U.S. wants pledge for stable Chinese yuan as talks resume: report

WASHINGTON (Reuters) – The United States is seeking to secure a pledge from China it will not devalue its yuan as part of an agreement intended to end the countries’ trade war, Bloomberg reported on Monday.

Officials from the two countries, which resumed talks on Tuesday in Washington, are discussing how to address currency policy in a “Memorandum of Understanding” that would form the basis of a U.S.-China trade deal, the news agency reported, citing unnamed people involved in and briefed on the discussions.

U.S. Treasury Secretary Steven Mnuchin had told Reuters last October that currency issues must be part of U.S.-China trade negotiations and that Chinese officials told him that further depreciation of the yuan was not in their interests.

The Bloomberg report said the U.S. request for a pledge to keep the yuan’s value stable was aimed at neutralizing any effort by Beijing to devalue its currency to counter American tariffs.

Spokesmen for the U.S. Trade Representative’s office, which is leading the talks, and the U.S. Treasury, which leads currency policy, could not immediately be reached for comment.

Two days of negotiations between deputy-level officials began on Tuesday, led by Deputy U.S. Trade Representative Jeffrey Gerrish on the U.S. side. Higher-level talks involving Mnuchin and led by USTR Robert Lighthizer, are expected to begin on Thursday.

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The talks follow a round of negotiations that ended in Beijing last week without a deal but which officials said had generated progress on contentious issues between the world’s two largest economies.

The talks are aimed at “achieving needed structural changes in China that affect trade between the United States and China. The two sides will also discuss China’s pledge to purchase a substantial amount of goods and services from the United States,” the White House said in a statement issued late on Monday.

U.S. tariffs on $200 billion in imports from China are set to rise to 25 percent from 10 percent if no deal is reached by March 1.

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Huawei founder says will not share data with China: CBS News

WASHINGTON (Reuters) – Huawei Technologies Co Ltd’s founder and chief executive pledged not to share any customer information with the Chinese government and said the company had never done so, in an interview with CBS News that aired on Tuesday.

Asked if it had shared data with China’s government, Huawei’s Ren Zhengfei said in a translated interview with the television news outlet: “For the past 30 years, we have never done that. And (for) the next 30 years to come, we will never do that.”

Ren also said the company did not have a back door to share customer data with Beijing without his knowledge.

“It is not possible,” he told CBS, saying if there were such an opening the United States would have uncovered it already.

On Monday, Ren said in a separate interview with the BBC that the technology company would not undertake any spying activities and that it could shift its business investments to other countries amid an ongoing U.S. pressure campaign.

The United States is calling on its allies not to use technology from Huawei, the world’s biggest producer of telecommunication equipment, amid concerns over its relationship with the Chinese government and allegations it has enabled state espionage.

Huawei has repeatedly denied such claims.

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China’s ‘Belt and Road’ Plan in Pakistan Takes a Military Turn

ISLAMABAD, Pakistan — When President Trump started the new year by suspending billions of dollars of security aid to Pakistan, one theory was that it would scare the Pakistani military into cooperating better with its American allies.

The reality was that Pakistan already had a replacement sponsor lined up.

Just two weeks later, the Pakistani Air Force and Chinese officials were putting the final touches on a secret proposal to expand Pakistan’s building of Chinese military jets, weaponry and other hardware. The confidential plan, reviewed by The New York Times, would also deepen the cooperation between China and Pakistan in space, a frontier the Pentagon recently said Beijing was trying to militarize after decades of playing catch-up.

All those military projects were designated as part of China’s Belt and Road Initiative, a $1 trillion chain of infrastructure development programs stretching across some 70 countries, built and financed by Beijing.

Chinese officials have repeatedly said the Belt and Road is purely an economic project with peaceful intent. But with its plan for Pakistan, China is for the first time explicitly tying a Belt and Road proposal to its military ambitions — and confirming the concerns of a host of nations who suspect the infrastructure initiative is really about helping China project armed might.

As China’s strategically located and nuclear-armed neighbor, Pakistan has been the leading example of how the Chinese projects are being used to give Beijing both favor and leverage among its clients.

Since the beginning of the Belt and Road Initiative in 2013, Pakistan has been the program’s flagship site, with some $62 billion in projects planned in the so-called China-Pakistan Economic Corridor. In the process, China has lent more and more money to Pakistan at a time of economic desperation there, binding the two countries ever closer.

For the most part, Pakistan has eagerly turned more toward China as the chill with the United States has deepened. Some Pakistani officials are growing concerned about losing sovereignty to their deep-pocketed Asian ally, but the host of ways the two countries are now bound together may leave Pakistan with little choice but to go along.

Even before the revelation of the new Chinese-Pakistani military cooperation, some of China’s biggest projects in Pakistan had clear strategic implications.

