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We are back in Beijing after a nice few weeks of camp and home in the Washington DC area. I wish I had the energy of our kids, who have been up and running around since 2 AM after four hours of sleep.

Gu Kailai, the disgraced wife of Bo Xilai, gets her day in court today in Hefei. As Bloomberg notes in China’s Rule of Law Scrutinized as Bo’s Wife Begins Murder Trial, it may literally be just a day. I think the odds are Gu receives the death penalty with a two year reprieve while Zhang Xiaojun, the family orderly (勤务兵), is sentenced to death. The Wall Street Journal has live coverage of the trial, though do not expect OJ Simpson-like suspense.

The latest issue of the Hoover Institution’s China Leadership Monitor is out with several good articles about the Bo Xilai case. James Mulvenon’s The Bo Xilai Affair and the PLA, Joseph Fewsmith’s Bo Xilai and Reform: What Will Be the Impact of His Removal? and Alice Miller’s The Bo Xilai Affair in Central Leadership Politics are all very informative. As usual, Miller goes against conventional wisdom and makes the case that:

Bo’s removal in that respect therefore does not indicate a departure from the “rules of the game” as played in the last two decades. From a political perspective, each of the three purges—of the two Chens and of Bo Xilai—removed an irritant to the top leadership at an important moment of transition. The Politburo leadership has, publicly at least, sustained its usual façade of unity throughout the Bo affair, and Bo’s removal likely strengthens rather than disrupts preparations for convocation of the 18th Party Congress this fall.

Ed Wong and Jonathan Ansfield of the New York Times write about PLA-Party relations in China’s Military Seeks More Sway, Worrying Communist Party. The story has a great lede about a drunken general:

During a holiday banquet for China’s military leadership early this year, a powerful general lashed out in a drunken rage against what he believed was a backhanded move to keep him from being promoted to the military’s top ruling body…The general, Zhang Qinsheng, vented his fury in front of President Hu Jintao, according to four people with knowledge of the event. At the banquet, he even shoved a commanding general making toasts; Mr. Hu walked out in disgust.

Note the reference to four sources, as this lede is almost Bo Guagua Red Ferrari-esque. The James Mulvenon essay on The Bo Xilai Affair and the PLA is a good companion to this story.

Hu Shuli’s has an interesting editorial in the latest issue of Caixin Magazine that uses Jiang Zemin’s recent call to study history to argue for continued reform. She writes that:

A group of younger party leaders will take the helm this year. They must deepen their study of China’s history, particularly its recent history, so they can continue the good work that was started at the third plenary session of the 11th Central Committee. They must not forget the reasons China chose the path of reform, and why it must now stick to it. It is critical that those in power understand this.

Call me hopelessly naive, but I am betting the 18th Party Congress will be a turning point for much needed and much deeper reform.

Today’s links:

