The Sinocism China Newsletter 09.24.13

An abbreviated and delayed version today, thanks to meetings.

Today’s Links:


CLSA Analyst: China’s Ghost Cities Like Zhengzhou, Wenzhou, Ordos May Not Be as Empty as They Seem – China Real Time Report – WSJ In the case of Henan’s Zhengzhou—frequently dubbed China’s “largest ghost city”—Ms. Wong notes that a number of media portrayals of the city’s newer areas have used photographs taken between 2010-12, before the metro system connecting the district to the city’s more established neighborhoods was completed. On her most recent visit there in August, Ms. Wong said she saw many cars, “hordes of pedestrians” and considerable ground activity in addition to curtains and air-conditioners installed in numerous residential buildings. “I asked local people about what they think…about Zhengzhou being a ghost city and the answer is, ‘What?’ They don’t actually have any idea they’re being labeled a ghost city,” Ms. Wong said. According to CLSA surveys, 65% of middle-income Chinese households report owning just one property, her report notes. But many such property owners aspire to upgrade or buy another, and Ms. Wong suggests they have the potential buying power to do just that, noting that 60% of them have no mortgages.

Speedy Trains Transform China –  Just five years after China’s high-speed rail system opened, it is carrying nearly twice as many passengers each month as the country’s domestic airline industry. With traffic growing 28 percent a year for the last several years, China’s high-speed rail network will handle more passengers by early next year than the 54 million people a month who board domestic flights in the United States….A paper for the World Bank by three consultants this year found that Chinese cities connected to the high-speed rail network, as more than 100 are already, are likely to experience broad growth in worker productivity. The productivity gains occur when companies find themselves within a couple of hours’ train ride of tens of millions of potential customers, employees and rivals…// Could the claims that these would be white elephants and too much for China’s current level of development perhaps have been wrong? How many times was the Chunnel refinanced, and is it still considered a wasteful investment?

Related: Despite a Deadly Crash, Rail System Has Good Safety Record – statistics suggest that China’s high-speed trains have actually proved to be one of the world’s safest transportation systems so far. Less clear is how long that safety record will last. Government data shows that the system has carried about 1.8 billion passengers since the start of 2009. Rail experts inside and outside China say they are not aware of any fatal crashes other than the one near Wenzhou. They also note that obsessive attention to the rail system by social media users means that it would be nearly impossible to cover up another fatal high-speed train crash — although there have been unconfirmed reports of pedestrians killed after sneaking past fences and on to the tracks. // ” Less clear is how long that safety record will last.” why is this sentence here? couldn’t you say this about any safety record anywhere in the world?

Measuring the Width of the Wealth Gap – Caixin The income gap found out by the CSER’s survey is also wider than NBS’ estimate, but compared with past data it shows signs of narrowing. The top 10 percent household income is 20.9 times that of the lowest 10 percent, compared with NBS’ 8.6 times. It is, however, lower than the institute’s 2007 survey of 26 times. The picture is different once rural household income is factored in. If we compare the average of top 20 percent urban income and bottom 20 percent of rural income, the gap is 67 times, larger than 2008’s 64.6 times.

Cities Blow Out in Construction Spree-Caijing A case in point is the city of Datong in Shanxi Province, where five years of heavy investment under the governance of its former mayor has transformed the city’s landscape. But now the city, faced with the double whammy of massive debt and a faltering macroeconomy, is unable to carry on with its construction projects. Datong, plagued by its overly ambitious city planning and construction programs, is the epitome of China’s urbanization drive.

