China Newsletter (Issue 93 – September 1, 2021)

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China Newsletter
What China Is Reading
Issue 93 – September 1, 2021
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In This IssueThe articles shared here do not necessarily reflect the views of China Newsletter or Dialogue China. All articles sourced from WeChat public accounts unless otherwise noted.
I. Editorial
1. The “Didi Chuxing” Incident Should Be Taken Seriously by the United States
II. Policy
2. The “Second Generation of Farmers” Have Fled, Why Do Local Officials Still Not Take the Interests of the “People” Into Account?
3. Many People Overlook a Really Important Demographic Indicator Trend
4. Always Promote “Gender Equality,” Why is There a Birth Gender Imbalance?
5. Elements of Digital Transformation of Government — The Two-Way Drive of “Technology Empowerment” and “Technology Rights”
6. Digital Participation of Rural Migrants in Village Autonomy
III. Politics
7. Dealing with India in Distress, Why Are Chinese So Conflicted?
IV. Society
8. Why Are you Reckless to the Extent of Concealing Information from Higher Authorities? The Profit Trap Behind the “Escaped Leopard Incident”
9. Why is it Taking the Chinese So Long to Recover Their National Self Respect?
V. Finance and Business
10. “Fear of Losing to China” is a Dangerous Logic
11. China’s Manufacturing Industries “Precocious” Decline? The Deadlock of Special Interests Must be Broken

1. The “Didi Chuxing” Incident Should Be Taken Seriously by the United StatesWang Dan – Radio Free Asia Commentary – July 19, 2021Following the Chinese government’s political crackdown on major companies such as Alibaba and Tencent, after interfering with its initial public offering (IPO) plan, “Didi Chuxing” * became the new target. On June 30, 2021, the company’s public offering on the United States’ stock market to raise capital by floating shares, raised US$4.4 billion in capital. It is said to be the largest initial public offering of a Chinese company since Alibaba Group went public in the United States in 2014. But the euphoria of the company’s fundraising success soon vanished like mist and smoke as the Chinese Communist authorities immediately stepped in.
* 滴滴出行/Didi Chuxing Technology Company is a Chinese vehicle for hire company headquartered in Beijing with over 550 million users and tens of millions of drivers. The company provides app-based transportation services, including taxi hailing, private car hailing, social ride-sharing, and bike sharing; on-demand delivery services; and automobile services, including sales, leasing, financing, maintenance, fleet operation, electric vehicle charging, and co-development of vehicles with automakers. “滴滴”/ Didi means “beep beep” in Mandarin (like a car’s horn). So 滴滴出行 literally means “Beep-beep! Go on a journey.”
On July 2, 2021, the China Internet Information Office announced that in order to “protect against national data security risks” it was going to conduct a network security audit of “Didi Chuxing.” They ordered that “Didi Chuxing” suspend new user registrations, and take down “Didi Enterprise Edition” and 25 other software applications. This series of blows resulted in the share price of “Didi Chuxing” falling 20 percent, resulting in a market capitalization loss of US$14 billion. This news shocked the domestic and international financial markets, and there are multiple aspects of China’s policy changes that can be discerned from this event. But from another point of view, two entities need to learn the same lesson from this incident: United States investors and the United States government.
Why do I say this? First, “Didi Chuxing” going public in the United States, and the initial public offering being a great success, says clearly that in the United States and on Wall Street many investors are still bullish on the China market, and still have high expectations and hope to continue to take a share in the profits of China’s economic growth. Obviously, dependence on China’s economic development is still deeply rooted in the minds of United States’ investors. I think this is a very dangerous mindset. Leaving aside the fallout in the political relationship between China and the United States since the outbreak of the pandemic, which has already entered a high risk area, investors should become more vigilant about the use of large foreign corporations as a political weapon against the United States or in retaliation against the United States. It seems that United States’ investors are still too optimistic about the prospects of China’s economic development, or are unable to penetrate the dense fog of seductive figures to see through to the huge hidden risks that lie ahead. The “Didi Chuxing” incident has already clearly illustrated that China has become a high risk area for investment, which is a lesson that United States investors must learn or they will learn it the hard way.
Second, this time the Chinese government punished the company “Didi Chuxing” for various political reasons. Within a few days, United States’ investors suffered significant economic losses. This should be a wake-up call for the relevant United States’ securities regulators who approve the listing of Chinese companies in the United States. For a long time, the United States’ Securities Exchange Commission has not been prudent in auditing the listing of Chinese companies. The threshold is not high. The reason is that everything is done according to market standards. Chinese enterprises are treated the same as those of other countries, equally without discrimination. This certainly sounds like a manifestation of the strict spirit of the market and the principle of the rule of law. However, should not such a principle and law be adjusted in accordance with the actual situation to protect the interests of United States’ investors?
The actual situation is that whether it is a private or state-owned enterprise, as long as it comes from China it is impossible to guarantee that it is 100 percent acting out of pure economic interest. Behind these enterprises, there is a huge visible hand of the government exerting control. The Chinese Communist Party is not just using economic considerations to regulate large corporations. There are also a lot of political considerations. The interference of such political factors is now becoming more and more obvious and more and more extreme.
Therefore, Chinese companies going public in the United States must not be treated simply by the uniform standards of the market economy. Policy changes must be made, raising risk assessment standards for Chinese companies going public, taking into account the comprehensive policy changes in China. Analysis of the economic operating environment in China and the political factor must also be added and given more weight. If, in the face of the increasing control and interference of Chinese political power in recent years a blind eye is turned to the increasing government control of and interference in corporations, and China continues to be treated as a market economy, this is more than just a problem of naïveté, and it will result in United States’ securities investors’ interests not being more carefully protected. This is a lesson that the United States government should learn from the “Didi Chuxing” incident.【Back to TopPolicy2. The “Second Generation of Farmers” Have Fled, Why Do Local Officials Still Not Take the Interests of the “People” Into Account?Zhang Shuwan – Beijing Cultural Review – May 2, 2021Why Read This?
This paper compares the history of the governance of migrant farming groups since the reform and opening up. It discovers long-standing policies that have tightened or loosened controls on the movement of rural labor. Both served the needs of economic development at the time, not the migrant farmers as a group themselves. In recent years the situation has changed, China proposes to promote a new type of urbanization with people as the core. One of the goals is to enable migrant farmers to enjoy equal rights and benefits. But to achieve this goal universally everywhere will not be easy.(Read the full text

