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Washington’s back channel to Pyongyang

U.S. Secretary of State Rex Tillerson was in Beijing today, where he met with Chinese president Xi Jinping in the Great Hall of the People to discuss North Korea and the agenda for President Trump’s first visit to China in early November. The meeting appears to have been cordial. Afterwards, Xi hailed Trump as a personal friend and said he expected Trump’s China visit to be “wonderful.”

In comments to reporters after the meeting, Xi said he and Trump have “maintained a good working relationship and personal friendship,” and extolled Trump’s pending visit to China as “an important opportunity for the further development of China-U.S. relations.” Trump’s China visit, Xi predicted, “will be a special, wonderful and successful one.”

The world can only hope that Xi is right. On September 3, North Korea conducted its sixth and most powerful nuclear test. So far this year, Pyongyang has launched more than a dozen missiles making clear that it seeks the capability to hit the continental U.S. with an atomic weapon.

Trump has asserted that China, overwhelmingly North Korea’s largest trade partner, holds the key to pressuring North Korean leader Kim Jong Un to abandon his nuclear ambitions. Until recently, Beijing has resisted US calls for economic sanctions against North Korea. But over the past few weeks, the Chinese government has shown an increasing willingness to join the US and the rest of the United Nations in tightening the screws on Kim. This week, Beijing ordered North Korean companies operating within Chinese borders as well as joint ventures between Chinese and North Korean companies outside China to close within 120 days.

But Tillerson revealed during his trip to Beijing that the US isn’t totally reliant on China to cope with North Korea. In comments to reporters, he acknowledged for the first time that the US has multiple channels for communicating directly with Pyongyang about ways to avoid a military confrontation. “We are probing, so stay tuned,” Tillerson said. “We ask, ‘Would you like to talk?’ We have lines of communications to Pyongyang — we’re not in a dark situation, a blackout…. We have a couple, three channels open to Pyongyang.” Tillerson declined to elaborate on the nature of the those channels.

Trump’s public exchanges with Kim in recent weeks have been less than amicable. The US president used his first speech to the United Nations to disparage Kim as “Little Rocket Man” and vow that the U.S. would “totally destroy” North Korea if it were to attack. Kim responded by calling Trump a “dotard” and warning of the “highest level of hard-line countermeasure in history.”

In China today Tillerson said rhetoric between the US and North Korea had gotten “a little overheated.” Whether Trump and Kim can lower the temperature ahead of China’s 19th party congress in October and Trump’s Asia visit in November remains to be seen.

Clay Chandler

Politics and Policy

Navarro sidelined? Peter Navarro, one of the Trump White House’s most strident critics of US trade policies with China, has been pushed further from the Oval Office in a restructuring led by White House chief of staff John Kelly. On Tuesday, Kelly decreed that the Office of Trade and Manufacturing Policy, run by Navarro, should be part of the National Economic Council, leaving the Harvard0-trained economist to report to the council’s director Gary Cohn, with whom Navarro and ousted Trump strategist Steve Bannon clashed repeatedly on trade issues. CNN

North Korea tops agenda for Trump’s Asia trip. Trump will travel to five Asian nations from Nov. 3-14, including Japan, South Korea and China. He will also stop in the Phillipines, where Trump has praised authoritarian leader Rodrigo Duate, and Vietnams, which is still reeling from Trump’s decision to abandon the Trans Pacific Partnership. In Vietnam, Trump will attend the Asia-Pacific Economic Cooperation forum. New York Times

Written in the stars. Chinese president Xi Jinping is widely expected to enshrine his “Xi Jinping Thought” by writing it into Communist Party charter when the five-yearly Communist Party congress kicks off on Oct 18. Xi’s “China Dream” strategy to brand China as a global power has been front and center of Chinese propaganda campaigns in recent weeks and if accepted as the Party’s guiding principles, would stand Xi on par with Mao Zedong, whose thought is second only to Marxist ideology. Wall Street Journal 

