassy has warned all “Chinese-invested organisations and Chinese citizens to increase security awareness”.
File photo of Pakistan police officers in Islamabad. The Chinese embassy has warned all “Chinese-invested organisations and Chinese citizens to increase security awareness”.(AP)

China on Friday warned its nationals in Pakistan of plans for a series of imminent “terrorist attacks” on Chinese targets there, an unusual alert as it pours funds into infrastructure projects into a country plagued by militancy.

Thousands of Chinese workers have gone to Pakistan following Beijing’s pledge to spend $57 billion there on projects in President Xi Jinping’s signature “Belt and Road” development plan, which aims to link China with the Middle East and Europe.

Protecting employees of Chinese companies, as well as individual entrepreneurs who have followed the investment wave along what is known as the China-Pakistan Economic Corridor, has been a concern for Chinese officials.

“It is understood that terrorists plan in the near term to launch a series of attacks against Chinese organisations and personnel in Pakistan,” the Chinese embassy in Pakistan said in a statement on its website.

The embassy warned all “Chinese-invested organisations and Chinese citizens to increase security awareness, strengthen internal precautions, reduce trips outside as much as possible, and avoid crowded public spaces”.

It also asked Chinese nationals to cooperate with Pakistan’s police and the military, and to alert the embassy in the event of an emergency.

It did not give any further details.

Pakistan’s foreign ministry could not be reached immediately for comment.

China has long worried about disaffected members of its Uighur Muslim minority in its far western region of Xinjiang linking up with militants in Pakistan and Afghanistan.

At the same time, violence in Pakistan’s southwestern Baluchistan province has fuelled concern about security for planned transport and energy links from western China to Pakistan’s deepwater port of Gwadar.

The Taliban, sectarian groups linked to al Qaeda and the Islamic State all operate in Baluchistan, which borders Iran and Afghanistan and is at the centre of the “Belt and Road” initiative.

In addition, separatists there have long battled the government for a greater share of gas and mineral resources, and have a long record of attacking energy and other infrastructure projects.

Islamic State claimed responsibility for killing two kidnapped Chinese teachers in Baluchistan in June, prompting the government in Islamabad to pledge to beef up security for Chinese nationals.

It had already promised a 15,000-strong army division to safeguard projects along the economic corridor.

China’s security concerns abroad have grown along with its global commercial footprint.

In 2016, a suspected suicide car bomber rammed the gates of the Chinese embassy in the Kyrgyz capital Bishkek, killing the attacker and wounding at least three people.

China’s Fickle Government Whines About Neighbors Democracy: Constantly



China objects to Pres Kovind’s Arunachal trip, says bilateral ties at ‘crucial’ juncture

China claims Arunachal Pradesh as part of south Tibet and routinely criticises India if its leaders visit the state.

INDIA Updated: Nov 20, 2017 23:22 IST

Sutirtho Patranobis
Sutirtho Patranobis
Beijing, Hindustan Times
President Ram Nath Kovind at the valedictory function of 40 years of celebrations of Vivekananda Kendra Vidyalaya, Arunachal Pradesh, at Indira Gandhi Park in Itanagar on Sunday.
President Ram Nath Kovind at the valedictory function of 40 years of celebrations of Vivekananda Kendra Vidyalaya, Arunachal Pradesh, at Indira Gandhi Park in Itanagar on Sunday. (PTI)

China on Monday strongly criticised President Ram Nath Kovind’s visit to Arunachal Pradesh, saying Sino-India relations were at a “crucial moment” and that New Delhi should not complicate the dispute.

“China firmly opposes the Indian leader’s relevant activities in the relevant region,” foreign ministry spokesperson Lu Kang told a regular briefing.

“The Chinese government (has) never acknowledged the so-called Arunachal Pradesh,” Lu said, responding to a question from the Chinese state media on Kovind’s visit to the northeastern state.

China claims Arunachal Pradesh as part of south Tibet and routinely criticises India if its leaders visit the state.

Read more

Barely two weeks ago, Beijing had criticised defence minister Nirmala Sitharaman’s visit to the state.

