Newsletter 82 - September 4, 2021
Welcome to the 82nd edition of Trade War.
Xi Jinping Thought now to be taught to China’s primary school children. Economics reporting faces new controls. And Alibaba fires staffers who revealed sexual abuse allegations.
George Soros issues a new warning over Xi’s heavy-handed approach to the Chinese economy saying foreign investors face a “rude awakening.” 996 overtime tech culture ruled illegal. Didi and JD.com get unions. And ‘Common Prosperity’ won’t “feed the lazy” in China’s rich province of Zhejiang.
Xi Jinping Thought - now on Chinese school curriculum
Plans to have children study Xi Jinping Thought in school is making Chinese parents unhappy, reports the Financial Times Sun Yu.
With some calling it reminiscent of an earlier era when a Mao Zedong personality cult dominated China, more than a dozen parents interviewed by the Financial Times expressed concern about plans to start teaching Xi Thought in primary school next month.
“The eponymous philosophy, which features a mixture of patriotic education and praise for the Chinese Communist party’s general secretary, will become part of the national curriculum from primary school to university next month,” reports the business paper.
Starting from third grade, students will have one class every week on Xi. Primary school students will that “General Secretary Xi guides the whole party and the Chinese people”, while graduate school students must be able to “publicize, interpret and study” his thoughts, announced the National Textbook Committee Office of the ministry of education.
Hey kid, you better know your Xi
“At age 7 you study reading, writing, and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” says one tweet.
Xi Thought: obsessed with struggle but also versatile
Xi Jinping Thought mixes Marxist communist ideology with conservative morals, while also including advice on governance, says author and China researcher François Godement in an interview on PRI’s The World.
“It's literally a handbook on governance. Xi Jinping is a micromanager who touches just about every subject,” says Godement. “And there's a mixture of Marxist communist ideology — sometimes bordering on a return to Maoism — but also conservative morals, which is much more akin to traditional China.”
And while Xi Thought has become more militant and is “obsessed with struggle,” Xi himself is very versatile, as shown by his shifting approach to private enterprise, says Godement.
“For example, during [Xi’s] ascent to power, he actually courted private entrepreneurs, and even foreign enterprises, because it suited him. It was the language of the time. And also, as a provincial leader, he needed these guys to have a better economic record,” points out Godement.
“Now he's leading an onslaught against them, starting with the Chinese entrepreneurs and probably going on to foreign enterprises as well, slowly diminishing their role. And that is very close to Mao as well, who can, as you say, turn around on a dime.”
‘Malicious’ reporting on economy to be punished
Beijing will crack down on media that “maliciously” criticize China’s financial markets and its economy, report Bloomberg News’ Alan K. Wan and Amanda Wang.
The two month-long campaign will take action against those who “bad-mouth China’s financial markets and falsely interpret domestic policies and economic data,” the Cyberspace Administration of China said in a statement. Meanwhile, republishing critical foreign media “without taking a stance or making a judgment” will also be targeted.
The new policy aims to ensure that the internet contributes to the “sustainable and healthy development” of China’s economy and its society. Tencent, ByteDance’s news aggregator Toutiao and Douyin, China’s version of TikTok have all promised to follow the new rules.
Alibaba fires staffers for revealing sexual assault allegations
Ten Alibaba employees that publicized the recent sexual assault allegations that rocked their company have been fired, report Bloomberg News Coco Liu and Zheping Huang.
The employees were fired for sharing the “harrowing account posted on an internal forum by a colleague surnamed Zhou, who accused a former manager of rape,” reports the financial news service. The sacked individuals violated company policies against sharing content from Alibaba’s online employee forums, people “familiar with the matter” told Bloomberg.
“The internal platform -- which is open to Alibaba’s 250,000 employees as well as many at fintech giant Ant Group Co. -- is considered off-limits and the company has fired others for leaking information in the past, the people said.”
Soros: China investors face ‘rude awakening’
China investors face a ‘rude awakening’ writes George Soros in a commentary in the Financial Times. Soros also singles out Xi Jinping for particular criticism, as he did in a recent piece he wrote for the Wall Street Journal.
“Xi Jinping, China’s leader, has collided with economic reality. His crackdown on private enterprise has been a significant drag on the economy,” writes Soros. “Xi does not understand how markets operate. As a consequence, the sell-off was allowed to go too far.”
“Chinese financial authorities have gone out of their way to reassure foreign investors and markets have responded with a powerful rally. But that is a deception. Xi regards all Chinese companies as instruments of a one-party state. Investors buying into the rally are facing a rude awakening,” he writes.
“That includes not only those investors who are conscious of what they are doing, but also a much larger number of people who have exposure via pension funds and other retirement savings.”
Running list of crackdowns
SupChina’s Chang Che has assembled a tweet thread that lists the myriad crackdowns now ongoing in China, including on ecommerce and fintech companies, firms that want to IPO in the west, real estate companies, and on celebrity culture.
‘996’ overtime work is illegal, says Chinese court
China’s Supreme People’s Court has ruled that the so-called ‘996’ tech overtime work culture is illegal, reports Reuters.
