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

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Today is the first installment of Beidaihe Watch.

Xi Jinping is officially in Beidaihe, per Xinhua’s Chinese VP greets experts, grassroots talents. According to another Xinhua report (习近平会见北戴河暑期休假专家) Liu Yandong, Li Yuanchao, Ling Jihua and Ma Kai were with Xi at the meeting. Their presence is noteworthy but by no means a confirmation that the leadership is all in Beidaihe or about to start important meetings.

While there has been no official confirmation of leadership meetings in Beidaihe, and there may never be, several foreign media outlets are reporting that the meetings have either started (China opens secret leadership conclave-FT and SCMP-Horse trading under way in earnest), are about to start (The Hindu : China’s leaders in crucial leadership meet), or have been delayed but will be starting within two weeks (明鏡新聞網: 明鏡獨家 ：北戴河會議再次推遲 十八大反而提早).

The Financial Times quotes a source as saying that the size of the 18th Politburo Standing Committee will likely be reduced from nine to seven seats and lists the likely candidates. The FT’s reporting jibes with rumors over the last several weeks and a Duowei news report (noted last week in Sinocism) from July 31–筹谋十八大领导核心 中共高层云集北戴河_多维新闻网–that cites sources as saying the reduction to 7 seats is decided and that 6 of the candidates are just about set.

Duowei claims those six are Xi Jinping, Li Keqiang, Zhang Dejiang, Li Yuanchao, Wang Qishan and Yu Zhengsheng and that competition for the last seat is between Liu Yunshan, Zhang Gaoli and Wang Yang. Duowei claims in a separate report that Shanghai Party Secretary Yu Zhengsheng will be leaving his post by the end of August and moving to a new role in Beijing–8月底省部级官员再有异动 俞正声入京韩正掌沪_多维新闻网. We will know in less than 4 weeks whether or not Duowei is right about Yu.

As always we should be very skeptical about leaks and predictions concerning elite Chinese politics. Duowei and the FT may have source/sources who really do know, or think they know, but for now all we have is informed speculation. The 18th Party Congress is likely at least two months away, a lot can change in the interim, and leaking about elite personnel changes to reporters in China is always a bit suspicious.

Beidaihe Watch may be titillating if you like political intrigue but is unlikely to provide the kind of visuals a good TV series needs.

Today’s Links:

• China’s Leading Securities Paper Calls For Yuan Depreciation | MNI coincidence that this came just after the US Congress goes on vacation for the month of August?//A leading official newspaper has called for China to allow the yuan to depreciate to help exporters and address concerns about deflation.The front-page editorial in the official China Securities Journal acknowledged that depreciation could trigger some capital outflows, but also said these would be “manageable.”
• BBC News – Zambian miners kill Chinese manager during pay protest Zambian miners have killed a Chinese manager by pushing a mine trolley at him during a riot at a coal mine in the south of the country.
• Reform by stealth is reason for optimism about China – FT.com
  By Eswar Prasad
  China pessimists are claiming vindication as growth slows in the world’s second-largest economy. Optimists point out that Beijing has fiscal room to respond but there are risks to any short-term policy measures. A surge in bank-financed investment, for example, could boost growth but it is also likely to increase the stock of non-performing loans in the banking system and set back the goal of rebalancing growth by promoting private consumption. An ageing population and a rocky leadership transition strengthen the bears’ case.
  However, there are grounds for hope. Recent political turmoil, including the Bo Xilai affair, put reactionary forces in the Communist Party of China on the defensive. Meanwhile, reform-minded officials pushed through some modest but significant financial market reforms.
• Arizona company trained Chinese Olympians for London Games – latimes.com
  Marty Weems was watching the Olympics on his office computer here the other day, cheering on his favorite athletes. But the competitors weren’t Americans — not by a long shot. They didn’t even hail from the same continent.
  He was rooting for Chinese rower Zhang Xiuyun as she willed her way across the water’s surface, fist-pumping her to a leading time. And he hooted and clapped as Chinese table tennis teammates Li Xiaoxia and Ning Ding captured the gold and silver medals, respectively.
  For Weems, his patronage is personal. He has gotten to know all three women, who are among hundreds of Chinese athletes and coaches — many of them Olympians — who have spent time training for major sports events outside the realm of their normally secretive homeland, in a Phoenix sports facility Weems helps run.
• Will Chinese Courts Refuse to Accept Suits Involving Internet Censorship? | Tea Leaf Nation
  As the Chinese Internet hurtles headlong into an uncertain future, the country’s legal system struggles to catch up. Pressed for time, the government’s reaction may be to fashion the legal equivalent of a blunt axe, rather than a finely crafted scalpel, against lawsuits filed by private citizens involving censorship on the Internet. The possible bellwether: One aggrieved netizen who calls herself “Fire Dragon Woman.”
• 永州警方：被逼卖淫幼女之母上访被劳教_网易新闻中心
  horrible story out of yongzhou, hunan about mother of rape victim who was sent to reeducation for labor after protesting the handing of her case. interesting that weibo now being used to force redress for older cases, expect more of this//
  8月5日，湖南永州公安局公布了被逼卖淫幼女母亲唐慧被执行劳教的说明。通报称唐慧为达到“判处7名被告人死刑”的目的，先后7次在永州法院、湖南高院等处大门口堵门拦车，其行为严重扰乱单位秩序和社会秩序，造成极坏的社会影响。
• Chinese Consumer Products Get More Competitive – WSJ.com
  Gone are the days when big multinationals in China could easily dominate every consumer segment from toothpaste to laundry detergent.
• Policy flaws make low-income housing unpopular |Economy |chinadaily.com.cn
  At a time when China’s housing prices are beyond the reach of most prospective homeowners, low-income housing has not received the warm welcome authorities expected..
  The audit office of Henan province recently said that over half of the low-rent houses in the province’s six cities remain empty.
• Concern increases over local stimulus|Economy|chinadaily.com.cn
  These programs, and others, have been dubbed the “local stimulus’’, a reference to the 4 trillion yuan stimulus that was rolled out by the central government in 2008 to ward off the impact of the global crisis.
  But questions are being asked about the financial sources to pay for the stimulus with a property market slowdown and curbs on financing vehicles, a form for local governments to raise cash.
• The Hindu : News / International : China’s leaders in crucial leadership meet Some of China’s top leaders have headed to the seaside town of Beidaihe near here for crucial discussions on finalising the next generation of leaders, ahead of the once-in-a-decade transition in October. While officials and state media have kept silent on the secretive deliberations, an aide of a representative of the Communist Party’s powerful 370-strong Central Committee confirmed to The Hindu the presence of several of the committee’s members in Beidaihe this weekend for discussions.