Related: 河北一半地级市债务率超过100%_经济频道_财新网 half of Hebei’s prefectural-level cities have debt rations over 100%–Caixin// 最高者省会城市石家庄达241%;财政部安排驻各省份专员办,逐省调研探查债务“地雷”,对债务超过警戒水平的市县提出警示

China Money Rate Drops Most in Month as PBOC Adds Cash – Bloomberg “The biggest reverse-repo sales in more than half a year means the PBOC wants the money-market rates to stabilize before the holidays,” said Liu Wenbo, a Shanghai-based analyst at Shanghai Cifco Futures Co. “However, we should also note that the maturity of six days means it only aims to ensure quarter-end cash supply, not a signal of loosening.” //this quarter end will not see a repeat of the June liquidity crunch

Private Banks Required to Endorse Themselves -Caijing So far, nearly 20 private companies and institutions have expressed their intention to enter the domestic banking industry since the State Council gave the nod to private banks about two months ago. But unlike their peer financial institutions, particularly state-owned banks that are implicitly endorsed by the government, private banks need to take full responsibility for all losses in case of business failure, stressed the chief administrative authority in in a document released July 5 meant to encourage private capital to enter the domestic financial sector.

Related: 中关村银行有望首获民营牌照 新华社——经济参考网 Zhongguancun Bank to be the first to get a private banking license, with backing from 360Buy? // 备受外界关注的中关村银行目前已进入实质筹建阶段。《经济参考报》记者从接近中关村管委会人士处独家获悉,中关村银行目前正在开展包括工商注册在内的各项申请银行牌照的前期准备工作,预计将在年内正式向监管层申请银行牌照,并有望在众多民营银行申请者中率先获批。

Related: China Stocks Drop as Financial Companies Fall Most in Two Months – Bloomberg “The entry of private sectors into the banking industry means more competition,” said Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co., which oversees $3.3 billion. “Smaller banks will bear the brunt of the deregulation.”

Parsing the “public opinion struggle” – China Media Project But when we look at the language transmitted by the Central Political Office of the People’s Liberation Army and the General Secretary of the Central Committee of the Chinese Communist Youth League, and when we see this in combination with the campaign against internet celebrities and civil society figures such as Xu Zhiyong and Wang Gongquan, it’s clear that the notion of the “public opinion struggle” has already become a general principle of public opinion control for the Chinese Communist Party. Moreover, the sword of the “public opinion struggle,” which once on occasion was turned against the West, against religious cults and against separatism, is now being turned also against domestic intellectuals and ordinary internet users.

Related: 新闻宣传战线在苏共亡党中的迷失及警示_2013/18_求是理论网 Red Flag on lessons from the Soviet Communist Party loss of control over the media and the subsequent collapse // 深刻反省苏共亡党的历史教训,我们发现,本来应该是与党同呼吸共命运的新闻媒体,在苏共亡党过程中竟然起了推波助澜甚至反对党的作用,被称为压倒苏共的最后一根稻草。这一切是怎么发生的,我们应该如何深入剖析问题根源,从中又该得到怎样的时代警示呢?  一、新闻宣传战线的主管领导思想“僵化”导致了新闻宣传工作死气沉沉…二、新闻宣传战线的主管领导全面“西化”导致了控制权丧失和意识形态混乱.. 三、新闻单位主要负责人被撤换导致苏共新闻宣传战线领导权全面失落…   四、戈尔巴乔夫支持新闻改革和“新闻自由”导致反苏、反共、反社会主义宣传肆意泛滥…五、更多媒体纷纷站到了苏共对立面导致党员和群众思想日益混乱和迷茫…(作者:清华大学马克思主义理论博士后流动站博士后、国家文化安全与意识形态建设研究中心副秘书长)

‘In China, it’s never like this’: An interview with Peter Hessler You think about all the pressure on young people in China. Their lives are incredibly regimented. It makes me think that it’s a true revolution. You have a lot of grassroots activities, a lot of street-level protests. It looks much different in China. We get the big statistics on protests that happened in China, but it really matters who those protesters are and what they are asking for. Here [in Egypt] at every protest people would ask for the regime to step down and the president to resign. They demand complete overhaul. In China, it’s never like this, and it’s always specific things, localized demands. You never have a protests asking for the downfall of the communist party.



China flash PMI: good signs | beyondbrics Some fear, or claim, that domestic demand has recently largely been fueled by unsustainable credit-based stimulus. But that is an exaggeration. After all, China is still a current account surplus country… Looking ahead, we expect the cyclical pick up to be consolidated in the coming quarters, benefiting from the strengthening global demand outlook, which supports growth directly via stronger exports and by improving sentiment and profitability in industry and thus the willingness to invest.

