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GREG BAKER/AFP via Getty Images CHINESE COMPANIES Chinese Firms Consider Delisting From NYSE, Nasdaq as US Pressure Grows

Emel Akan In “The China Hustle,” a docu- listed companies to come into com- where the PCAOB can inspect the mentary released in 2018, David pliance with the new standards. work of their auditors but may have ASHINGTON—A My negotiations explained how Chinese companies The other recommendations a percentage of their operations rising number of over the last mislead U.S. investors through include requiring enhanced dis- in China or another jurisdiction Chinese compa- overstating their operations, reve- closures of the risks of investing where this is a problem,” he told nies are consider- 10 or 15 years nues, and profits. He helped expose in Chinese firms, reviewing the The Epoch Times. ing delisting from in China have $15 billion in fraud in U.S. capital risk disclosures of registered funds If it becomes law, Chinese com- Wthe U.S. stock exchanges as Wash- been that you markets and had 12 companies that have exposures to these firms, panies like PetroChina, Alibaba ington increases its crackdown delisted from the exchanges. requiring funds that track indexes Group, and Tencent will be forced on foreign companies that fail to really have to After the financial crisis of 2008, to perform more due diligence on to comply with the U.S. rules or lose comply with U.S. audit standards. push things to hundreds of Chinese firms listed an index and its index provider, access to the world’s largest capital Chinese online travel giant Ctrip the edge before on U.S. exchanges through reverse and issuing guidance to investment markets. is the latest company reportedly mergers with public but mostly advisers with respect to fiduciary “This is truly a no-brainer biparti- exploring going private. The com- there’s any dormant U.S. companies. Many obligations. san issue,” David said. pany has held early-stage talks with movement. I turned out to be frauds, the docu- “The recommendations outlined “It was gratifying to see a unani- a number of investors, including think [Chinese mentary showed. in the report will increase investor mous vote in the Senate. It should private equity firms and tech com- Another prominent whistleblower protection and level the playing be the same in the House. And it panies, about funding its delisting firms] are going of Chinese companies, Carson field for all companies listed on U.S. should get done. And if it doesn’t from Nasdaq, Reuters reported. to challenge Block, of Muddy Waters Capi- exchanges,” Treasury Secretary get done, China’s not going to If the deal goes through, Ctrip this to the last tal, recently helped uncover the Steven Mnuchin, who leads the change.” would join other companies delist- Luckin Coffee accounting fraud. working group, said in a statement. The trend of Chinese companies ing from the U.S. exchanges, amid minute. The shares of the Chinese cof- Meanwhile, the U.S. Congress delisting from U.S. exchanges is growing tensions between the Dan David, actvist feehouse chain crashed and were has taken action to protect Ameri- expected to continue. And the United States and China. short-seller Dan subsequently delisted from Nasdaq can investors and their retirement proposed crackdown in the United China’s largest online classifieds David after the company’s long history of savings. States is pushing Chinese compa- The entrance to a ByteDance office in Beijing on July 8, 2020. platform 58.com and Beijing-based financial crimes was exposed in an Sens. John Kennedy (R-La.) and nies to seek secondary listings in web-search company Sogou Inc. 89-page report by Muddy Waters. Chris Van Hollen (D-Md.) intro- Hong Kong. NATIONAL SECURITY are among the companies that The scandal was a wake-up call duced bipartisan legislation, the Nasdaq-listed gaming company recently announced potential del- for U.S. lawmakers, regulators, and Holding Foreign Companies Ac- NetEase and e-commerce giant isting of their shares from the New investors about the extreme risks countable Act, which passed the JD.com, for example, debuted in York Stock Exchange (NYSE). Chinese companies pose to U.S. U.S. Senate by unanimous consent the Hong Kong stock exchange in TikTok’s Parent Company Employs Chinese For more than a decade, Chinese capital markets, Block told CNBC. on May 20. The bill still awaits a June. companies have taken advantage of As of September last year, 172 vote in the House. Critics argue that if Chinese com- U.S. capital markets while operat- Chinese firms were listed on major Under the bill, foreign companies panies start leaving U.S. exchanges, ing under lax standards. U.S. exchanges, with a collective whose auditors fail to be inspected it could hurt financial-sector profits Communist Party Members in Its Highest Ranks Beijing has refused to allow audit market capitalization of more by the PCAOB for three consecu- and the global competitiveness inspections of its U.S.-listed com- than $1 trillion, according to the tive years will be subject to trading of U.S. markets. Over the past 15 Beijing-based ByteDance staffs Chinese Communist Party senior managers, highlighting TikTok’s security risks panies, citing state-secret laws. U.S.