The China Curse

China’s Appetite Pushes Fisheries to the Brink
By ANDREW JACOBS

Vendors and wives of fishermen waiting for boats to return to Joal, Senegal.

JOAL, Senegal — Once upon a time, the seas teemed with mackerel, squid and sardines, and life was good. 

But now, on opposite sides of the globe, sun-creased fishermen lament as they reel in their nearly empty nets.
“Your net would be so full of fish, you could barely heave it onto the boat,” said Mamadou So, 52, a fisherman in Senegal, gesturing to the meager assortment of tiny fish flapping in his wooden canoe.
A world away in eastern China, Zhu Delong, 75, also shook his head as his net dredged up a disappointing array of pinkie-size shrimp and fledgling yellow croakers. 

“When I was a kid, you could cast a line out your back door and hook huge yellow croakers,” he said. “Now the sea is empty.”
Overfishing is depleting oceans across the globe, with 90 percent of the world’s fisheries fully exploited or facing collapse, according to the United Nations Food and Agriculture Organization. From Russian king crab fishermen in the west Bering Sea to Mexican ships that poach red snapper off the coast of Florida, unsustainable fishing practices threaten the well-being of millions of people in the developing world who depend on the sea for income and food, experts say.

Senegalese fishermen with their meager catch. 

But China, with its enormous population, growing wealth to buy seafood and the world’s largest fleet of deep-sea fishing vessels, is having an outsize impact on the globe’s oceans.
Having depleted the seas close to home, Chinese fishermen are sailing farther to exploit the waters of other countries, their journeys often subsidized by a government more concerned with domestic unemployment and food security than the health of the world’s oceans and the countries that depend on them.
Increasingly, China’s growing armada of distant-water fishing vessels is heading to the waters of West Africa, drawn by corruption and weak enforcement by local governments. 

West Africa, experts say, now provides the vast majority of the fish caught by China’s distant-water fleet. 

And by some estimates, as many as two-thirds of those boats engage in fishing that contravenes international or national laws.
China’s distant-water fishing fleet has grown to nearly 2,600 vessels (the United States has fewer than one-tenth as many), with 400 boats coming into service between 2014 and 2016 alone. 

Most of the Chinese ships are so large that they scoop up as many fish in one week as Senegalese boats catch in a year, costing West African economies $2 billion a year, according to a new study published by the journal Frontiers in Marine Science.

Part of China’s enormous fishing fleet at the harbor in Zhejiang, China.

Many of the Chinese boat owners rely on government money to build vessels and fuel their journeys to Senegal, a monthlong trip from crowded ports in China. 

Over all, government subsidies to the fishing industry reached nearly $22 billion between 2011 and 2015, nearly triple the amount spent during the previous four years, according to Zhang Hongzhou, a research fellow at Nanyang Technological University in Singapore.
That figure, he said, does not include the tens of millions in subsidies and tax breaks that coastal Chinese cities and provinces provide to support local fishing companies.
According to one study by Greenpeace, subsidies for some Chinese fishing companies amount to a significant portion of their income. 

For one large state-owned company, CNFC Overseas Fisheries, the $12 million diesel subsidy it received last year made the difference between profit and loss, according to a corporate filing.
“Chinese fleets are all over the world now, and without these subsidies, the industry just wouldn’t be sustainable,” said Li Shuo, a global policy adviser at Greenpeace East Asia. 

“For Senegal and other countries of West Africa, the impact has been devastating.”
In Senegal, an impoverished nation of 14 million, fishing stocks are plummeting. 

Local fishermen working out of hand-hewn canoes compete with megatrawlers whose mile-long nets sweep up virtually every living thing. 

Most of the fish they catch is sent abroad, with a lot ending up as fishmeal fodder for chicken and pigs in the United States and Europe.
The sea’s diminishing returns mean plummeting incomes for fishermen and higher food prices for Senegalese citizens, most of whom depend on fish as their primary source of protein.
“We are facing an unprecedented crisis,” said Alassane Samba, a former director of Senegal’s oceanic research institute. 

“If things keep going the way they are, people will have to eat jellyfish to survive.”
When it comes to global fishing operations, China is the indisputable king of the sea. 

It is the world’s biggest seafood exporter, and its population accounts for more than a third of all fish consumption worldwide, a figure growing by 6 percent a year.

Buyers and sellers at Zhoushan fish market. China has depleted the seas close to home.

