Has China Overplayed Its Hand?

Xi Jinping, Chairman of China's Communist Party, envisions a "China Dream", not to cool or feed the planet, but to regain China's place, center stage in world history. Kublai Khan's civilization, superior to Europe's in the 13th century, waited for Marco Polo to discover Chinese people paid for their goods with paper money and healed their wounds with a kind of vasoline. Unwilling to wait for China to be discovered in the 21st century, Chairman Xi chooses to dream of world domination by following Deng Xiaoping's 1978 advice, "It is a glorious thing to be rich." To be a rich country in the 21st century requires the technological superiority the world associates with Silicon Valley. When Chairman Xi learned, in April, 2018, a US ban on microchip exports could cause the bankruptcy of a Chinese firm, ZTE, he saw how the patent a US company held on a specific semiconductor chip established the international standard for an item essential in every device connected to a cell phone network. From that point on, his "Made in China 2025" program aimed for self reliance and acquiring standard essential patents (SEPs). Using a SEP without being licensed subjects a user to the charge of infringement. According to a German patent data source, Huawei now holds 2000 5G SEPs. Normally, a firm has to license its monopoly rights to anyone on FRAND (fair, reasonable and non-discriminatory) terms. The US wants to withhold licensing its SEPs to competitors because of national security concerns. To be fair, Huawei would have to be allowed to do the same. The chip situation is very complicated, because Washington has not been able to resist lobbying from US firms that want to continue selling chips to Huawei, a short term gain, since China is determined to end reliance on US supplies. Nonetheless, as of September 26, 2020, the US Commerce Department requires US suppliers to obtain hard-to-come-by licenses to export what China's Semiconductor Manufacturing International Corporation (SMIC), considered a supplier to the Chinese military, needs to upgrade and maintain its manufacturing and hardware equipment. Not easy to replicate or fund are the processes of: 1) designing the delicate silicon microchips created for different purposes, such as operating driverless cars, and 2) constructing the automated, super-cooled and shock resistant facilities where chips are manuractured. Ironically, Taiwan, which Beijing claims under its "one country, two systems" policy framework, currently is among the countries with facilities capable of fabricating microchips. Yet, Beijing is at odds with the democratic government Taiwan re-elected in January, 2020. Chairman Xi's detrmination to maintain stability through surveillance-guaranteed control and conformity undermines a relationship that provides Taiwan's top tier brainpower and technology. What steps is China taking to reduce external dependency, even from Taiwan, on foreign sources of semiconductor chips? - Enhanced domestic training of top quality skilled workers - Using experienced Chinese hackers to scoop up foreign researh and development progress in a wide variety of high tech industrial, medical, engineering, solar, gaming and military fields - China Talent Plan, a spy-like program for recruiting foreign individuals with access to intellectual technology property who are willing to work with Chinese partners - Huawei, a Chinese company with total annual earnings of over $100 billion annually from 170 countries, sells smartphones and cellular and internat gear that give Beijing potential access to big data from around the world. Some US professors targeted by the China Talent Plan have seemed oblivious to the way China uses them, but the FBI has been concerned for more than a decade. Yanqing Ye, for example, would see herself on an FBI wanted poster after she entered Boston University's Department of Physics, Chemistry and Biomedical Engineering without declaring, on her visa application, her status as a Lieutenant in China's military, her membership in the Chinese Communist Party and her association with China's National University of Defense Technology (NUDT). The FBI found a Princeton professor working on unmanned drones and autonomous submarines with a scientist from NUDT. Although Huawei has global sales, its biggest customer is China, where a 2017 law requires any citizen or organization, including Huawei, to comply with all government requests. Therefore, the US attempts to prevent countries from making Huawei purchases, especially the countries in the "Five Eyes" spying pact that shares intelligence among Australia, New Zealand, Canada, the UK and US. When Britain concluded a review of an April 24, 2019 decision to build its 5G (fifth generation) network with a limited amount of Huawei equipment, the decision was overturned on July 14, 2020. In October, 2020, Sweden also decided not to use Huawei products in its 5G network. Following the UK's decision, Britain suggested forming a 10-country alliance of democracies to develop 5G technology and to eliminate dependence on Huawei and other Chinese technology companies. With 6G technology already on drawing boards, an alliance of G7 countries (Britain, Canada, the US, France, Germany, Italy, Japan) and Australia, South Korea and India represents an important source of brainpower and financing to develop future networks. Such a NATO-like coalition also could more than match China's future investments in computing power to handle big data, the semiconductor industry, drones, robotics, autonomous weapons and other advanced technology. By attempting to gain world domination, China has stirred up widening opposition to its transgressions, such as internment of one million Uighur Muslims in so-called re-education camps, disregard of Hong Kong's 50-year guarantee of rights under China's takeover agreement with Britian and an expanding claim to the South China Sea. What some are calling a tech Cold War is more. Chinese Communism and the democratic ideals of human rights, the rule of law and representative government are waging a battle for history's center stage.

