The economic news is getting more negative by the day. On the heels of a cover package in the most recent issue of Caixin (放贷难_财新网) on the problems banks are having making new loans and a Caijing report that New Loans by China’s Big Four Banks Near Zero in Early May, the Wall Street Journal elaborates in China’s Banks Are Ready to Make Loans, but Find Limited Takers. Patrick Chovanec, who is now so bearish (and not without reason) that we may learn his bile is being extracted for a special high-end elixir, wrote a depressing and worrisome blog post in which he argues that China Real Estate Unravels. Caixin has another article that suggests the deterioration of the real estate market means that Beijing may no longer push back on local government attempts to loosen restrictions-地方再探救市. Remember, the real estate slowdown has been engineered by the government, which is intentionally constricting demand, but it increasingly looks like the policies are overshooting on the downside. In what is likely an unintentional move to stimulate construction, Chinese media reports that increasing numbers of subsidized housing buildings are so shoddy that they will have to be torn down and rebuilt-全国多地保障房被指偷工减料 部分须推倒重建 .

For those looking for less bearish views CLSA is out with a more sanguine report titled Misunderstanding China Popular Western illusions debunked (PDF) and the long and excellent podcast of a May 1 Brookings-Caixin Media Symposium–Structural Reforms and China’s Economy–is now online. Depression about the state of the economy is not leading to more wine consumption, as the Lafite bubble has collapsed, wine prices overall are declining, interest in wine investing is waning-购 拉菲“坠落”：重挫温州游资-and China is seeing a slowdown in bottled wine imports.

Bloomberg reports that Chen Guangcheng should receive his passport to leave for the US by May 21-Chen May Get China Passport by Next Week. Yesterday’s discussion of Chen should have included a mention of Gady Epstein‘s excellent story–Suppressing dissent: The emperor does know–in the most recent Economist that examines the treatment of Chen and debunks the widely held myth that somehow Beijing (aka The Center) does not know about the harsh stability preservation tactics of local officials. The New York Times article China’s Obsession With Stability Can Come at the Cost of Laws clearly benefited from the the Economist story.

Today we not only have more toxic food problems but we also have a budding toxic cosmetics scandal. Dementia-causing, alum-tainted rice noodles have been discovered in Jinan (济南黑作坊日产千斤毒米线 明矾过量或致痴呆) and McDonald’s is growing so fast in China that it plans to almost double the number of its employees in China.  Now we learn that you have to be careful with your Chinese creams. “Heavy Metal” Cosmetics (no, not a brand for fans of metalheads like Kaiser Kuo) appear to be not uncommon in the China market–“金属”化妆品勃兴调查,

The South China Sea continues to be hot. Vietnam has declared that it will not recognize China’s fishing ban and that in fact the ban covers territory that really belongs to Vietnam (越南：不承认中国南海休渔令). Vietnam’s “insolence” is now the top topic on Sina Weibo. Phillipine president Aquino has announced that the Philippines will Buy Military Jets Amid Sea Dispute With China, and, coincidentally (?) a US navy attack submarine has docked in Subic Bay. The authoritative Information Dissemination blog discusses the domestic challenges China will face in any outcome that does involve “total victory” over the Philippines on this issue.

I do occasionally write more than just this daily post, and last night’s Midnight In Peking, Murder In Beijing discusses the excellent book Midnight in Peking and the 2006 unsolved murder of a beautiful Italian woman in Beijing.

Thanks for reading, and remember the best way to see this daily post is to subscribe by email, especially if you are in China, as Sinocism is still blocked here.