• China to promote maritime connectivity with ASEAN, says vice FM – Xinhua | English.news.cn
  Vice FM Fu Ying said Sunday that China is ready to promote maritime connectivity with ASEAN…China has made efforts to link more closely with ASEAN over land. China, Fu said, has made much effort for the construction of the Kunming-Bangkok Highway.
• South China Sea issue should only be resolved by concerned parties, vice FM says – Xinhua | English.news.cn
  Chinese Vice Foreign Minister Fu Ying said Sunday that China has consistently attempted to resolve the South China Sea issue through friendly negotiations between sovereign countries directly concerned on the basis of historical facts and universally recognized international law.
  Fu made the remarks in an interview with Xinhua on the relations between China and the Association of the Southeast Asian Nations (ASEAN).
  “The South China Sea is not an issue between ASEAN and China, but rather between China and relevant ASEAN countries,” Fu said.
• Player Shakeout in Latest Race for Shale Gas – Caixin Online
  Scores of smaller companies and local governments are joining state-run oil majors in new bids for shale gas rights..
  These local governments may be taking a risk, however, since the central government’s State Council has ruled that Beijing has ultimate authority over the nation’s shale gas.
  Indeed, Zhang said it’s illegal for a local government to create its own shale gas blocks independent of the MLR tender process
  Any agreements signed by companies with local governments for shale gas blocks are “worthless pieces of paper,” said an industry source. “Local governments have no mineral rights.”
• 铁道部通报刘志军违纪六大问题_公司频道_财新网
  Caixin has more details on the former railways minister liu zhijun corruption case, from an august 3 internal circular//
  【财新网】（记者 王晨 谷永强）8月3日下午，铁路系统内部通报了原铁道部部长刘志军涉嫌违纪的六大问题。这显示对刘志军的调查工作已基本结束，对其问题已有初步结论。
• KPMG and the PCAOB | China Accounting Blog | Paul Gillis
  I expect that the PCAOB and KPMG (as well as the other Big Four who are in the same boat) have been talking with the PCAOB about this issue for some time. If the PCAOB decides the firms need new registrations, and then do not allow new registrations because of the barriers to inspection, the result will be that most U.S. listed Chinese companies will be without auditors, and will likely be delisted from U.S. exchanges. We are already facing that risk if the PCAOB and China are unable to reach a deal on inspections, but the issues with the Big Four could accelerate that process from the December 31, 2012 deadline for inspections.
• The Useless Tree: Mao Zedong and the PRC’s Olympic Gold Anxiety
• 江苏警方：“启东市长办公室搜出避孕套”为谣言 _资讯频道_凤凰网
  Chinese police say claims that condoms were found when the city government offices were ransacked we’re just rumors. Seems awfully quiet in qidong, expect an early autumn harvest and settling of accounts//
• China Detains 2,000 Suspects in Counterfeit Drug Scheme – WSJ.com
  BEIJING—Chinese police said Sunday they seized more than $182 million of counterfeit pharmaceuticals last month in the latest attempt to clean up a food and drug market that has been flooded with fakes.
• After False Start, China’s Sun Yang Finds Gold – China Real Time Report – WSJ
  After a fearful near-disqualification, Chinas Sun Yang took home gold for the 1,500 meter freestyle race on Saturday, shaving the world record by 3.12 seconds.
  Mistaking the broadcasters attempt to silence the crowd in the Aquatics Center for the signal to start, Sun Yang leapt into the water, only to realize his fellow competitors were stepping down from their respective podiums. Dazed by his potential false start, Sun looked to the pool official, waiting to see if he was disqualified.
• Dun & Bradstreet’s China Woes Could Threaten Sale – WSJ.com
  HONG KONG—Dun & Bradstreet’s business model in China is under fire, following regulatory crackdowns that gutted a key business unit and could threaten the broader sale of the company.
  The China market is critical to the commercial database company’s international growth ambitions, but its business is rapidly shrinking there. In recent months, the Chinese government has made it more difficult for companies like D&B to access financial information, including audited reports, for private companies. Such information is a key component of the credit reports and research D&B provides to businesses through a joint venture operated with Huaxia International Credit Group.
• Macau Police Raid Casinos, Hotels After Deadly Attacks on Guests – Bloomberg
• Wang Xiangwei on Horse Trading and Beidaihe | SCMP.com
  Now President Hu Jintao is believed to be the key force behind efforts to reduce the size to seven before his retirement. His experience has shown that with nine members, it is very difficult to reach a consensus over tough issues. It appears that most of the factions have agreed in principle to reduce the size of the committee to seven.
  If the smaller size is adopted at the meeting, that would also make it easier to speculate on the composition of the standing committee. (Determining the seven strongest candidates has long been a favourite pastime of anyone interested in mainland politics.)
  While everyone has their own favourites, the following six invariably top lists: Xi and Vice Premier Li Keqiang are the safest bets, as they are already Politburo Standing Committee members and appear certain to take over from Hu and Premier Wen Jiabao . The other four almost certain candidates are Li Yuanchao , the head of the Organisation Department; Yu Zhengsheng , the party secretary of Shanghai; Zhang Dejiang , the party secretary of Chongqing, and Vice-Premier Wang Qishan .
