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This week’s China Insider column for Dealbook looks at the Central Economic Work Conference and the Diaoyu/Senkaku Islands dispute after the election of Shinzo Abe. Some highlights:
The government is aware of the problems and has promised repeatedly to change the growth model. Xi Jinping, in power for barely a month, has raised expectations for reforms, as Xinhua noted in “China Awaits More After Xi’s New Moves“:
Now that the public’s expectations have been raised, the challenge lies in living up to these expectations..
People are also wondering whether monopolies will be broken up or at least weakened, whether more opportunities will be given to the private sector, and whether gaps can be narrowed between different industries and state-owned and private companies.
One of the keys to weakening monopolies and strengthening the private sector might be the long-awaited income distribution reform plan. Premier Wen Jiabao has talked about such a plan since 2004 and over the last several months there have been repeated promises in the Chinese press that a plan would be delivered before the end of the year.
Last week, The Wall Street Journal wrote in “China Tries to Shut Rising Income Gap” that:
Now, the plan is finally set to be released this month after a push by Mr. Wen, in the 11th hour of his tenure. But after at least a half-dozen drafts, some of the most significant proposals have been watered down, or dropped completely, after opposition from state-owned firms, researchers involved in the project say. The result is a general set of principles rather than a practical road map with specifics on how to redistribute wealth, they say.
Caijing, one of China’s top business magazines, on Monday reported that the plan would be delayed [UPDATE: The original Caijing story 收入分配改革方案再延期 has been deleted but is available on other sites, including iFeng.com] past the end of the year because of opposition by special interest groups.
This is potentially bad news, though the income distribution reform plan is Wen Jiabao’s initiative and he is a lame duck. It is possible that Mr. Xi and Li Keqiang, Mr. Wen’s successor, want to introduce their own plan sometime in 2013, though if you believe in “seeking truth from facts” this new delay is both a worrisome sign of the power and intransigence of Chinese special interests and a risk for Xi Jinping, as raising expectations can be dangerous if you do not deliver.
The corruption crackdown continues. The latest issue of Caixin has a long article on the case of Li Chuncheng-李春城的“圈内人”-and has already posted an abridged translation in Former Mayor of Chengdu Is Focus of Graft Investigation:
A land auction is at the center of an investigation focusing on a former Chengdu mayor, Li Chuncheng. The Communist Party’s anti-graft watchdog is probing Li, who was ousted as the Sichuan Province deputy party chief and removed from party ranks…
Tongtai’s stock structure changed three times in two years, and in August 2009, less than a year before the auction, the Chengdu branch of real estate giant Vanke became the largest stake-holder of Tongtai.
A Chengdu real estate industry insider said Tongtai was the middleman, using its connections to win the bid on behalf of Vanke and taking a cut for handling the deal.
Tongtai doesn’t have the money or the ability to develop the project, and Vanke, a public company listed in Shenzhen, can’t participate directly in a pre-staged auction, therefore a scheme that saw Vanke buy a stake of Tonghai was used, said the insider. Vanke didn’t answer an inquiry…
Caixin learned that some Sichuan officials reported to the central leaders facts about Li’s alleged wrongdoings.
The South China Morning Post reports that Politburo member Li Jianguo has been accused of favouritism :
An activist has accused a newly elected Politburo member, National People’s Congress deputy chairman Li Jianguo, of promoting his nephew to a plum position, making him the youngest department-level cadre. Han Chongguang, from Handan in Hebei province, sparked a heated debate on Sina Weibo and elsewhere on the internet on Sunday when he posted the allegations against Li, the highest-level official to be accused of corruption by a member of public in recent months.
Meanwhile, another Shenzhen official is under investigation for corruption (深圳市卫人委主任江捍平涉违纪被调查(图)-搜狐滚动) and 29 people, including cadres, have signed an accusation posted on several web sites that the that mayor of Xingtai, Hebei takes bribes and keeps a mistress among other “crimes” (邢台29干部联名举报市长 河北省纪委:正了解核实 – 新华法治 – 新华网).
There are a lot of nervous officials right now.
