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China’s Tesla Rival Denies Reports of Mass Layoffs, Inflated Sales Figures
Popular WeChat Account Valued at 2 Billion Yuan Snapped Up By Education Firm
China to Draft Value-Added Tax Law This Year
LATEST
Death Toll Rises to 64 in Explosion at Chemical Plant in Eastern China
Here Are the First Companies Hoping to List on China's High-Tech Board
Police Officer Took 42 Million Yuan in Bribes to Change Drivers’ Traffic Records
Historic Car Maker Enters New-Energy Ride-Hailing Business
Urban Chinese More Inclined to Save Than Spend in Q1: PBOC Data
China’s Tesla Rival Denies Reports of Mass Layoffs, Inflated Sales Figures
Chemical Blast in East China Kills 47, Seriously Injures 90
Tencent Quarterly Profit Sags, to Pay Dividend
Former Tencent AI Chief to Head New Sinovation-Backed Hong Kong Lab
U.S. Trade Delegation to Visit Beijing on March 28-29, China Says
The Fall of a Mysterious Private Villa in a Protected Wilderness Area in China
More Party Discipline Inspections Are Coming, With Focus on Central Government Institutions
China to Draft Value-Added Tax Law This Year
China Construction Bank Names New President
China High-Level Economic Forum to Focus on Opening Up
China Telecom to Invest 9 Billion Yuan in 5G This Year
People’s Daily Head Leaves for High-Level Position at Beijing’s Liaison Office in Hong Kong
Xiaomi Swings to Profit Amid Lackluster Smartphone-Industry
After Food Scandal, New Rule Requires School Officials to Dine With Students
Like the U.S., China Has Its Own College Admissions Problems

By Zhao Jing, Yang Rui, Zhao Runhua and Mo Yelin / Mar 23, 2019 06:27 PM / Society & Culture

The death toll for an explosion at a chemical plant in eastern China's Jiangsu province rose to 64 as of Saturday morning, with 21 in critical condition and 73 seriously injured, state-run broadcaster CCTV broadcaster reported.

Another 28 are still missing as of Saturday morning, the state-run Xinhua News Service reported.

The blast, which created an enormous fireball and registered as a magnitude 2.2 earthquake, occurred at 2:48 p.m. Thursday in the factory located in an industrial park in Yancheng city in Jiangsu province, about 270 kilometers north of Shanghai.

The cause of the blast is still under investigation. But a worker told Caixin that a fire started in a truck carrying natural gas and expanded to tanks storing benzene, which is highly flammable. Benzene is naturally found in crude oil and petroleum products and is commonly used to make plastics and synthetic fibers.

In the aftermath of the blast, all factories in the park have halted production, Caixin has learned. Many of those factories were damaged by the explosion.

Related: Contamination Fears After East China Chemical Blast Kills 47


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By Zhang Yu and Teng Jing Xuan / Mar 22, 2019 07:08 PM / Business & Tech

Photo: VCG

Photo: VCG

China’s new high-tech board has revealed the first listing applications it’s received.

The first batch of nine applications includes high-tech companies like Amlogic, a fabless semiconductor company based in the U.S. and China, Chinese imaging technology firm Raytrontek, and carbon-nanotube maker Cnano Technology.

The other applicants:

- Hejian Technology Corporation, one of China’s largest semiconductor foundry companies

- Guangdong Lyric Robot Intelligent Equipment Co., Ltd., and Jiangsu Beiren Robot System Co., Ltd., which specialize in factory automation technology

- Ronbay Material, a lithium battery material supplier

- Ankon Technologies, a high-tech medical device maker

- Wuhan Keqian Animal Biological Products Co., Ltd, which makes biological products including vaccines and veterinary drugs

Related: New Tech Board Committee Candidates Named

 

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By Huang Yuxin, Wang Mengyao and Zhao Runhua / Mar 22, 2019 06:42 PM / Politics & Law

Photo: VCG

Photo: VCG

A police officer is currently being tried in Hunan province for taking 42 million yuan ($6.27 million) in bribes over seven years in order to change individuals’ driving records.

Officer Xiao, while policing traffic in the province’s capital city of Changsha, worked with agents to find drivers who wished to scrub their records to avoid fines and punishment, charging them for the service.

Xiao also illegally granted violators’ vehicles with “punishment waivers” – which are supposed to be exclusively given to special-purpose vehicles such as police cars and ambulances – in exchange for bribes, a local court trial says.

