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

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The cover story of this week’s Caixin goes deep into the corruption of former Raliways Minister Liu Zhijun. The first paragraph makes it sound like the police sent by Beijing to arrest him may have interrupted Liu in the middle of a threesome at a 5-star Nanjing hotel. The article is not yet online but iPad subscribers to the magazine get the new issue Saturday evenings, so here is a screenshot of the lusty lede. It must be said that corrupt Chinese officials really do enjoy themselves… [UPDATE: Caixin translation online–How Dangerous Liaisons Led to Massive Corruption. Unfortunately it is an abridged translation that omits the threesome lede. END UPDATE]

Another school year is about to start and the same issue of Caixin has a special report on Beijing schools for the children of migrant workers–北京：打工子弟学校存亡. There are not enough schools, the government continues to crack down, yet people keep finding ways to provide at least basic education to some of these children.

Migrant children education is a huge problem that stems in large part from the hukou system, the overstretched resources of the Beijing government, and discrimination. I wrote about these issues and the fact that Beijingers have their own challenges getting their children into good schools in last year’s Are You Willing To Send Your Child To The Same School As The Children Of Vegetable And Rice Sellers?:

Discrimination against migrants is official policy, as evidenced China’s hukou regime. That prejudice is also common to many urban dwellers.

As with the rest of China, Beijing has too many people and too few resources. We have already seen Beijing limit purchases of cars and homes, and it is inconceivable that Beijing will reform the hukou system and allow anyone who applies to become an official Beijing resident. As I wrote earlier this year, it seems Beijing’s motto is becoming less “Beijing Welcomes You” and more “Beijing for Beijingers.”

This kind of mainstream discrimination is also relevant to the “China Fantasy” some foreign observers seem to hold about the eventual “democratization” of China. Beijingers, and probably most urban dwellers in China, are highly unlikely to ever allow rural Chinese to have equal status with them.

Zhou Kehua (see yesterday’s Sinocism for background) is the subject of a massive manhunt, may be surrounded in a mountainous area in Chongqing and has reportedly shot and killed one pursuing police officer. This guy is like a Chinese Rambo (except evil, as I should have noted when first writing this post).

Last night I went to a screening of the enjoyable Shanghai Calling (纽约客@上海). Cross-cultural movies can easily fall into dumb cliches, but this movie is very funny, avoids most of those pitfalls and made both the foreign and Chinese audience members laugh, a lot. It opened in China Friday, not sure when it opens in the US.

Today’s links:

• 周克华再杀一名铁警 军方参与围捕_网易新闻中心
  police officer killed by three gunshots during search for zhou kehua
• China Says Gu Confesses to Murdering Briton – WSJ.com
  didn’t at least part of the story first burst out on sina weibo, in Chinese?//
  The drama burst into the open in March, when The Wall Street Journal reported that the U.K. had asked the Chinese government to launch an investigation into the death of the British businessman. The episode has thrown a spotlight on the murkiness of criminal procedures in China.
• 房产税试点或扩至湖南湖北 以市场价为基准－中国证券报
  China Securities Journal says property trial tax may be expanded to Hunan and Hubei, with property value basis as “market value”. this could be interesting
• 抄底资金“逆袭”B股-中国证券报
• China’s slowing economy could complicate relationship with U.S. – The Washington Post
• Firms Diversifying Funding Options, Analysts Say – Caixin Online
  Chinese companies’ financing options are increasingly diversifying away from bank lending, analysts say, citing the big slump in bank loans last month along with a surge in bond issuance.
  Banks issued loans worth 540 billion yuan in July, data from the central bank shows. This was much lower than the previous month’s 920 billion yuan and the average forecast of 680 billion yuan in a Caixin poll of economists this month.
  The slump, experts say, coupled with the publishing of disappointing economic indicators, suggests the country’s economy is still on a downward track, with demand and investment still at low levels.
• Local Governments Feel the Capital Pinch – Caixin Online
  Local governments are also counting on attracting investors to mitigate capital pressure. The Guangxi government has set a target of 566 billion yuan in outside investment within the year. In Changsha, Hunan Province, the city government has worked with banks to offer 820 billion worth of investment packages to attract investors.
  But commercial banks are being prudent about an investment expansion. Jiang Chaoliang, chairman of Agricultural Bank of China, recently said ABC would continue to provide support to infrastructure projects, such as a rural water project, however, “banks will avoid blind expansion and secure stable operations to serve the real economy.”
• 北京：打工子弟学校存亡_杂志频道_财新网
• Two Ways to See China’s Problems – Economic View – NYTimes.com
  The optimistic view is that Chinese excess capacity and overbuilding are manageable — that the current overextensions of investment will be propped up, but they won’t have to be propped up for long. In this view, the Chinese economy will fairly soon grow rather naturally into supporting its current capital structure, and its downturns will be mere hiccups, not busts.
  The pessimistic view is that the problems are so large that the government’s attempts to prop up its investments with further subsidies could so limit consumption, and so distort resource allocation, that the Chinese economy will stagnate. In this view, the political means for allocating investment would grow to dominate market forces, the proposed “economic rebalancing” of the Chinese economy toward domestic consumption would become a distant memory, and China would have an even tougher time opening its capital markets and liberalizing its economy. Given that China already faces competition from nations where wages are lower, and that its population is aging, the country might not return to its previous growth track.
• Report predicts rapid chronic disease growth in China – Xinhua | English.news.cn
  According to the ministry, rapid industrialization, urbanization and an ever-aging population mean the number of patients with chronic diseases has been rising continually and quickly. Chronic diseases have placed heavy pressure on China’s healthcare system, as such cases account for 70 percent of the total number of disease cases.
  Friday’s report predicted that the treatment burden for myocardial infarctions, strokes, diabetes and chronic obstructive pulmonary disease will rise by 50 percent from 2010 to 2030.
• Henan on electronics map |Industries |chinadaily.com.cn
  a lot of cheap labor in Henan still//
  Although Henan is the most populous province in China, with more than 105 million people, it has never been known for its manufacturing prowess until now. However, during the first six months of this year, Henan had a growth rates of 91.6 percent, compared with about 8 percent for the whole of China.
  Looking at the remarkable growth, some observers say it likely results from the large supply of labor or the low manufacturing costs. A closer look, though, reveals that the actual impetus stems from large investments made by Foxconn, the contract-manufacturing arm of the Taiwan-based conglomerate Hon Hai Precision Industry Co Ltd.
  Foxconn, which undertakes contract manufacturing of the iPhones and iPads for Apple Inc, was the source of more than 48 percent of the city’s foreign trade of $10.43 billion during the first six months.
• Property giant sees H1 net profits falter amid tightening measures – Xinhua | English.news.cn
  people do not give beijing enough credit for taking on the interest groups that represent real estate, construction and related industries. lots of talk about how beijing paralyzed by special interests, but in fact the central government has brought these groups to their knees with the real estate repression policies of last 28 months//
  BEIJING, Aug. 11 (Xinhua) — The China Merchants Property Development Co., one of the country’s major real estate developers, posted a year-on-year decline of 16 percent in net profits for the first half of the year, attributing the slump to the government’s tight grip on the sector.
• Xinhua Insight: China’s coal industry reforms to survive – Xinhua | English.news.cn
  TAIYUAN/JINAN, Aug. 11 (Xinhua) — China’s coal giants have been seeking ways to rid themselves of incessant price falls and aggressively stockpiling since April, although experts believe the industry’s “golden years” are already gone.
• The Twitter black market: dealers, abusers, and fake accounts | VentureBeat
  imagine how big the weibo underground economy is
• Minxin Pei–Superpower Denied? Why China’s ‘Rise’ May Have Already Peaked | The Diplomat
  What this analysis reveals is that the growth of Chinese power under one-party rule has peaked. The seductive authoritarian state-capitalist development model may have delivered an economic miracle in the post-Tiananmen era, but for all practical purposes this model has lost its magic, if it has not gone totally bankrupt.  However, China’s future does not have to be a dismal one.  The obverse of this analysis is that, with the right reforms, particularly a return to a pro-market growth strategy and a transition to democratic rule, China can comfortably confront these domestic and external challenges.  A more liberal market-based economic system will utilize resources more efficiently and equitably than state-capitalism.  Democratic reforms will give the regime a fundamental source of political legitimacy at home and also help reduce animosity and distrust of China abroad.  China will have an excellent chance to lay the economic and political foundations for a 21st-century superpower.  If this were to occur, China’s best days would still be ahead, not behind.