–China Economic and Security suspension. years, the U.S. stock exchanges, Hence, these firms don’t follow the Review Commission annual report. The bill would also require com- investment banks, and money- same disclosure requirements as The Public Company Accounting panies to disclose whether they are management firms have benefited Nicole Hao mittee member’s full name, gender, James Carafano, vice president of news site Lei News. The tool com- their U.S. counterparts, creating Oversight Board (PCAOB), a U.S. owned or controlled by a foreign from the U.S. listing of Chinese birthday, date they joined the CCP, The Heritage Foundation’s Institute bines different collaboration apps risk for investors. watchdog, has long complained government, including China’s firms. U.S. lawyers and bankers ore than 130 employ- It’s a Chinese- ID numbers, and type of position in for National Security and Foreign into a single platform. In recent months, the White about the inability to inspect the communist regime. have earned fat commissions by ees at ByteDance, the company, such as managerial or Policy, said this level of CCP member- Meanwhile, Meng Haibo is director House and Congress have called audit work papers of these firms. taking these firms public. the Chinese owner owned technical. ship is typical for Chinese companies. of the public affairs department at for greater oversight of U.S.-listed A Bipartisan Issue Experts believe, however, the of video-sharing ap- company. ... The revelations come as the U.S. “All instruments of power are tied ByteDance, according to a 2018 re- Chinese companies. White House to Tighten Rules On May 22, Rep. Brad Sherman (D- greater oversight would pay off in plication TikTok, are You have no government intensifies scrutiny of back to the Communist Party, and port by Youth Hangzhou, a state-run Whistleblower and activist A working group appointed by Calif.) introduced identical legisla- the long term, as it would improve Mpart of a Chinese Communist Party TikTok and other Chinese-owned that includes economic instruments newspaper. He is in charge of “affairs short-seller Dan David believes President Donald Trump on Aug. tion in the House, which was later the investment environment. (CCP) committee embedded in the confidence in apps on national security grounds. of power,” Carafano told The Epoch related to government cooperation” the Chinese regime won’t change 6 released a report with a list of included in the National Defense “A U.S. listing has always been company. Many of the employees their handling U.S. officials have repeatedly sound- Times. and heads big data analysis projects, its behavior unless Washington recommendations to address risks Authorization Act of 2020. attractive to firms seeking visibility work in management positions, an of data. And ed the alarm that American personal He said that in China, there is no according to the report. pushes for more accountability. posed by the Chinese companies in Some lawmakers, however, are and foreign currency. The new law internal document reveals. data collected by TikTok could be ac- transparency about links between Dang Liya, a senior manager of “My negotiations over the last 10 U.S. financial markets. trying to determine whether any won’t diminish this,” Shang-Jin The extent of CCP membership you have no cessed by Beijing, as Chinese compa- private companies and the CCP, thus ByteDance’s language training apps, or 15 years in China have been that The working group has recom- changes are needed in the bill so it Wei, professor of Chinese business among ByteDance management confidence nies are beholden to the CCP. “these companies literally can’t be joined the Party in 2013. you really have to push things to mended that the Securities and Ex- doesn’t hurt companies that have and economy at Columbia Business further demonstrates the company’s that they’re ByteDance didn’t respond to a re- treated and trusted the way you Other staff on the list are lower-level the edge before there’s any move- change Commission take measures small operations in China, accord- School wrote in an article in Project ties to the Chinese regime, fueling quest for comment. would interface with other compa- managers at the firm’s different prop- ment. I think [Chinese firms] are to enhance the listing standards on ing to legislative staff for a member Syndicate. security concerns about TikTok. independent President Donald Trump on Aug. nies in global commerce.” erties, according to The Epoch Times’ going to challenge this to the last U.S. exchanges for access to audit of the House Financial Services “The more likely outcome of the By law, Chinese companies are re- of Chinese 6 issued executive orders to ban U.S. ByteDance’s presence in the United research. minute. I know they’re lobby- work papers. Committee. new U.S. law is that it will strength- quired to set up Communist Party direction. transactions with ByteDance, and States via TikTok raises concerns, Ca- For example, Xia Yong is the chief ing Congress” through their U.S. Under the plan, U.S. regulators “The intent of the bill is not to en the PCAOB’s bargaining posi- units within their offices to ensure Chinese internet giant Tencent Hold- rafano said, given its access to vast editor of Toutiao, a popular news ag- business partners, David told The would provide a transition period capture companies which have tion vis-à-vis foreign authorities,” that business policies and employ- James Carafano, ings Ltd. The ban will take effect in swathes of Americans’ personal data. gregator app owned by ByteDance, Epoch Times. until Jan. 1, 2022, for currently operations mostly in jurisdictions he said. ees toe the Party line. ByteDance, vice president, 45 days. Trump has also given Byte- TikTok’s assurances that it operates while Xia Manxue is a