According to a deal Xiao had with one agent surnamed Zhong, the former could take up to 2,250 yuan per each record-change request.

From 2010 to 2017, Xiao took 1,055 bribes from nine agents including Zhong and illegally acquired a total 42.46 million yuan, including 32.11 million yuan from Zhong alone.

During the trial on March 1, Xiao admitted to all the charges, and burst into tears with regret. No final court-decision has been made so far.

Related: Murder Conviction of Former Police Chief Upheld
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By Zhao Runhua / Mar 22, 2019 06:17 PM / Business & Tech

Photo: VCG

Photo: VCG

Ride-hailing and new-energy vehicles are two emerging industries that are attractive to both car makers and internet giants. And yet they’re also very different – and have incredibly high standards for entry.

Despite this, major companies are now collaborating to merge the two into one.

Chongqing Changan Automobile, one of the country’s oldest car makers, will establish a new joint venture with founding shareholders that include car manufacturers FAW and Dongfeng Motor, and affiliates of tech giants Tencent, Alibaba and Suning, the company announced on Friday, in order to invest in ride-hailing businesses operated with new-energy vehicles.

It's also widely suspected that the new joint venture could form its own new-energy ride-hailing fleet in China.

Chongqing Changan Automobile, FAW, and Dongfeng Motor will each pay 1.6 billion yuan ($238.85 million) in cash to acquire 16.39% of the new company’s total equity respectively. Alibaba's and Tencent's affiliates will pay 2.25 billion yuan along with two financial services companies and a tech company for 23.06% of the total equity, while Suning's affiliate has agreed to pay 1.7 billion yuan for 17.42%. The new company will likely be named Nanjing Lingxing Equity Investment Partnership Enterprise, according to an official announcement.

Major challenges await the new company. The sizable capital injections in the business’s early stages, intended to help attract passengers and boost market share, could add to financial risk, the announcement said. Securing the multiple licenses required for the business will also be difficult.

Related: Tencent, Changan Auto Announce Autonomous-Vehicle Joint Venture


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By Teng Jing Xuan / Mar 22, 2019 05:57 PM / Society & Culture

Photo: VCG

Photo: VCG

China’s urban residents were more inclined to save or invest their money than to spend it in the first quarter of 2019, according to quarterly figures from the central bank released Friday.

Of the 20,000 depositors across 50 Chinese cities surveyed by the People’s Bank of China in the most recent quarter, 25.9% said they were more inclined to spend, down 2.8 percentage points from the previous quarter, while 45% said they were more inclined to save and 29.2% were more inclined to invest, up 0.9 and 1.9 percentage points from the previous quarter respectively.

The survey also asked respondents how they felt about employment.

The bank’s Employment Sentiment Index reading was 45.8% in the first quarter, up 0.3 percentage points from the previous quarter but still under 50%, which indicates that overall sentiment is still negative. Only 16.3% of respondents thought the employment situation was good and that it was easy to find jobs, while 51.9% thought it was average and 31.8% either thought the situation was poor or were unsure.

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By Teng Jing Xuan and Zheng Lichun / Mar 22, 2019 03:49 PM / Business & Tech

Photo: VCG

Photo: VCG

Chinese electric carmaker Nio has denied rumors that it inflated sales figures and is undergoing mass layoffs.

The company had delivered a total of 13,964 of its ES8 model cars as of the end of February, Nio said in a Weibo statement Friday. Employee purchases of the car accounted for only 2% of all the cars sold, Nio said.

The company’s statement comes after reports by people who said they were Nio employees circulated online, saying that Nio had falsified sales data by making internal purchases, and that the company was laying off a large number of employees. Nio said the rumors “lacked factual basis.”

With regard to the layoffs, Nio told Caixin it was “optimizing its personnel structure” based on the company’s strategy, and that it was still continuing to attract “talented people” to join the company.

Nio, which has previously declared its plans to become China’s Tesla, recently reported a net loss of $1.4 billion for 2018, up 92% from the previous year.

Related: Nio Drops Plan for Shanghai Factory After Tesla Beats It to the Punch

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By Ge Mingning, Wei Shumin, Liang Yingfei, Yang Rui, Qi Xiaomei and Zhao Runhua / Mar 22, 2019 12:45 PM / Society & Culture

Flames were still visible at the site of the explosion in Xiangshui county, Jiangsu, 16 hours after the explosion on Thursday. Photo: Caixin

Flames were still visible at the site of the explosion in Xiangshui county, Jiangsu, 16 hours after the explosion on Thursday. Photo: Caixin

An explosion Thursday at a chemical plant in eastern China has killed at least 47 people and seriously injured 90, according to state media.