The nation’s fishing industry employs more than 14 million people, up from five million in 1979, with 30 million others relying on fish for their livelihood.
“The truth is, traditional fishing grounds in Chinese waters exist in name only,” said Mr. Zhang of Nanyang University. 

“For China’s leaders, ensuring a steady supply of aquatic products is not just about good economics but social stability and political legitimacy.”
But as they press toward other countries, Chinese fishermen have become entangled in a growing number of maritime disputes.
Indonesia has impounded scores of Chinese boats caught poaching in its waters, and in March last year, the Argentine authorities sank a Chinese vessel that tried to ram a coast guard boat. 

Violent clashes between Chinese fishermen and the South Korean authorities have left a half-dozen people dead.
For Beijing, the nation’s fleet of fishing vessels has helped assert its territorial ambitions in the South China Sea. 

In Hainan Province, the government encourages boat owners to fish in and around the Spratlys, the archipelago claimed by the Philippines, and the Paracel Islands, which Vietnam considers its own.

A Filipino fishing boat that had been chased away from Scarborough Shoal in the South China Sea by a Chinese Coast Guard vessel last year. 

This maritime militia receives subsidized fuel, ice and navigational devices. 

Backed by the firepower of Chinese naval frigates, they have driven away thousands of Filipino fishermen who depended on the rich waters around the Spratly Islands.
Across the Philippine province of Palawan, the impact is reflected in the rows of idled outriggers and the clouds of smoke drifting across freshly denuded hillsides.
Unable to live off the sea, desperate fishermen have been burning protected coastal jungle to make way for rice fields. 

But heavy rain often washes away the topsoil, environmentalists say, rendering the steep land useless.
“Young boys spend their lives preparing to become fishermen,” said Eddie Agamos Brock, who runs Tao, an ecotourism initiative. 

“Now they have no way to make a living from the sea.”

Fishermen in an outrigger in front of a fire for slash-and-burn agriculture on Darocotan Island in the Philippines. 

For Senegal, which stretches along the Atlantic for more than 300 miles, the ocean is the economic lifeblood and a part of the national identity. 

Seafood is the main export, and fishing-related industries employ nearly 20 percent of the work force, according to the World Bank.
Ceebu jen, a hearty fish stew, is the national dish, and sawfish — once plentiful but now rare — grace bank notes. 

No Senegalese postcard is complete without an image of pirogues, the exuberantly painted boats fishermen use.
Despite declining fish stocks, unrelenting drought linked to climate change has driven millions of rural Senegalese to the coast, increasing the nation’s dependence on the sea.
With two-thirds of the population under 18, the strain has helped fuel the surge of young Senegalese trying to reach Europe.
“Foreigners complain about Africa migrants coming to their countries, but they have no problem coming to our waters and stealing all our fish,” said Moustapha Balde, 22, whose teenage cousin drowned after his boat sank in the Mediterranean.
The migration to the coast has transformed this seaside city, Joal, from a palm-shaded fishing village into a town of 55,000. 

Abdou Karim Sall, 50, president of the local fishermen’s association, said there were now 4,900 pirogues in Joal, up from a few dozen when he was a teenager.
“We always thought that sea life was boundless,” he said while patrolling the coastline. 

Now, he added, “we are facing a catastrophe.”

Fishermen pulling in nets off the coast of Joal, Senegal. 

Mr. Sall became a local hero after he single-handedly detained the captains of two Chinese boats that were fishing illegally. 

These days, residents curse him under their breath because he has expanded his campaign against overfishing to include Senegalese boats that flout fishing rules designed to help stocks rebound.
“I understand why they hate me,” he said. 

“They are just trying to survive from day to day.”
Still, most of his ire is directed at the capacious foreign-owned trawlers. 

These days, more than 100 large boats work Senegalese waters, a mix of European, Asian and locally flagged vessels, according to government figures. 

That number doesn’t include boats that fly Senegalese flags but are owned by Chinese companies.
Also uncounted are the ships that fish illegally, often at night or on the fringes of Senegal’s 200-mile-wide exclusive economic zone — well out of reach of the country’s small navy.
Dyhia Belhabib, a fisheries expert trying to quantify illegal fishing along the African coast, said Chinese boats were among the worst offenders; in West Africa, they report just 8 percent of their catch, compared with 29 percent for European-flagged vessels, she said.
According to her estimates, Chinese boats steal 40,000 tons of fish a year from Senegalese waters, an amount worth roughly $28 million.
Her figures do not include boats engaged in illegal fishing that were never caught — nearly two-thirds of all Chinese vessels, she said. 