commercial founded in March 2012, set up its Heritage Dance until Sept. 15 to sell TikTok to independently to ByteDance are “ir- product manager there, according Party committee in October 2014. Foundation’s Microsoft or another American firm. relevant,” he added. to her LinkedIn page. ANGELA WEISS/AFP via Getty Images According to Party regulations, Institute for National Microsoft confirmed that it’s in talks “It’s a Chinese-owned company,” The company’s hiring practices also companies’ committee members are Security and Foreign to buy the app. Carafano said. “You have no con- give Party members preference. For appointed at political conferences. Policy Secretary of State Mike Pompeo fidence in the software. You have example, the company’s recent job Members serve five-year terms. previously said the U.S. adminis- no confidence in their handling of recruitment notice for “editors” in It’s unclear exactly how many Party tration’s actions targeting Chinese data. And you have no confidence charge of monitoring current-affairs- members or committee members are apps seek to address a “broad array that they’re independent of Chinese related content specified that “CCP among ByteDance’s 60,000 employ- of national security risks that are pre- direction.” members have hiring priority.” ees across 230 global offices; the list sented by software connected to the obtained by The Epoch Times is only Chinese Communist Party.” CCP Members List Police Cooperation a partial listing of committee mem- The CCP members list reveals the Zhang Fuping, the company’s “chief On April 25, 2019, ByteDance signed a bers at its Beijing headquarters. extent of the Party’s relationship with editor” and vice president, has previ- strategic cooperation agreement with At the headquarters office, at least ByteDance, and dovetails with the ously been identified in Chinese me- China’s Ministry of Public Security, 138 employees—mostly in manage- tech giant’s long-documented his- dia reports as secretary of the firm’s which is in charge of the country’s ment positions or technical roles—are tory of cooperating with authorities Party committee. He also appears police. in the company’s influential Beijing on censorship. in the name list The Epoch Times Local police routinely arrest and Party committee, according to the in- The logo of social Founder and CEO Zhang Yiming and obtained. detain those who post information network application ternal list. Sixty on the list are classi- Tik Tok, seen on a other senior executives have openly ex- Zhang is in charge of censorship- deemed sensitive by authorities. fied as having a managerial role. smartphone, on May pressed their desire to have the com- related tasks for the company’s social At the signing ceremony, Zhan Jun, The document details each com- 27, 2020. pany support Party goals in the past. media platforms. Party boss of the propaganda depart- In previous Chinese state-run me- ment within the Ministry of Public MARTIN BUREAU/AFP via Getty Images dia reports, Zhang expressed his Security, said, “We should use new willingness to promote the Party’s online media to voice out the good censorship policies. voices of Chinese police, tell nice In an April 2019 interview with police stories, build a good image of Xinhua, Zhang explained that net- our police, and foster close relations work security to the company means between police and the people.” “the public opinion can be led in the State-run media China Police Net right direction ... full of positive en- reported that ByteDance would ergy, and promote the core values of help set up and operate Toutiao socialism.” and Douyin accounts for each po- The internal name list that The lice department within all Chinese Epoch Times obtained reveals that provincial governments—at the many senior managers are also mem- municipal and county levels—as bers of the Party committee. well as the national ministry. Byte- Committee member Zhang Nan Dance will help to promote the (male) was listed as an employee posts generated by the police ac- who directly reported to one of Byte- counts, the report added. Dance’s top 14 executives, in an or- Chinese police own more than ganization chart obtained by news 50,000 social media accounts across site The Information in April 2019. different platforms and have more Those 14 in turn report to the CEO, than 100 million followers in total, Zhang Yiming. according to the report. Zhang Nan was promoted in March to business director of the Feishu app, Epoch Times staff Annie Wu and according to a report by Chinese tech Cathy He contributed to this report. The New York Stock Exchange at Wall Street in New York City on Aug. 3, 2020. 4 | CHINA INSIDER Week 33, 2020 Week 33, 2020 CHINA INSIDER | 5

