China Readings for October 13th

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

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  • Asia Times Online :: SUN WUKONG: New leftists salute Wall Street brethren– As the Occupy Wall Street protests targeting corporate greed and political corruption spread from coast to coast in the United States, China’s new leftists – socialist critics of the country’s capitalist-style economic reforms – are beginning to lend support, declaring the demonstrations as a “great revolution” that sounds the death-knell for capitalism throughout the world.Supporters of the new leftists have staged street protests in at least two cities of Henan province, Luoyang and Zhengzhou, in the past few days to show their “firm support” for the “Great Wall Street Revolution”.
  • xinhua-Chinese researchers capture first photos of amur leopard since 1949– Two clear photos of the endangered amur leopard were recently taken in a forest in northeast China’s Jilin Province, marking the first time for China’s professional researchers to get photos of the rare animal since 1949, researchers said on Wednesday.The amur leopard, one of the world’s most endangered large cats, has been spotted in a forest in the province’s Yanbian prefecture, according to Sun Ge, a doctoral candidate at Peking University who set up automatic infrared cameras in the forest to capture images of the animal.
  • China to construct own polar research vessel-xinhua– China is set to build a giant research vessel, known as a ‘polar icebreaker’ which will be capable of circumnavigating and penetrating the polar icecaps.The ship will be launched in 2013, according to “” which cited the Global Chinese Broadcasting Cooperation. The new icebreaker, yet to be named, will go on polar scientific expeditions along with the Xuelong, or “the Snow Dragon”, China’s current icebreaker, which was made in the Ukraine.
  • 董事长总经理反目: 一个“处级富豪”的资产腾挪 – 宏观 – 21世纪网– 一个在职处级干部,以董事长身份坐拥数十家广西私营企业,运作十年波澜不惊,日前却因与总经理之间的矛盾博弈,暴露了“处级首富”的身份。“十一”过后,广西“梦之岛”连锁店总经理钟群指控董事长刘礼宁的材料已上报广西壮族自治区商务厅,由区商务厅主持的三方协调会即将举行。如此协调,此前已进行过两次。刘礼宁担任董事长的“梦之岛”为广西百货业龙头,共10家分店逾万名员工、年营业额20亿,对外发售的联名购物卡在卡金额约8亿元,持卡人十多万。“梦之岛”的10家分店虽使用统一品牌,但实为各自独立的法人公司。钟群告诉本报记者,广西南宁梦之岛百货有限公司(民族店)7年间被董事长刘礼宁无偿“借款”28次,所借款项被投入刘所掌控的两家房地产企业,累计资金1.38亿元,至今尚有8296万元仍未归还;另外,截至8月中旬,梦之岛民族店被其他分店拖欠购物卡消费款累计9845万元,民族店资金链因此面临断裂。钟群声称,“多年来,我一直努力适应,终于无法容忍。”
  • Chinese Copper Inventories Revealed To Be Double Estimated | ZeroHedge – In a piece of news that can not be taken well by students of Dr. Copper, the FT reveals for the first time that China’s estimated copper inventories, based on numbers from the China Non-Ferrous Metals Industry Association, were 1.9 million tonnes at the end of 2010 which is almost double the lower end of the consensus estimate of 1.0-1.5 MM tonnes (and, as the FT points out, “more than the US consumes in a year). So while copper is doing its high beta thing on the nth short squeeze day in stocks, the smart money is starting to bail for very obvious reasons. And if the reasons are not obvious, this means that “The estimates, which were announced at a recent meeting of the International Copper Study Group but have not been made public, imply that real Chinese copper demand may have been lower than thought in recent years.” In other words, and to all who are still confused by why Zero Hedge jokes at each and every iteration of economic growth driven by “inventory stockpiling”, this is nothing other than trying to do at the national level, what Goldman and JPM do at the LME level each and every day: hoard and sell, only in China’s case it is more hoard and forget. Alas, when China itself is the only real marginal buyer (not to mention that millions of domestic businesses operate using Letters of Credit backed by copper), things get very, very ugly, and explains why China has been so secretive about this number.
  • China reveals size of copper inventory – – Chinese copper inventories stood at 1.9m tonnes at the end of 2010, more than the US consumes in a year, according to estimates by the state-backed China Non-Ferrous Metals Industry Association. The estimate is significantly higher than the 1.0m-1.5m tonnes range that foreign executives have assumed in the past.
    MoreThe estimates, which were announced at a recent meeting of the International Copper Study Group but have not been made public, imply that real Chinese copper demand may have been lower than thought in recent years.