Uzbekistan

Kashgar

Tajikistan

Turkmenistan

China

Kabul

Islamabad

Afghanistan

Lahore

Iran

Pakistan

India

Chinese road projects

Chinese port projects

Karachi

Gwadar Port

200 miles

Arabian Sea

Uzbekistan

Kashgar

Tajikistan

Turkmenistan

China

Kabul

Islamabad

Afghanistan

Lahore

Pakistan

India

Iran

Chinese road projects

Chinese port projects

Karachi

Gwadar Port

200 miles

Arabian Sea

Kashgar

Uzbekistan

Tajikistan

Turkmenistan

China

Kabul

Islamabad

Afghanistan

Lahore

Pakistan

Iran

India

Gwadar

Port

Karachi

Chinese road projects

200 miles

Chinese port projects

Source: Center for Strategic and International Studies | By The New York Times

A Chinese-built seaport and special economic zone in the Pakistani town of Gwadar is rooted in trade, giving China a quicker route to get goods to the Arabian Sea. But it also gives Beijing a strategic card to play against India and the United States if tensions worsen to the point of naval blockades as the two powers increasingly confront each other at sea.

A less scrutinized component of Belt and Road is the central role Pakistan plays in China’s Beidou satellite navigation system. Pakistan is the only other country that has been granted access to the system’s military service, allowing more precise guidance for missiles, ships and aircraft.

The cooperation is meant to be a blueprint for Beidou’s expansion to other Belt and Road nations, however, ostensibly ending its clients’ reliance on the American military-run GPS network that Chinese officials fear is monitored and manipulated by the United States.

[Read The Times’s series “China Rules,” about how China wrote its playbook to counter the West.]

In Pakistan, China has found an amenable ally with much to recommend it: shared borders and a long history of cooperation; a hedge in South Asia against India; a large market for arms sales and trade with potential for growth; a wealth of natural resources.

Now, China is also finding a better showcase for its security and surveillance technology in a place once defined by its close military relationship with the United States.

“The focus of Belt and Road is on roads and bridges and ports, because those are the concrete construction projects that people can easily see. But it’s the technologies of the future and technologies of future security systems that could be the biggest security threat in the Belt and Road project,” said Priscilla Moriuchi, the director of strategic threat development at Recorded Future, a cyberthreat intelligence monitoring company based in Massachusetts.

An Asset on the Sea

The tightening China-Pakistan security alliance has gained momentum on a long road to the Arabian Sea.

In 2015, under Belt and Road, China took a nascent port in the Pakistani coastal town of Gwadar and supercharged the project with an estimated $800 million development plan that included a large special economic zone for Chinese companies.

Linking the port to western China would be a new 2,000-mile network of highways and rails through the most forbidding stretch of Pakistan: Baluchistan Province, a resource-rich region plagued by militancy.

The public vision for the project was that it would allow Chinese goods to bypass much longer and more expensive shipping routes through the Indian Ocean and avoid the territorial waters of several American allies in Asia.

From the beginning, though, key details of the project were kept from the public and lawmakers, officials say, including the terms of its loan structure and the length of the lease, more than 40 years, that a Chinese state-owned company secured to operate the port.

If there was concern within Pakistan about the hidden costs of the China-Pakistan Economic Corridor, also known as CPEC, there was growing suspicion abroad about a hidden military aspect, as well.

In recent years, Chinese state-owned companies have built or begun constructing seaports at strategic spots around the Indian Ocean, including places in Sri Lanka, Bangladesh and Malaysia.

Chinese officials insisted that the ports would not be militarized. But analysts began wondering whether China’s endgame was to muscle its way onto coastal territories that could become prime military assets — much as it did when it started militarizing contested islands in the South China Sea.

Then, Sri Lanka, unable to repay its ballooning debt with China, handed over the Chinese-built port at Hambantota in a 99-year lease agreement last year. Indian and American officials expressed a growing conviction that taking control of the port had been China’s intent all along.

In October, Vice President Mike Pence said Sri Lanka was a warning for all Belt and Road countries that China was luring them into debt traps.

“China uses so-called debt diplomacy to expand its influence,” Mr. Pence said in a speech.

“Just ask Sri Lanka, which took on massive debt to let Chinese state companies build a port of questionable commercial value,” Mr. Pence added. “It may soon become a forward military base for China’s growing blue-water navy.”

Military analysts predict that China could use Gwadar to expand the naval footprint of its attack submarines, after agreeing in 2015 to sell eight submarines to Pakistan in a deal worth up to $6 billion. China could use the equipment it sells to the South Asian country to refuel its own submarines, extending its navy’s global reach.

Deepening Debt

When China inaugurated Belt and Road, in 2013, Prime Minister Nawaz Sharif’s new government in Pakistan saw it as the answer for a host of problems.

Foreign investment in Pakistan was scant, driven away by terrorist attacks and the country’s enduring reputation for corruption. And Pakistan desperately needed a modern power grid to help ease persistent electricity shortages.

Pakistani officials say that Beijing first proposed the highway from China’s western Xinjiang region through Pakistan that connected to Gwadar port. But Pakistani officials insisted that new coal power plants be built. China agreed.