China Feels Winds of Change

Not only has the US President tired of China's theft of intellectual property and lopsided trade balance, but Malaysia's new 93-year-old prime minister, Dr. Mahathir Mohamad, is fed up with loans for Beijing's worldwide Belt and Road Initiative. Labeling China's project "new colonialism," Dr. Mohamad traveled to Beijing to cancel the previous Malaysian government's agreement to finance a rail line and two pipelines for an inflated $20 billion (China may, however, have a way to regain these contracts, if Beijing turns over Jho Low, who was the mastermind of a financial scam in Malaysia). Sierra Leone's new president, Julius Maada Bio, also told China it canceled the previous administration's contract to build a new airport, since the existing one is underutilized.

     Despite heavy Chinese spending in support of Abdulla Yameen in the Maldives, the atolls that occupy a key position to monitor trade in the Indian Ocean, Ibrahim Mohamed Solih won a surprise victory in that country's September, 2018 presidential election.

     Chinese citizens also were none too happy in September, 2018, when they learned President Xi Jinping, at a meeting of the Forum on China-Africa Cooperation, committed another $60 billion to 53 African countries after committing $60 billion in 2015. Censors quickly removed social media criticism that claimed loans would not be repaid and aid was needed for domestic projects.

     China's unabashed interest in Africa's mineral commodities and growing market is arousing dormant European competition. Following his trip to China to inquire about funding for infrastructure projects, President Buhari of Nigeria received visits by French President, Emmanuel Macron, Germany's Chancellor, Angela Merkel, and British prime minister, Theresa May. It was Mrs. May's first trip to former British colonies in five years.

     At home, Tiananmen Square did not end demonstrations in China in 1989. Labeled "picking quarrels and causing trouble," "public-order disturbances," strikes by workers in factories and service industries, or just plain incidents, the Communist Party still tries to tamp out what it considers threats to peace and security by arresting demonstrators and those who post social media information about the protests. Despite these government crack downs, protests continue. In 2016, for example, parents of dead children, whose only children were born during the era of China's one-child policy, took to the streets in Beijing. This year, parents protested a local government's decision to transfer children from nearby schools to distant ones. Whether land is seized by local officials, soldiers demand higher pensions, or a minority wants to practice religion, state controls continue to spark tensions.

     China fears large movements, such as members with loyalties to international  trade union organizations or religions (Muslim, Buddhist, Shinto, or Christian).  The government is wary of any large gathering. Security keeps visitors out of Hongya, the Dalai Lama's birthplace in March, when in 1959, a demonstration against Chinese rule in Tibet led to the Dalai Lama's exile and the dissolution of his government there. During the 19th National Congress of the Chinese Communist Party in Beijing, police canceled the Norlha Basketball Invitational tournament in China's Tibetan region. The Public Security Bureau feared the large crowd of spectators the tournament would attract in the Dalai Lama's former domain. (Also see the later posts, "Challenging Chinese New Year" and "Playgrounds Welcome March Basketball.")

China Stretches a Napoleon-Style Belt

Emperor Xi Jinping gained open-ended power, when China's Communist Party scrapped his two, five-year term limit in February, 2018. He already had launched an ambitious One Belt, One Road (OBOR) Initiative to connect China to Europe and a Maritime Silk Road (MSR) that will join China to Africa. The Silk Road term, not coined until the 19th century by a German, is well suited to the OBOR and MSR initiatives which mimic the ancient variety of land and sea routes that carried silk and other goods, as well as ideas, between Asia, Europe, and Africa. Many have observed, however, that besides a means to facilitate trade, China's port projects could serve as a way to establish worldwide influence and naval bases for China's expanding navy.

