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In this week’s China Insider column for Dealbook I look at the new leadership in Welcome to the Xi Jinping Era. Sinocism readers already know my guess, that Xi will turn out to be a hard-line, nationalist reformer.
The column also discusses the apparent signaling that Xi may launch a renewed crackdown on corruption:
Chinese officials have made lots of anti-corruption noise over the last few years, even as graft has spread like a cancer through society, but Mr. Xi’s anti-corruption rhetoric is more dire and aggressive. By making such a big deal of it so early in his term, he risks quickly destroying any good will and credibility if he does not show results, though more high-profile corruption cases could be equally damaging. There are some who would argue that any crackdown might be too late as the system may now be so rotten that a serious crackdown on venality would destroy it.
Cynics will argue, correctly, that we have heard all this before. The Christian Science Monitor, on February 12, 1982, wrote the following (h/t Sam Crane):
Amid reports that thousands of Chinese party and government officials may soon be fired or transferred, China has issued a notable public explanation of the reasons behind the anticipated shakeup.
”Whether rule by the communist party goes bad (as meat goes bad) or collapses is no longer a question of abstract theory, but a real danger,” writes Zhang Yun, a deputy secretary of the party’s Central Commission for Inspecting Discipline.
Bloomberg has a long look at trust products and the shadow banking industry in Purple Palace Abandoned Shows China Shadow-Banking Risk:
“The heyday of trusts is gone, and now they’re left with quite a few land mines to navigate,” said Ivan Shi, a Shanghai- based analyst at consulting firm Z-Ben Advisors Ltd. “Surviving the peak of repayment next year is probably the biggest challenge as we know many projects are dodgy.”
Trusts need to repay investors about 250 billion yuan in principal and return on property-linked investments this year, and an estimated 310 billion yuan more will come due in 2013, according to CICC. Issuers may be forced to extend payment deadlines, sell new trusts to pay off old ones or dispose of collateralized assets, the firm said.
Extend and pretend, kick the can down the road..call it whatever you want, but expect China to do it as well or better than the US, Europe and Japan.
Today’s suggested readings:
BUSINESS AND ECONOMY
人民日报-努力实现更长时期的平稳较快发展（热点追踪） ——我国经济形势与发展趋势研究综述 – long people’s daily article on the economy says 2013 GDP growth may go above 8%// 而且2013年的经济增速有望超过今年，回到8%
China Increased Slightly in US Debt Holding in Sept.; May Have Turned to Gold-Caijing – China, the largest U.S. creditor, increased holdings of U.S. Treasuries by only 300 million U.S. dollars in September, narrowing its gap between Japan who boosted U.S. debt holdings by 7.9 billion in the month, preliminary data published by the Department of the Treasury showed.
俏江南董事长张兰惹官司被诉 其户口已注销_财经频道_一财网 – South Beauty founder Zhang Lan in a lawsuit with a cofounder, turns out her Beijing hukou has been cancelled, which usually only happens if you have died, or switched national identities..speculation Zhang now has a US passport..wonder if she knows the tax issues..//
不良贷款行业地域双向扩散 贷款重组成风险缓释主选项_财经频道_一财网 – growth in bad loan restructuring industry..can a Chinese Repo Man be far behind…//
二代收入差距背后：父母身份决定子女收入地位_财经频道_一财网
经济参考网–铁道部酝酿设立铁路发展基金 – Ministr
CHINASCOPE – Red Flag Manuscript: State-Owned Enterprises (SOEs) Are the Bellwether for the Rise of China’s Economy – Recently, the Chinese Communist Party (CCP) agreed that having the backing of state funding and favorable government policies gives China’s SOEs a huge economic advantage. Hu Angang, Director of the Center for China Studies, Tsinghua University, wrote an article on for Red Flag Manuscript, a publication of the Central Committee of the CCP in which he argued that, although China’s SOEs are a form of enterprise and compete in the global market, they differ greatly from Western enterprises in that they are state-owned and under the leadership of the CCP. China’s SOEs have the advantage of being backed by state-owned capital and, as such, have the ability to generate strong competition to rival the world’s top 500 enterprises. They should be the leading force for China’s “going abroad” strategy. The following are translated excerpts from the article.] [3]
Building an Innovation Nation – Caixin – China wants to take the next step in its economic development, but as economist Wu Jinglian points out, this will require fundamental changes to how government and private business interact
Old hands to become China’s new finance guards | Considered View | Breakingviews – Picking a new central banker in China is not as momentous as, say, selecting a new chief for the U.S. Federal Reserve. Monetary policy is still believed to be set behind the scenes by the country’s premier or its State Council. Running the central bank may be more about following the party line, as Zhou showed last month when he cancelled a high-profile speech in Japan following a territorial dispute. Moreover, the likely new heads aren’t much different from the ones they are replacing. Most of them, including Lou and Xiao, earned their promotions in the era of former premier Zhu Rongji.