With CPEC under fresh scrutiny, Chinese and Pakistani officials in recent weeks have contended that Pakistan has a debt problem, but not a Chinese debt problem. In October, the country’s central bank revealed an overall debt and liability burden of about $215 billion, with $95 billion externally held. With nearly half of CPEC’s projects completed — in terms of worth — Pakistan currently owes China $23 billion.

But the country stands to owe $62 billion to China — before interest balloons the figure to some $90 billion — under the plan for Belt and Road’s expansion there in coming years.

Pakistan’s central bank governor, Ashraf Wathra, said publicly in 2015 that he had no clarity on Chinese investments in Pakistan and was concerned about rising debt levels. It still took him months after that to secure a briefing from cabinet officials.

“My main question was, ‘Do we have any feasibility studies of these projects and a cost-benefit analysis?’ Their answers were all evasive,” recalled Mr. Wathra, who has since retired.

Ahsan Iqbal, a cabinet minister and the main architect for CPEC in the previous government, said the project was well thought-through and dismissed Mr. Wathra’s account.

“No one wanted to invest here — the Chinese took a chance,” Mr. Iqbal said in an interview.

But the bill is coming due. Pakistan’s first debt repayments to China are set for next year, starting at about $300 million and gradually increasing to reach about $3.2 billion by 2026, according to officials. And Pakistan is already having trouble paying what it owes to Chinese companies.

Fighter Jets and Satellites

According to the undisclosed proposal drawn up by the Pakistani Air Force and Chinese officials at the start of the year, a special economic zone under CPEC would be created in Pakistan to produce a new generation of fighter jets. For the first time, navigation systems, radar systems and onboard weapons would be built jointly by the countries at factories in Pakistan.

The proposal, confirmed by officials at the Ministry of Planning and Development, would expand China and Pakistan’s current cooperation on the JF-17 fighter jet, which is assembled at Pakistan’s military-run Kamra Aeronautical Complex in Punjab Province. The Chinese-designed jets have given Pakistan an alternative to the American-built F-16 fighters that have become more difficult to obtain as Islamabad’s relationship with Washington frays.

The plans are in the final stages of approval, but the current government is expected to rubber stamp the project, officials in Islamabad say.

For China, Pakistan could become a showcase for other countries seeking to shift their militaries away from American equipment and toward Chinese arms, Western diplomats said. And because China is not averse to selling such advanced weaponry as ballistic missiles — which the United States will not sell to allies like Saudi Arabia — the deal with Pakistan could be a steppingstone to a bigger market for Chinese weapons in the Muslim world.

For years, some of the most important military coordination between China and Pakistan has been going on in space.

Just months before Beijing unveiled the Belt and Road project in 2013, it signed an agreement with Pakistan to build a network of satellite stations inside the South Asian country to establish the Beidou Navigation System as an alternative to the American GPS network.

Beidou quickly became a core component of Belt and Road, with the Chinese government calling the satellite network part of an “information Silk Road” in a 2015 white paper.

Like GPS, Beidou has a civilian function and a military one. If its trial with Pakistan goes well, Beijing could offer Beidou’s military service to other countries, creating a bloc of nations whose military actions would be more difficult for the United States to monitor.

By 2020, all 35 satellites for the system will be launched in collaboration with other Belt and Road countries, completing Beidou.

“Beidou, whatever any users use it for — whether it’s a civilian navigating their way to the grocery store or a government using it to coordinate their rocket launches — those are all things that China can track,” said Ms. Moriuchi, of the research group Recorded Future. “And that’s what is most striking: that this authoritarian government will be a major technology provider for numerous countries in Asia, Africa and Europe.”

For the Pentagon, China’s satellite launches are ominous.

China’s military “continues to strengthen its military space capabilities despite its public stance against the militarization of space,” including developing Beidou and new weaponry, according to a Pentagon report issued to Congress in May.

In October, Pakistan’s information minister, Fawad Chaudhry, said that by 2022, Pakistan would send its own astronaut into space with China’s help.

“We are close to China, and we are getting more close,” he said in a later interview. “It’s time for the West to wake up and recognize our importance.”

Wooing Pakistan’s Military

Though the relationship between China and Pakistan has clearly grown closer, it has not been without tension. CPEC could still be vulnerable to political shifts in Pakistan — as happened this year in Malaysia, which shelved three big projects by Chinese companies.

Campaigning during the parliamentary elections that made him prime minister in July, Imran Khan vowed to review CPEC projects and renegotiate them if he won. In September, after meeting in Saudi Arabia with the crown prince, Mr. Khan said that the kingdom had agreed to invest in CPEC too.

Pakistan’s new commerce minister then proposed pausing all CPEC projects while the government assessed them.

The moves by Pakistan’s new government angered Beijing, which was concerned they could set back Belt and Road globally.

But in Pakistan, China has a steady ally it can approach to smooth things over: the country’s powerful military establishment, which stands to fill its coffers with millions of dollars through CPEC as the military’s construction companies win infrastructure bids.

