The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions/donations are welcome, and feel free to forward to recommend to friends. Thanks for reading.

The Global Times writes in a horrific story that Sexual abuse of children ‘left behind’ by migrant worker parents is on the rise. Just this week we learned that a teacher in Gansu has been arrested for raping or molesting at least 8 girls aged 10-13–甘肃教师强奸多名小学生续:受害者多为留守儿童. The Hukou system is a big part of the problem, as most cities do not provide adequate access to schooling for migrant children, but poverty and cultural taboos around discussions of sex and child abuse are also to blame, as is the universal trait of human depravity. Unfortunately for these “left behind” kids their dads are not around to beat the predator to death, as a Texas father just did.

Abolishing the Hukou system might help but it will not be enough. Some parents leave their kids in the villages because they want to work longer hours and make and save more money. Unfortunately, serious Hukou reform is unlikely, especially for tier 1 cities, as most urban resources are already overtaxed and prejudices towards rural Chinese remain ingrained in society. I discussed some of these issues in last year’s Are You Willing To Send Your Child To The Same School As The Children Of Vegetable And Rice Sellers?

Toxic Food du jour is back. Mengniu admitted that web reports of spoilage and contamination at one of its ice cream plants were true and promised, once again, to fix things–蒙牛乳业承认一冰淇淋厂脏乱差 称责任人被停职.

Mengniu has a history of food safety problems, but Denmark’s Arla Foods thinks there is great potential for the firm, having just spent $283 million for a 6% stake in the company. The seller? Fang Fenglei’s Chinese private-equity fund Hopu Investment Management, very smart money. Will the Arla executives feed their children Mengniu products?

Caixin looks at the systemic issues in China’s food industry in China’s Food Fright. “Caixin has found that these publicized food safety scandals represent only a fraction of unsafe food production practices. Hundreds of chemical food additives are pumped into products that Chinese people consume every day.”

Former Ambassador to China Jon Huntsman has joined Brookings as a distinguished fellow. Real Republicans do not join the Brookings, so let the speculation begin about what this might mean for his future political plans. Speaking of politics, House Science Committee Chairman Ralph Hall said that Obama ‘bows’ and ‘scrapes’ to Chinese ‘enemy’ during a hearing about US-China scientific collaborations.

Reuters reports that the SEC is seeking Big 4 audit papers from China:

“The Chinese arms of all of the Big Four audit firms have been asked by U.S. regulators to turn over documents related to audits of China-based companies that are listed in the United States, a person familiar with the matter said on Tuesday…The formal requests made by the U.S. Securities and Exchange Commission raise the stakes in a standoff between U.S. authorities, the companies and Chinese officials over access to the auditors’ work papers.”

China accounting guru Paul Gillis recently wrote on his China Accounting Blog that:

“Without resolution, the only meaningful option for the SEC, and the PCAOB, is for the PCAOB to deregister the firms and for the SEC to ban them from practice before the SEC…The consequence of those actions would be that U.S. listed Chinese companies would be without auditors and unable to find them. Having an auditor is a listing requirement of the exchanges, so under exchange rules the companies face delisting. The U.S. listed Chinese companies would be unable to file financial statements as required. That should lead the SEC to eventually deregister the companies with the SEC.”

Not that the cold IPO market needs any more chilling, but how can the SEC responsibly approve any IPO applications by Chinese firms until this issue is resolved?

Today’s links:

• China Proposes Easing Rules for Foreign Investors – WSJ.com
  China’s securities regulator has proposed rules that will ease restrictions and broaden market access for foreign institutional investors, marking the latest effort to liberalize the country’s financial sector.
• In Asia, Complex Securities Gain Favor – WSJ.com
  already backfiring on some. know of a few rich chinese who have been screwed by big banks’ products, vow to never buy structured products from western banks again. some of the big banks have already done significant reputational damage to themselves.
• Philippine ships ready to return to Scarborough | ABS-CBN News
  The Philippines will send ships back to Panatag (Scarborough) Shoal if Chinese vessels remain in the area, President Aquino said Wednesday.
• 菲称将派飞机赴黄岩岛 威胁再部署船只_资讯频道_凤凰网
• 人民日报-习近平在北京高校调研时强调 高校党建要继续坚持和贯彻好正确指导原则
  People’s Daily on Xi Jinping’s remarks about strengthening Party in higher education institutions
• 人民日报-《乔石谈民主与法制》出版座谈会在京举行 王兆国出席
  Publication and launch event for Qiao Shi’s new book makes page 4 of today’s People’s Daily
• 人民日报-胡锦涛会见美国总统奥巴马（胡锦涛主席出席G20墨西哥峰会）
  Nice people’s daily front page pic of Hu and Obama
• 党报再刮“主义风” 为十八大扫清路障_多维新闻网
  【多维新闻】随着中共十八大的临近，各类准备工作也开始步入正轨。中共党报《人民日报》继发表肃清精致利己主义和狭隘极端主义的系列文章后，再度以“时代需要怎样的价值”为主题发表肃清形式主义的文章。截止多维记者发稿前，该报已围绕“主义风”连发三炮，此举也被外界解读为替十八大做好舆论层面的铺垫。
• Blockbuster move by National Film |Companies |chinadaily.com.cn
  National Film Capital Co Ltd, the government-backed entertainment firm, has revealed plans to invest $300 million in 10 English-language movies, one of which will star a Chinese superhero being dubbed Ming: The Annihilator, the creation of iconic Spider-Man and Incredible Hulk creator Stan Lee.
  Launched by China Film Foundation, National Film is a private equity group of limited partnerships involving investors from both home and abroad.
  The Chinese company’s Hollywood division – China Mainstream Media National Film Capital Hollywood Group Inc – based in Beverly Hills will produce and distribute the movies working alongside major Hollywood studios and independent moviemakers.
• SEC seeks Big 4 audit papers from China -source | Reuters
• Sinopec eyes move for Chesapeake assets – FT.com
  Sinopec, the Chinese oil and gas group, is considering bidding for billions of dollars worth of assets owned by Chesapeake Energy, the US gas producer.
• China Punches Back in Rare Earths Row, Claims Rising Scarcity Justifies Export Curbs « naked capitalism
• 央视：房价反弹将失楼市回归理性机会_中国经济网――国家经济门户
  CCTV: a quick recovery in housing prices will be a lost opportunity to bring property prices back to a reasonable level
• Ralph Hall: Obama ‘bows’ and ‘scrapes’ to Chinese ‘enemy’ – Darius Dixon – POLITICO.com
  President Barack Obama “bows” and “scrapes” to America’s Chinese “enemy,” House Science Committee Chairman Ralph Hall said Wednesday.
• China denies military drill with Russia, Syria, Iran – Xinhua | English.news.cn
  China on Wednesday said there was no truth to an Iranian media report about a joint military drill involving China, Russia, Syria and Iran.
• More Party influence in higher education institutions urged – Xinhua | English.news.cn
  is Zhang Weiying a party member? is this one of the reasons he was replaced as dean of peking u guanghua school of management?//
  Chinese Vice President Xi Jinping has urged the country’s higher education institutions to give Communist Party of China (CPC) branches a bigger role in the education and management of faculties and students.
• Sand-washing operation of Yellow River held at Xiaolangdi Reservoir – Xinhua | English.news.cn
  The Yellow River has been plagued by an increasing amount of mud and sand. Each year, the river bed rises as silt deposits build up, slowing the water flow in the lower reaches. The Xiaolangdi Reservoir in the middle reach of the Yellow River has experienced sand-washing operation for 13 times since 2002 and succeeded in clearing out the silt deposits at the dam and washing 762 million metric tons of mud and sand into the sea.
• 蒙牛乳业承认一冰淇淋厂脏乱差 称责任人被停职_新闻_腾讯网
  Mengniu admits web reports of contamination and chaos at one of its ice cream factories are true.
• Workers blamed for bridge collapse | SCMP.com
  Part of a nearly completed bridge collapsed in the northeast province of Liaoning late on Monday afternoon, and the local government said worker negligence was to blame, as construction procedures had not been properly followed
• Russia Professors Found Guilty Of Spying For China
  A Russian court on Wednesday convicted two professors of a St.Petersburg university of handing over missile secrets to China, the latest in a string of espionage cases that reflected underlying tensions between Moscow and Beijing despite declarations of cooperation and friendship.
• Diplomatic row between China, Cambodia and France over Patrick Devillers – Telegraph
  Cambodia has warned it will not extradite a French architect, who is linked to the alleged killer of Neil Heywood, without evidence from China.
• Forget Grexit, it’s time to fret about ‘Chindown’ – FT.com
