The Sinocism China Newsletter For 09.06.12

"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 Twitter @niubi or Sina Weibo @billbishop. Feel free to donate through the button on the top right, and if there is a story you think I should include please send it to me. 

Reuters has found some interesting information that may confirm a mid-October opening of the 18th Party Congress. In Ready, steady, go for China Congress, not marathon runners we learn that:

A notice on the rescheduling of the 11th China International Exhibition on Public Safety and Security from October 22-25 to December 3-6 is even more explicit.

“We have received notice from the Big Events Management Office of the Beijing Public Security Bureau that the Communist Party’s 18th Congress will be held in the middle of October 2012,” the industry association organizing the exhibition said.

“It has requested that all big public events in Beijing scheduled for October be rescheduled in order to fully safeguard security in the capital before, during and after the 18th Party Congress,” the China Security and Protection Industry Association added in its notice.

Clifford Coonan of The Independent writes in The old guard prepares to anoint China’s new generation that “the party’s elite has been told the congress will begin between 15-18 October, a source with close links to high-ranking delegates has told The Independent.”

So October it may be, though Xi Jinping’s cancellation of meetings with Hillary Clinton as well as Russian and Singaporean dignitaries has set the rumor mill whirring. The South China Morning Post is apparently reporting that he hurt his back playing soccer in Zhongnanhai. MIT professor Taylor Fravel reminds us of the Perils of Predicting Chinese Politics and that “the real-life selection of top Chinese leaders requires a great deal of internal party bargaining and often may not be confirmed before the congress actually opens.”

I believe Xi’s absence is no big deal, but that may just reflect my financial bias as I own a case of Xi Jiu, a Baijiu Bet on Xi Jinping’s ascension.

Former Chongqing police Wang Lijun has been officially charged:

According to the indictment issued by the Chengdu City People’s Procuratorate, although the defendant Wang Lijun, then-vice mayor of Chongqing as well as chief of the municipality’s Public Security Bureau, had known beforehand that Bogu Kailai was under serious suspicion of murdering Neil Heywood, he consciously neglected his duty and bent the law for personal gain so that Bogu Kailai would not be held legally responsible. Wang was indicted for the crime of bending the law for personal gain.

Prosecutors said Wang, while he was performing his official duty, left his post without authorization and defected to the United States Consulate General in Chengdu. He was also indicted for the crime of defection.

According to prosecutors, Wang illegally used technical reconnaissance measures, either without the approval of authorities or by forging approval documents. He was indicted for the crime of power abuse. Wang also took advantage of his position and accepted massive bribes in a bid to secure benefits for other individuals. He was indicted for the crime of bribe-taking.

Of course everyone wants to know what this means for Bo Xilai. No one outside the center actually does, but that won’t stop people speculating. The New York Times quotes people who say these charges are good news for Bo and those who say they are bad news for him. My guess is Bo will not get off so lightly. From Key Figure in Scandal That Felled Bo Xilai Is Charged:

Li Weidong, a political commentator in Beijing, said that the charges against Mr. Wang open the door for the government to criminally charge Mr. Bo and possibly redress some allegations of abuses of power in Chongqing.

“If they say that Wang Lijun committed so many crimes and Bo Xilai did not commit any, no one will believe it,” Mr. Li said. “Over all, this means that the chances of Bo facing criminal prosecution are growing. He was Bo Xilai’s main aide, after all.”

But Mr. Li projected that Wang would face a jail sentence of more than 20 years or possibly life in prison. The charges of bribery and abuses of power also indicated that corruption cases in Chongqing could be redressed, he said.

One of the charges against Wang Lijun is that he ” illegally used technical reconnaissance measures”, which may raise the question of possible involvement of Wang “acquaintance” and father of China’s Great Firewall Fang Binxing.

A scandal is growing over the use of genetically modified rice in a 2008 research project involving school children in Hunan. Xinhua reports that China continues to probe alleged GM rice testing:

Authorities are continuing to investigate whether dozens of children in central China were used as test subjects in a U.S.-China joint research project that included genetically modified (GM) rice.