Shortly after the commerce minister’s comments, the Pakistani Army’s top commander, Gen. Qamar Javed Bajwa, hurried to Beijing for an unannounced visit with President Xi Jinping. The meeting came six weeks before Mr. Khan made his first official visit with the Chinese president, a trip he had listed as a priority.

Statements from the military said General Bajwa and Mr. Xi spoke extensively about Belt and Road projects.

General Bajwa “said that the Belt and Road initiative with CPEC as its flagship is destined to succeed despite all odds, and Pakistan’s army shall ensure security of CPEC at all costs,” read a statement from the Pakistani military.

Shortly after the Beijing meeting, Pakistan’s government rolled back its invitation to Saudi Arabia to join CPEC and all talk of pausing or canceling Chinese projects has stopped.

But China could face another challenge to its investments: a Pakistani financial crisis that has forced Mr. Khan’s government to seek loans from international lenders that require transparency.

Throughout September, international delegations traveled to Islamabad carrying the same message: Reveal the extent of Chinese loans if you want financial assistance.

In a late September meeting with visiting officials from the International Monetary Fund, Pakistan’s government asked for a bailout of up to $12 billion. The fund’s representatives pressed Pakistan to share all existing agreements with the Chinese government and demanded I.M.F. input during any future CPEC negotiations — a previously undisclosed facet of the negotiations, according to communications seen by the Fund and a Pakistani official. The fund also sought assurances that Pakistan would not use a bailout to repay CPEC loans.

But the Chinese Embassy in Islamabad stepped up its engagement as well, demanding that CPEC deals be kept secret and promising to shore up Pakistan’s finances with bilateral loans, Pakistani officials say.

Three months after taking office, Mr. Khan still has not made good on his campaign promises to reveal the nature of the $62 billion investment Beijing has committed to Pakistan, and his government has backtracked on an I.M.F. deal.

In early November, Mr. Khan visited Mr. Xi in Beijing, a trip during which he was expected to clinch bilateral loans and grants to ease Pakistan’s financial crisis.

Instead, his government walked away with vague promises of a deal “in principle,” but refused to disclose any details.

Luz Ding contributed reporting from Beijing.

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Alibaba is the force behind popular Chinese Communist Party app: Sources

BEIJING (REUTERS) – A Chinese government propaganda app that recently became a huge hit was developed by Alibaba, two people at the company told Reuters, at a time when the nation’s tech firms are under global scrutiny over their ties to Beijing.

“Xuexi Qiangguo”, which literally translates as ‘Study to make China strong’ and is a play on the government propaganda theme of applying President Xi Jinping’s thoughts, overtook Tik Tok and WeChat to become the county’s most popular app on Apple’s China app store last week.

It was developed by a largely unknown special projects team at Alibaba known as the “Y Projects Business Unit”, which takes on development projects outside the company, said the people.

New York-listed Alibaba declined to comment on whether the business unit had developed the app.

The app’s development by Alibaba, whose Chairman Jack Ma is a member of the Communist Party, is the latest example of a Chinese tech company collaborating with the government.

The country’s propaganda department has released the app ahead of next month’s National People’s Congress in Beijing, China’s top annual parliamentary gathering.

JOB OPPORTUNITIES

The app, which includes short videos, government news stories and quizzes, was created by an Alibaba team.

A user of Alibaba’s own messaging app DingTalk can use their login credentials to log into Xuexi Qiangguo. Alibaba said the app was built using DingTalk’s software.

Staff at the Alibaba unit are responsible for developing and maintaining the app that includes news, videos, livestream and community comments, according to the sources and a job advertised for Xuexi Qiangguo on Alibaba’s career website.

The unit does not have a website, but is described in job ads on popular Chinese careers site Zhipin.com as a strategic level project that is in a creation stage and offers many job opportunities.

At least part of the app’s runaway popularity can be attributed to directives issued by local governments and universities that require people in China’s expansive party member network to download the app.

The app has been downloaded over 43.7 million times on Apple and Android devices since its launch in January, according to estimates by Beijing-based statistical consulting firm Qimai.

It was not immediately clear whether Alibaba makes money from the app, or who initiated its development.

Last month, Alibaba executive vice-chairman Joe Tsai slammed US treatment of fellow Chinese tech firm Huawei Technologies as “extremely unfair”, and sharply criticised what he called an attempt by the US government to curb China’s rise via the trade war.

Huawei, the world’s biggest network equipment maker, has been largely barred from the United States and some other countries on suspicion that its products could be used as a conduit for spying. Huawei and China have denied the allegations.

EXTENSIVE COLLABORATION

But major Chinese tech companies have cooperated extensively with governments in China on infrastructure, cloud computing and public security as part of the country’s “Internet Plus” policy drive to improve traditional industries.

Collaboration with state media has also increased in recent years, amid tighter censorship laws that require companies to toe the party line.

Tik Tok creator Beijing ByteDance Technology and WeChat creator Tencent are among some who have collaborated with state media outlets using their social media platforms.

“The upside for these firms is that their track record of cooperation can put them in a better position to obtain key licences or opportunities,” said Mark Natkin, managing director at Beijing-based Marbridge Consulting, adding these collaborations were Beijing’s way of maintaining control over private firms.