  If Greece goes, almost everyone will suffer. But as China slows, the impact is likely to be more mixed. Only for some will it spell the end of their magic moment.
• Prince Charles caught in the act of hurting the feelings of the Chinese people : Shanghaiist
  “The Prince of Wales and the Dalai Lama greeted each other like old friends when the two men met for the first time in four years, although the Tibetan spiritual leader did insist on holding hands.”
• 南方周末 – 北京人社局回应2012企业工资指导线
  wage increase expectations in China are high and getting higher. Not a good sign for inflation fighters, but good sign for consumption
• Missouri businessman in limbo in China in dispute over debt, unsure when he’ll get back to US – The Washington Post
  Because of the unpaid debt to Chinese suppliers, and citing Fleischli’s status as NorthPole’s legal representative in China, a court in Xiamen ordered Fleischli detained, Margo said.
  Margo said Fleischli hadn’t even realized he was NorthPole’s legal representative, a role that makes Fleischli the point of contact for the company.
• Dalai Lama: China unrealistic on Tibet, talks futile | Reuters
  Tibetan spiritual leader the Dalai Lama said on Wednesday resuming talks with China on his homeland’s future was futile unless it adopted a “realistic” stance, adding it was useless trying to convince Beijing he was not seeking full independence…
  In comments likely to enrage a Chinese leadership already angry over his trip to Britain, the Dalai Lama also said a shift towards democracy and better human rights in China was inevitable and the Chinese people “really want change”.
• Jon Huntsman joins Brookings – Think Tanked – The Washington Post
  real republicans don’t join brookings
• LSD, Ecstasy, and a Blast of Utopianism: How 1967’s “Summer of Love” All Began | Culture | Vanity Fair
  china could use a summer of love
• P&G cuts growth targets as China slows | Reuters
  Slower growth in China and tough markets in Europe and the United States prompted Procter & Gamble (PG.N), the world’s largest household product maker, to cut its growth forecasts on Wednesday in the midst of a $10 billion cost-cutting program.
• China’s Food Fright – Caixin Online
  It’s the law of the jungle in the food safety industry – with hidden poisons now including new growth hormones
• In Gold Market, China Sparkles as India Fades – China Real Time Report – WSJ
  Chinese demand for gold isn’t letting up following a strong first quarter that saw demand reach record levels from Asia’s biggest economy, offsetting weakening appetite in India.
• Ai Weiwei Blocked From Court – China Real Time Report – WSJ
  Ai Weiwei, the Chinese dissident artist, accused authorities Wednesday of blocking him from attending a hearing on his lawsuit against the Beijing tax bureau. He also said that police had detained his legal adviser.
• Africans’ Protests Highlight Tensions in Guangzhou – China Real Time Report – WSJ
  Protests by Africans in Guangzhou this week over the death of a Nigerian man in police custody prompted wide reactions online and served to draw attention to tensions between locals and the southern city’s large population of African immigrants
• Chinese Netizens Wants Freedom of Speech from Sina Weibo Premium Membership » M.I.C. Gadget
• Canadian universities, colleges confront questions about Chinese ties – The Globe and Mail
  This ambitious effort to gain friends and influence – building its so-called soft power – has targeted students first and foremost, in partnerships with universities and colleges to open language and culture schools called Confucius Institutes. Since 2004, more than 300 Beijing-financed institutes have popped up all over the world, including a dozen in Canada.
  Cash-strapped colleges and universities mostly greeted the institutes with open arms, keen to forge links with an ascendant economic superpower. But those same schools are now confronting uncomfortable questions about the extent of the Chinese state’s reach into Canadian academia.
• Chen Guangcheng: Will Chinese justice rescue my detained nephew? – The Washington Post
• 退休后深居 乔石高调出书引猜疑_多维新闻网
  qiao shi appears in beijing at launch of his new book “on democracy and rule of law” 《论民主与法制》
• CapitalVue News: Beijing Home Prices Increase
  June 20 — The average home transaction price in Beijing for the first half of June rose five percent from a month ago, while transaction volume increased nine percent, reports cnstock.com.
• Japan’s Human Trafficking Problems Not Resolved: US State Department : Japan Subculture Research Center
  The US State Department released their annual Trafficking in Persons (TIP) report today  (June 19th 2012) and once again Japan was ranked as a 2nd tier nation. It barely escaped being placed on the watch-list for a 2nd time, according to some sources.
• Advice from CCPPC on China’s Property Curbs: Relax! – China Real Time Report – WSJ
  “Restrictions on purchases should be relaxed for high-end residential properties in first-tier cities,” the newspaper cited the proposal as saying.
  The article mentioned other elements of the proposal, such as lower taxes for small businesses and further interest-rate cuts, but offered nothing further on the property market.