The official Xinhua news agency went on to describe Arunachal Pradesh as being “illegally” established in areas of the Tibet Autonomous Region.

Kovind had said on Sunday that if the northeast is the crown of the country, Arunachal Pradesh is the “jewel in the crown”. The President was on a four-day tour of the northeast.

On Monday, Lu continued the tirade.

“China and India and are in the process of settling this issue (border dispute) through negotiation and consultation, and seek to reach a fair and reasonable solution acceptable to all. Pending final settlement all parties should work for peace and tranquillity,” Lu said.

“China firmly opposes the Indian leader’s relevant activities in the relevant region,” he said, adding: “China and India’s relations are at a crucial moment and we hope India could work in the same direction and maintain general picture of bilateral ties and refrain from complicating border issue.”

Lu also said India should “work to create favourable conditions for border negotiations and for the sound and stable development of bilateral ties”.

Read more

The Xinhua report said, “The so-called ‘Arunachal Pradesh’ was established largely on three areas of China’s Tibet – Monyul, Loyul and Lower Tsayul – which are currently under India’s illegal occupation.”

It added, “In 1914, British colonialists secretly instigated the illegal ‘McMahon Line’ in an attempt to incorporate into India the above-mentioned three areas of Chinese territory. None of the successive Chinese governments have ever recognised this line.”

Meanwhile, an official statement from China on last week’s border dialogue between officials of the two countries said it was in the “fundamental interest of both countries to maintain the healthy and stable development” of bilateral relations and this is the “common expectation of both the region and the international community”.

Diplomats from the two countries met in Beijing on Friday for the 10th round of the Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC), initiated in 2012 with a focus on maintaining peace along the frontier.

It added that in the next phase, the two sides will continue to implement the important consensus reached by leaders of the two sides.

China Blinks on South Korea, Making Nice After a Year of Hostilities



China Blinks on South Korea, Making Nice After a Year of Hostilities

November 2, 2017


Xi Jinping at the Communist Party Congress in Beijing last month. The Chinese president smoothed relations with South Korea on Tuesday.  Credit Frayer/Getty Images

BEIJING — For more than a year, China has railed against South Korea, calling for boycotts of its products over Seoul’s decision to let the United States deploy an anti-missile system, which Beijing fears threaten its own security.

On Tuesday, however, China abruptly changed course, essentially saying “never mind,” as the two countries agreed to end their dispute even though South Korea is keeping the system in place.

China’s unexpected move to settle the rancorous dispute could scramble President Trump’s calculations about how to deal with allies and North Korea on the eve of his first trip to Asia.

The decision, by the newly empowered Chinese president, Xi Jinping, appeared to reflect a judgment that China’s continued opposition to the deployment of the American missile defense system was not succeeding in fraying the South Korean government’s alliance with Washington.

But it could also pose a fresh challenge to Mr. Trump, as he attempts to build support in the region to put greater pressure on North Korea to curb its nuclear and missile programs.

South Korea’s liberal president, Moon Jae-in, is more receptive to diplomacy with the North Koreans than either Mr. Trump or Japan’s prime minister, Shinzo Abe. Drawing Mr. Moon closer to Beijing, analysts said, could create a new alignment on how to deal with the North, with China and South Korea facing off against Japan and the United States.

“It’s going to undermine the Trump administration’s effort to build solidarity among the U.S., Japan, and Korea to put pressure not only on North Korea but on China to do more on North Korea,” said Michael J. Green, an Asia expert at the Center for Strategic and International Studies.

Much about the rapprochement is not known, Mr. Green cautioned, and the Chinese could be exaggerating the implications of the agreement. But it adds yet another volatile element to Mr. Trump’s 12-day, five-nation tour of Asia, which begins this weekend.

Formally, the Trump administration welcomed news of the thaw. The State Department spokeswoman, Heather Nauert, told reporters on Tuesday, “We see that as providing better stability, greater stability for a region that desperately needs it because of North Korea.”