• Review & Outlook: North Korea’s Gulag – WSJ-New evidence reveals a vast, cruel network of prison camps.
• ScienceDirect.com – Progress In Oceanography – Responses of fish production to fishing and climate variability in the northern South China Sea
• Philippines to Buy Military Jets Amid Sea Dispute With China – Bloomberg
  he Philippines may buy two squadrons of military jets for as much as $1.6 billion, President Benigno Aquino said, as the country pushes to modernize its defenses amid a territorial dispute with China.
  The government could buy new training jets for between $400 and $800 million per squadron and upgrade the planes to fighters, Aquino told Bombo Radyo today. The seller would be a “progressive nation” and not the U.S., the Philippines’ main ally, he said
• Structural Reforms and China’s Economy | Brookings Institution
  just listened to the podcast, very informative//
  The rapid pace of economic development in China over the last 30 years has begun to expose a new set of economic and social challenges. To deal with these challenges, China’s leaders will need to employ a new set of policy tools that may be very different from what has been successful in the past. In addition, China’s leaders must adapt to the growing influence of a broad array of non-state actors. Making these adjustments in the midst of a major transition of China’s political leadership will be no small task.On May 1, the John L. Thornton China Center at Brookings and Caixin Media will host a conference examining China’s major economic policy challenges, the substance of economic reform measures and the issues concerning their implementation.
• 全国多地保障房被指偷工减料 部分须推倒重建 – 新闻中心 – 搜狐焦点网
  Shocker, shoddy construction problems in many subsidized/public housing units. some will have to be torn down and rebuilt.
• 人民日报-创新理论引领伟大实践 —— 一论坚持和完善我国基本经济制度
• 人民日报-从国际金融危机看西方新自由主义
  Long page 3 People’s Daily essay on Looking at Western Neo-Liberalism and the Financial Crisis
• 人民日报-中国国际传播战略 与发展研究中心成立
  China establishes the “China International Broadcast/Communications Strategy and Development Research Center”
• 铁路窝案再发酵：呼铁局副局长被查 – 宏观 – 21世纪网
  Says multiple corruption investigations ongoing inside the Ministry of Railways, The Liu Zhijun case is not dead, just very big, very complicated, and very political
• 拉菲“坠落”：重挫温州游资 – 食品·饮料 – 21世纪网
  On the collapse of the Lafite bubble, and wine price declines and a decline in interest in wine investing in general
• Message in a Bottle for Spirits Maker Moutai – Caixin Online
  Government agencies buy some of China’s best baijiu at discount prices, denying its legendary distiller profit potential
• 越南：不承认中国南海休渔令_网易新闻中心
  Vietnam says it does not accept China’s fishing ban in parts of the South China Sea, will ignore it, that part of the area in which China has declared the ban belongs to Vietnam. terrific…
• 朝武装人员：今日不交赎金将处理掉人质_网易新闻中心
  North Koreans of unknown identity holding 29 Chinese fisherman, demanding 1.2M RMB ransom, or will kill them today..with allies like these
• Amazon.com: China Hand: An Autobiography: John Paton Davies, Jr.
• “China Hand: An Autobiography” by John Paton Davies Jr. – The Washington Post
• China Flies New Stealth Fighter as Problems Plague U.S. Jets | Danger Room | Wired.com
  The second copy of China’s stealth fighter prototype has just flown at a research facility in the city of Chengdu. The first flight of the J-20 Mighty Dragon with the nose number 2002 doubles Beijing’s stealth test fleet at a time when America’s latest jet fighters are hobbled by cost overruns, labor disputes and lethal design flaws. But it’s far from certain how much, and how fast, the new Chinese jet will alter the military balance.
• Federal court enjoins NDAA – Glenn Greenwald – Salon.com
  How the Rule of Law is supposed to work. Rule of Law is an important weapon in the global soft power struggle, and China should have nothing on the US in this area//
  An Obama-appointed judge rules its indefinite detention provisions likely violate the 1st and 5th Amendments
• Former D.C. teacher makes FBI ‘Most Wanted’ list after 2008 child porn discovery – The Washington Post
  you never know, some of these scum may now run to China to teach. Schools here do limited to no background checks//
  The discovery was as shocking as it was horrific: a camera with explicit photos of a child who attended Washington National Cathedral’s exclusive Beauvoir elementary school, which caters to some of the area’s most powerful families.
  The camera was assigned to third-grade teacher Eric Justin Toth
• Information Dissemination: Perception problem in the South China Sea Dispute
  “Eighty percent of the population wants us to use the military,” says Yang Yi, former director of the Institute for Strategic Studies at the National Defense University in Beijing. “They’re asking, ‘Why are we so weak? Why are we wasting money on our Navy if we are not going to use it?’ Outsiders really do not appreciate what is going on inside China.” Yang says there is a risk of miscalculation as China builds its military and asserts territorial claims in the region. Abroad, he says, China is seen as too assertive; but at home, it’s just the opposite.
