The Sinocism China Newsletter For 09.21.12

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

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Kyodo News reports that Japan is seeking dialogue with China to repair frayed ties, China Daily writes that Japan is urged to follow path of dialogue and negotiation and that Tokyo plans to send a special envoy to China to ease tensions after its “purchase” of the Diaoyu Islands. Meanwhile, a Japanese TV network showed pictures of a Chinese frigate and claimed that two Chinese Navy’s frigates were spotted in the waters 150 miles northwest of Diaoyu Islands Wednesday.

This week’s Economist cover story examines the Diaoyu/Senkaku Islands dispute. The magazine asks could Asia really go to war over these?:

Asia does indeed have reasons to keep relations good, and this latest squabble will probably die down, just as others have in the past. But each time an island row flares up, attitudes harden and trust erodes. Two years ago, when Japan arrested the skipper of a Chinese fishing boat for ramming a vessel just off the islands, it detected retaliation when China blocked the sale of rare earths essential to Japanese industry.

Growing nationalism in Asia, especially China, aggravates the threat (see article). Whatever the legality of Japan’s claim to the islands, its roots lie in brutal empire-building. The media of all countries play on prejudice that has often been inculcated in schools. Having helped create nationalism and exploited it when it suited them, China’s leaders now face vitriolic criticism if they do not fight their country’s corner. A recent poll suggested that just over half of China’s citizens thought the next few years would see a “military dispute” with Japan.

Zhang Jianjing, managing editor of China Reform, writes that China’s real rival is not Japan but resistance to reform:

China should take the long view in dealing with this dispute. In modern times, the country has handled most of its territorial disputes with the diplomatic measure of “non-recognition.” This has solved most of disagreements between China and its neighboring countries and also with countries which had overseas territories in China. The best way to safeguard China’s interests is for it to adhere to the principle of the maintaining the status quo, resolutely refusing to recognize attempts to change the status quo and simultaneously fighting back against such behavior. A military conflict should be a last resort. This position, in line with international justice, is bound to gain the favor of international opinion… In this sense, internally, China also has a race against time. Because increasingly powerful interest groups have a fear of further reform, China might misuse its “time window,” squander a historic opportunity and miss out on the reform process. In comparison with this issue, the Sino-Japanese race against time is trivial.

Let’s hope Zhang’s views are shared by those in power in China.

Pankaj Mishra writes in his Bloomberg View column that China and Japan Must Break Out of History’s Trap:

At some point, however, the bigger, more powerful country – – the one that has “stood up” — will have to take the risk of breaking the stalemate with a bold and generous initiative. In 1924, as Sun Yat-Sen pointed out, it was Japan’s turn to choose what kind of country it wanted to be. It is now China’s opportunity to show its own rise will indeed be peaceful, and that it will value Right over Might.

Nice sentiments, but they did not pan out in 1924…

Yesterday I linked to the Reuters report about Tung Chee-hwa’s claim that Xi Jinping’s disappearance was due to a back injury from swimming and noted that Tung’s comments appeared to validate Reuters’ earlier reporting. Use of “appear to” was meant to convey skepticism of Tung’s statement. I was not explicit enough, and one of those “rival reporters” wrote in:

“You imply that Tung’s statement is definitive and thus Reuters got it right while the rest of us didn’t. I think this is sort of jumping to conclusions. Tung is vice chair of the CCPCC and thus close to the leadership but not in a position to know. He’s certainly not in the inner circle by a long shot. No one has asked him the key question we ask all our sources: how do you know?

I would interpret it as this: the initial line given to diplomats was that Xi had hurt his back so it makes sense that when the party finally realized it couldn’t stonewall any longer, that it returned ot this line and designated Tung as the guy to deliver the message. The day before going on CNN, he told this line to newspaper editors in NYC, leading me to think it’s part of their quasi-official line.

Thus Reuters was tapping into the official line–kudos for doing so a few days earlier but that’s about all. It’s not like they got the truth and the rest of us didn’t, as you’re implying. The truth is still unknown and it could well be that his backache was caused by a heart attack–a sore back is one of the most common symptoms of a heart attack. If I had to bet money, I’d put money on the pool accident, but in terms of writing a story this is still not definitive; it’s just a glad-hander’s story.

I know it might seem like I’m fighting a rearguard action but I think this interpretation (the official line is bad back caused by sporting accident but we don’t really know what happened) is the most conservative based on what we know and who said what.”

Mirror News, which occasionally publishes accurate information about China elite politics, is also not buying Tung’s claims, as noted in 明鏡獨家:董建華公開胡錦濤習近平信息,並不權威.