Ms. Nauert, however, said she did not know whether China’s move indicated it no longer had objections to the deployment of the antimissile system, the Terminal High Altitude Area Defense, or Thaad.

The White House has not publicly addressed the rapprochement. A senior administration official, who asked for anonymity to discuss a sensitive diplomatic issue, acknowledged it could complicate matters, but said there should be no inherent conflict in South Korea restoring its relations with China while at the same time pushing to keep maximum pressure on North Korea.


The Terminal High Altitude Area Defense equipment was installed in September in Seongju, South Korea, over China’s protests. Credit Yohnap, via Agence France-Presse — Getty Images

In restoring better relations with South Korea, Mr. Xi appeared to have decided that he could afford to blink. But he also does not face a vigorous political opposition or press, which could accuse him of flip-flopping on the issue.

Even under Mr. Moon, whose outlook toward China had been more favorable than his predecessor’s and who has called for a more balanced diplomacy between Beijing and Washington, Mr. Xi made no headway in achieving his stated goal of stopping the deployment of the Thaad.

A second phase of the missile defense system, intended to defend South Korea from the escalating nuclear and missile threats from North Korea, was installed despite China’s protests in September, just four months after Mr. Moon took office. China had insisted it would not tolerate Thaad’s powerful radar so close to its own missile systems.

Mr. Xi’s tough stance against South Korea also included the informal, though punishing, economic boycott that helped reinforce the American relationship with Seoul, undermining China’s long-term goal of replacing the United States as the pre-eminent power in Asia.

“This is the reversal of an ineffective and costly policy on the part of China,” said Shi Yinhong, professor of international relations at Renmin University of China.

In agreeing to restore cordial relations, South Korea pledged not to accept additional Thaad launchers and agreed not to join a regional missile defense system with the United States and Japan. The agreement not to accept any more Thaad deployments had been a longstanding policy stance of Mr. Moon anyway, a South Korean government official said on Wednesday.

South Korea also promised not to join a trilateral military alliance with the United States and Japan. Mr. Moon, like his predecessors, had shown no interest in expanding military relations with Japan, its former colonial master.

With the increased threat from North Korea, Mr. Moon had aligned himself more closely with Mr. Trump and Mr. Abe.

The three leaders met on the sidelines of the Group of 20 summit meeting in Germany in July and agreed to enhance their defense capabilities against the North Korean threat.

In warming up to South Korea, Mr. Xi probably recognized that Mr. Moon would be more malleable to favoring dialogue with North Korea than was his conservative predecessor, Park Geun-hye.

At the recent party congress in which he was elevated to a second five-year term as president, Mr. Xi showed himself determined to project China’s power in a “new era.” Resolving the North Korea crisis dovetails with that theme, and any move toward talking with the North would be easier with Mr. Moon by his side.

South Korea and China announced their decision to restore relations just before Mr. Trump’s visit.

The timing was interpreted in Beijing as a way to blunt some of the impacts of the American president’s stop in Seoul, where he is expected to deliver a speech to the National Assembly.


President Moon Jae-in of South Korea, President Trump and Prime Minister Shinzo Abe of Japan in Hamburg, Germany, in July for a Group of 20 summit meeting. Credit Stephen Crowley/The New York Times

Indeed, the rapprochement between China and South Korea carries risks for the United States. How far Mr. Moon would now lean toward China is something that Washington needs to watch closely, said Evans J. R. Revere, a former State Department official who has dealt with the Korean Peninsula.

In agreeing not to join a regional missile defense system, South Korea is addressing China’s concerns about what it views as the United States’ aim to “contain” China.

“Beijing was worried that Thaad would eventually be succeeded by ‘son of Thaad’ — a regional missile defense system involving the United States, South Korea and Japan and others that would be aimed at dealing with China’s offensive missile force, unlike the current Thaad, which it is not,” Mr. Revere said.

For Mr. Moon, the Chinese government’s efforts to discourage the purchase of popular South Korean goods as punishment for the Thaad deployment has taken a toll. China is by far the biggest trading partner of South Korea; two-way trade is bigger than South Korea’s trade with the United States and Japan combined.

