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December 15, 2018

It has been only two weeks since Donald Trump revealed his alter ego on Twitter and already Tariff Man seems destined for a Marvel movie. Coming soon to a theater near you: “Avengers: Trade War”!

We’re not quite in “Charlie Bit Me” or Apparently Kid territory yet. Still, the Internet went wild. And you know a meme has arrived when it rates a 10-panel “origin story” cartoon in the (failing!) New York Times. Then there’s this video from The Late Show with Stephen Colbert (“Look, up in the sky! It’s a blimp with jaundice! No, it’s Tariff Man!”).

In Washington, the conventional wisdom is that this has been a bad week for Trump. Maybe so. But Tariff Man had a great week—one that almost felt like that last two or three minutes in most Marvel movies where the hero rallies in the face of impending doom and gets on with saving the universe.

There was new evidence China’s economy is slowing sharply, putting pressure (at least in theory) on Xi Jinping to make concessions. And there were tantalizing signs the Chinese leader is doing exactly that. China this week made its first major purchases of American soy beans since the trade war erupted in July, and said it would temporarily reduce tariffs on U.S. auto imports to 15%, down from the 40% rate it set earlier this year in retaliation for American tariff increases. The Wall Street Journal reports that China is even preparing to scrap Made in China 2025, an industrial policy Trump criticized for unfairly subsidizing China’s technology sector, and replace it with a more inclusive program that offers wider market access for foreign companies.

Meanwhile, Beijing showed admirable restraint in official comments about the extradition of Huawei chief financial officer Meng Wanzhou to face charges of financial fraud in the U.S. Chinese spokesmen continue to stress that discussions about Meng’s arrest should be kept separate from the trade negotiations.

Maybe Tariff Man was right: trade wars really are “easy to win” after all.

I wouldn’t bet on that. There are still a lot of ways the Huawei case could go wrong. And as Commerce Secretary Wilbur Ross warned on CNBC Wednesday, it’s still not clear whether changes to Made In China 2025 will be meaningful or just cosmetic. Trickiest of all will be figuring out a way for Trump and Xi to reach an agreement that each can credibly present as victories to constituents at home. As any Marvel fan can tell you: don’t leave the cinema until after the credits roll.

More China news below.

Clay Chandler
@claychandler
clay.chandler@timeinc.com
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Economy and Trade

Taking collateral. Huawei's CFO Meng Wanzhou was released on bail, for a tidy $7.5 million. Meng must comply with a curfew, and accept monitoring and surveillance while awaiting her U.S. extradition hearing. Meanwhile, by no coincidence, two Canadians have been detained in China on suspicion of endangering national security - one a former diplomat and NGO employee, the other a businessman who notably helped Dennis Rodman visit North Korea. The Guardian

Show on the road. Tencent Music finally debuted in New York, after postponing its original October IPO due to market declines. December hasn't been much better. The music streaming service raised $1.1 billion, pricing shares at the low end of a proposed range and valuing the music arm at $21.3 billion, below Spotify's $24 billion. Analysts say it's a sign of rational pricing returning to the market. CNBC

Home of IPOs. WuXi AppTec raised $1.01 billion in a Hong Kong listing, valuing the company at $10.2 billion. WuXi, a platform for R&D in medical tech, is already listed in Shanghai. That should be the last major offering in Hong Kong this year. The financial hub is on track to be the 2018's top IPO center by volume. Reuters

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Innovation and Tech

Apple chips. A provincial court in Fujian ruled in favor of Qualcomm, finding Apple had infringed several of the chipmaker's patents. The court ordered Apple to stop selling iPhones in China. Apple - still selling phones - has appealed and claims the lawsuit only applied to iPhones running iOS 11 anyway, while all new sales run on iOS 12. It doesn't seem likely a ban on Apple will hold, especially since it could cost thousands of Chinese their jobs making iPhones. The Verge

Freewheeling. Mobike is under investigation in Germany on suspicion it violated the GDPR. Violators can be fined up to $22 million. Mobike operates in over 20 European cities and claims it is in strict compliance. But the bike-sharing company might soon spin off its European arm anyway, for a cool $100 mill. Tech titan Meituan, which acquired Mobike in April, is strictly China-focused and doesn't want to handle an international entity. Financial Times

Singapore shuffle. Lucy Peng, co-founder of Alibaba and former executive chairman at Ant Financial, is stepping down from her role as CEO of Lazada, the Singaporean e-commerce site Alibaba acquired in 2016. Peng took the lead at Lazada just nine months ago. She will stay on as executive chairman while Pierre Poignant, who has worked at Lazada for six years, will take over as CEO. Bloomberg

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In Case You Missed It

Chinese e-commerce giant JD.com under pressure to spell out its future FT

Alibaba's ‘Double 12' shopping event sales driven by food platforms TechNode

Baidu among 80 plus companies found faking corporate information TechNode 

Chinese battery firm halts purchases of cobalt from Glencore Channel News Asia

China economy needs new stimulus plan after November data disappoints, economists agree SCMP 

US intelligence community says quantum computing and AI pose an ‘emerging threat' TechCrunch

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Politics and Policy

Battleground, Africa. National security adviser John Bolton accused China of "deliberately and aggressively" pursuing economic leverage in Africa and using "bribes, opaque agreements" and strategic debt to "hold states in Africa captive" to Beijing's demands. Speaking at the Heritage Foundation, Bolton announced ‘Prosper Africa', the Trump administration's vague gambit to counter Chinese influence on the continent. New York Times

Snapshot. Chinese police confirmed that award-winning photographer Lu Guang, who has been missing for over a month, was arrested in Xinjiang province, but did not give a reason why. Lu disappeared on November 3 while travelling through Xinjiang, where the government has forcibly detained over a million ethnic Uighurs. Lu's previous work investigated a ‘blood for cash' scheme initiated in rural China that left thousands infected with HIV. TIME

Pastor, don't preach. Chinese authorities detained Wang Yi, a former layer and film critic turned prominent Christian pastor, along with 100 members of his congregation in signs of a crackdown against unofficial churches. China, an atheist state, officially requires all places of worship to register with the state, but has turned a blind eye to the numerous ‘unofficial' churches, mosques and temples that cater to millions of pious Chinese.  New York Times

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