     In pinyin, the form of Chinese characters described in Roman letters, the One Belt, One Road Initiative is called yidaiyilu. The worldwide use of English and the U.S. dollar rankles China. Beijing's Academy of Contemporary China and World Studies claims globalization is now causing many words, such as xiongmao, the pinyin word for giant panda, to be recognized outside of China.

     Ever since Romans built the Appian Way, leaders have recognized how transportation binds an empire together. Yet, China's infrastructure projects will test the tight control Beijing now maintains over its citizens' telecommunication and face-to-face contacts with the outside world. Like the Chinese employees who built the railroad in Kenya, those building the new container terminal and nearby oil storage installation at Walvis Bay in Germany's former African territory of Namibia, are sealed off from the local community. They live in a closely monitored compound of barracks imprisoned by a wall topped by electrified barb wire.

     Stretching thousands of miles from Beijing, work on the OBOR and MSR cannot help but require ongoing contacts with local government officials, financial institutions, suppliers, laborers, religions, and academics in the countries the roads pass. Already, the China Democratic League, one of China's eight non-communist parties, submitted a proposal to the advisory body, the National Committee of the Chinese People's Political Consultative Conference, suggesting cultural exchanges along the routes are as important as trade.

      Singapore-based Broadcom's failed hostile bid for the San Diego company, Qualcomm, might, however, signal China's determination to maintain control over vast areas by using high-speed optic fiber communications and Smartphone communication and data exchange. The Committee on Foreign Investment in the United States (CFIUS) cited national security issues to block Broadcom from access to Qualcomm's wireless chips and 5G (fifth generation) high-speed mobile network technology and standards. In April, 2018, the U.S. Commerce Department placed a 7-year ban (now lifted) on sales of chips, all from Qualcomm, to China's ZTE, because the company violated a 2017 agreement not to send telecommunications equipment containing Qualcomm chips to Iran and North Korea. In Australia, (and later in the UK and Sweden) China's Huawei telecom companies remain banned from 5G networks.  Before its US-blocked acquisition of Qualcomm, Broadcom transferred its headquarters from Singapore to San Jose, California, and later purchased Manhattan-based CA Technologies, a chipmaker in the infrastructure software field. In July, 2018, China would block Qualcomm's acquisition of China's NXP semiconductor company.

     Noticeably missing from China's One Belt, One Road initiative was any reference to North Korea. But that was before members of the women's hockey players in North and South Korea agreed to play together in the 2018 winter Olympics; and U.S. President Trump accepted Kim's invitation to meet on June 12, 2018 in Singapore. Suddenly, on March 25, 2018, North Korea's dark green train carried Kim to China for a strategy session prior to the upcoming US-North Korean meeting, from which China was excluded. Subsequently, Beijing agreed to Liaoning province's $88 million plan to build roads on the North Korean side of the Friendship Bridge that connects the two countries at Dandong.

     Whether China's strategy in Africa is considered part of the Maritime Silk Road (MSR) or an extended One Belt-One Road-One Continent strategy, China already has shown interest in the Continent by its trade, military base in Djibouti, the dam its Export-Import Bank built in Uganda, and railroad projects in Zambia, Tanzania, Kenya, Ethiopia, Sudan, and Nigeria. Other current and proposed Chinese port, rail, and airport projects ring Africa in the following countries:

• Seychelles
• Mauritius
• Tunisia
• Tanzania
• Uganda
• Rwanda
• South Sudan
• Mozambique
• Namibia
• Gabon
• Cameroon
• Ghana
• Senegal

Look and Read for International Surprises

"They're all wearing jeans," a friend said back in 1979, when Iranian militants were storming the U.S. Embassy in Tehran. That observation introduced me to what can be learned by looking at the details in media photos and also by looking for unexpected information in novels and other publications.

The clothes and expressions on people used to illustrate articles say a lot. When criminals or terrorists are captured, we don't see them well-groomed, wearing well-tailored business suits, or smiling at the camera, because pictures are chosen to help tell the same stories as the articles tell.