• China welcomes UN decision over Japanese “island” claims – Xinhua | English.news.cn
  China on Wednesday welcomed a decision by a United Nations (UN) commission not to adopt Japanese claims over the geopolitical classification of Okinotori Atoll, an outcropping in the Philippine Sea.
• Hard Lesson for China-Concept Stock Investors – Caixin Online
  Cash and accounting records vanished after worried U.S. investors launched a management overhaul at ChinaCast Education
• Wang Yang: “I read comments on Sina Weibo every day.” Chinese netizens not buying it | Offbeat China
• McDonald’s to Almost Double China Employees as Gears Up – Bloomberg
  McDonald’s Corp. (MCD), the world’s largest restaurant chain, will hire 70,000 people in China this year
• German Held on Art Smuggling in China as Buyers Dodge Tax – Bloomberg
  The German manager of an art-freight company is being detained in a Chinese jail for allegedly falsifying values of imported artworks to help buyers avoid 10 million yuan ($1.6 million) in import duties and value added taxes.
  Customs officials raided the Beijing office of Integrated Fine Arts Solutions Ltd., which specializes in contemporary art, on March 30, seizing records and arresting Nils Jennrich, 32, and his Chinese colleague
• Mixed Results at China’s Internet Firms – WSJ.com
  China’s biggest Internet companies are posting mixed results despite the addition of millions of new online users each year, as efforts to tap the promise of the world’s largest online market are complicated by tougher government content restrictions, higher costs and a shift to mobile devices.
• China’s Banks Are Ready to Make Loans, but Find Limited Takers – WSJ.com
  Bank lending plunged in April, according to the People’s Bank of China, and has remained weak in May, said bankers and borrowers. The decline is because companies are wary about borrowing when demand is uncertain and profits are evaporating. It also is because Chinese banks are unwilling to lend to companies in problem markets—like exporters, or companies out of favor with the Chinese government, such as property developers. The result: China’s banks can’t turbo-charge the economy as they have in the past.
• Eric X. Li: Democracy Is Not the Answer
• Necessary Brainwashing? Hong Kong’s Patriotism Lessons Stir Controversy – China Real Time Report – WSJ
• Thai police seize tiger carcasses believed destined for China – The Washington Post
• 央视新台址主楼完成竣工验收 体育频道将率先入驻-财经网
  The new, main CCTV tower in Beijing CBD is finally completed and ready for use. CCTV Sports is moving in first, will be there by the start of the London Olympics. The adjacent, burned-out tower is still under repair
• FT Alphaville » What happens if the Chinese government cracks down on all copper ‘financing deals’?
  Goldman Sachs’ latest commodity note considers the influence of China’s bonded warehouses, chock-full of copper, on the underlying market for the metal.
• Economist Mao Yushi on what really goes on behind the gates of the National Development and Reform Commission: Shanghaiist
  There are indeed many problems going on at the National Development and Reform Commission. I live just opposite their building and can see what’s going on very clearly. On our road, you’ll find many gift shops. All these people coming from out-of-town enter the building with big and small bags, and later leave empty-handed. At the end of the day, NDRC officials leave the building with big and small bags. They can’t use all the stuff, so they sell them back to the gift shops, who in turn resell them to others who have come to Beijing on a mission
• Multi-media performance “Tian´anmen” ready to hit stage CCTV News – CNTV English
  The multi-media performance entitled “Tian’anmen” has proceeded to its final rehearsal before officially hitting the stage. Presenting the Chinese capital’s most recognizable political landmark, it uses high technology, dances and songs to vividly depict the charisma of Beijing.
• AP-China TV blames Dalai Lama for Tibet immolations
  BEIJING (AP) — China has released a documentary accusing the Dalai Lama of orchestrating a wave of self-immolations by Tibetans, in its most elaborate attempt so far to shape international opinion about the protests against Chinese rule.
  The documentary shown globally by state broadcaster China Central Television features police surveillance footage of the fiery protests. Mostly lone Tibetans are seen ablaze on small town roads before being blasted by security forces with fire extinguishers or covered with blankets.
• First impressions count | China Daily Asia Pacific
  American Michael Stephen Kai Sui has become a Chinese Internet phenomenon by releasing videos of himself imitating people from around the world…
  Sui was born in the United States and came to Beijing at the age of 7 and learned Chinese from scratch. When he was 15, he returned to the US to continue his education.
