The Sinocism China Newsletter 07.18.14

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

Today’s Links:


China Home Prices Fall in Record Cities Signals More Easing – Bloomberg Prices fell in 55 of the 70 cities last month from May, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the statistics. Prices in Shanghai and the southern city of Guangzhou fell 0.6 percent each from May, the biggest drop since January 2011, while they declined 0.4 percent in Shenzhen. Prices fell 1.7 percent in the eastern city of Hangzhou, the largest monthly decline among all the cities.

Related: Beijing first-half property sales fall 34.8 year-on-year, driven by residences | South China Morning Post Two of the big factors in the drop are a subsidised-housing programme for first-time buyers and the success of restrictions meant to curb soaring prices

Anti-corruption drive: Anchor away | The Economist just a coincidence that Starbucks was an Edelman client when Rui Chenggang attacked the Forbidden CIty Starbucks branch, and then just a few months later Edelman invests in Pegasus, the PR firm Rui cofounded?  //  The reach of the anti-corruption campaign into CCTV is also noteworthy. Comprising 42 channels, CCTV is a behemoth that profits from its ability to bring in huge sums from advertising—16 billion yuan ($2.6 billion) in 2013 from prime-time slots alone—and from its place as a powerful part of the central bureaucracy. The mood at the network, says the employee, is now tense. “Everyone knows that if they have been dirty they could be in big trouble, and it’s now too late to get clean.”

Related: Edelman, Rui Chenggang, and China PR-Silicon Hutong written by a longtime China PR practitioner  //  What happened to Edelman could have happened to any of dozens of local and international PR firms. Rui had made himself a target, and Edelman is the largest PR firm in the world. But the rest of us have now been given a shot across our bows. Either we bite the bullet now, change course and adopt ethical tactics and practices, or we leave our firms, our people, and our livelihoods at the mercy of government caprice. If we don’t, this will happen again, and when it does we will all find that it will not be a single firm in the spotlight – it will be every PR practitioner in China.

Related: China Central Television purge occurs amid corruption probe – Whether the effort aimed at CCTV is only aimed at rooting out corruption or also settling a few political scores along the way is unclear, said Prof Zhan of Beijing University, adding that the involvement of prosecutors points to a lack of an overarching “political” tinge. “Judging from the circumstances now, we do not have sufficient reason to believe that it is a political purge,” he said. One former CCTV journalist who requested anonymity, said nothing was clear to his colleagues still at CCTV except that all the investigations were somehow linked.

Britain and Hong Kong: No panderers, please: this issue’s black and white | The Economist–Leader Time for Britain to rediscover its moral compass and confront China over Hong Kong  //  wasn’t that compass pawned?

Related: Hong Kong’s media: Tamed hounds | The Economist But in the past two years several news organisations have experienced management shake-ups and worrying episodes of intimidation. The South China Morning Post, Hong Kong’s leading English-language newspaper, has recently installed a number of senior editors who have worked at mainland newspapers or agencies. Frustrated journalists at the paper tell of stories that are critical of China often being toned down or dropped altogether. In February Commercial Radio axed Li Wei-ling, a talk-show host who frequently takes the government to task; she accused her employer of bowing to government pressure in exchange for the renewal of its licence. In January Kevin Lau, Ming Pao’s chief editor, was removed, to the shock and anger of many of the paper’s reporters. Then, onFebruary 26th, Mr Lau was nearly killed in a knife attack.

Related: Violence And Other Threats Raise Press Freedom Fears In Hong Kong : Parallels : NPR An independent judiciary and a free press are the mainstays of that autonomy, and anxious residents say those pillars are slowly being weakened under increasing pressure from the Hong Kong government, and the central Chinese government in Beijing. The Hong Kong Journalists Association’s annual report, “Press Freedom Under Siege,” cited Ming Pao’s last-minute headline change as an example of a pattern of censorship, violence and interference.

How to Read China’s New Press Restrictions | A ChinaFile Conversation Orville Shell–Even as professional journalists have sought to adopt elements of the Western press model and to perform a greater watchdog role in Chinese society, the Party has never wavered from its foundation principle that the press in New China must remain the CPC’s “mouth and tongue.” It is this unyielding principle which lays behind each restatement of the Party’s right, obligation, and commitment to manage China’s press to serve its own goals, even as those goals have morphed substantially since the time of Mao. The latest set of regulations is only the most recent in a long string of reminders that the media in China has no legal basis to assure its independent, watchdog status.