• ICBC Puts Drop to 19-Month Low on China Optimism: Options – Bloomberg
  Options traders have cut bearish Industrial & Commercial Bank of China (601398) Ltd. wagers to the lowest in 19 months on speculation earnings at the world’s most profitable lender will increase as the Chinese government acts to boost growth.
• UBS Sees 20% Gain for China’s Stocks as Haitong Forecasts Losses – Bloomberg
  UBS AG says China’s benchmark stock index, this year’s worst performer in the largest emerging markets, will jump as much as 20 percent by year-end, while Haitong Securities Co. expects the measure to keep tumbling as economic growth slows.
• Hong Kong $2.8 Billion Arts Hub to Fill Cultural Void – Bloomberg
  Also known as the Museum of Visual Culture, M+ will house 20th- and 21st-century art, design, architecture, video and sound installations.
  M+ is intended to be Hong Kong’s answer to the Centre Pompidou in Paris or the Guggenheim in Bilbao, and will address the longstanding complaint that Hong Kong remains something of a cultural desert.
• Glimpse of China’s New Fighter Fuels Rumors | Defense News | defensenews.com
  TAIPEI — Rumors, guesstimates and doctored photos are all part of the labyrinth of Chinese military blogs. Western analysts often dismiss or ignore them — but not videos…In late June, several videos appeared on the Internet showing a fighter fuselage, wrapped in a tarp, being transported along a highway from Shenyang Aircraft Corp. (SAC) to the Chinese Flight Test Establishment, an air force test center at Xian-Yanliang Airbase, Shaanxi Province.
  The configuration matches descriptions of China’s second stealth fighter, the J-21 Snowy Owl, including that of a model displayed by university students connected to SAC at the International UAV Innovation Grand Prix held in Beijing in September 2011.
• Baidu staff delete posts for cash – Globaltimes.cn
  Ugly, what many have assumed about Baidu. Sounds like rogue employees, management on top of it// Three employees from Baidu, China’s largest search engine, have been arrested for being paid to delete online posts on its website, the company confirmed Sunday.
  The three were suspected of colluding with external partners to delete online messages. Another employee was also fired for attempting to delete posts for cash, but not arrested.
• Commentary: Intensive U.S.-led war games detrimental to Asia-Pacific stability – Xinhua | English.news.cn
  Since the start of the year, U.S. armed forces have massively and incessantly engaged in joint military exercises in the Asia-Pacific region.
  The notable increase of U.S. military presence in the region has sent a dangerously wrong message to some countries and thus undermines the region’s peace and stability.
• Great breakthrough for Chinese swimming in Olympic pool – Xinhua | English.news.cn
  The curtain was lowered for the eight-day swimming competitions at the London Olympics on Saturday. China has for the first time mounted to the second place on the medal tally with a glorious 10 medals overall behind the United States.
  It has been a major breakthrough for Chinese swimmers in Olympic pool. The epic triumph for Sun Yang in last day’s 1,500m freestyle final, in which he wiped more than three seconds off the previous world record of his own and edged over silver medalist with a huge eight seconds, marked an incredible ending for China’s remarkable performance in London.
• Central bank to strengthen monetary policy fine-tuning – Xinhua | English.news.cn
  China’s central bank said Sunday it will strengthen the fine-tuning of its monetary policy in the second half of this year, indicating as many analysts believe that more liquidity may be injected into the world’s second largest economy.
• Chinese VP greets experts, grassroots talents – Xinhua | English.news.cn
  Chinese Vice President Xi Jinping (R) greets a group of renowned experts and grassroots talents in Beidaihe, north China’s Hebei Province, Aug. 5, 2012. Those experts and talents were invited by the central authority to a routine high-profile holiday program in Beidaihe, a popular northern seaside resort close to the Chinese capital, as a form of recognition and reward for their works.
• 习近平会见北戴河暑期休假专家 – 高层动态 – 新华网
  xi jinping, liu yandong, li yuanchao, ling jihua, ma kai meet experts on vacation in beidaihe, but still not conclusive proof the beidaihe meeting happening, but looking likely //
  中共中央政治局委员、国务委员刘延东，中共中央政治局委员、中央书记处书记、中央组织部部长李源潮，中共中央书记处书记、中央办公厅主任令计划，国务委员兼国务院秘书长马凯，以及中央组织部、人力资源和社会保障部负责同志参加会见。
• 永州公安局：受害者母亲被劳教系因扰乱社会秩序 – 新华法治 – 新华网
• China opens secret leadership conclave – FT.com
  FT reporting with certainty that Beidaihe meeting happening, also reports that a source tells them PBSC will go from 9 to 7 and predicted a lineup. Duo wei reported on Aug 2 the same lineup for the 18th PBSC//
  One person familiar with the leadership succession said the party would probably cut the size of the politburo standing committee…from nine to seven seats.
  The four leading candidates for the other five seats are thought to be Li Yuanchao, head of the powerful organisation department which oversees personnel moves, Wang Qishan, a vice-premier recognised for his economic expertise, Zhang Dejiang, a vice-premier who replaced Mr Bo as party secretary of Chongqing, and Yu Zhengsheng, the Shanghai party secretary.
  For the seventh seat, the leadership is believed to be considering Wang Yang, party secretary of Guangdong province, Zhang Gaoli, his counterpart in the Northern city of Tianjin, and Liu Yunshan, head of the party’s propaganda department.
• 新华人寿前董事长关国亮释放 Xinhua Life CEO released from jail early. Lots more to this story people seem to think

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