The Sinocism China Newsletter For 09.27.12

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The islands dispute may get worse. Meetings in Beijing and New York (Reuters) appear to have made no progress and Prime Minister Noda vowed no compromise as Japan, China dig in on islands row (Reuters):

“As for the Senkakus, they are an inherent part of our territory in light of history and also under international law,” Noda said of the rocky islets China claims as the Diaoyu Islands in a bitter spat between Asia’s two biggest economies.”There are no territorial issues as such. Therefore, there cannot be any compromise that represents a retreat from this position,” he told a news conference in New York after attending the U.N. General Assembly.

Japan’s opposition has picked a new leader (Reuters), and he has no interest in compromise with China:

That would put Abe in position to become the next prime minister and he wasted no time in laying out his credo, promising to protect Japan’s borders and revive its economy.”Japan’s oceans and territory are being threatened and the economy has stagnated due to prolonged deflation and the strong yen,” he told a news conference after being chosen by party lawmakers. “It is my mission to overcome these difficulties and build a strong and prosperous Japan.”

China is not yielding, as Xinhua notes in China’s resolve to safeguard sovereignty will never change:

In fact, if the Japanese government had not announced the “purchase” of the islands in the first place, the two sides would still have had chances to work out solutions following a guideline proposed by late Chinese leader Deng Xiaoping and described as “laying aside differences and engaging in joint exploitation.”

But due to the “purchase” drama, a strong sentiment is now shared by the Chinese government and people that a rising and militarily more powerful China should not tread the old path of being bullied and stripped of territories by other countries, notably Japan.

As an ancient Chinese saying goes, “It is up to the one who tied the knot to untie it.” Since China was not the one who started the spat, it is reasonable to conclude that it would be willing to put it to a proper end should Japan make good-will concessions.

Japan precipitated this crisis by breaking the long-established status quo. China exacerbated it with the nasty protests, its announcement of baselines that formally demarcate its territorial waters (Foreign Policy) and continuing hints at further measures against Japan.

Neither side appears to be seriously looking for the off-ramp, and the politics are getting very dangerous. With Xi Jinping taking over imminently we should expect a further ratcheting up of tension, unless Japan makes a “good-will concession”. But such a retreat in the face of Chinese pressure would be political suicide in Japan, just as any softening by a Chinese leader, especially when he has just taken power, would be in China.

The next move by China may be to increase economic pressure on Japan, though Caixin argues in a new editorial that waging ‘economic war’ on Japan would be unwise:

The Diaoyu row is distressing to the Chinese. Economic sanctions remain a strategic tool of the Chinese government, but they must be wielded wisely. On this issue, China’s goals are clear and Beijing has taken effective measures so far. Diplomacy remains the best choice of action, military pressure has its use, and an economic war is in no way inevitable.

This separation of politics and economics is likely to remain a feature of Sino-Japanese ties. Economic co-operation may not engender strategic trust, but an economic war will certainly send overall relations plunging to a low. China can resolve this dispute without resorting to economic sanctions. Time is on its side.

Any wise readers see a way to resolve this dispute?

China’s stock market fell to its 2009 low on concerns about the economy and profits (Bloomberg), briefly dipping below 2000, a level most observers think the government is determined to hold. Marc Faber, aka Dr. Doom, has now gone bullish on Chinese shares (MarketWatch):

In a surprise departure from his previously bearish stance, Faber was upbeat on China stocks. Among other reasons, he said he’s wary of the popular scepticism towards mainland China, citing a recent investor survey that found the investments ranked bottom of the class — even below European equities — in terms of expected returns over a 12 month horizon.

“I think China stocks are quite a good buy,” Faber said, though he recommended avoiding shipbuilding and steel shares, saying these sectors continue to suffer from an investment hangover.

There is an argument to be made that any positive statements about reform by Xi Jinping could give a psychological fillip to the Chinese market. In fact, the completion of the seemingly turbulent transition, which is now rumored to be in the second week of October, could restore some near-term confidence among investors.

But any renewed confidence might be broken by increasing tensions with Japan, though as a recent investment report suggests (China Daily) the disputes are good for some:

Sinolink Securities conservatively estimated that the construction of a complete carrier battle group would cost 64 billion yuan ($10.09 billion).

