"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner
Thanks for reading. The best way to see this daily post is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. You can also follow me on @niubi or Sina Weibo @billbishop. And if you really like it feel free to donate through the button on the top right.
Beijing-based journalist Eric Fish has a good post about blame and accountability at his Sinostand blog. In Assigning Blame for a Hard Landing Fish writes that:
the mismanagement of the economy by the Chinese government is where the lion’s share of the blame rests for China’s economic woes. When faced with an economic crisis and potential unrest, the government opted (as always) to secure short-term stability at the cost of long-term sustainability by throwing cheap money at the problem and trying to guide the invisible hand of the market too forcefully. “The debt-ridden western countries are to blame” argument can only stretch so far.
But accepting blame and owning up to deep systematic flaws with its economic model aren’t in the CCP playbook. So it’s likely we’ll see that argument stretched to its very limit. The question is, will people buy it?
He is right, and the same argument could be applied to US politicians, policymakers, pundits and economists in a discussion of the causes of the 2008 financial crash. Remember when Bernanke Blamed the Global Financial Crisis on China (Naked Capitalism)? China and the US may be converging, at least when it comes to lack of accountability, corruption by special interests, and an unwillingness to take responsibility for economic policy decisions. Then again, perhaps this is true of politicians everywhere, regardless of the political system?
Gregory Kulacki of the Union of Concerned Scientists takes issue with the recent New York Times report that China is developing Intercontinental Missile Capabilities. Kulacki writes at the All Things Nuclear blog that:
The Global Times did publish several items prior to Bradsher’s August 24 story that discuss the contents of a Jane’s Defense Weekly news item, published in the August 22 edition, claiming China had tested a new ICBM on July 24. The Jane’s report was based on an August 15 story by Bill Gertz, who cited “unnamed U.S. officials” as the source of his information about the test. All of the stories in the Global Times clearly indicated that the claim of a missile test, and the claim the tested missile was a DF-41 that could carry multiple warheads, came from the either the Jane’s Defense Weekly article, Bill Gertz, or other “Western”, “American” or “foreign” media reports.
In other words, the report that China was “developing” the capability to put multiple warheads on ICBMs originally came from Bill Gertz, was repeated by Jane’s Defense Weekly and was repeated again by the Global Times. It did not originate from or reflect the official position of the Chinese government or the Chinese military.
Kulacki’s post is another reminder that finding good information is very hard in China and readers should always focus on the sourcing of reports, an issue we have discussed repeatedly as it relates to reporting on Chinese politics. Last year Kulacki wrote “China’s Nuclear Arsenal: Status and Evolution.(PDF)” Reporters writing about this topic should probably talk to him.
Neil Bush, a frequnt visitor to China, caused a bit of a stir on Sina Weibo when he wrote “I’m Thinking Of Joining The CCP. What Do You Think Of My Accessories?”. Good thing Jeb Bush is not running for president right now.
Kaifu Lee has a great essay debunking a sloppy report by US firm Citron Research. Citron usually shorts China stocks, vocally, but in this case issued a very sketchy report hyping Sohu. In China Short Sellers: Exposing Fraud or Practicing Fraud? Lee writes that:
Recently, several “China Short Sellers” have developed a scheme to make themselves rich. First, short a US-listed China stock. Then, write a negative report on that company. After the stock drops, cover the short, and pocket a huge profit. This practice itself is already questionable, but what is despicable is how these short sellers take advantage of the information asymmetry between China and the US, and write reports full of holes and lies, knowing that their American readers have no way of verifying them. This paper dissects one such example, Short Seller Citron Research’s report “Qihoo’s entry into search puts SOHU in play” (August 24). This paper will show that Citron lacks even the most basic understanding of the Chinese Internet/Search market, yet it fabricates and distorts information to deceive investors. It is not my intention to support or challenge Citron’s recommendations, but only to expose Citron’s ignorance and deception, and raise the question whether any investor should ever trust them.
Independent research firms like Citron and Muddy Waters have done investors a real service, but their reports are getting increasingly sloppy and stretched, perhaps because the low-hanging fruit is gone.
Youku has apparently told the Chinese press (优酷土豆称美调查不针对公司-搜狐IT) that the rumored FINRA investigation into insider trading before the Youku-Tudou merger is only directed at individuals, has nothing to do with the company and Youku will cooperate fully.
