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In uncertain foundations The Financial Times has a sobering look at shadow banking in China that is sure to stir the loins of China bears everywhere:
“The vast majority of the financial activities conducted by China’s non-bank institutions are regulated,” says Zhou Xiaochuan, China’s central bank governor. “It’s not like other countries where they completely escaped regulation.”
Despite this note of confidence, the depth and effectiveness of regulatory control is a matter of open controversy. The chairman of Bank of China, a big commercial lender, is far more candid about the potential hazards of shadow banking.
“To some extent, this is fundamentally a Ponzi scheme,” Xiao Gang wrote in the China Daily. “The music may stop when investors lose confidence.”..
Xiao Gang’s October 12 China Daily Op-ed is worth reading in its entirety, and here are his ponzi scheme comments:
In fact, when faced with a liquidity problem, a simple way to avoid the problem could be through using new issuance of WMPs to repay maturing products. To some extent, this is fundamentally a Ponzi scheme. Under certain conditions, the music may stop when investors lose confidence and reduce their buying or withdraw from WMPs. The rollover of a large share of WMPs could weigh heavily on formal banks’ reputations, because many investors firmly believe that banks won’t close down and they can always get their money back.
Xiao is one of the front-runners to replace Zhou Xiaochuan as the next head of the People’s Bank of China. If he gets the job, expect him to be the anti-Greenspan and proactively try to tackle the risks building in the system.
The Washington Post reports that the Defense Intelligence Agency will send hundreds more spies overseas, including to China:
Among the Pentagon’s top intelligence priorities, officials said, are Islamist militant groups in Africa, weapons transfers by North Korea and Iran, and military modernization underway in China…
U.S. officials said DIA operatives, because of their military backgrounds, are often better equipped to recruit sources who can answer narrow military questions such as specifications of China’s fifth-generation fighter aircraft and its work on a nuclear aircraft carrier. “The CIA would like to give up that kind of work,” the former officer said.
Apple may be shifting some assembly to the US, as Apple Insider discusses in some new iMacs marked as being ‘Assembled in USA’:
While the markings don’t necessarily mean that Apple is in the midst of transferring its entire assembly operation from China to the U.S., it does indicate that at least a few of the new iMacs were substantially assembled domestically…
This suggests that there is at least some substantial assembly being performed in the U.S., though it is not clear what that entails or why.
James Fallows discusses the potential for a return of some manufacturing to the US in this month’s Atlantic Magazine article Mr. China Comes to America:
For decades, every trend in manufacturing favored the developing world and worked against the United States. But new tools that greatly speed up development from idea to finished product encourage start-up companies to locate here, not in Asia. Could global trade winds finally be blowing toward America again?
In 走读大中华 “脊背”上的学校 Rose Luqiu looks at the state rural education in a 30 minute program on Phoenix TV. Her report was inspired by the recent outrage over kids carrying their own desks to school (Bloomberg). Just last week a school lunch scandal in rural Henan sparked outrage in China (NBC News). Meanwhile, Caijing gives us a peak at the 14 new “Red Army” primary schools in Jiangxi in this slideshow–江西省建14所红军小学.
Today’s links:
BUSINESS AND ECONOMY
China PMI survey shows growth reviving, but uneven | Reuters– “Much activity is emanating from the state sector, with infrastructure projects driving growth. In China’s relatively closed economic system, this means that activity levels can be sustained,” wrote Xianfang Ren and Alistair Thornton of IHS Global Insight. “Whilst we feel that the economy has been stabilized through the short-term, we feel that the manner in which activity has been revived will retard China’s economic reform agenda and make the transition onto a sustainable footing all the more tricky.”
