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Today’s must-read is my China Insider column for the New York Times Dealbook. (Hah, what do you expect me to say?) In Reform and the Internet, With Chinese Characteristics I discuss the prospects for reform coming out of the 18th Party Congress and the recent upgrading of Internet controls in Beijing:
Foreign hopes aside, there is no reason China cannot continue changing its economy while maintaining some Internet controls. Political change and Internet restrictions will have a harder time coexisting.
In the meantime, the world needs to get used to the fact that China is serious about building “Socialism with Chinese characteristics” and an “Internet with Chinese characteristics.”
Much of the Western commentary about the prospects for reform has been bearish. Cheng Li has been one exception, as he reiterates, rather excitedly, to Christiane Amanpour in Will there be more freedom and reforms in China’s future?
Reuters reports on efforts to push financial reforms in China’s financial reformers adapt Party rhetoric in low-key pitch:
Contained in otherwise bland statements meant to project an image of unity, the reformers struck at the heart of state economic planning by urging for market forces to be given more influence over credit allocation, that could increase for example innovation in technology, and for restrictions on cross-border capital flows to be relaxed.
There have been some interesting Chinese discussions of the reform prospects, including but far from limited to Deng Yuwen’s 邓聿文：如何理解中共的“三个自信”-财经网, Duowei’s 协商治国 中国特色的政改“新路”_多维新闻网 and First Financial’s 从十八大报告看改革新指向一财网.
The new standing committee will make its first public appearance Thursday at about 11 AM. Expects lots of guessing about who is a “reformer”, “conservative” or “hardliner”. The goal of any reform from the center is to preserve the rule of the Communist Party and ensure the continuation of what the leadership calls “the Great Chinese Renaissance” (a concept that deserves more examination). We will probably see reformers who have very Nationalist and “hardline” leanings when it comes to foreign policy. So should we call them “reformist hardliners”?
John Garnaut’s new ebook on Bo Xilai is now on Amazon. I read an advance copy of The Rise and Fall of the House of Bo: How A Murder Exposed The Cracks In China’s Leadership and highly recommend it.
Today’s links:
BUSINESS AND ECONOMY
Analysis: China’s social financing stable despite new yuan lending drops – Xinhua | English.news.cn– New yuan-denominated lending in October hit a 13-month low of 505.2 billion yuan (80.32 billion U.S. dollars), dropping 81.6 billion yuan from a year earlier, the People’s Bank of China (PBOC), the central bank, said Monday. The week-long National Day holiday at the beginning of October contributed to the lending decline, said Zhong Zhengsheng, an analyst from Everbright Securities.
Concern Banks May Be Underreporting NPLs – Caixin- Even though the ratios are still below many economists’ cautious estimate of 2 percent, the banking regulator is apparently worried as it examines factors that reflect loan quality from other perspectives. Above all others, banks are given considerable leeway in determining whether a loan is toxic or not. Classifying a loan as one notch above NPL status, referred to as “special mention,” allows banks to suppress the level of bad loans and avoid drawing extra reserves for potential loss.
China keeps gold bugs smiling | beyondbrics – But, said Zheng Zhiguang, general manager of precious metals at ICBC, despite annual growth in demand of around 14 per cent, the gold market in China is “only just beginning”. In fact, China’s gold market could be “entering a period of more sustained and steady growth”, thanks to improved investment access and rising incomes.
Roth Capital closes Shanghai office – MarketWatch – deals, especially sketchy ones, hard to sell these days// Roth Capital Partners, which helps Chinese companies tap the U.S. capital markets, has sharply scaled back its China operation after a string of corporate accounting scandals soured investors on the offerings it promoted.
Chart of the week: China’s decade of markets – underwhelming | beyondbrics – The Shanghai Composite is up, but if you invested $100 in 2002 when Hu took the top job, you would now have just over $150. Better than sitting on your cash, but far behind the property-driven Hang Seng index (up 239 per cent), and indeed the MSCI Emerging Markets index (up 129 per cent). Still, if you had put $100 in the S&P 500, your investment would only be up 48 per cent. The FTSE 100 index has risen over a decade by 38 per cent.