To protect the sovereignty of both the East and South China Sea, China might need two carrier battle groups, representing an investment of about 130 billion yuan, Sinolink Securities said.

I am officially worried for my children…

On to today’s links:


Pension Shortfall Exists, Higher Retirement Age Probable: Official-Caijing – A Chinese official has signaled Tuesday the country may have to reform the current pension system by raising retirement age to make up the gap in funding. That contrasts with previous rhetoric by government’s officials, including a spokesman with the Ministry of Human Resources and Social Security, who said in July that revenue from the pension funds could well cover the spending.

7 Days Jumps to Four-Month High in New York on Buyout Offer – Bloomberg – who is next in this privatization trend? ctrip? sohu? perfect world? // The board of Guangzhou-based 7 Days received the “non- binding” proposal from a group of private-equity firms led by the Carlyle Group (CG) LP and Sequoia Capital, and existing shareholders including the company’s co-chairmen Boquan He and Nanyan Zheng, it said in a statement today. The group plans to purchase all outstanding shares with cash at $4.23 each, or $12.7 per ADR.

CHINASCOPE – “China’s Huge Highway Liabilities Relate to Years of ‘Great Leap Forward’ Development” – On September 25, 2012, People’s Daily published an article related to the nation’s highways asking, “How can highways survive with over one hundred billion yuan in highway liabilities?”  The liabilities of the 19 listed highway companies amounted to 124.79 billion yuan (US$19.8 billion) for the first half-year of 2012, compared to 105.33 billion yuan (US$16.72 billion) for the same period last year.

Big Developers Buying Land, But Market Still Uncertain, Analyst Says – Caixin – With the end of the year approaching, local governments had not yet met their annual revenue targets, prompting them to put more land on the market. Fees from land transfers are the chief source of revenue for China’s local governments. Governments in several cities have put more land on the market in the second half of the year, Yu Liang, president of China Vanke, said. The company’s purchases didn’t mean it expected the market to bounce back, Yu said.

Hot land deals pick up in Beijing, surges seen in other cities – Xinhua | – Ten plots of land changed hands in Beijing in the seven day period ending Sept. 26, marking deals of 11.87 billion yuan (1.88 billion U.S. dollars) — a figure comparable to 14.49 billion yuan in land deals seen in the first six months, according to data from the city’s land reserve center.

一线城市集体点刹楼市:北京叫停拍地广州限售_国内财经_新浪财经_新浪网 – tier 1 municipal governments adding various measures to repress real estate prices

保障房乱象调查:开豪车的神秘业主|保障房|乱象调查|豪车_21世纪网 – 21st century business herald looks at corruption in the allocation of subsidized housing in beijing// 核心提示:北京市昌平区保障性住房建设项目,即使是工作日也有宝马、奔驰、奥迪等多辆豪车停泊其中。“申请人要是经审核没有问题后才可入住,但入住后收入会否变化,我们不能管的了

谁在糊弄谁?房产税征与不征的辩驳_21世纪网 – nice 21st century business herald feature on the debate in china over a property tax

China crackdown to support rare earths prices | Reuters – A crackdown on small, inefficient rare earth producers in China is likely further to restrict supply from the world’s biggest producer of the minerals and support weak prices, mining services group Rare Earths Global said

China Economic Watch | The Change in Renminbi Expectations – Is this trend likely to change anytime soon? It’s hard to predict, but the market does not appear to think so. The market for non-deliverable forwards is pricing in little to no appreciation for the renminbi over the next year. Add the growth in foreign currency deposits, along with the decline in renminbi deposits in Hong Kong, to the list of indicators that perceptions around renminbi appreciation have significantly changed.

Chinese slowdown haunts premium carmakers at Paris show | Reuters – the 2009-11 stimulus-fueled corruption carnival is over// “The Chinese have overconsumed premium cars in recent years,” Singapore-based Bernstein analyst Max Warburton wrote in a study published on September 25. “Right now, we see a number of risks to sustained high profits from China.”



Chinese female official aspires to top role – The Washington Post – Most of the 25 members of China’s Politburo are uncannily similar, with their black-dyed hair, dark suits and science degrees, but one stands out. With her trademark blue skirt-suit and pearls, Liu Yandong, 66, the top official in charge of health, education, culture and sports, is the only woman in the group.