  • Celebrity Announces Independent Candidacy in Beijing | China Digital Times (CDT) – Cheng Yuting, born in 1988, is a well-known professional model who has won awards in various contests including the recent 2010 Asian Games Etiquette Volunteer Selection Contest. On October 10, she announced through her microblog that she will be running for the People’s Congress election in Chaoyang district of Beijing. Her tweet soon generated over 1,000 comments as well as over 4,000 retweets. Following is her announcement:
  • 17 million yuan invested, luxury cruise boat sinks at christening ceremony | ChinaHush – On October 10th, a microblog user posted a entry with photos, claiming that “A luxury boat named ‘JiuGang’ (酒钢号, named after Jiuquan Iron And Steel Group) sank when it was put in the water for the first time.” The entry attracted a lot of attention. Later that day, Lanzhou Ministry of Transportation responded that the issue was already resolved. The boat was towed ashore and there were no causalities . They explained the accident was caused by mishandling from the builders. The boat will be put in water for trial again after one month. However, Jiuquan Iron And Steel Corporation (JISCO), which the boat was named after, claimed that they had no knowledge of the boat’s christening ceremony nor the sinking of the boat.
  • Tudou CEO Gary Wang: My Disastrous Meeting with Steve Jobs | TechRice – said tudou was stealing
  • Credit Suisse Buries China’s Banks | ZeroHedge – n a report issued by Credit Suisse’s Sanjay Jain, the China strategist, who joins such now infamous skeptics as Bank of Countrywide Lynch’s David Cui, has revised his base case Non Performing Loan ratio forecast from 4.5%-5.0% to 8.0%-12.0%: a unprecedented doubling in cumulative losses. Why unprecedented? Because as he explains, this could “would work out to 65–100% of banks’ equity.”
  • Zambians send a 20-year government packing and warn the Chinese they could be next – By Paul Bonicelli | Shadow Government– Credit is due to the recent incumbent, Rupiah Banda of the Movement for Multi-party Democracy, who gave up power peacefully after a clear defeat to Sata and the Patriotic Front Party. In the aftermath of the election, both men appear determined that the peaceful change of power be accepted as normal with both retribution and sour grapes being set aside.But a larger and more interesting issue is the fulfillment in Zambia, and in the person of the new president, of the idea that Africa should not become prey to a new colonial power, that of the Chinese. China-watchers have been observing for about a decade now the growing influence of China as it buys friends in the developing world among the producers of raw materials to feed the growing Chinese economy. A combination of Chinese party, government, military and preferred businesses have been extracting and importing raw materials — in the case of Zambia, copper — by means of cheap labor and sometimes abusive labor practices and with the complicity of the host country’s government.Sata was transparent about his plans and tough in his talk regarding the Chinese during his campaign for office. He called the Chinese investors “infestors” and vowed that if elected he would put an end to the flouting of labor and tax laws and other abuses, abuses that cannot happen if the government is determined to stop them.
  • Shenzhen sweatshop allegations force Gucci to act –– Gucci announced it was replacing managers at its flagship store in the booming southern Chinese city of Shenzhen after allegations by five former employees they had been working in sweatshop conditions.
    The former employees at the three-floor store in the Chinese city across the border from Hong Kong alleged they had been on their feet 12 hours a day and needed permission to drink water and for toilet breaks, which were limited to five minutes.The former employees alleged that a pregnant employee had been warned for eating an apple during the work day. “It was a kind of torture for us,” they alleged in the letter. “Short rest, water or food was [denied] even for a pregnant employee.”
  • Chinese army mobilises cybermilitias –– MASSIVE STORY IF NOT EXAGGERATED. IF TRUE, HOW WOULD US ALLOW ANY CHINESE INTERNET FIRM TO BUY A US INTERNET COMPANY, ESP ONE AS LARGE AS YAHOO?//Nanhao Group is, in many ways, an ordinary technology company. Its staff make online scoring systems, exam-mark scanners and other educational hardware and software.But many of its 500 employees in Hengshui, just south-west of Beijing, have a second job. Since 2005 Nanhao has been home to a cybermilitia unit organised by the People’s Liberation Army.“All staff under the age of 30 belong to the unit,” said Bai Guoliang, Nanhao vice-president. It is unclear what exactly the unit does, but according to a local government announcement when it was set up, it consisted of two groups tasked with cyberattack and cyberdefence.

