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Trump toes the line
Feb 17, 2017 (WiC 354)

“At your request, I will do that,” promised President Trump – meekly, and out of character – in a call last Friday with his Chinese counterpart.

According to the Wall Street Journal, Xi Jinping had just asked him to “uphold” the One China Policy.

The news caused some relief, as Xi had made plain that sticking to the framework was an inviolable precondition for Sino-US relations.

That said, Trump was not giving much away by agreeing to Xi’s request. After all, he was only confirming what every US administration has adhered to since the 1970s – Washington’s agreement to withhold diplomatic recognition of Taiwan. The shock was that Trump had previously questioned this bedrock assumption (see WiC349).

While Trump was drawing praise in Beijing for stepping back from his Taipei threat, not all the authorities were delighted by The Donald. As TVB News points out, a judge with China’s Supreme People’s Court took the unusual step of going on social media to criticise the American leader. This time it was not about Taiwan, but Trump’s Twitter-fuelled rant against a Seattle judge who had smacked down Trump’s executive order banning travel from seven Muslim nations.

Judge He is an expert on the US legal system, says TVB, having translated many books about the Supreme Court into Chinese. He said the American president was entirely wrong to publicly question the ruling as it violated the principle separating the powers of the executive and judicial branches in the American system. And in his online post, the Chinese judge connected the Trump incident with a case that occurred in Guangxi last month where a judge was murdered after a divorce case got messy.

“The president who scolds judges and the thugs who kill judges are both public enemies of the rule of law,” wrote He.

Such is the topsy-turvy world we live in today: in this case of Trump versus He, the leader of the free world has just been chastised for undercutting the rule of law by a judicial representative of a one-party state.

Animal spirits
Jan 27, 2017 (WiC 353)

China’s baijiu sector seems to be more than recovering from President Xi Jinping’s clampdown on graft and extravagance. We reported in May last year that Kweichow Moutai’s share price had hit an all-time high of Rmb260 per share. As of this week it is trading at Rmb345 with a market value of Rmb434 billion ($63 billion).

The strong performance could be partly explained by the Shanghai-Hong Kong Stock Connect. The trading platform allows foreign investors to buy into Shanghai-listed large caps such as Moutai. Since the stock link commenced in late 2014, Moutai’s shares have more than doubled. Shanghai’s key index climbed less than 20% during the same period. Indeed, China Daily noted last week that consumer staples was the only sector on the main stock exchanges with positive returns last year. And according to the Bernstein Global Spirits Guide, high-end baijiu is so profitable that the top four brands are estimated to account for 27% of pre-tax earnings for the global spirits industry.

Sales were previously seen as a proxy for corruption (see WiC172). But since Xi took office baijiu makers have been forced to restructure their businesses. The turnaround, China Daily says, is also buoyed by rising middle class incomes. It reports that surging demand for the spirit to toast in this year’s Lunar New Year has seen classic Moutai increase almost 40% in price to Rmb2,000 per bottle this week.

Costa how much…?
Jan 20, 2017 (WiC 352)

The Chinese Super League continues to make headlines in the UK press, with the tabloids particularly excited in the past week about news that Chelsea’s star striker might join a Chinese club.

The reports have rumoured that Diego Costa’s agent has been negotiating a deal with a Tianjin team that could earn him £30 million a year in salary.

Chelsea have denied that a deal has been discussed – although earlier this month it sold Oscar to Shanghai SIPG for £60 million – and the London club’s angry manager dropped the Spanish international from the team last weekend. Some of the tabloids believe Costa will stay at Chelsea for the remainder of the season, but will then follow Carlos Tevez to China for a record transfer in the summer.

However, the Financial Times notes that China’s sports administration is trying to clamp down on the transfer spending, mandating that Super League clubs can only field three foreign players in games versus the previous limit of four. The rule change was made on Sunday. To foster more domestic talent a provision was also included that at least one Chinese player under 23 must be on the pitch throughout matches, in a move designed to “elevate the level of the national team”.

It’s an interesting plan and while WiC sees merit in the idea, we do sympathise: it could make substitutions more complex for coaches, and what would happen if all a team’s under 23 year-old players were injured?