• AP News: Murder trial of wife of Chinese politician begins
  An official at the courthouse, who, like most Chinese officials, refused to give her name, confirmed the trial had started after a convoy of black cars entered a side entrance into an underground parking lot and a British diplomat was seen entering the court. The diplomat did not comment.
• Merger boost looks short-lived for China’s Youku | Reuters
  both tudou and youku are still bleeding cash. few paid much attention to their recent earnings reports. still amazed at how lucky tudou got with the wonderfully pricey (if you are/were a tudou shareholder) youku exit//
  (Reuters Breakingviews) – Youku’s (YOKU.N) quarterly results underscore the need for further consolidation in China’s online video market. True, revenues almost doubled, as TV viewers continue to migrate to the internet. But profits are still elusive. The company’s losses more than doubled, to $9.4 million. Even after Youku buys smaller rival Tudou (TUDO.O), too many players will be chasing too little good content. In the long run, deep-pocketed diversified players are likely to win out.
• Shenyang Businesses Remain Closed Over Inspection Panic – Caixin Online
  Small businesses in the northeastern city of Shenyang are still closed, despite local media reports which state authorities are not carrying out inspections
• 【舒立观察】从历史学什么_杂志频道_财新网
  original chinese of hu shuli’s editorial
• Staying on Track – Caixin Online Hu Shuli editorial
  Jiang Zemin has issued a reminder about the importance of studying history, and our leaders should take this to heart when facing questions about continuing with reform…A group of younger party leaders will take the helm this year. They must deepen their study of China’s history, particularly its recent history, so they can continue the good work that was started at the third plenary session of the 11th Central Committee. They must not forget the reasons China chose the path of reform, and why it must now stick to it. It is critical that those in power understand this.
• Caterpillar exporting China-made goods | Reuters
  Caterpillar Inc (CAT.N) has begun exporting Chinese-made machinery to the Middle East and Africa, part of a plan to offset a dip in China’s economic growth, a top official at the company said in an interview.
• Asia Pacific talks not aimed at containing China: U.S. official | Reuters
  US doesn’t believe China when it says its military buildup is directed at the US, why should China believe what US says?//
  U.S.-led talks on a free trade pact in the Asia Pacific region are not an attempt to economically contain China, a top U.S. trade official said on Wednesday.
  “This is absolutely not a negotiation that’s directed at China,” Deputy U.S. Trade Representative Demetrios Marantis said in remarks at the Woodrow Wilson Center for International Scholars.
• China’s economic slowdown bottoming out, data seen showing | Reuters
  some smart people would disagree//
  China’s industrial output and fixed-asset investment are expected to show signs of picking up in data on Thursday, indicating that the economy is starting to stabilize after sliding for six straight quarters.
• China’s Wanxiang to take control of battery maker A123 | Reuters
  China’s largest automotive parts supplier is poised to take control of U.S. battery maker A123 Systems (AONE.O), which received $249 million green-technology grant from the Obama administration in 2009.
• Parents question worth of study tours |Society |chinadaily.com.cn
  mostly scams, tell all my friends to avoid them, along with placement agents//
  Overseas study tours for students, usually with a price tag of thousands of dollars, have become controversial among Chinese parents following a number of recent scandals.
  In July, a photo of primary school students sitting outside Woodbury Info Center, a shopping center close to New York, caused a stir online as netizens learned the teachers were shopping while the children chewed hamburgers on the curb.
• Defects found on 12 rail lines – Xinhua | English.news.cn
  The Ministry of Railways has found quality defects on 12 rail lines that may endanger railroad safety, according to a document recently obtained by the media.Seven of the 12 lines have been put into service, including high-speed passenger railways between Wuhan and Guangzhou and between Zhengzhou and Xi’an, according to the document.
• China now top export destination for most of US|Economy|chinadaily.com.cn
  ll but 15 of the 435 districts represented in Congress recorded larger numbers of goods sold to China than to other export markets in 2011, according to a leading business group…The US-China Business Council, which represents US companies that do business with China, also found that in 418 of those 420 congressional districts, the growth in exports to the country hit triple digits between 2002 and 2011.
• ‘China bashing’ a political game|Americas|chinadaily.com.cn
