"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner
Hi folks, apologies for the delay today. It is not out of petulance about the poor response to yesterday’s panhandling but rather due to a stomach bug I have had all week and that was winning this morning.
The pollution in Beijing is bad again and the government is warning of a sandstorm overnight but I do not think that is what has me down. For those who like or need to track air pollution in China, this new site aqicn.info looks useful, if a bit scary with all the graphs.
This week’s Sinica Podcast looks to be a good one with a discussion on Mo Yan and the Nobel Prize by people who know what they are talking about.
Today’s links are a bit thin, all should be back to normal by Monday.
Thanks for reading, and thanks especially to the readers who offered support Thursday.
THE ESSENTIAL EIGHT
China to Raise Down Payment, Loan Interests on Second Home Purchases -Caijing Local Chinese governments are discussing details of even stricter property regulations including raising the minimum down payment required and loan interests on second house purchases, the China Securities Journal reported. The minimum down payment required on the second house is expected to rise to 70% and loan interests increase by 30%, the newspaper cited an unnamed source as saying.
SOHO中国转型之难 – 经济观察网 － 专业财经新闻网站 Economic Observer on SOHO’s recent results and its attempts to transition from selling units in the complexes it develops to operating them. EO questions some of the numbers in their recent earnings release as they pertain to Chaowai SOHO. SOHO HQ is in that complex; a brief walk-through of the retail floors could be edited into a “ghost mall” video of its own. last time I visited Guanghua SOHO, down the street, it was also having retail struggles..But the offices tend to rent fast as they are cheap and well-located. just never ever rent above a floor you can walk up to in a SOHO building. You can end up waiting 15-30 minutes for the elevator at peak times. One office space owner in SOHO Shangdu (between Chaowai SOHO and Guanghua SOHO) who uses his space for his business is looking to rent out his office and rent a few floors down in the retail area, at a big discount to what he can rent his space for..even though when he bought the office the sale prices for retail space were significantly higher than the prices for office space above..now completely inverted. Also interesting are the recent attacks on Pan Shiyi-Ren Zhiqiang business dealings, led in part by Wu Fatian. SOHO has gotten a lot of bad press lately, esp around the housing elder sister case. Almost seems like someone has it out for them// 然而，根据记者的实地了解，这几个项目无论是出租率还是租金，似乎都和SOHO中国在上述报告中所披露的数据有一定差距。例如，在其在上述报告中，其按照售价及所有成本计算的租金收益率分别为9%和24%，根据这两个数据所推导的朝外SOHO项目目前平均租金水平分别为7.6元和7.96元。然而，该项目中介给出的信息却是，只有一层店铺租金较高，为8.5—13元不等，但2—7层商铺以及7—11层写字楼完全可以以四五元/平方米/天的价格拿到。SOHO中国租赁部招租的自持朝外SOHO一个地下一层商铺和一个三层商铺的租金均为4元/平方米/天。各大中介发布的5元招租广告随处可见，而从这些机构反馈的数据，该项目租金回报率在5%—8.6%不等，且以6%—7%左右为多。而从记者实地了解的情况，出租率似乎也未达到上述PPT中所公布的94.2%，尤其是1—7层未开业的商铺目测应在25%以上，8—11层也有不少大门紧锁的写字间。
Officials Stall on Property Tax ‘Because Most Own Homes’ –(Beijing) – I have been saying this for years. shocked at some of the punditry about this issue that has completely ignored the “politics”..corruption at the dark heart of the obstacles to so many needed reforms// The idea of a property tax is opposed by more than 90 percent of government officials because many own several or more homes, an economist at the Chinese Academy of Social Sciences (CASS) says. That was why it is difficult for the country to introduce the tax, said Zhang Zhuoyuan.
王岐山两会露杀机 升级反腐为“战争”_多维新闻网【多维新闻】and the new leadership knows the risks from corruption. Duowei says that Wang Qishan upgraded the rhetoric about cracking down on corruption, called it a “war” at the NPC// 中国两会召开之际，自上台后一直强调反腐的新一届中共决策层也在这个问题上继续表态，中纪委书记王岐山更是一再升级“习八条”，对反腐发出“打持久战和歼灭战”，把反腐罕见上升为“战争论”的高度。 据官媒报道，3月6日王岐山参加北京代表团审议时再次响应习近平，升级当下中共的“反腐斗争”，称“党风廉政建设和反腐败斗争事关党的生死存亡”。
PBOC’s Rise to Top a Story of Deft Politics Amid Turmoil – Bloomberg Increasingly, the PBOC has become an international lender of last resort, particularly as European politicians try to persuade the Chinese to buy their bonds. No wonder that Zhou Xiaochuan, the bank’s governor, has been dubbed “the world’s central banker,” a man whose statements can move global markets. It’s hard to believe that just three decades ago the PBOC was only a minor institution in the labyrinthine Chinese bureaucracy. Its ascension is a story of turbulent economic transition, skillful leadership and, above all, deft political strategy. And its most significant challenges may still lie ahead.
