I am heading to the US later today for a few weeks. Posting will be light to non-existent for the next couple of days but will resume from DC.

Stock market reaction to Saturday’s New York Times report alleging data manipulation and a deeper economic slowdown than anticipated should be interesting. It is quite possible that Hong Kong and China markets will rise as investors believe this news will make a bigger stimulus a near certainty. Then again, they could either drop or stay flat. (How is that for hedging a market prediction?)…

Regular readers of Sinocism know that I disagree with some of the foreign media reports about senior leaders pushing for Western-style political reform. Last year’s Views On Political Reform And Leadership Splits In China is just one of several comments I have made on the subject.

In the latest issue of the Jamestown Foundation’s always excellent China Brief, Peter Mattis discusses the prospects for political reform in Central Party School’s Critiques Suggest New Leadership Dynamics:

Political reform in China since Deng Xiaoping’s “Southern Tour” in 1992 has seemed a distant if always tempting narrative for analysts and observers. The cycles of foreign hope and disappointment with Chinese leadership attest to this. The most recent stirrings of political reform discussion may be keeping within strict boundaries that do not challenge the CCP’s right to rule, but recent articles in the official Chinese media suggest this discussion is more than mere rhetoric—or, at least, has political implications for the 18th Party Congress…

An article in the latest issue of the school’s journal, Red Flag, posed the question of whether Deng Xiaoping would approve of structural political reform. The answer, unsurprisingly, was “no,” at least as Westerners understand it. The CCP’s rule “suits China’s national conditions and is in accord with the fundamental interests of the people” (Red Flag, June 12). Structural political reform—if it did not include removing the CCP from power or implementing anarchy-causing, Western-style democracy—however, could be understood as China’s adaptation to the structural changes in society as well as dealing with the problems of bureaucracy, excessive concentration of power, corruption and local officials carving out exploitative fiefdoms. Combined with an attack on those who would walk away from the CCP’s leadership, the article seemed to be critical of those who supported the ousted Chongqing Secretary Bo Xilai and other counter-reformers….

True systemic political reform may not be in China’s near future; however, the discussion inside China suggests the status quo is increasingly unacceptable to China’s leaders. Structural political reform may remain elusive, but the CCP appears to be engaged in a serious debate about the future of China—serious enough that Beijing is concerned leadership splits may emerge that would damage Chinese stability. Without a loyal PLA, the party leadership may not have the confidence to continue their discussion, leading once again to political stagnation. The Central Party School attacks could indicate a new alignment between Hu and Xi, disrupting conventional wisdom about factional divides. Although uncertain, this possible realignment would have profound implications for the makeup of the next Politburo Standing Committee and the prospects of even limited CCP-centric reforms.

As I wrote last month, there is no question there are differences at the top, but I wish someone would produce evidence that the differences are ideological ones as opposed to battles over personal interests and political advantages. Speeches about reform are not evidence someone is a reformer. We may see debates and eventually reforms around intra-Party democracy, but the idea that anyone at the top is seriously pushing for western-style political reforms seems rooted more in hope, manipulation and confusion than any evidence-based reality.

Wang Xiaolu (王小鲁), author of the 2010 study looking at China’s grey income, posted on his blog a recent interview he did about income distribution in China–答《时代周报》：收入分配改革为何迟迟不出台？. The National People’s Congress, for the eighth time since 2004, is debating a salary reform plan. Wang is not confident of its passage because the true reforms needed to improve income distribution touch too many vested interests.

A report today makes the passage of the proposed plan even less likely. According to Economic Reference News (经济参考报), authorities in 12 provinces so far have requested permission to reduce the mandated increase in the minimum wage, in response to the slowdown in the economy–12省区工资指导线涨幅下调 经济减速或为主因. Rising wages are key for the much needed economic rebalancing, and worker expectations for salary increases are such that any reductions in the rate of growth could upset a lot of people.