So Hu knows Wen it happened, He decided to disappear from view, and Xi isn’t talking? (sorry…)

On to today’s links:


China Stocks Fall to Lowest Level Since 2009 on Japan Row, Data – Bloomberg – and a Chosun spread rumor of China going on “Class 3 Military Alert” hit markets around region. No confirmation, skeptical of the rumor and the motives of the spreaders//

China customs to tighten customs inspection of Japanese products | Kyodo News– Chinese customs authorities have tightened the inspection of Japanese products bound for China and Chinese goods bound for Japan, Japanese business sources said Thursday.The move apparently is part of China’s retaliatory measures against Japan over an aggravating territorial dispute in the East China Sea.

Vegas Bet on Chinese VIPs – WSJ feds may have a lot of fun, are the following money that is flowing from China for other reasons?// “Getting money over to America is even harder than getting money to Macau,” he said. “That’s why the junkets have a big role in Vegas.”

Car Dealers See Market Shift to Lower Gear – Caixin Online – Car dealers nationwide have begun to experience life in the slow lane after government policies to spur sales ended last year. Also putting the brakes on sales were ownership restriction rules starting in late 2010 that were intended to ease traffic congestion in cities such as Beijing and Guangzhou. In addition, the economy has slowed this year, exacerbating the plight of dealers. “For some car brands, we have inventories on hand of up to four months worth of sales,” Pang Qinghua, chairman of Pang Da Automobile Trade Co. Ltd. said. “The normal stockpile lasts for one and a half months.”

FedEx CEO On China – Business Insider I’ve been somewhat amused watching some of the China observers, I think, completely underestimate the effects of the slower exports on the overall China economy.”

Central Banker Calls for Selling Bonds to Local Residents – Caixin Online – good as long it is optional. China has a history of non-optional bond purchases by citizens// Zhou Xiaochuan, governor of the People’s Bank of China, wrote an essay published in the bank-owned magazine China Finance arguing that China should establish a local government debt system where local governments mainly sold their bonds to their residents. Such an arrangement would better protect local governments from default, he said.

China Manufacturing Activities Pull out From 41-Month Low in September-Caijing – China’s manufacturing activities are showing signs of steadying after hitting a 41-month low in August, the preliminary reading of a HSBC index shows Thursday, on track to ease market concerns over a slowing economy after the world’s second-largest economy reported a slew of weak economic data in recent months.

Sony Weighs Sale of U.S. Headquarters Tower in Manhattan – Bloomberg – rumors that SOHO China’ may be interested in bidding. Pan Shiyi and Zhang Xin like Manhattan, hear they have a nice place in central Park West, often post pics on weibo of runs through central park// The Tokyo-based company is “beginning to talk with people in the real estate community” about the potential sale of 550 Madison Ave.

Toyota Supplier Reviews China Plans as Anti-Japan Protests Mount – Bloomberg – “The protests may affect our decision on making further investment in China,” Toyo Tire & Rubber Co. (5105) Chief Executive Officer Kenji Nakakura, 64, said in an interview in Osaka this week. “China remains an important market from which we can’t retreat, but when it comes to increasing investment we may be more inclined to do it in other countries such as Malaysia.”

Carlyle Grows More Cautious on China – Deal Journal – WSJ– competition for buyouts is heating up, as local Chinese private-equity firms become more sophisticated. Mr. Conway expressed some concern that local rivals will be favored in future deals, rather than foreign firms like Carlyle.He also raised questions about whether new political leaders will prove as capable as those who have led the nation over the past few decades, though he said it’s unlikely that growth will plummet. “It would be a mistake to bet against Chinese leadership, they’ve done a great job over the past 20 years,” Mr. Conway said. “But we’re not as optimistic as a couple of years ago.”

Japan firms say China protests affect business plans: Reuters poll | Reuters – About 41 percent of Japanese firms see friction with China affecting their business plans, with some considering pulling out of the country and shifting operations elsewhere, a Reuters poll showed, amid growing tensions sparked by a territorial dispute.

EU, China leaders avoid protectionism after trade rows | Reuters – European Union and Chinese leaders agreed on Thursday to avoid trade protectionist measures following months of increasing tensions between the global partners with China undertaking to continue to invest in European debt.

Analysis: China worries spur Mexico stock market flows | Reuters – Fund managers are shifting the composition of their portfolios to protect themselves against further slowing in China. That is bad news for exporter Brazil, but good news for Mexico, which has low trade exposure to Asia and which is starting to claw back the export share and wage competitiveness it lost to China.