The Buck Stops With The Other Guy: China’s Government Debt Issues – WSJ – The edifice isn’t about to come tumbling down. But one of the nice things about having banks fund the local governments is that the banks can be leaned upon to suck up any bad debts and help the governments through the hard times. On the other hand, Chinese investors who feel wronged have a long history of protesting outside of government buildings and taking to the courts. Let’s hope China’s debt problems stay financial and not political.
Jun Ma: Roadmap for RMB Internationalization – 马骏 – 名家博客 – 博客 – 财经网 – This report is an English summary of a policy study on “RMB offshore market and capital account liberalization” written originally in Chinese. Sponsored by China Finance-40 Forum, the original report was authored by a team led by Jun Ma that consisted of a few Deutsche Bank analysts as well as university and government researchers.
Running Up the Score – Caixin The central government has already started building a cat cage of far-reaching regulations on real estate, the initial framework of which is divided into four parts. The first is to reorder the fiscal revenue split between local governments and the central government. The second is to build a better tax collection apparatus for real estate. The third is to improve the income distribution structure and shrink the gap between the poor and rich. The fourth is to reestablish a land system. This is exactly the kind of real estate regulation apparatus that people have been clamoring for, but before market mechanisms are established, it is not likely in the short term that the government will abolish current restrictions on real estate purchases per citizen, restrictions on loans, differentiated credit policies and taxation policies.
住建部长：限购政策短期内不会退出_网易新闻中心 – No near-term plans to relax real estate repression policies
前十月北京商品房销售面积超去年全年_地方经济_新浪财经_
Economic slowdown bites China’s employment: official – Xinhua | English.news.cn – “The impact of economic slowdown on the job market is starting to emerge,” said Vice Minister of Human Resources and Social Security Yang Zhiming at a press conference on the sidelines of the 18th National Congress of the Communist Party of China, which opened on Nov. 8.
POLITICS AND LAW
China Mandates ‘Social Risk’ Reviews for Big Projects – NYTimes.com – thanks Internet// The cabinet of China has ordered that all major industrial projects must pass a “social risk assessment” before they begin, a move aimed at curtailing the large and increasingly violent environmental protests of the last year, which forced the suspension or cancellation of chemical plants, coal-fired power plants and a giant copper smelter.
The truth about Beijing’s Jingxi Hotel’s corridors of party power | South China Morning Post– The Jingxi also appears to be cashing in on its exclusive clientele, with the advertising on the walls that surround it reportedly generating income of around 10 million yuan (HK12.4 million) a year. Advertisers seeking to win influence with the country’s movers and shakers must believe it is money well spent. According to reports by the mainland media and on overseas political gossip websites, the Jingxi is also known for the superb quality of its staff. Security is handled by elite soldiers and its telephone operators are female soldiers fluent in dozens of dialects and languages.
Car crash cover-up could force Ling Jihua out, say sources | South China Morning Post – Competitive elections to Central Committee cast more uncertainty over future of Ling Jihua, the president’s tainted ex-chief of staff, say sources
China’s new leader is hemmed in by history – FT.com – By Roderick MacFarquhar – Mao had a revolutionary victory to justify his transformative policies; Deng had the trauma of the Cultural Revolution to justify reform and opening to the outside world. Since then the party leadership has been transfixed by the Soviet Union’s collapse. Mikhail Gorbachev aimed to reform communism but he destroyed it. No Chinese leader can guess which reform might bring about the end of communism in China, so the temptation is to do little. Short of a national disaster, Mr Xi may be reduced to muddling through.
Chinese Officials Show Support to Assets Disclosure-Caijing – Chief of China’s Intellectual Property Office Tian Puli said Sunday in a group interview that he was “totally okay” with disclosing his assets if the government requires officials to do so. Tian made this remark a day after Yu Zhengsheng, Secretary of Shanghai Municipal Committee of CPC said he is willing to disclose his assets which was widely hailed among the public.