China’s Dream Team-China Economic Watch–If there is anything we can take away from the provincial leadership experiences shared by the 18th PSC it is that the current leadership has a great variety of on-the-ground experiences and approaches to economic growth and rebalancing. Although some may see the fixed investment bubble created by Zhang Gaoli in Tianjin as negative indicator for rebalancing, his record is countered with the rebalancing work employed by Xi Jinping and Yu Zhengsheng in Zhejiang and Shanghai. Such a mix certainly has the potential to create bottlenecks in policy formulation as some fear, but it could also serve to create better policies that fully exploit the diverse experiences of this group of new leaders.
POLITICS AND LAW
《财经网》 – CAIJING.COM.CN – this week’s Caijing cover story on “china’s choice” re political and economic reform, key pieces include 政改现实路径-财经网 – 刚刚产生的中共新一代领导人，担负着推进全面改革，
Hu Deping: Reform and Rule of Law – Economic Observer Online – Summary：To continue to push ahead with the construction and implementation of a socialist system of constitutional governance is one of the basic tasks of the Communist Party of China.
How U.S. Asia ‘Pivot’ Could Hurt Reform in China – China Real Time Report – WSJ– Over a plate of Chairman Mao’s favorite dish – red-braised pork, or hongshaorou in Mandarin – a foreign reporter listened as a young and well-connected Communist Party member laid out three conditions for China to pursue bolder political reforms under the leadership of newly anointed party chief Xi Jinping: First, leaders themselves must support it. Second, domestic circumstances must allow for it. Finally, China needed a benign international environment to give leaders the confidence to pursue the most sensitive of reforms.
Wukan: Still Unsolved, and Still Significant – China Real Time Report – WSJ – In the face of the problems mentioned here, it is no wonder that the Wukan mode has “fizzled.” The Wukan events and the lack of progress a year after they first arose suggests the extent to which the protests, the institutions involved and the stark policy issues confronting the Party-state present major challenges to China’s new leadership. The uprising in a little village symbolizes issues of law and policy that are intimately intertwined throughout Chinese society and must be unwound.
China downgrades powerful domestic security chief position | Reuters – as part of a move to a new and smaller top elite, an expected move that reflects fears the position had become too powerful. The official Xinhua news agency said in a brief announcement that Zhou Yongkang’s position as head of the Political and Legal Affairs Committee, a sprawling body that oversees law-and-order policy, had been taken over by Public Security Minister Meng Jianzhu.
Meng Jianzhu appointed head of CPC Political and Legal Affairs Commission – Xinhua | English.news.cn –
Zhao Leji appointed head of CPC Organization Department – Xinhua | English.news.cn –
The Key to Bringing Democracy to China – By Hasheng Yuang | Foreign Policy – perhaps, if there is broad amnesty// Chinese political elites implicitly understand that democracies provide security of property and of persons. When ousted by Bo, Wang Lijun, the former police chief of Chongqing, did not turn to the Chinese Ministry of Justice but the U.S. consulate in Chengdu. Other Chinese elites outsource their personal security by sending their family members to study and to reside in the United States; wouldn’t they like a little more of that security closer to home? For democracy to work for China, it has to work for China’s most powerful. There is no other way.
Dear leaders: what would you do? – China Media Project– After seeing the updated post, Weibo Zhiwei (微博之维), a Chinese media researcher, wrote enthusiastically: “Weibo is becoming a platform for supervision by public opinion.” A good case can be made for Weibo Zhiwei’s statement. Indeed, social media can turn mass attention to a case or issue and perhaps exert some pressure on authorities…But there is a huge caveat too. We can’t forget that with just under 1.5 million followers on Sina Weibo, Yu Jianrong is a one-man media phenomenon.