CSRC Makes Changes to Personnel, Bureau Functions – Caixin Online – The China Securities Regulatory Commission (CSRC) has carried out another personnel reshuffle and amended the functions of two bureaus, the latest move in a broader effort by the regulator to reinvigorate the securities market through gradual deregulation. Sources with knowledge to the matter said the staff adjustment involves all four vice chairmen of the CSRC: Yao Gang, Zhuang Xinyi, Liu Xinhua and Jiang Yang.

China to see another bumper harvest this year: minister – Xinhua | – China is likely to see growth in grain output for the ninth consecutive year in 2012 with a bumper harvest expected for autumn grain crops, the country’s agricultural minister said here Thursday.

产粮区农户“零存粮” 粮食安全隐忧初现 深度报道——经济参考网 – Economic Reference News–does China have as much grain in storage as people believe? maybe not…//

Foreign realty developers target China |Economy | – A growing number of overseas real estate projects are trying to attract Chinese investors, as global economic woes soften their own domestic real estate markets.A record 147 overseas projects from more than 30 countries and regions are attending the 2012 Beijing International Property Autumn Expo, according to statistics from the expo’s sponsor.



Senior CPC official leaves Beijing for visits to Singapore, Turkmenistan – Xinhua | – several PBSC members overseas, then October holiday. last Plenum of 17th has not yet happened, as far as we know, appears likely that 18th Party Congress will now be late October// Zhou Yongkang, a senior official of the Communist Party of China (CPC), left Beijing Friday for official good-will visits to Singapore and Turkmenistan. Zhou will also attend a high-level forum on social management in Singapore, which runs from Sept. 21 to 25.

广州前8月查处处级以上干部48人 公安局副局长何靖被“两规”_财经频道_一财网 – major ongoing anti-corruption sweep in Guangzhou. vice police chief officially “double regulated”

Wukan villagers threaten fresh protests – The Washington Post – The elections are seen by many as simply a tool to defuse anger rather than a genuine step toward democracy. So, a year after their first major protest, Wukan’s frustrated villagers are again considering action. Even Zhang’s younger brother supports fresh demonstrations, scheduled to start Friday, as a way to prompt the Guangdong government to intervene.

Trade and the campaign: Chasing the anti-China vote | The Economist – A full-scale trade war over car parts is also unlikely for another reason. American firms are having growing success shipping auto parts to car-mad China, exporting $1.3 billion-worth in 2010. Good news for the American heartland, in other words. Just don’t expect to hear much about it while there is an election on.



Obama’s Evolution to a Tougher Line on China – – The tense exchange, Mr. Bader and other officials said, was a turning point in the president’s complex relationship with China, a journey that began with hope and accommodation but fell into disillusionment after Beijing started flexing its muscles on trade and military questions and proved to be a truculent partner on a variety of global issues..“I certainly think we tested the limit of how far you can get with China through positive engagement,” said Benjamin J. Rhodes, a deputy national security adviser. “We needed to toughen our line in Year 2, and we did that.”

Panetta’s Speech at the PLA Engineering Academy of Armored Forces in China, September 2012 – Council on Foreign Relations – Our rebalance to the Asia-Pacific region is not an attempt to contain China. It is an attempt to engage China and expand its role in the Pacific. It’s about creating a new model in the relationship of our two Pacific powers. It’s about renewing and revitalizing our role in a part of the world that is rapidly becoming more critical to our economic, diplomatic, and security interests. And as I’ve made clear, essential to all of these goals — essential to these goals is a constructive military-to-military relationship with China.

北京日报:美调停中日矛盾是火上浇油_网易新闻中心 – nice invective from Beijing Daily about the US and its role in islands dispute.

China, Japan and the world’s Agadir Crisis (1911) – Telegraph Blogs – As long-standing readers know, my own view is that the West should “appease” China – in the old-fashioned and honourable meaning of the word – until and unless such a policy proves unworkable. We must be very careful to avoid the “Wilhelmine syndrome”, turning a potential enemy into an actual enemy by playing to China’s fears – perfectly understandable fears in many ways. Easier said than done, of course… Ultra-hawks such as former UN Ambassador John Bolton pushing for a policy of containment and outright confrontation are in my view a danger to humanity.

Chinese navy holds drill in East China Sea – Xinhua | – who needs viagra when you have a picture like this?//

China government’s hand seen in anti-Japan protests – – yes, waking up Monday to official media pronouncements for non-violent protests was like watching a switch get flipped, as noted in Monday’s Sinocism // James Reilly, a scholar who has written a book about Chinese public opinion toward Japan, said negative and positive stories planted in the state media are used to tell the public how to behave. “The government is really good at sending signals about when it is OK to protest and when it is not,” Reilly said.