Some times pictures unexpectedly generate funny ideas instead of the serious ones they are intended to communicate. Draperies/curtains made into clothes is a device we've seen in Gone With the Wind, Sound of Music, and Enchanted. Seeing China's President, Xi Jinping, dwarfed by the enormous red drape behind him at the 19th National Congress of the Communist Party, all I could think of was how many gowns could be fashioned from that material.

Then, there is the information that turns up in unexpected places. While reading the class notes about alumni in a secular university's magazine, I saw a former student wrote a book about a Roman Catholic priest, Bernhard Lichtenberg, who was martyred for speaking out on behalf of Jewish citizens against Nazi practices.

When I was listening for stock market tips, Jim Cramer, a stock analyst and the host of "Mad Money" on CNBC, mentioned he once heard a professor say, if you wanted to learn about reality, read novels. Sure enough, I was reading the latest novel, The House of Unexpected Sisters, by Alexander McCall Smith, the British author who writes a series set in Botswana, Africa, when, on page 151, I saw he wrote about a store that sold furniture made from Zambezi teak and mukwa wood, "none of this Chinese rubbish." I hadn't expected the controversial subject of African wood, a subject I discussed in the blog post, "Don't Take Any Wooden Nickels," to turn up in a novel.

Look East at South Korea, China, and Japan

North Korea is not the only country drawing attention eastward. On February 9, 2018, the Winter Olympics will begin in Pyeongchang, South Korea.

     In October, 2017, the 19th National Congress of the Communist Party of China confirmed Xi Jinping as China's President for his second, and probably not final, 5-year term. His Chinese Socialism for a New Era is designed to replace Russia with China as the world's other superpower.
Unlike Russia, Xi cracks down on the corruption that makes President Putin vulnerable to opposition by those suffering economic deprivation. But Xi is not confident enough of his position to lessen censorship or to release from house arrest the widow of Liu Xiaobo, a leader of China's pro-democracy demonstration in 1989, or to free, permanently, critics, such as activists, Joshua Wong, Nathan Law, and Alex Chow, who organized a 2014 pro-democracy protest in Hong Kong.

     China's neighbor in Japan continues to push for a constitutional amendment that would give the country the right to maintain a military force. Like Xi, Japan's Prime Minister Shinzo Abe won a landslide election in October, 2017 that solidified his position and plans for economic growth. In 2020, the Summer Olympics will come to Tokyo.

   

China's Manifest Destiny East, West, North, and South

Mainland China is not about to let Hong Kong stand in the way of its "Manifest Destiny" to the East. Despite the terms of the 1984 Sino-British treaty that ended colonial rule and prepared Hong Kong to become a semi-autonomous region of China on July 1, 1997, the island is unlikely to remain unchanged for 50 years. In fact, free elections ended three years ago. On June 30, 2017, a spokesman for China's foreign ministry said the mainland is no longer bound by the 1984 treaty.

     On July 1, 2017, just before Hong Kong's annual march to commemorate the 1984 treaty, China's President Xi Jinping, on his first visit to the island, warned "Any attempt to endanger China's sovereignty and security, challenge the power of the central government...or use Hong Kong to carry out infiltration and sabotage activities against the mainland" is an "impermissible" way to cross a red line.

     Martin Lee,  who is known as Hong Kong's "father of democracy," observed money is all the Communist Party has. (Under Deng Xiaoping, China embraced striving for economic progress by the country and individuals.) It has no core values or principles of freedom, civil rights, or a rule of law.
He told the 60,000 or more pro-democracy protesters on July 1, "Even if our country will be the last in the entire world to reach that goal, we will still get there."

     Meanwhile, China will continue to pursue its eastward quest to dominate the South China Sea and maintain control over its so-called semi-autonomous regions: Hong Kong, Macau, and Taiwan.

     Activities involving India and Myanmar (Burma) also reveal China's interest in securing a strategic position in the West. Its Maritime Silk Road (road, bridge, and tunnel) project, estimated by the Asian Infrastructure Investment Bank (AIIB) to cost at least $1.7 trillion per year through 2030, is designed to reconstruct the ancient Silk Road linking China to India. The hydroelectric dam China built on the Brahmaputra River gives Beijing control over the needed monsoon water that flows from Tibet through India and Bangladesh. And China's interest in securing access to the Bay of Bengal through Myanmar prevents Beijing from pressuring that country to severe its military ties to North Korea.