    The Nanhao operation is one of thousands set up by the Chinese military over the past decade in technology companies and universities around the country. These units form the backbone of the country’s internet warfare forces, increasingly seen as a serious threat at a time of escalating global cybertensions.

  • Digital Dao: Here are the Facts about Huawei and the Chinese Government – Huawei is considered a national champion telecommunications firm in a nation that monitors all telecommunications networks and engages in cyber-espionage activities using, at least in part, Huawei equipment. The company’s Chairwoman used to work for the MSS, China’s foreign intelligence service and its founder started the company after serving in the PLA. Those are the facts, and they should be sufficient to justify denying Huawei access to the U.S. market as well as shame U.S. companies like Symantec who have partnered with them.
  • Asia Unbound » Adam Segal » Anyone But Huawei – A new report about Huawei’s connections to the Chinese military and intelligence agencies will make it even more unlikely that the telecomm company will ever be approved for a major acquistition in the United States (it should be noted that Huawei already supplies many smaller companies throughout the United States). Actually, given all the previous reports on Huawei, the letter eight Republican senators sent to the Obama administration urging an investigation of the company, and given that Rick Perry’s presence at a ribbon-cutting ceremony in Texas has become a campaign issue, the claim that Huawei has links to the Ministry of State Security just seems like unnecessary piling on.
    Huawei has mounted a vigorous PR campaign against the charges, and I would not lend too much credence to some of the sources that are cited in the report tying Huawei to the MSS, but we need to change this story line. The fact is there are good reasons why the United States should welcome Chinese investment, even in technology sectors
  • Jack Ma’s American Journey « Silicon Hutong– if Mr. Ma believes that his expressed desire to live in America will soften the discomfort of the American public and the Committee on Foreign Investment in the United States will feel toward the purchase of Yahoo! by a Chinese company, he is too late. Assuring both Washington DC and Main Street USA that Alibaba is not the long arm of the Party and is trustworthy enough to be the custodian of a massive storehouse of information on American citizens will demand a lengthy campaign, not well-meaning gestures. A year under American law building visibility, accessibility, and trust is a good start, but no more, and any bid for Yahoo is likely to happen sooner than that.Finally, before venturing into the North American wilds, both Alibaba and Mr. Ma would do well to consider an adjustment in their approach to the global media. I spend a lot of time with journalists who represent the world’s leading media outlets in China, and whenever the subject of Alibaba comes up, the response is always a shaking of the head. The word is that not only does Mr. Ma appear increasingly inaccessible to the global media, his international PR staff is allegedly not above haranguing journalists whose coverage of Alibaba is deemed less than supportive.
  • China Herald: Huawei’s PR fail in Europe– China’s IT giant has organized itself a PR-mess in Europe by mentioning a large number of companies among its success stories, while those companies were not even familiar with Huawei’s name.The Dutch daily The Volkskrant (article here in Dutch) made a tour along the press departments of the companies.
  • Where does online agression come from? – China Media Project– OTE: The following editorial published in today’s edition of Shanghai’s Oriental Morning Post is translated an re-posted here with the permission of the author, Guo Yukuan (郭宇宽), a former professional journalist who is currently doing post-doctorate studies at Tsinghua University’s Research Center for Theoretical Economics. The Oriental Morning Post version is available here.Recently I posted something online that was a bit at odds with the views of some internet users. Of course, it’s quite normal to find different views about a particular topic or issue, and I’m perfectly happy to exchange views with those who don’t see eye to eye with me.But many web users have a very interesting way of “conversing.” Not bothering to listen to specific points I make, they pipe right up with things like: “Guo Yukuan, what do you know about logic! You with your PhD! Has your conscience been eaten by dogs?” That kind of thing. It’s as though they feel an unrestrained hatred towards me.
  • Sogou Outruns Google in China by Usage, for the Time Being? | TechNode– In a report by independent market research institute CNZZ, Sogou, the search engine curated by Chinese portal outran Google China in terms of user adoption.According to the report, claims 7.09% of China’s search market share while Google China’s share down to 6.51%. Baidu is still far ahead of its rivals with 78.98% of market share.
  • Letter from China: Faust, China, and Nuclear Power : The New Yorker– To China’s credit, it is building two reactors that use a new generation of technology known as the “pebble-bed” design, which is safer than older reactors. After Japan’s meltdowns, China temporarily suspended further licensing while it checked the safety of projects underway, but it has since declared its thirteen working reactors problem-free.Were China to abandon nuclear power tomorrow, it would set back global efforts to limit the effects of climate change, while almost certainly leading to more deaths from the mining and burning of coal. But, in order to avoid disasters at its new plants, China must commit itself to operating them with the highest international standards of transparency and bureaucratic rigor.
  • Prof. Gillis: No One Has Officially Declared the VIE Illegal | iChinaStock– (iChinaStock News) It is a time of high regulatory uncertainty for US-listed Chinese stocks. To address this topic, iMeigu, iChinaStock’s Chinese-language sister-site, conducted a microblog interview today with Paul Gillis, an expert on accounting and the VIE structure in China.Are VIEs Illegal?Q: Have the appropriate Chinese institutions officially declared VIE structures to now be illegal? If they have not why would the SEC or PCAOB suddenly change their view of VIEs, especially as the top us auditing firms have signed off on them for years? And will those accounting firms that effectively blessed these structures have any liability for resulting losses?Gillis: No one has declared the VIE structure illegal officially. A recent paper by the CSRC points out that VIEs have been used inappropriately to get around restrictions on foreign investment and requirements to register foreign investment in Chinese companies. I think the recent cases of Gigamedia and Alipay, together with a more clear discussion of how VIEs were used to avoid (evade) Chinese laws, has increased the risk profile. The PCAOB recently called accountants to task over whether they are properly assessing the risk.
  • Sina, Tencent And Others Preparing For New Weibo Restrictions | DigiCha– “For example, Beijing’s municipal government is likely to promulgate a real-name requirement system to regulate Weibo soon.”…The controls may include issuing licenses to those microblogging sites that “can effectively eliminate rumours”, Song said. “Just like a supermarket, the food safety watchdog would hardly allow the operation of a supermarket if it regularly sold counterfeit or poisonous food.”Leading mainland internet expert Professor Li Yonggang said the government might target bloggers with more than 50,000 or 100,000 followers for tighter control.As tighter control usually results in a withering of business, microblog operators are taking the issue seriously. A Guangzhou-based new media industry insider said a handful of top executives from various mainland microblog operators held a low-profile meeting in Guangzhou last month and discussed how to respond to the expected regulations.