Back to topPolicy3. Many People Overlook a Really Important Demographic Indicator TrendLi Jianxin, Liu Ruiping – Beijing Cultural Review – May 11, 2021Why Read This?
This article points out that the era of relying on domestic population movement to fill the population gap in the provinces is over. If places still use the “snatch people” strategy to make up for the lack of labor force, it will lead to unhealthy competition and exacerbate regional development imbalances. Implementing incentive fertility policies according to local context, introduction of relevant socio-economic support policies, it is the top priority in the formulation of population development strategies around the world.(Read the full text

Back to topPolicy4. Always Promote “Gender Equality,” Why is There a Birth Gender Imbalance?Xu Chaoyi – Southern Metropolis Observer – May 10, 2021Why Read This?
The reason why there is an imbalance in the birth sex ratio, the situation of “more men and fewer women” in the birth population, it is only because of the general public preference for male babies, this preference is deeply rooted in cultural traditions and customs, difficult to turn around in a short period of time. It is important to recognize that, in all aspects of real life, both exist in society, culture, economy, institutional gender inequality. It is these physical presences that result in gender preference and choice of gender for newborns.(Read the full text

Back to topPolicy5. Elements of Digital Transformation of Government — The Two-Way Drive of “Technology Empowerment” and “Technology Rights”Meng Tianguang – Political Scientist – May 4, 2021Why Read This?
With the deepening of the fourth industrial revolution, big data, emerging technologies such as artificial intelligence have profoundly influenced socio-economic development and national governance. The digital transformation of government with data-driven and digital governance as the core feature has become the core issue of global governance transformation. The digital transformation of government is not only prompting the embedding of digital technology into the government hierarchy to promote governance restructuring, business process reshaping and service changes, it also constructs a new government-society relationship, government-market relationship, to support the construction of digital society and the development of digital economy.(Read the full text

Back to topPolicy6. Digital Participation of Rural Migrants in Village AutonomyHe Yang – Political Scientist – May 23, 2021Why Read This?
The participation of rural migrant population in villagers’ self-governance is the meaning of “effective governance” of villagers’ self-governance. Based on the case of Zhejiang County A, this explores the digital participation of rural migrant population in village autonomy. Compared to the traditional participation method, digital participation has multi-dimensional characteristics and important value. However, it also has limited application to the type of business, faced with various risks such as technology and the difficulty to include all participating subjects. In the future, it should be clarified the types of transactions to which the digital participation method applies. Avoiding digital engagement risks, and handling properly digital space and physical space interface issues.(Read the full text

Back to topPolitics7. Dealing with India in Distress, Why Are Chinese So Conflicted?Beijing Cultural Review – Beijing Cultural Review – May 18, 2021Why Read This?
Faced with a succession of internal and external situations out of control and Western allies’ failure to save them, India’s national governance is in a predicament. So much so that it had to make “the first policy change in 16 years” and start receiving external aid, including purchasing materials from China and other countries. This significant change has led people to deeply reflect about India. Reconnecting with India has also become a point of contention in Chinese public opinion.(Read the full text

