Sinocism China Newsletter For 08.30.12

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

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The excellent Chris Buckley has an interesting story about preparations for the 18th Party Congress–Exclusive: China considers downgrading domestic security tsar in next line-up | Reuters. Buckley writes that:

China’s Communist Party is considering downgrading the role of domestic security chief as part of a move to a new and smaller top elite, reflecting fears that the position has become too powerful, sources said.

But there are at least two issues with the story. First, this shift has been discussed ad nauseum in the overseas Chinese press. Duowei especially has been all over this, as Sinocism noted here, herehere, here, and here over the last couple of months.

Reuters even admits in this story that “Overseas Chinese websites, which are beyond the reach of Beijing’s censorship, have also carried reports that the Standing Committee will shrink to seven.” This is not the first time Reuters has headlined something as “exclusive” when it has already been in the Chinese language press. I assume this is the work of an overzealous editor and/or headline writer.

Second, Reuters buries the much more interesting news, disclosing details of a July meeting in Beijing chaired by Hu Jintao:

Broad plans for the power succession and other proposals for the party congress were discussed at a secretive conclave in Beijing in late July, when two sources said Hu spoke to hundreds of senior officials for several hours.

Chinese state media issued a brief account of Hu’s speech. But the two sources said the full version dwelled on the major economic and social challenges facing the government.

“He spoke about the many problems and potential crises. There was a sense of anxiety,” said a retired official, who said he was given a broad summary of Hu’s speech.

“He spoke about corruption, environmental pressures, economic problems – about all the problems facing the party,” said another retired official.

Could this meeting Buckley writes about have been more important than the rumored Beidaihe conclave?

The China bears are winning. Bulls everywhere seem to be throwing in their pom poms in the face of increasingly negative economic news.

But Stephen Roach says China is Okay, relying on “the greatest urbanization story the world has ever seen” argument and using Pudong as an antidote to the “ghost cities” exaggerations:

Shanghai Pudong is the classic example of how an “empty” urban construction project in the late 1990’s quickly became a fully occupied urban center, with a population today of roughly 5.5 million. A McKinsey study estimates that by 2025 China will have more than 220 cities with populations in excess of one million, versus 125 in 2010, and that 23 mega-cities will have a population of at least five million. China cannot afford to wait to build its new cities. Instead, investment and construction must be aligned with the future influx of urban dwellers. The “ghost city” critique misses this point entirely.

Pudong is a bad example, as there is only one Shanghai. That said, if there are so many ghost cities in China why does everyone pushing the bear case point to Ordos? Shouldn’t there be a lot more empty cities? I know some very smart money that pulled out a couple of years ago and is now looking to get back into China. Perhaps they are early, as things are almost uniformly grim here. Then again, there are always long and short opportunities. Is Roach deploying his own capital into China right now?

A reader posted an interesting comment to yesterday’s thoughts about the GOP platform and China. The reader writes:

I think there is a difference between rhetoric and campaign promises. On the rhetorical end, a candidate can say all kinds of things and criticize “the butchers in Beijing.” As I recall, however, candidate Clinton did not offer much in the way of specific changes to China policy apart from pressing them on human rights….which he did however ineffectually.

Candidate Romney however has made specific policy statements in the context of a campaign promise. The record on campaign promises being acted upon is in fact rather high—-somewhere in the 80-90% range being implemented in some fashion and the others being attempted…

That the Chinese media is adopting the US media stance I think is a little disconcerting. I probably would rather have a prepared Beijing throwing a couple of sharp elbows at the beginning of the administration rather than have an unprepared Beijing face the reality of some of Romney’s promised policies. It is also worth noting that this administration made it clear that the “pivot” or “rebalancing” was coming well before the specific policy actions were announced, so Beijing may not have liked it but they were not surprised.

Comments are always welcome, either through email or on the Sinocism site.

The New York Times’ In China, Sons Fight Railways Ministry Over Crash is a heartbreaking story of Chinese immigrants who returned to China for a visit and died in last year’s Wenzhou train crash:

For the brothers’ parents — Cao Erxing and his wife, Chen Zengrong, both 56 — the return to China was a capstone to lives of toil in New York City sweatshops and restaurant kitchens. The father and mother, neither of whom studied beyond middle school, had left Fujian Province with their boys, taught themselves English and earned enough money to buy a house in Queens. At the time of their death, they were custodial workers at La Guardia Airport…“They finally felt financially secure enough to take their first vacation,” Leo Cao said…His father died at the scene, but his mother survived for two hours, leaving haunting unanswered questions. Did she receive adequate medical care? And who was heartless enough to swipe the $10,000 from the satchel fastened to her waist?…..“My father was so proud of China’s progress,” Leo Cao said. “Unfortunately it was China’s progress that killed my parents.”