Today’s Links:
BUSINESS AND ECONOMY
Land Transfer Fee Figure Hits 16-month High in November – Caixin – good news for banks that have to mark to market loan book at year end..value of some of the collateral looks good thanks to this// The revenue in-take from land transfer fees in 10 major cities was the highest in 16 months in November, a report by a real estate consulting firm in Shanghai said on December 17. Some 66.3 billion yuan was collected in November, up 23 percent from October, E-house China R&D Institute said. The average land transaction price was 2,580 yuan per square meter, up 18 percent from October. This figure was the highest in the past 22 months.
住建委：北京代办补缴社保 购房资格将不予认可-财经网 – government reacts to reports of loosening in beijing’s property controls, says not true, will not allow the social insurance payment loophole//自2012年12月18日起，补缴社保在购房资格审核中不予认可。同时重申：非本市户籍家庭以缴纳社保方式申请在京购房资格的，应自提出申请的上一个月开始往前推算60个月连续在京缴纳社会保险，且提出申请之月须为正常参保状态。
All aboard – Globaltimes.cn – and will be packed almost immediately…Beijing public transportation infrastructure still woefully inadequate, good for Beijing to keep investing in it…new line 6 stop will be 5 minutes from my apartment, and extension of line 10 will be convenient. line 6 + line 10 + full occupancy of new CCTV by Chinee New Year will likely drive up CBD property prices and rents// After years of planning and construction, Beijing’s four new subway lines are set to open December 28. Adding on to the existing 15 lines, the four new or expanded lines total 69.8 kilometers with 166 trains. They will enhance the speed of Beijing’s public transit and cut down on walking distance between transit stops.
Full convertibility of the yuan ruled out |Economy |chinadaily.com.cn– Central bank chief Zhou Xiaochuan said on Monday that the country’s goal to achieve the yuan’s capital account convertibility doesn’t necessarily mean 100 percent convertibility or a free-floating currency. “We shouldn’t interpret capital account convertibility as a free currency, with cross-border asset transfers without control, zero financial supervision, and the internationalization of the yuan,” said Zhou, governor of the People’s Bank of China. International institutions such as the International Monetary Fund didn’t set up clear and unified standards to measure the openness of capital accounts, and 100 percent convertibility barely exists, Zhou said at a forum in Sanya, Hainan province.
招商银行济南分行承认“拼爹门”名单属实_网易新闻中心 – document leaked online from china merchants bank jinan branch listing job applicants “guanxi”, bank confirms it is real
China urges rating agency to make “more accurate” assessment – Xinhua | English.news.cn – Media reported that Fitch Ratings said in a report that stable outlooks dominated emerging Asian sovereign ratings, and the region’s two giants, China and India, are major exceptions to the stable outlook.
China Targets Urbanization, Reforms in Central Economic Work Conference-Caijing –
Risks be damned; China set for another year of the same | FT Alphaville– Don’t be misled by the proclamations of ‘reform‘ or ‘quality growth‘ from China’s central economic work conference at the weekend. It’s more of the same, at least for the time being. The more concrete message was that economic and monetary policies would “remain stable for year ahead”. In other words: keep pursuing for just a little longer the brittle policies of property price inflation, more infrastructure investment, and looser money and credit.
POLITICS AND LAW
人民日报-从最坏处准备 向最好处努力（人民论坛·新征程 新使命） ——凝聚未来中国的力量之六 詹勇– Most read people’s daily article so far today..on working for reforms in spite of the dangers and difficulties// 小平同志早就说过，改革开放是有风险的事，没有万无一失的方案。今天，改革进入深水区，思想观念的障碍让共识更难凝聚，利益固化的藩篱使改革阻力重重，国际形势的变化也给发展平添变数，新的风险正在积聚。这个时候，最考验改革者勇气与智慧的，就在于敢不敢正视“最坏处”、会不会解决“最难处”、能不能争取“最好处”。从最坏处准备，向最好处努力，方向虽然明确，但前行的路不好走。风险与挑战多是不速之客，更不按套路出牌，没有一叶知秋的预判，没有未雨绸缪的谋划，没有从蝴蝶翅膀振动中感知风暴的敏锐，就会在骤至的风险面前手足无措、顾此失彼。
人民日报-多项改革协同推进 广东深化改革再探路 – page 1 praise for guangdong for exploring deeper reforms
人民日报-网络不是法外之地（今日谈） – brief page 1 people’s daily–“Internet is not an area outside of the law”
政治体制改革应积极稳妥地推进_—访中央党校侯少文教授-学习时报 –Central Party School Professor Hou Shaowen discusses political system reform in Study Times
Building Relationships – Caixin – To succeed, Qianhai needs to have the proper ties, not only with Hong Kong and Shanghai, but with other financial reform zones
王立军屡被“人肉” 重庆秋后算账味正浓_多维新闻网 – 【多维新闻】Duowei on the steady stream of stories in Chinese media about Wang Lijun and the mess in Chongqing// 连日来，关于王立军的新闻呈现集中爆发之势。从打黑故事到个人做派，从鲸吞民企资产到李庄揭底，从与薄熙来的了断到与谷开来的暧昧关系，在重庆事件本该渐渐淡出公共视线的背景下，王立军屡屡成了媒体“人肉”的对象。鉴于其与重庆不可分割的关联，所以王立军抢占舆论场或是被“人肉”，都一定程度上预示着重庆这把秋后算账的火还将持续蔓延。
赦免会衍生更多腐败_网易新闻中心 – not everyone thinks amnesty for corrupt officials is a good idea..this argues it would cause even more corruption
Gu Kailai – FT.com – The story of Gu, now in jail after being convicted of the murder of a British businessman, is very different from the others in this issue. Nevertheless, her impact in shaping China’s political future makes her one of the most influential women of 2012.
