Huawei isn't going away
People's Daily interview with Ren Zhengfei, EVs, the boring Trump-China trade war, no tariffs for Africa, global income tax crackdown, corrupt judge.
This is The China Week newsletter, a succinct summary and analysis of news from China. It’s a little late this week as I’ve been traveling and needed time to digest what I think is the most important news from China of the week: an interview with Huawei CEO Ren Zhengfei in the Communist Party’s newspaper, the People’s Daily.
Next week’s newsletter will be sent midweek as per usual.
—Jeremy Goldkorn
Ren Zhengfei interview in the People’s Daily
Huawei CEO calls for openness and basic research
On June 10, the house newspaper of the Chinese Communist Party, the People’s Daily, printed a prominent front page feature that seemed designed to send a message: a Q&A with the founder and CEO of telecom giant Huawei, Ren Zhengfei 任正非.
“This is really remarkable,” writes Manoj Kewalramani in Tracking People’s Daily: “CEOs, particularly tech CEOs, do get quoted in reports on the front page and in the paper. But you don’t get such top billing. It just goes to show the significance of Huawei as an entity for the Party-state.”
Perhaps the most notable thing is the headline: “The more open the country is, the more progress we will make—Dialogue with Ren Zhengfei.” That’s a rather unusual and welcome signal after more than a decade of China tightening control and closing gates and doors. (Even if it does not mean there will be substantial policy changes! Rhetoric can give you hope.)
Aside from the headline, below are the sections I think are most interesting, in translations from Tracking People’s Daily, with annotations by me:
Q: There has been a “warning” about the use of Ascend chips [i.e. the U.S. Department of Commerce has said it may place restrictions on U.S. use of products that use Huawei advanced Ascend computer chips]. Has this had any impact on Huawei?
A: …Huawei is not that formidable…Our single chips are still one generation behind the United States. We use mathematics to compensate for physics, non-Moore to compensate for Moore, and cluster computing to compensate for single chips; in terms of results, we can then reach practical outcomes.
First there is some modesty, but then comes the real message: The U.S. can restrict hardware sales to China, but Huawei and other Chinese companies will find ways to compensate for backward chips.
Q: What do you think of basic theoretical research?
A: When our country has a certain economic strength, it should emphasize theoretical research, especially basic theoretical research [i.e. scientific research that does not have immediate commercial applications]. Basic research takes not just 5-10 years, generally it takes 10 years, 20 years or even longer. If we don’t do basic research, there are no roots. Even if the leaves are luxuriant and thriving, they will fall when the wind blows. Buying foreign products is very expensive, because the price includes their investment in basic research. So, whether China does basic research or not, we still have to pay money. The question is can we pay it to our own people doing basic research?
This is a sad contrast to current establishment attitudes in the U.S., where Elon Musk and Donald Trump have just cut billions of dollars in funding from basic research. The effects are already showing; see for example this South China Morning Post story, subtitled “Top Chinese researcher is the latest academic to leave after U.S. President Donald Trump’s university funding cuts.”
The state of China’s electric car industry
Chinese EVs in France; too many in China?
“AESC, the battery subsidiary of Shanghai-based green tech company Envision Group, has started production at its plant in Douai, France,” reports Caixin. French President Emmanuel Macron attended the inauguration and said: “We are turning a new page in the history of French industry”
But not all is well in China’s EV industry: Last month, Wei Jianjun 魏建军, chairman of Great Wall Motors and veteran auto industry warned that China’s EV industry is dangerously unprofitable. Volt Rush has details.
My view: From portal websites in the 1990s, to YouTube clones in 2006, to bike-share services ten years later, new industries in China are often over-invested, and then most of the players fail, leaving a few winners who create profitable businesses.
London meetings and Xi-Trump calls
U.S.-China trade war: the state of play
On the evening of June 5, Xi Jinping held a phone call with U.S. President Donald Trump at Trump's request. Then on June 9, a U.S. delegation including Commerce Secretary Howard Lutnick met Chinese Vice Premier He Lifeng 何立峰 in London for two days of talks. This is how Politico characterized the results:
For the second time in two months, President Donald Trump…touted a “deal” with China. There’s one problem: It’s largely the same deal the two countries agreed to last month.
And the initial readouts of the handshake agreement underscore just how far the Trump administration is from achieving its larger goals in the trade negotiations with Beijing.
My view: Trump may be so annoyed by the June 14 No Kings protests or something else that he decides to change the terms of the “deal” on a whim, and Beijing likely understands that. So the status quo is still uncertainty.
No tariffs on goods from 53 African countries
Free trade with Africa
On June 11, Xi Jinping announced that “China is ready to negotiate and sign the agreement…to implement the zero-tariff treatment for 100% tariff lines for 53 African countries which have diplomatic relations with China…adding that China will provide more convenience for the least developed countries in Africa to export to China.”
China to tax middle class diaspora?
Global income tax crackdown coming?
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