Beijing finalizes rules for generative AI

• Offices with a reputation for conducting mostly commercial business like the Hong Kong Economic and Trade Office also hire lobbyists to pursue political objectives in Washington.
• The influence efforts have included lobbying against the 2019 Hong Kong Human Rights and Democracy Act, legislation that punished Chinese officials for eroding the city’s human rights.

Texas Republican Lamar Smith and Michigan Democrat Bart Stupak are some of the dyed-in-the-wool Washington insiders working to advance the Hong Kong government’s interests in the U.S.

• Some of the lobbyists previously spearheaded tough-on-China legislation while in office, but now they are promoting the interests of the Beijing-backed Hong Kong government.

We spoke to Hong Kong Democracy Council’s Mason Wong to get all the details.

Eduardo Jaramillo

The government is trying to stimulate the internet platform economy: The People’s Daily’s front page today highlights a meeting yesterday between premier Lǐ Qiáng 李强 and executives from Meituan, Xiaohongshu, Alibaba Cloud, and several other large tech companies (English summary here).

More from Chinese state media:

• The People’s Daily also highlights a story on military awards that Xí Jìnpíng 习近平 gave to “two outstanding military units and two individuals” (English translation here).
• Xinhua News Agency’s top story today is about the “four full respects” for other countries that Xi says represents Chinese diplomacy, and China’s “cultural gene” for promoting world harmony.

China finalized its official rules to govern generative artificial intelligence (AI), becoming the first country to release such guidelines to regulate the advanced technology such as ChatGPT.

The rules, announced (in Chinese) today by the Cyberspace Administration of China (CAC), will go into effect on August 15. They will require generative AI services to obtain a license in order to operate, and also stipulate that platform providers must carry out a security review.

However, the rules will only apply to generative AI services that are available to the general public in China, rather than services being developed in places like research institutions. Foreign providers of generative AI tools for Chinese residents must also comply with the set of rules, but Chinese-developed ones that serve only overseas users will not be subject to the guidelines.

China’s exports fell by 12.4% in June compared to a year earlier to $285.32 billion, according to data released today by China’s General Administration of Customs (GAC). Imports also fell by 6.8% over the same period, data showed.

The drop in exports marks the second successive decline caused by falling global demand, and the latest sign the country’s economic recovery is struggling. Foreign direct investment in China also fell to $20 billion in the first quarter compared to $100 billion a year earlier, according to an analysis by research firm Rhodium Group per the Wall Street Journal.

Dǒng Yúnhǔ 董云虎, the Party chief and chairman of the Standing Committee of the Shanghai Municipal People’s Congress, has been placed under investigation by the Communist Party’s anti-graft watchdog, the Central Commission for Discipline Inspection (CCDI) announced on Wednesday.

Dong is suspected of “serious violation of law and discipline” — a common euphemism for corruption — according to the brief statement, becoming the highest-ranking official to be probed in nearly a year.

• Turkic Muslim youth cast adrift in Turkey, far from the financial and emotional support of families locked down in China since 2016, are suffering from addiction, homelessness, and low self-esteem. The China Project spoke to older Uyghur exiles dedicated to making positive change.
• American-Chinese food arrives in Beijing. Is the arrival of chop suey, egg foo young, crab rangoon, and sesame orange chicken a cultural boon or abomination?
• James Mann’s book Beijing Jeep tells the story of one of the earliest and most spectacular Sino-U.S. joint ventures: AMC’s 1979 JV to produce Jeeps in Beijing. It all went wrong. The book is the latest to find space on Paul French’s Ultimate China Bookshelf.

Ruth Ingram

It was pragmatic: Honduras is the fourth-poorest country in the Western Hemisphere, and can use investment wherever it can find it.

• Chinese social media points to the benefits Honduran businesses can now reap by accessing the P.R.C.’s gargantuan market. Imports to China increased 229% year-on-year in the past four months alone, and will likely skyrocket in the future.
• Infrastructure is another long-term benefit. Castro’s government aims to set up enough hydroelectric dams in the country’s mountainous and river-filled landscape to generate 600MW of electricity, and is hoping China will help fund an hydroelectric dam on the Patuca River.

The P.R.C., meanwhile, didn’t seek out diplomatic ties just for access to Honduran coffee, bananas, and seafood.