Feng Li/Getty Images` NATIONAL SECURITY Microsoft’s Extensive Ties to Beijing Could Muddy TikTok Discussions, Experts Say Bowen Xiao “It is no secret that Microsoft has had a an American company. It’s clearly a multi- ately respond to a request for comment. presence in China since 1992,” Watnik told national company that’s made billions in he future of TikTok is in the The Epoch Times. “Microsoft enjoys special China, that enables Chinese censorship Moving Forward? crosshairs as the app faces status in China as the only Western com- through things like Bing and Skype.” Rob Behnke, CEO at Halborn, a cyberse- a September ban from the pany China permits to operate a search If Microsoft wants the TikTok deal to go curity firm working with emerging tech- United States unless its engine and a social media company within through, executives might want to consider nologies, told The Epoch Times that at this parent company sells it to its borders: Bing and LinkedIn.” divesting from China, Navarro said. point “it’s not even speculation,” that Tik- Microsoft or another U.S. Under Beijing’s “great firewall” policy, Beijing used to utilize Microsoft’s Win- Tok sends U.S. data to China. company. But Microsoft’s both these companies have been censored dows operating system in their military, “So a change in management will change decades-long ties to Beijing could muddy inside China. Zhang Yiming, the founder however it is moving to replace it with a this and hopefully the backdoors will be Tthe waters. of Bytedance, also used to work for Mi- new operating system independently de- closed should this end up actually happen- The video-sharing app, which is wildly crosoft and has an estimated net worth of veloped by China. ing,” he said. “This is more so about data popular among American teens, has come more than $16 billion. TikTok recently garnered more than 2 privacy than security, though.” under bipartisan scrutiny over national As Microsoft’s own website touts, the billion downloads on Google Play Store A successful acquisition would just mean security and privacy concerns in relation to company’s “most complete subsidiary and Apple’s App Store globally, according that it would be a U.S. company spying on its ownership. TikTok, which was acquired and largest R&D center outside the United to Sensor Tower Store Intelligence. Americans, rather than the Chinese, Behn- by Beijing-based ByteDance Technology States is in China.” According to the research firm, the app re- ke said. He called the recent U.S. rhetoric Co. in 2017, is estimated to have tens of mil- Microsoft’s website also boasts that in ceived the most downloads for any app ever around the app “purely a political play.” lions of active users in the United States. early 2015, the company was recognized in the first quarter of this year when it ac- The concerns around TikTok come amid The crux of the concern is that under a by Fast Company magazine as one of the cumulated “more than 315 million installs.” broader anxiety over forced technology 2017 national intelligence law, Chinese “World’s Top 10 Most Innovative of 2015 Blair Brandt, a Republican strategist and transfers from U.S. companies to Chinese companies are required to provide their Companies in China.” It was also included political adviser, said the fact that Micro- authorities and intellectual property theft. data to the ruling Communist Party. While as one of the “Companies Remaking the soft’s software is being used by the CCP China has built up its technology largely some experts are optimistic that a Micro- Chinese Economy.” “certainly makes you second-guess things.” on what it has stolen from the West, with soft purchase will bring an end to alleged “By operating in China, Microsoft thus costs of intellectual property theft amount- backdoor data mining, others say the com- makes a Faustian bargain: It gets billions ing to an estimated $600 billion a year. pany’s own extensive ties with Beijing are in profits and market share in the most Trump has described TikTok’s presence a cause for concern. populous country in the world, but in re- Again, all technology used or created in the United States as a landlord–tenant President Donald Trump has recently turn it must cede to Beijing’s demands for by the CCP is to keep the Communist relationship and that his administration taken a firm stance on Chinese apps. On government censorship, and limits on free “holds all the cards.” Aug. 6, he issued executive orders that ban expression and user privacy in connection regime in power. Think total control. Mark Grabowski, an associate professor transactions with TikTok and social media with its online platforms,” Watnik said. Casey Fleming, chairman and CEO of intelligence specializing in cyber law and digital ethics app WeChat after Sept. 20. The orders also “On what level can an American com- and security strategy firm BlackOps Partners at Adelphi University, said it would be a ban transactions with ByteDance and We- pany who enters into a Faustian bargain relief to know that under a Microsoft pur- Chat’s parent company, Tencent Holdings. of this sort be trusted? Can a United States chase the Chinese regime would at least no As the potential reality of a full-fledged company that has already engaged, and “We cannot assume, at least on face value longer be able to directly exploit TikTok to (L–R) Chinese Communist Party leader Xi Jinping and his predecessors Hu Jintao and Jiang Zemin in Beijing on Sept. 30, 2014. ban approaches, small-scale restrictions continues to engage, in the Faustian bar- alone, that their ownership of TikTok will spy on Americans. are already taking place. The Senate re- gain be trusted to cease such activity?” naturally prevent the privacy violations we “But I’m not sure Microsoft is the answer,” cently unanimously approved a bill intro- Other major companies such as Google, were originally concerned about,” he told The he told The Epoch Times. “They’re part of duced by Sen. Josh Hawley (R-Mo.) that meanwhile, have exited China in protest Epoch Times. “The devil will be in the details. the so-called Frightful Five or group of bans government employees from using over government censorship and alleged “Selling TikTok to an American firm is a American tech giants that have accrued a TikTok on government devices. hacking by the regime. Given Microsoft’s great compromise, but