Today’s links:


社评 沉着理性应对 三角债蔓延风险|社评|沉着|理性_21世纪网 – 21st Century Business Herald Editorial on calmly and rationally facing the spreading risk if triangle debts//

Fiscal Crunch Time in the Nation’s Capitals – Caixin Online – latest Caixin cover story// Central government orders to ramp up gross domestic product are clashing with fiscal realities as revenue growth decelerates for provincial, city, prefecture and county governments across the country. Moreover, the slowdown in tax, fee and land-sale receipts is unnerving local government officials whose ambitious plans for social welfare programs and infrastructure projects are now in jeopardy… The Ministry of Finance reported all the nation’s local governments took in 3.7 trillion yuan combined between January and July up 13.8 percent from the same period 2011, But the report also said combined spending increased 23 percent to 6.3 trillion yuan. Year-on-year spending increases for central and local governments were 13.4 percent and 25.6 percent, respectively. For the first half, national tax revenue increased 9.8 percent to 5.5 trillion yuan. The growth rate was 19.8 percentage points lower than the same period the year before.

China’s economy shows signs of stabilizing: official | Reuters– Zhang Ping, head of the National Development and Reform Commission, told a meeting of the National People’s Congress, or parliament, that China’s two-pronged policy program had been effective. The government’s policies and measures have been effective and the country’s economic growth is stabilizing at a slow pace,” Zhang was quoted by the official Xinhua news agency as saying. “Speculative and investment demand have been effectively suppressed due to government control policies for the real estate market,” he added. Zhang said both economic growth and consumer inflation were within the government’s targeted range, while main reforms to adjust the economic structure were making progress.

Ordos becomes a ghost town as property bubble bursts| –But in grand scale of things is this really a big deal? The dollar amount for Ordos seems fairly immaterial, no? $3B is less than a week’s worth of bailouts for Citigroup// In 2010, local land developers had invested 18.98 billion yuan (US$3 billion) in construction projects, with 56.4% of this amount borrowed from private lenders. At that time, almost all the 500-odd real estate companies in the city had departments to solicit investment from private lenders, according to the weekly. The bubble collapsed in 2009 and the construction of many half-completed buildings stopped for lack of financial support.

北京第一高楼总投资240亿元–社会–人民网 – CITIC’s HQ, Beijing tallest building when completed 2016-17, will cost 24B RMB, be 528 Meters high, have 108 floors, located just west across 3rd ring road from China World Complex, just south of new CCTV tower. Traffic in CBD will get interesting//

China Finance Minister Pushes for Differential House Tax-Caijing – The government will also “steadily” advance trial programs to reform the property tax, which has been so far enacted in municipalities of Shanghai and Chongqing covering newly built homes only.

Glut Means Gloom for China’s Once-Sunny Commercial Property Sector – China Real Time Report – WSJ – In Guangzhou, multinational firms have slowed their expansion plans, but the leasing demand from domestic companies in sectors such as insurance, media and IT remained strong, said Colliers. Office rents in Beijing and Shanghai , however, continued to hum along. In Beijing, grade A office rents rose by an average of 4.2% between the first and second quarters of 2012, while in Shanghai, rents grew 3.6% over the same period, said Colliers. Reasons for the growth: Strong demand from domestic firms coupled with a lack of new office space.

Overseas-Listed Firms Seek a Path Home – Caixin Online – money to be made picking the firms likely to privatize. suggestions?// Tough regulators and harsh short sellers prompt companies to leave foreign bourses and seek listings back in China, but a slew of obstacles stand in their way

Exclusive: China’s fraud-hit Suntech strikes more trouble in Italy | Reuters – An Italian court has filed criminal charges against an investment fund controlled by China’s Suntech Power Holdings, the world’s largest maker of solar panels, accusing it of illegally building solar farms to milk state subsidies.

Shanghai stocks hit 43-month low as confidence falters — Shanghai Daily will 2000 hold?// SHANGHAI stocks tumbled today, sending the key index to its lowest in 43 months as investors speculated that policymakers may hold off additional easing measures.