• Peak Oil? How about Peak China? | Via Meadia
  It’s a grim analysis, not just for China but for the rest of the world as well. It is not in anyone’s interests to see China flounder. A rich China, secure in its legitimacy at home and abroad, is also a stable China, capable of powering the growth of her neighbors as well as offering a huge market for U.S. products.
  The upcoming leadership transition, to be held later in the fall, offers a chance of renewal.  Whether Beijing can rise to meet the challenges of the first decades of the 21st century as it did the last decades of the 20th remains to be seen. The challenges are not insurmountable, but they will require enormous political courage in the face of powerful vested interests.
• China: Dissident Prosecuted for Leaking Staged Suicide Photo · Global Voices
  Dissident Zhu Chengzhi [zh] has been charged with inciting the subversion of state power for investigating the death of labour activist Li Wangyang while he was in police custody.
• Beijing Reasserts Its Claims in South China Sea – NYTimes.com
  The sustained attention to the South China Sea has been almost certainly coordinated from the senior ranks of the central government, Chinese analysts and Asian diplomats said. “Suddenly, the top leaders have taken a more hard-line policy,” said Shi Yinhong, a foreign policy adviser to the State Council, China’s equivalent to the cabinet.
  After the State Department criticized China’s actions, Beijing immediately accused Washington of taking sides with smaller Asian nations against China. On Aug. 4, the Foreign Ministry summoned Robert S. Wang, the deputy chief of mission at the American Embassy in Beijing, and in an accompanying statement said the State Department had shown “total disregard of facts, confounded right and wrong, and sent a seriously wrong message.”
• The Gu Kailai Murder Trial: The “Rashomon” Version : The New Yorker
  One day after her one-day trial, the murder case against Gu Kailai is making its way into the public domain, and it is proving to be a showcase of political engineering. Rarely has someone admitting to murder looked so sympathetic in doing so. The mitigating factors, the narrative, and the details have been carefully sculpted to ensure as little damage as possible to Gu and her husband, Bo Xilai, while shifting blame to those with less political clout—namely the deceased and the police officer who ratted them out
• 5J – 火腿系列和荣誉
  Cinco Jotas ham has a chinese web site. tasty, pricey
• Truth, lies and suspicion in the sex-slave trade – Stock & Land
• itshua: 经济形势确实很糟糕 这几天一直在企业实地调研- 雪球
  这几天一直在企业实地调研，经济形势非常糟糕，不是某行某业，是所有的行业都很差劲。简单说说。
• 法律的尊严不容践踏–薄谷开来、张晓军涉嫌故意杀人案庭审纪实–法治–人民网
• The investor who saved Mugabe – Mail & Guardian Online
  would have expected Chinese money//
  A New York hedge fund [Och Ziff] “loaned” the millions Zanu-PF needed to crush the opposition Movement for Democratic Change’s victory in the 2008 elections.
• General could survive Bo Xilai scandal-Garnaut
  “Hence the appearance of General Zhang on a list of delegates to the 18th Communist Party Congress could indicate continuing uncertainty over control of the military” Really? is there evidence in this article to support this conjecture?//
  HEFEI: The head of China’s nuclear weapons arsenal may remain in contention for promotion to the military’s uppermost sanctum, despite what looked to be career-threatening links to the fallen political maverick Bo Xilai.
  The public relations problems began for General Zhang Haiyang, political commissar of the 2nd Artillery Force, in March when a wealthy Chongqing entrepreneur, Li Jun, told Western media outlets he had been tortured, interrogated and had handed over millions of yuan as part of what, he was told, was a conspiracy by Mr Bo for General Zhang’s benefit.
• China divides Labor across its generations | The Australian
  THIS week Paul Keating launched an assault on the Rudd-Gillard East Asian strategy of militarily hugging close to the US against a rising China, provoking a counter-attack from Defence Minister Stephen Smith, an architect of the deeper US alliance…Australia is now plunging into an intense intellectual dispute, guaranteed to spill into Labor and Coalition politics, about how to manage its greatest external policy challenge for half a century — the rising competition between China and the US.
• Paul Ryan – Wikipedia, the free encyclopedia
  At an Atlas Society meeting celebrating Ayn Rand’s life in 2005, Ryan said that “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand”,[19] and “I grew up reading Ayn Rand and it taught me quite a bit about who I am and what my value systems are, and what my beliefs are. It’s inspired me so much that it’s required reading in my office for all my interns and my staff.”[20] In response to criticism from Catholic leaders, in 2012 Ryan distanced himself from Rand’s Objectivist philosophy, telling National Review that while as a young man he became interested in economics because of her novels, “It’s a big stretch to suggest that a person is therefore an Objectivist… I reject her philosophy. It’s an atheist philosophy. It reduces human interactions down to mere contracts and it is antithetical to my worldview. If somebody is going to try to paste a person’s view on epistemology to me, then give me Thomas Aquinas. Don’t give me Ayn Rand.”[21]
• What’s Paul Ryan’s foreign policy? | FP Passport
  China: Ryan appears to be less hardline and hawkish about China than Romney, who has pledged to designate Beijing as a currency manipulator on his first day in office. True, Ryan has shuddered at the idea of a world led by China and Russia and criticized China’s restrictions on freedom of expression, “coercive population controls,” and “unsound economic policies.” But he’s also argued that “we stand to benefit from a world in which China and other rising powers are integrated into the global order with increased incentives to further liberalize their political and economic institutions.”
• You’ll never be Chinese–Prospect Magazine
  Mark Kitto on leaving China. Surprised how many expats at one time or another harbor idea they can “become Chinese”

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