• The new alliance was only ever “about reducing the number of diplomatic relations for Taiwan,” says Alicia Garcia-Herrero, Chief Economist for Asia Pacific at Natixis and Senior Fellow at Bruegel, believing China now prioritizes alliances for geopolitical gains over business opportunities.
• Taiwan now only has 13 countries that recognize it diplomatically. “With this new arrangement, the P.R.C. further erodes Taiwan’s political ties to the Latin American and Caribbean region, which is still a relative diplomatic stronghold for Taipei,” says Margaret Myers, director of the Asia and Latin America Program at the Inter-American Dialogue.

This is the state of China relationship with its new little friend.

Alex Colville

Welcome to the Jing is a photobook project shot by French photographer Laurent Hou (罗鸿 Luó Hóng) between 2013 and 2017. The photobook captures a special moment in the city’s history: after the Olympics and before the citywide demolition of illegal buildings that began in 2017, Hou snapped around 100,000 shots, mostly of quirky people and happenings inside the city center.

Below are links from our NewsBase to other noteworthy reports published in the last 24 hours from and about China.

BUSINESS AND TECHNOLOGY:

Generative AI
China’s slow AI roll-out points to its tech sector’s new regulatory reality / Reuters
“China has joined the global rush to generative artificial intelligence, boasting close to 80 AI models from firms like Baidu and Alibaba and startups attracting almost $14 billion of funding over the last six months.”
China publishes interim rules on generative AI / Reuters
“China issued interim measures on Thursday to manage its booming generative artificial intelligence (AI) industry, saying they would apply only to services offered to the public as regulators seek to support development of the technology.”
China sets out new rules for generative AI, with Beijing emphasizing healthy content and adherence to ‘socialist values’ / SCMP (paywall)
China publishes interim rules on booming generative AI industry / Nikkei Asia (paywall)
China issues final guidelines for managing generative AI services / Caixin (paywall)
China takes friendlier approach to AI in finalized guidelines / Bloomberg (paywall)
Elon Musk says China is ‘on team humanity’, willing to work with U.S. on existential AI threats / SCMP (paywall)
“The tech billionaire said that after conversations with Chinese leaders, he believes the country will be proactive in working on a cooperative international framework for AI.”

Automobile industry
As Chinese cars speed into global markets, tensions will only escalate / FT (paywall)
“China’s emergence as the world’s largest auto exporter caught many people — including the biggest carmakers — by surprise.”

Exports
China trade: tough times for exporters as ‘only the wearer knows where the shoe pinches’ amid tumbling shipments / SCMP (paywall)
“The fall in China’s exports to US$285.32 billion, after they had dropped by 7.5 per cent in May, marked the biggest decline since shipments fell by 17.7 per cent in combined figures for January and February 2020.”
China’s drop in exports signals deepening slowdown in global trade / WSJ (paywall)
“Exports are crumbling in China and across Asia, showing the deepening toll that rising interest rates are taking on global trade and economic growth.”

Stock disconnect
China shuts ‘fake’ foreign investors out of stock connect programs / Nikkei Asia (paywall)
“China’s securities regulator is plugging the loophole to cut off  ‘fake foreign capital’ by banning mainland investors from trading onshore shares via stock connect programs with Hong Kong.”

Regulation platforms
Chinese premier urges transparent regulation of platform firms / Nikkei Asia (paywall)
“Chinese local governments need to make the regulation of platform firms more transparent, predictable and less costly, Premier Lǐ Qiáng 李强 said on Wednesday, in his latest push to address the country’s broader economic issues.”

U.S.-China tech war
U.S. tech can’t quit China and Netflix dives into Asia / FT (paywall)
“An analysis of financial data by Nikkei Asia shows that of the top 100 global companies in China by sales in the most recent fiscal year, 17 were US tech-related companies.”

China’s economic recovery
Why China is flirting with deflation as the west battles rising prices / FT (paywall)
“While central banks in developed countries wrestle with stubbornly high inflation, China has the opposite problem — the world’s second-largest economy is flirting with deflation.”
Xi gets serious about boosting private sector as economy slumps / Bloomberg (paywall)
“Chinese President Xí Jìnpíng 习近平 finally appears to be extending an olive branch to private businesses battered in recent years by regulatory crackdowns and the world’s most restrictive COVID-19 policies.”
Xi Jinping chokes off crucial engine of China’s economy / WSJ (paywall)
“Foreign direct investment in China fell to $20 billion in the first quarter from $100 billion a year earlier, hurting an already struggling economy.”
Price drops beckon for money-conscious Chinese consumers / Sixth Tone
“Prices of meat and vegetables are flatlining in China despite serious disruptions to supply. Consumers are happy, suppliers less so.”