We have two sets of assholes du jour. First, residents in the hometown of Feng Jianmei, victim of the recent forced abortion at 7 months, unveiled a banner calling on people to “beat the traitors, expel them from Zengjia Township“. The reason? The family did an interview with a foreign correspondent (a German one according to Weibo). Per Weibo, the aborted child’s father was forced to flee. The reaction on Weibo is decidedly in opposition to the villagers’ actions, and those villagers clearly did not get the memo about the policy that Bloomberg discusses in Traitor Gets Treated to Lunch as One-Child China Seen Softening.

Second, Chinese supercar drivers set speed record, lose licenses:

Chinese police have fined two drivers 2,200 yuan (US$346) and revoked their licenses after they were caught speeding in their “supercars,” reaching 258 kilometers per hour on the G15 Shenyang-Haikou expressway, setting a speed record for the country’s highway system.

“Off with their heads” is something a lot of people could probably get behind these days…

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still mostly blocked by the GFW. 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/recommend to friends. Thanks for reading.

Today’s links:

• 北京决堤河水灌入地铁10号线工地_网易新闻中心
  sewage canal bursts into part of beijing’s line 10 phase 2 construction, may delay completion. officials say no injuries, but that is what they would say…
• 明鏡新聞網: 中紀委的八道辦案程序
  book out about the liu zhijun case, and how the CDIC handles cases like this
• Day of pride from orbit to ocean |News |chinadaily.com.cn
  From sea to space, from orbit to ocean, Chinese skill and technology proved up to the challenge.
• 《新世纪》周刊第507期_杂志频道_财新网
  this week;s Caixin is manna for China Bears.”Bad Loans Are Here”
• 危机、民主和理性_杂志频道_财新网
  Hu Shuli’s editorial in latest issue of Caixin
• 北京市住建委：房价反弹回涨不具备支持因素_新闻_腾讯网
  Beijing housing officials trying to talk down resurgent expectations of real estate price increases
• China Medical Services Market Seen Hitting $500 Billion – Bloomberg
  China, where 260 million people suffer from cancer, diabetes and other diseases, is in a hurry to bolster its medical services. Investors are ready to help.
• Chinese earthquake kills at least four, injures 100 – Telegraph
  The US Geological Survey (USGS) said the quake struck the border between the provinces of Sichuan and Yunnan just before 4:00pm (0800 GMT), at a shallow depth of just 5.8 miles.
• China moves to lift property market – FT.com
  what are the ratios for new york los angeles and san francisco?//
  In China, economists see a house prices-to-income ratio of about 7 as reasonable, as was historically the case in fast-developing Asian economies. The norm in rich countries is closer to 4. Ms Yao of Dragonomics says the good news is that the nationwide market is fast approaching the preferred level as housing prices edge down while wages climb. The price-to-income ratio for houses peaked at 8.1 in 2009, but fell to 7.4 last year and will decline further this year, according to the Shanghai E-House real estate research institute.
  The bad news is that the price-to-income ratios in China’s leading cities are still extremely high: 12.4 in Shanghai, 11.6 in Beijing and 15.6 in Shenzhen.
• Lessons from an early failure – FT.com
  When Richard Liu, the founder and chief executive of 360buy, China’s second-largest online retailer by transaction volume, first tried his luck as an entrepreneur, he failed miserably.
• China: Dug in too deep – FT.com
  Overspending and project delays reveal many China mining groups are ill-prepared for global expansion
• Traitor Gets Treated to Lunch as One-Child China Seen Softening – Bloomberg
  When Yi Fuxian spoke out against China’s one-child policy three years ago, he says local officials in his home town in Hunan called him a “national traitor.” On his latest visit, they bought him lunch.
• Max Boot: China Starts to Claim the Seas – WSJ.com
  why does the WSJ give any credibility to a failed chickenhawk neocon like max boot? and why does the council on foreign relations waste a billet on him?//  The U.S. sends a signal of weakness over the Scarborough Shoal…
• Chinese crackdown boosts artist Ai on world stage | Reuters
• Chinese ship ‘accidentally rams’ Philippines boat – Yahoo! News
  The Philippines alleged on Sunday that a Chinese vessel accidentally rammed a local fishing boat north of a disputed South China Sea shoal, killing one and leaving four others missing.
• NPC to debate salary reform plan – Globaltimes.cn