The Hyundai Research Institute found that the Thaad dispute was likely to have cost South Korea $7.5 billion so far this year, a 0.5 percent hit to its gross domestic product. China lost $880 million, just a 0.01 percent drop of its G.D.P., the institute said.

South Korean car sales plummeted in China. Lotte, the retailer, recently put 112 of its stores in China on the market after customers abandoned it. South Korean movies and cosmetics also suffered.

The government-encouraged boycott — coupled with what was perceived as Beijing’s interference in South Korea’s internal affairs over Thaad — hardened the view of China as a bully among the South Korean people.

“We have seen anti-Chinese sentiments rising in South Korea,” said Seo Jeong-kyung, a professor at the Sungkyun Institute of China Studies in Seoul. “So did the approval ratings for the Thaad deployment, and calls mounted for strengthening the alliance with the Americans.”

Despite the apparent resolution of the standoff between the two countries, there was no guarantee that the accord would stick.

People’s Daily, the official Communist Party newspaper, issued a somewhat friendly, but mostly stern, editorial. “Only proper resolution of the Thaad issue can bring the Sino-Korean relationship back onto the right track,” it said.

It was possible that both sides agreed to resolve their differences so the two leaders, Mr. Xi and Mr. Moon, could meet in Vietnam next week during an Asian economic summit meeting. After that, there is the talk of Mr. Moon visiting China before the end of the year.

“This is a direct result of South Korea’s efforts to mend fences,” said Cheng Xiaohe, an associate professor of international relations at Renmin University. “China also realizes that Thaad should not hold hostage the whole relations between the two nations. But I think the Thaad issue is just shelved, not resolved.”

Jane Perlez reported from Beijing, and Choe Sang-Hun from Seoul, South Korea. Juecheng Zhao contributed research from Beijing.

A version of this article appears in print on November 2, 2017, on Page A4 of the New York edition with the headline: China Blinks on South Korea, Making Nice After a Year of Hostilities. Order ReprintsToday’s Paper|Subscribe


China lifts Xi’s status to most powerful leader in decades



China lifts Xi’s status to most powerful leader in decades

Chinese President Xi Jinping, front row center, leads other cadres to raise their hands to show approval of work reports during the closing ceremony for the 19th Party Congress at the Great Hall of the People in Beijing, Tuesday, Oct. 24, 2017. (Andy Wong/Associated Press)
 October 24 at 2:39 AM
BEIJING — The ruling Communist Party on Tuesday formally lifted Xi Jinping’s status to China’s most powerful ruler in decades, setting the stage for the authoritarian leader to tighten his grip over the country while pursuing an increasingly muscular foreign policy and military expansion.The move to insert Xi’s name and dogma into the party’s constitution alongside the party’s founders came at the close of a twice-a-decade congress that gathered the country’s ruling elite alongside rank-and-file party members. It not only places him in the first rank with past leaders Mao Zedong and Deng Xiaoping, but also effectively makes any act of opposing him tantamount to an attack on the party itself.

“The Chinese people and nation have a great and bright future ahead,” Xi told party delegates as the meeting came to a close after delegates approved the addition of Xi’s ideology of “socialism with Chinese characteristics for a new era” to the party charter.

“Living in such a great era, we are all the more confident and proud, and also feel the heavy weight of responsibility upon us,” he said.

The concept Xi has touted is seen as marking a break from the stage of economic reform ushered in by Deng Xiaoping in the late 1970s and continued under his successors Jiang Zemin and Hu Jintao. The placement of Xi’s thought among the party’s leading guidelines also comes five years into his term — earlier than his predecessors.

“In every sense, the Xi Jinping era has begun in earnest,” said Zhang Lifan, an independent political commentator in Beijing. “Only Mao’s name was enshrined in the party ideology while he was still alive. We’re opening something that hasn’t been broached before.”

For centuries, Chinese emperors were accorded ritual names that signaled either they were successors in a dynastic line or the founder of an entirely new dynasty. What Xi accomplished this week was a modern equivalent of the latter, Zhang said.