China, Vietnam vow to solve South China Sea issue on basis of consensus – Xinhua | – if China wants a fight Vietnam is the “cleanest” target, though no pushover. US has no treaty obligations.// China and Vietnam agreed on Thursday to implement a consensus reached previously by the leaders of both countries regarding the South China Sea so as to solve the issue via negotiations and dialogue. In his meeting with Vietnam Prime Minister Nguyen Tan Dung in south China’s city of Nanning, Vice President Xi Jinping said issues regarding the South China Sea do not represent the entirety of China-Vietnam relations, but will affect their ties if improperly dealt with.

China’s Wen Jiabao demands EU lift arms embargo – Telegraph – Wen Jiabao has used his last summit with the European Union to demand that Brussels lifts its arms embargo on Beijing in a move that doused hopes for a final economic boost from the retiring Chinese premier.

China PM’s complaints lost in broadcast cut — (BRUSSELS) – Media following Thursday’s EU-China summit in Brussels lost the last words of a complaint delivered by Chinese Premier Wen Jiabao against the European Union when a live video broadcast was suddenly cut.  After listing positive achievements in EU-China ties during a ceremony closed to the press but broadcast live, the Chinese leader chose forceful language to demand the lifting of an EU arms embargo and ask EU nations to lift all tariffs on Chinese goods.

China’s checkbook diplomacy in Nicaragua | beyondbrics – Nicaragua continues to maintain relations with Taiwan, which has been a generous lender of aid and technical assistance over the years. Now, however, the government in Managua appears to be sidelining its old friend.

State to tighten oversight of intl NGOs – People’s Daily Online – By amending existing law, China will set clear rules for international NGOs to register on the mainland and will strengthen supervision of their activities. Li Liguo, minister of civil affairs, made the announcement at a news conference in Beijing on Thursday.

The Inconvenient Truth Behind the Diaoyu/Senkaku Islands – author has deep ties to Taiwan’s KMT// That said, when I look at the underlying question of who has the best claim, I’m sympathetic to China’s position. I don’t think it is 100 percent clear, partly because China seemed to acquiesce to Japanese sovereignty between 1945 and 1970, but on balance I find the evidence for Chinese sovereignty quite compelling. The most interesting evidence is emerging from old Japanese government documents and suggests that Japan in effect stole the islands from China in 1895 as booty of war. This article by Han-Yi Shaw, a scholar from Taiwan, explores those documents. I invite any Japanese scholars to make the contrary legal case. – Nicholas Kristof

The Risk of Nuclear War with China – All Things Nuclear – In the face of growing strategic distrust, neither government seems willing to accept the risks for peace that are necessary to minimize the risks of war, which, while still small, continue to grow.

The Fifty-Megaton Elephant in the Room – By Jeffrey Lewis | Foreign Policy There are some voices suggesting that the administration should find a way to make clear to Beijing that China’s small stockpile of a few hundred nuclear weapons is plenty and that we aren’t likely to start any nuclear wars, at least not unless we really have to. Last month, the Secretary of State’s International Security Advisory Board began circulating draft copies of a report on Maintaining U.S.-China Strategic Stability that recommended “mutual nuclear vulnerability should be considered as a fact of life for both sides.”  If you do not closely follow the arcana of U.S. nuclear weapons policy, this statement might seem blindingly obvious. After all, China holds some $1.2 trillion in U.S. Treasury securities. Looking at the ways in which the United States and China are economically interdependent, it might be easier to count the ways in which we are not mutually vulnerable. But just four years ago, a very different ISAB report was leaked to the Washington Times. That report, drafted under Paul Wolfowitz’s name, advised that “Washington should also make it clear that it will not accept a mutual vulnerability relationship with China” — before making a series of bizarre assertions about Chinese foreign policy right out of the Manchurian Candidate.



Hit TV Show Sings Song of Media Model Success – Caixin Online – Murdoch finally found a profitable way into China TV?// A reality-talent TV songfest popular in more than 40 countries around the world has become an instant hit in China, underpinning enthusiasm for an experimental business model linked to media sector reform. The Voice of China’s debut show in July immediately won high audience ratings in the 42 cities where it appeared. Viewer ratings nearly doubled for the show’s second weekly broadcast, and rose another 30 percent soon after. Especially noteworthy from a business perspective was that the program’s joint producers, Zhejiang Satellite Television (ZJST) and Canxing Production, a company linked to global media magnate Rupert Murdoch’s Star Media, succeeded while shaping an investment structure never before seen among domestic media players.