FOREIGN AND DEFENSE AFFAIRS
提速对美投资-财经网 – Caijing cover story this week about increasing investment into US..DHS/TSA needs a tutorial in dealing with rich Chinese going through immigration, to avoid misundertandings// 中国已经开始由出口大国向海外投资大国转身，未来五年到十年，中国在经济总量上追赶美国的过程中，其对外投资增长的主要一极将是对美投资，中美经济关系的深层次重构亦将因此而动
China urges Japan to properly handle tricky issues – Xinhua | English.news.cn –
China Weighs in on Japan’s Election – Japan Real Time – WSJ– “PM-hopeful Shinzo Abe have [sic] paid two visits to the notorious Yasukuni Shrine, which honored WWII war criminals,” the commentary said. “These moves have raised suspicions among Japan’s neighbors. They also pose a risk to regional peace and stability.” Aside from foreign relations, Xinhua’s commentator even had some advice for what Japan’s new leaders need to focus on at home. “For Japan’s new leadership, it is of more urgency for them to save the Japanese economy, which has been plagued by decades of deflation and in its fourth recession since 2000, than pick fights with its neighbors
China Friction Awaits Abe as He Says Disputed Isles Are Japan’s – Bloomberg – A day after his Liberal Democratic Party reclaimed power in a landslide, Abe called China “an essential partner for economic growth.” At the same time, he insisted that the sovereignty of the islands, known as Senkaku in Japan and Diaoyu in China, wasn’t an issue. China’s media response to the election ranged from cautious to stern, with the English-language Global Times saying Chinese leaders must take a “firm stance” toward him. Bilateral relations are at their lowest point since 2005 over the disputed islands, with China stepping up sea and air patrols, and Abe seeking greater control over the chain.
A Line in the Sea – By Michael Auslin | Foreign Policy – the assumption by US experts that this is just driven by the PLA may be wrong and frankly dangerous// Given the PLA’s hard-line stance toward Japan, and the expansion of its naval and air activities in the East China Sea, where the Senkakus are located, it seems unlikely that Xi will challenge the military leadership and dramatically change China’s security presence near the islands. Rather, he can be expected to support the PLA and expand the scope of its missions in waters that China claims, including the East China Sea, as long as it doesn’t appear to be a reckless move that either causes outright conflict or brings in the United States in a far more active manner. Success in keeping the pressure on Japan and appearing in lockstep with the PLA could also protect Xi from any potential rivals who might seek to undermine him through cultivating their own support from the military.
Commentary: China’s Bad Diplomacy | The National Interest– If the recent and rather crude nationalist bluster serves as tonic for domestic weakness, Beijing is buying itself real trouble. A better path still lies open: China can reach an understanding with the United States about each country’s respective Asian footprint and then join in stewardship of a rules-based maritime system. But Beijing’s recent moves instead entrench a stupid and self-marginalizing policy, deepening Sino-American mutual suspicions and making that mutually beneficial destination harder to reach. James Clad was U.S. deputy assistant secretary of defense for Asia Pacific Affairs from 2007-09. Robert A. Manning is Senior Fellow at the Atlantic Council and served on the State Dept. Policy Planning Staff (2004-08).
