China Reform Monitor: No. 1343

August 6:

Hundreds of police patrolled the streets of Beijing's financial district to prevent a planned protest to demand government action against financial losses sustained in risky peer-to-peer (P2P) lending platforms. Enraged petitioners came from around the country to urge Beijing to redress their grievances, the Straits Times reports. More than 120 buses lined the roads from the China Banking Regulatory Commission, where the protest was to take place, to the Diaoyutai state guesthouse 3km away. Security forces rounded up scores of petitioners and drove them away in the buses to detention centers on the city’s outskirts. China's $195 billion P2P industry is the world's largest, but is highly risky and unregulated. The number of failed P2P firms has soared from 93 in 2013 to 4334 this June. In July, 164 firms were marked as "problematic platforms" from which investors could no longer withdraw funds, the China Digital Times reports.

In an op-ed in the Asia Times, Prakash Katoch, a retired lieutenant general in India’s Army Special Forces, said Sri Lanka’s Hambantota Port will become a major Chinese military instillation and that statements from Beijing and Colombo that the facility is for purely economic purposes are misleading. "These are standard Chinese checkers;" he writes, "China said Gwadar in Pakistan was only being developed for commercial purposes, yet Chinese marines are already deployed in Gwadar and Chinese naval ships are being stationed there along with Pakistani vessels." PLA Navy nuclear submarines have been docking in Colombo since the 2000s, but rather than putting in at Sri Lanka Port Authority berths, which is mandated for military vessels, they docked at Colombo South Container Terminal (CSCT), "a ‘Chinese enclave’ within a Sri Lankan-administered harbor," Katoch wrote. CSCT is "a deep-water facility built, controlled and run by China – in clear violation of the China-Sri Lanka protocol. The Chinese-Sri Lankan military base in Hambantota must be viewed in conjunction with other China bases in the Indian Ocean Region. Gwadar and Djibouti are already operationalized."

August 19:

Apple has removed about 4500 gambling apps from its China app store after it was criticized by the official CCTV, the Financial Times reports. "Apple established the rules for allowing apps onto its store, but it did not itself respect them, resulting in a proliferation of fake lottery apps and gambling apps," CCTV had reported. "Gambling apps are illegal and not allowed on the App Store in China. We have already removed many apps and developers for trying to distribute illegal gambling apps on our App Store, and we are vigilant in our efforts to find these and stop them from being on the App Store," Apple said in response. In July, CCTV aired a segment in which it alleged illegal apps downloaded from Apple app store had defrauded users.

August 20:

The Communist Party of China is celebrating the 40th anniversary of the Reform and Opening Up policy initiated by Deng Xiaoping in 1978-79, by glorifying the contributions of Xi Jinping and his father Xi Zhongxun, the Wall Street Journal reports. The publicity drive began in June. At the reform-anniversary exhibition at the national art museum in Beijing paintings of Xi and his late father —who helped steer reforms as a Guangdong provincial chief from 1978-80—overshadowed depictions of Deng. In June, the Shenzhen museum was closed for "upgrading," and when it reopened in August a Deng sculpture at the entrance had been replaced with a Xi quote and photographs and text portraying the elder Xi’s contributions now appear alongside Deng-related displays. "Comrade Xi Jinping has raised the banner of reform. A new era of ideological liberation is sweeping through China," reads the new introductory text and sixteen large photographs of Xi dominate the now-expanded section on Reform and Opening Up.

August 22:

During his five-day visit to China, Malaysia’s Prime Minister, Mahathir Mohammad, pushed renegotiation talks on China’s Belt and Road projects, the South China Morning Post reports. Citing "lopsided" terms and high costs, Mahathir "deferred" the $20 billion East Coast Rail Link and two pipelines worth over $2 billion. "The projects will not go on. At the moment, the priority is reducing our debt...it will be deferred until such time when we can afford, then maybe we will reduce the cost. If we have to pay compensation, we have to pay. This is the stupidity of the negotiations before. We must find a way to exit these projects...this is our own people’s stupidity," he said.

Mahathir alleges that large loans the Dato Seri Najib administration took from China’s Export-Import Bank for the projects had been drawn down by Chinese companies although the projects remain unfinished. "What kind of stupidity is this? We agree to pay on time without any condition that work must be done," Mahathir charged. In response, China’s foreign ministry spokesman said that the two countries "should approach these problems through friendly negotiations with the purpose of maintaining friendly ties and adopting a long-term view."