China Readings for September 21st

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

  • Journalist murdered while covering illegal cooking oil scandal – Reporters Without Borders – Reporters Without Borders is appalled to learn that Li Xiang, a journalist with Luoyang Television in Luoyang (in the eastern province of Henan) who had been following an illegal cooking oil scandal and had written about it in his blog, was stabbed to death yesterday.
  • 你被跟踪了_杂志频道_财新网 – "You Are Beijing Followed" Caixin on how easy it is to track someone with LBS in CHina if yu hire the right private detective firm. And much more
  • VIEs to the State Council | China Accounting Blog | Paul Gillis
  • Information Dissemination: The ASW Challenge: South Korean Edition – This is a remarkable article for several reasons. Read it all, although I'll focus on this quote.

    South Korean patrol boats and corvettes are able to detect a mere 30 percent of submarines at a time when North Korea is increasing the frequency of submarine infiltration drills.

    According to data the Joint Chiefs of Staff and the Defense Intelligence Agency submitted to Democratic Party lawmaker Shin Hak-yong of the National Assembly's Defense Committee, North Korean submarine infiltration drills in the West Sea increased to 28 between January and August 2010, from a mere two in the same period in 2008 and only five in 2009.

  • Bank of China halts FX swaps with some European banks: sources | Reuters – Bank of China (601988.SS), a big market-maker in China's onshore foreign exchange market, has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, three sources with direct knowledge of the matter told Reuters on Tuesday.

    The European banks include French lenders Societe Generale (SOGN.PA), Credit Agricole (CAGR.PA) and BNP Paribas (BNPP.PA), and Bank of China halted trading with them partly because of the downgrading from Moody's, the sources said.

  • China Says It May Regulate Corporate Structure Used for Overseas Listings – Bloomberg – China may regulate a corporate investment structure that enables domestic companies to list overseas, a Commerce Ministry spokesman said.

    “There are currently no laws or regulations to regulate VIE,” Shen Danyang, a ministry spokesman, said at a regular briefing in Beijing today, referring to variable-interest entities. “Mofcom and other related government agencies are studying ways to regulate such investment.”

    The government’s position on the VIE structure, which allows foreign investors to tap cash flow from Chinese companies where foreign investment is restricted, became unclear after Alibaba Group Holdings Ltd.’s e-payment affiliate Alipay dismantled its VIE structure following discussions with the People’s Bank of China. At least 42 percent of Chinese businesses listed on the New York Stock Exchange or Nasdaq use the structure, including Baidu Inc. and Sina Corp.

  • Md. casino developer courts wealthy Chinese by offering green card in exchange for $500,000 investment – The Washington Post – On the first Saturday in September, about 50 well-off Chinese crowded into a fourth-floor
    conference room in a high-rise on fashionable Nanjing Road to listen in hushed silence to an unusual sales pitch. For a mere $500,000 investment, they were told, the participants could receive a coveted American green card to allow them and their family members to live in the United States.

    The investment being pitched was in Maryland — a place most of the attendees had never heard of. And the project involved was a casino, called Maryland Live!, the largest being developed in the state, rapidly rising out of a parking lot at the sprawling Arundel Mills mall.

  • US Underpricing "Investor Green Cards" | Sinocism – According to an article-The American Dream Of The Chinese Rich-in today’s China Daily:

    the number of so-called “investor green cards” issued to non-Americans nearly tripled to 4,218 in the 2009 fiscal year. About 1,800 of those recipients are from the Chinese mainland. South Korea is second with 903 recipients.

    The minimum required for an “investor green card” used to be $1 million. Now it is $500,000. Leave it to the genius economists of the US government to cut the price in the face of both inflation and increasing demand.

    $500,000 is pocket change for a large number of newly rich Chinese. As the article states:

    Most of the investors are quite wealthy and $500,000 represents only a small portion of their wealth. Liu Jie, for example, said she would sell a few apartments to pay for her part of the investment immigration program.

    In a time of huge budget deficits and rising taxes, why doesn’t the US government consider a market pricing mechanism for these “investor green cards”? An auction system might work, and the government could set the reserve price at $5 Million and probably see no decrease in demand or job creation.

  • Many Fields in China Closed to Foreigners, Says Gary Locke – But will US do anything about it, or stick to its suicidal, unilateral free trade dogma?//

    Gary Locke, the new U.S. ambassador to China, complained recently that foreign countries are not allowed to invest in many field in China

    Gary Locke, the new U.S. ambassador to China, complained recently that foreign countries are not allowed to invest in many field in China, the China News Week reported.

  • Collusion and Collision: Searching for guidance in Chinese cyberspace-SecDev – Full report available on Scribd
  • U.S. companies play by Chinese cyber-rules – Checkpoint Washington – The Washington Post – U.S.-based tech firms seeking access to China’s exploding population of computer users bend too easily to China’s rules of censorship and surveillance, according to a new report by SecDev Group, a think tank focused on regions at risk from violence and insecurity.

