China Readings For August 24th

"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner

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The bad news about China’s economy is piling up faster than unsold cars at a Beijing auto dealership. A key China Manufacturing Gauge Fell to a 9-Month Low (WSJ) and the New York Times reports today in a front page article by Keith Bradsher that China’s Economy is Besieged by a Buildup of Unsold Goods. The Times article again says China is massaging/hiding data and it discusses the problems in the auto sector:

Inventories of unsold cars are soaring at dealerships across the nation, and the Chinese industry’s problems show every sign of growing worse, not better. So many auto factories have opened in China in the last two years that the industry is operating at only about 65 percent of capacity — far below the 80 percent usually needed for profitability.

Yet so many new factories are being built that, according to the Chinese government’s National Development and Reform Commission, the country’s auto manufacturing capacity is on track to increase again in the next three years by an amount equal to all the auto factories in Japan, or nearly all the auto factories in the United States.

Clearly there is far too much capacity in the auto industry, and the new government rules sharply limiting car purchases by government agencies is having an effect.

The Conference Board offered a flicker of hope Thursday with its report that the China July Leading Index Rises 0.7% (MNI) but in general it is hard to find much to be optimistic about. Yesterday I had a call with the China strategist for a top US bank who started the call by saying something to the effect that things are really grim in China right now and we are looking for any bright spots…

The State Council has approved an ambitious and needed initiative to cut red tape and help small businesses as Bloomberg reports in China Starts Reform Boosting Guangdong Party Boss Wang’s Profile and Xinhua discusses in Government reforms will decide China’s future. Throw in tax cuts, as Andy Xie has suggested, and the GOP might be able to get behind the CCP…

China will not be pleased. The Wall Street Journal reports that the U.S. Plans New Asia Missile Defenses:

as part of a defensive array that could cover large swaths of Asia, with a new radar in southern Japan and possibly another in Southeast Asia tied to missile-defense ships and land-based interceptors…

“The focus of our rhetoric is North Korea,” said Steven Hildreth, a missile-defense expert with the Congressional Research Service, an advisory arm of Congress. “The reality is that we’re also looking longer term at the elephant in the room, which is China.”

The timing of the leak is interesting.

The lead essay of the latest issue of Foreign Affairs is How China Sees America: The Sum of Beijing’s Fears by Andrew J. Nathan and Andrew Scobell. The authors conclude that:

China has not earned a voice equal to that of the United States in a hypothetical Pacific Community or a role in a global condominium as one member of a “G-2.” China will not rule the world unless the United States withdraws from it, and China’s rise will be a threat to the United States and the world only if Washington allows it to become one. For the United States, the right China strategy begins at home. Washington must sustain the country’s military innovation and renewal, nurture its relationships with its allies and other cooperating powers, continue to support a preeminent higher-education sector, protect U.S. intellectual property from espionage and theft, and regain the respect of people around the world. As long as the United States addresses its problems at home and holds tight to its own values, it can manage China’s rise.

The same issue also has an essay from Princeton professor, former Cheney advisor and current Romney advisor Aaron L. Friedberg. In Bucking Beijing: An Alternative U.S. China Policy Friedberg concludes that:

China’s recent behavior may prove helpful in this regard. Beijing’s truculence has caused deep anxiety among many of China’s neighbors, making them more inclined than ever to work together to balance the Asian giant. For this reason, other governments in the region have generally welcomed the more muscular rhetoric that has been emanating from Washington in recent months. But they remain uncertain whether the United States will have the resources and the resolve to back up its brave words. Whoever is elected president in November will have to take steps to dispel these doubts. Developing and funding a credible strategy for countering China’s buildup and adopting a tougher approach to economic engagement will both be important. So, too, will be continuing to stand firm on issues of principle. As it engages and balances Beijing, the United States must do what it can to encourage what George Kennan might have termed the “gradual mellowing” of Chinese power.

It is not hard to see why Beijing distrusts Washington.

Strangely there is no mention in the Foreign Affairs article of Friederg’s role as a co-chair, Asia Pacific on Mitt Romney’s foreign policy and national security advisory team. (Another member of Romney’s foreign policy team is Paula J. Dobriansky, whose China experience includes serving as a director of Duoyuan Printing, one of several Chinese stock frauds that blew up on US investors in 2011.)

Today is the 46th anniversary of the death of the great writer Lao She. He committed suicide after being tortured in the Cultural Revolution.

