If you read only one thing about Donald Trump’s visit to China this week, I recommend this essay on Chinafile by veteran China hand Orville Schell.
Schell—former dean of University of California, Berkeley’s Graduate School of Journalism, current director of the Asia Society’s Center on U.S.-China Relations, author of numerous insightful books about China—travelled with Trump through Asia on assignment for Vanity Fair. His Nov. 10 post from Beijing describes in exquisite detail China’s efforts to welcome Trump with pomp and circumstance:
Trump and his wife Melania were greeted at the Beijing airport by China’s top diplomat Yang Jiechi. There was a marching band, soldiers standing at attention, a phalanx of “smartly dressed children waving miniature Chinese and American flags” who “jumped up and down as Trump’s motorcade passed.” They dined with Chinese president Xi Jinping in the Forbidden City. Trump is the first foreign leader accorded that honor since the founding of the Peoples Republic in 1949.
The US president showed Xi a video of his granddaughter, Arabella Kushner, singing in Mandarin and reciting classical Chinese poetry. Xi, according to Chinese state media, praised her performance as worthy of an “A+.”
For the duration of his visit, Trump refrained from criticizing China’s leaders for discriminating against Western companies in the China market. He seemed even to absolve China for past unfair trade practices. Before Trump’s departure, the two countries announced business deals worth $250 billion—although most of those deals will take years to implement or were, in any case, already in the works.
The Washington Post declared Trump’s Beijing visit a “festival of flattery.” Jim McGregor, veteran China watcher and senior executive at consultancy APCO, said China had “played Trump like a fiddle.” China, he said, was “under the operative notion that, with Trump, flattery will get you everywhere.”
Schell’s view is more nuanced. He frets that Trump, despite his boasts about being a brilliant negotiator, is “so over-infatuated with his courtship, so hungry to ingratiate himself, and so eager to be bathed in acceptance that he had ended up being taken.”
But Schell also acknowledges the possibility that Trump’s praise for Xi may be a ploy. It is theoretically possible, he concedes, that the Trump White House “actually does have a stratagem that calls for Trump to continue making-nice and bonding with Xi at the top of the power pyramid to create as much ‘mutual trust’ as possible… while at the same time allowing other administration officials to begin pushing much harder on specific concrete issue areas on other levels below.”
Schell thinks the latter scenario is unlikely. My view, for what it’s worth, is that global business leaders would do well to give Trump the benefit of the doubt—at least for the next few months.
More China news below.
Trump in China
Trump’s “miracle” deals. More than $250 billion in business deals were secured after Trump’s week in China as the president seeks to correct the $350 billion trade deficit between the two countries, according to Commerce Secretary Wilbur Ross. These include an agreement by China Petrochemical Corp. to help develop a $43 billion liquefied natural gas project in Alaska and a $37 billion aircraft order from Boeing. However, observers point out that a large number of these were in the form of nonbinding memoranda of understanding and include existing agreements with Chinese partners. Bloomberg
Over the Firewall. President Donald Trump managed to circumvent the “Great Firewall” of China during his visit as he fired off a late-night tweet in Beijing to thank host Xi Jinping. Trump is the first foreign diplomat to be given a rare tour and private dinner in the Forbidden City since the People’s Republic of China was founded in 1949. Reuters
Tea and sympathy. The Forbidden Palace hall in which Donald and Melania Trump shared an afternoon tea with Xi Jinping and his wife Peng Liyuan was intentionally chosen for its historical and cultural significance that underscores cooperation between the two countries. The Western-style Bao Yun Lou, or Hall of Embodied Treasures, was built in in 1915 with funds remitted by the US government under then-president Theodore Roosevelt. After the Boxer rebellion, an anti-foreigner movement from 1899 to 1901, China’s Qing dynasty government owed compensation to eight countries including the United States, but the latter agreed to forego the debt and the funds were redirected to the hall’s construction instead. South China Morning Post
Economy and Trade
On the other hand. While Trump is busy signing off on a slew of trade deals in China, a group of bipartisan lawmakers back home in Washington have announced new legislation to add greater scrutiny to Chinese investments in the US. The new laws give greater powers to the Committee on Foreign Investment in the United States, or Cfius, a panel that regulates foreign mergers and reviews acquisitions for potential threats to national security. New York Times
Guardians of finance. China’s Financial Stability and Development Committee, a new cabinet-level committee that will oversee China’s sprawling financial industry, started its first meetings this week. Formed in July as part of Xi Jinping’s plans to deleverage systemic risks in China’s banking system and maintain the country’s financial stability, the committee will also coordinate financial reforms, China’s monetary policy and financial regulation and policies on financial risk management, and new risks such as cryptocurrencies, risky insurance products and peer-to-peer lending, though the New York Times is skeptical that the body led by “lame duck” vice premier Ma Kai will be able to achieve substantial reform. Caixin
To market, to market. Beijing is widely expected to announce a national carbon trading scheme at a global climate change meeting in Bonn, Germany next week. Xi Jinping had spoken about the 2017 launch of an emissions trading system that would be larger than any market currently existing in the EU, and a policy document on the scheme has gotten approvals from China’s National Development and Reform Commission and is now awaiting the final greenlight from top leadership. Financial Times
In Case You Missed It
‘Grandpa, what are spies?’ Cartoon urges Chinese children to be on alert South China Morning Post
Technology and Innovation
Master Ma. Alibaba founder Jack Ma will star in a 20-minute kungfu video alongside martial arts heavyweights such as Jet Li, Donnie Yen and Sammo Hung in a 20-minute video set to be released on Nov 11, or Singles Day, China’s annual online shopping festival equivalent where internet retailers offer deep discounts akin to Black Friday and Cyber Monday sales in the US. E-commerce rival JD.com, meanwhile, has teamed up with tech giant peers Tencent, Baidu and Toutiao to broaden its reach by tapping into user data on its partners’ platforms tp place adverts more effectively. JD is also forking over Rmb 2.1 billion ($316 million) of subsidize logistics firms, trumping the $225 million offered by Alibaba. Week in China
So far, Sogou-d. Tencent-backed Sogou Inc, China’s second-largest search engine, surged as much as 13.1% in its first day of trading on the New York Stock Exchange on Thursday, giving the Beijing-based firm a $5.76 billion valuation. Sogou’s initial public offering was priced at $13 per American depository share, at the upper end of the expected $11 to $13 range, raising $585 million. The IPO follows just a day after the Hong Kong IPO of China Literature Ltd, Tencent’s e-book unit. Reuters
Snap deal. Tencent has taken a 12 per cent in Snap Inc, the parent company of messaging app Snapchat said a day after posting a 16% slide in its quarterly results on Wednesday. Tencent’s 145.8 million class A common shares of Snap are estimated to worth about $1.7 billion but gives it no voting rights. Reuters
Hold your horses. Jack Ma has quashed years of rumors about an upcoming IPO for Ant Financial, Alibaba’s financial payments spin-off. Ma told media on his visit to Malaysia this week that they will only consider the IPO route for Ant Financial in two years, and will spend focus on growth and expansion-oriented investments in the meantime. Tech in Asia
The value of friendship. Despite the ban on Facebook in China, the Chinese government and state media agencies spend hundreds of thousands of dollars on Facebook advertising every quarter, according to an inside source, making it Facebook’s biggest advertising market in Asia. New York Times