     As for China's quests in the North and South, see the posts, "China Stakes a New Arctic Claim," China's plans for its Polar Silk Road in "Santa Opens Arctic for Business,"  and "China Is Everywhere in Africa."

North Korea: Bill Clinton's Second Chance

                                 Diplomacy Only Choice for North Korea-US Relations


     On Andrea Mitchel's report July 7, 2017, James Clapper said the only solution he sees for the North Korean situation is diplomacy. To that end, consider:

     President Bill Clinton always wanted a Nobel Peace Prize. He tried unsuccessfully in the Middle East to follow in the steps of Theodore Roosevelt, Woodrow Wilson, and Jimmy Carter. From his experience bringing home two U.S. hostages from North Korea, he has credibility with Kim Jong Un. By opening up new contacts with the United States, he could help free Kim Jong Un from the Chinese clutches that threatened to replace him with his half brother, Kim Jong Nam. The last thing Pyongyang needs is more cloistering sanctions.

     President Trump offered Xi Jinping a great trade deal in exchange for help curbing North Korea's threats to South Korea, Japan, and the United States. Why shouldn't Pyongyang benefit from a great U.S. trade deal? Or, better yet, from Tiger Woods' help building a golfing resort in North Korea. Asians love golf.

     No Clintons were among "The 100 Most Influential People" in TIME magazine's annual list in 2017, but Kim Jong Un was. Wish he'd come to the U.S. to attend TIME's New York party for invitees. At least he knows he's on the list with Donald Trump, Juan Manuel Santos, Theresa May, Pope Frances, and other world leaders.

     Couldn't President Clinton bring Dennis Rodman back to visit basketball-loving Kim Jong Un and set up a future exhibition game by the Harlem Globetrotters in North Korea? After all, they are called the Globetrotters. It may be too soon for help with U.S. training methods to pay off for North Korean athletes marching into PyeongChang, South Korea, for the Winter Olympic Games next February. But sending a well-dressed contingent of new speed skating challengers there would announce that their golfers, archers, and badminton and ping pong players will be ready for the 2020 Summer Games in Tokyo.

     And isn't it time for the ePals.com website, that enables U.S. classrooms to work on projects with classrooms in foreign countries, to reach out to teachers and students in North Korea to learn about more cities than Pyongyang? Later, President Trump would discover there is a beach city called Wonsan that would be perfect for a golfing resort. Could an earlier North Korean-US partnership classroom project create a toy for Hasbro or Mattel to market?

     Entertainment seems to have a magnetic pull on North Korean leaders. How did Kim Jong Nam lose his chance to succeed his father? He discredited the family by trying to go to Disneyland in Japan. And wasn't Kim Jong Nam's mother an actress and isn't Kim Jong Un's wife a singer? U.S. booking agents might discover some untapped talent in North Korea. Ben Affleck is someone who could handle the challenge of developing an ARGO-type script and acting in and directing a film, not in China but in North Korea.

     With nuclear weapons and long range missiles, Kim Jong Un got the world's attention. He's now in a position to capitalize on a new opening to U.S. diplomatic, trade, development, media, sports, education, and entertainment resources. This is his moment...and Bill Clinton's.

   

   

   

Exotic Farming

If Xi Jinping, Kim Jong-un, Vladimir Putin, and Bashar al-Assad suddenly planted vegetable gardens in the front yards of their residences, that would be exotic farming. When she was the US First Lady, Mrs. Obama did encourage young people to eat nutritional vegetables by planting a vegetable garden in the White House's backyard, and she invited students from Wisconsin and other States to help harvest the crops.

     Looking around the world you can find other examples of exotic farming. Until late in 2018, Pakistan kept eight buffaloes to provide milk for its prime minister. To grow alfalfa for nearly one million cows, Almarai, the largest dairy producer in oil-rich, water-poor Saudi Arabia, paid $31.8 million for 1,790 acres of land in California. Unfortunately, growing alfalfa there diverted water from the Colorado River that was needed by drought prone California.  Transporting heavy, bulky animal feed thousands of miles also required burning fossil fuel that emits the greenhouse gases that cause climate change.