Why China A-Shares Have Been Weak – Business Insider – Bank of America economist Ting Lu explains: The most asked question from global investors is why Chinese onshore A-shares did not respond to the improving fundamentals. Is this because these macro indicators have low quality and give us a wrong picture? We don’t think so. Very often the sentiment-driven A-share market is a barometer for Chinese investors’ mass psychology instead of the real economy
京楼市成交量价齐涨 11月新房成交同比涨94.3%_中国经济网??国家经济门户
沪楼市年末上演火爆行情 11月成交面积同比翻番_财经频道_一财网 – home sales and prices also up in shanghai in november// 目前，土地市场升温迹象明显，
郭广昌潘石屹 “车轮”舌战_财经频道_一财网 – growing war of words between pan shiyi and guo guangchang accompanying the fosun-soho lawsuit over the plot of land on shanghai’s bund// 作为上海外滩地王之争的两大主角，
A Year of Rebuilding for China’s Li Ning – WSJ.com – Li Ning horribly mismanaged// Recently, Li Ning has been discounting heavily and the company is paring back an underperforming store network. Earlier ambitions to expand overseas have evaporated and the company is now refocusing on China. Mr. Kim spoke with The Wall Street Journal’s Fiona Law about China’s changing retail market and the future for Li Ning.
Toyota China sales tumble again in Nov, though pace eases: executive | Reuters– Toyota’s sales in China totaled roughly 60,000 vehicles last month, a senior company executive said, compared with 81,800 cars the company and its Chinese partners sold in November last year. The pace of the last month’s decline – roughly 25 percent from a year earlier – eased from the previous two months but was still “far off from our more normalized and targeted sales pace,” said the Toyota executive who declined to be named because the information had not yet been made public.
PCAOB’s Doty on China | China Accounting Blog | Paul Gillis My interpretation of Chairman Doty’s comments is that the upcoming December meeting between U.S. and Chinese regulators is the crossroads, and if no significant progress is made the PCAOB is going to move to deregister Chinese accounting firms that it cannot inspect. That is likely to be a lengthy process, starting with a rule-making action, followed by public comment, and concluding with SEC approval. Doty introduces a new twist – the view that the White House or Congress could intervene in the process.
POLITICS AND LAW
人民日报-沿着复兴路 共筑中国梦 ——复兴之路启示之三 – more on page 1 of today’s people’s daily about renewal and the chinese dream
人民日报-习近平总书记阐述“中国梦”，
改革是怎样重启的——社会主义市场经济体制的由来_杂志频道_
Rule of Law in China: Prospects and Challenges | Brookings Institution – On November 28, the John L. Thornton China Center at Brookings hosted the launch of In the Name of Justice: Striving for the Rule of Law in China (Brookings Press, 2012), a new book by Professor He Weifang, one of China’s most influential legal thinkers. The discussion brought together prominent American legal scholars to present a critical assessment of the development of China’s legal system
新华网：部分官员把党性挂嘴上将女性放心里_网易新闻中心 – 新华网济南12月2日电 在雷政富被免职一周之后，又一位官员被女人“拖下水”：
深圳原副市长梁道行疑因大运会经费问题落马_网易新闻中心 –
李庄曝王立军2年有51位秘书 1人顶嘴被关300天|李庄|王立军|重庆_新浪新闻 –
Chinese Dissident Chen Guangcheng Blasts Communist Party in New Video – The video was released just in advance of the United Nation’s Human Rights Day, which is slated for December 10th.
AFP: China court ‘denies’ report over jail terms – BEIJING — A Chinese court has asked for an apology from a newspaper which said it jailed 10 “interceptors” who illegally held petitioners attempting to lodge complaints with the government, state media reported on Sunday.
FOREIGN AND DEFENSE AFFAIRS
人民日报-钓鱼岛问题事关中国主权，
Commentary: U.S. move on Diaoyu Islands to backfire against itself – Xinhua | English.news.cn – As ties between China and Japan plunge to their lowest in decades over territorial dispute, an amendment passed by the U.S. Senate to make the Diaoyu Islands covered by a U.S.-Japan security pact will boomerang.
China concerned about DPRK’s satellite launch plan – Xinhua | English.news.cn – sounds likely to be December 17, 1 year anniversary of Daddy’s death. would not want to be the program manger if it fizzles again// Foreign Ministry spokesman Qin Gang said the DPRK has the right to peaceful uses of outer space, but that the right should be exercised within limitation of UN Security Council resolutions.