How to Win in China: Reflecting on the Life of one of China’s Most Vivacious Expats | Tea Leaf Nation RIP Henry Winter. I only met him once, had several mutual friends. Quite a character by all accounts// My favorite video of Henry Winter shows him strolling down the streets of Shanghai’s central business district wearing a wool poncho, a red-plumed cowboy hat, white wrap-around sunglasses, and knee-high leather boots….I first saw the video in late 2010, and forgot about it soon after. But when I heard of Henry’s death this past summer — at age 43, from a cerebral hemorrhage — I found the clip once more. The video is from a now-discontinued CCTV show called Wealth Story Forum. It tells the story of Henry’s life, touching on his schooling at Columbia and Wharton, work stints in France and Hong Kong, a stretch as a kung fu student in China, and, finally, his emergence as a Shanghai-based tech entrepreneur with an outré fashion sense.
The dragon gets a bear hug – The Hindu Asia arms race getting into higher gear// Russia is resuming the supply of advanced weapon platforms to China in a move that may have implications for India. At the end of last year, Russia concluded a framework agreement with China for the sale of four Amur-1650 diesel submarines. In January it signed another intergovernmental agreement for the supply of Russia’s latest Su-35 long-range fighter planes. If the deals go through, it will be for the first time in a decade that Russia has delivered offensive weapons to China. It will also mark the first time that Russia has supplied China with more powerful weapon platforms compared with Russian-built systems India has in its arsenals. In the past, the opposite was the rule.
James Palmer – China’s generation gap interesting look at an important topic// Chinese parents bemoan the laziness and greed of their children, but this generation of young people has had enough
BUSINESS AND ECONOMY
China’s Stocks Decline, Capping Weekly Loss, After Shipment Data – Bloomberg Combined exports for January and February increased 23.6 percent from a year earlier, compared with a 5 percent gain in imports, data showed today. ..The Shanghai Composite Index (SHCOMP) slid 0.2 percent to 2,318.61 at the close, taking its loss for the week to 1.7 percent amid concern the government will tighten monetary policy and regulators will allow the resumption of initial public offerings. The CSI 300 Index retreated 0.5 percent to 2,606.93. The Hang Seng China Enterprises Index (HSCEI) climbed 1.4 percent.//hear goldman out with a note on the trade data raising the possibility of potential “over-reporting by China exporters to facilitate rising FX inflows”
Exclusive: China wealth fund, Commerce Ministry to get new heads – sources | Reuters Reuters now backtracking on the Guo Shuqing part, see next item. // Securities regulator Guo Shuqing is tipped to take the helm at the $482 billion state investment vehicle, China Investment Corp (CIC) CIC.UL, and China’s chief trade representative, Gao Hucheng, is seen running the Commerce Ministry, two sources with leadership ties told Reuters. The appointment of seasoned, English-speaking financial negotiators to run the two agencies is a sign that China’s new leaders would make commercial logic a major thrust of the push for market access Beijing needs for planned acquisitions of $560 billion of overseas assets in the five years to end-2015.
Securities regulator reluctant on China wealth fund job: sources | Reuters “offer”? these leadership appointments “offers”? Reuters now nicely covered if original “exclusive” turns out to have been wrong// Two sources with ties to China’s leadership said Guo declined the offer to move, and it was unclear if he would eventually be persuaded to take it.”He’s reluctant to go because he has been with the CSRC for less than two years,” said one source, who didn’t want to be identified to avoid repercussions for discussing secretive elite politics. Guo took over at the regulator in October 2011.
证监会辟谣郭树清调任中投_金融频道_财新网 【财新网】（记者 郑斐）针对路透社对证监会主席郭树清调任中投公司的报道，证监会新闻发言人表示，有记者就路透社关于证监会主席郭树清调任中投公司的报道向证监会求证，对此：我们不知道外媒的消息来源，也不认为他们能比我们更早地获知类似信息，我们认为，这是毫无根据的传言。
Eight Questions: Michael Pettis, ‘The Great Rebalancing’ – China Real Time Report – WSJ Opinion on the outlook for China’s economy is sharply divided. China bulls believe that, with reform, China has another decade or more of rapid growth ahead of it. The bears maintain that imbalances are so great that a sharp slowdown in the next few years is inevitable. Few have done more to shape the bear case than Michael Pettis, a professor of finance at Peking University. In his new book, “The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy,” Mr. Pettis makes the case for why China is about to run out of steam.