Today’s links:


住建部:正研究强化房地产市场调控政策_公司频道_财新网 – Ministry of Housing and Rural-Urban Development says considering policies to strengthen real estate controls, clearly trying to damp surging expectations about the property market, esp given that economy looks so bad many now assume government will have to turn to the property sector for growth again, as unhealthy as it may be//

Xinhua Insight: More regulation possible as house prices rise

正确认识形势 坚定发展信心–观点–人民网 – People’s Daily page 1 on correctly understanding the current economic situation and maintaining confidence. not the way hu jintao and wen jiabao wanted to end their 10 year run, all hopes on the 18th party congress, hard to see how it can live up to all the expectations//

China’s Labor Market Tightens – – Guo Sheng, the chief executive officer of recruitment website, said that growth in the number of jobs advertised on the website had slowed sharply, from 77% growth in 2011 to 17% growth in 2012. “The bad news is that growth in job opportunities has slowed, the good news is there is still growth,” he said. He also sees signs that the slowdown in China’s growth was denting wage increases. “At the end of 2011 and the beginning of 2012 wages were rising at around 15% to 20% a year,” he said. “From the second quarter we are seeing slowing growth and falling inflation reducing wage increases.”

State Council Seeks to Limit Polluting, Energy-Gobbling Industries – Caixin Online –how will this affect the economic analyses that rely on electricity consumption data?// Industries with high energy consumption and emissions will face new restrictions under State Council guidelines issued on August 21 that are intended save energy and cut greenhouse gas emissions. The measures include restricting bank loans and water and power supplies

China’s Slowdown May Be Worse Than Official Data Suggest Dallas Fed paper on problems with Chinese data, specifically electricity consumption vs industrial output

A Nightmare Scenario – Caixin Online – Stephen Roach imagines a US-China trade war//

China escalates U.S. trade dispute, requests WTO decision | Reuters – In a move that escalates a trade row with the United States, China said it would ask the World Trade Organization (WTO) to adjudicate a dispute over U.S. punitive import duties on 22 Chinese exports, including solar panels and steel products.

China may start building rare earths stockpile in Sept -report | Reuters – China, the world’s largest producer and consumer of rare earths, may start building an 18,000-tonne strategic stockpile of the elements in September, the Economic Information Daily newspaper said on Thursday.

Breakingviews: China has no liquidity problem. That’s a problem | Reuters – (Reuters Breakingviews) – Beijing has managed to keep credit and cash growing despite falling property prices, weak corporate profits and slowing GDP growth. Such successful financial management may help it avoid the kind of liquidity trap that made the U.S. recession so painful. But it could encourage the kind of behavior that has kept Japan in a slump for so long.

RPT-UPDATE 1-Bank of China posts weakest quarterly profits growth in 3 years | Reuters – “Margins will likely fall more in the second half of this year, partly because of the interest rate liberalisation we’re seeing,” said Tan Yuansheng, president of Chongqing Rural Commercial Bank, which reported a 25 percent jump in its first-half earnings on Aug. 17. The net interest spread has tightened to just 0.9 percent, based on the lowest permissible lending rates and highest permissible deposit rates, from more than 3 percent as recently as June.

China’s ‘B’ Shares Getting Erased as ‘A’ Shares Boom – Deal Journal – WSJ –  The end may finally be near for China’s troubled foreign currency-denominated stock market after the world’s largest producer of shipping containers proposed quitting the exchange and moving its listing to Hong Kong.

工程腐败,假专业之名–舆情频道 – a nice look at municipal infrastructure corruption in China, through a case in Beijing//北京市纪委、北京市监察局主办的《是与非》杂志最近披露一起案件——发生在2010年9月17日的北京玉渊潭“9·17”透水事故,背后隐藏着北京市河湖管理处原主任李柱腐败案件。目前,李柱已经被依法移送司法机关追究刑事责任。

各地投资大手笔:稳增长还是秀政绩-中国青年报 –     “地方经济和民间存量资金,将是下一轮经济高潮的‘双主角’”,他说,这个大方向是对的,在注重投资效益的同时,中国经济已经到了“向下延伸”的时刻,“大城市病”正在透支中国经济肌体的体力,而在以县区为主的小城镇的广阔天地中,可以大有作为。

Chinese Clothing Companies Moving to Southeast Asia on Rising Costs-Caijing – Chinese clothing companies are moving off the Pearl River Delta (PRD) in south China’s Guangdong Province, one of the leading economic regions and a major manufacturing center in the country, with decreasing orders and piled-up inventories, the online site of CCTV reported. Some of them have started to set up new businesses in countries of Southeast Asia, according to a survey carried out by the official TV program.