The Chinese Center for Disease Control and Prevention (China CDC) said in an online statement that its researcher was not informed that the American side had used GM rice in the joint test, which was designed to study how children’s bodies absorb and transform beta carotene.

This sounds like posterior covering after the issue exploded online, but can you imagine the reaction if a Chinese team had used GM food in research involving American kids?

Han Han is now on a marketing tour for his new book. He recently gave an interview to the Wall Street Journal’s Patrick Brzeski. Han had this to say about China’s soft power efforts:

…If you’ve got one hand clamped around somebody’s throat, you can’t toss money about with the other hand and expect the poor guy to suddenly sing a song of timeless beauty for you. The same rule applies to my own books…If you really want to export great masterworks of literature and art, it’s actually very simple: Don’t keep sticking your finger into every pie…

And this about censorship:

If in the past few months there have been changes for the better or for the worse in China’s media environment, that’s only because of technical improvements or because they were forced to give in to pressure. Such concessions are a good thing, all the same. What I hope for is that I can write and speak freely, without needing to consider whether I might be offending the government or stepping on some big shot’s toes, and that when I answer a foreign reporter’s questions I don’t need to worry about the repercussions.

Yes, that would be nice.

On to today’s links:


Beijing to see the fastest office rental growth|Markets| – someone at dinner last night from CCTV, says all of CCTV will have moved into the new Beijing CBD headquarters by end of this year// Beijing will see the fastest office rental growth this year and in the next five years, with rents expected to surpass Shanghai in 2013, real estate consultancy company DTZ said in a report on Tuesday. Due to strong demand and limited supply, Beijing’s prime office rental growth was the largest in the country, with a 46.8 percent year-on-year increase at the end of the first half, and with rental levels edging closer to Shanghai, according to the report.

Rail projects to spur economy|Economy| – China’s top economic planner announced on Wednesday the approval of 25 new urban rail transit and intercity rail line projects with a total investment of more than 800 billlion yuan ($127 billion) as the world’s second-largest economy struggles with a slowdown. The projects, most of which will take three to eight years, are expected to inject vitality into the country’s slowing economy and improve the investment environment, but economists warned of low-efficiency investment. The estimated investment for the new transit system will exceed 158 billion yuan in Shanghai and 124 billion yuan in Guangzhou, according to statements on the National Development and Reform Commission’s website.

城投债“全面开花” 单月发行量近千亿_财经频道_一财网 – local government financing vehicles sold 100B rmb worth of bonds in August?// 接近监管部门的知情人士向《第一财经日报》记者指出:“平台贷款规模庞大,可以说是当前银行体系的最大阴影。在监管层面,本来就有通过债券市场的这个口子,以缓解地方融资平台流动性风险的考虑。”

Amid Heating Plant Rage, Local Official Flees – Caixin Online – (Liaoning) – A former government official and his wife are believed to be cooling their heels in the United States after fleeing corruption charges and public rage over an ineffective heating plant in frigid northeast China. Authorities suspect Wang Guoqiang and his wife, whose last name is Tan, slipped away with large sums of money absconded from a city government in Liaoning Province, along with bribery proceeds and other illegal gains. Moreover, investigators say they want to question Tan about allegedly using her position as a local customs agency official to pull off passport tricks so that the couple could get U.S. visas.

When Local Officials Don’t Listen – Caixin Online – Hu Shuli’s latest editorial// Contrary to Beijing’s wishes, provinces and cities are imprudently pursuing large development projects, and only reorganizing government can prevent such schisms.. Using government-led investment to spur growth goes against the intent of market reforms; it isn’t up to the government to shape the economic structure. In an exhibition of project-planning, one local government even used the image of a rocket, and tellingly likened itself to a launcher, the market to a booster and technology to an accelerator. This faith in government-led growth is typical of the outdated mindset favored in the old model of development.//This was in Guizhou, per Caixin’s Wang Shuo on Weibo

Iron ore imports pile up in China’s ports – Xinhua | – “In the short-term, the iron ore market will continue to suffer from oversupplying and the downward trend seems irreversible,” Xinhua analysts said in the report.