North Korea Plans Rocket Launch as South Korea Holds Election – Bloomberg – The launch will take place between Dec. 10 and Dec. 22, the state-run Korean Central News Agency said on Dec. 1. South Korea “sternly” warned its neighbor against the plan, saying the firing would bring a “forceful response” from the world.
Vietnam Says China Must Avoid Trade Weapon in Maritime Disputes – Bloomberg – “Economic force should not be applied in the case of settlement of territorial disputes,” which should be addressed through international law, Deputy Foreign Minister Pham Quang Vinh said in a Nov. 28 interview in Hanoi. He said he had “observed” Japan’s conflict with China. Japan reported last month that its exports to China tumbled 12 percent…China was Vietnam’s largest economic partner in 2011, with bilateral trade totaling $36 billion, excluding figures for Hong Kong, according to preliminary data from Vietnam’s General Statistics Office — an increase from $27 billion a year earlier. Vietnam’s economy is set to grow at its slowest pace in 13 years in 2012 after policy makers tightened credit to stem inflation
China ‘dictatorial’ in Scarborough Shoal dispute, says Albert del Rosario | South China Morning Post – Philippine minister says Beijing told Manila it aims to permanently station ships in disputed territory, creating an ‘impossible’ situation
LNG Tanker Charts Shortcut to Asia – WSJ.com – A tanker full of chilled natural gas is about to complete a trip through the Arctic Ocean to Asia, as a combination of climate change, the shale-gas revolution and the earthquake in Japan opens a potentially disruptive trade route
Alarm as China Issues Rules for Disputed Area – NYTimes.com – Wu Shicun, the director general of the foreign affairs office of Hainan Province, said Saturday that Chinese ships would be allowed to search and repel foreign ships only if they were engaged in illegal activities (though these were not defined) and only if the ships were within the 12-nautical-mile zone surrounding islands that China claims…In an interview here on Saturday, Mr. Wu said the new regulations applied to all of the hundreds of islands scattered across the sea, and their surrounding waters. That includes islands claimed by several other countries, including Vietnam and the Philippines.
French firms must fight China for stake in Africa: Moscovici | Reuters – French companies must go on the offensive and fight the growing influence of rival China for a stake in Africa’s increasingly competitive markets, France’s Finance Minister Pierre Moscovici said on Saturday.
Chinese tycoon must reapply for approval on Iceland resort: media | Reuters– State radio said Huang’s Iceland-registered firm Zhongkun Grimsstadir had in mid-November asked for more time to supply further information, and that it could take a few more months. In a letter to architect Halldor Johannsson, Huang’s Icelandic representative, the government said Huang should submit a new application which would be reviewed by a government committee.
The plot against the Internet – Eliza Krigman – POLITICO.com – “It was very important for the United States to send a shot across the bow and let countries like China and Russia know that we are onto the games they’re trying to play,” said Rep. Mary Bono Mack (R-Calif.), who led a successful effort to pass a resolution against the interference in August. Sen. Marco Rubio (R-Fla.) backed a companion measure in the Senate.
The Hindu : Opinion / Lead : What China’s transition means for India – The new leadership in Beijing is likely to look for stability in relations with New Delhi as it addresses more urgent issues with its neighbours in the Asia Pacific and the U.S.
U.S.-China Relations under Barack Obama and Xi Jinping | Brookings Institution – chinese transcript only so far//On November 29, the Brookings-Tsinghua Center for Public Policy hosted Jeffrey Bader for a public forum to discuss these and related issues facing the Obama and Xi administrations.
Doubtless at Forty 四十不惑 | The China Story – The following address was written on the invitation of the Australia-China Friendship Society in Canberra. It was presented at the Celebration of the Fortieth Anniversary of Australia-China Diplomatic Relations organised by The Federation of the Chinese Associations of the ACT 澳大利亚首都地区华人联合会, an event held at the Hellenic Club Woden ACT on 20 November 2012. Due to time constraints on the night, only a short excerpt of this speech was given. The full text is offered here on the eve of the change of government and of anniversary of the formal bilateral relationship.—
Chinese firm Huawei spends tens of thousands lobbying British politicians – Telegraph – A controversial Chinese company accused of posing a threat to US national security has been spending tens of thousands of pounds lobbying MPs and ministers.