• In Focus – Scenes From 21st-Century China – The Atlantic
  n this, the latest entry in a semi-regular series on China, we find images of tremendous variety, including astronauts, nomadic herders, replica European villages, pole dancers, RV enthusiasts, traditional farmers, and inventors. This collection is only a small view of the people and places in China over the past several weeks. [47 photos]
• Cheap Coal Is Dead. Long Live Renewables. (Part 1) – Bloomberg
  China’s vast reserves near Inner Mongolia can be mined for $25 a ton. But by the time it travels by rail across North China, then by sea to southern coastal cities, the cost rises to more than $125 a ton….
  China and India, which had been counting on buying coal for $40 a ton, now find that imported coal at $120 a ton is “cheap.” Dozens of coal plants in China and India cut back capacity because of fuel costs and shortages.
• China Steps Said to Grow Bond Market, Add Issuer Scrutiny – Bloomberg
  China is allowing more companies to trade bonds and increasing scrutiny over issuers as the government seeks to ensure that the expansion of its nascent debt market isn’t derailed by defaults.
  The top economic planning agency ordered local governments to examine the ability of companies to repay bonds maturing in 2012 and 2013, two people with direct knowledge of the matter said yesterday, asking not to be identified as they weren’t authorized to speak to media. China Securities Regulatory Commission began allowing mutual funds to invest in private placements by smaller companies, according to an agency document obtained by Bloomberg News.
• China Unicom to Reduce Cheapest Smartphone Prices by 30% – Bloomberg
  censorship load to increase exponentially//
  China Unicom (Hong Kong) Ltd. (762), the country’s second-biggest wireless carrier, will cut the price of its cheapest smartphones by 30 percent to about $110 in an effort to expand its market share as user growth slows.
  China Unicom will introduce smartphones costing less than 700 yuan in China in the near future, after “great success” with models priced at less than 1,000 yuan ($157), President Lu Yimin told the GSMA Mobile Asia Expo in Shanghai today.
• 独家：广东廉政风暴来袭 数百名官员被双规_多维新闻网
  big corruption investigation in guangdong. caixin has reported 2, duowei has more. bad 4 wang yang? or is wang yang running the corruption investigation,getting ahead of what some think is big anti-corruption campaign about 2 come from beijing?//
  【多维新闻】据大陆官方证实，广东省政府原副秘书长谢鹏飞、财政厅副厅长危金峰因涉嫌严重违纪问题，正在接受中共党内的调查。但多维新闻从多个渠道获悉，谢、危的落马仅仅是这轮广东廉政风暴的一角。实际上，广东官场近些日子正在经历一场廉政反腐的大地震，已经有数百名官员被“双规（规定的时间，规定的地点）”。据悉，这只是此次廉政风暴的开始，后续将会有更多的官员落马。
• Dangerous Liaisons: Zhang Ziyi sues Boxun in California｜Politics｜News｜WantChinaTimes.com
  can’t imagine boxun has the resources to fight this.//
  Zhang’s suit, filed on June 14 in the US District Court in California by American legal powerhouse Glaser Weil, alleges libel, false light invasion of privacy, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage and unlawful business practices.
  The claim named 27 defendants, being China Free Press, a North Carolina-based non-profit organization doing business as Boxun, Watson Meng, a North Carolina resident and the so-called “alter ego” of China Free Press, and 25 unnamed individuals designated as Does 1 to 25.
• Information Dissemination: What is Air-Sea Battle?
  Today’s guest speaker is Admiral Jonathan Greenert, Chief of Naval Operations. Below are his opening remarks at the Brookings Institution Air-Sea Battle Doctrine on May 16, 2012
• China upgrades its eavesdropping on Taiwan: report｜Politics｜News｜WantChinaTimes.com
  China has upgraded electronic satellite receptors at a site in southeastern Fujian province which lies across the strait from Taiwan, according to images taken by new commercial satellites, a US weekly reported Monday.
  Defense News reported from Taipei that according to an analysis of high-definition satellite photos, the facility on Dongjing Shan, near Daqiu village in Fujian province, has been upgraded and can now cover all of Taiwan and even a US base in Okinawa.
• CFA Institute: A New Investment Thesis for China « Patrick Chovanec
  The professor’s synthesis, or conclusion, was that “an imminent correction to China’s economy will create promising opportunities in dynamic new sectors,” including agriculture, logistics, retail, consumer brands, and health care…
  He counts himself among those predicting a “hard landing,” but readily admitted to being conflicted about China’s future, telling delegates: “I don’t really feel that comfortable wearing a bear suit.” That’s because Chovanec sees huge untapped potential in the economy of China, a country he first visited in 1986 (he has since traveled to each of the country’s 31 provinces, as well as Taiwan). Chovanec’s use of the thesis, antithesis, synthesis framework is borne of an attempt to reconcile these competing views.

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions/donations are welcome, and feel free to forward to recommend to friends. Thanks for reading.

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