China Coveting Power Parity Joins U.S.-Led Naval Drills – Bloomberg “The PLA sending four ships to Rimpac is intended to show China’s growing maritime prowess in the region and its increasing capabilities to handle regional maritime affairs,” Li Jie, a Beijing-based senior researcher at the Chinese Naval Research Institute, said. “It also serves as a subtle warning that the U.S. would be better off to not encourage what would be harmful to Chinese interests in the region.”  //  Is that really how the US Navy perceives things, or is it how a Chinese researcher hopes the USN does, perhaps reflecting sentiment higher up in his food chain?

Qingdao Port Warehouse Receipts Forged with Phony Seals, Says Source – Caixin massive due diligence failure, at least by the foreign banks involved…they deserve their losses  //  Dezheng Resources Holding Co. Ltd. fabricated the seals and warehouse receipts of a branch of the Qingdao Port Group Co. to receive loans from banks, said a source from Qingdao Port. A representative of Dezheng Resources forged warehouse receipts for Qingdao Port with phony seals, and also fraudulently used seals from several other companies including Sinotrans & CSC Holdings Co., said the source who did not give further detail on the representative’s role in the ongoing investigation launched by authorities.

The Business of Urbanization in China-CKGSB Knowledge “What is new urbanization? How does it differ to China’s last periods of urbanization where they brought 500 million citizens from countryside to cities? I think that had been an era of focus on hardware— transport infrastructure, getting roads, buildings, bridges, and so on—correctly invested into, and now it shifts toward… how to put more livability around China’s urbanization,” says David Frey, Partner at KPMG’s Global China Practice and country head of the consultancy’s Cities Global Center of Excellence.

Q. and A.: Bill Porter on Journeys, Poets and Best-Sellerdom in China – For more than 30 years, Bill Porter has been one of the most prolific translators of Chinese texts, while also developing into a travel writer with a cult following. Under the pen name Red Pine, the 70-year-old resident of Port Townsend, Wash., has translated over a dozen books of poetry and religious texts, including collections of poems by Hanshan and Song Boren, the Daoist classic Dao De Jing and numerous Buddhist sutras. Under his own name, he has also published travel works like “Zen Baggage: A Pilgrimage to China” and “Road to Heaven: Encounters With Chinese Hermits.”



Xi Brings Brazil Chinese Deals for Jets, Energy, Cars – Bloomberg China pledged more than $8.6 billion in investments and loans in Brazil today as President Dilma Rousseff vows to attract capital to stimulate a slowing economy.

Huge embezzlement in China’s affordable housing projects – Xinhua The National Audit Office (NAO) said in a statement on Friday that a nationwide auditing campaign revealed 7.83 billion yuan (1.27 billion U.S. dollars) was appropriated in 2013 to fund non-affordable housing projects like construction of infrastructures and industrial parks. The campaign carried out from December to March also detected that 38 organs and individuals defrauded 1.54 billion yuan in shanty town renovation projects by falsifying documents. In addition, some 47,500 ineligible families benefited from affordable housing as approval procedures were slack in some regions, according to the statement. The NAO has told related authorities to rectify wrongdoing, and police have started to probe alleged crimes.//corruption at the core of so many issues here. A well-managed affordable housing program would do wonders for relieving housing problems and social tensions

China’s debt-to-GDP level: 200% and counting | The Economist reopening of the lending taps means debt is an even bigger burden for the economy. With credit at 200% of GDP and average financing costs of roughly 7%, Chinese borrowers now need to generate cash-flow growth of 14% to cover their interest payments without eroding their profitability or being forced to borrow yet more. That is a tall order in an economy in which nominal growth is now running at 9%.

Bad Debt Cannot Simply Be “Socialized” – Carnegie Endowment for International Peace Finally Beijing can assign the losses to the state sector, by reforming the houkou system, land reform, interest rate and currency reform, financial sector governance reform, privatization, etc. Most of the Third Plenum reforms are simply ways of assigning the cost of rebalancing, which includes the recognition of earlier losses, to the state sector. This is likely however to be politically difficult. China’s elite generally benefits tremendously from control of state sector assets, and they are likely to resist strongly any attempt to assign to them the losses.  //  they also strongly resist a corruption crackdown, how is that going?