China says only heavy punches will dent rising monopoly behavior | Reuters “Only heavy punches will work,” Xu Kunlin, head of the anti-monopoly bureau at the National Development and Reform Commission (NDRC), said in a speech to a business forum in Beijing. “It’s easy to find evidence on many firms’ monopolistic behavior in China,” Xu said. “Some of it could be found on the Internet,” he added, noting the ease of discovery was the reason why investigations had been so successful this year.

China gets 12.5 percent stake in Russia’s Uralkali | Reuters China, the world’s largest consumer of potash, has acquired a 12.5 percent stake in Russia’s Uralkali (URKA.MM), the world’s largest producer of the soil nutrient, via its sovereign wealth fund, Uralkali said on Tuesday.

Chinese Rater Dagong Flags Local Debt – Two years after it tried to position itself as a global player by downgrading U.S. government debt, China’s best known credit-ratings firm is raising red flags over a problem close to home: climbing local-government debt. At the end of June, Dagong Global Credit Rating Co. broke ranks with its local competitors and downgraded three bonds issued by infrastructure-construction companies wholly owned by Chinese cities. It said it was losing faith in the governments’ backing of the bonds.

China’s Generation Winnebago Avoids Traffic in RVs – Bloomberg As more Chinese embrace automobile culture, foreign RV makers are expanding in China. Researcher estimates the number of motor homes in China will surge from about 9,000 to 800,000 in the 10 years to 2022. The U.S. has some 9.6 million RVs on its roads, according to 21RV. Winnebago Industries Inc., based in Forest City, Iowa, began working in 2011 with dealers in Beijing and several other cities, selling models ranging from 200,000 yuan ($33,000) to 2 million yuan. Thor Industries Inc., the Elkhart, Indiana-based owner of the Airstream brand, started selling its distinctive silver camping trailers from a Beijing dealership in March.

That Chicken in Your Soup – Senator Charles Schumer of New York last week offered a long list of horror stories of contaminated food in China — ranging from eggs with toxic levels of melamine to rat labeled as lamb in Shanghai. And then there is the threat of another bird-flu outbreak, one of the reasons the United States still does not import chickens grown and slaughtered in China.


甘肃张家川县公安局长停职  PSB head in Zhangjiachuan, Gansu removed from post..He had a bribe problem in his past, arrest of teen for online rumors stirred up all sorts of online scrutiny of the town and the officials. more problems likely ahead for them

“House sister” denies charge of faking ID – Xinhua In January, online whistleblowers revealed that Gong, who later became known as “House Sister” among the public, held more than 20 Beijing properties worth an estimated 1 billion yuan (159.4 million U.S. dollars) under the names Gong Aiai and Gong Xianxia. Beijing police later confirmed that Gong owned 41 properties in the city, totaling 9,666.6 square meters.

PR112 / 2013 / News & media releases / News and media / Internet / Home – INTERPOLS EOUL, Korea – One of China’s most wanted criminals and subject of an INTERPOL Red Notice for attempted murder and organized crime membership has been arrested in Seoul following months of intelligence work and operational cooperation between the INTERPOL National Central Bureaus (NCBs) in Seoul and Beijing. Chinese national Chuanbo Lu is believed to be one of the principal leaders of a major organized crime syndicate involved in blackmail, extortion, drug smuggling, money laundering and the illegal running of casinos in China.

China’s anti-waste campaign targets meetings – Xinhua Meeting sizes should be strictly controlled and conference days should not be prolonged unnecessarily, according to the measures on conference fees management regarding central government departments, posted on the website of the Ministry of Finance. If the participants are mainly from Beijing, the conference venue should not be set outside of the capital, according to the measures. Meetings should not be held at scenic sites, which are banned by the Communist Party of China Central Committee and the State Council. Conference forms should be improved to draw on modern information technology like video-phone conferences or Internet video conferences to cut costs and improve efficiency, according to the measures.