【舒立观察】改革此其时_杂志频道_财新网 – 经济正在企稳，改革时机呈现。在中共最高层换届之后，各个部门、
Chengguan defends his bribe taking, tells court he didn’t want to offend – People’s Daily Online– The head of an urban management brigade in Guangzhou, South China’s Guangdong Province, told his bribery trial that he had to accept money so as to not offend the “powerful” middlemen, the Guangzhou Daily reported Monday. Wang Baolin, 49, former head of the urban management brigade of Taihe township in the city’s Baiyun district, is charged of taking 4.32 million yuan ($692,919) in bribes and 500 grams of gold products from people who built illegal buildings.
FOREIGN AND DEFENSE AFFAIRS
Tensions flare over South China Sea at Asian summit | Reuters – Japan warned on Monday that a row over the South China Sea could damage “peace and stability” in Asia as China stalled on a plan to ease tensions and disagreements flared between the Philippines and Cambodia over the dispute.
‘We are ready to build more carriers’ |Politics |chinadaily.com.cn– lots of money to be made// The company that played a key role in equipping China’s first aircraft carrier is ready to build more “seagoing airbases”, its chairman said. “China is the only one of the five permanent members of the UN Security Council not to have an aircraft carrier wholly developed by itself,” said Hu Wenming, chairman of China State Shipbuilding Corp.
Brookings Institution–Panel 1 – America and China in the Aftermath of Election and Succession: Paths and Pitfalls Event | November 19, 2012 – J. Stapleton Roy, Kenneth G. Lieberthal, Cheng Li, Jonathan D. Pollack
Brookings Institution–Panel 2 – America and China in the Aftermath of Election and Succession:Paths and Pitfalls Event | November 19, 2012 – Bader criticizes the new york times in first 2 minutes of his talk..he really does not like the NYT, also went after them in his book Obama and China’s Rise: An Insider’s Account of America’s Asia Strategy. sense some wishful thinking and increasing disillusionment from panel// Jeffrey A. Bader, Alan Romberg, Jonathan D. Pollack
70th anniversary of Japanese germ massacre marked in Zhejiang – Xinhua | English.news.cn – A ceremony commemorating victims of Japan’s germ warfare in China 70 years ago was held in a Zhejiang Province village on Sunday, after which non-governmental figures from China and Japan made an appeal for these Japanese crimes to be acknowledged.
金正恩视察第534部队 训练场骑马“秀”英姿_网易新闻 – pictures of Kim Jong-un looking studly on a steed as he visits troops//
‘Green card’ process may get easier – People’s Daily Online – Liu said the draft mostly targets immigrants in the field of technology who will be able to apply for permanent residency after living in China for 10 consecutive years, provided they have spent at least nine months each year in the country. They must be employed, have accommodation and a good tax record. The success of their application will no longer be dependent on the position they hold.
China Grabs Share in Latin America Wind With Cheap Loans Bloomberg In one of the latest transactions, China Development Bank Corp. agreed on Nov. 15 to loan $261 million for a Grupo Isolux Corsan SA project in Argentina that will use 100 megawatts of turbines from Xiangtan, China-based XEMC Windpower Co. The state-run bank is talking to Argentine developer Geassa to support a $3.5 billion wind project that would be the continent’s largest.
HONG KONG AND TAIWAN
Mixed Messages From China on Taiwan–The Diplomat– Taiwanese who were present at the show could hardly mask their horror when the video showed a series of F-16 aircraft on the tarmac of what was unmistakably Hualien Air Force base on the east coast of Taiwan. Seconds later, one of the aircraft (tail no. 6657) exploded in a huge ball of flames after being hit by a M20. So much for winning the hearts and minds of Taiwanese “compatriots” (though to be fair, during the Taipei Aerospace and Defense Technology Exhibition in August 2011, Taiwan’s military showcased its Hsiung Feng III “Brave Wind” anti-ship missile with a large display showing the “carrier killer” hitting an aircraft carrier that looked very much like China’s first aircraft carrier, the Liaoning).