China Mobile to Acquire 15% of Voice-Recognition Company – Bloomberg Anhui USTC iFlytek, clearly not willing to cede this market to Apple and its Siri//  

(UPDATE) Motorola Employees in Nanjing Say No, Want More Compensation -Caijing – Google is what is known here as a very 肥羊 (fat sheep)

How a Series of Glitches Has Slowed Gome – Caixin Online –



China Forces Myanmar’s Ethnic Refugees to Go Home – – KATMANDU, Nepal — The authorities in southwestern China are forcibly evicting thousands of encamped ethnic Kachin refugees who fled a renewed civil war in neighboring Myanmar, pushing them back into the conflict zone in Kachin State in northern Myanmar, according to foreign human rights researchers and some residents in Kachin State.

US weapons no use for Diaoyu Islands issue – People’s Daily Online – The Chinese people cherish peace but also possess the strong will of smashing any provocation. Nobody can take an inch of land from China by threatening China or playing tricks; do not even think about it.

Deeper Asian splits possible after South China Sea spat: Indonesia | Reuters – Deeper divisions could open up between Southeast Asian states and Beijing unless they do a better job of handling disputes such as a recent quarrel over the South China Sea, Indonesia’s foreign minister said on Thursday.

China is developing a ‘super-missile’ | – Mainland state media have acknowledged for the first time that China is developing a state-of-the-art intercontinental ballistic missile (ICBM) equipped with multiple nuclear warheads that could defeat America’s anti-missile defences. On Wednesday, the Global Times, a newspaper under the party mouthpiece People’s Daily, denied a report by the consultancy IHS Jane’s last week that a Dongfeng-41, or DF-41, had been test-fired last month by the Second Artillery Corps, the People’s Liberation Army’s strategic missile force. Instead, it said, such a missile was being developed.

My night at the rodeo with China’s elite – – Deng Xiaoping once wore a cowboy hat, seen by many at the time of proof they wanted to be just like us. Is there are “Americans are from mars, Chinese are from Venus” book?//

Would China and Vietnam want a fight? « southseaconversations 讨论南海 – In the event of a skirmish with China, however, Vietnam still couldn’t count on support from either the US or Russia, both of which continue to have enormous national interests in maintaining peace with the People’s Republic. When it comes to the South China Sea, Vietnam is the only country that has ever actually tried to fight with the PRC there — and that did not end well (see video at top). Yet Vietnam’s position in the Spratlys remains very favourable compared to the People’s Republic’s, occupying at least six islands and more than twenty reefs and atolls, and an estimated 2,000 troops posted as of 2002. Why would they risk this, with possession is (probably) nine-tenths of the law? To me, this all points to Vietnam being determined to avoid serious escalations, even as the US bolsters its position in the region.

Vietnam prepares its people for war with China|Politics|News| – A new National Defense Education Act has been approved by the standing committee of Vietnam’s National Assembly on Aug. 20 to provide basic military training to every civilian under 50 years old, according to Duowei News, an outlet run by overseas Chinese.

In Vietnam, Growing Fears of an Economic Meltdown – – very dangerous when mixed with China’s problems and the South China Sea disputes//A senior Vietnamese Communist Party official, speaking in the ornate drawing room of a French colonial building, compared the country’s economic problems to the market crash 15 years ago that flattened many economies in Asia.

Diaoyu in Our Heart: The Revealing Contradictions of Chinese Nationalism – Helen Gao – The Atlantic – what happens when the government stops delivering the goods//in fact, web users’ responses seemed to be driven more by a deep discontent with the current China than by a veneration for these more developed economies: a large number of participants put their answers as bluntly as “Anywhere but the mainland.”

Much Ado About The Sansha Garrison | The Diplomat – Don’t believe the hype: Beijing’s Sansha military garrison is more of an administrative move than an arms buildup in the South China Sea.

Mitt Romney advisor calls for tougher US line on China – Telegraph – “We can’t base our policy on some theory about how we might be able to influence what goes on in China. We have to base it on the balance of power and what our interests are,” said Aaron Friedberg, a member of Mr Romney’s foreign policy and national security advisory team.

With Friends Like These: China’s ‘Pariah’ Problem | China Power – “responsible world power” to Beijing means being subservient to US in the existing, flawed from China’s perspective, international system. Propping up these pariahs clearly hurts them, but they have not figured out any other options that don’t appear to help the US//Beijing cannot expect to be seen as a responsible world power while it associates with pariah states and defends a Syrian dictator engaged in a bloody civil war to keep power. By affiliating itself with countries on the edge of the current world order, China is undermining its own strategic aspirations. It will not be able to gain the respect of the international community or inject its ideas into the global conscience. China’s leadership would be wise to remember the old adage, “You are known by the company you keep.”