we do have to look at tremendous amount of power. Xi Jinping’s Show of Muscle Before The State Department, the Department extensive presence inside China, Watnik what buyers provide the right track record “I also worry whether Microsoft will im- of Homeland Security, the Department of said he believes the CCP “has the ability and level of integrity.” pose censorship on TikTok. They’ve included Defense, and the Transportation Security to exert leverage over Microsoft by imple- All sales of Western technology and speech restrictions in their Terms of Service Administration have already barred Tik- menting policies and regulations that tech manufacturing to China should be for other products, such as Office 365, that go Chinese Regime’s Army Day Tok on government devices, and in Decem- could reward or punish Microsoft’s busi- banned to protect national security, ac- well beyond what’s required by law.” ber 2019, the U.S. Army blocked its soldiers ness operations in China.” cording to Casey Fleming, chairman and While Microsoft is believed to be one from using the app. Lt. Col. Robin Ochoa, Microsoft CEO Satya Nadella has at- CEO of intelligence and security strategy of the main players, Twitter also has ex- Zhang Dun ship has deteriorated to its lowest cept applause from the audience. Li an Army spokeswoman, told Millitary. tempted to quash concerns, saying in an firm BlackOps Partners. pressed interest in an acquisition. point, as evidenced by the closures was obviously embarrassed. com that “it is considered a cyber threat.” Aug. 2 statement that the company “would He believes there will be no change to Robert J. Bunker, adjunct research profes- Commentary There are also of consulates, along with the series The Epoch Times recently reported that ensure that all private data of TikTok’s Beijing’s espionage practices even if it sor at the Strategic Studies Institute of the he seven top leaders of the Chinese reports of punitive measures against Chi- Rumors That Xi Has more than 130 employees at ByteDance are American users is transferred to and re- agrees to Microsoft’s acquisition. U.S. Army War College, said the TikTok Chinese Communist Party floating around nese officials and companies by the Been Asked to Step Down part of a Chinese Community Party (CCP) mains in the United States.” “Again, all technology used or created by saga is part of a wider issue, a battle to de- (CCP) have not appeared Trump administration. Nikkei senior staff writer Katsuji Naka- committee embedded in the company. TikTok also has repeatedly claimed that it the CCP is to keep the communist regime cide the landscape of the internet. in Chinese media since that say Xi’s Of course, the Party is not innocent zawa speculated in a recent article that Many of the employees work in manage- stores all U.S. user data in the United States in power,” he told The Epoch Times. “Think “I think the United States should ‘fight’ the beginning of August. opponents in this diplomatic chain reaction. The since the CCP faces many problems, ment positions, according to internal docu- with backup redundancy in Singapore. total control.” for the future of a liberal-democratic in- TThis could suggest the annual secre- are trying to CCP has initiated numerous attacks Party elders would definitely want to ments. ByteDance, founded in March 2012, There are also critics of a Microsoft pur- By law, Chinese companies are required fluenced global internet by both engaging tive Beidaihe conclave—when the to intensify international tensions. talk to Xi during the Beidaihe conclave. set up its Party committee in October 2014. chase in the higher levels of the admin- to set up Communist Party units within and containing China in this regard,” he CCP leadership gathers with no an- get him off the The provocative military activities There are also Chinese reports istration. White House adviser Peter Na- their offices to ensure that business policies told The Epoch Times. “Hence Microsoft nouncements, no press releases, and throne. in the Taiwan Strait, South China floating around that say Xi’s oppo- Extensive Presence varro told CNN: “Whose software does the and employees toe the Party line. and other U.S. companies should purchase no public contact—is taking place at Sea, and the East China Sea; the nents are trying to get him off the Scott Watnik, litigation partner at U.S. law People’s Liberation Army in China run on? A spokesperson for Microsoft told The TikTok, Zoom, and other potentially CCP- the seaside resort not far from Beijing. border conflict with India and the throne. firm Wilk Auslander and co-chair of the Microsoft. The Chinese Communist Party, Epoch Times via email that the compa- linked business entities.” With various disasters and conflicts subsequent decline in relations with For instance, an open letter circu- firm’s cybersecurity practice, said the anxi- whose software do they use to do all the ny “doesn’t have anything to share,” in in 2020 posing major difficulties for neighboring countries; and aban- lating online in March called for an eties surrounding a Microsoft purchase are things they do? It’s Microsoft. response to a written query. Epoch Times staff member Nicole Hao the regime, such as the trade talks doning the Sino-British Joint Dec- expanded meeting of the Politburo to well warranted. “So, this is not a whitehat company that’s A TikTok spokesperson didn’t immedi- contributed to this report. and the CCP virus (aka novel coro- laration to push forward a national discuss “the issue,” that is, whether navirus) outbreak, the secret retreat security law in Hong Kong—all have Xi should step down. The letter was