U.S. Increasing Military Presence in the Philippines – In a move that prompted a swift and angry response from China, the U.S. has reportedly agreed to substantially increase its military presence in the Philippines, increasing the number of troops, aircraft and ships which routinely rotate through the country
China’s Treasuries Rise to Five-Month High as Japan Keeps Pace – Bloomberg – China’s position in the debt increased $7.9 billion, or 0.7 percent, to $1.16 trillion, U.S. Treasury Department data released yesterday show. Japan’s holdings rose $5.2 billion, or 0.5 percent, to a record $1.13 trillion. For the year, Japan has purchased $76.7 billion of the securities, more than any other country, compared with $9.6 billion for China.
Late fighter jet director honored as “most beautiful” – Xinhua | English.news.cn– Luo Yang, head of production for China’s new J-15 fighter jet, had a heart attack after spending days observing landing tests for the J-15 aboard China’s first aircraft carrier. He died in hospital on Nov. 25 at age 51. “Most beautiful Chinese” is a term created by the public to honor contemporary role models and heros, and Luo deserves such a title, said Liu, a member of the Standing Committee of the Political Bureau of the CPC Central Committee.
Star Exclusive: IEDC | Indianapolis Star | indystar.com – In less than a year before her death, she had been plucked from a job low-paying job as a “glorified interpreter” and given a state contract that would pay her up to $100,000 to land business deals overseas. And then, in mere weeks, she was slammed by an array of fraud and extortion allegations. A Chinese billionaire swindled. A green card dangled as bait. A bribe solicited. A “formal complaint” alleging she was selling access to Indiana state officials for personal gain.
Smaller U.S. Colleges Try to Crack Chinese Market – NYTimes.com – One factor that made it easier for Samford University to catch the attention of some of the thousands of Chinese students at a recent education expo was that many mistook it for a university with a similar name: Stanford.
TECH AND MEDIA
Rumor: Alibaba, Sina Microblog Resume Investment Talks | Marbridge Consulting – China Internet News – popped sina’s stock monday night..hear Sina CEO allocated a large % of Weibo newco for himself..might be nice payday for him if Alibaba takes a piece..rumors in Chinese tech press that Du Hong, Sina COO, to replace Chao as CEO//According to an industry source, Chinese e-commerce conglomerate Alibaba Group and internet company Sina (Nasdaq: SINA) resumed talks today about a possible Alibaba Group investment in Sina’s Weibo microblogging service.
Director slams unwritten film censorship rules in mainland | South China Morning Post– Mainland director Xie Fei made a scathing attack on film censorship, saying “unwritten rules” against taboo subjects in movies stifled the industry. The 70-year-old filmmaker and Beijing Film Academy professor published an open letter on his Sina Weibo account on Saturday, appealing for the censors to be replaced by a proper film-rating system.
Social networking sites’ e-commerce ventures ignored by Chinese shoppers-WantChinaTimes.com – Chinese social networking companies’ attempts to cash in on new e-commerce ventures, a trend which started about a year ago, seem to have failed, reports internet giant Tencent’s technology news website.
SOCIETY, ART, SPORTS, CULTURE AND HISTORY
In School Attacks, Another Unflattering China-U.S. Comparison – China Real Time Report – WSJ – twin school attacks in the U.S and China on Friday are shining an unflattering light on hot-button issues in both countries, with Chinese media and microbloggers berating local officials in Henan province for failing to be as open and caring as their counterparts in Newtown, Conn.
China school attack suspect arrested|Society|chinadaily.com.cn – Initial police investigation found Min, a long-term epilepsy sufferer, had been strongly psychologically affected by rumors of the upcoming end of the world predicted by ancient prophecy.
Staring Down the Barrel: the Rise of Guns in China – WSJ.com – Shanghai — China’s weapons laws are among the world’s toughest. Its blanket ban on private ownership of rifles, pistols and even gun replicas is a core tenet of social policy. Still, a gun culture is taking hold.
洛阳11岁童工因在店中偷窃财物被店主殴打致死_新闻_腾讯网 – shop owner in luoyang henan, catches 11 year old worker stealing from him, beats the child to death. uproar ensues after story goes online, shop owner arrested// 新京报讯 （记者李宁）日前，有网帖称洛阳一店铺老板殴打一名11岁的童工，并致其不治身亡。昨日，洛阳市公安局消息证实，目前，该店铺老板已经被刑拘，具体的细节正在求证。
Shanghai Teen Barred From School Fights Policy Hurting Millions – Bloomberg – A 15-year-old girl’s wish to go to school in Shanghai has landed her father in jail and sparked a national debate over a national-registration policy that deprives millions of Chinese of basic rights.
