Driving the Day
1. China-NBA spat heats up
China’sspat with the NBA (see yesterday’sTip Sheet) is escalating.
On Tuesday, NBA Commissioner Adam Silver issued a new statement making it clear that the NBA is standing its ground:
- “Values of equality, respect and freedom of expression have long defined the NBA — and will continue to do so.”
- “The NBA will not put itself in a position of regulating what players, employees and team owners say or will not say on these issues.”
Silver’s statement was not well-received in China.
Since yesterday, at least 13 of the NBA’s 25 official domestic partners have terminated or suspended cooperation with the league. They are:
- Anta Sports
- Master Kong
- Mengniu Dairy
- Mi Gu
- Xiaoyin Tech
- Luckin Coffee
Why this matters: China is increasingly trying to pressure multinational businesses to hew to Beijing’s political line. The NBA’s refusal to do so will be an important bellwether for whether or not a company can succeed in pushing back against Beijing’s efforts.
What to watch: Silver is headed to Shanghai today.
NBA.com: Adam Silver’s statement on NBA and China
NBA.com: Adam Silver says he still plans to visit China later this week
Fox Business: NBA’s China dilemma: $4B at risk as Chinese TV cancels game broadcasts
2.Xi meets with Pakistani PM
Xi Jinping met with Pakistani Prime Minister Imran Khan in Beijing on Wednesday.
Some context: Khan has a lot of asks for Beijing.
- He wants more Chinese support for Pakistan in its ongoing conflict with India over Kashmir – the issue has become more heated after India revoked Kashmir’sspecial status in August.
- Khan also wants to secure Chinese support to keep Pakistan off an international terror financingblacklist that would severely impede Pakistan’sability to raise funds.
- Finally, Pakistan also needs Chinese money and investment as it teeters on the edge of an economic crisis.
More context: Xi Jinping is heading to India on Friday to meet with Indian Prime Minister Narendra Modi. So Khan wanted to make sure to get in Xi’s ear before the trip.
So far, there is scant reporting on what the two leaders talked about.
Khan also met with Premier Li Keqiang on Tuesday. Li promised more economic cooperation (Xinhua):
- “He said China is ready to work with Pakistan to seek greater synergy between their development strategies…[and] strengthen cooperation in infrastructure, economy, trade, finance and industrial capacity.”
Get smart: Chinese leaders generally support Pakistan, but they also want the country to do more to promote the Belt and Road – and to combat terrorism.
Dawn: ‘Wish I could follow President Xi’s example and put 500 corrupt people in Pakistan in jail,’ says PM Imran
DW: Pakistan thanks China for ‘support on Kashmir issue’
3. State Council looks to improve business environment
The State Council got back to work on Tuesday and held an executive meeting.
Top of the agenda: Improving the business environment.
The meeting approved new draft regulations, highlights of which include:
- “Local governments are required to make public the time required for applying for permits and certificates, opening bank accounts, and applying for electricity use, and other items related to starting a new business.”
- “Explanations need to be made to the public for cases that are not completed within the stated time period.”
- “Real-estate registration and transactions, as well as tax payments, shall be done in one stop.”
Businesses will also get more say in policymaking:
- “Views of market players and industrial associations should be fully heeded when making regulations, ordinances and normative documents that are closely related to business production and operation players.”Premier Li Keqiang was explicit that this is intended to combat the slowdown:
- “[This is] a key measure for tackling the downward economic pressure and attracting more foreign investment.”
Get smart: Most of these initiatives are not new, but rather a restatement of current policies.
Get smarter: Economic reformers are harnessing the downturn to push through liberalizing reforms.
4.New law for public employees
Yesterday, China’snational legislature, the NPC Standing Committee, released the first draft of the Law on Governmental Sanctions for Public Employees.
The law will cover a broad range of public employees, including SOE executives and management atpublic hospitals anduniversities.
To stay on the law’sgood side, everyone needs to get their politics right. State employees can be punished for:
- “…publishing articles, speeches…and so forth, opposing the nation’s guiding ideology established in the Constitution, opposing the leadership of the Chinese Communist Party, opposing the socialist system, or opposing Reform and Opening Up…”
They also need to follow directions:
- “Refusing to implement…Party and State directives and policies, or the major decisions…of the Party Central Committee [is sanctionable].”
Oh, and no telling tales out of school:
- “Disclosure of state secrets, work secrets, or disclosure of trade secrets and personal privacy [is sanctionable].”
Get smart: The law is a clear reflection of the increasingly restrictive political climate under Xi Jinping.
5.Tensions with US are expanding
As we told you yesterday, the US Commerce Department added 28 Chinese companies and government agencies to its Entity List over human rights abuses in Xinjiang on Monday (see yesterday’sTip Sheet).
On Tuesday, US Secretary of State Mike Pompeo upped the ante and announced the imposition of visa restrictions on Chinese government officials believed to be complicit in the Xinjiang repression.
The Chinese government was not exactly thrilled. A Ministry of Commerce spokesman said (Xinhua):
- “The United States has frequently imposed unilateral sanctions on Chinese entities… under the guise of human rights.”
- “Xinjiang affairs are purely China’s internal affairs, and are related to China’s sovereignty, security and territorial integrity.”
This will further complicate Thursday’s trade talks – which were already not looking promising (SCMP):
- “A source, who has been briefed on preparations for the trade talks, also told theSouth China Morning Poston condition of anonymity that the Chinese delegation may cut short their stay in Washington, removing the possible chance of the talks extending into Friday evening as the delegation would be expected to head to the airport instead of departing at some point on Saturday.”
Get smart: Tensions with the US are expanding to encompass nearly all aspects of the bilateral relationship.
SCMP: US imposes visa restrictions on Chinese officials over ‘brutal suppression’ of Uygurs and other Muslims in Xinjiang, citing ‘internment camps’
The Guardian: US blacklists 28 Chinese companies and government agencies over Uighur repression
Xinhua: China firmly opposes U.S. inclusion of 28 Chinese entities in “Entity List”: MOC spokesperson
SCMP: China tones down expectations ahead of US trade war talks as Vice-Premier Liu He leads team to Washington
6.Apple becomes latest MNC caught in HK crossfire
Foreign companies have been caught in the crossfire between Beijing and pro-democracy forces in Hong Kong in recent weeks.
Apple Inc. looks like the latest casualty.
Tuesday night, a commentary published on Party mouthpiece People’sDailyofficial social media admonished Apple for “providing escort to rioters.”
Some context: On Friday, Apple approved an app, HKmap.live, that uses crowd-sourced data to track police movements in Hong Kong.
Citing HKmap.live and a song available on iTunes that “promotes Hong Kong’s independence,”People’sDaily accused Apple of:
- “Facilitating illegal activity”
- “Allowing violence to prevail and putting more users in danger”
- “Betraying Chinese people’s feelings”
The commentary ends with a thinly-veiled threat:
- “Apple and other similar companies…should understand: their markets will be larger and more sustainable if China is good and Hong Kong is good.”
What to watch: Will Apple attempt to appease Beijing?
The bottom line: For MNCs in China, political risk is on the rise.
People’s Daily:为暴徒 “护航”, 苹果公司想清楚了吗？
SCMP:Apple allows Hong Kong protest map app that can track police and protester locations