    The source said Meng Bo, deputy editor-in-chief of ($SINA) and project manager at Sina Weibo, was among those at the meeting.

  • Google: Android Market back up in China | Digital Media – CNET News– NOT ALWAYS CHINA’S FAULT WHEN IT COMES TO GOOGLE//Google and the Chinese government seemed to be at odds once again today, as the search’s giant’s Android Market was apparently inaccessible in mainland China. But what appeared to be an intentional government blocking was merely a glitch related to a software update, Google told CNET.
    “We identified a technical issue during a software update and have now fixed it,” Google spokesman Taj Meadows wrote in an e-mail.
  • NASDAQ’s CEO on Chinese Listings and the VIE Structure | iChinaStock– iChinaStock secured an exclusive interview recently with Robert Greifeld, president and CEO of NASDAQ, to discuss Chinese listings and the VIE structure.Chinese overseas-listed firms have faced a series of fraud and accounting scandals this year that have prompted both US and Chinese regulators to consider new rules. US regulators are seeking closer cooperation with their Chinese counterparts. Chinese regulators are at present studying new rules to regulate the ubiquitous VIE structure used by Chinese firms to accept foreign investment.In this context, Mr. Greifeld shared his perspective on the market uncertainty and NASDAQ’s approach.
  • Masking the pollution– A Beijing-based American doctor has suggested that residents should wear face masks to guard against the capital’s worsening air pollution.However, both Chinese doctors and environmental protection authorities regard his suggestions as unnecessary scaremongering.
    As air pollution levels reached a new high after the October 1 National Day holiday, according to data from the US embassy’s Air Quality Index (AQI), Dr Richard Saint Cyr posted a warning on his Sina Weibo account Sunday.Saint Cyr, a family doctor at Beijing United Family Hospital said, “Beijing’s air pollution levels are right now astonishingly high and very hazardous to anyone: The AQI at the US Embassy is over 500 – the machine doesn’t go higher than that! Please, everyone take care!”Though many Web users showed great concern over the deteriorating air quality in Beijing after reading his microblog, Chinese doctors, local residents and the Municipal Environmental Protection Bureau seem less worried.