Iron ore tests the Chinese floor theory | beyondbrics – Nothing says “downturn” in China quite like the freefall in prices of iron ore, the key steelmaking ingredient. Prices for the TSI benchmark 62 per cent Fe iron ore stood at $94.8 per tonne on Tuesday, down 19 per cent in the last four weeks. “Watching this market is like watching the Titanic,” wrote commodity broker London Dry Bulk in a research note.

Report: China’s Health Care System Deeply Sick – China Real Time Report – WSJ – The Chinese government has spent $125 billion over the past three years to extend insurance coverage to 95% of the population while also improving access to hospitals and clinics. But despite that effort, the country’s health-care system still has a long way to go to and the challenges ahead are mounting, according to a new study from consultancy McKinsey & Co.

Wolters Kluwer to Boost China Workforce for Health, Legal Growth – Bloomberg – Wolters Kluwer NV (WKL), Europe’s largest tax and legal publisher, will expand its China workforce by 17 percent in the next six months to seize opportunities presented by the nation’s reforms of the health and legal industries. The publisher will add about 50 people, including sales staff and subject-matter experts such as physicians and legal scholars, to the 300 now in the country, Chief Executive Officer Nancy McKinstry said in an interview in Beijing today. “The level of change around regulations, legal developments and medicine continues to increase rapidly,” she said.

Chongqing Hit Developers with Large Fines in 2011 – Caixin Online – A special inspection into tax payments in the real estate sector launched by the Chongqing government in 2011 collected 4.5 billion yuan in fines, recent data from the city’s Finance Bureau shows. A source closed to the bureau said that to alleviate fiscal pressure, several city government agencies, including the tax department, land bureau and the industry and commerce administration, jointly launched a special city-wide inquiry that targeted property companies. The inspection focused on the land value-added tax, which in the past had been loosely supervised, the source said. Longfor Properties Co. alone was told to pay 300 million yuan.

Chinese Buyer Roils Burgundy – – Macau casino executive Louis Ng is getting a crash course in international relations as he tries to calm the French storm that followed news he had purchased a vineyard in the hallowed wine region of Burgundy…Called “le chinois” [the Chinese] by the local French media, the 60-year-old Mr. Ng is among the most powerful casino executives in the Chinese gambling enclave of Macau. He is the chief operating officer at SJM Holdings Ltd.,the holding company founded by Hong Kong tycoon Stanley Ho that controls several of Macau’s casinos and hotels.

Three multinational retail giants face problems in China| – Multinational retailers Walmart, Carrefour and Tesco are all encountering major problems in the Chinese market. A local retail company manager told the Shanghai-based National Business Daily that Carrefour, the world’s second-largest retailer, is planning to sell its operations in China, with China Resources Enterprise being the most likely buyer.



经济观察报社因多项违规被行政处罚 – 新华时政 – 新华网 – excellent Economic Observer Newspaper (registered in Shandong) fined 30k RMB, report (s?) stripped of journalist credential, punished administratively// 据了解,山东省新闻出版局已于近日依法对该社做出警告、罚款3万元的行政处罚,并对编造虚假新闻的记者做出吊销新闻记者证的行政处罚,对编写失实报道的记者做出警告的行政处罚,同时责令该社立即纠正其他违规行为。

China Yahoo! dissident to be released from jail | theSundaily – A Chinese dissident whose conviction for subversion was based on evidence provided by US Internet giant Yahoo! will be released from a 10-year prison term this week, his wife said Wednesday. Wang Xiaoning, 62, became a cause celebre after a Beijing court named Yahoo Holdings (Hong Kong) as the source of evidence that led to his 2003 conviction, in a public relations disaster for the company.

Climbing China’s Greasy Poll – Economic Observer Online – In-depth and Independent – Summary:Asking a Chinese official their age is starting to become even more sensitive than asking a woman of a certain age how old she is. Zhou Li (周黎), a professor at Peking University, likened Chinese officials’ clambering up their career ladders to “participating in a championship,” as everyone vies to get ahead. Within this context, the government’s age requirement for official jobs has progressively been lowered, while positions at each level of the hierarchy have a maximum age restriction.

Propaganda Bites Official – Economic Observer Online – In-depth and Independent – Wuhan, the largest city in the central Chinese province of Hubei, has a reputation for being one of China’s three “furnace” cities, but on this occasion the heat was on the government officials as they were about to appear on a program where they’d be grilled by the host and a live audience made up of residents.

Cities Pilot Alternative to “Re-education through Labor” – Economic Observer Online – – Summary:The cities of Nanjing, Lanzhou, Zhengzhou and Jinan are piloting a replacement system called “education and correction of violations” (违法行为教育矫治). Officials said the core of the new system was “education and letting those who’ve been educated back into society.”