Little Red Tape – MoneyBeat – WSJ To test if Premier Li Keqiang‘s government is reforming, Ernan Cui and Andrew Batson at Gavekal Dragonomics counted recent red-tape cuts. Since the start of 2013, the central government has announced 468 changes or cancellations, such as removing approvals needed to invest in airports or wind power. At this rate, it’s reducing 16% of existing rules every year. That’s better than the 6% annual rate at which Beijing cut red tape from 2007 to 2012. But it’s not as good as the 17% between 2002 and 2004, when the country cleared an impressive 1,806 regulations. More than a quarter of the rule changes won’t have any tangible effect on business, but half might make life easier for heavily regulated service industries such as finance or culture, Gavekal notes

Jeb Bush Raising Private Equity Funds as Campaign Weighed – Bloomberg A second Britton Hill fund called BH Logistics LP raised $26 million from 10 investors in April, including China’s HNA Group Co., according to regulatory filings. The fund used the proceeds to buy 1.4 million shares of Dorian LPG Ltd. (LPG), according to filings. Dorian expanded its board and appointed Savett as a director. HNA Group, based on the tropical Chinese island of Hainan, operates a fleet of 483 jets through its control of Hainan Airlines Co. and Hong Kong Airlines Ltd. The company had about $58 billion of assets as of April, including controlling stakes in 10 companies listed on mainland Chinese and Hong Kong exchanges. // does not look like the actions of someone preparing to run for President

Family planning: One-child proclivity | The Economist China’s fertility rate has fallen to an estimated 1.5 children per couple, in line with the European average but below the 2.1 that maintains a constant population and is more normal for a country at China’s stage of development. With China ageing quickly, a higher birth rate is needed to underpin long-term social and economic stability. In the past, the state used harsh methods to stop its citizens having babies. In the future, it will have to find clever ways to encourage people to have them. Other countries, not least neighbouring Japan, have struggled with that.

熊猫烟花注资1亿进军P2P-手机和讯网 an explosive mix, Panda Fireworks launches P2P lending subsidiary

中信银行理财品账面亏损超四成 兑付收益却达6.2%-手机和讯网 a look at a Citic Bank wealth management product that is far underwater



China to hold public trial of foreign couple who worked for GSK | Reuters The couple “will be tried in public” the official Xinhua news agency said on Thursday, citing a statement from the Shanghai No.1 Intermediate People’s Court. “The two defendants hope their families can attend the trail,” Xinhua said. It did not give further information on the decision.

Former vice governor of Hainan under investigation – Xinhua Former vice governor of south China’s Hainan Province Ji Wenlin is under investigation for allegedly taking bribes, the Supreme People’s Procuratorate (SPP) said in a statement Friday.

Prosecutors investigate senior party official for bribery – Xinhua Prosecutors have started the investigation into Yu Gang, former deputy head of the general office of the Commission for Political and Legal Affairs of the Communist Party of China (CPC) Central Committee, the Supreme People’s Procuratorate said on Friday. Yu has been investigated for suspected crime of bribery and been “placed under coercive measures,” an SPP statement said.

Former national political advisor under bribery probe – Xinhua Yang Gang, formerly a national political advisor, is being investigated for allegedly taking bribes, according to a Friday statement from the Supreme People’s Procuratorate. Yang, former deputy head of the Committee for Economic Affairs of the National Committee of the Chinese People’s Political Consultative Conference, was previously stripped of his Communist Party of China (CPC) membership and his official post, said a statement released on July 11 from the CPC Central Commission for Discipline Inspection (CCDI).

China boosts security on buses – Xinhua China has been struck by a number of fires and explosions aboard commuter buses in recent years.