The blast, which created an enormous fireball and registered as a magnitude 2.2 earthquake, occurred at 2:48 p.m. Thursday in Jiangsu, a province that produces much of China’s agricultural chemicals.

The factory, run by Jiangsu Tianjiayi Chemicals, is located in an industrial park in Xiangshui county, and there are concerns about exposure to the chemical benzene that allegedly caused the explosion.

Benzene is commonly used to make plastics and fibers and is naturally found in crude oil and gasoline. Exposure to benzene is known to cause cancer.

A worker told Caixin that a fire started in a truck carrying natural gas, and expanded to tanks storing benzene. The worker witnessed two blasts, and said the area outside the facility was chaotic with people rushing to escape. The government has not officially announced the cause of the blast.

By 6 a.m. Friday, 16 hours after the accident, there were still visible fires and audible blasts in the area, with black, blue, and yellow smoke rising, witnesses told Caixin.

According to public government records, in January 2018, a local inspection group found 13 safety risks at Jiangsu Tianjiayi Chemicals, including insufficient operating rules for benzene storage. A family member of a worker at the plant told Caixin that the company suspended production in 2018 due to safety concerns but quickly resumed operation by the end of the year.

Rescues are ongoing, and residents and workers in nearby areas have been evacuated. China’s National Health Commission is also sending doctors and mental-health experts to the site.

See more photos here.

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By Zhao Runhua and Qian Tong / Mar 22, 2019 12:58 AM / Business & Tech

Photo: VCG

Photo: VCG

Tencent is turning to the dividend playbook to get investors excited about its sagging shares.

The gaming and social networking giant turned in a solid performance for 2018, with annual revenue up 32% to a cool 312.7 billion yuan ($46.80 billion), and annual operating profit up a less impressive 8% to 97.7 billion yuan, according to its latest financial report. But its profit tumbled more than 30% in the fourth quarter, as Tencent and its gaming peers suffered under a regulatory freeze on new game titles, which was finally lifted in January. 

In a bid to boost sentiment towards its sagging stock, the company proposed a dividend of HK$1 ($0.13) per share, turning to a commonly used corporate tactic to make its stock more attractive. Tencent’s Hong Kong-listed shares shed nearly 30% last year as investors fretted about the gaming approval freeze. They have gained back some of that this year amid a broader rally on China’s domestic stock markets.

Despite all the headwinds, Tencent contends that gaming remains a robust profit engine.

Its 2018 mobile gaming revenue increased 24% to 77.8 billion yuan, amid strict regulation on content production and children’s gaming addiction prevention that were separate from the freeze on new title approvals. PC games posted annual revenue of 50.6 billion yuan, down 8%, as players adopted more mobile options and the new title freeze dampened business.

Advertising, based on Tencent’s powerful WeChat and QQ social networking services, generated annual revenue of 58.1 billion yuan, up 44% year-on-year.

The company says 2019 will be all about infrastructure construction and cutting-edge technology. Internet of things will remain a crucial strategic area, and expanding gaming businesses in overseas markets is also on the agenda.

 

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By Isabelle Li / Mar 21, 2019 05:37 PM / Business & Tech

Sinovation's Beijing office. Photo: VCG

Sinovation's Beijing office. Photo: VCG

Sinovation Ventures, the tech investment firm founded by former Google China head Kai-fu Lee, says it will team up with the Hong Kong University of Science and Technology (HKUST) to build a new AI research lab.

The new Computer Perception and Intelligent Control Lab will be led by former Tencent AI Lab chief Zhang Tong, Sinovation said in its announcement Wednesday. Zhang is currently a faculty member at HKUST, and will also be joining Sinovation as a research partner, the venture capital firm said.

Zhang’s departure as executive director of Tencent’s AI Lab was confirmed by the internet giant in January, after a tenure of less than two years. The Stanford-trained AI scientist was previously a professor at Rutgers University in New Jersey, and had also worked at IBM, Yahoo, and Baidu, before joining Tencent.

Related: Star Researchers’ Departures Marks Shift in China’s AI Sector


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By Zhang Yu and Liu Jiefei / Mar 21, 2019 05:00 PM / World

An American delegation led by Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer will visit Beijing on March 28-29 for trade negotiations, China's Ministry of Commerce announced Thursday.

China’s Vice Premier Liu He will head to Washington in early April for another round of the trade talks, Gao Feng, the ministry’s spokesperson, said at a regular briefing.