Are U.S. Defense Experts Getting China Wrong? | Defense News | defensenews.com – Are Western experts on China’s military modernization efforts misreading and downplaying the level of ambition, sophistication and just plain guts the Chinese are showing in the country’s quest to be a top arms player?
HONG KONG AND TAIWAN
Academics protest over MOE e-mail – Taipei Times – Dozens of university professors yesterday launched a petition to protest against the Ministry of Education’s (MOE) “concern” for student protesters, demanding the ministry apologize for its implicated threats to student activists. Representatives of the 36 university professors who signed the petition expressed grave concerns at a press conference over “the re-emergence of the White Terror” embodied in an e-mail from the ministry, which asked universities to “show concern” for students taking part in anti-media monopoly protests last week.
IPS – Media Giant Advances on Taiwan | Inter Press Service– “If these tycoons gain control over 50 percent of Taiwan’s media, we will never know how much news will be lost and not published and how much of what is published is false,” Chen warned. “Tsai Eng-meng’s WWCT Group will become a vertically and horizontally integrated hegemon if the purchase of Next Media is approved,” National Taiwan University economics department chairwoman Cheng Hsiu-ling told the FTC hearing.
TECH AND MEDIA
China’s dot-com darlings tap cheap global credit | Reuters – good luck expanding into western internet markets..can you say huawei 2.0?// Chinese search engine company Baidu Inc paid a lower interest rate than Google Inc when it sold $750 million in 10-year bonds last month. China’s three dominant dot-com names – Baidu, Alibaba and Tencent Holdings Ltd – have successfully tapped global funding this year, stockpiling a combined $6 billion in debt despite investor scepticism about opaque Chinese companies.
Splinternet Behind the Great Firewall of China – ACM Queue some interesting detail about how the GFW operates..sounds like time to figure out how to use SSH// Essentially, GFW is a government-controlled attacking system, launching attacks that interfere with legitimate communications and affecting many more victims than malicious actors. Using special techniques, it successfully blocks the majority of Chinese Internet users from accessing most of the Web sites or information that the government doesn’t like. GFW is not perfect, however. Some Chinese technical professionals can bypass it with a variety of methods and/or tools. An arms race between censorship and circumvention has been going on for years, and GFW has caused collateral damage along the way.
Tencent Cooperates With American Express For Internet Payments – ChinaTechNews.com – The new product is reportedly an international account which is supported by both Tenpay and American Express. By opening this account, users will be able to realize cross-border RMB settlements. Chinese users will be able to buy products from about 100 U.S. websites that accept American Express credit cards, once they apply for a virtual account with Tenpay.
QQ音乐启动Qplay战略 和超十家终端商达成合作_科技_腾讯网 –Tencent launches Qplay, a rival standard to Apple’s airplay..and no one covers it in English..remarkable, a top 5 global Internet firm, vastly under-covered by English language tech press// 腾讯科技讯（Lois）11月29日消息，
China bans rowdy game show after mom’s rant about turning her daughter into the ‘sexy goddess of China’ – NY Daily News – The mother of Gan Lulu, a model well-known for wearing racy outfits, got into a screaming match with another audience member about her daughter’s risque image. Gan’s career was launched after her publicity-seeking mother leaked a nude video of her online.
SOCIETY, ART, SPORTS, CULTURE AND HISTORY
两名智障工的回家路_特别报道_新京报网 – so much darkness..Beijing News looks at mistreatment of two mentally disabled workers trying to get home// 10月4日，
京沈高铁密集穿行引发北京沿线居民抗议 数条高铁环评不达标_中国经营网_中国经营报 – a NIMBY protest in Beijing over concerns about impact of route of new high speed railway
The National Creative Cluster | Beijing China | Sasaki Associates « World Landscape Architecture – landscape architecture webzine – Near Songzhuang, a quiet village on the outskirts of Beijing, a unique opportunity exists to create a new urban district dedicated entirely to the cultivation of new ideas. The National Creative Cluster (NCC) is envisioned as the country’s preeminent knowledge hub, making the district a center for China’s innovative home-grown talent, and a destination for the world’s most creative thinkers. Sasaki’s master plan for NCC – selected in May 2012 for implementation – focuses on five structuring principles that underscore and support the overarching philosophy of the district: to bring industries with shared values and complementary skills and technologies together to help spark new ideas.