“The downside is they may get tapped to participate in projects which, on economic or PR considerations alone they might normally eschew, but which may be uncomfortable or unwise to refuse.”

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President Trump receives update on China trade talks

PALM BEACH, Fla. (Reuters) – President Donald Trump received an update on trade talks with China on Saturday at his Florida retreat after discussions in Beijing saw progress ahead of a March 1 deadline for reaching a deal.

Trump, at his Mar-a-Lago club, was briefed in person by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross, White House Chief of Staff Mick Mulvaney and trade expert Peter Navarro, said White House spokeswoman Sarah Sanders. Treasury Secretary Steven Mnuchin, economic adviser Larry Kudlow and other aides joined by phone.

The White House offered no additional detail.

Both the United States and China reported progress in five days of negotiations in Beijing this week but the White House said much work remains to be done to force changes in Chinese trade behavior.

Shortly after the meeting with his trade team, Trump said on Twitter the talks in Beijing were “very productive.”

At a White House press conference on Friday, he said the talks with China were “very complicated” and that he might extend the March 1 deadline and keep tariffs on Chinese goods from rising.

U.S. duties on $200 billion worth of Chinese imports are set to rise from 10 percent to 25 percent if no deal is reached by March 1 to address U.S. demands that China curb forced technology transfers and better enforce intellectual property rights.

China’s vice premier and chief trade negotiator, Liu He, and Lighthizer are to lead the next round of talks this coming week in Washington.

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China surveillance firm tracking millions in Xinjiang, says researcher

BEIJING (REUTERS) – A Chinese surveillance firm is tracking the movements of more than 2.5 million people in the far-western Xinjiang region, according to a data leak flagged by a Dutch internet expert.

An online database containing names, ID card numbers, birth dates and location data was left unprotected for months by Shenzhen-based facial-recognition technology company SenseNets Technology Ltd, according to Mr Victor Gevers, co-founder of non-profit organisation GDI. Foundation, who first noted the vulnerability in a series of social media posts last week.

Exposed data also showed about 6.7 million location data points linked to the people which were gathered within 24 hours, tagged with descriptions such as “mosque”, “hotel,” “internet cafe” and other places where surveillance cameras were likely to be found.

“It was fully open and anyone without authentication had full administrative rights. You could go in the database and create, read, update and delete anything,” said Mr Gevers.

China has faced an outcry from activists, scholars, foreign governments and UN rights experts over what they call mass detentions and strict surveillance of the mostly Muslim Uighur minority and other Muslim groups who call Xinjiang home.

According to its website, SenseNets works with China’s police across several cities. Its Shenzhen-listed parent company NetPosa Technologies Ltd has offices in a majority of Chinese provinces and regions, including Xinjiang.

SenseNets and NetPosa, as well as the Xinjiang regional government, did not immediately respond to requests for comment on Sunday.

The Chinese government has ramped up personal surveillance in Xinjiang over recent years, including the construction of an extensive video surveillance system and smartphone monitoring technology.

Mr Gevers said the foundation directly alerted SenseNets to the vulnerability, in line with GDI.Foundation protocol.

He said SenseNets did not respond, but that it has since taken steps to secure the database.

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China's producer prices slow for seventh straight month, raising deflation fears

BEIJING (Reuters) – China’s factory-gate inflation slowed for a seventh straight month in January to its weakest pace since September 2016, raising concerns the world’s second-biggest economy may see the return of deflation as domestic demand cools.

Consumer inflation, meanwhile, eased in January from December to a 12-month low due to slower gains in food prices, official data showed on Friday, despite the Lunar New Year holiday, which typically pushes up demand for food.

China’s producer price index (PPI) in January rose a meagre 0.1 percent from a year earlier, data from the National Bureau of Statistics (NBS) showed, a sharp slowdown from the previous month’s 0.9 percent increase. Analysts polled by Reuters had expected producer inflation would slow to 0.2 percent.

While tame inflation gives authorities the flexibility to ease monetary policy to shore up economic growth, deflationary risks could further hurt corporate profitability.

On a monthly basis, producer prices have already been falling over the past three months. In December, PPI fell 0.6 percent, moderating from a 1 percent decrease in December.

“It is too early to say China has entered the deflationary environment, but the risks definitely have heightened,” said Raymond Yeung, Chief Economist of Greater China at ANZ, adding that profitability of upstream industries will come under pressure.

Earnings at China’s industrial firms shrank for a second straight month in December, putting pressure on policymakers to support industries hurt by slowing prices and weak factory activity.

Data showed prices for raw materials fell in January for the first time in over two years, swinging from an 0.8 percent rise in December. Price rises in the production sector also turned negative.

Recent factory surveys show weakening domestic orders and shrinking business activity, with both official and private sector reports pointing to growing strains in China’s manufacturing sector, a key source of growth and jobs.

Domestic demand for industrial goods and services has eased in recent months as the government’s multi-year campaign to curb corporate debt and risky lending practices crimps capital spending and corporate investment.