  A plan that aims to boost the earnings of middle-income earners and ensure fairer income distribution will be discussed by the Standing Committee of the National People’s Congress (NPC) at the end of June. If approved, the plan is expected to be announced in the second half of this year, a senior NPC official said Thursday. “The plan proposes adopting international practices that would increase minimum salaries. It also includes tax reforms,” He Keng, vice director of the Financial and Economic Committee of the NPC, said at a meeting in Beijing.
• 答《时代周报》：收入分配改革为何迟迟不出台？-王小鲁-我的搜狐
  Wang Xiaolu interview about attempts at income distribution reform
• Members of Congress trade in companies while making laws that affect those same firms – The Washington Post
  speaking of kleptocrats
• Exiled Chinese author awarded German literary Peace Prize｜Politics｜News｜WantChinaTimes.com
  Liao Yiwu, a Chinese dissident author living in exile in Germany, was awarded this year’s Peace Prize by the German Publishers and Booksellers Association, becoming the first Chinese author to receive the award since its establishment in 1950, reports the Hong Kong-based version of Chinese internet portal Sina.
• Amazon.com: Little America: The War Within the War for Afghanistan (9780307957146): Rajiv Chandrasekaran: Books
  From the award-winning author of Imperial Life in the Emerald City, a riveting, intimate account of America’s troubled war in Afghanistan…When President Barack Obama ordered the surge of troops and aid to Afghanistan, Washington Post correspondent Rajiv Chandrasekaran followed. He found the effort sabotaged not only by Afghan and Pakistani malfeasance but by infighting and incompetence within the American government: a war cabinet arrested by vicious bickering among top national security aides; diplomats and aid workers who failed to deliver on their grand promises; generals who dispatched troops to the wrong places; and headstrong military leaders who sought a far more expansive campaign than the White House wanted. Through their bungling and quarreling, they wound up squandering the first year of the surge.
• Rise of the new media moguls | SCMP.com
  Taiwanese tycoons Tsai Eng-meng and Cher Wang, who both support stable cross-strait relations, have taken different approaches to acquiring media interests…
  Tsai made his first foray into the media business in late 2008, buying the financially troubled China Times group, which included two major newspapers, a weekly magazine, and two television stations (one terrestrial and the other cable), for NT$20.4 billion (HK$5.3 billion). He snapped it up just ahead of Jimmy Lai Chee-ying, the owner of Hong Kong’s Next Media (SEHK: 0282) group.
• D.C. mayor visiting China to tap investors – The Washington Post
  Officials expect to announce next week that several Chinese entrepreneurs will be investing as much as $40 million in the second phase of the O Street Market, a 1 million-square-foot mixed-use retail and residential project in Shaw. In exchange, the 80 investors will receive EB-5 visas to move to the United States, officials said. Gray said he hopes to persuade more foreign business executives to take advantage of the federal immigration program by investing in the District.
• Pictures-Passengers at Shanghai Airport Protest Delays
• Police calm stranded travelers at Hongqiao airport — Shanghai Daily
  AIRLINE passengers upset at delays and cancellations affecting their holiday plans threw objects at airline ticket counters at Hongqiao International Airport on Thursday, forcing the airport to call in extra police to restore order.
• Amazon.com: Winner Take All: China’s Race for Resources and What It Means for the World (9780465028283): Dambisa Moyo: Books
• China crunch – FT.com
  Dambisa Moyo, the Zambian-born economist, is thus tempting fate with her third book. Her argument that the world faces a Malthusian future of shortages of everything from water to food and metals such as copper comes as the copper price has fallen by 20 per cent in a year and as mining companies worry that the “supercycle” in commodities is over.
  Still, it takes more than a temporary softening of the Chinese economy and weakening in its demand for commodities to disprove Moyo’s thesis. We could simply be experiencing a pause in an inexorable process. “The world needs to face up to hard facts,” she writes. “The commodities outlook is fundamentally bleak.”

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still mostly blocked by the GFW. 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/recommend to friends. Thanks for reading.

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