TECH AND MEDIA
China Telecom Starts Accepting Apple iPhone5 Orders on November 20-Caijing – China Telecom has said it will start taking orders of Apple’s iPhone 5 from Tuesday, without giving details about prices and contracts as well as the date customers can actually get their hands on an official-channel iPhone 5.
Toxic Roots: The Challenge of China’s Tech Expansion – What is perhaps most interesting about cases like UCWeb and WeChat, and even Lenovo to a certain extent, is that their brand names are not visibly Chinese companies to the average consumer unless you are reasonably familiar with the technology industry. While I’m sure Tencent would never confirm such a thing, I believe its WeChat branding is a conscious effort to leave the baggage of made-in-China behind. Its social games studio in the US is similarly low-key, flying under the moniker of Icebreak Games.
银行挑战者：阿里小贷_杂志频道_财新网 – Alibaba may challenge banks with its SME loans business// 从与银行合营到自营，
Will Baidu Have a New Decision Maker? -Caijing – heard this months ago. Baidu flatly denies it. very possible a short seller trying behind this// The scenario for a leadership shift within China’s largest search engine operator may not appear so far away, if rumors about its chief Robin Li (Li Yanhong) divorcing his wife Melissa Ma, which have flooded Chinese largest microblogging platform, Sina Weibo, are proved true. The rumor started when a Sina Weibo user under the handle “Internet 007” said last Monday that the Baidu CEO had broke up with his wife that he has been married for 16 years. The post was later found to be removed.
China’s Tencent to Add Payments Services to WeChat – WSJ.com – BEIJING—Chinese Internet company Tencent Holdings Ltd. plans to tie a payment service to its popular WeChat application, an effort to turn the fast-growing service with more than 200 million global users into a commercial power.
YY IPO Set For Tuesday, Defying Fears Of New Chinese Stocks RENN FB – Investors.com – “Chutzpah” isn’t a Chinese word, but a Chinese Internet startup sure seems to have it. Despite the short holiday week, a recent wave of postponements and an investor animus that’s kept Chinese IPOs off the market for nearly eight months, as of midday Monday YY was still set to go public with its eponymous ticker on Tuesday.
Silicon Valley Firms Seek a Bigger Piece of China’s Technology Pie–The Asian Lawyer – Gunderson hired a superstar lawyer to run their China business// Silicon Valley firms are maneuvering now to try to make sure they get a bigger piece of the action when the market bounces back. Cooley opened its first overseas office in Shanghai last December, with partners Bradley Peck and Patrick Loofbourrow relocated from San Diego. Another Silicon Valley firm, Gunderson Dettmer, is currently awaiting approval from Chinese authorities to open its first international office in Beijing.
SOCIETY, ART, SPORTS, CULTURE AND HISTORY
央视五问贵州5男童闷死事件 流浪多日无人相助_新闻_腾讯网 – horrible story of 5 kids who suffocated in bijie, guizhou while sleeping in a trash container in attempt to stay warm. huge issue now in media and social media..for a country that talks about a great renewal it does not do enough to protect is children…
失利的“国考状元”刘金星|公务员|刘金星|失利_21世纪网
马云入股新浪微博直面腾讯 造梦FaceBook？|FaceBook|马云|新浪微博_
ENERGY, ENVIRONMENT AND HEALTH
Power Company in Frustrating Song and Dance with Regulator – Caixin – (Luoyang) – One step backward, two steps forward and then another two steps back became something of a frustrating dance routine for one power company in Henan Province as it dealt with government agencies. In the end, Zhongcheng Group left the dance floor and headed for the courtroom, filing a lawsuit against a branch of the country’s powerful economic planning agency, the National Development and Reform Commission (NDRC)…the court sided with the NDRC in rejecting the lawsuit.//shocker…
FOOD AND TRAVEL
Liquor firm denies claim its drinks are tainted — Shanghai Daily – so this time baijiu may actually be poison// According to a report on news website 21cbn.com, Jiugui, a type of Chinese liquor selling for 438 yuan (US$70) a bottle, was found to contain three plasticizers with one being 260 percent above the permitted level.