“With factory-gate deflation likely to deepen in the coming months, we expect policymakers to roll out further measures to ease financial pressure on industrial firms, including cuts to benchmark lending rates,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

The CPI rose 1.7 percent in January from a year earlier, slower than the 1.9 percent increase in December, and below expectations of a 1.9 percent gain.

On a month-on-month basis, the CPI rose 0.5 percent.

The food price index in January rose 1.9 percent from a year earlier, down from December’s reading of 2.5 percent, data showed on Friday.

The moderation in food prices breaks the historic pattern of acceletation that typically precedes the week-long Lunar New Year, which came in the first week of February this year.

While the slowdown was due in part to a decline in pork prices as the effects of African Swine Fever on the industry receded, the broader impact on prices pressures remains a concern.

The core consumer price index, which strips out volatile food and energy prices, rose 1.9 percent year-on-year, accelerating from 1.8 percent’s gain in December.

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Drinking coconut juice gives bigger breasts? Controversial Chinese beverage maker probed over false claims

BEIJING (CHINA DAILY/ASIA NEWS NETWORK) – The market watchdog in Haikou, Hainan province, has launched an investigation into Coconut Palm Group, a beverage maker, for allegedly publishing illegal advertisements, Haikou’s Industry and Commerce Administration said in an online statement on Wednesday (Feb 13).

“Market supervision authorities will strictly investigate and deal with illegal advertisements in accordance with the law to maintain a healthy market order and to protect the rights of consumers,” it said.

Coconut Palm, which sells a popular coconut juice nationwide, has been criticised for unsophisticated language and false claims.

Its new packaging, which was updated earlier this year, uses a promotional style featuring women with big breasts.

The advertisements include a woman in a tight, low-cut top holding a can of coconut juice. Adjacent slogans read: “A can a day and you will be white, tender and bosomy” and “Genuine Coconut Palm coconut juice: I drank from small to big”.

The latter slogan, in particular, sparked an online kerfuffle, because it’s not clear if it means small child to big adult or refers to changing breast size.

Coconut Palm has denied any wrongdoing in its advertising. A customer service staff member said the slogan “from small to big” refers to age rather than breast size, Beijing News reported.

A television commercial features several women with big breasts wearing tight tops and frolicking on a beach.

The administration has sent investigators to the company to look into the matter and said it will announce the result as soon as possible. The company has been cooperative and has withdrawn posters from its entrance, Thepaper.cn, a news website, reported.

Many voiced concerns over the advertisements, saying they imply that the drink can help enlarge breasts. They wondered whether the product actually has such an effect.

The company was founded in 1956 and has undergone changes since 1986. It is China’s biggest enterprise producing natural plant protein soft drinks. Coconut juice is the company’s star product and has been branded as a national drink by the company, as it is often served at major banquets.

Some netizens expressed disappointment in the venerable brand.

“I don’t get it why such a good old brand with tasty products is using such a marketing strategy,” a social media user said.

Another wrote: “The drinks are truly tasty. I personally think there’s no better coconut juice in the market than Coconut Palm. But vulgar advertising has been a long-standing problem. Could it be their organisational culture?”

China’s law against unfair competition stipulates that anyone using advertising or other means to make false or misleading claims about goods will face fines of up to 200,000 yuan (S$40,100), and income derived from such publicity will be confiscated.

It is not the first brouhaha over the company’s advertising content. It has used ditties to promote other products such as “Wives who love their husbands drink Coconut Palm’s pomegranate juice” and “A full papaya makes me bosomy”.

Nutritionist Fan Linin told Thepaper.cn that the notion that spreading coconut milk on breasts or drinking coconut milk daily can make breasts fuller was based on one newspaper report rather than scientific research results, which shows a lack of responsibility towards consumers.

Ding Jinkun, a lawyer, said so far there is no evidence that drinking coconut juice daily can increase breast size.

If the company cannot provide sufficient evidence, then it may have violated the law against unfair competition and could face punishment, Ding said.

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President Trump, India, China: Your Friday Briefing

(Want to get this briefing by email? Here’s the sign-up.)

Good morning.

Woes mount for President Trump, India considers new censorship measures and China brings digital propaganda to the people. Here’s the latest:

A difficult day for the Trump administration

Andrew McCabe, the former deputy F.B.I. director, said that the agency was so alarmed by President Trump’s decision to fire the bureau’s director, James Comey, in 2017 that Justice Department officials considered encouraging cabinet members to invoke a constitutional amendment to remove him from office.

Mr. McCabe made the disclosure in an interview for the television program “60 Minutes.”

The news came hours before the Justice Department came under new leadership. The Senate confirmed William Barr as attorney general, despite concerns from Democrats that he might not make public the findings of his department’s ongoing Russia investigation.

Another blow for Mr. Trump: Congress is expected to quickly pass a border security deal that would avert another government shutdown and deprive the president of what might be the last chance to build his wall.