供地将迎“洪峰” 开发商恐无力接盘 新华社——经济参考网 – doesn’t sound like developers will be buying much of the land local governments want to sell, at least at the asking prices. local governments getting desperate// 《经济参考报》记者还了解到,国土部在今年加大了对开发企业“囤地行为”的清查力度,例行的土地督察工作每个季度总结通报一次。此外,业内认为地方政府对土地的当前定价依然偏高,这些都将改变以往开发商通过大幅购入土地然后“坐等升值”的利润模式。..张大伟告诉记者,“大部分前期上涨过快,以及配套落后的郊区地块下半年价格仍有望回落;而地段稀缺的优质地块则可能在竞标中小幅上涨。”另外,从过往经验来看,“地王项目入市通常都表现平平,因此预计下半年居住用地‘地王’再频繁出现的可能性很小。房企购地行为仍然会以谨慎为主”。

各地财政吃紧频设土地盛宴 龙头房企抄底 – Shanghai Securities News–Are top Chinese real estate developers starting to bottom fish in land sales by desperate local governments?//

CHINASCOPE – China Secutimes: Tishman Speyer, a Leading US Real Estate Firm, “Is Fleeing” China – On August 31, 2012, China Secutimes published an article titled, “The Largest U.S. Real Estate Firm Is Fleeing China’s Real Estate Market; What Signal It Discloses.” Tishman Speyer, a U.S. real estate developer, is trying to sell its properties in China. The two plots of land that Tishman Speyer currently has for sale are in New Jiangwan in Shanghai. One plot is worth 1.6 billion yuan (US$252 million) and the other one is worth 3.2 billion yuan (US$505 million).

Wahaha’s Zong Passes Baidu Founder Li as China Wealthiest – Bloomberg – Zong Qinghou, head of China’s third- largest beverage maker, is the country’s richest man after disclosing his stake in closely held Hangzhou Wahaha Group Co. is more than double previous estimates. The 66-year-old soda and juice tycoon owns more than 80 percent of Wahaha, the company’s spokesman Shan Qining said in an interview on Sept. 3. That stake elevates Zong’s net worth to $21.6 billion, according to the Bloomberg Billionaires Index. He is now $13.4 billion wealthier than Robin Li, founder of the nation’s biggest search engine.

Bottoms Up, Profits Up: Moutai Defies China Slump – China Real Time Report – WSJ– Times may be tough in China but not everyone shares the pain: Kweichow Moutai, the maker of the fiery liquor that looks harmless but has the kick of jet fuel, is finding plenty of reason to celebrate amid the gloom. The company, which comes close to being a “national champion” and says that its form of baijiu (or “white alcohol”) is one of the world’s three most famous liquors, announced that it is raising the prices of some of its beverages by 20-30%. That launched the shares of the company’s stock nearly 6% on the Shanghai stock exchange on Tuesday. Talk about elastic demand. Analysts who follow the stock were tipsy with delight, saying the move puts the company on track to meet its target of a 51% increase in 2012 revenue.

State Monopolies Continue to Dominate China’s Top 500 – Economic Observer Online – In-depth and Independent – Of the 500 companies that made it on to this year’s list, 310 are state-owned enterprises with the other 190 privately run companies. .. A large operating revenue however does not necessarily mean large profits. The operating profit ratio of the Top 500 companies decreased to 4.7 percent, down 1.07 percentage points on last year.

Ambow Trading Halted on Company’s Probe Into Unit’s Schools – Bloomberg – very ugly. auditor is PWC not Deloitte, audit partner very respected professional. If even PWC-audited Ambow is fraud, then investors’ default view should be how do you believe any firms here// China’s Central Television said on Sept. 3 that Ambow’s one-on-one education unit exaggerated staff training results and that the schools’ registrations with industry regulators were incomplete, according to a statement by Ambow posted yesterday. Ambow said it will start an investigation into the issues “immediately,” discipline the persons involved and take corrective steps.