Today’s links:
BUSINESS AND ECONOMY
Gloomy chart of the day: China industrial profits | beyondbrics – Hardly a week goes by without a depressing bit of economic data from China. Monday’s version is industrial profits, which are down 5.4 per cent in July from 2011, according to national statistics. Profits were Rmb366.8bn – the fourth straight month of decline. For January to July, the overall drop is 2.7 per cent year-on-year. The Shanghai Composite index closed on Monday at 2055.7, down 1.7 per cent – its lowest close since March 2009.
鄂尔多斯2千万平在建楼盘停工 全民放贷变讨债_新闻_腾讯网 – 20 million square meters of projects in Ordos have stopped construction, shadow banking system under serious stress there, reports say up to 90% of residents have invested in real estate, now trying to get their money back. could get ugly without a bailout, and with one. whoops//
CCB’s Bad Loans Rising Rapidly in East China – WSJ.com – the country’s second-largest lender by assets, warned of risks from the bank’s rising nonperforming loans in eastern China, though it said it has set aside sufficient provisions against loans made to a private company that has already filed for bankruptcy. Vice President Chen Zuofu told a press conference in Beijing Monday there was a sharp rise in the bank’s nonperforming loans in the first half of the year to borrowers in the Yangtze River Delta, a region that is a major hub for small manufacturers and exporters.In some areas of the wealthy east-coast province of Zhejiang, which is part of the Yangtze region, the bank’s ratio of nonperforming loans is now above 2%, he said.
Central Gov’t Pushes Big Banks to Hire Local Auditors – Caixin Online – what could go wrong?// Beijing is considering tougher measures to compel state-owned banks to hire local auditors, part of its long-term push to strengthen domestic auditing services. Officials from the Ministry of Finance called executives at Industrial and Commercial Bank of China and the Agricultural Bank of China to ask them to include domestic firms as candidates for their next auditor, several sources with knowledge of the matter said.
地方政府有多缺钱_杂志频道_财新网 – “How much money are local government’s short?” Caixin cover story on local government finances
The water margin | China Economic Review – Ting Lu, China economist at Bank of America-Merrill Lynch, discusses the economic lessons of Beijing’s deadly summer rainstorms
新闻分析:中国股市期待走出低迷 – 新闻中心 – 新华网 – Xinhua seems to be trying to prop up the stock market. hard to jawbone confidence if market keeps dropping, especially if it breaks 2000. Hu and Wen need to learn from Obama, Geithner and Bernanke and start pumping up equity prices; a pop will make a lot of people happier, even if the absolute economic impact is minimal//
Another Chinese city starts car purchase lottery to ease traffic gridlock – Xinhua | English.news.cn – auto industry sales will continue to suffer. just about every city in china needs an auction or a lottery// Guangzhou announced early last month to allocate the city’s annual 120,000 new car registration quota through a dual model of auction or lottery. Among 64,866 people who applied for the lottery and auction, 58,405 passed an assessment to vie for 10,907 plates, which means that one out of six people will be lucky enough to win a plate.
Hot hog sales raise specter of inflation in China | Reuters – Worried by the state of the pig industry, China’s top economic planning agency this month ordered stockpiling of frozen pork in anticipation of a supply squeeze when consumption peaks during the Lunar New Year next February. China holds reserves of pork, both in live animals and frozen meat, to help stabilize domestic prices during extreme price fluctuations. The stockpiling is also used to try to curtail food inflation and steady its domestic industry.
Boost in China’s Cotton Output Has Ripple Effect – WSJ.com– Xinjiang Uygur Autonomous Region—China’s largest cotton producing region, which accounts for near half of national output—is expected to see a harvest of 3.2 million metric tons in the 2012-13 marketing year that began Aug. 1, up 4% on year, the local government said in a statement on its website dated Friday. This will help offset production declines in other regions caused by reduced planting, increasing the imbalances in the oversupplied domestic market.
辽宁凤城市委书记疑卷款2亿元离境_网易新闻中心 – has the party secretary of fengcheng, liaoning, absconded with 200m RMB?
页岩气集体躁动中藏“李鬼”-中国证券报·中证网 – China may be in a bit of a shale gas bubble//
China brokerage firm makes a run for it, literally｜WantChinaTimes.com – China US Bridge Capital Co was a brokerage firm which helped dozens of Chinese companies in listing their shares in the US. That is, until its employees walked into the office one day in June and found it completely deserted. Its chairman Kit Tsui and CEO Guo Hongwei disappeared, leaving a huge amount of debt and some 3 million yuan (US$472,000) in back pays owed to its more than 20 employees.