  United States politician Rick Larsen said he hopes China understands that the so-called “China-bashing” in the presidential campaign is simply a reality of elections — a political process that is important in the US.
• Haikui hammers Shanghai, East China|Society|chinadaily.com.cn
  In Shanghai, the meteorological department raised the typhoon alarm to red, the highest level, at 11:30 am on Wednesday. The entire city was subject to the storm’s wrath, with maximum rainfall in areas close to 130 millimeters.
  Many companies closed for the day, and hundreds of thousands of residents living on the city’s outskirts were evacuated. Haikui’s impact on Shanghai was expected to subside slightly between Wednesday night and early Thursday.
  As of 2 pm Wednesday, a total of 700 flights had been canceled at Shanghai’s two major airports.
• 张富泉：改革开放是继往开来的传家宝–理论–人民网
• 人民日报-举国体制与奥运辉煌（伦敦夜话）
  People’s Daily takes issue with those who say gold medals important, lauds the success of China’s national sports system
• 6.1万亿平台贷清理难题 “降旧控新”表外依旧膨胀|平台贷|降旧控新|清理_21世纪网
  本报记者从监管部门获得的数据显示，截至2012年3月末，仍按平台管理的融资平台数量较去年末增加了549家，平台贷款余额上升0.7万亿，达到6.1万亿，这一数据仅比去年三季末略有下降。
• 狗主人高楼抛下小狗砸中他人车辆被刑拘_网易新闻中心
  Beijinger arrested after throwing his dog out his window at hou xiandaicheng. Dog damaged a car below, but sounds like will be ok. arrested for threatening public safety, does china even have animal cruelty laws on the books?
• 北京暴雨救人农民工获赠捐款被工地扣留_新闻_腾讯网
• China’s Rule of Law Scrutinized as Bo’s Wife Begins Murder Trial – Bloomberg
• Adelson Sues National Jewish Democratic Council for Libel – Bloomberg
  Sheldon Adelson, chairman of the Las Vegas Sands Corp. (LVS), sued the National Jewish Democratic Council and its top officers for libel, saying the organization falsely claimed he approved of prostitution in his Macau casinos.
• Chinese Leadership and Elite Responses to the U.S. Pacific Pivot | Hoover Institution
  by Michael D. Swaine..Over the past several years, the most significant overall U.S. foreign policy action of relevance to China has been the announcement and initial follow-through of the so-called Pacific pivot or “Rebalancing” of U.S. attention and resources to the Asia-Pacific. Many observers and officials in the United States, China, Asia, and elsewhere view this policy move as an important response not only to the growing overall significance of the region to American interests, but in particular to the challenges and opportunities presented by an increasingly powerful China. The Pacific Pivot has thus drawn considerable attention and levels of controversy in many quarters, and nowhere more so than in Beijing. This article takes a close look at Beijing’s reactions to Washington’s increased stress on Asia, including its assessments of the perceived implications of this policy shift for the region and for China in particular.
• 新浪高管称微博面临发展困惑 流量暴增难变现 _新浪（SINA） _i美股
  A Sina VP talks about the difficulties in monetizing Sina Weibo’s massive usage//
  让新浪副总裁王高飞没想到的是，苦心经营10年的手机新浪网，被诞生仅2年的微博轻松超越。在PC时代，门户、搜索是入口，移动互联网到来，入口在哪里？如何将暴涨的流量变现，成为摆在他面前最棘手的问题。现在的微博，并不是移动互联网入口，在寻找入口的努力中，让人感到困惑、彷徨、恐惧……
• Paper launches drive to boost party chiefs | SCMP.com
  In a new propaganda blitz, the People’s Daily is publishing a series of special reports heaping praise on the economic success of certain regions – a move aimed at helping their party chiefs secure promotion at the next party congress, analysts say…
• Inside the Ring: China warship grounded – Washington Times
  Inside the Ring obtained the first photograph of the Chinese ship that was beached July 7 and stranded for 10 days. The photo was taken by a Philippines military photographer during a flight over the disputed Half Moon Shoal that both Beijing and Manila claim as their maritime territory. The shoal sits astride a key strategic waterway about 70 miles from the Philippines island province of Palawan.
• The Chongqing Model Worked | Foreign Policy
  really?//
  In the short term, the Chongqing model will remain tarnished both inside and outside China by the backlash against Bo’s political ambitions and policy missteps, as well as the charges against his wife. But when the dust settles and the fog clears, the Chongqing model may be remembered as a useful social and economic experiment that tackled the tensions between state and people lying at the heart of modern China, providing a credible alternative while China struggles to rebalance its economy and policies. While Bo’s political career is clearly over, he may also be remembered as a maverick risk-taker for tackling these challenges — whatever his personal motives.
• Chinese Sitcom Accused of Being Cheap Knock-Off of American Sitcoms
  A popular Chinese sitcom called iPartment has been on the receiving end of increasing flak from viewers who contend the show is little more than a compilation of jokes shamelessly stolen from American sitcoms.