“When darkness falls, the dynamics of illegal fishing change dramatically and it becomes a free-for-all.”
The problem is magnified across the western Atlantic. 

Some countries, like Guinea-Bissau and Sierra Leone, have just a handful of boats to police their national waters.

Men making new fishing nets on the streets of Joal. 

In Senegal, recent legislation has drastically increased fines for illegal fishing to $1 million, and officials pointed to the two impounded foreign-owned boats in Dakar, the nation’s capital, as proof that their efforts are bearing fruit.
Glancing out at the sea, Capt. Mamadou Ndiaye described the challenges he faces as the director of enforcement for Senegal’s Ministry of Fisheries and Maritime Economy. 

Many scofflaws, he noted, fish on the edge of Senegal’s territorial waters and can easily escape when threatened.
His agency cannot afford speedboats or satellite imagery; it could also use a functioning airplane. “Still, we have more than many other countries, and we have to help them, too,” he said.
Most of the small pelagic fish that swim in Senegalese waters — and make up 85 percent of the nation’s protein consumption — migrate in enormous schools between Morocco and Sierra Leone. Along the way, they are scooped up by hundreds of industrial trawlers, at least half of them Chinese-owned.
In 2012, Senegal stopped granting licenses to foreign trawlers for these small fish, but neighboring countries have refused to follow suit. 

Mauritania, where most of the fleet is Chinese-Mauritanian joint ventures, is home to 20 fishmeal factories that grind sea life into exported animal feed, with another 20 planned, according to Greenpeace.
Protecting the seas means saying no to China, whose largess is funding infrastructure across Africa.
“It’s hard to say no to China when they are building your roads,” said Dr. Samba, the former head of Senegal’s oceanic research institute.
Then there is the lack of transparency that keeps national fishing agreements with China secret.
“There is corruption in opacity,” said Rashid Sumaila, director of the Fisheries Economics Research Unit at the University of British Columbia Fisheries Center.

“The Chinese pay bribes to get access and that money doesn’t trickle down, so the population is hit by a double whammy.”
Beijing has become sensitive to accusations that its huge fishing fleet is helping push fish stocks to the brink of collapse.
The government says it is aggressively reducing fuel subsidies — by 2019 they will have been cut by 60 percent, according to a fishery official — and pending legislation would require all distant-water vessels manufactured in China to register with the government, enabling better monitoring.
“The era of fishing any way you want, wherever you want, has passed,” Liu Xinzhong, deputy general director of the Bureau of Fisheries in Beijing, said. 

“We now need to fish by the rules.”

Women selling fish at the street market in Joal.

Here in Joal, the dwindling catches have prompted the closing of three of the town’s ice factories, with the fourth barely holding on. 

On the town’s main quay, where women wade into the surf to meet arriving pirogues, the competition for fish has become intense.
“We used to have big grouper and tuna, but now we are fighting over a few sardinella,” said one buyer, Sénte Camara, 68. 

On a good day, she makes $20; on a bad day, she loses money. 

“The future is dark,” she said.
To catch anything, fishermen have to venture out farther, putting their lives at risk if an engine stalls or a late summer storm barrels through.

Sometimes the danger is a super trawler whose wake can easily swamp a pirogue.
At Joal’s vast outdoor smoking center, the lack of fish was apparent in the empty racks normally stacked with yellow-tailed sardinella and millet stalks smoldering below.
Daba Mbaye, 49, one of the few people working, said the smokers could no longer compete with the fishmeal factories.
“They leave us with nothing, and we are powerless to stop them,” Ms. Mbaye said. 

“Now we are forced to catch juvenile fish, which is like going into a house and killing all the children. If you do that, the family will eventually disappear.”

Five hundred women in Joal work full time salting, grilling and drying mackerel, anchovy and sardinella.