Chinese Law and Politics Blog: Chinese State Council White Papers and the “Turn Against Law” – In recent years, Chinese central authorities have turned against a range of legal reforms that they had pursued in the late 20th century. They have de-emphasized judicial professionalization.  They have increased the harassment and abuse of public interest lawyers.  And since 2006, Party authorities have pursued “Socialist Rule of Law” political campaigns re-emphasizing Party supremacy and warning against the infiltration of “Western” rule-of-law concepts.   (For more on this, see here.) Official Chinese rhetoric with regard to legal reform has also changed.  Comparing two State Council White Papers – China’s Efforts and Achievements in Promoting the Rule of Law (2008) and the Socialist Legal System With Chinese Characteristics (2011) illustrates this shift.



How Foxconn Changed a Small Chinese Town – The National Business Daily has a long feature story about the effects of one Foxconn plant in Xinzheng, Henan. The plant, which has been in operation for two years, has boosted Henan’s economy to the extent that Foxconn operations now account for 48 percent of the province’s total exports. And Foxconn plants have helped Henan’s international exports grow over the last two years even as the larger trend in the region is flagging international numbers.



A Diplomatic Incident in China: A Close Call : The New Yorker  has official Chinese media publicized arrest of the flag filcher?// The roots of conflict between China and Japan reach far past the Second World War, and the island dispute is unlikely to be solved soon. But this case should be a wake-up call not only for both sides of this relationship; under slightly different circumstances, the United States might well find itself in the equivalent of a limo-flag situation. The likelihood will depend, to some degree, on whether the persons responsible for this incident are treated seriously and fairly. In any case, when the day comes—and I fully expect it will—some of the world’s great powers will discover that their fragile and carefully managed relationships now rest, more than ever, in the hands of the public.

China’s Real Blue Water Navy | The Diplomat – China’s navy is not poised to speed across the Pacific to threaten America the way the Soviet Union once did, if not worse. This despite Peter Navarro and Greg Autry’s over-the-top polemic, Death by China: Confronting the Dragon—A Global Call to Action, in which they claim that “[T]he People’s Republic is moving forward at Manhattan Project speed to develop a blue water navy capable of challenging the U.S. Navy.” Such statements lack basis in fact and present an ideal strategic teaching moment to remind analysts and policymakers that Beijing’s evolving naval structure and operations yet again show that China is not working off a traditional European, Soviet, or American naval development playbook.

Clinton to visit China, meet with leaders next week amid tensions over South China Sea dispute – The Washington Post –

China’s Restrained Nationalism | Flashpoints – Accurate?// If the Chinese government had resorted to any of the measures described above, it would have met with widespread criticism for acting provocatively and irresponsibly. But in fact, Chinese leaders have displayed more self-control when it comes to sovereignty issues than their counterparts in Japan, Russia, South Korea and Taiwan. Hu, Wen, and other Chinese leaders have to stay on the right side of Chinese nationalism just like their East Asian counterparts; but with no opposition promising to do more, they don’t need to be too accommodating.

Ex-Motorola Worker Gets 4 Years for Trade Secret ‘Raid’ – Bloomberg – Indicted in 2008, Jin was accused of working simultaneously for Motorola and for Kai Sun News (Beijing) Technology Co., also known as SunKaisens, which was affiliated with China’s military. Motorola, now known as Motorola Solutions Inc., is a maker of communications equipment based in Schaumburg, Illinois, about 28 miles (45 kilometers) from Chicago…U.S. customs agents stopped Jin as she was about to board a plane at Chicago’s O’Hare International Airport on Feb. 28, 2007. In her possession were more than 1,000 Motorola documents, $30,000 in cash and a one-way ticket to China.

Gregory Kulacki: Misattribution and Exaggeration Mar Reporting on Chinese Missile Test – Within a week, the unsubstantiated claims of a single U.S. reporter were being presented in newspapers across the United States and around the world as an official Chinese announcement that they were developing a new ICBM that could carry multiple warheads. The chain of exaggeration and misreporting may never have started if Jane’s Defence Weekly had examined the origin and credibility of Gertz’s claims. In the opening paragraph of his report Gertz insinuates but does not state clearly that U.S. officials told him the allegedly tested missile is a new Chinese ICBM. Several paragraphs later he admits the Pentagon declined to comment on the test. Moreover, all of the information on China’s supposed new ICBM that appears in the Gertz report appears to come from unofficial U.S. analysts known to have made similar claims about Chinese nuclear capabilities in the past. Gertz presents no evidence that a new missile was tested, and no evidence that China is developing a new Chinese ICBM with the capability to carry multiple nuclear warheads.