Who Will Be Watched: Margaret K. Lewis on China’s New CPL & Residential Surveillance | China Law & Policy – After 16 years and a world of changes, China finally revised its Criminal Procedure Law (“CPL”).  Implementation is set to take place in three months.  So the question remains, is China ready for these changes?  Are the lawyers aware of how these changes will impact their practice?  Will we see a different landscape?

学习时报_2012-09-24_参考文摘_什么导致了苏联剧变 – Study Times on what caused fall of Soviet Union

CHINASCOPE – Study Times: “What Caused the Drastic Changes in the Former Soviet Union?” – On September 2012, Study Times, the publication of the Party School of the Central Committee of the Chinese Communist Party, published an article titled, “What Caused the Drastic Changes in the Former Soviet Union?” The article blamed the Stalinist social model instead of socialism for the fall of the former Soviet Union. According to the article, the collapse of the former Soviet Union was inevitable because: 1) the people were not the masters of the country; 2) the country developed fake democracy; 3) the Party cadres overrode the people and had privileges; 4) intellectuals and peasants suffered discrimination; 5) the people’s living standards improved very slowly; 6) innocent people were killed at random.

Commentary: Officials’ property declarations key to corruption fight – Xinhua |– good luck, been talking about this for years, latest measures already widely mocked online// Property declaration by officials in the public sector conforms to the will of the people and reflects the authorities’ decisiveness to build a clean and transparent government. It is a long war to fight corruption, and improving the property declaration system could be a vital and forceful tool.

Leninism still relevant to China: CPC think tank – Xinhua |– Leninism still has relevance in China, a communist theory expert said Wednesday while explaining why the Communist Party of China (CPC) is upholding Leninism as one of its guiding philosophies. Yan Jianqi, a researcher with the Party Literature Research Office of the CPC Central Committee, said at a press conference that Leninism offered guidance for poor and weak countries to build socialism in colonial times.

Senior official addresses China Law Society conference – Xinhua |– A senior official of the Communist Party of China (CPC) on Wednesday called on the country’s legal professionals to make innovative contributions to building a socialist country under the rule of law. Legal workers should learn from the people and from practices and go deep among the public, Zhou Yongkang, a Standing Committee member of the Political Bureau of the CPC Central Committee, said at a conference marking the 30th anniversary of the reconstruction of the China Law Society.

China stresses Party leadership in cultural reform – Xinhua | – Chinese top leaders Hu Jintao, Wen Jiabao, Li Changchun, Xi Jinping and Li Keqiang meet with representatives attending an award ceremony on the work of reforms and development in the country’s cultural sector, in Beijing

Obama mocks Romney for newfound outrage on China trade | Reuters – James Mann’s China Fantasy thesis now mainstream, to chagrin of many pundits, academics and policymakers, in both parties, who pushed the trade will free China agenda// “He’s been talking tough on China,” Obama said in a speech at Bowling Green State University. “When you hear you this newfound outrage, when you see these ads he’s running promising to get tough on China, it feels a lot like that fox saying, ‘You know, we need more secure chicken coops.'”



Chinese National Charged With Carbon-Fiber Export Scheme – Bloomberg – Liu, a Chinese citizen who had lived in Flanders, New Jersey, was convicted of stealing thousand of electronic files detailing performance and design of guidance systems for missiles, rockets, target locators and unmanned aerial vehicles in 2010. Prosecutors alleged that he delivered presentations about the technology at several Chinese universities, the Chinese Academy of Sciences and at government conferences with the aim of securing future employment.. ALSO TODAY.. Ming Suan Zhang appeared today before U.S. Magistrate Judge Vera Scanlon in Brooklyn, New York, on charges of violating U.S. trade restrictions. He is accused by the U.S. of being involved in a proposed multimillion-dollar deal to export material for possible use in a test flight of a new Chinese fighter jet.

中国首艘航母交接入列_腾讯新闻_腾讯网 – tencent news goes all in with its special site about the launch of the liaoning aircraft carrier..think of the martial fantasies some of this imagery must stir in passionate, frustrated young men//

China Offers Support to Mali Military in Fight Against Islamists – Bloomberg – this probably won’t help anti-terrorism efforts in Xinjiang// China offered to support Mali’s military in its fight against Islamist rebels who have seized northern parts of the country, said Guo Xueli, charge d’affaires at the Chinese Embassy.