太原103支巡逻队24小时上路 保障十八大治安-财经网 – provinces have started extra patrols to ensure law and order in run up to the 18th Party Congress. this is a series of pictures of one such patrol in Taiyuan, Shanxi//

薄熙来扔出的白手套 – 纽约时报中文网 国际纵览 – 这种政治竞争的姿态,不啻向现行的权力交接秩序扔出了白手套。但是,谷开来案和王立军案的出现,令薄熙来就如同是扔出了白手套的挑战者,还未及与决斗的另一方对剑,就已经因自身肌肉的溃腐而输掉了决斗。



人民日报-考古发掘表明,人类大约二百万年前已生活在这里 泥河湾 挑战人类起源地Page 1 people’s daily on archeologists in nihewan, hebei,now claiming signs humans lived there 2 million years ago//

Crocodile Tears? CCTV Blasted Over Pre-Cooked Liu Xiang Coverage – China Real Time Report – WSJ – What do convicted murderer Gu Kailai, serial killer Zhou Kehua and Chinese hurdler Liu Xiang have in common? As of Wednesday, all three stand at the center of viral, conspiracy-driven controversies that say unflattering things about the credibility of China’s state-run media.

CCTV Informed of Liu Xiang’s Injure Before London Race; Emotional Narration Carefully Scripted-Caijing – You can never be cynical enough in China. And cynicism corrodes the soul//A Weibo user, verified as a renowned Chinese sport commenter, via the twitter-like service said: “Liu Xiang, you are a good actor. You can act in Hollywood with big name stars now, rather than play honest audiences for fools.”

The Party who cried “Wolf!” – China Media Project – A friend of mine wrote: Was Liu Xiang’s appearance at the Olympics all just a performance? Was Ye Shiwen on steroids or not? Was that really Gu Kailai in the courtroom? Was it really Zhou Kehua (周克华) who was beaten to death? And on and on. This makes one think of the ancient story of the boy who cried wolf, who was lying over and over so no one believed him, until he was eaten himself by the wolf. China’s propaganda machine has cranked out lies for 60 years. Now it has come to the point that anything they say is met with doubt.

Portrait of Notorious Killer Emerges – Caixin Online – Zhou Kehua was a former mercenary and master of disguise before he met his bloody demise

Low-altitude airspace to open up |Industries | – SHENYANG – China will relax the ban on the use of low-altitude airspace across the country starting in 2013, the country’s air traffic authorities said Thursday. A series of reforms will be implemented in five to ten years, creating an independent airspace market under some government guidance, said Zhu Shicai, an official with the state air traffic control commission.

China’s ‘Leftover Ladies’ Are Anything But – Businessweek – The bottom line: The number of never-married urban Chinese women ages 25 to 34 is around 7 million, a dramatic increase from the 1980s.

Chinese avoid government charities in favor of online giving – The Washington PostWilliam Wan just moved to Beijing for the Washington Post, Enjoying his work// The emergence of Weibo philanthropy has been spurred on by widespread suspicion and exasperation among Chinese with their government’s decades-long stranglehold over the social assistance and charity sector. And for the ruling Communist Party — in the midst of a once-in-a-decade transition of leaders — the trend suggests a troubling disconnect. The fact that increasing numbers of citizens would rather donate to random strangers online than to state-managed charities points to a growing distrust in government institutions.

Better Cops, Less Crime – Caixin Online – Eight years, more victims and the overzealous use of deadly force – how the Zhou Kehua case highlights abhorrent police coordination in the public security system

The National Security Agency’s Domestic Spying Program – – The filmmaker Laura Poitras profiles William Binney, a 32-year veteran of the National Security Agency who helped design a top-secret program he says is broadly collecting Americans’ personal data…To those who understand state surveillance as an abstraction, I will try to describe a little about how it has affected me. The United States apparently placed me on a “watch-list” in 2006 after I completed a film about the Iraq war. I have been detained at the border more than 40 times. Once, in 2011, when I was stopped at John F. Kennedy International Airport in New York and asserted my First Amendment right not to answer questions about my work, the border agent replied, “If you don’t answer our questions, we’ll find our answers on your electronics.”’ As a filmmaker and journalist entrusted to protect the people who share information with me, it is becoming increasingly difficult for me to work in the United States. Although I take every effort to secure my material, I know the N.S.A. has technical abilities that are nearly impossible to defend against if you are targeted.

Aung San Suu Kyi, Burma’s Revolutionary Leader | People & Places | Smithsonian Magazine – The Nobel Peace Prize winner talks about the secret weapon in her decades of struggle—the power of Buddhism