EU Business Chiefs Attack China Industrial Policy

European Union Chamber of Commerce in China warns foreigners of dangers dealing with protectionist economy.
By Josh Lowe

A report by EU business leaders based in Beijing, released Tuesday, warns of the dangers of trading with China, which it describes as remaining highly protectionist.
The report, published by the European Union Chamber of Commerce in China, criticises China’s industrial policy, referred to as China Manufacturing 2025.
“It seems that the Chinese Government is determined to maintain a prominent role in guiding the economy,” the report states, adding that policy measures it is using to do so are “highly problematic.”
In a warning to foreign businesses, which it says should be treated equally under Chinese law, the report says that “Chinese policies will further skew the competitive landscape in favour of domestic companies.”
The report found that Chinese government contracts are “largely closed to foreign suppliers,” while deals that force foreigners to give up advanced technology are an “increasing requirement” for access to Chinese markets.
Substantial local and central government subsidies are available for favored companies in priority industries, the report says.
Commitments made by Xi Jinping in Davos in January to treat foreign companies more equally and boost foreign investment were welcome, the report said. 

But, it warned: “In the interests of mutual benefit, and to ensure that China reaches its full technological potential, the European Chamber hopes that China follows through on these commitments.”

U.S. Won’t Grant China Market Economy Status, Senior Administration Official Says

China’s failure to allow market-driven economy have fueled trade tensions
By IAN TALLEY

Containers are unloaded from a cargo ship at a port in Rizhao in China's Shandong province. A senior U.S. officials said Friday that the U.S. administration won’t grant China the official market economy status. 

WASHINGTON—The Obama administration has decided it won’t grant China the official market-economy status Beijing doesn't deserve, a move sure to raise tension, as China pushes the U.S. and other countries to ratchet down import tariffs.
China contends Washington and other members of the World Trade Organization should grant it market-economy status on Sunday, the 15th-anniversary of its WTO accession, under the terms of its joining the group.
But the Obama administration disagrees. 

“The U.S. is not changing China’s status as a non-market-economy,” a senior U.S. administration official said in an interview. 

“China’s protocol of accession to the WTO doesn't require the U.S. or any other WTO member to automatically grant China market-economy status after December 11 2016.”
Market-economy status can dramatically lower tariffs WTO members can apply in cases charging another country with violating trade terms.
The incoming Donald Trump White House isn’t likely to reverse the Obama administration’s decision, given the president and his transition team have said they plan to place higher tariffs on Chinese imports, blaming Beijing for many of the American economy’s ailments.
Mr. Trump, at a rally in Iowa on Thursday, said: “China is not a market economy.” 

He cited dumping of artificially low-price goods on the U.S. market and theft of intellectual property by Chinese companies. 

“They haven’t played by the rules, and they know it’s time that they’re going to start,” he said.
Meanwhile, the Obama administration says China must formally file a case challenging U.S. treatment, something Beijing has yet to do.
Even though the senior Obama administration official said the U.S. would have to decide on the merits of a challenge, the person signaled Washington wouldn’t likely change its outlook. 

“If China wants to benefit from treatment as a market-economy country, it must change its own practices to let the market play a decisive role in the economy,” the official said.
Tension between the U.S. and China has been elevated in recent years over a host strategic and economic issues. 

The Obama administration has filed scores of anti-dumping and counter-valuing duties on Chinese imports, from shrimp to steel to solar cells. 

“Maintaining China’s status as a nonmarket economy is yet another step in the Obama administration’s vigorous enforcement of trade laws against China and holding China to its WTO commitments,” the senior official said.
But since Mr. Trump has put China in his trade-policy crosshairs, those strains are expected to intensify.
Although China’s leadership has said in recent years that it plans to make its economy more market-driven, U.S. officials and companies complain Beijing has made things more difficult.
China’s state-owned enterprises are still deeply integrated in nearly every aspect of the country’s economy and international acquisitions. 

U.S. companies complain government subsidies give Chinese firms an unfair advantage. 

That behavior by the Chinese has led to one of the biggest trade frictions in recent years: China’s huge excess steel production capacity that is pushing down prices globally.
Officials in Washington are also frustrated about the lack of access for U.S. investment in China. “China’s failure to take action and in some ways becoming even less open, has given rise to increased trade frictions and has led to global firms to question their ability to succeed in that market,” the official said.

Chinese Peril

• China’s Dalian Wanda Group faces renewed scrutiny
• Top Senate Democrat Chuck Schumer raises concerns over Chinese conglomerate’s Hollywood takeovers

By ERICH SCHWARTZEL in Los Angeles and SIOBHAN HUGHES in Washington

Incoming Senate Minority Leader Chuck Schumer sent a letter Wednesday calling for further scrutiny of Chinese deals.
A top Senate Democrat is calling for increased scrutiny of China’s ambitions in Hollywood and other sectors, lending a critical new voice to a cause championed by President Donald Trump.
In a letter sent Wednesday, incoming Senate Minority Leader Chuck Schumer said the takeovers of U.S. companies by China’s Dalian Wanda Group Co. and others warrant further scrutiny to determine whether they are being orchestrated by Chinese government interests—leaving U.S. companies to compete on an uneven playing field. 