“He wants to join that pantheon of leaders,” he said.

Despite being elevated to the status of both a political and theoretical authority in the party, Xi still lacks the broad popular support of the Chinese public that Mao had enjoyed, said Zhang Ming, a political analyst in Beijing who recently retired from a prestigious university.

“This (elevation) is a result of the party’s political system and not of the sincere support of the people’s hearts,” Zhang Ming said. “If he can achieve that, he would become Mao.”

Xi has described his concept as central to setting China on the path to becoming a “great modern socialist country” by midcentury. This vision has at its core a ruling party that serves as the vanguard for everything from defending national security to providing moral guidance to ordinary Chinese.

He’s set the target dates of 2021 — the 100th anniversary of the party’s founding — and the People’s Republic’s centenary in 2049 — for the establishment of a prosperous, modern society. China has the world’s second-largest economy and legions of newly wealthy urban residents, but raising living standards for millions of people continues to be a challenge.

Zhang Ming, the retired professor, said the goals Xi laid out were lofty but mostly constituted mere rhetoric. “These goals have nothing to do with the people but are just jargon that people shouldn’t take seriously,” Zhang said. “It is not important for him to achieve these goals, just as long as his power reaches its peak.”

The move came at the close of the 89 million-member party’s twice-a-decade national congress at Beijing’s hulking Great Hall of the People, where nearly 2,300 delegates gathered to elect the party’s leading bodies and hear reports.

Although the delegates nominally have the power to vote on candidates, all choices are carefully vetted and the outcomes decided by negotiations among the top leaders.

The constitution was also amended to include references to the party’s “absolute” leadership over the armed forces, which have been modernizing rapidly under Xi, and a commitment to promote Xi’s signature foreign policy and infrastructure initiative known as “One Belt, One Road.” That initiative seeks to link China to Southeast Asia, Central Asia, Africa, Europe and beyond with a sprawling network of roads, railways, ports and other economic projects.


Associated Press writers Gerry Shih and Gillian Wong contributed to this report.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

As China Has Become The Worlds Biggest Predator: Xi Warns U.S.



China has called on the US to “abandon its prejudices” after US Secretary of State Rex Tillerson claimed Beijing was subverting the global order and pursuing predatory economic policies.

“China firmly upholds the international order with the United Nations at its core,” Chinese foreign ministry spokesman Lu Kang said Thursday.
“China is dedicated to developing long-term healthy and stable relations with the United States.”
Speaking Wednesday at a forum for US-India ties, Tillerson said Beijing’s “provocative actions in the South China Sea directly challenge the international law and norms that the United States and India both stand for.”
China has reclaimed a large amount of land in the disputed waters of the South China Sea, turning reefs into military bases in defiance of an international court ruling.
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Lu said the country would “never give up its legitimate rights and interests.”

US Secretary of State Rex Tillerson shakes hands with Chinese President Xi Jinping before their meeting at the Great Hall of the People on September 30, 2017 in Beijing, China.

Tough talk

Tillerson’s latest comments represent something of a return to form for the top US diplomat, who was a strident critic of China during his confirmation hearings in January.
He called on China to be denied access to islands it was occupying in the South China Sea, and compared Beijing’s actions to Russia’s military intervention in Ukraine.
“Building islands and then putting military assets on those islands is akin to Russia’s taking of Crimea. Its taking of territory that others lay claim to,” Tillerson said, sparking an angry reaction from Chinese state media.
In a subsequent visit to Beijing however, he took a far softer tone, echoing Chinese language on the need to “expand cooperative areas and achieve win-win results.”
On Wednesday, Tillerson said that while the US wants a constructive relationship with China, “we will not shrink from China’s challenges to the rules-based order, and where China subverts the sovereignty of neighboring countries and disadvantages the US and our friends.”