U.S. President Donald Trump delayed raising punitive tariffs on $200 billion of Chinese imports, after important progress was made in negotiations late last month in Washington.

However, the two sides are at loggerheads over an enforcement mechanism the U.S. is trying to impose on China to ensure Beijing live up to its promises. Trump has also said he will not remove tariffs on China until the country proves its compliances with any trade agreement.

Read all of Caixin's coverage of the U.S.-China trade war

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By Zhao Runhua and Tanner Brown / Mar 21, 2019 04:22 PM / Politics & Law

Photo: VCG

Photo: VCG

Imagine a private citizen felling trees and damaging environmental structures in Yellowstone National Park, to illegally build a bizarre villa that houses stuffed animals and sculptures. Moreover, this rogue building is closed to visitors.

Well in China, these dreams can come true.

In Heilongjiang province, in China’s northeast, lies the government-protected Zhangguangcai Ling forest zone — an expanse of trees and wildlife.

Yet in the midst of this wild reserve, a complex of ornate, ancient-Chinese-style buildings have been built over the last 14 years, without approval, and with scant information about who or what was behind them, or what their purpose was for.

The staying-power of this unauthorized complex is also a testament to the failure of local officials to resolve the issue.

Three times local officials have ordered “Cao Garden,” as it is called, to be dismantled and for the backers to pay fines. But the buildings still stand, with their artifacts gathering dust.

But the mystery may be coming to an end. On Tuesday, a high-level provincial conference urged the local Mudanjiang city government to set up an investigation team to inspect and “seriously” punish those responsible. Officials said the investigation results and punishment decisions will be released publicly.

Some news has already emerged. CCTV reported yesterday that a private company owned by a man named Cao Bo is behind the complex. Cao acquired the rights to operate a government-owned horse ranch at the location, but with no additional changes.

Cao denied the villa complex is private, and asserted he had always been wanting to giving it back to society as a gift. He said the reason why it remained closed was because of the incomplete construction and government’s punishment notices.

Cao and the case are still under investigation.

View more photos of the villa complex here.

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By Zhao Runhua / Mar 21, 2019 03:49 PM / Politics & Law

Head of the Central Commission for Discipline Inspection, Zhao Leji. Photo: China News Service

Head of the Central Commission for Discipline Inspection, Zhao Leji. Photo: China News Service

China will soon begin another round of Communist Party disciplinary inspections — the third since the party re-elected its leadership in 2017.

The inspections will look into three central government departments and 42 state-owned enterprises (SOEs) under the central government, according to state-run Xinhua News Agency.

Targets include the State-owned Assets Supervision and Administration Commission, the National Energy Administration, and the State Administration of Science, Technology and Industry for National Defense. The SOEs range from telecom and aerospace technology to investment firms.

Zhao Leji, secretary of the Party’s corruption watchdog — the Central Commission for Discipline Inspection — and head of the inspection round, said the SOEs must improve “political awareness” and strengthen related supervision to better implement Beijing’s mandates.

According to People’s Daily, the inspection round will be carried out by 15 inspection work groups. 

Disciplinary inspections have long been a crucial part of the Party’s anti-corruption campaign, looking into suspicious cases and requiring government departments and SOEs to respond to inspection feedback with actions. This very often leads to exposure of corruption cases which could put high-level officials under harsh punishment.

During the first inspection round last year, the National Bureau of Statistics further investigated into 131 fixed income investment projects, and removed three bureau officials from their positions, to respond to the inspection group’s criticism. Eastern China’s Shandong province punished 3,095 Party members for the same inspection round.  

Related: Shaanxi Anti-Corruption Official Under Investigation — for Corruption

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By Cheng Siwei and Liu Jiefei / Mar 20, 2019 07:15 PM / Politics & Law

China will try to complete drafting laws on taxes, including the value-added tax (VAT) and consumption tax, this year, the Ministry of Finance said Wednesday.

VAT is the largest source of government tax revenues, and will be a major part of the nearly 2 trillion yuan ($300 billion) tax and fee cuts this year.

Beijing promised to cut the VAT rate to 13% from 16% for manufacturers, and cut the rate for transportation and construction companies to 9% from 10%, according to the government work report released earlier this month.

Related: Why Value-Added Tax Cuts Are Essential to Helping Businesses

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By Wu Hongyuran, Zhang Yuzhe and Zhao Runhua / Mar 20, 2019 06:00 PM / Finance

Liu Guiping. Photo: VCG

Liu Guiping. Photo: VCG

State-owned China Construction Bank, China's second-largest bank, is getting a new head.