Beijing-New York plane ‘spends hours in air before returning’ – Telegraph – An Air China plane bound for New York allegedly spent hours flying only to return to Beijing after receiving a “threatening message”.

Weibo Rumor Watch: Netizens Question Official Explanation For Airplane Grounding | Tea Leaf Nation – The consensus online seems to be that a government official, most likely a local party boss, possibly with corruption issues, was on the plane and attempting to flee. One netizen asked, “It took them that long to realize someone was trying to flee?”

Rich kids’ arrogant, disastrous driving fans hatred of wealthy – People’s Daily Online – If there’s one piece of advice rich parents in China should follow, it’s this: Don’t let your kids anywhere near a car. The latest case of drunken and deadly idiocy happened in Chengdu, where a 19-year-old, driving a sedan, hit a group of roadside migrant workers, injuring two and killing one.

In China Artists Like Zhao Zhao Face Political Oppression – SPIEGEL ONLINE – Zhao was supposed to have a major solo exhibition in New York this year, at a gallery owned by Christophe Mao, an art dealer active in both Beijing and New York. For Zhao the exhibition would have been an important step toward making a name for himself internationally. He packed up a large number of his works to be shipped by sea — but the shipment never left the northern port of Tianjin. China’s powerful customs police confiscated the cargo.

Zhang Yimou’s Next Act Could Be Lucrative – Caixin Online – China’s most famous director has been busy. Zhang Yimou is seeking a new employer and setting up an investment fund in Shanghai, and both deals involve very large sums. Caixin learned that the fund, Zhang Yimou Cultural Industry Fund, will have 2 billion yuan to invest in filmmaking. Neither the names of the other investors nor the revenue-sharing arrangement were known.

Ratio Juris: Toward an Understanding of Classical Chinese Medicine Worked for me, cured asthma I had for 20 years, while living in Beijing’s pollution// This is the first of a series of posts I hope to make over the course of a year or two on the therapeutic value of Classical Chinese Medicine. In doing so, I’m not intending to make any claims for the (comparatively superior or otherwise) therapeutic value of “holistic medicine” in general, indeed, I believe that many of the claims on its behalf by its aficionados, be they practitioners or patients, are probably exaggerated, misleading, or, quite frequently (and far worse), false. My interest in this subject is motivated by a broader concern with the sundry questions that arise among and between modern science, religious worldviews (broadly construed), and what we’ll term the “healing arts.” I’m particularly intrigued by the philosophical and religious underpinnings—beliefs, values, orientations—that “justify” or influence these arts. And to narrow the focus even further, it is religious worldviews of Asian provenance that intrigue me most of all, although for the time being we’ll attend to those of primarily Chinese pedigree.

Ratio Juris: Toward an Understanding of Classical Chinese Medicine, Part 2: From Classical to Traditional Chinese Medicine – Even if one believes that the theory and praxis of Classical Chinese Medicine (CCM) should be subject in its entirety to the scientific adjudications of what has come to be called evidence-based medicine (EBM) (and I do not believe it should be wholly subject to such a sieve), it is possible to at least imagine how CCM might fall under the rubric of “science” generally in a broad and historically-based construal of the meaning of such an enterprise

BOOKS Daoism and Anarchism: Critiques of State Autonomy in Ancient and Modern China : John A. Rapp – want to read// This volume in the Contemporary Anarchist Studies series focuses on anti-statist critiques in ancient and modern China and demonstrates that China does not have an unchallenged authoritarian political culture.Treating anarchism as a critique of centralized state power, the work first examines radical Daoist thought from the 4th century BCE to the 9th century CE and compares Daoist philosophers and poets to Western anarchist and utopian thinkers. This is followed by a survey of anarchist themes in dissident thought in the People’s Republic of China from 1949 to the present. A concluding chapter discusses how Daoist anarchism can be applied to any anarchist-inspired radical critique today. This work not only challenges the usual ideas of the scope and nature of dissent in China, it also provides a unique comparison of ancient Chinese Daoist anarchism to Western anarchist. Featuring previously untranslated texts, such as the 9th century Buddhist anarchist tract, the Wunengzi, and essays from the PRC press, it will be an essential resource to anyone studying anarchism, Chinese political thought, political dissent, and political history.