Microsoft Said to Ask China to Stop Piracy at Four Firms – Bloomberg – The world’s biggest software company filed its complaint against CNPC, China Post Group, China Railway Construction Corp. and Travelsky Technology Ltd. (696) last month to a government panel led by Vice Premier Wang Qishan, said the three people, who asked not to be identified because the filing isn’t public. Microsoft alleged that more than 40 percent of Office and Windows server client software used by CNPC, parent of China’s largest company by value, is unlicensed, the people said.

TechInAsia–China’s Alibaba Spins Off Aliyun Mobile OS Business, Supports it With $200M Investment – it comes just a week after Aliyun suffered a major setback, hitting the global news when Google slammed it as an incompatible version of Android. Alibaba disagrees with that assessment, but the end result was Google preventing a new flagship Aliyun phone, made by Acer, from launching.



Professor Han Deqiang, Founder Of Maoist Organization Utopia, Accused Of Slapping Old Man For Besmirching The Dead Chairman Beijing Cream  netizens identified the younger man as Beijing University of Aeronautics and Astronautics professor Han Deqiang, a well known economist and better-known founder of Utopia, a Maoist organization whose website remains shut down since April

British Man Helps Chinese Homeless in Xi’an, Netizen Reactions – chinaSMACK – A British engineer sold 3 companies, a mansion, 2 sports cars, and came to Xi’an, China to hand out steamed stuffed buns to the homeless. Like that, 7 years have passed.



Wasted Electricity ‘Cost Wind Power Firms 5 Bln Yuan Last Year’ – Caixin Online – China’s wind power firms lost more than 5 billion yuan last year because restrictions from state-owned companies limited the amount of electricity they could produce, a September 18 report said. The figure represented half of the sector’s profit, a report by the NGO Greenpeace, the government-affiliated China Association of Resource Comprehensive Utilization (CARCU) and the Global Wind Energy Council said.

染色中药风波后续:中国药都遇土地拆迁之痛|染色|中药|_21世纪网 – lots of fake chinese herbal medicine. scary



Anyuan: Mining China’s Revolutionary Tradition (Asia: Local Studies / Global Themes): Elizabeth J. Perry: Amazon – How do we explain the surprising trajectory of the Chinese Communist revolution? Why has it taken such a different route from its Russian prototype? An answer, Elizabeth Perry suggests, lies in the Chinese Communists’ creative development and deployment of cultural resources – during their revolutionary rise to power and afterwards. Skillful “cultural positioning” and “cultural patronage,” on the part of Mao Zedong, his comrades and successors, helped to construct a polity in which a once alien Communist system came to be accepted as familiarly “Chinese.” Perry traces this process through a case study of the Anyuan coal mine, a place where Mao and other early leaders of the Chinese Communist Party mobilized an influential labor movement at the beginning of their revolution, and whose history later became a touchstone of “political correctness” in the People’s Republic of China. Once known as “China’s Little Moscow,” Anyuan came over time to symbolize a distinctively Chinese revolutionary tradition. Yet the meanings of that tradition remain highly contested, as contemporary Chinese debate their revolutionary past in search of a new political future.

Disappearing Shanghai: Photographs and Poems of an Intimate Way of Life: Howard W. French,Qiu Xiaolong: Amazon – This book is a photographic exploration of life in the old and rapidly disappearing quarters of Shanghai, with accompanying poems and essays by the author of fiction and poetry, Qiu Xiaolong.

Strong Society,Smart State: The Rise of Public Opinion in China’s Japan Policy (Contemporary Asia in the World): James Reilly: Amazon– Through a detailed examination of China’s relations with Japan from 1980 to 2010, Reilly reveals the populist origins of a wave of anti-Japanese public mobilization that swept across China in the early 2000s. Popular protests, sensationalist media content, and emotional public opinion combined to impede diplomatic negotiations, interrupt economic cooperation, spur belligerent rhetoric, and reshape public debates. Facing a mounting domestic and diplomatic crisis, Chinese leaders responded with a remarkable reversal, curtailing protests and cooling public anger toward Japan.

Nobody Told Asia About The End of Men – By Mara Hvistendahl | Foreign Policy – So what to make of The End of Men: And the Rise of Women, Hanna Rosin’s provocative new book proclaiming a global shift in gender dynamics? Rosin charts a fascinating trend in the United States — and then stretches to make the case that in Asia, too, patriarchy is on the verge of being upended. As University of Maryland, College Park, sociologist Philip N. Cohen is chronicling in a series of blog posts, The End of Men is riddled with misleading statistics and analysis

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 blocked by the GFW. You can also follow me on Twitter @niubi or Sina Weibo @billbishop.