要网络民主,不要网络“大民主”_2013/18_求是理论网 近年来,随着互联网技术的发展与普及,网络民主逐渐进入人们的视野。然而,对于网络民主,有人欢喜有人忧。网络民主能产生正能量,这已被大多数人所认可,但与此同时,网络民主也存在失序的问题,从而成为政治动荡、社会混乱的因素,不能不引起我们的高度重视。



China Gains New Friends in Its Quest for Energy – China’s urgent quest for energy is the main driver of its strategic interest in a region whose proximity allows huge reserves of oil and gas to be moved overland through Chinese-built pipelines rather than by ship through American-dominated sea lanes from the Middle East. In the long term, analysts say, China’s economic ties with Central Asia could liberate it from any concern that the United States could use its superior naval power to enforce a sea blockade, should relations ever deteriorate to the point of confrontation.

Syria’s Assad criticises U.S. threat of strikes: China TV | Reuters “If the U.S. wants to find excuses for war, it will find them as it has never stopped war,” Assad said in an interview with China’s state television, CCTV, in the Syrian capital. “With or without the Syrian crisis, we will always be on alert against some Western countries’ intention to override the U.N. Charter and the international laws,” he added, according to a transcript of his translated remarks from CCTV.



New U.S. envoy to Hong Kong vows to push for democracy | Reuters The new U.S. envoy to Hong Kong insisted on Tuesday that Washington would not be silenced by China in calling for democracy in the global financial hub, vowing to continue speaking out for core rights and freedoms. U.S. Consul-General Clifford Hart’s first public speech in the former British colony came amid rising political and diplomatic tensions that have included formal warnings from China that Western nations must not meddle in the city’s politics.

Diplomatic tension over Hong Kong exposes fragility of hopes for democracy | Reuters From China warning Western nations to stop meddling in Hong Kong to Communist Party-backed newspapers describing “plots” by foreign spies to seize the city, a growing row over electoral reform has exposed the fragility of hopes for full democracy.

Politics in Taiwan: Daggers drawn | The Economist interesting that the Economist places Taiwan (aka the Republic of China) articles in the Asia section and not the China section? // RARELY in Taiwan’s 17 years of democracy have opinion polls painted a president as unpopular as Ma Ying-jeou. Though he is often accused of being ineffectual, it is actually a rare show of decisiveness that has lost Mr Ma (pictured, left) recent support. At issue is his handling of alleged wrongdoing by a titan of Mr Ma’s Kuomintang (KMT), Wang Jin-pyng (pictured, right). The effect has been to threaten the unity of the ruling party, as well as send ripples across the Taiwan Strait.





EXCLUSIVE: China to lift ban on Facebook – but only within Shanghai free-trade zone | South China Morning Post Nice if true but I am skeptical // Beijing has made the landmark decision to lift a ban on internet access within the Shanghai Free-trade Zone to foreign websites considered politically sensitive by the Chinese government, including Facebook, Twitter and newspaper website The New York Times. Government sources informed of the decision told the South China Morning Post on condition of anonymity that the authority in charge of the Hong Kong-like free-trade zone in Shanghai, the first such zone on the mainland, would also welcome bids from foreign telecommunications companies for licences to provide internet services within the new special economic zone.

Microsoft forms Chinese console venture | Polygon Microsoft has formed a joint venture with Shanghai media giant BesTV to launch a new games device offering streaming entertainment services into China. The companies posted a note on the Shanghai Stock Exchange today outlining the new operation, which will launch with an initial investment of $237 million. Unconfirmed reports in the Chinese media stated that the new operation would launch a console based on Xbox technology called Bestpad.

E-commerce: Tencent’s worth | The Economist The Economist says Tencent is overvalued // Tencent does give its services away: QQ is used by 800m people, and its WeChat social-networking app (which initially resembled America’s WhatsApp) has several hundred million users. What makes it different from Western rivals is the way it uses these to peddle online games and other revenue-raising offerings.

China’s Alibaba goes global with its eBay-like Taobao service, starting with Singapore launch – The Next Web Chinese e-commerce giant Alibaba has officially made a move to go global by launching its Taobao marketplace in Singapore, seeking to make its mark in Southeast Asia after using Hong Kong and Taiwan as a stepping stone a year ago to make the jump overseas.