China's top court and the Ministry of Human Resources and Social Security “published guidelines and examples on what constituted as overtime work, saying they were focusing on the issue as it had attracted widespread attention recently.”
The overtime practice of "996", or working from 9 am to 9 pm six days a week, had become “a badge of honor for some Chinese companies and employees,” reports Reuters. “Silicon Valley heavyweights such as Sequoia Capital's Mike Moritz have highlighted it as a competitive advantage the country had over the United States.”
The move against "996" comes at the same time as the “wide ranging Beijing-led regulatory crackdown on country's technology giants that has targeted issues from monopolistic behavior to consumer rights,” the news service notes.
11 ride-hailing firms ordered to remedy “misconduct’
China has ordered 11 ride-hailing firms to fix their “misconduct,” reports Bloomberg News.
“Officials from the transportation ministry and other departments summoned executives from 11 companies -- including Didi, Meituan and Alibaba’s ride-sharing and navigation unit Amap -- and criticized them for disrupting fair competition and hurting the interests of drivers and passengers, according to a statement published Thursday,” reports the financial news service.
The use of unlicensed drivers, lax protection of user data, and engaging in “vicious” competition that hurt the industry’s safety and stability were all cited as concerns.
“The 11 companies were required to carry out self-inspections, fix those issues and draft compliance plans before the end of the year, according to the statement.”
Didi and JD.com both install official union
Didi and JD.com both have set up the official Chinese union in their operations, reports Reuters.
The opening of branches of the All-China Federation of Trade Unions in the two companies is a “landmark” in a tech sector largely without organized labor, writes the news service.
“Regulators in China have come down hard on its biggest technology firms this year, criticizing them for policies that exploit workers and infringe on consumer rights in addition to unleashing a slew of anti-trust probes and fines,” reports Reuters.
The move is seen as part of Xi’s ‘Common Prosperity’ drive which aims to more equitably distribute wealth. “In July, the ACFTU and seven other top Chinese government bodies published guidance about safeguarding the rights of gig economy workers and suggested unions could play a role in helping negotiate with firms.”
Some are skeptical that China’s notoriously toothless official union will push serious changes. “Aidan Chau, a researcher at the Hong Kong-based China Labour Bulletin, said the country's unions have rarely directly challenged how companies treat their workers, instead focusing on matters such as alleviating employee grievances and promoting work safety.”
Common Prosperity won’t “feed the lazy” in Zhejiang
A pilot program for ‘Common Prosperity’ in China’s Zhejiang Province has set modest targets, writes Bloomberg News Tom Hancock.
Zhejiang, home to 65 million people and known for having many of China’s most successful private enterprises, including Alibaba and Geely, was designated in June as a site to pilot policies to cut inequality and control rising housing costs.
The plan calls for Zhejiang to reduce the gap between its urban and rural incomes, with city dwellers now earning twice as much as those from the countryside in the province, and to grow the share of labor compensation in GDP to more than one-half. Spending on education and healthcare is also to be raised.
Provincial officials made it clear they will not create a European-style welfare state supported by taxes, however. China can’t afford “to feed the lazy,” and “welfarism” is a “trap,” senior official Han Wenxiu said to reporters last week.
“The Zhejiang plan suggests Beijing wants to raise incomes through private sector investment in poorer areas, and to encourage rural residents to start their own businesses,” reports Bloomberg.
“The plan also calls for wealthy entrepreneurs to donate more of their wealth to society. Zhejiang is home to at least 10 multi-billionaires, according to data collected by Bloomberg, with a combined net worth of $236 billion.”
A commentary published in China’s state media has called the Xi crackdown on business a “profound revolution,” reports Bloomberg News.
China’s growing reliance on industrial policy and erratic regulatory actions could harm its vibrant tech sector, writes China Money Network founder Nina Xiang in Nikkei Asia.
A prominent Chinese economist and free market advocate has warned that ‘Common Prosperity’ could lead to too much state intervention, reports Bloomberg News.
“Top leaders have alluded to strengthening ‘tertiary distribution,’ or philanthropy, to encourage the rich to give back to society,” writes the financial news service.
“[Peking University economist Zhang Weiying] warned it’s crucial to preserve entrepreneurs’ motivation to create wealth, because without it ‘the government will have no money to transfer payments, and charity will become a source of water.’”
China’s ‘Common Prosperity’ drive to make a more equitable society can rely on both redistribution through tax policies and reforms of its market, writes former China director of the World Bank Bert Hofman.
On the economic costs of the tech crackdown
I talk about the economic costs of China’s efforts to control its private tech companies, in an interview with VOA Chinese (Chinese).
Speaking to Dubai-based Asharq News about Japan’s plans to up its defense budget and how it is related to worries about the U.S. and China clashing over Taiwan.
Six years ago in Beijing
At the 70 anniversary of the end of World War II, in 2015 Beijing held a massive military parade, here featuring a Red Flag with its sunroof being used in traditional Chinese leader style. (Yes, that’s Xi.)