Tech industry
Chinese premier’s meeting with tech executives fuels stock rally / FT (paywall)
“Chinese tech stocks are rallying after top government officials indicated a shift from reining in the companies’ influence to helping them grow and strengthen China’s position on the world stage.”

Semiconductors
How ‘chiplets’ are emerging as a core part of China’s tech strategy / Reuters
“The sale of struggling Silicon Valley startup zGlue’s patents in 2021 was unremarkable except for one detail: The technology it owned, designed to cut the time and cost for making chips, showed up 13 months later in the patent portfolio of Chipuller, a startup in China’s southern tech hub Shenzhen.”

Shenzhen
The rise of Shenzhen, China’s Silicon Valley – from seaside town to fast-moving city with secret pockets of tranquility / SCMP (paywall)
“A little over four decades ago, Shenzhen was a fishing town on China’s south coast. Today, it boasts the highest GDP per capita in China.”

Local debt
China’s Qingdao sets up firm to bail out its local government financing arms / Reuters
“Qingdao city in China’s debt-laden Shandong province has set up a company to bail out its cash-strapped local government financing vehicles, sources said, as regional governments rush to reduce debt risks in a wobbly economy.”

Rare earths
Rare earths prices sink to lowest since 2020 as China ramps up supply / Reuters
“Prices for rare earths sank to their lowest since late 2020 this week as soft demand from green energy companies and the automotive sector combined with rising supply from top producer China, analysts said on Thursday.”

IMAX in China
IMAX proposes $124 million buyout plan for China unit / Caixin (paywall)
“Imax Corp., the Canadian big-screen cinema operator, has proposed a $124 million plan to buy out its Hong Kong-listed subsidiary that oversees its business in China.”

McDonalds
McDonald’s China owners Carlyle, Trustar plan $4 billion exit, Bloomberg reports / Reuters
“Carlyle Group Inc and Trustar Capital are planning to raise $4 billion from wealth funds to buy part of their stakes in McDonald’s Corp operations in Hong Kong and mainland China, Bloomberg News reported.”

Cellphones
Honor CEO aims to topple Apple in China with foldable phone / Caixin (paywall)
“The absence of a foldable phone in Apple Inc.’s portfolio is creating an opening for rivals to overtake the iPhone-maker, according to Honor Device Co. Ltd.’s chief executive officer.”

Wanda Group
Wanda Group sells $307 million shares in cinema unit amid liquidity pressure / Caixin (paywall)
“Dalian Wanda Group Co. is selling an 8.26% stake in its cinema unit to raise nearly 2.2 billion yuan ($307 million) as the conglomerate faces liquidity pressure.”

Foxconn
Why did Foxconn pull out of its India deal? / Foreign Policy (paywall)
“The Apple supplier’s sudden reversal reveals some of the private-sector obstacles to New Delhi’s tech ambitions.”

POLITICS AND FOREIGN AFFAIRS:

The Communist Party, elite politics, and government
Shanghai legislation chief Dong Yunhu purged in China corruption investigation / SCMP (paywall)
“Shanghai’s top legislator is under investigation for corruption, making him the most senior official to be disgraced since the Communist Party wrapped up a major reshuffle in October.”
Top Shanghai lawmaker under graft investigation / Caixin (paywall)

ASEAN
China and ASEAN agree to try to conclude nonaggression pact on sea feud in 3 years / AP
“China and Southeast Asian nations agreed Thursday to try and conclude within three years a long-delayed nonaggression pact aimed at preventing the frequent territorial spats in the busy South China Sea from turning into a major armed conflict.”

Hong Kong
Hong Kong will launch scheme to bring in 12,000 construction workers next week; first batch to arrive in fourth quarter / SCMP (paywall)
“Hong Kong will begin accepting applications next week for a labor scheme to import 12,000 construction workers to ease a manpower crunch, with the first batch expected to arrive in the fourth quarter.”
Hong Kong’s national security law: 3 years on, more than 160 prosecutions, 8 bounties later, what else can the city expect? / SCMP (paywall)
“Most arrests are still linked to 2019 social unrest, so law will be used less frequently after this phase, sources say.”
Fukushima discharge row: Hong Kong environment chief insists on Japanese seafood ban, says city may ease rules if Tokyo proves safety / SCMP (paywall)
“Hong Kong’s environment minister on Thursday insisted on a ‘precautionary move’ by the government to ban seafood from 10 Japanese prefectures over an impending release of waste water from the Fukushima nuclear plant, saying the city would consider easing measures if Tokyo could prove its plan was safe.”