Jiang outmanoeuvres Hu again to sway Standing Committee line-up | South China Morning Post But, to the surprise of many people, Wang Qishan will be in charge of anti-corruption as the head of the Central Commission for Discipline Inspection. This has led to speculation that he has been sidelined. But some party insiders who know Wang well think otherwise. For one, Wang himself prefers a job that gives him full authority over a portfolio.
Wukan Woes Show Land-Reform Delay Risks as Hu Leaves Task to Xi – Bloomberg – Xiaohui Wu, a land-tenure specialist at Landesa, a Seattle- based group that studies global land issues, said his organization has had “regular contacts” with Chinese government officials on legal changes that would make it harder for farmers to be kicked off their land and increase levels of compensation if they are. The proposed laws, which may be considered by China’s legislature in March, would also give farmers more say in the land-appropriation process, he said.
China’s 6th generation leaders await roles – FT.com – Decisions made during the Communist party’s 18th Congress will chart the course for Mr Hu and other members of the so-called “sixth generation” as they are groomed for power in 2022 when Mr Xi and Li Keqiang, incoming premier, retire.
‘Glocalizing’ top civil servants |chinadaily.com.cn – The high fliers, carefully vetted by the Central Organization Department, are sent to the Kennedy School of Government at Harvard University. The New World Fellows Program, established in 1998, has now tutored more than 550 Chinese participants from local and central governments and has expanded into a series of tailored and open-enrollment programs called the China Public Policy Program
胡锦涛：决不走改旗易帜的邪路 南方网稿件 南方网 from 2008 – so “决不走改旗易帜的邪路” not a new term// 今天（18日）上午，
Mom communists taking babies to national congress – Xinhua | English.news.cn – Commommies? //Mothering infants is not easy for career women, and especially for Jiang Min and Luo Wei, who are for the first time attending a national congress of the Communist Party of China (CPC).
毛新宇的两任漂亮妻子-财经网 – why is caijing running a photo series on mao xinyu and his first and second wife?
厉有为：关于政治体制改革若干问题的思考-战略与改革网 – 前深圳市委书记厉有为：时间就是生命，改革就是求存——
述评：中共再启改革钥匙 – 新华时政 – 新华网– 新华网北京１１月１２日电（记者许晓青 程云杰 李建敏 刘宝森） 在此间召开的中共第十八次全国代表大会上，胡锦涛在报告中提出，
An American ‘revolutionary’ assesses China’s transition – Fast Forward – YouTube – Sidney Rittenberg, former member of China’s Communist Party and translator for Mao Zedong, is positive on China’s new leadership but says the Party is far from its founding ideals
FOREIGN AND DEFENSE AFFAIRS
China and US navigate in risky waters – FT.com – The good news is that, from everything we know, the new leadership teams in Washington and Beijing are both determined to avoid conflict between the US and China. The bad news is that the risks and dangers of miscalculation are rising.
China unveils WZ-10 attack helicopter[1]|chinadaily.com.
China’s Other Transition – By Dean Cheng | Foreign Policy– Many questions remain on how the military will evolve under incoming chairman Xi Jinping. Here are four of the biggest:
Is China Unintentionally Rekindling Japan’s Great Power Ambitions? | Via Meadia – China’s increasingly assertive foreign policy is, perversely, the one faint glimmer of hope for the moribund Japanese economy. Military Keynesianism, in which Japan builds up its armed forces, emerges as an aggressive exporter of arms worldwide, and pumps up its economy by large R&D budgets for military technology, could give Japan’s economy and its corporate sector a huge boost, particularly if this new military technology spurs the development of civilian high-tech companies. Some Japanese nationalists have been promoting this idea for years.
Chinese boost for US colleges — Shanghai Daily – Nationally, there were 765,000 foreign students on US campuses last year, with China (158,000) the top source, followed by India, South Korea and Saudi Arabia (the fastest growing thanks to an ambitious scholarship program by the Saudi government). The Department of Commerce calculates they contribute US$22.7 billion to the US economy, and many stay after graduation.