Banking veteran Liu Guiping is replacing 60-year-old Wang Zuji, who has resigned, Caixin learned Wednesday.

Liu will formally take office upon receiving approval from shareholders, board members, and regulators.

Born in 1966, Liu worked for another leading banking institution, Agricultural Bank of China, for 25 years. In 2014, he became a vice general manager at China Investment Corp., China’s sovereign wealth fund. In 2016, Liu moved into politics, serving as a vice mayor of Chongqing, overseeing the southwestern city’s financial industry.

Follow all of China’s high-level personnel changes at our Movers and Shakers section.

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By Cheng Siwei / Mar 20, 2019 05:06 PM / World

Photo: VCG

Photo: VCG

A high-level annual economic forum bringing together China’s top officials and world business leaders is scheduled to start this weekend and will focus on further opening up the country’s economy.

The China Development Forum (CDF) 2019 will last for three days at the Diaoyutai State Guesthouse in Beijing. The gathering is being hosted by the Development Research Centre (DRC), a ministerial-level body of the State Council, the country’s cabinet.

The theme this year is “Greater Opening-up for Win-Win Cooperation.” Observers are closely watching how China will deal with other countries and participate in global governance, at a time when competition between world powers is intensifying, nationalism and protectionism are on the rise, and uncertainties in geopolitics and global economic growth are increasing, Long Guoqiang, a vice minister of the DRC, said at a briefing on Wednesday.

Premier Li Keqiang will meet with some of the event’s foreign attendants and Han Zheng, a vice premier, will give a keynote speech at the opening ceremony. Senior officials at powerful government agencies — including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce and the People’s Bank of China — will speak at some of the sessions and answer questions from the audience. Other high-level officials joining discussions include Hong Kong Chief Executive Carrie Lam.

A total of 96 chairpersons or CEOs of Fortune Global 500 companies have confirmed their attendance, including Apple chief Tim Cook and Stephen Schwarzman, head of American investment firm Blackstone.

Related: Read Caixin's series on The World Bank’s Role in the Transformation of China’s State Sector: Part One, Part Two, Part Three

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By Liu Yanfei, Tang Ziyi and Han Wei / Mar 20, 2019 04:17 PM / Business & Tech

China Telecom executives releasing the company's annual earnings report at a press conference in Hong Kong on Tuesday. Photo: VCG

China Telecom executives releasing the company's annual earnings report at a press conference in Hong Kong on Tuesday. Photo: VCG

China Telecom, one of the country's three major carriers, said it will invest 9 billion yuan ($1.3 billion) in the development of 5G this year, as China competes to lead in the next-generation technology.

Company President and Chief Operating Officer Ke Ruiwen announced the plan on Tuesday at a press conference in Hong Kong while releasing the company's annual report in 2018 and outlook for this year.

The 9 billion yuan is a fraction of the expected spending to update the fifth generation of mobile telecom services in China — which will cost carriers an estimated 1.2 trillion yuan, or 1.5 times their investment in the 4G network, said Wei Leping, a telecom expert at the Ministry of Industry and Information Technology.

The announcement comes just days after state-owned China Unicom said it would invest up to 8 billion yuan in 5G this year. 

China Telecom’s net profit hit 21.21 billion yuan in 2018, up 13.9% from the previous year, fueled by increasing subscribers of its telecom and cloud services. Revenue rose 3% to 377 billion yuan.

Related: Former China Mobile Chairman: Eight Things to Know About 5G

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By Lin Yunshi and Zhao Runhua / Mar 20, 2019 04:01 PM / Politics & Law

Lu Xinning (left). Photo: VCG

Lu Xinning (left). Photo: VCG

The former deputy editor-in-chief at state-run People’s Daily, Lu Xinning, has been appointed deputy director at the Liaison Office of the Central People’s Government in the Hong Kong Special Administrative Region — the communication channel between Beijing and Hong Kong, according to a Tuesday announcement.

The Office is widely seen as Beijing’s formal representation in Hong Kong.

Lu, 52, graduated from the country's prestigious Peking University with a degree in Chinese Language and Literature, then worked for People’s Daily for almost 28 years until the new appointment.

In 2009, Lu became the first woman to head the People’s Daily’s commentaries department. She was promoted to deputy editor-in-chief in 2014.