     Other examples of exotic farming offer better options. A London warehouse has become an aquaponic vertical farm that grows salad greens and herbs and produces fish. On the roof of a former factory in The Hague, Urban Farmers, a Swiss aquaponics system does the same. Berlin's Infarm modular, indoor hydroponic systems grow herbs, radishes, and greens right in Metro Cash & Carry supermarkets.

     Look up aquaponics and hydroponics on the internet. These exotic new urban agricultural projects can be near consumers in shops, restaurants, schools, and hospitals. They can provide job opportunities for those trained to find balconies and roof tops with micro climates that have sun and little wind, to decide what crops to plant, to monitor quality, and to find customers.

   

Posts about TIME's 100 Most Influential People

• Lin-Manuel Miranda and Stephen Curry: "Stage Your Life"
• Pope Francis: "Why Is the Pope Going to Philadelphia?" "Warning to Students: Don't Cheat," "Good News from Cuba," "We Have a Pope"
• Christine Lagarde: "When to Buy/Sell in the World Market"
• Angela Merkel and Hillary Clinton: "What Are You Wearing in the New Year?"
• Jin Liqun: "China's Corruption Crackdown, New Bank Backing, and Release of PR Activists"
• Barack Obama: "Good News from Cuba," What Moscow Could Learn from History"
• Xi Jinping: "Time to Revisit China's and the World's Foreign Currency Exchange Rates," "China's Corruption Crackdown, New Bank Backing, and Release of PR Activists," "Let's Visit China"
• Aung San Suu Kyi: "Who Are Your Country's Super Heroes?" "Hope for the Future"
• Hillary Clinton: "It Takes a World to Raise a Child"
• Vladimir Putin: "What Moscow Could Learn from History," "Hearing Voices from Mexico and Russia," "Hope for the Future"
• Kim Jong Un: "Corruption Has Consequences," "Nuclear Straight Talk," "Reasons to Celebrate Global Victories," "Hope for the Future"

Time to Revisit China's and the World's Foreign Currency Exchange Rates

Watching how a change in the amount one country's currency, such as a US dollar, can buy of another country's currency, such as Chinese yuan, illustrates globalization at work. Currency exchange rates certainly demonstrate how countries are interconnected.

     What brings this subject to mind (after it was addressed in the earlier post, "When to Buy/Sell in the World Market") is today's Chinese devaluation of its currency by about 2% against the US dollar. Based on information in the earlier post, kids who have an interest in finance might conclude China was attempting to reduce the price of its exports in order to compete with lower priced goods from other countries. China's imports of luxury goods and electronics from the US would cost more, and US tourists in China would get more for their money.

     In the past, China selected a midpoint currency conversion rate that fluctuated between 2% above or below the US dollar. As a result of China's first devaluation, the US dollar could buy 6.22 yuan compared to 6.11 the day before. The next day the value of the yuan dropped a little over 4%, but that is nothing like the 20% to 40% devaluation that would be needed to compete with much lower priced competitors like Vietnam or Burma. Although China did not want to risk losing investment capital that would exit a country whose currency has this kind of weak buying power, subsequent devaluations have caused capital to flee.

     The truth is, demand is weak within China, as shown by Alibaba's slowed quarterly growth. China's $50 billion canal project in Nicaragua has been put on hold until 2016. While no reason was given, the stock market dip has caused the fortune of Wang Jing, CEO of the HKND Group funding the canal, to fall from $10.2 billion to $1.1 billion. Yet, in December, 2015, President Xi Jinping announced China would be giving Africa emergency food and $60 billion in grants and loans.

     Weak demand throughout the world is hurting all exporters, including South Korea and Taiwan. Countries that depend on their commodity exports to China are especially hard hit as reported in the later post entry, "Falling Commodity Prices Spur Diversification in Emerging Markets." A 2% currency devaluation and even a 20% devaluation will not cure sluggish worldwide industrial and consumer demand.

   

   

   

   

   

China's Corruption Crackdown, New Bank Backing, and Release of PR Activists

In case there was any doubt about China's determination to stamp out corruption, the April 2015 arrest of Zhou Yongkang, former head of the domestic secret police and the most senior member of the Chinese Communist Party to face corruption charges, should dispel that notion. Assets from Zhou's family members and associates totaling $14.5 billion were seized, and 300 of his relatives and allies have been  taken into custody or questioned. Zhou, and earlier Bo Xilai, were believed to have been investigated by the special investigation team composed of cross-agency law enforcement officials that can only be authorized by Beijing's senior leadership to investigate high ranking Communist Party members.