China Considers Limiting Foreign Education Agents – NYTimes.com long overdue cleanup, or just move to limit foreign participants?// The Chinese Education Ministry is seeking opinions on draft regulations that would restrict the international education agencies that help Chinese students study overseas.
New South China city building desalinator |news |chinadaily.com.cn – The project, which will be capable of processing 1,000 cubic meters of seawater daily upon its completion, will supply water for residents of Yongxing Island, where the municipal government is located, according to a spokesman from the local economic planning body.
TECH AND MEDIA
The amazing China smart phone market | LinkedIn –
消息称京东商城完成新一轮4亿美元融资|京东|消息|商城_
Ka-CHING! Tmall, Taobao 24-hour Sale Blows By Cyber Monday | Alizila:– The results easily topped 2011 sales for Cyber Monday in the U.S., previously thought to hold the record for the most online sales in a day. Cyber Monday sales last year were $1.25 billion, according to comScore. GMV on Tmall alone yesterday exceeded $2.1 billion. Tmall is China’s largest B2C shopping website.
Amendment No.1 to Form F-1 YY.com previous draft mentioned “selling shareholders” 27 times. this draft has 0 mentions, added language re insiders buying. wonder if they need to buy to save IPO, as DCM and Sequoia bought 20m of VIPS IPO to get the deal done. tough market, esp for Chinese IPOs // Several of our existing shareholders and their affiliates, including Granite Global Ventures, Steamboat Ventures Asia and Morningside China TMT Fund, as defined in this section, have indicated to us their interest in purchasing up to an aggregate of US$30.0 million of ADSs offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering.
新闻出版总署署长:未来售一两张盗版碟就会判刑|判刑|新闻|
ENERGY, ENVIRONMENT AND HEALTH
China Leads the Way as Demand for Coal Surges Worldwide – NYTimes.com – Global demand for coal is expected to grow to 8.9 billion tons by 2016 from 7.9 billion tons this year, with the bulk of new demand — about 700 million tons — coming from China, according to a Peabody Energy study. China is expected to add 240 gigawatts, the equivalent of adding about 160 new coal-fired plants to the 620 operating now, within four years. During that period, India will add an additional 70 gigawatts through more than 46 plants.
China focus: Beijing mounts push for increased energy from renewables – FT.com – By 2015, Beijing aims for 30 per cent of China’s generating capacity to come from non-fossil fuel sources, a government white paper published last month says. Clean energy is prized in China because it helps the country reduce its dependence on imported energy sources and also contributes to lowering carbon emissions.
FOOD AND TRAVEL
In China’s Outback: Australian Lilian Carter on making wine in Xinjiang | Grape Wall of China – This fall, Lillian Carter started her second China adventure when she headed to Xinjiang winery Wang Zhong, a six-hour drive south of capital city Urumqi, and followed up on the vintages she did at Pernod Ricard winery Helan Mountain in Ningxia in 2008 and 2009. Carter, who has worked at Oakridge Wines and at Domaine Chandon, both in the Yarra Valley, and at Orlando Wines in the Barossa Valley, answered a few questions about her new post.
New heights for private aircraft |Economy |chinadaily.com.cn– The market started to boom in 2009 and has since forged ahead rapidly, according to Jason Liao, CEO and chairman of China Business Aviation Group, a major business craft dealer in the country.
Plan to allow great use of lower-altitude airspace |Sci-Tech |chinadaily.com.cn – The reforms being used to open up that airspace will accelerate next year and the applications that must be filled out for general aviation procedures will be simplified, Ma Xin, an official from the State Air Traffic Control Commission, told a forum in Zhuhai, Guagndong province, on Monday
A good Daniel Bell critique by Linda Jakobsen: http://www.lowyinterpreter.org/post/2012/11/13/an-absurd-defence-of-communist-rule-china.aspx
thanks, already marked for tomorrow’s newsletter