China Lead Stockpiles Seen Dropping as Battery Makers Expand – Bloomberg – The inventories in Guangdong province and Shanghai, the two main trading regions, fell to about 100,000 metric tons this month, the lowest level since February 2010 and down from a record 300,000 tons in August 2011, according to SMM Information & Technology Co., citing data from a weekly survey. The figure doesn’t include holdings in Shanghai Futures Exchange warehouses, which have dropped 52 percent since the year’s peak in February.
Weber Shandwick – About Us – Press Releases – 2012 – Weber Shandwick Expands China Practice to Drive Global Leadership for China-based Multinationals – high school classmate, he was a senior when i was a freshman, all the girls loved him, including one i liked…//SAN FRANCISCO, Aug. 21, 2012 – Weber Shandwick, a leading global public relations firm, today announced the expansion of a specialty area aimed at helping China-based public and private multinationals and state-owned enterprises take their brands global. The practice, called Emergent China, works with leading China-based companies and their executives to address the challenges and opportunities of engaging effectively across multiple continents, multiple cultures and multiple languages.Weber Shandwick’s team consists of senior strategists who have deep on-the-ground experience in China and in key markets around the world. The team has a presence in the Americas, Europe and Asia. Emergent is headed up by Executive Vice President William Brent…Brent, who is based in San Francisco, spent 15 years in China as a foreign correspondent and as a marketing and media entrepreneur.
POLITICS
人民日报-人大常委会第二十八次会议在京举行 吴邦国主持 审议民事诉讼法修正案草案、农业技术推广法修正案草案、精神卫生法草案、特种设备安全法草案、旅游法草案、环境保护法修正案草 – Standing Committee of National People’s Congress meeting in Beijing in normally scheduled meeting, discussing lots of proposals, including a Rumor that they will also revoke Bo Xilai’s NPC delegate status
Senior official urges deepened judicial system reform – Xinhua | English.news.cn – Zhou Yongkang stressed that the country’s judicial work must give priority to the Party’s cause, people’s interests and the Constitution and laws, and it must stick to China’s own situations while selectively borrowing experiences from other countries. Zhou called for strengthened judicial democracy and openness to ensure people’s rights to know, participate in and supervise the country’s judicial cause.
人民日报-周永康在中央司法体制改革领导小组全体会上强调 认真总结经验巩固扩大司法体制改革成果 让人民享有更加充分的司法民主司法公正 – Zhou Yongkang’s remarks on front page of People’s Daily//
劳教废立之间-财经网 – long look by Caijing at re-education through labor, hope/expectation is that Tang Hui travesty in Hunan may finally lead to its abolition//
CPC extends presence within foreign enterprises – Globaltimes.cn – of the listed Internet companies only Tencent is open about its Party branch/representatives// The rapid development of Party branches in foreign enterprises started in 2001, when then president Jiang Zemin announced at the celebration of the 80th Anniversary of the CPC that people working in all kinds of enterprises, whether they were SOEs, foreign enterprises or private-owned enterprises, were all “contributors to the socialist construction,” Zhang Dong, director of the Party committee office at the Beijing Investment Promotion Bureau (BIPB), told the Global Times.
TECH AND MEDIA
Warning from China Film Watchdog: Not Enough ‘Co’ in Co-Productions – China Real Time Report – WSJ – China has a message for Hollywood: The door to the fastest-growing film market is not wide open.Chinese film regulators say they are cracking down on China-U.S. co-productions as several upcoming films have exploited existing co-production rules to gain easy entry into the Chinese film market, according to a report from the state-owned China Daily.
Sequoia Said to Beat $975 Million Goal for Venture Funds – Bloomberg – This time, Sequoia is seeking $450 million for its U.S. early-stage fund and separately targeting $325 million for a China-focused early-stage fund, said the people. The firm is seeking $200 million for Sequoia Capital Israel V LP, an early- stage fund mainly focused on information technology.