Cindy Ord/Getty Images in Beidaihe for the Party comrades triggered sanctions from countries shared to popular social media plat- surely merits attention. in the free world. form WeChat by Chen Ping, a promi- Domestically, the Party is saddled nent princeling. The Absence of the with problems: floods in the south; Also, a tweet by hedge fund man- Seven Politburo Standing drought in the north; epidemics of ager and frequent Beijing critic Kyle Committee Members various infectious diseases through- Bass went viral in April. According to Since Aug. 1, none of the seven Polit- out China; voices against the regime his “sources within ... the Guangdong buro standing committee members from social elites—such as Ren Zhiq- elite (Uncle Deng’s family) are be- have made any public appearances iang, real estate tycoon and an out- ginning to rattle the cages of change on state-run broadcaster CCTV. spoken descendant of former Party against the supposed ‘emperor for Although Party General Secretary officials (known as a “princeling”), life,’” referring to former Party leader Xi Jinping was reported to have sent and Xu Zhangrun, a professor at Ts- Deng Xiaoping and Xi. a message of condolence to Lebanese inghua University; the deteriorating So far, The Epoch Times has not President Michel Aoun on Aug. 5 over economy; and even the surfacing of been able to verify these claims. explosions in the country’s capital, infighting among Party factions. In a recent speech, U.S. Secretary of Beirut, he did not make a public ap- A typical telltale case would be State Mike Pompeo called on the free pearance. that of the conglomerate Tomorrow world to act together with the Chi- One of the signs suggesting an an- Group, which responded on July 18 to nese people, to propel real change in nual conclave of leaders is underway Beijing’s announcement of takeovers China. “Changing the CCP’s behavior would be that experts in science, of nine of its subsidiaries with an on- cannot be the mission of the Chinese medicine, and technology would line version of a “solemn statement.” people alone. Free nations have to be invited to Beidaihe for summer Founded by Xiao Jianhua in 1999, work to defend freedom,” he said. “If vacation for a day or two by current within 20 years the firm spanned the free world doesn’t change ... com- and retired senior cadres before the multiple fields such as finance, -in munist China will surely change us.” meeting. dustry, real estate, communication It seems unlikely that Xi will be over- Take the 2003 Beidaihe retreat as services, energy, and the internet. thrown simply through one Beidaihe an example. Then-vice chair Zeng Xiao is alleged to be a “big white meeting. After all, Xi has developed his Qinghong greeted Chinese experts glove” (money launderer) for high- military power in the past eight years and scientists in Beidaihe to discuss ranking officials, and was reportedly since he took the top Party position. the SARS (severe acute respiratory being investigated for his close ties To remove Xi won’t be as easy as how syndrome) epidemic. to an official known for his loyalty both former Party general secretaries This year, with the raging pan- to former Party leader Jiang Zemin. Hu Yaobang and Zhao Ziyang were demic, it is yet unknown whether Another example is widely circu- purged, since neither Hu nor Zhao the Party will invite experts to the lated footage showing the opening held any real power in the military. seaside resort. of the Beidou 3 satellite navigation Nonetheless, it is reasonable to be- system on July 31, when vice premier lieve that a political power struggle is This Year’s Agenda Liu He, a close ally of Xi who was the being staged at Beidaihe now. This closed-door meeting in Beidai- ceremony’s emcee, publicly humili- he will likely discuss the numerous ated premier Li Keqiang. Aired on Views expressed in this article are challenges, domestic disasters, and state-run CCTV, the footage showed the opinions of the author and do international tensions that are yet to that when Li was introduced at the not necessarily reflect the views of be resolved. The Sino-U.S. relation- ceremony, Liu left him no time to ac- The Epoch Times. A mobile phone featuring the TikTok app is displayed next to the Microsoft logo in New York on Aug. 3, 2020. 6 | CHINA INSIDER Week 33, 2020 Week 33, 2020 CHINA INSIDER | 7

Kevin Frayer/Getty Images

FOOD SECURITY China Faces Food Shortage as Droughts, Flooding, and Pests Ruin Harvest

VCG/VCG via Getty Images Nicole Hao

hinese Vice Premier Hu Chunhua re- cently asked the governors of each province in China to make sure the sown areas of agricultural crops wouldn’t shrink and crop yield won’t C be reduced this year. At a food security meeting held in Beijing on July 27, he warned that governors would be punished if they failed to uphold the promise, includ- ing with dismissals. Farmers work And when Chinese leader Xi Jinping in the fields visited northeastern Jilin Province on in Yangzhou, July 22, he told the local government Jiangsu to treat grain production as a prior- Province, China ity task. on June 6, The top officials’ emphasis on food 2018. supplies raised questions about whether China is facing a severe food this year. He and his fellow villag- Other Signs shortage this year. ers were worried that they might not Recent trends in the Chinese mar- There are other signs. have enough food to eat, as flooding ket also indicated that there is