Commentary: U.S. firms poison reputations of China start-ups for profit – Xinhua | – seek truth from facts// In fact, the “blame China” game has been played quite often in contemporary U.S. society. From the presidential campaign to capital markets, painting an ugly face on China helps politicians win votes and helps short-sellers reap fortunes. However, when basic facts are disregarded, such moves will prove shameful, at best. To be honest, a small number of Chinese companies have falsified data and reports to woo investors in the U.S. stock market. However, they have paid for their mistakes, as many withdrew from the market last year or saw their share prices plunge. But that is not the whole picture, as a majority of companies comply with laws and rules

No Sympathy: the China Short Seller Brawl Heats Up | China Hearsay – Call me a cynic, but unless I know otherwise, I’m assuming that every last one of them has lost money because of a Citron or Muddy Waters report. In other words, these guys are probably biased as hell, and their statements should be looked at just as closely as a short seller research report. That being said, Kai-Fu Lee’s critique of Citron’s recent foray into the world of search engines is quite persuasive, if you ask me.  Did I mention that I don’t trust anyone?

Boeing Raises China 20-Year Plane Demand Forecast 5.2% – Bloomberg – Boeing Co. (BA) raised its 20-year China commercial-aircraft market forecast by 5.2 percent, at least the third straight increase, as economic growth and rising incomes spur air travel in the world’s most populous nation.Carriers in China will need 5,260 new planes worth $670 billion through 2031, according to a forecast the Chicago-based planemaker released today in Beijing. The company last year predicted the country would need 5,000 new planes with a value of $600 billion through 2030

Hong Kong CEO Battles Chinese Over Affordable Housing – Bloomberg – Leung Chun-ying, the property surveyor who took over as the city’s chief executive in July, on Aug. 30 said he’ll boost the supply of homes and start drafting laws giving preference to locals over buyers from mainland China. He’s trying to cool prices that surged 85 percent since 2009 even as predecessor Donald Tsang raised minimum mortgage deposits, added taxes and increased land sales in a losing bid to stem the boom.



China and the Soviet Union: Similarities Between the Ferrari Crash and the Chernigov Incident : The New Yorker – don’t think the communist party has relied on faith for a long time here. it relies on dreams of national renaissance, progress, lucre, fear and force. but Weibo exposes everything, especially in a downturn when progress and lucre are lacking…// Beijing is not Moscow in 1990, as far as anyone can tell. China’s defining problem is not deprivation; it is, perhaps, something closer to fairness and expectation. Any political party relies, in the end, on a fragile foundation that balances performance and faith. It can lose one or the other at various times, but if it loses both at once, it’s in trouble. The Chinese Communist Party is bracing for tougher economic times ahead, and it will need rely more than ever on faith. With each new story, that gets harder. Those are the rules, and they were the rules twenty two years ago, on a cold night in Chernigov.



No Movement on Key Disputes as Clinton Meets With Chinese Leaders – – did we expect them to? // Most important, the Chinese leadership showed no signs of buckling after months of efforts by Mrs. Clinton and her senior aides to persuade the country to be more flexible on maritime disputes in the South China Sea.

U.S. and China Yield Little Ground in Talks – – No Progress Seen on Territorial Spats, Syria; Back Problem Blamed as Xi, Seen as Next President, Skips Clinton Meeting

Chinese president meets U.S. Secretary of State – Xinhua | – “The China-U.S. relations have great strategic significance and global influence, and this is worth cherishing and protecting,” said Hu. He said China is willing to maintain and strengthen dialogue, communication and coordination with the U.S., and eliminate any disturbance in order to ensure that bilateral ties will forge ahead in the right direction.

Hillary Clinton’s China visit: To make or solve troubles? – People’s Daily Online – The United States should bear a big responsibility in the sustained tense situation in East Asia on the territorial dispute and is the key country to constantly carry out military exercises in the Pacific region. Then, what is the purpose of Clinton and other officials’ China visit at this time?