China’s Property Curbs Are Not Successful, Billionaire Lo Says – Bloomberg article also notes that he is spinning out the Shanghai Xintiandi development. A bearish sign he is trying to take chips off the China table, or something else going on?// China’s property curbs in the past decade have been unsuccessful and the new round of measures will slow property sales, said billionaire Vincent Lo, also a member of the government’s advisory board. “Certainly they haven’t been,” said Lo, chairman of Shui On Land Ltd. (272), a Shanghai-based developer, in an interview in Beijing yesterday. “Had they been successful, home prices wouldn’t have risen higher the more the government curbed.”
China Vanke dollar bond raises $800m – FT.com Vanke on Friday sold a five-year bond with a coupon of 2.625 per cent, or 195 basis points over US treasuries, in a rare investment grade Chinese property issue. The company is rated BBB+ by Fitch and Standard & Poor’s, and Baa2 by Moody’s…analysts said Vanke’s strong bond debut showed that the negative sentiment is not yet seeping into the debt markets. “The new issue shows that the bond market is not overly concerned about the recent property tightening announcements, having overreacted once before,” said Owen Gallimore, head of Asia credit strategy at ANZ, who added that Vanke has the scale, diversity of assets and strong balance sheet needed to “weather sector disappointment”.
China Group in Talks to Buy GM Building Stake – WSJ.com Zhang Xin of SOHO China. she is so smart, SOHO listed in Hong Kong, real money long ago already offshore// Ms. Zhang has been an exception to this rule. In 2011, her family bought a 49% stake in Park Avenue Plaza, a 1.2 million-square-foot Manhattan office tower for nearly $600 million, executives familiar with the deal said. Since then, Ms. Zhang has been looking for more. She also was part of a group that put in an ultimately successful bid late last year on Sony Corp.’s U.S. headquarters at 550 Madison Avenue, known as the Chippendale building, which sold for $1.1 billion after a hotly contested bidding process.
China: rising wages will drive economic change under new leadership | beyondbrics China’s unit labour costs (ULC) have in the last two years risen faster than those of Asian competitors. That’s tough for manufacturing exporters. But it’s not the whole story. Levenson says the increases in unit labour costs “may contribute to the needed shift in China’s growth model”.
POLITICS AND LAW
Mongol ally of incoming premier to become chief of State Council | South China Morning Post Yang Jing, an ally of incoming premier Li Keqiang , is poised to become secretary general of the State Council in Li’s cabinet, to be unveiled next week. The secretary general takes care of the cabinet’s daily work as the premier’s right-hand man. The position will allow Yang, a Mongol, who currently heads the State Ethnic Affairs Commission and a member of the party’s powerful Secretariat of the Central Committee, to work more closely with Li
China must seize rare chance for reform – FT.com The new leadership is more talented and entrepreneurial, says Zhang Weiying
南方周末 – 【两会特别报道·温总理谢幕】温家宝从政往事 a look at Wen Jiabao as premier in Southern Weekend. Nice picture of his office, or at least the part of it in the frame// 编者按：本次两会上，国家领导人即将完成新老交替。事实上，71岁的国务院总理温家宝已多次提到“告别”。 十年奔走，十年辛劳。温家宝领导的两届政府，正当中国转型的关键时期。十年功过毁誉，且待后人评说，正如他退任之前所言，“知我罪我，其惟春秋”。 本期两会专题报道中，南方周末将目光投向这位老人，关注他这十年的执政之路，追溯他政治人生的种种细节，回望他的泪水与笑脸，焦虑与遗憾。
FOREIGN AND DEFENSE AFFAIRS
John Kerry should pay no more attention to Weibo than Xi Jinping does to Twitter: Shanghaiist social media one of many useful inputs for US government agencies to assess China, and Tea Leaf Nation is a great resource for helping with that…but you can easily get distracted by the noise…// I agree with Tech in Asia’s Charlie Custer that “Chinese society is better off with Weibo than without it”, but at the same time we mustn’t overestimate social media’s importance, nor should we underestimate the Communist Party’s ability to shape public opinion for its own purposes on any medium.