a food In early July, the government or- has hit the region continually. shortage. gan China National Grain and Oils China’s leading producer and Information Center released its es- Droughts supplier of processed agricultural timates that the corn supply gap in Wheat is mainly planted in central products, state-run China Agri-In- the 2020–2021 fiscal year would be The early rice and northern China. Farmers only dustries Holdings, announced on 25 million metric tons—more than in our province harvest once a year in late May to Aug. 3 that the central government double the previous estimated 12 early June. released 3.6 million metric tons of million metric tons. was ruined Wheat production in Henan Prov- state-reserved rice to the market re- Extreme weather across large before harvest. ince contributes to roughly a quarter cently, which were harvested from Chinese leader Xi Jinping arrives at the closing session of the Chinese regime’s rubber-stamp legislature conference while other Communist Party officials applaud, in Beijing on May 28, 2020. swaths of China has led to the de- The mid- of China’s total agricultural produc- 2014 to 2019. struction of crops. Since early June, tion. However, droughts killed the China has a national grain reserves heavy rains have swamped the coun- season rice was crops in Henan, Inner Mongolia, system in order to maintain food se- try’s south, center, and east. Mean- destroyed by Gansu, Xinjiang, Jilin, and other curity, but how much the country ac- while, parts of the northwest and the floods. Now northern provinces. tually possesses in reserve has been northeast are coping with droughts. Privately-run Chinese grains and called into question. Power Struggle in China May Be Pests such as locusts and fall army- it’s too late to oil wholesale platform CCTIN visited Meanwhile, all domestic grain worms have also invaded crops. plant the late wheat production areas of Henan, prices have gone up in the first week Farmers told The Epoch Times they rice. Anhui, and Jiangsu provinces and of August, compared to the same pe- suspect that they would lose their reported that the quality of wheat in riod last year, according to data is- Playing Out in Beidaihe Now harvests this year. Mr. Li, Poyang county, 2020 was worse than that in 2019, and sued by Orient Securities and Huatai Jiangxi Province production was 15–30 percent less Securities. Flooding than previous years. Soybean prices, in particular, in- Chinese farmers plant rice in 13 State-run media Xinhua reported on creased 37.83 percent to 4,761 yuan Shan Fengchen Everyone understood it, though The Rocket Force provinces, including Hunan, Hubei, June 16 that 50.7 percent of Inner Mon- ($682.10) per metric ton in August Xi did not make it explicitly clear. to the South China Sea Jiangxi, Anhui, Jiangsu, Zhejiang, Si- golia’s land suffered heavy droughts this 2020 from 3,454 yuan ($484.85) per Commentary The Rocket Force, formerly the chuan, Chongqing, Guizhou, Guang- year. The region mainly grows wheat, as metric ton in August 2019. In July 29, Chinese leader Xi Jin- The Muscle to Deter Second Artillery Corps, was dong, Guangxi, Yunnan, and Fujian. well as soybeans and corn. Crops and The Chinese regime also recently ping, who is also the chairman of Political Opposition established on Dec. 31, 2015. All these provinces were impacted by wild grass were unable to grow, impact- made record purchases of U.S. ag- the Chinese Communist Party’s The CCP started as a bunch of Since then, the CCP’s army has flooding in June and July. ing local animal husbandry. ricultural goods. On July 29, China Central Military Commission, pre- factions constantly fighting each changed from the three armies Farmers plant rice at three different One woman in Xinjiang shared purchased its biggest-ever order of sided over a ceremony in Beijing to other. To the winner, it’s always of land, sea, and air to the four times of the year. The early season is a video on social media on July 17, U.S. corn, 1.937 million metric tons, promote Xu Zhongbo to the rank of foremost importance whether armies of land, sea, air, and mis- planted in late March and harvested showing large wheat fields that have which will be delivered during the of general. The Military Commis- or not the military is on their siles during the Xi era. in late June. The middle season is dried up. 2020–21 marketing year that begins sion is the Party’s top agency for side. Many people believe that At the inauguration ceremony planted in early May and harvested on Sept. 1, according to the U.S. De- commanding the military. the “Gang of Four,” including in 2015, Xi emphasized that the in late September. The late season is Pests partment of Agriculture. The event was supposed to be Mao’s third wife, who seemed PLA Strategic Support Force is a planted in late June and harvested The northern Jilin and Heilongjiang Qin, an agriculture researcher in a celebration, but the response so powerful and unstoppable new-type combat force to main- in mid-October. The flooding in June provinces reported native locust China who only gave his last name from both the audience and Xu during the Cultural Revolution, tain “national security” and is and July impacted all three seasons plagues in June. In late June, a for- because he wasn’t authorized to was lifeless and deadly silent, were brought down because they critical to developing the PLA’s of rice planting. eign locust invasion entered China’s speak to foreign media, explained based on state media footage. lacked military support. The combat