China Livid Over Japan Island Purchase Reports – China Real Time Report – WSJ – In disregard of China’s solemn representations and firm opposition, Japan single-mindedly pushes forward the island purchase process which severely harmed China’s territorial sovereignty and hurt the feelings of the Chinese people,” Foreign Ministry spokesman Hong Lei said at a regular press briefing in Beijing on Wednesday afternoon, his voice climbing in pitch as he spoke. “We cannot help but ask where is Japan trying to lead China-Japan relations to

Commentary: Islands-buying farce breaks Japan’s historical commitment – Xinhua | – The Japanese government has ridiculously reached an agreement with the self-claimed Japanese “private owners” of China’s Diaoyu Islands to formally purchase them soon, a daredevil move that could further wreck its ties with Beijing.

China territorial disputes: a warning in the history of Imperial Japan – – this view gaining currency in dc?//The emerging Japan of the 1920s and ’30s, like today’s China, was steeped in historic resentment of the West’s forcible imposition of commercial and cultural influence. Both countries set about building military capabilities commensurate with their new economic prowess.

Chinese Company, North Korea Squabble Openly – – An unusually public spat between the North Korean government and a Chinese company is providing a rare note of visible tension between Pyongyang and its closest ally and benefactor. North Korean’s official news agency Wednesday defended a North Korean company, Ryongbong Corp., in its dealing with a Chinese partner, Liaoning Xiyang Group. The dispute involves a project in North Korea to process iron ore, an ingredient in steel. Xiyang has accused the North Korean government of improperly suspending the project..

Romney’s Young ‘China’ Hand – Forbes – Mitt Romney’s old China hand is more young than old, more Taiwan than China. Lanhee Chen, 34, is Romney’s policy wonk and one of Romney’s brains on China policy.  The California born policy director for the Romney campaign said that when it comes to China, a president Romney would label China a currency manipulator right from the start.



360Buy, Suning, Gome Investigated for Fraud in China E-Commerce Price War – When 360Buy CEO Liu Qiangdong kicked off a price war in China’s e-commerce sector, he probably didn’t expect things to go quite as far as they did. But thanks in part to the mudslinging on weibo, the war got very high profile very fast. It got a lot of attention, including the addition of China’s National Development and Reform Commission (NDRC), which recently kicked off an investigation into the “price war” via its Office of Price Supervision. The investigation is ongoing, but the Commission has already announced via the Beijing News that early results indicate that some e-commerce players may be guilty of using fabricated “original prices” in their advertising materials to hoodwink consumers.

京东就未实现零毛利承诺致歉 称已制定整改方案_互联网_科技时代_新浪网 – shocker, 360buy lied to consumers about its price cuts in latest ecommerce war. you can never be cynical enough…blowing up online//

WeChat App Adds Integration with Twitter and Facebook as It Goes Global – Tencent killing it with this app..most of my Beijing friends now talk about/use this before Sina Weibo//The Chinese-made messaging app WeChat – which boasts over 100 million registered users – has seen an update to its iPhone app today that adds some useful features for its international users.Now at v4.3, today’s bump brings support for some Facebook and Twitter syncing, as well as a new way to zap images from your computer browser over to your phone. That’s called Shake Down, and is intended to make it easier to share cool stuff you find on the web, and include it in a WeChat message to some buddies. Those with the updated iOS app can try it at

Apple blamed for 10 unfair after-sale clauses – People’s Daily Online – The China Consumers’ Association again made comments on the unfair repair clauses of Apple on Aug. 30, detailing ten items. It is the third time that the company was blamed by the China Consumers’ Association in 2012.

A hottest investment spot in China: Mobile Internet – attracting $378 mn in H1 – In the first half of 2012, mobile internet industry has attracted an overall published investment of $378 million (about 2.4 billion yuan), according to data from Zero2IPO Database.



Hunt widens from officials’ watches to luxury belts, glasses – – so many fake glasses in China, impossible to tell from a picture// “Using modern technology to supervise the government and officials is an inevitable choice to ensure a democratic system,” Cai Zhiqiang, an anti-graft professor said. Officials should not focus on how to protect themselves from exposure in the Internet age, Cai said. Instead, they should think about how to improve their ability to serve the people, the professor added.