党报总结今年上半年反腐四大新特点:速度创纪录_网易新闻中心 People’s Daily Overseas edition looks at the anticorruption efforts in 1H 2014, notes 4 characteristics, including but not limited to speed, new charges like adultery, cooperation among departments, esp audit office and CCDI…



Chengdu-area PLA officer detained in bribe case amid military graft probe | South China Morning Post Investigators took Yang Jinshan , a lieutenant general, to Beijing last week as part of a corruption investigation, four sources said. His family members and secretary were also detained. The sources, including people with connections to the military, said the investigation into Yang, 59, and other senior military officials was part of the wider inquiry into Xu Caihou, a former vice-chairman of the powerful Central Military Commission.

Manila urges unity for South East Asian nations in China sea dispute | Reuters Albert del Rosario said the Philippines wanted to hold talks with Brunei, Malaysia and Vietnam before foreign ministers from regional grouping the Association of Southeast Asian Nations (ASEAN) meet for an annual conference in Myanmar next month. “We are working towards having a possibility of claimants meeting before the ASEAN ministerial meetings,” Del Rosario told reporters after talks with Thailand’s acting foreign minister, Sihasak Phuangketkeow.

China and the Arctic: Polar bearings | The Economist Certainly China is interested in the Arctic. On July 11th its icebreaker, Xue Long (“Snow Dragon”), embarks on the country’s sixth Arctic expedition, with 65 scientists on board. A new 1.3 billion yuan ($210m) icebreaker will soon be launched, and last December a China-Nordic research centre was opened in Shanghai. In this section The flow of things Polar bearings Big Blue smoke Reprints Related topics Norway China New freight opportunities interest China along the Northern Sea Route (NSR) as ice recedes. In 2010 four ships took the route. Last summer 71 vessels did so. Each ship that takes the route must, at certain points, be accompanied by an ice-breaker, so it is unclear how soon the NSR will be suitable for mass transit, if at all.

Breaking Western Monopolies: Chinese Military Innovation Bearing Fruit | The Jamestown Foundation On July 10, several Chinese news outlets announced that China had taken an important step towards achieving “self-reliance” (zizhu baozhang) through the “breaking” (dapo) of a foreign monopoly on military-use computer airborne systems (People’s Daily Online, July 10). Many details of the two real-time operating systems (RTOS) have yet to be released, yet their implications for China’s national military industrial complex are nonetheless important, given it has long been criticized for its limited progress in indigenous innovation resulting from an over-reliance on foreign importation of technology and knowledge.

China’s Strategic Rocket Force: Upgrading Hardware and Software (Part 2 of 2) | The Jamestown Foundation Along with the PLA’s growing air; naval; space and counter-space; and information and electronic warfare capabilities, the continuing modernization of China’s nuclear and conventional missile forces is likely to pose increasingly serious tactical, operational and strategic challenges for the United States and its friends and allies in the region. Potential responses to China’s conventional missile threat could include dispersal, hardening, longer-range strike systems and a variety of measures to deny, disrupt or degrade Chinese intelligence, surveillance, reconnaissance and targeting capabilities.

Lawfare › Bringing More Due Process to CFIUS: An Overview of the D.C. Circuit’s Opinion in <em>Ralls</em> As Lawfare-ers have described here (and here, and here, and here), the CFIUS process is unique, as Ralls itself illustrates. The company, owned by two Chinese nationals, had acquired four American-owned companies in Oregon in order to develop windfarms.  The deal raised national security concerns—the windfarms notably were situated not far from a U.S. military installation—and the President accordingly issued a rare executive order ordering Ralls to divest of any interests in the Oregon businesses. Crying foul, Ralls brought suit against CFIUS in the United States District Court for the District of Columbia, which last year dismissed the suit on jurisdictional grounds.

With NDB established, Beijing turns to new bank for Asia|WantChinaTimes After the establishment of the New Development Bank (NDB) operated by the BRICS states on July 16, China is proposing to set up the Asian Infrastructure Investment Bank (AIIB) as another part of Beijing’s bid to break the dominance of the United States and Japan-led international financial institutions.



Broadcast Regulator to Tighten Oversight of Internet TV Programming – The government is also moving to close the regulatory gap that now exists for online video, with industry sources predicting new rules to tighten control of the online video industry to come this year.