HEARD ON THE STREET: Paring Apple’s Big iPhone Weekend – Last year, Apple sold over two million of the iPhone 5 the first weekend it went on sale in China, but that was three months after its initial debut. Including China sales could account for at least half of the increase in this year’s opening weekend.

Alibaba Pushes Mobile Messaging App – Digits – WSJ Even though Laiwang has been available to smartphone users since the end of 2012, the app only has about a million users. It faces an uphill battle against Tencent’s WeChat, a popular messaging app that has about 300 million registered users in China according to a recent estimate by Macquarie Securities. Laiwang, available for downloading on Apple Inc.’s iPhone as well as other smartphones powered by Android, is part of Alibaba’s efforts to take on Tencent, as the two companies compete for dominance at a time when more online activities migrate to mobile devices from personal computers.

Has Xiaomi redacted the Communist red star from its mascot?–TechInAsia Of all the Chinese companies with an international reach, Xiaomi would certainly rank among the least politicized (If Huawei smartphones came with a red, five-pointed star printed above its logo, it’d be in even more trouble with US Congress).

Why ‘The Voice’ Is China’s No. 1 TV Show – Producers of “The Voice of China” attribute the show’s popularity to its unbiased contestant selections. The show has an average viewership of more than seven million per episode on television and more than 70 million viewers online, according to data from media firm GroupM and online market research firm iResearch Consulting Group. “Almost every other show in China looks at someone’s appearance to judge their talent,” says “Voice of China” director Zhang Weiqi. “This isn’t one of those shows.”






China Says Consumers Need to Bear Some Costs of Tighter Fuel Standards – The National Development and Reform Commission, China’s top economic planning agency, said Monday that higher costs to improve nationwide fuel quality will be borne by both the refining industry and its consumers. It didn’t elaborate. “Currently, the situation of the atmospheric environment in China is grim,” the NDRC said on its website. Tiny particulate matter in the air has “harmed the health of the population and has had an impact on society and harmonious stability,” it said.

北京未来五年或需投入近5万亿元治理大气_新闻_腾讯网 5 Trillion RMB needed over next 5 years to clean up Beijing’s air?// 人民网北京9月23日电 北京市环保局副局长、新闻发言人方力在今天下午召开的“北京市清洁空气行动计划”新闻发布会上表示,在未来五年全社会为治理大气需要投入的资金估计可能近5万亿。具体到政府,估计政府要投入千亿以上,大概两千亿、三千亿。

A yankee in China: There’s money in Beijing’s filthy air | GlobalPost Since its founding in 2007, LP Amina has grown from one employee (Latta) to roughly 130, split between China (its largest office) and Charlotte, North Carolina. By the end of 2013, it will have completed a total of 30 projects and turned over $35 million in revenue. Most importantly, Latta says, this year LP Amina will make its first annual profit. Getting there has been a long journey, and not always an easy one. Latta arrived in China eight years ago, an employee of French energy giant Alstrom. He knew little about the country, but was attracted to it.

Tibetans’ caterpillar fungus fortune nearing exhaustion – Xinhua The caterpillar fungus, a cash cow for Tibetans, may die out in China in two decades, as a result of overexploitation on the Qinghai-Tibet Plateau, experts have warned. When the harvest season ended this summer, many unlucky diggers found their fungus incomes were not even enough to cover their costs — mainly a fee that varied from 5,000 up to 50,000 yuan (817 to 8,170 U.S. dollars) levied by local authorities according to the acreage where they were allowed to dig.



China Probes Juice Makers into Allegations of Processing Rotten Fruits -Caijing China Food and Drug Administration has visited the factories and urged immediate rectifications, according to the official Xinhua. A factory of Huiyuan Juice Group, the largest juice producer in China and once the buying target, is among the three companies involved in the scandal blown off by Chinese media. Shares of the other two, Haisheng and Andre, both listed on the Hong Kong Stock Exchange, were suspended trading Monday while Huiyuan plunged 5 percent.