Taiwan Strait
U.S. Navy plane flies through Taiwan Strait, China carries out more drills / Reuters
“Chinese fighter jets monitored a U.S. Navy patrol plane that flew through the sensitive Taiwan Strait on Thursday, as China carried out a third day of military exercises to the south of the island Beijing views as China’s sovereign territory.”

Taiwan #MeToo
Taiwan #MeToo scandals push Tsai to toughen equality laws / Bloomberg (paywall)
“President Tsai Ing-wen’s (蔡英文 Cài Yīngwén) government moved to strengthen Taiwan’s equality laws after a series of sexual harassment scandals rocked the island’s political elite ahead of a critical election.”

U.S.-China competition and tensions
China renews call for U.S. to lift sanctions; ‘open’ to Raimondo visit / Reuters
“China on Thursday renewed its call for the United States to lift ‘unilateral’ sanctions against Chinese enterprises ahead of a possible visit by the U.S. Commerce Secretary Gina Raimondo.”
China’s Wang Yi, US Secretary of State Antony Blinken meet for second time in a month, signaling further thaw / SCMP (paywall)
“Chinese foreign policy chief Wáng Yì 王毅 met U.S. Secretary of State Antony Blinken on Thursday, the second meeting between the top diplomats in less than a month indicating a thaw as both sides seek to manage their deepening rivalry.”
Blinken to meet China’s Wang Yi in Jakarta: U.S. State Department / Nikkei Asia (paywall)
Looming U.S. investment restrictions on China threaten diplomatic outreach / NYT (paywall)
“Any such restrictions are expected to anger Beijing and will be the first test of the new channels of communication that the world’s two largest economies are trying to restore.”
The myth of neutrality / Foreign Affairs (paywall)
“As the U.S.-Chinese rivalry intensifies, other countries increasingly confront the dilemma of siding with either Washington or Beijing. This is not a choice that most countries wish to make.”

Germany
As concerns about China grow, Germany loosens its embrace / WSJ (paywall)
“For decades, selling to China has been a key ingredient in Germany’s recipe for economic success. Now, Berlin wonders if its partner has gotten too close for comfort.”

U.K.
British approach to China risk ‘completely inadequate’, committee says / Reuters
“Britain’s approach to the national security threat posed by China is ‘completely inadequate,’ with too much focus on short-term economics rather than long-term risks, a parliamentary committee said on Thursday.”
U.K. response to Chinese spying ‘completely inadequate’, report finds / FT (paywall)

Singapore
China, Singapore foreign ministers discuss accelerating recovery of travel, business links / Caixin (paywall)
“Singapore and China will continue to accelerate post-pandemic recovery, focusing on areas such as air travel and business.”

Pacific Islands
China’s Pacific Islands envoy to visit Cook Islands amid police plan concern / Reuters
“China’s special envoy to the Pacific Islands will visit Cook Islands, the current chair of the Pacific Island Forum regional bloc, on Thursday for meetings with officials, the Cook Islands government said.”

Russia
China, Russia vow to work together to boost regional ties in talks on ASEAN sidelines / SCMP (paywall)
“China and Russia reaffirmed ties and vowed to work together to strengthen regional cooperation in talks on the sidelines of the ASEAN summit in Jakarta.”

South Africa
South Africa courts Chinese investment ahead of BRICS summit / SCMP (paywall)
“South Africa is seeking more Chinese investments as it struggles with the impact of rolling blackouts and high unemployment.”

SOCIETY AND CULTURE:

Marriage
Plea for marriage rules reform sparks debate on parental consent / Sixth Tone
“Amid a declining marriage rate, netizens argue that China’s regulations infringe upon individuals’ freedom to choose their partners.”

Architecture
China used to be an architect’s dream. Now, it’s becoming a nightmare. / Sixth Tone
“A few years ago, architecture was among China’s most popular and glamorous careers. But as a decades long construction boom fizzles, the profession has been plunged into crisis.”