capabilities. Mr. Li, who is from Poyang county, Yunnan Province in the southwest, that grains have three primary uses Prior to his promotion, Xu was purge of two former general sec- The establishment of the Rocket Jiangxi Province, told the Chinese- from Laos, and continued moving to in China: food for human consump- political commissar of the Rocket retaries of the CCP, Hu Yaobang Force was important to Xi, as it language Epoch Times on July 18: other regions. tion, feed for livestock, and raw mate- Force within China’s People’s and Zhao Ziyang, was also evi- realized his “China Dream” and “The early rice in our province was Authorities warned that more lo- rials to make wine and other indus- Liberation Army, according to dently due to the lack of military the “Dream of a Strong Military,” as ruined before harvest. The mid-sea- custs would enter from Laos before trial products. state media China Daily. In Chi- support to some extent. well as being a strategic initiative to son rice was destroyed by the floods. late August. He said the current shortage “won’t nese officialdom, it is rare for the In recent years, there has been build a modern military power sys- Now it’s too late to plant the late rice.” And the fall armyworm, which feeds be as serious as people not having Military Commission to hold an a wave of backlash against Xi tem with Chinese characteristics. While sobbing on the phone, Mr. on corn, reportedly has destroyed food to eat. ... The key is no feed for awards ceremony for one officer within the CCP. Xi’s biggest Recently, military confronta- Chen from Hunan Province said crops in Shandong, Anhui, Jiangsu, livestock and poultry. Then, people alone. So, what is the significance Simply put, Xi political opponents are from a tions between the United States farmers in his area had no harvest Henan, and other provinces in July. don’t have enough meat to eat.” of Xi’s move on the eve of Aug. 1, is struggling. faction that include former Party and China in the South China the anniversary of the Chinese Proceeding leader Jiang Zemin, his right- Sea have escalated. Two U.S. Betsy Joles/ Getty Images regime’s army founding? hand-man Zeng Qinghong, and aircraft carrier battle groups ap- on his current their followers. There are endless peared in the region, reconnais- The ‘Red Envelope’ path of love rumors of coups and assassina- sance aircraft have flown over the to Win Military Support for power and tion attempts. Taiwan Strait many times, and a The PLA is “the gun that is During the CCP’s annual “Two P-8A anti-submarine aircraft has always under the command of protecting the Sessions” political meetings this approached Shanghai as close as the Party.” For the military, the Party, he will year, the split between Xi and 76.5 kilometers. importance of “Army Founding continue the premier Li Keqiang was made Should the United States and Day” is second only to the Chi- public. This was the first admis- China enter a conflict in the nese New Year—called the Spring game to the end. sion that the Party and state South China Sea, the four armies Festival in mainland China—and government apparatus had come of land, sea, air, and missiles could be called the “Second apart, and the Party’s image of in Xi’s hands will be put to the Spring Festival.” Therefore, when unity was broken. test. China’s army, navy, and air the “Second Spring Festival” is Simply put, Xi is struggling. force are no match for the United approaching, being the leader of Proceeding on his current path of States. The only unit with some the Party and the army, it’s only love for power and protecting the function is the Rocket Force. But, natural for Xi to offer a red gift Party, he will continue the game it’s Xi’s last card, and this may envelope at the celebration. to the end. Xi’s final fate could be have been another important Of course, it is impossible for to follow in the footsteps of Nico- reason why he had to throw a “red everyone to get a gift like a pro- lae Ceausescu, the last commu- envelope” at the Rocket Force. motion. It was decided that the nist leader in Romania who was In conclusion, in its dying state, “red envelope” be given to Xu. overthrown and executed in 1989. the CCP is like a critically ill Xi clearly delivered his message: At present, Xi holds the Par- patient at the ICU, but there is no Listen to the Party, and be loyal ty—its power and its life—in hope of recovery. Xi, although to the Party; don’t learn from Xu his hands. To firmly grasp the committed to protecting the Caihou, Guo Boxiong, Gu Jun- military would greatly ensure his Party, is deeply trapped by chal- shan, Fang Fenghui, and Zhang safety. Standing there at the cer- lenges to the Party and factional Wang Jianjun Yang, generals who were sacked emony and accepting the salute coups. Thus, Xi is like sitting on a stands outside his over allegations of corruption. from the newly promoted gen- volcano. dairy farm while The promotion did not just send eral, Xi may have been sending worrying about the a message to the Rocket Force, but a message to his political oppo- Views expressed in this article are market in Hulunbuir, Inner Mongolia, also to the Air Force, the Army, and nents: princelings from all walks the opinions of the author and do China on May 1, the Navy: Being loyal to the Party is of life, stay cool with me. See? I not necessarily reflect the views of 2019. equivalent to being loyal to me! have this guy in my hand! The Epoch Times. 8 | CHINA INSIDER Week 33, 2020

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