Amazon cancels New York City headquarters

The technology giant announced it wasn’t going to “move forward” with plans to build a sprawling corporate campus in Long Island City, Queens, after stiff opposition from some local lawmakers and unions empowered by the rise of Democratic political strength.

Amazon had forecast that the campus would have created more than 25,000 jobs.

The opposition: A point of contention was the $3 billion package of incentives and subsidies the city and state agreed to — their largest ever, dedicated to one of the world’s richest companies. City officials had also agreed to remake the Queens waterfront to facilitate the campus and give the company’s chief, Jeff Bezos, access to a helicopter pad.

There was also concern over the company’s anti-union practices and the changes its huge presence would bring to Queens. Before Amazon’s announcement, we looked at the resistance.

New Zealand fears Beijing’s scorn

Recent incidents have raised concerns that New Zealand’s ties with China — its largest export market — were fraying over a decision to block the Chinese telecom giant Huawei from supplying technology for New Zealand’s 5G network.

First, an Air New Zealand flight bound for Shanghai was turned around for unclear reasons. And second, a major joint tourism initiative was abruptly canceled.

Bigger picture: New Zealand is one of a growing band of Western nations that have become skeptical of Huawei. How Beijing deals with the country could provide clues for how it may push back elsewhere.

In other China news: Sweden said it was investigating its ambassador to China after she was accused of arranging unauthorized, back-room negotiations between the daughter of a detained Swedish book publisher and two Chinese businessmen who pressured her to keep silent.

India considers sweeping censorship rules

The government has proposed new measures that would give it more power to monitor and suppress information on the internet, drawing comparisons with China’s muscular censorship.

“The proposed changes have an authoritarian bent,” said one activist.

Details: The new rules would allow Indian officials to demand the removal of posts or videos from Facebook, Twitter, Google, TikTok and other platforms that they deem libelous, hateful, deceptive or invasive of privacy.

Internet companies would also have to build new tools that would enable blockling “unlawful information or content,” and would need to weaken privacy protections of messaging services, like WhatsApp, so that authorities can trace messages back to their original senders.

What’s next? Public comment on the proposal has ended so Prime Minister Narendra Modi’s government could implement the measures at any time. The administration has been eager to push this through before national election dates are announced, which would trigger special pre-election measures that limit new policies.

Working independently as well as through trade groups, Microsoft, Facebook and dozens of other tech companies are fighting back against the proposals.

Bigger picture: With these rules, India joins a growing resistance worldwide against the giant internet companies that were allowed to flourish unfettered.

Here’s what else is happening

Kashmir: A vehicle filled with explosives ran into a convoy of paramilitary forces in the Indian-controlled part of Kashmir, killing at least 40 soldiers — perhaps the deadliest attack there in 20 years. The Jaish-e-Muhammed, which the U.S. considers a terrorist organization, quickly claimed responsibility.

Saudi Arabia: Apple and Google are being pressured to remove an app that lets male “guardians” track and restrict the movement of women in the kingdom, accusing the tech companies of enabling gender discrimination.

Philippines: Maria Ressa, the co-founder of Rappler, a news start-up that has been critical of President Rodrigo Duterte, was released on bail a day after she was arrested in a digital libel case.

Brazil: After a mining dam collapsed last month, burying more than a 150 people under mud, our team used geospatial analysis to map out other high risk areas.

Switzerland: A warmer climate is rapidly melting away most of the glaciers in the Alps, and engineers are working on how to adjust their approach to the country’s biggest energy source — water.

Ryan Adams: Seven women and over a dozen associates came forward with accounts of how the prolific singer-songwriter and ex-husband of Mandy Moore dangled career opportunities while pursuing female artists for sex. He has denied the accusations.

Egypt: The country’s Parliament approved a sweeping measure that clears the way for President Abdel Fatteh el-Sisi to stay in power until 2034, further entrenching his authoritarian rule and the military’s dominance.

Airbus: The aircraft maker said it would cease production of the mammoth double-decker A380. Orders for the plane dwindled as air travel shifted focus to smaller jets and regional airports.

JPMorgan Chase: The financial giant became the first major U.S. bank to issue its own cryptocurrency. The JPM Coin, representing a single U.S. dollar, will enter testing in a few months.

China: A new app designed by the government allows users to catch up on the latest state media reports, view a quote of the day from President Xi Jinping and quiz themselves on his policies. It’s Beijing’s latest effort to bring Communist Party propaganda initiatives into the digital age.

Brexit: The increasingly messy divorce between Britain and the E.U. bloc is, according to the Dutch, akin to a furry blue monster.

Smarter Living

Tips for a more fulfilling life.

Recipe of the day: Wait, you don’t need a recipe. Sam Sifton gives you 38 ways to get dinner on the table without one.

The environmental impact of growing flowers commercially is higher than you might think. Here’s how a romantic can stay green.

Considering a trip to one of our “52 Places to Go in 2019”? We’ve collected 52 books to help you explore each spot.

Back Story

Our Back Story on Wednesday on the Fahrenheit and Celsius scales included a fact surprising to us: The temperature scale devised by Anders Celsius in the early 18th century set the boiling point at zero degrees and the freezing point at 100, the opposite of current use.