Yizzu.com Brings Chinese Art to the Masses and Builds a Community – One Beijing based tech start-up called Yizzu.com is taking advantage of this new and booming opportunity but democratizing art for the masses. In short, YIZZU is a platform for Chinese artists to showcase their artwork online and allow people to purchase re-prints for a few hundred yuan, compared to buying an original painting for thousands of yuan.
Affordable Contemporary Art Prints | Somo –
Artist Cai Guo-Qiang ‘explodes’ tree on the National Mall – The Washington Post
ENERGY, ENVIRONMENT AND HEALTH
Occurrence of multiple-drug-resistant tuberculosis grows | South China Morning Post – The mainland has more cases of multiple-drug-resistant TB (MDR TB) than any other country, with 120,000 new cases each year. Poor case management and a lack of new drugs makes the fight against the disease extremely difficult.
Li Keqiang’s meeting with NGOs injects new life into HIV/Aids fight | South China Morning Post– Murong Feng , from the Hebei Light of Love Care Group for People with HIV/Aids in Baoding , Hebei , said he was surprised when he was asked to join the meeting and was impressed by Li’s pragmatism and saw new hope in his messages.”We’ve have been working with people with HIV/Aids for so many years and for the first time we’ve felt like we’re finally being rewarded somehow,” he said.
Loess Plateau Watershed Rehabilitation–Permaculture News What is different about the Loess Plateau is that there was a conscious decision to try to reverse the degradation at scale and restore ecological function to a vast area. The work on the Loess Plateau is helping prove that it is possible to rehabilitate large-scale damaged ecosystems and that this is the best way we have to mitigate and adapt to human induced climate changes as well as address numerous other problems.
FOOD AND TRAVEL
Southwest China starts track-laying for first high-speed railway – Xinhua | English.news.cn– The railway, which will link cities including the cities of Mianyang, Deyang, Chengdu and Leshan, stretches 312 kilometers across the Wenchuan earthquake struck areas. Workers will lay down tracks about six kilometers a day, and work will be completed by the end of 2013. High-speed trains will run at a designed speed of 200 kilometers per hour.
BOOKS
Restless Empire: China and the World Since 1750: Odd Arne Westad: 9780465019335: Amazon.com: Books – In Restless Empire, award-winning historian Odd Arne Westad traces China’s complex foreign affairs over the past 250 years, identifying the forces that will determine the country’s path in the decades to come. Since the height of the Qing Empire in the eighteenth century, China’s interactions—and confrontations—with foreign powers have caused its worldview to fluctuate wildly between extremes of dominance and subjugation, emulation and defiance.
“Restless empire” China and the World Since 1750” by Odd Arne Westad – The Washington Post – Something good is happening in history departments around the world when it comes to China. Western historians have finally taken a cue from their China-watching counterparts in journalism and put ideology to the side to describe China with a newfound clarity. Gone is the tendentious political correctness that for decades muddled a lot of academic writing on the Middle Kingdom; out, too, is the exoticism of China as a world apart. This is excellent news for people interested in China and the role it played in the past and could play in the future.The latest example is “Restless Empire,” a wonderful book by the Norwegian-born and American-educated historian Odd Arne Westad
“Western historians have finally taken a cue from their China-watching counterparts in journalism and put ideology to the side to describe China with a newfound clarity.”
I have a PhD in history from one of the best departments in the U.S. The idea that the average China-watching Western journalist has much (anything!) to offer the very learned professors I studied under is ludicrous. Pomfret should know better. Fracking journalists. Newfound clarity, my ass. Journalists lecturing historians? I can’t bear it.