8 more cult members detained over doomsday rumors |Society |chinadaily.com.cn– Police in east China’s Jiangsu Province said they have detained eight more members of a cult for spreading rumors of an impending apocalypse, bringing the total to 101 nationwide. The people, all belonging to the “Almighty God” cult, spread doomsday rumors door-to-door or at public venues and claimed that only the cult could save people’s lives, according to police.
生活在别处—在线播放—优酷网，视频高清在线观看 – mini-documentary look at chinese checking out, pursuing alternative lifestyles in Yunnan’s Dali
Beijing Bans Warhol’s Mao Portraits from China Exhibition – Bloomberg – A person familiar with the show who asked not to be named because of the political sensitivity of the issue, confirmed the Mao works had been rejected by the Ministry of Culture. The Ministry of Culture and the Ministry of Foreign Affairs didn’t immediately respond to faxed questions seeking comment today
ENERGY, ENVIRONMENT AND HEALTH
China Bans Some Hospitals From Raising More Debt – Bloomberg – China ordered county-level public hospitals to stop borrowing money after an audit showed some of them took on too much debt when upgrading facilities, according to a document seen by Bloomberg News. The National Development and Reform Commission, the finance and health ministries and the China Banking Regulatory Commission, requested banks stop issuing new loans and reduce lines of credit to county hospitals nationwide, according to the Oct. 31 emergency notice that was distributed this month and seen by Bloomberg.
Shandong gets permit to build nuclear plant|Industries|chinadaily.com.cn – The project, located in Shidao Bay, Weihai City, has been granted a permit from the National Nuclear Safety Administration, according to a statement posted on the website of the Ministry of Environmental Protection. The plant will be jointly developed and operated by China Huaneng Group, China Nuclear Engineering Corp and Tsinghua University, with an investment ratio of 47.5 percent, 32.5 percent and 20 percent, respectively. A set of high temperature gas-cooled nuclear power reactors will be built in the first phase with an investment of 3 billion yuan ($478 million).
Scientists discover evidence of giant panda’s population history and local adaptation – Dec. 16, 2012 — A research team, led by Institute of Zoology of Chinese Academy of Sciences and BGI, has successfully reconstructed a continuous population history of the giant panda from its origin to the present. The findings suggested whereas global changes in climate were the primary drivers in panda population fluctuation for millions of years, human activities were likely to underlie recent population divergence and serious decline.
FOOD AND TRAVEL
Wine Auctions Drop 19%, Chinese Demand Cools for Bordeaux – Bloomberg – Davis cited slowing economic growth, over-stocking by Hong Kong dealers and a government crackdown on corruption as factors behind somnolent Chinese wine buying in early-to-mid 2012.
Tibet encourages airlines to open new routes |Industries |chinadaily.com.cn– The government of the Tibet autonomous region will invest 100 million yuan ($16.05 million) a year to encourage airlines to operate routes in Tibet, according to Xinhua.com. The airlines, which will launch routes between Tibet and other domestic cities, will receive 10,000 to 20,000 yuan for each flight in the first three operating years, under the government’s plan.
BOOKS AND LITERATURE
Two Billion Eyes: The Story of China Central Television: Ying Zhu: Amazon Through a series of interviews with a fascinating cast of power players including a director of a special topic program that incited the 1989 student movement, current and past presidents of CCTV, and producers at the frontline of the network’s rapidly evolving role in Chinese culture, celebrated media analyst Ying Zhu unlocks a doorway to political power that has long been shrouded in mystery.
Serving two masters | China Economic Review The resulting interviews shine unprecedented light on CCTV’s inherent contradiction of deep government control and near-complete commercialization. This contradiction drives some journalists and entertainers to cynicism, even clinical depression, while others ride the system to wealth and acclaim. However, the majority of CCTV employees seem to be pragmatists, who accept that they must do their best within the system. These employees toe the censor’s line due to a deep-seated belief that the channel can do good, whether by informing the domestic public, entertaining them or promoting a positive view of China abroad.