CCTV9 Interview with ADM Zhang Zheng – YouTube – Interview in English with ADM Zhang Zheng, first captain for aircraft carrier Liaoning. good English, when will a US Admiral speak Chinese as well as this Chinese Admiral speacks English?

U.S. Unease Over Legal Basis for Drone Strikes – – imagine the reaction if China took this approach. Or when it does, once it has weaponized drones// Obama Administration Charts Delicate Legal Path Defending Controversial Weapons

The Chosun Ilbo- China to Deploy Drones to Monitor Ieo Island – guess disputes w Japan, Philippines and Vietnam not enough// Ieo Island is located in an area where the exclusive economic zones of Korea and China overlap but lies much closer to the Korean Peninsula, 149 km southwest of Korea’s southernmost island of Mara.

The Island Imbroglio-Sinica Podcast – As memories of earlier episodes of over-exuberant patriotism resurface, the events have the Sinica folks recalling with some nostalgia that the last time both Xi Jinping and a bunch of islands were in the news, the excitement was over Xi’s vacation stopover in Fiji on his way to a state visit to Latin America. This week on Sinica, Kaiser Kuo is pleased to host new guests: Damien Ma, analyst with the Eurasia Group, who also contributes frequently to the Atlantic Monthly, and Ian Johnson, former Beijing bureau chief for the Wall Street Journal, now with the New York Times. We are also thrilled to be rejoined by Tania Branigan, ace correspondent for the Guardian in Beijing

Land disputes in Cambodia focus ire on Chinese investors – The Washington Post– When China’s President Hu Jintao visited Cambodia this year, Tep Vanny, a 32-year-old housewife fighting eviction from her family home in central Phnom Penh, set off down Mao Tse-Tung Boulevard to try to deliver a plea for help to the Chinese Embassy. Among thousands of residents in the Boeung Kak Lake district of the capital whose land has been targeted for redevelopment by a Chinese-financed real estate company, Tep Vanny carried a letter explaining the “sadness and suffering” caused by the project — which has turned Phnom Penh’s biggest lake into a barren, arid expanse of sand — and begging the Chinese leader to “intervene for a fair resolution of our land dispute problems.”

Russian far east region bans Chinese migrant farmers|Economy|News| – Amur Oblast in Russia’s far east announced on Monday that migrant agricultural workers from China will not be allowed to cultivate land in the area from next year, and they will be replaced by workers from North Korea as well as other parts of Russia, reports the Chinese-language news portal North News, based in Inner Mongolia.

Conceptualizing Future United States-China Relations | Brookings Institution – interesting podcast// On September 25, the Center for Northeast Asian Policy Studies (CNAPS) and the John L. Thornton China Center at Brookings hosted a discussion featuring presentations by several of the book’s authors. David Shambaugh provided a conceptual framework for analyzing U.S.-China relations; Ashley J. Tellis of the Carnegie Endowment for International Peace evaluated how the relationship functions in the realist international environment; and Harry Harding of the University of Virginia described American visions for the future of the relationship. Senior Fellow Jonathan Pollack, acting director of the John L. Thornton China Center, provided remarks following the presentations. Senior Fellow and CNAPS Director Richard Bush moderated the discussion.

U.S.-China Relations and the 18th Party Congress: Uncertainty Amidst Political Transition | Center for Strategic and International Studies Interesting event, Richard Armitrage, Stapleton Roy and Chris Johnson talk Chinese politics. Armitrage, after mocking Obama’s peace prize (said Obama got it just because he wasn’t George W Bush), said that Deng Xiaoping should have gotten the nobel peace prize, for lifting 600 million people out of poverty//



China’s Taobao makes big push to shed U.S. notorious label | Reuters – seems a bit premature, Taobao been allowing IPR violations for years, shouldn’t it prove it can be clean for a meaningful period of time before getting this label removed?// China’s largest e-commerce company, Alibaba Group, has won support from the U.S. movie industry in its campaign to persuade the Obama administration to drop its website from a U.S. list of “notorious markets” that sell fake goods. But U.S. software, clothing and shoe manufacturers are urging USTR to keep Taobao on the annual list, which is expected to be released in coming months.

