No longer a pipe dream
Apr 21, 2017 (WiC 362)

Myanmar has a track record when it comes to transporting essential supplies to China. Famously the Burma Road was built between Lashio (in Myanmar) and Kunming (in southwest China) in 1938, covering 1,154km. For the next four years it supplied Chinese leader Chiang Kai-shek with military and other essential materiel, offering a lifeline as his retreating forces fought against Japanese troops (which were busy occupying China’s eastern seaboard). It was owing to the strategic importance of the Burma Road that Japan’s army invaded the country in 1942.

This past week a signing ceremony in Beijing signalled the strategic importance of Myanmar’s location once again. The heads of state of both governments watched as a new agreement was signed for the operation of the Sino-Myanmar Crude Oil Pipeline. The oil link had been tested as far back as 2014 but later disputes saw its commercial opening delayed and the crucial final 2.5km remain unbuilt. According to the South China Morning Post, the breakthrough came more recently when the Myanmar government agreed to lower transit fees through the pipeline. That permitted the Chinese and Myanmar sections of the oil link to be connected this month.

The opening of this key piece of cross-border infrastructure will be welcome news for President Xi Jinping and his Belt and Road blueprint. The pipeline will have capacity to transport 22 million tonnes of crude annually to China from the Middle East and Africa, with tankers no longer having to navigate the Strait of Malacca and pass through the South China Sea. Bypassing the Strait is viewed by security strategists as vital – that’s because that sea lane is a chokepoint that could be used by an adversarial navy to block oil imports from the Middle East.

In more purely economic terms, Chinese state media reports that the pipeline will alleviate shortages of oil in southwestern China. To this end the oil major CNPC has constructed a refinery in Kunming capable of processing 13 million tonnes of crude per year and says it will become operational once the pipeline starts to pump the required volumes. That will be soon: last Sunday a Suezmax tanker arrived at the pipeline’s starting point in Myanmar and began discharging its cargo of 140,000 tonnes of oil. Xinhua said this formally inaugurated the project – which is China’s biggest investment in its neighbour.

The Financial Times points out none of this has been without controversy on both sides of the border. In Myanmar there have been protests about land grabs – and potential oil leaks – along the pipeline’s route and in Kunming residents have demonstrated against the refinery and the pollution that it will generate. The SCMP says there are also concerns that the pipeline may have to halt operations if armed conflict flares up between ethnic groups in northern Myanmar. Last November three such militias attacked police stations and government offices in Muse and Kutkai, temporarily halting Sino-Burmese cross-border trade.

Upwardly mobile?
Apr 7, 2017 (WiC 361)

Huawei’s pursuit of its global rivals is hotting up and the Shenzhen firm is forecast by most analysts to take top spot in smartphone sales within three years.

But the push into phones is weighing down profits. Revenues were up just under a third to Rmb522 billion ($75.69 billion) in 2016. Earnings were flat, up 0.4% to Rmb37 billion, the smallest growth in five years.

Huawei says the slowdown is due to increases in spending at its consumer division, where it shipped 139 million smartphones last year. Now third in sales after Apple and Samsung, it has been investing in higher-specification models and spending more on marketing and distribution. About 56% of its revenues came from its traditional networking business last year, but the proportion has been declining as sales of smartphones increase. Yet even as it chases down its international rivals, Huawei has come under attack in its home market, losing top position to Oppo (see WiC358).

The declining margins have been prompting tough talk from Ren Zhengfei, Huawei’s hard-charging founder, who penned a memo to staff last month telling them not to slack off or the company would “fall apart”. “Huawei will not pay for those that don’t work hard,” he warned.

Lucky 7?
Mar 31, 2017 (WiC 360)

Ma Ying-jeou was re-elected Taiwan’s president in January 2012 after winning a total of 6.89 million votes. Two months later CY Leung was also elected to Hong Kong’s top post with 689 votes – garnered from a 1,200-strong committee dominated by pro-Beijing members.

The staggering difference between the number of votes required to lead Taiwan versus the former UK colony is why the nickname “689” has been widely used by Hongkongers to mock their unpopular leader (“9” also sounds the same as “dog” in Cantonese).

Hong Kong will soon have its first female political boss after Carrie Lam won a divisive election on Sunday (her terms starts on July 1). Lam might have broken the glass ceiling but after winning 777 votes from the same election committee, the Beijing-backed candidate has already got a new nickname that might plague her time in office. Lam has already been dubbed “CY 2.0” for serving as Leung’s most senior official over the past five years. But “777” looks worse. In colloquial Cantonese, “7” could be an expletive too – slang for the male genitalia (Samsung’s marketing team in Hong Kong painfully found this out when launching the controversial Note 7, see WiC343).

Lam’s fans tried to put a more positive spin on the digits, suggesting that Hong Kong’s luck has returned as “777” is the number that comes up when one wins the jackpot in a casino slot machine.

Things could have been vastly different should a Beijing-initiated electoral reform have gone through in 2014. This was set to introduce universal suffrage for the 2017 election. But it got blocked in the city’s legislative body as pro-democracy legislators insisted that any Hongkonger should be allowed to stand, while the reform still gave Beijing the right to pre-screen the candidates (see WiC287). Had that reform been enacted, opinion polls suggest John Tsang – formerly the financial secretary and the favoured candidate of the pro-democracy groups – would have beaten Lam. So you might say Hong Kong’s democracy activists ended up shooting themselves in the foot. They can complain about Lam’s election, but they played their own part in ensuring that outcome.

Meanwhile two out of the four leaders in Greater China (which includes the mainland, Taiwan, Hong Kong and Macau) are now women. Mao Zedong might have considered that ratio appropriate, having coined the maxim that women represent “half the sky”.