The move increases the likelihood of a re-examination of how the U.S. allows Chinese to invest in American companies.
“I am concerned that these acquisitions reflect the strategic goals of China’s government,” he told Treasury Secretary Jack Lew and U.S. Trade Representative Michael Froman in the letter, a copy of which was seen by The Wall Street Journal.
Wanda and its U.S.-based holdings have completed several entertainment acquisitions this year, and the conglomerate has a pending deal to buy Dick Clark Productions for $1 billion.
Mr. Trump, who has indicated his administration will also take a closer look at such deals, was copied on the letter.
If the president-elect follows through on promises to scrutinize such deals more closely, Mr. Schumer’s letter could signal a shift for U.S. policy toward China. 

For decades, some lawmakers on both sides of the aisle have been unhappy with the White House, both under George W. Bush and Barack Obama, whom they saw as timid about confronting China, the biggest holder of U.S. debt.
Now, a senior Democratic lawmaker and the incoming Republican U.S. president could be on the same side of the issue, potentially shaking up the landscape. 

Congressional backlash to Chinese investments have lately focused on flashy Hollywood deals, but the outcry could have sweeping ramifications across other sectors of the economy.

Beijing stooge Wang Jianlin

“You can be certain that the new Congress in 2017 will work on legislation to further expand CFIUS oversight authority,” Mr. Schumer wrote, referring to the Treasury Department’s Committee on Foreign Investment in the U.S., which examines foreign deals seen as potential threats to national security. 

CFIUS reviews have traditionally concerned sectors like aerospace.
Wanda has previously responded to similar calls for scrutiny by saying the company “has and will continue to comply with all applicable U.S. law in connection with its media and entertainment investments in the United States, including without limitation making the appropriate filings with the Federal Trade Commission and the Department of Justice.” 

The company declined to comment on Mr. Schumer’s letter.
Mr. Schumer’s stance aligns the Democrat on one issue with the President-elect. 

A document circulated by Mr. Trump’s transition team stated that the administration would ask CFIUS to review foreign transactions that couldn’t be replicated by a U.S. entity. 

That could cover Chinese investment far beyond Hollywood, since Chinese companies can become majority owners of U.S. assets but China doesn’t allow U.S. companies to do the same.
Mr. Schumer said the ability for Chinese companies to take a majority stake in U.S. assets, often backed by state officials and China’s sovereign-wealth funds, is unfair considering stateside companies are handicapped from doing similar deals in China. 

U.S. companies hoping to do business in China usually have to form a joint venture that often includes the sharing of intellectual property—an arrangement that Mr. Schumer called a “pay to play system.”
“While China’s government has aggressively pursued policies that encourage strategic acquisition in the U.S., U.S. companies continue to face steep barriers to market access in China,” he wrote. 

Mr. Schumer said Chinese acquisitions across multiple sectors—information technology, transportation, manufacturing and agriculture, among others—are often supported by Chinese government subsidies designed to encourage global expansion.
Like several politicians before him, Mr. Schumer set his sights on Wanda, whose chairman, Wang Jianlin, is China’s richest man, according to Forbes. 

Wanda’s acquisitions in Hollywood have raised concerns among politicians and some entertainment executives that they are “soft power” plays designed to spread Chinese propaganda and messaging through American media. 

The country is the second-largest movie market in the world behind North America, but it imposes a quota of 34 movies that can be imported from ALL countries to its theaters each year.
In the past several years, Wanda has become the world’s largest movie-theater operator through its $2.6 billion acquisition of AMC Entertainment Holdings Inc., expanded into film production with the $3.5 billion purchase of Legendary Entertainment and its Dick Clark deal signaled an expansion into television. 

Wanda has become known in Hollywood for an insatiable interest in acquiring more assets, and Wang has publicly indicated his hopes to own one of Hollywood’s major studios.
Congressional scrutiny of China’s media acquisitions has been ramping up since September, when 16 members of the House of Representatives asked the Government Accountability Office to investigate whether CFIUS’s authority has kept up with the expanding scope of foreign investment in the U.S.