• Dissident Chen May Get China Passport by Next Week – Bloomberg
  Blind Chinese activist Chen Guangcheng should receive a passport by May 21 that would allow him to leave for the U.S., according to Bob Fu, a Texas-based Christian aid worker who is in daily touch with him.
• New Loans by China’s Big Four Banks Near Zero in Early May-Caijing
  China’s biggest four banks have posted nearly zero growth in new loans for the first two weeks of May, extending the country’s weak credit growth last month
• A Tale of Two Brothers: One in China, Other in US | PRI’s The World
  When you meet Bill and Fred Engst, it’s hard not to ask questions, especially when you hear them talk. They speak English with a Chinese accent.
  Fred and Bill were born in China, the sons of two Americans who moved there in the 1940s to be part of the Communist Revolution.
• Deutsche: China’s cheap for a reason | beyondbrics | News and views on emerging markets from the Financial Times – FT.com
  Another growl from Deutsche Bank’s emerging markets bear, John-Paul Smith. This time he’s had a close look at Chinese corporates – and doesn’t like what he sees.
  He’s worried about the overcapacity created in the recent huge investment wave, compounded by Beijing’s failure to maintain discipline over its free-spending regions or enforce loudly-touted consolidation plans in key industries, eg steel.
• Midnight In Peking, Murder In Beijing | Sinocism
  While I was reading “Midnight In Peking” I vaguely remembered reading about the 2006 murder of a beautiful young Italian woman in Beijing.
  Paola Sandri, a 28 year old graduate student on a short-term teaching assignment in Beijing, was brutally killed just south of Chaoyang Park, near the gate of the Beijing Art Academy (北京画院; Map), in the early morning hours of July 25. There were rumors of darker forces involved in the crime, and at least one Chinese Internet posting claims Chinese men driving a Mercedes may have been involved.
• Chinese Property Giant Vanke’s Foreign ‘Tryout’ – China Real Time Report – WSJ
  Vanke isn’t stepping too far from China. The property markets in Hong Kong and Singaporeare influenced by the Chinese economy and Chinese buyers, and are also impacted by government property cooling measures.
• Protecting rights, checking power . . . but how? – China Media Project
  The one noteworthy phrase that stuck out in the People’s Daily series was “Preserving rights, checking power” (保障权利，制约权力). As CMP Director Qian Gang (钱钢) noted, this phrase, combining “preserving rights” and “checking power”, has appeared in just four articles in the People’s Daily since 2000, the last mention being in February 2010.The prominent play given to the phrase in the May 14 series suggests that China’s leaders may be grooming it as a new political catchphrase. Look in particular at how the phrase is emphasized in the layout of the political reform page.
• Chinese firm’s Canadian contracts raise security fears – Politics – CBC News
  The former head of U.S. counter-espionage says the Harper government is putting North American security at risk by allowing a giant Chinese technology company to participate in major Canadian telecommunications projects.In an exclusive interview in Washington, Michelle K. Van Cleave told CBC News the involvement of Huawei Technologies in Canadian telecom networks risks turning the information highway into a freeway for Chinese espionage against both the U.S. and Canada.
• Chinese Telecom Investment in the U.S.: Weighing Economic Benefits and Security Risks – Economics – AEI
  At an event on Thursday at AEI, experts on China discussed the implications of a report written by AEI’s Claude Barfield on the trade-offs involved in determining policies for Huawei.
• AEI – Scholars – Claude Barfield
  Thinks the US government is wrong to be paranoid about Huawei
• Communist elders urge removal of China police czar – Yahoo! News
  Misleading headline, sounds like retired mid-level officials, not really “elders”//
  Zhao Zhengrong — a retired anti-corruption official from Zhaotong city in the southwestern province of Yunnan — told AFP he and 15 other party members had sent the proposal advocating Zhou’s removal to higher authorities.
  “We are demanding this because Zhou Yongkang directed the ‘Chongqing model’ and supported Bo Xilai. They are liars, they are of the same ilk,” Zhao said. Two other signatories to the open letter confirmed it to AFP.
• Sina results beat view, warns Weibo to eat into Q2 – Yahoo! Finance
  Sina Corp (SINA) sounded a bearish note for the coming quarters, warning that further losses may lie ahead because of increased investment into its microblogging platform Weibo, China’s version of Twitter.
• 贷款拐点_杂志频道_财新网
  Caixin cover story on the lack of demand for loans in the economy
• 地方再探救市_杂志频道_财新网
  Will Beijing allow some of the early May moves by local governments to stimulate the real estate market?//
  地方政府在5月初上演了新一轮的“试探救市”。这一次中央政府没有像之前一样迅速表态

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