Undercover Investigation into Shady Chinese Agencies Promoting U.S. Birth Tourism | – A new undercover investigation by takes a look at shady Chinese agencies that promote travel to America for purposes of giving birth to a US citizen baby. I’ve included an English translation of  the September 5, 2012, article below.

Agencies help foreigners evade rules to land jobs|Society| – According to information gathered by China Daily, consultation companies in Beijing and Shanghai are charging 1,500 yuan ($236) to 20,000 yuan to foreigners who cannot meet the work-visa requirements to help them obtain one. Prices are based on the client’s nationality, age and educational background. “Many foreigners have received work permits and visas through our connections with the local government,” said a female agent at Xiangrui Business Consulting in Shanghai’s Pudong district, when contacted by a China Daily reporter posing as a Japanese student. “Even if you’ve never worked before, there’s no need to worry, since our boss used to work with the government and has connections.”

Skies too friendly for foreign pilots|Society| – Domestic skies will not become a place where inexperienced foreign pilots can boost their flying hours to make their resumes more impressive, a key document from the civil aviation authorities said on Wednesday.

中国第一豪门荣氏家族老厂变豪华会所|拯救|纺织业|荣氏_21世纪网 – an original factory from Rong family textile dynasty in Wuxi is now a luxury club



Shanghai to build $3.96 billion drain system – People’s Daily Online – The Shanghai Water Authority is planning to build a 25 billion yuan ($3.96 billion) drainage system with wider pipes so the city can better withstand heavy rains and prevent flooding, city officials said Tuesday. When a heavy downpour hits, these pipelines will serve as an underground reservoir to store large amounts of water, which will eventually be sent on to the city’s 50-odd sewage treatment plants.

Sinking Shanghai “not prepared to admit” climate change threat – More recently in Shanghai, a row has erupted over the extent of the city’s vulnerability. In August, city officials acted quickly to dismiss research published in Natural Hazards journal, which put Shanghai at the top of a flood-vulnerability ranking, above Dhaka in Bangladesh and Manila in the Philippines. Hu Xin, deputy director of the Shanghai Flood Control Headquarters, said the findings were “incomplete”, according to China Daily. He pointed out that the city’s coastal levees were designed to withstand a once-in-200-year high tide. Researchers from Fudan University have also pitched in with historical data showing the city has rarely been struck by typhoons.

Making a Killing on Herbal Medicine – Caixin Online – Commercial harvesting on the Tibetan Plateau continues to push many of China’s most treasured medicinal plants and wildlife to the edge of extinction


BOOKS This Generation: Dispatches from China’s Most Popular Literary Star (and Race Car Driver)  Han Han: For those who follow Chinese affairs, Han Han is as controversial as they come—an irreverent singer, sports celebrity, and satirist whose brilliant blogs and books have made him a huge celebrity with more than half a billion readers. Now, with this collection of his essays, Americans can appreciate the range of this rising literary star and get a fascinating trip through Chinese culture. The Great Famine in China, 1958-1962: A Documentary History: Xun Zhou – Drawing on previously closed archives that have since been made inaccessible again, Zhou Xun offers readers, for the first time in English, access to the most vital archival documentation of the famine. For some time to come this documentary history may be the only publication available that contains the most crucial primary documents concerning the fate of the Chinese peasantry between 1957 and 1962. It covers everything from collectivization and survival strategies, including cannibalism, to selective killing and mass murder.

A Great Leap Into the Abyss – – In Qiaotou district, in Sichuan Province, “An old lady named Luo Wenxiu was the first to start consuming human flesh,” investigators wrote. “After an entire family of seven had died, Luo dug up the body of the 3-year-old girl, Ma Fahui. She sliced up the girl’s flesh and spiced it with chili peppers before steaming and eating it.” The report, dated Feb. 9 of that year, is one of more than 100 astonishing documents collected by the historian Zhou Xun in a new book about Mao Zedong’s Great Leap Forward, published by Yale University Press.

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 Twitter @niubi or Sina Weibo @billbishop. Feel free to donate through the button on the top right, and if there is a story you think I should include please send it to me.