With $40m Series B, Momo Proves Huge Market for Casual Hook-ups in China | PandoDaily – careful if you have this on your phone. your partner may not be pleased// In China, meanwhile, an app called Momo is showing to the world the potential of mobile for facilitating casual hook-ups and insta-dates. Since its launch a year ago, the app has accrued 10 million users. This week it received a massive $40 million Series B round, according to various reports (the Global Times put the figure at $50 million), with Alibaba rumored to be among the investors.
Flurry: China Is Fastest Growing Market For iOS & Android Devices, Chile Comes In 2nd | TechCrunch – massive spike in network and censorship loads coming, telecoms and information manager are going to face huge challenges// China became the largest smartphone market with regard to devices shipped late last year, and now Flurry pegs China as (what a surprise!) the fastest growing market for iOS and Android devices. China’s smart device market grew just over 400% year-over-year, easily pulling ahead of BRIC compatriots Russia and Brazil, whose smartphone markets grew (a completely respectable) 189% and 220% respectively between July 2011 and July 2012.
360Buy Blocks Jack Ma’s Etao Price Comparison, Price War Rages On – 360Buy has been raging a price war with competitors Suning and Gome for over a week now. Unfortunately for 360Buy, the best news to come out of this for consumers so far is that according to Alibaba’s Etao price search engine, Amazon is cheaper than any of the price-warring companies. That’s embarrassing. What’s a chargined e-commerce website to do? Block Etao’s spider so it can no longer index 360Buy prices, apparently.
Jack Ma: In a Price War, Consumers Are the Ultimate Losers – true, once the capital dries up. but for now these price wars are a shopper’s dream// “Actually, a nasty price war hurts consumers’ interests the most. If the firms involved aren’t making profits, or are even operating at a loss […] they can’t possibly provide after-sales service, let alone innovate new things [that would ultimately be good] for consumers.”
Huawei expands lobbying amid national security probe by Congress – The Washington Post – Huawei Technologies, China’s biggest maker of phone equipment, has quadrupled spending on lobbyists in Washington as a House panel investigates whether its expansion in the United States poses a security threat. Huawei spent $820,000 on lobbying in the first six months of this year, up from $200,000 for the same period in 2011, according to U.S. Senate records.
Inside Huawei, the Chinese tech giant that’s rattling nerves in DC | Mobile – CNET News – A Congressional committee wants to know if this telecommunications powerhouse is a national security threat. Why? CNET went to China to find out.
The Race to the 4G Mountaintop – Caixin Online – Since May, China Mobile has accelerated its development of 4G networks. In August, it launched bidding for system equipment manufacturers in China’s homemade 4G wireless technology and started trial operations in 13 cities. China Mobile is looking to get ahead in 4G – the fourth generation of cell phone mobile communication standard – because it fell behind competitors China Unicom and China Telecom in the 3G battle.
FOREIGN AFFAIRS
Japan protests after man seizes flag from ambassador’s car in Beijing – Times LIVE – A man ripped a Japanese flag from a car carrying Japan’s ambassador in Beijing on Monday, triggering a protest from Tokyo in the latest flare-up of a territorial row that provoked the worst anti-Japanese protests in years.
Japan blocks landing on disputed islands to defuse China tensions | Reuters – The Japanese government on Monday refused to let Tokyo metropolitan authorities land on islands at the centre of a territorial dispute with China, a move aimed at defusing tensions that led to biggest anti-Japan protests in years.
2012年08月28日 星期二_A01版-头版_新京报电子报 – China’s aircraft carrier makes cover of Beijing News (and many papers/news sites), sailing into the typhoon for “baptism”
Airbus eyes big orders during Merkel visit to China | Reuters – Airbus hopes to win orders to sell up to 100 A320 planes to China when German Chancellor Angela Merkel visits the country this week, industry sources said on Monday.
“Merkel in China” by Sanjaya Baru | Project Syndicate – Somehow doubt human rights will be high on the agenda. Germany/Europe has no leverage it is actually willing to use, China can act with impunity, and knows it// There are several dimensions to the bilateral relationship. Germany needs both China’s markets and the funds that its government can deploy to purchase German and European bonds. It also has more than 7,500 enterprises operating in China, with gross investment totaling $18.5 billion. Moreover, Germany has sold $15 billion worth of technology to China, and bilateral trade hit a high of $169 billion in 2011, accounting for 30% of total China-EU trade. The two countries have set a bilateral trade target of $280 billion for 2015. Trade, however, is not the only immediate concern. Far more important, especially for Germany, is to get China to invest in and hold its bonds. In mid-August, at the First IISS Oberoi Lecture in Mumbai, Klaus Regling, the CEO of the European Financial Stability Facility, underscored the importance of Chinese demand for EFSF bonds and China’s role in stabilizing the eurozone.
