driving the day
1.TikTok fights back
Last week, we told you about the Trump administration’s plan to force TikTok’s sale.
But TikTok isn’t taking US pressure lying down.
The company plans to file suit against the Trump administration (NPR):
- “The lawsuit will argue that President Trump’s far-reaching action is unconstitutional because it failed to give the company a chance to respond.”
- “It also alleges that the administration’s national security justification for the order is baseless.”
Some context:Over the past week, the administration has fired a series of shots across China’s technological bow, including:
- The launch of the “Clean Network” initiative aimed at freezing Chinese companies out of the Western internet
- Banning US citizens from “any transaction” with ByteDance’s TikTok and Tencent’s WeChat
Get smart:It’s unclear what form these bans will take in practice, how enforceable they are, and what is meant by “any transaction”.
Tencent is trying to figure it out(Sina Finance):
- “The company is reviewing the potential consequences of the administrative order…to fully understand its impact.”
Get smarter:Though TikTok has been the headline story, a WeChat ban and the resulting scrap with Tencent has much broader implications.
2. CSRC proposes US audit cooperation
On Saturday, China’s securities regulator (CSRC) said it wanted to cooperate with the US on co-auditing US-listed Chinese companies.
Some context:Last Thursday, the US Treasury Department published policy recommendations that would give US-listed Chinese companies until January 1, 2022 to comply with US audit standards.
- Companies that fail to meet the requirements will be delisted from stock exchanges in the US.
The CSRC has sent US regulators a new proposal for a co-auditing arrangement
- “On Aug. 4, the Chinese side sent updated proposals concerning the joint inspections to the PCAOB based on the latest needs and ideas of the U.S. side.”
“Strengthening the supervision of listed companies’ information disclosure and improving auditors’ professional ethics and their practices are important means to protect the legitimate rights and interests of investors.”
Get smart:China’s capital markets have been long plagued by bad corporate governance. Improving accounting practices is in the interests of China’s financial regulators.
Get smarter:The Treasury Department is pushing for closer scrutiny of Chinese companies partially in an oblique bid to force them to delist. Don’t expect American regulators to jump at the opportunity to cooperate with their Chinese counterparts.
3. Srsly u guise
On Friday, China’s top diplomat, Yang Jiechi, added his voice to the chorus.
Ina lengthy editorial on US-China relations,
Yang called for harmonious coexistence (Xinhua):
“China and the US working together can make great things happen for the two countries and the world at large, while China and the US stuck in confrontation spells disaster for the two countries and beyond.”
“To uphold world peace and promote development for all is the shared mission and responsibility for China and the US.”
Yang then launched into a rhetorical highlight reel of US-China relations throughout history, focusing on episodes of cooperation and mutual respect.
After blaming US politicians for current tensions, Yang put forward a prescription for getting things back on track:
“To safeguard and stabilize the relationship…the right attitude is to respect history, keep pace with the times, and build on past achievements.”
Yang and other senior officials couldn’t be any clearer…they don’t want conflict with the US.
Washington hears ya. Washington don’t care.
4. Beijing shrugs off HK sanctions
Last Friday, the US Treasury Department announced sanctions on 11 Hong Kong and mainland officials for their roles in introducing Hong Kong’s national security law.
The list includes heavyweights like:
Carrie Lam, Hong Kong Chief Executive
Xia Baolong, Director of the Hong Kong and Macau Affairs Office
Luo Huining, Director of the Hong Kong Liaison Office
These poor unfortunate souls will have any assets within US jurisdictions frozen and are barred from travelling to the US.
The Hong Kong government criticized the sanctions, deriding them as a means for US politicians to create trouble in the US-China relationship.
You don’t see this everyday.
Luo Huining, poked fun at the development(Hong Kong Liaison Office).
“I possess absolutely no assets and properties in the US and other foreign countries.”
“Therefore, such…sanctions are bound to be in vain.”
“Perhaps I should send 100 dollars to Mr. Trump for him to freeze to implement the ‘sanctions’.”
To further complicatematters, Hong Kong financial authorities said the sanctions have no legal status in the city and told licensed financial institutions that they are required to treat customers fairly.
The people affected knew these sanctions were coming. They weren’t caught off guard.
US Treasury Department:Treasury Sanctions Individuals for Undermining Hong Kong’s Autonomy
HKSAR Government:HKSAR Government calls so-called US sanctions shameless and despicable
Hong Kong Liaison Office:Response from LOCPG Director Luo Huining to the So-called US“Sanctions”
SCMP:National security law: Hong Kong’s financial institutions gripped by anxiety over United States sanctions
5. Shanghai faces another test
And finally, a quick recap of the COVID-19 situation in China over the past four days.
According the National Health Commission (NHC):
On Thursday, China reported 37 new confirmed cases – 10 of which were imported from abroad.
On Friday, China reported 31 new confirmed cases – six of which were imported from abroad.
On Saturday, China reported 23 new confirmed cases – eight of which were imported from abroad.
On Sunday, China reported 49 new confirmed cases – 35 of which were imported from abroad.
Of the 49 newly confirmed cases on Sunday
18 were imported from the UAE into Shanghai through two international flights.
The 14 domestically transmitted cases were all in Urumqi, Xinjiang.
In response to the imported cases in Shanghai:
Shanghai authorities have traced and quarantined a total of 237 people.
Civil aviation authorities will punish one of the two airlines that carried more than 10 cases into China by suspending its flight route for four weeks.
The Shanghai government has announced it will further tighten screening measures on incoming overseas arrivals.
Shanghai is looking to welcome foreign participants to the annual China International Import Expo (CIIE) in November.
Ensuring the COVID-19 threat posed by international visitors is controlled will be a key political task for the city.