It was a surprise to some readers as well, who wrote in to ask if we had our facts straight.

Fortunately, we did. Celsius was from Sweden, and wanted to be able to measure frigid temperatures without using negative numbers. That’s because the minus sign could be missed, resulting in errors.

Many attribute the reversal to Carl Linnaeus, known as the father of taxonomy. Also a Swede, in the 1740s, he ordered a thermometer using Celsius’ gradations, but with calibration shifted to move in the same direction as Fahrenheit’s.

Know of any other facts that are so counter to conventional wisdom or understanding that they sound wrong? Email us, with “Odd fact” in the subject line.

Andrea Kannapell, the briefings editor, wrote today’s Back Story.

Your Morning Briefing is published weekday mornings and updated online. Sign up here to get it by email in the Australian, Asian, European or American morning. You can also receive an Evening Briefing on U.S. weeknights.

And our Australia bureau chief offers a weekly letter adding analysis and conversations with readers.

Browse our full range of Times newsletters here.

What would you like to see here? Contact us at [email protected].

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Top U.S. trade envoys to meet China's Xi, no decision on deadline extension

WASHINGTON/BEIJING (Reuters) – The Trump administration’s top two negotiators in trade talks with China will meet on Friday with Chinese President Xi Jinping, but there has been no decision to extend a March 1 U.S. deadline for a deal, White House economic adviser Larry Kudlow said on Thursday.

“The vibe in Beijing is good,” Kudlow told Fox News Channel in an upbeat assessment of the U.S.-China talks that are set to conclude on Friday in Beijing.

The two sides are pushing to de-escalate a tariff war that has dimmed global growth forecasts, roiled financial markets and disrupted manufacturing supply chains.

U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25 percent from 10 percent if the two sides don not reach a deal by March 1, increasing pressure and costs in sectors from consumer electronics to agriculture.

Although U.S. President Donald Trump said earlier this week that an extension of the deadline was possible if a “real deal” was close, Kudlow, director of the National Economic Council, said the White House had made no decision on that.

“I can’t speak to that. No such decision has been made so far,” Kudlow said when asked if there would be a 60-day extension.

The talks, scheduled to run through Friday, follow three days of deputy-level meetings to work out technical details, including a mechanism for enforcing any trade agreement.

China proposed in the talks this week to increase purchases of U.S. semiconductors to $200 billion over six years as part of a deal to ease American tariffs, a person briefed on the talks told Reuters. But the semiconductor proposal, first reported by the Wall Street Journal, was part of a “recycled” package of goods purchase offers that Beijing first presented in the spring of 2018, the source said.

The person also said little progress had been made so far this week on the most difficult issues involving U.S. demands that China make sweeping changes to curb forced technology transfers and industrial subsidies and to enforce intellectual property rights.

Mnuchin and U.S. Trade Representative Robert Lighthizer opened the high-level talks at the Diaoyutai state guest house with Chinese Vice Premier Liu He, the top economic adviser to Chinese President Xi.

Trump told reporters on Wednesday that the negotiations had been progressing “very well.”

A Bloomberg report cited sources as saying Trump was considering pushing back the deadline by 60 days to give negotiators more time after the Chinese side requested a 90-day extension.

A source familiar with the talks told Reuters on Wednesday before the high-level talks began that the Chinese had not raised the idea of a 90-day extension.

Hu Xijin, the editor-in-chief of China’s nationalist Global Times tabloid, also tweeted that speculation on an extension was “inaccurate,” citing a source close to talks.

Chinese Commerce Ministry spokesman Gao Feng told reporters he had no information on the trade talks’ progress.

Trump has said he did not expect to meet with Xi before March 1, but White House spokeswoman Sarah Sanders has raised the possibility of a meeting between the leaders at the president’s retreat at Mar-a-Lago in Florida.

Chinese Foreign Ministry spokeswoman Hua Chunying said she noted Trump had said many times he wished to meet with Xi, and that China was willing to maintain “close contact” with the U.S. side, but said she had no information to share on any visit by the Chinese president.

‘TESTED BY THE TRADE WAR’

The Chinese government has offered few details about the state of negotiations this week.

Chinese January trade data released on Thursday showed imports from the United States fell 41.2 percent from a year earlier to $9.24 billion, the lowest amount in dollar terms since February 2016.

Exports to the United States also declined 2.4 percent to $36.54 billion, the lowest amount since last April.

China’s trade surplus with the United States narrowed to $27.3 billion in January, from $29.87 billion in December.

China’s soybean imports fell 13 percent in January from a year earlier, customs data showed, as a hefty duty on shipments from the United States, its second largest supplier, curbed purchases.

The United States has used tariffs as leverage to demand Beijing make major structural policy changes such as enforcing intellectual property rights.

But China has denied accusations of trade abuses. While Chinese officials have repeatedly pledged to improve market access for foreign investors, few experts expect Beijing to agree to anything that would force fundamental changes to what Washington complains is its state-led approach to trade.

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