    And though the United States is at the forefront of nations supporting freedom of expression online, the report says that voluntary codes of ethical conduct so far have not worked.

    In Collusion and Collision: Searching for guidance in Chinese cyberspace, SecDev researchers criticized search engine firms for “conforming to China’s censorship and surveillance policies” as the price of doing business in a market with 450 million Internet users.

  • Beer company threatens Tibetan antelope | Environment | – Snow Beer is offering customers an expedition to the Tibetan Plateau that is supposedly off-limits to everyone except scientists
  • Alibaba Announces Real-Name Requirement for All China Users | Penn-Olson – Chinese e-commerce giant Alibaba announced last week that all of its China users must register using a legitimate government ID number before September 23rd if they wish to continue using the service. In an announcement on its own site, the company defined the change as a move to improve trustworthiness and accuracy as well as for combating fraud.
  • China’s super rice output sets a new world record_XINHUANET – Photo taken on September 2009 shows Yuan Longping, known as the "father of hybrid rice", laughing loudly when he visited the trial plantation of hybrid rice in Longhui County of Shaoyang City, central China's Hunan Province. The yield of China's hybrid rice breed, which is known as super rice, has exceeded 900 kg per mu (0.067 hectare), setting a new world record in rice output. The rice breed, DH2525 (Y two superior No. 2), produced a harvest of 926.6 kg per mu during its trial plantation in Longhui County of Hunan Province, according to the provincial academy of agriculture at a press conference on Monday. To ensure the accuracy of the yield, a team of experts under the Ministry of Agriculture (MOA) randomly selected three out of the 107.9 mu trial field's 18 plots and supervised the harvest on Sunday. (Xinhua/Zhao Zhongzhi)
  • Review & Outlook: China’s European Trade Fumble – – Chinese Premier Web Jiabao made waves last week for suggesting that financial aid to Europe could be tied to trade concessions, and especially a Brussels move to designate China a "market economy" for trade-law purposes. This has been portrayed as a menacing act of policy leverage or worse. It's more accurate to say this is a sign of how ill-prepared Beijing is to assume the leadership role it seems to covet on the global economic stage.

    Much of this is bluff. Few people believe such a bailout would ever be forthcoming. China's Communist Party leaders are wary of angering the Chinese people by wasting their money on profligate European governments, especially after the losses they took on U.S. investments made in 2008-2009. Brussels isn't likely to make the trade concessions anyway.

    But the episode is nonetheless instructive for how China mishandled an argument even when it has a point on the trade merits.

  • Ron Suskind’s ‘Confidence Men’ Focuses on Obama – Review – – The portrait of the Obama White House that the veteran journalist Ron Suskind draws in his searing new book, “Confidence Men,” is that of a young, inexperienced president lacking the leadership and managerial skills to deal effectively with the cascading economic problems he inherited; a brainy but detached executive with a tendency to frame policy matters intellectually “like a journalist, or narrator, or skilled observer”; an oddly passive C.E.O. whose directive on restructuring the banks in the wake of the 2008 financial crisis was, the author says, ignored or slow-walked by his own economic team.
  • Secret Sats, Giant Rockets: U.S. Unveils Space War Arsenal | Danger Room | – last week, the U.S. government revealed new and formerly secret space initiatives that underscore America’s continuing orbital dominance. NASA announced plans for the biggest-ever rocket, set to launch in six years. Meanwhile, the hush-hush National Reconnaissance Office (NRO), keeper of America’s most secretive surveillance satellites, used the occasion of its 50th birthday to declassify its ongoing orbital eavesdropping campaign over Afghanistan.

    Far from retreating from space, Washington is doubling down on its orbital force structure. The risk is this: with more and more of its critical capabilities packed into Earth’s limited orbit, America is increasingly vulnerable to a space counter-attack by China or Russia.

  • China to keep buying U.S. Treasuries: report – Yahoo! News – they have no choice until they change their currency policy//

    China, the largest foreign holder of U.S. government debt, will keep buying U.S. Treasuries, the official People's Daily, the ruling Communist Party's mouthpiece reported on Tuesday, citing government researchers.

  • China Will Allow Loans to Some LGFVs for Public-Rental Housing Projects – Bloomberg – China will let financial institutions lend to qualified local government financing vehicles for public-rental housing projects, the government said, citing a meeting presided over by Premier Wen Jiabao.
  • Rein: Why China Should Not Bail Out Europe – CNBC – China is being a responsible global stakeholder by stepping in to calm markets and ensure the fiscal viability of its own nation. It is taking care of its internal interests and helping where it can globally. But the Chinese know that buying bonds is not a long-term solution. Western Europe and America need to focus on reforming the economy to produce items Chinese want and build consumer confidence through job creation and not dream that a Chinese bailout will work.