Drug baron seized under China-ROK joint crackdown – Xinhua | English.news.cn – Cui Yongsen, head of a drug cartel based in northeast China’s Jilin Province, was accused of smuggling a substantial amount of methamphetamine, known as ice, and opium from other countries and selling the drugs in China from 2009 to October 2010, sources with the Chinese ministry said. Cui fled to ROK in January last year after five of his gang members were captured by local police.
人民日报-美国军火走俏加剧地区安全困境（国际论坛） 钟 声 – as expected, zhongsheng in today’s people’s daily on the new report about us arms sales
Breaking the Ice: China’s Emerging Arctic Strategy | China Power – The Arctic remains an area where there are still disputed territorial claims, along with questions regarding the international status of the northern waterways. Given China’s wide-reaching claims to large parts of the South China Sea based on island baselines, it has been and no doubt will continue to be wary of taking any positions on the Arctic disputes that could undermine its territorial claims closer to home. In general, its position on the Arctic appears to still be evolving but it is based on the premise that the Arctic remains a global commons, with non-Arctic states having access to the region and its resources.
军报头版报道二炮导弹发射 战略意图明显_多维新闻网 – discusses 7.24 missile test, quotes US media as saying had MIRV//今年7月24日，解放军二炮部队进行导弹试射。美国爆料称，该导弹型号为新型洲际导弹DF-41，为公路机动型洲际导弹，是北京首款配备分导式多弹头的战略导弹。美官员称，该型导弹战力惊人，“可携带多达10枚分导核弹头”，每枚分弹头更能打击“每一个人口超过5万的美国城镇”。据熟悉此次测射报告的美方官员称，这次导弹试射引起了美军方及情报机构对中国的远程导弹威胁的强烈关注。
中国军网_“大国长剑”铸就和平之盾 – “大国长剑”铸就和平之盾 第二炮兵已完成从“山沟里的部队”到“车轮上的部队”的全面转型，精确打击能力大幅跃升
SOCIETY
Translation: To Know What’s Wrong With China, Look At Her Construction | Tea Leaf Nation – Li Chengpeng much more interesting than Han Han// To prominent blogger Li Chengpeng, deceit is everywhere in modern China. In the aftermath of the shocking collapse of a 10-month-old bridge in the northeastern city of Harbin, Li took to his account on Sina Weibo, China’s Twitter (@李承鹏) to comment on the bridge’s unfortunate role as a metaphor for today’s China. Since its posting earlier today, Li’s essay has been retweeted over 44,000 times and garnered over 8,000 comments. Tea Leaf Nation translates; the original Chinese version follows at bottom
China AIDS patients topple gate of gov’t office – About 300 AIDS patients and their relatives tore down the main gate of a government office in central China during a protest Monday over unmet demands for financial assistance. Protester Li Xia said police in Zhengzhou city beat some of the patients with batons after the group gathered outside the Henan provincial government office and blocked the main gate to demand a meeting with officials. She said one protester was dragged into the government building by police.
BBC News – China editor’s suicide sparks web debate – The suicide of a senior editor working for China’s Communist Party newspaper has sparked strong reaction from Chinese cultural and media circles and on the internet.
Editor’s suicide prompts reflection, reproach – China Media Project – News of the suicide last week of Xu Huaiqian (徐怀谦), the chief editor of the Earth (大地) supplement of the Party’s official People’s Daily, has prompted a burst of discussion on Chinese social media of the extraordinary pressures facing journalists in China today.
Tourism with Chinese characteristics, my trip to Taierzhuang, a newly constructed ancient town « lijia zhang’s blog – a huge local tourism investment that paid off. not common// I heard that before this major tourist project had kicked off, the local economy was in a bad shape as the coal mining had been declining steadily. Luckily, by all accounts, Taierzhuang’s re-inventing its self as an ancient town has been a success story. Last April, it started to receive visitors. By June this year, 3 million people, vast majority in tour groups, have made their way here. No doubt a lot more to come. More and more Chinese with money and leisure at their hands are looking for places to go