Inside the Ring: Asia pivot threatened – Washington Times Gertz…// National security officials in the military and at the Pentagon are voicing growing worries that the second Obama administration is preparing to jettison the new policy focus on Asia known as the “pivot” or rebalancing. Evidence cited by these officials includes a recent Chinese government visitor who was told that the White House plans to kill the shift to Asia in mid-2013 as part of its conciliatory approach to China. Beijing is the key, but unspoken, target of the major military and diplomatic effort to increase security in Asia and calm the fears of U.S. allies alarmed by what they see as the new Chinese hegemon in Asia. The Obama administration so far has failed to criticize China for its years of cyberespionage attacks or even acknowledge publicly that China is conducting computer assaults. The administration also has provided lukewarm support for key allies, as its low-key handling of visit last month by Japanese Prime Minister Shinzo Abe showed
Is the ‘China Dream’ Really a ‘Strong Military Dream’? | Tea Leaf Nation glad to see someone writing more on this// The concept of the “Strong Military Dream” might have bigger implications – it could represent the China Dream. A day after the PLA Daily article was published, an article entitled “The China Dream is a Strong Military Dream; a Great Nation Must Have a Strong Military” appeared on several big-name websites, including huanqiu.com, the Chinese-language edition of the Global Times. The article pointed out that the “‘China Dream’ is not a ‘Dream of Riches,’” and that, “On the political world stage, a rich nation is not the same as a strong nation.” The main thrust of the article was that the China Dream was one of a strong nation – and a strong military.
TECH AND MEDIA
Chinese Government Rep Says E-Commerce Sites Have Evaded Billions in Taxes On Wednesday, NPC representative Wang Tian made a rather shocking accusation: Chinese e-commerce platforms have permitted sellers to evade more than 100 billion RMB ($15 billion) in taxes. And that’s just in the year 2012. In fact, the taxes lost from Alibaba platforms alone add up to more than 35 billion RMB ($5.5 billion), according to Wang. To be clear, Wang isn’t saying the problem is e-commerce companies themselves — at least not entirely. Rather, he says that an investigation has revealed most sellers on e-commerce platforms don’t provide official invoices to customers along with their purchases.
Al Gore Sued Over Current TV Sale to Al Jazeera (Exclusive) The lawsuit was filed Tuesday in San Francisco Superior Court by John Terenzio, who presents himself as a highly regarded media consultant, executive and TV producer who conceived the idea for the distribution of an American version of Al Jazeera. Now, Terenzio claims that he has been cut out of the lucrative deal. Terenzio, who says in the suit he created China Central Television and reprogrammed it for American audiences [THIS TRUE?], alleges that in late 2011, he presented a proposal for Al Jazeera titled “Path to U.S. Distribution” by Richard Nanula, a principal in Colony Capital. The purpose of the presentation was to explore potential financing and joint venture partners for the project.
SOCIETY, ART, SPORTS, CULTURE AND HISTORY
“The less good earth”–Los Angeles Review of Books-Alec Ash–over spring festival, the village comes alive again. Courtyards fill, families reunite, red wall hangings are strung, hay or coal-fired woks light up, bottles of rice wine and boxes of fireworks are heaped in the corner. Pigs are bought and ate whole – meat, trotter, lung, liver, heart, kidney, intestines, face, ear and “bung”. Neighbors gamble over cards (one game is called “struggle against the landlord”) or Chinese dominoes, and try to find out how much each has earned this year without asking. At night men smoke in a circle around a bag of gunpowder, pausing to stuff some in a fireworks stick, light the fuse with their cigarette and cover their ears. It’s a fortnight of noise, food, booze, bangs and posturing. And then all that is left is to wish your neighbor gongxifacai (“good fortune in making money”), and leave the village and its land behind again, empty as before.
Chinese netizens outrageous at Guanzhou Chengguan who beat a mom in front her 2-year-old kid | Offbeat China The most-shared picture in the past 12 hours on Sina Weibo, China’s leading microblogging service, is a set of images in which a group of Chengguan (China’s special urban Administrative and Law Enforcement officers) tried to take away a street vendor mom in front of her little kid. The most heart-wrenching picture from the set is one in which the 2-year-old girl was crying in the “arms” of her mom who wasn’t able to hold her kid with both hands tied up.
ENERGY, ENVIRONMENT AND HEALTH
About 60,000 could lose homes for controversial China dams | Reuters Outgoing Premier Wen Jiabao, a geologist by trade and populist by instinct, vetoed the dams in Yunnan province on the UNESCO-protected Nu River, known outside China as the Salween, in 2005, after an outcry from environmentalists. But in late January, the government unexpectedly announced that dam building would resume, with the Nu River high on the list for development. Qin Guangrong, Yunnan’s Communist Party chief, told reporters on the sidelines of China’s annual meeting of parliament that work had not yet begun.
Greenpeace says fertilizers polluting water – Globaltimes.cnThe deteriorating water quality of many large domestic lakes and reservoirs is being caused by the excessive use of fertilizers, according to a report published by the environmental NGO Greenpeace on Thursday. The report, based on a survey in August, was the first Greenpeace has conducted nationwide to look at the excessive use of fertilizers as a cause of water contamination.