乐视网临停急召沟通会 宣称牵手中宣部(更新)_公司频道_财新网 LeTV is scrambling // 会上,针对近期围绕乐视网的种种传闻和忧虑,刘弘也宣布了一个重要消息:今日(7月18日)晚间,中宣部党建网将登录乐视超级电视轮播频道,乐视希望借此消息,打消市场对有关监管部门和乐视网关系的担忧。\

China web giant Baidu launches search engine in Brazil–TechInAsia Baidu spokesperson Kaiser Kuo tells Tech in Asia the Brazilian version comes decked out with several features not available in the Chinese version: a smart searchbox that predicts queries and shows preview shots of top results while typing, an open content platform with several local partners, and some interactive elements like the ability for users to “like” their favorite athletes and celebrities. Kuo says Baidu hasn’t announced any targets yet for Baidu Busca.

Alibaba Waiting Until After Labor Day to Begin IPO Roadshow – Bloomberg Alibaba’s goal had been to get a deal done before a summer lull that begins in August, when many fund managers leave for vacations and trading volumes in the U.S. slump. To complete the deal in that short timeframe, Alibaba had discussed the option of dividing its management team up in order to conduct simultaneous investor meetings across the globe, two people said. That was one of several options on the table, they said.

Can Amazon and Microsoft crack cloud computing in China? | China Economic Review Microsoft has a stronger foothold in the Chinese market with its Azure service, which launched as a limited preview last June and went fully live this March. “We pride ourselves as the only multinational company that has a true public cloud service here in China,” George Yan, who manages Microsoft’s China cloud business, told China Economic Review in an interview in early June. Azure’s key selling point as a global provider is that any individual or company can sign up for the service, in contrast with AWS, which is not yet fully public. Amazon declined to comment for this story. //  how many PRC clients does Microsoft have for this in China? I have heard a very small number; no one trusts the US firms. 

滴滴快的拿到合法“牌照”_滚动新闻_新浪财经_新浪网 年初打响的快的和滴滴的打车软件市场之争,随着补贴大战的熄火,如今渐渐归于平淡,但是它们引发了大家对打车软件的争议。   昨天,交通运输部正式颁行了《关于促进手机软件召车等出租汽车电召服务有序发展的通知》(以下简称《通知》),明确指出“着力营造统一、开放、公平、有序的发展环境”,并规定“平台运转不得影响手机召车软件正当功能和良性竞争”。这意味着国家首次在政策层面肯定了打车软件合法地位,打车软件有了“身份证”。

How Taobao Is Crowdsourcing Justice in Online Shopping Disputes | Alizila After he gets off work from his office job, Li occasionally logs onto Taobao’s User Dispute Resolution Center and spends the evening as a Taobao “dispute assessor.” With fellow volunteers, Li, 28, reviews evidence and makes rulings on disagreements between consumers and merchants in online purchases that have gone wrong, passing judgment on more than a dozen cases a night.



China gets crushed, humiliated at European Mahjong Championship: Shanghaiist Chinese competitors at the fifth Open European Mahjong Championship held in Strasbourg, France did not return victorious, West China Metropolis Daily reports, as the highest ranking position among the Chinese competitors was an embarrassing 30th place. Ten Chinese players participated in the contest with player Yan Wenying taking 30th place overall in the competition, the highest ranking among Chinese. His team Guohua came in 37th in the team competition. Adding further insult to injury, the individual title was claimed by a Japanese competitor



Getting a Healthy Interest in Medical Tourism – Caixin A rush of patients are checking into travel abroad for healthcare needs, helped by a rising demand for better quality medical care and sophisticated treatments



Kapital Creation: A Beijing State of Mind by Matthew Niederhauser & John Fitzgerald » Kapital Creation Aerial Update — Kickstarter We also had an exciting day taking out a hexacopter to shoot aerials. Be sure to check out select footage from the drone at the bottom of this update. We got a camera over 250 meters in the air to film stunning views of Beijing’s urban sprawl and landmarks.

Beijing Monorail Plan Earns Ire Among Residents – Caixin On July 8, representatives from several residential communities handed in a joint statement to the Chinese Research Academy of Environmental Sciences (CRAES), which published environmental assessments for the project, attacking the validity of previous assessments on the monorail project. The 33.7-kilometer long beam-riding monorail project, with maximum speeds of 76 kilometers per hour, is set to be built in the east part of the city and will run through several residential communities.

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