The cult of Xi Jinping

The cult of Xi Jinping 02:46

Trump trip

Tillerson’s latest remarks came just three weeks before US President Donald Trump makes his first official trip to China.
They also coincided with China’s 19th party congress — a massive gathering of Communist Party members during which President Xi Jinping said China should “take center stage in the world,” adding that “no one should expect China to swallow anything that undermines its interests.”
Trump was full of praise for Xi when the pair met in Florida in April, but the relationship between the two leaders has apparently cooled in the wake of the ongoing North Korean crisis, for which Trump has blamed Beijing for failing to take more stringent action against Pyongyang.
Foreign ministry spokesman Lu directly quoted Xi Thursday, saying China “will never pursue development at the expense of other countries’ interests, but China will also never give up its legitimate rights and interests.”
Tillerson praised Delhi’s mode of development in comparison to Beijing, setting out a vision of an “Indo Pacific” order stretching from the US west coast to India that would be underpinned by the US and its allies, a move that could be seen in Beijing as an attempt at containment or as a challenge in a region that China sees as falling under its sphere of influence.
“We are pleased to see the US and India — and indeed all countries of the world — develop normal relations, as long as such relations are conducive to peace, stability and development of the region, as well as the improvement of mutual trust between countries in the region,” Lu said.

Emboldened China Wields Its Laws to Silence Critics From Abroad



Asia Pacific

Emboldened China Wields Its Laws to Silence Critics From Abroad


BEIJING — On the morning he disappeared, the activist Lee Ming-cheh crossed from Macau into mainland China to meet with democracy advocates.

It was 177 days later when he reappeared in public, standing in the dock of a courtroom in central China last week, confessing to a conspiracy to subvert the Communist Party by circulating criticism on social media.

The circumstances surrounding Mr. Lee’s detainment remain murky, but what has made the case stand out from the many that the Chinese government brings against its critics is that Mr. Lee is not a citizen of China, but rather of Taiwan, the self-governing island over which Beijing claims sovereignty.

The proceedings against Mr. Lee, who is expected to be sentenced as soon as this week, punctuated what critics have warned are China’s brazen efforts to extend the reach of its security forces to stifle what it perceives as threats to its power emanating from overseas.

In recent months alone, China has sought the extradition of ethnic Uighur studentsstudying overseas in Egypt and carried out the cinematic seizure of a billionaire from a Hong Kong hotel in violation of an agreement that allows the former British colony to run its own affairs. The billionaire, Xiao Jianhua, now appears to be a material witness in another politically tinged investigation against the Chinese conglomerate Dalian Wanda.

China abruptly surfaced charges of rape against yet another billionaire, Guo Wengui, after he sought political asylum in the United States, where he has been making sensational accusations about the Communist Party’s leadership. Mr. Guo’s case could become a major test for the Trump administration’s relations with Beijing at a time of tensions over North Korea and trade.

The Chinese billionaire Guo Wengui has sought political asylum in the United States.


“China has been extending its clampdown — its choking of civil society — throughout the world, and often it is attempting this through official channels such as the U.N. or Interpol,” said Michael Caster, a rights campaigner who was a co-founder of the Chinese Urgent Action Working Group. “Unfortunately, they’re very adept at doing it.”

The Chinese Urgent Action Working Group, which provided seminars for lawyers and legal aid for defendants in China, folded last year after the country’s powerful Ministry of State Security arrested and held Mr. Caster’s colleague, Peter Dahlin, a Swedish citizen, for 23 days.

Mr. Caster noted that Interpol’s president, Meng Hongwei, is a veteran of China’s state security apparatus. Human Rights Watch recently reported that China was blocking the work of United Nations agencies investigating rights issues and preventing critics from testifying at hearings, including in one case the leader of the World Uyghur Congress, Dolkun Isa.

China’s economic and diplomatic clout has meant that few countries are willing or able to do much to challenge its extraterritorial legal maneuvers. Some have even gone along.

And countries as varied as Armenia, Cambodia, Indonesia, Kenya, Spain and Vietnam have all extradited to China scores of people accused in a spate of telephone swindles targeting Chinese citizens, even though the suspects are, like Mr. Lee, citizens of Taiwan.