     In the book, The Little Red Guard, mentioned in the earlier blog post, "See the World," model workers of older Chinese generations felt betrayed by a new corrupt system that rewarded friends and relatives of Communist Party officials with promotions and raises. Although President Xi Jinping was said to be worried that the extent of corruption revealed at a trial of Zhou would undermine public faith in China's Communist Party and alienate other high level party members who fear their own corruption charges, Zhou was sentenced to life in prison in June, 2015. China also has added Wang Tianpu, president of Sinopec, China's state-owned Petroleum & Chemical Corporation, to its list of corruption suspects. In October, 2015, Sam Pa, who heads the Queensway group in Hong Kong and who has ties to China's intelligence service, was detained in Beijing. Queensway is an active deal maker in Africa and North Korea. In March, 2016, HSBC froze $87 million of Sam Pa's assets.

     Following the explosion of the Rui Hai International Logistics's chemical warehouse that killed over 100 and damaged 17,000 homes in Tianjin, ten Chinese officials were detained on suspicion of safety violations. Two Rui Hai executives admitted using political connections to get waivers that allowed the warehouse to be build closer to a residential area than allowed by law, and the warehouse had been cited for safety violations in the past.

     China's corruption crackdown already has put politician and powerful Chongqing party boss, Bo Xilai, in prison for life and given his wife, Gu Kailai, a suspended death sentence for poisoning British businessman, Neil Heywood, who may have been murdered for wanting too big a cut for helping get the family funds of Bo and Gu out of China. On July 28, 2015, when Man Mingan, the Chinese prosecutor in Gu's murder trial, was found hanged in his Anhui province apartment, police launched an investigation into the circumstances. In another strange development, China uncovered a fake anti-corruption unit that had its own interrogation room.

     The anti-corruption campaign has caused China's big rollers to flee Macau's casinos for Cambodia, where, as described in the earlier post, "Let's Visit China," they hope to do their gambling under the radar of investigators. Consequently, Macau's investors, who have seen their revenue drop, have decided to follow the Las Vegas model and give the island a more family-friendly image by adding a $2.3 billion theme park to a new casino.

     Meanwhile, a new Chinese-backed Asian Infrastructure Investment Bank (AIIB), which has won the approval of the World Bank, has been founded. The bank's president, Jin Liqun, was among the world's 100 Most Influential People selected by TIME magazine in 2016.  AIIB attracted 57 prospective founding members, including Singapore, India, Thailand, and even the UK (but not Japan, Australia, South Korea and the US, the more developed countries that control the rival Asian Development Bank.) Hoping the UK can cash in on billions of trade deals with China, British Prime Minister Cameron gave Chinese President Xi the royal treatment, including a ride in a horse-driven carriage, when he visited the UK in October, 2015. Although President Obama cautioned the UK about developing close ties with China and initially opposed Britain's participation in the AIIB, he eventually suggested the bank may have a positive impact on emerging markets. By 2017, the AIIB had 80 member nations including Britain ad Australia. The Asian Development Bank now works with AIIB to fund energy, transport, and infrastructure projects.

     The July, 2015 purchase of the former Milan headquarters of Italian bank, UniCredit, by the Chinese Fosun group headed by Guo Guangchang was just the latest in a series of recent Chinese investments in Italy, including Italian banks and companies, such as tire maker Pirelli and luxury goods manufacturer, Caruso.

     After being held for a month, China released five women's rights advocates who have a flair for gaining public attention. They were arrested in March when they prepared to distribute posters and stickers protesting domestic violence. Earlier, they had gained attention for the same cause by parading through the streets in bloody wedding gowns. The women who were charged with creating a disturbance could still be sentenced up to three years in prison, if they fail to report their movements to police and to make themselves available for questioning at any time.

Let's Visit China

While the world is focused on Scotland's vote to remain in the United Kingdom, the Ebola epidemic in West Africa, and ways to contain the ISIS menace, a  number of Chinese developments merit attention.