During her years at the outlet, Lu was a major contributor to commentary articles bylined “Ren Zhongping (任仲平)”, an internal writers’ group well-known for opinions on social issues and policy.

Lu also led interpretations of Xi Jinping’s quotes for “Xi Jinping Yongdian (习近平用典)”, a collection of the president’s sayings and ideas adopted from ancient Chinese classics.

Follow all of China’s high-level personnel changes at our Movers and Shakers section.

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By Hou Qijiang and Tang Ziyi / Mar 20, 2019 02:44 PM / Business & Tech

Photo: VCG

Photo: VCG

Xiaomi, the world's fourth-largest smartphone-maker, turned a loss of 43.9 billion yuan ($6.5 billion) in 2017 to a net profit of 13.5 billion yuan last year, according to the earnings report released on Tuesday.

The tech company’s 2018 revenue reached 174.9 billion yuan, up 52.6% year-on-year.

The bulk of that — 113.8 billion yuan, or 64%, came from smartphones, up 41% from the previous year.

This is an especially strong performance, as China’s overall smartphone industry saw weakening sales last year.

Total smartphone shipments in the country dropped 16% to 390 million units in 2018, according to the China Academy of Information and Communications Technology.

Xiaomi, which has long touted its products as offering value for money with a low-price strategy, spun off its lower-end brand Redmi in January, as a strategy to develop multiple specialized brands and target higher-end markets.

That strategy shift did hit Xiaomi a bit in the fourth quarter of last year, when its smartphone shipments slid 12.3% to 25 million, as the company prepared to launch the Redmi brand and new Xiaomi models.

On the earnings call, Xiaomi founder Lei Jun said the company plans to launch four to five new smartphone models in the second quarter this year to “improve” its products lines.

Related: Xiaomi ‘Matures’ With More Centralized Corporate Structure

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By Zhao Runhua / Mar 20, 2019 02:30 PM / Politics & Law

Photo: VCG

Photo: VCG

It’s still not clear if the recent school scandal involving spoiled cafeteria food was real or exaggerated, but either way, changes are afoot.

A new set of rules will require pre-higher education schools, including kindergartens, to set up a “companion mechanism” in which school leaders must dine with students and keep records of the meals. The rules also allow parents to dine with their children and offer feedback to schools.

China issued a 64-article rule last month — before the scandal — putting responsibility on the head of an education institution for food quality, including from outsourcing suppliers. It’s unclear if the dine-with-student rule was in place before the scandal, as the new guidelines were only publicly released yesterday.

In that scandal, a private school in Chengdu last week was found to be providing food that failed to meet safety standards. Photos of spoiled food circulated online and parents were infuriated. Hundreds of students from the school were sent to local hospitals for check-ups, and three were hospitalized. The school’s principal was even fired.

But days later, authorities alleged that the photos were faked, after their investigation found that only one out the 18 samples collected from the Chengdu No. 7 Experimental High School’s canteen did not meet safety standards.

Related: Authorities Allege School Food-Safety ‘Scandal’ Based on Fake Photos

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By Tian Jiawei and Zhao Runhua / Mar 20, 2019 12:44 PM / Society & Culture

Photo: VCG

Photo: VCG

The university admissions scandal in the U.S., which involved influential public figures bribing and cheating their children’s way into elite institutions, has been widely discussed in China. Caixin’s Chinese-language story about the scandal was one of our most-read articles.

The popularity isn’t hard to explain. China, home of Confucius, places foremost importance on education. But it has been struggling with corruption and lack of equal access to education for decades. A recent scandal involving celebrity Zhai Tianlin — who managed to get into prestigious schools but allegedly obtained fraudulent academic qualifications  re-sparked the debate here about privilege and higher education in China.

In the U.S., students normally apply to universities based on their scores on standardized tests, which, granted, they may take several times. But a number of other factors are included, such as extracurricular activities and awards.

Meanwhile, Chinese have their singularly important annual college entrance examination, also known as “Gaokao” — which in most cases solely decides a student’s fate, no matter what other supplementary activities they’ve done.

While China also has its admission bribery and privilege-related access problem, its situation is worsened as well-off parents pour money into exam training classes, including private tutors, to help their children ace the Gaokao. And as China’s wealth gap widens, the divide between who can and cannot afford this preparation is also widening.

Though China must address corruption in its admission system and provide more equitable access to Gaokao prep, one opinion writer, Qi Kezhan, stressed keeping the exam but introducing more flexible and diverse admission criteria.

Related: Record Numbers Take Grad-School Exam Amid Shaky Job Prospects

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