“Treating Lee Ming-cheh as a mainland Chinese marks a major watershed,” said Hsiao I-Min, a lawyer at the Judicial Reform Foundation in Taiwan, who accompanied Mr. Lee’s wife from Taiwan to attend the trial.

Peter Dahlin, a Swedish citizen, was arrested in China and held for 23 days last year.


Mr. Lee’s case has added new strain in relations with Taiwan, which have soured since the election last year of a new president, Tsai Ing-wen. China has cut off official communications with Ms. Tsai’s government over her refusal to voice support for what Beijing calls the “1992 consensus,” which holds that the mainland and Taiwan are both part of the same China but leaves each side to interpret what that means.

In response to Mr. Lee’s legal odyssey, Ms. Tsai’s government has been relatively muted. “Our consistent position on this case is that we will do everything in our power to ensure his safe return while protecting the dignity of the nation,” said a spokesman for the presidential administration, Alex Huang.

China and Taiwan had in recent years cooperated on criminal investigations under a protocol that required each to notify the other in cases involving the arrests of its citizens. The Chinese government has recently abandoned such diplomatic niceties, officials in Taiwan say.

Taiwan’s government was notified of Mr. Lee’s arrest only when the public was — 10 days after his detainment in March near Macau, the former Portuguese colony that, like Hong Kong, is a special administrative region of China with its own legal system.

Whatever the veracity of his courtroom confession, Mr. Lee, 42, assumed enormous risk to make contact with rights campaigners inside China. A manager at Wenshan Community College in Taiwan’s capital, Taipei, Mr. Lee volunteered for a rights organization called Covenants Watch and often traveled to the mainland.

Mr. Lee’s wife, Lee Ching-yu, learned his case had come to a head when a state-appointed lawyer contacted her this month. She only found out about his court appearance last week in Yueyang, in the southern province of Hunan, from news reports that circulated two days later, according to Patrick Poon, a researcher at Amnesty International.

According to excerpts released by the Yueyang Intermediate People’s Court, Mr. Lee entered a guilty plea. He appeared with a Chinese co-defendant, Peng Yuhua, and together they were accused of trying to organize protests using the social media platforms WeChat and QQ, as well as Facebook, which is banned here.

Mr. Lee told the court that watching Chinese state television during his prolonged detention convinced him that he had been deceived by Taiwan’s free news media and was wrong about China’s political system. “These incorrect thoughts led me to criminal behavior,” he said.

Mr. Hsiao, the lawyer from Taiwan, said none of Mr. Lee’s acquaintances had heard of the co-defendant. Mr. Peng testified that together they had established chat groups online and formed a front organization, the Plum Blossom Company, with the aim of fomenting change. Mr. Hsiao said that no such company existed.

“He was a fake,” Mr. Hsiao said of Mr. Peng. “This guy does not really exist. He was playing a role.”

Ms. Lee, too, denounced her husband’s trial as a farce. “Today the world and I together witnessed political theater, as well as the differences between the core beliefs of Taiwan and China,” she said at her hotel in Yueyang, adding that the “norms of expression in Taiwan are tantamount to armed rebellion in China.”

Mr. Lee’s case has echoes of the fate of five booksellers in Hong Kong, four of whom who were spirited out of the semiautonomous city in the fall of 2015 after publishing gossipy material about Chinese political intrigues, which, while legal in Hong Kong, is not in China.

One bookseller, Lee Bo, is a British citizen. Another, Gui Minhai, is a naturalized Swedish citizen; he vanished from his seaside apartment in Pattaya, Thailand, in October 2015 and returned to China in a manner that has not been fully explained. He appeared on state television in January 2016 and said he had voluntarily returned to face punishment for a fatal car accident in 2003. He remains in prison.

“What happened to my father is a much larger issue,” Mr. Gui’s daughter, Angela Gui, who has been campaigning for his release, wrote in an email. “It shows that foreign citizens aren’t safe from Chinese state security, even when they are outside China’s borders. I find it strange that governments aren’t more worried about China’s new self-proclaimed role as world police.”

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