    “It was only slight pollution, which was not bad enough for people to wear masks,” said Du Shaozhong, deputy head of the bureau, who said Saint Cyr’s suggestions did “not reflect the real air conditions” in Beijing.

  • CHINA The Next Generation | ARTnews – China’s younger artists are introspective, sophisticated, and hyper-aware of their identity in a globalized world
  • China and Vietnam Move to Reduce Tensions in South China Sea –– China and Vietnam announced on Wednesday agreement on a series of steps to reduce tensions in the South China Sea, a source of frequent friction over their rival claims to islands and undersea minerals.The two sides agreed to hold discussions twice a year to resolve their differences, and to set up a hot line between the two countries to address any disagreements more promptly.
  • Burma’s political prisoners – gallery | World news | – “Burma’s Fearlessness.” Incredible online gallery of Myanmar’s political prisoners by James Mackay
  • James Bond-style weapons found on North Korean assassin – Telegraph – The weapons include an innocent-looking black torch, complete with a wrist strap and the word “Police” along one side, that is actually a gun capable of firing a bullet.
    Prosecutors in the South Korean capital say the weapon had a range of around 30 feet and was loaded with a bullet that was coated in a poisonous chemical. A mere 10 milligrams of the poison is sufficient to cause breathing problems or heart failure, they said.
  • REFILE-DEALTALK-China’s US companies mull restructuring as crackdown looms | Reuters– A looming Chinese government crackdown on a corporate structure used by almost half of all U.S.-listed Chinese stocks coupled with growing investor uncertainty has prompted companies to mull major restructuring plans.New rules expected to apply to variable interest entities, a structure used by several of China’s internet giants, are not only forcing executives to consider various options, the rules are rattling investors as well.Shares in China based, U.S. listed internet companies Sina Corp and Baidu Inc have slumped around 26 percent and 12 percent since Reuters reported on Sept. 18 that the China Securities Regulatory Commission (CSRC) had suggested the government take action against VIEs.Any new rules from the Chinese authorities are not expected to shut-down existing VIEs, but lawyers say that the ongoing uncertainty is pushing several companies to investigate contingency plans.
  • Huawei Calls for ‘Accountability’ as U.S. Blocks Bid Over Security Concern – Bloomberg– Huawei Technologies Co., China’s largest phone-network equipment maker, asked the U.S. government to explain why it was barred from participating in a nationwide emergency network over national security concerns.The U.S. Commerce Department told the company last week it was being blocked from the interoperability testing phase that assesses equipment for the network because of “national security concerns” that weren’t defined, William Plummer, a Washington-based spokesman for Huawei, said in an e-mail today.“Notwithstanding that it is an ill-founded, ungrounded determination, it could have a chilling effect on our greater U.S. business activities and accountability needs to be defined appropriately,” Plummer said.
  • China Sovereign Fund to Invest $1 Billion in Kremlin-Backed Fund – Bloomberg– IRRELEVANT AMOUNT FOR CIC, THOUGH NO DOUBT MUCH WILL BE MADE OF IT//China Investment Corp., the nation’s sovereign-wealth fund, agreed to invest $1 billion in a Russian private-equity fund, the first foreign commitment to an investment pool championed by President Dmitry Medvedev.
    Beijing-based CIC, which managed $409.6 billion by end-2010, plans to invest in the Russia Direct Investment Fund, Kirill Dmitriev, head of the Russian company, said by phone from Beijing yesterday, where the agreement was signed during a visit by Prime Minister Vladimir Putin.
  • Hukou hassle parks migrant drivers– TOO MANY PEOPLE, TOO FEW RESOURCES, HUKOU REFORM, AT LEAST FOR TIER 1 CITIES, NOT IN THE CARDS FOR A LONG TIME, IF EVER//Shanghai authorities have begun tightening restrictions for non-local hukou (household registration) registering in the city’s driving schools. The move is intended to prevent people from getting their driver’s licenses outside of their hukou district.The newest regulation issued by the Vehicle Administrative Office of the Shanghai Municipal Public Security Bureau said the number of classes for non-local hukou holders should not exceed 45 percent of all the available classes.  And the total number of driving students should not be more than 23,000 every month.The regulation was drafted in accordance with the provisions of the Traffic Management Bureau of the Ministry of Public Security. The bureau says the number of the people who try to get driving licenses outside of their hukou should be in accordance to the local population.