Trade and Economy

Another trade deal blocked. The Trump administration has vetoed a purchase of a 10% stake in Here International NV, a European 3D mapping company with some Chicago operations, by a group of buyers including Chinese Internet giant Tencent Holdings. The scrap by the Committee on Foreign Investment in the United States (CFIUS) on national security grounds is the latest in a series of blocks over technology transfers by acquisitive Chinese firms. Caixin 

Step right in. China’s Ministry of Commerce has removed a 22-year-old regulation that requires foreign businesses to set up a representative office before operating in China, a long-drawn and complicated process for many firms. The move was aimed at boosting foreign investment in the service and high value-added services, as well as the central and western regions, in a time of slower domestic growth and increased erosion of China’s traditional low-cost advantages. South China Morning Post 

Building an ant colony. Ant Financial, the financial arm of Alibaba Group, will enter a joint venture with Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings by year-end to extend the reach of its popular Alipay online payments service in Hong Kong. The JV will allow AlipayHK to target 6.6 million customers of the more than 600 stores under CK Hutchison’s telecommunications and retail umbrella. Caixin 

Stop and goChina has pushed back by a year the introduction of demanding new sales targets for electric plug-in and hybrid vehicles. Under the new ruling, car makers have until 2019 to earn credits for new-energy vehicles to make up 10% of annual sales, and 12% for 2020. They previously had to amass 8% by 2018. The move is in line with China’s long-term goal of outlawing the production and sale of traditional fuel cars announced earlier this month. Reuters 

Free flow. Foreign food importers to China will have another two years before a regulation requiring certificates for the quality and safety of all food imports, from raw ingredients to processed items, will kick in. The rules, originally slated to be implemented on Oct 1, were held back after U.S. and European governments said it was unnecessarily strict. Wall Street Journal 

In Case You Missed It

Leaving nothing to chance, China increases security, social control before Congress Reuters

How China’s censorship machine is becoming a growth industry South China Morning Post

China’s Harsh Words Mask a Trade Boom With South Korea New York Times

China ban on waste imports leads to piles of paper abroad, surging prices in China Reuters

Fake news: Washington Post clone emerges in China Financial Times

Ivanka Trump’s supply chains in China cloaked in secrecy Associated Press

Hong Kong to Mainland High-Speed Rail System Is Ahead of Schedule Caixin

Mantis Shrimp or Panda? China unleashes storm of ideas for typhoon names South China Morning Post

Technology and Innovation

Whatsapp down. China has banned access to popular messaging service WhatsApp ahead of its five-yearly Communist Party Congress in October. The Cyberspace Administration of China added that messaging service should take proactive measures to curb the spread of “illegal information” relating to  violence and terror. South China Morning Post  

Thermal testing. Search engine giant Baidu has teamed up with the Chinese cyber police to launch an online service to control the spread of rumors. The service, which is embedded in Baidu’s search engine, news portals and online forums, identifies suspicious messages on the Internet through big data, natural language processing and artificial intelligence technology. The details are then forwarded to the authorities. Global Times 

Insider out. A former Huawei VP Li Yinan has been found guilty of insider trading by a Shenzhen court. Li was sentenced to 2 1/2 years in jail and fined 7.5 million yuan ($1.1 million) for purchasing shares in a tool manufacturing company after its then-president had told him the company was up for a merger. A former chief technology at search engine Baidu, Li has been hailed as a prodigy for becoming the youngest-ever vice president of Huawei at age 27. Caixin 

Detective drone. Hong Kong police have started tests using thermal drones for anti-crime and antiterrorism operations. The drones are made by Chinese drone manufacturer DJI, and are built with infrared sensors and cameras that can read body temperatures. DJI recently had its equipment banned by the US military over cybersecurity concerns, and were briefly suspended for use by Australia’s defensedepartment. South China Morning Post  

Summaries by Debbie Yong. @debyong

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