Back to topSociety8. Why Are you Reckless to the Extent of Concealing Information from Higher Authorities? The Profit Trap Behind the “Escaped Leopard Incident”Yao Zhongqiu – Beijing Cultural Review – May 10, 2021Why Read This?
Over the past few decades, changes in values in Chinese society resulted in the adoption of a laissez faire attitude – like an ostrich with its head in the sand – seeming to think that with economic development it will mature naturally. However, people found that although we have created an economic miracle in a short period of time, there are still many problems. Selfish opportunists without a sense of justice are destined to be stubborn “hitchhikers.” From a long-term perspective, selfish opportunists’ wealth is unstable. People think that their benefits are increasing, but in fact they are cheating each other, competiting for wealth and happiness.(Read the full text

Back to topSociety9. Why is it Taking the Chinese So Long to Recover Their National Self Respect?Du Weiming – Beijing Cultural Review – May 29, 2021Why Read This?
Can China’s traditional culture transcend politicization? Removing the dross, can we go beyond the “modernity developed in the West” and bring universal values to the world similar to Western “human rights”? The writer believes that Confucianism, the pillar of Chinese cultural tradition, is an entry point for creating a pluralistic modernity. In the context of the revival of tradition, what we need is not a return to Confucian values, rather it is the rebirth of Confucian values.(Read the full text

Back to topFinance and Business10. “Fear of Losing to China” is a Dangerous LogicZhu Feng – Political Science and International Relations Forum – May 29, 2021Why Read This?
The global outbreak of the new coronavirus pandemic highlights the significant challenges that global issues such as biological viruses are posing and will continue to pose to human security. The “greenhouse effect” is bringing global climate catastrophe, and will likely greatly outweigh the impact of the COVID pandemic on human public health and economic stability. For this reason, China and the United States as the world’s two largest carbon emitters, fossil fuel transition cooperation should be an important adhesive for strengthening cooperation between the two countries, But the Biden administration’s policy statements to date are troubling.(Read the full text

Back to topFinance and Business11. China’s Manufacturing Industries “Precocious” Decline? The Deadlock of Special Interests Must be BrokenCai Fang – Beijing Cultural Review – June 8, 2021Why Read This?
China’s economy still has huge room for resource reallocation. This paper makes a strong case for stabilizing the share of manufacturing in the national economy: Favorable to innovative development, tapping the potential of resource allocation efficiency, stimulating human capital accumulation and expanding middle-income groups, and promote a new dual circulation* development pattern. Finally, the authors suggest that competition policy should be constructed from industrial policy and social policy in a three-pronged approach, achieving goals such as increased productivity and new energy acquisition.
* China has unveiled a “dual circulation” strategy to cut its dependence on overseas markets and technology in its long-term development, a shift brought on by a deepening rift with the United States.
Chinese President Xi Jinping first raised the idea in May 2020 and later elaborated that China will rely mainly on “internal circulation” – the domestic cycle of production, distribution and consumption – for its development, supported by innovation and upgrades in the economy.
Xi also said “internal circulation” will be supported by “external circulation.”
Three decades ago, former leader Deng Xiaoping adopted a “great international circulation” strategy, but the 2008-09 global  financial crisis exposed the vulnerability of the export-led model and prodded policymakers to rebalance growth towards domestic demand.
The “dual circulation” strategy has become a key priority in the government’s 14th five-year plan (2021-2025), unveiled during the annual parliament session in early 2021.
To jump-start “internal circulation,” China needs to boost household incomes and consumption.
Key would be its ongoing urbanization program to turn millions of migrant workers into city dwellers to expand China’s middle class. About 60 percent of China’s population live in urban areas.
China is already a “hyper-sized” consumer market with 1.4 billion people. Its rapidly growing middle class is at least over 400 million strong.
So far this year, the recovery in consumption has lagged behind production amid job losses and economic uncertainties brought about by the coronavirus pandemic.
China has boasted the most complete manufacturing supply chains in the world, helped by foreign companies.
But tension with the United States has exposed China’s vulnerability as it relies heavily on U.S. high-tech products, such as semiconductors, forcing Beijing to spur domestic innovation in efforts to secure domestic supply chains.
Under the “dual circulation” strategy, Xi aims to boost tech innovation and push Chinese firms up the global value chain, key to globaliszng China’s home-grown companies, boosting household incomes, and in turn, stimulating domestic demand.
Chinese leaders still advocate greater market opening to attract more foreign investment in high-end manufacturing to strengthen its supply chain security and deter foreign countries from luring firms away from China.(Read the full text

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