    “We need to control the number of people taking this test,” Sun Guofu, the press officer with the Shanghai Traffic Police, told the Global Times on Tuesday. “Non-local hukou holders are not prohibited from taking driving classes in Shanghai, but we do have limited resources.”

  • China’s Foshan Suspends Decision to Ease Home-Purchase Limit – Businessweek – China’s southern city of Foshan suspended its decision to ease limits on property purchases less than a day after it said it would allow residents to buy a second home.
  • Taiwan Jet Deal Aids Ally Without Provoking Rival China: View – Businessweek– The 100th anniversary marking the fall of China’s last imperial dynasty upped tensions in the Taiwan Strait, with Chinese President Hu Jintao calling for “reunification through peaceful means” and his Taiwanese counterpart, Ma Ying-jeou, responding that he was just fine with the status quo.The last thing needed is outside provocation. So we applaud the Obama administration’s compromise decision last month to go ahead with a $5.85 billion deal to upgrade Taiwan’s existing fleet of F-16 fighter jets.
  • Almost half of £1 million Chinese auction bids unpaid six months after they were lodged – Telegraph
  • Exclusive: China launches lobbying push on currency bill | Reuters– HOW MUCH CHINESE MONEY WILL MAKE IT INTO 2012 CAMPAIGN? SO MUCH MORE MONEY IN CHINA, SO MANY MORE POTENTIAL CONDUITS, CHINA MUCH MORE SOPHISTICATED, MUST BE VERY HARD TO TRACK//China has launched an intense lobbying effort in Washington to kill legislation that would punish it for its currency system, in the latest display of its more sophisticated approach to influence U.S. policy.A 12-member “Congressional Liaison Team” inside the Chinese embassy has been meeting with aides to key lawmakers, making phone calls to congressional offices and speaking to the White House on the issue, according to Chinese and U.S. officials.The Chinese embassy has also been paying a blue chip Washington law firm [Patton Boggs] $35,000 a month to lobby Congress on its behalf and to provide China with a greater understanding of congressional politics.
  • Chinese telecom firm tied to spy ministry – Washington Times– WHETHER OR NOT THIS PROVES ANYTHING, IT IS CLEAR THAT HAUWEI’S US PLANS ARE DOOMED. THE COMPANY SHOULD STOP WASTING MONEY ON ITS US LOBBYING AND PR EFFORTS//A U.S. intelligence report for the first time links China’s largest telecommunications company to Beijing’s KGB-like intelligence service and says the company recently received nearly a quarter-billion dollars from the Chinese government.The disclosures are a setback for Huawei Technologies Co. Ltd.’s efforts to break into the U.S. telecommunications market. The company has been blocked from doing so three times by the U.S. government because of concerns about its links to the Chinese government.The report by the CIA-based Open Source Center states that Huawei’s chairwoman, Sun Yafang, worked for the Ministry of State Security (MSS) Communications Department before joining the company.

    The report on Huawei’s board members states that Ms. Sun used her connections at MSS to help Huawei through “financial difficulties” when the company was founded in 1987.