China's e-commerce platform, Alibaba, raised $25  billion when its shares went on sale September 19, 2014. As with other e-commerce firms, there are charges pending about the lack of sales tax paid on Alibaba purchases, and there is concern about e-commerce sales of counterfeit items. Also, there has been no news about how well China's shipping and delivery network is handling online purchases, a problem that has adversely affected India's e-commerce boom (See the later blog post,"Problems Present Career Opportunities.").

Alibaba was not the only company to enjoy a strong response to its initial stock offering. China's CGN nuclear power group received a similar response when its shares went on sale for the first time in Hong Kong. Yet, in January, 2015, the Chinese residential real estate developer, Kaisa Group Holdings, defaulted on a $128 million payment to foreign investors holding $500 million in bonds promising a 10.25% yield.

Urbanization and higher incomes in China are raising demand for locally produced goods, baby formula, disposable diapers, Western foods (such as cheese and Starbuck's and Costa coffee) and movies. Aiming to expand into the film business, Dalian Wanda, China's fourth richest man, who operates China's largest cinema chain and luxury hotels, is expected to open a major office in Hollywood, where he  has shown interest in buying shares in and film collaboration with Hollywood's Lionsgate studio. Jack Ma, executive chairman of Alibaba, also has had discussions with Lionsgate. In 2017, movie box office revenue in China will be $8.6 billion. By then, film studios and movie stars will begin to stash revenue in the Khorgos tax haven on China's far northwestern border with Kazakhstan.

Local governments continue to prop up failing heavy industrial plants, and China's manufacturing sector does not turn down opportunities to produce religious items. Though an atheist country, a Chinese factory has published over 125 million Bibles. Unfettered industrialization continues to cause China problems with pollution. Recent studies show China's population produces more carbon dioxide (CO2) per head than the European Union and U.S. Therefore, it was great news November 12, 2014 to learn that China and the U.S. have signed a pact, however symbolic, to limit carbon emissions. At a dinner and meeting in Beijing's Great Hall of the People during the November 11-12, 2014 Asia-Pacific Economic Cooperation (APEC) summit, both President Obama and President/General Secretary of the Chinese Communist Party, Xi Jinping, stressed peace, prosperity, stability, and a partnership that fosters security in a Pacific Ocean "broad enough to accommodate the development of both China and the United States."

At the end of the APEC summit, after Japan's Prime Minister, Shinzo Abe, and China's President met on November 10, 2014, Abe said he hoped the two countries would talk again and again (a hotline to prevent their vessels from conflict in the East China Sea has been proposed) and that they would work toward a mutually beneficial relationship. Earlier, a Chinese diplomat in Iceland was arrested as a spy for Japan.

Hong Kong tycoons are spending freely. The Chan brothers have donated $350 million to Harvard and expect to make another sizable donation to the University of Southern California. Stephen Hung ordered $20 million worth of Rolls Royces to transport gamblers at his Louis XIII resort in Macao. Nonetheless, Chinese gamblers, who have been staying away from Macao's casinos for fear of being targeted in China's crack down on corruption, have put a big dent in the island's revenue as they try to stay clear of China's anti-graft investigations into the origin of their wealth. Casinos in Cambodia have benefited from this exodus of Chinese gamblers trying to stay under the radar. Macau's investors, on the other hand, are trying to regain visitors by following the Las Vegas model and giving the island a more family-friendly image by adding a $2.3 billion theme park to a new casino.

Despite the use of tear gas and the arrest of a leader of the pro-democracy activists in Hong Kong, which has an almost country-to-country border crossing procedure with mainland China, protests continue to oppose Beijing's attempt to dictate which candidates can run for election in 2017. (See the later blog post, "Hong Kong Update.") Though not secure from authorities, Hong Kong protesters are using the smartphone mobile app, FireChat, to communicate with each other without relying on Internet connections. President Xi believes foreign countries are involved in the protests.

The number of Chinese students, who once made up 33% of international grad students in the U.S., is decreasing. French speaking Chinese students are on their way to former French African countries to work for Chinese companies there. In English-speaking Africa, China is building a $12 billion, 1,400 km railway in Nigeria.

(For more about China, see the earlier blog post, "See the World.")