Chinese internet users to overtake English language users by 2015 – Telegraph – The number of internet users accessing the web in Chinese is set to overtake English language users by 2015, according to a report by the UN Broadband Commission.

Hong Huang: The Muddy Water of Social Networks –– Navigating in the muddy waters of the Chinese social-networking world is not easy. Many brands have paid good money to launch campaigns, and although the numbers look wonderful, the truth is that the corporate Weibo account is followed by a Water Army of Corpses. So if you are thinking about launching a social-networking campaign in China, be careful. There are lots of Corpses and Zombies out there.

Director Reveals Mystery of China’s Film Censorship System on Weibo | Tea Leaf Nation – “No film is safe, no film investment is safe, no director’s creation is safe [under China’s film censorship framework],” said director Lou Ye (@导演娄烨) in a recent interview with Sina, a Chinese Internet portal, that explored his experience with the ironfisted gatekeepers of China’s arts and explained his decision to post details of the film censorship process on Sina Weibo, China’s Twitter.

Lenovo Counting on China Advantage to Challenge Apple Lead: Tech – Bloomberg – Lenovo Group Ltd. (992), set to overtake Hewlett-Packard Co. (HPQ) as the biggest PC maker this year, now has its sights on the smartphone and tablet markets, as it takes on Apple Inc. and Samsung Electronics Co. in China.



New Ullens Show Spotlights Chinese Architecture, Inspired by Duchamp – Scene Asia – WSJ – what the Ullens Center for Contemporary Art plans to show in its first architecture exhibition includes the drawing, film and other media by Yung Ho Chang, a Chinese architect who teaches at the Massachusetts Institute of Technology, cites Hitchcock and Duchamp as influences and co-founded Feichang Jianzhu, a design “atelier” whose name can translate, depending on pronunciation, to “unusual architecture” or “very architectural.”

» Global Times Olympics Journalist Tests Positive For Plagiarism Beijing Cream – ouch

Chinese journalist ‘plagiarised Boris Johnson’s Daily Telegraph column’ – Telegraph – The tale of Ms Zhao’s demise emerged on Wednesday when the blog Beijing Cream reported that a ‘Global Times Olympic journalist’ had ‘tested positive for plagiarism’. The Global Times source, who spoke on condition of anonymity, confirmed the story to The Daily Telegraph and suggested Ms Zhao’s limited experience with “proper journalism” may have contributed to her downfall.

» Protester Crushed To Death By Steamroller, Possibly On Order Of Town’s Vice Mayor Beijing Cream – On September 16, a man protesting demolition-relocation in Lianhua City in Changsha, Hunan province was crushed to death under a steamroller, possibly by order of the deputy mayor, as reported by KDNet on Sunday. The incident was posted onto Sina Weibo on Monday, where it has since been forwarded more than 16,000 times, eliciting comments such as, “Why should we love country?” (@manhengjie) and, “Spectacle too horrible to endure”

Protester shot to death while on fire at Liaoning forced-demolition: Shanghaiist – An investigation has found that a police officer, Zhang Yan, acted in self-defense after he shot to death a protester resisting a forced-demolition in Panjin, Liaoning Province, who had set himself on fire before rushing at the cop with a sickle. Official accounts are supported by that of a villager who told the Beijing News that the villager, Wang Shujie, poured petrol over himself and lit it before attacking the police.



广东环保厅官员称中石化要挟地方政府 偷排污水-财经网 – Guangdong EPA official says Sinopec threatening local government, ignoring environmental regulations



Dish: Da Dong’s Foie Gras With Lotus Root and Osmanthus – Scene Asia – WSJ – someone should talk to him about his photography and camera collection. Leica loves him, and many other rich Chinese guys// Mr. Dong has four restaurants in China, all named after himself, and a fifth planned for the new One World Trade Center building in New York City. He tried multiple experiments with foie gras, but his favorite – served at all of his outlets, including Da Dong’s Dongcheng District flagship – combines the ingredient with rice-stuffed lotus root in a sweet osmanthus sauce

The best way to see this daily post is to subscribe by email, especially if you are in China, as Sinocism is blocked by the GFW. You can also follow me on Twitter @niubi or Sina Weibo @billbishop