• Tian Shan No.1 Glacier melting in China’s Xinjiang – Xinhua | English.news.cn
  Photo taken on Aug. 7, 2012 shows the melting east branch of the Tian Shan No.1 Glacier in northwest China’s Xinjiang Uygur Autonomous Region. Located within the Tianshan Mountains 120 kilometers southwest of Urumqi, the Tian Shan No.1 Glacier is the closest glacier to an urban community in the world. Numbers from the Chinese Academy of Sciences indicate that the rate of the glacier’s recession grows every year under increasing global temperatures. Over the four decades between 1962 and 2006, the glacier’s surface area had shrunk by 14 percent, from 1.95 to 1.68 square kilometers, while its thickness had gone down by 15 meters
• FT Alphaville » Chinese banks’ Weapons of Mass Ponzi
• Brazilian Footballing Legend Pelé Gets Social in China, Joins Sina Weibo
  When we reported that American Olympic swimmer Ryan Lochte had just joined Sina Weibo, we thought he’d be the biggest new sporting name to hit the Twitter-esque site this week. But no. Because here comes a sporting legend, a walking testament to the power of football: Pelé.
• Romney tests China policy |Op-Ed Contributors |chinadaily.com.cn
  by david shambaugh
• Gu walks Madame Mao’s tightrope-Garnaut
  The last time the Chinese Communist Party put one of its leading wives on trial it was the fiery Madame Mao, accused of a leading role in the persecution of precisely 727,420 people during the Cultural Revolution.
  Today it is Gu Kailai, the wife of another charismatic and ruthless leader, Bo Xilai, accused of the ”intentional murder” of a British businessman and family friend, Neil Heywood.
  Like Mao’s wife, Jiang Qing, Gu is a petite but formidable operator who held no military rank but took to wearing a People’s Liberation Army uniform as she leveraged her husband’s political power, according to a report by Reuters and a photograph seen by the Herald.
• Great fall of China: section of wall collapses – Telegraph
  Workmen digging up a square in Zhangjiakou city, Heibei province, near the wall have been blamed for triggering the collapse of 100 ft of Great Wall.
• Chinese Prosecutors: Man Was Unwitting “Human Bomb,” Not Murderer | Tea Leaf Nation
  It’s never too late to say “sorry.” Investigators have apologized after announcing their findings that Zhao Dengyong, the man authorities openly suspected of bombing a government office in Qiaojia, Yunnan Province on May 10, was not a disgruntled outcast who turned to violence, as prosecutors first insinuated. Instead, he was just another victim. The true perpetrators paid the unwitting Zhao 100 RMB (about US$15) to bring a backpack into a government building, then used a cellphone to remotely activate the bomb that killed four people and injured sixteen.
• Hu Xijin: Liberals the cancer cells of China and tools of the Americans: Shanghaiist
• Economic Uncertainty Fuels Political Misgivings | Hoover Institution
  by Barry Naughton
  Political uncertainty is inevitable as China prepares for this fall’s leadership transition. This year economic conditions are also unusually unpredictable. In particular, while China is undergoing an inevitable economic slowdown, few have a clear idea of how drastic the slowdown will be, or how painful the transition to a slower growth path will be. Facing these multiple uncertainties, Chinese politicians are trying to leave themselves as much flexibility as possible.
• China’s Top Future Leaders to Watch: Biographical Sketches of Possible Members of the post-2012 Politburo (Part 2) | Hoover Institution
  by Cheng Li
  The composition of the new Politburo, including generational attributes and individual idiosyncratic characteristics, group dynamics, and the factional balance of power, will have profound implications for China’s economic priorities, social stability, political trajectory, and foreign relations. To a great extent, these leaders’ political position and policy preferences are often shaped or constrained by their personal experience, leadership expertise, factional affiliation, and bureaucratic portfolio. This series will provide concise and primarily fact-based biographies for 25 to 30 possible members of the next Politburo, focusing on the following three aspects: personal and professional background, family and patron-client ties, and political prospects and policy preferences. The aim is to present a complete set of biographical sketches of all members of this supreme leadership body by the time the 18th Party Congress has wrapped up in the fall of 2012.
• China’s Vantone Said to Discuss San Francisco Development – Bloomberg
  China’s Vantone Holdings Co. is in talks to transform a pier in San Francisco’s tourist district into space for Chinese companies seeking to do business in the U.S., said four people with direct knowledge of the matter.
  Talks between Vantone and San Francisco to develop Pier 19 are preliminary, said the people, who asked not to be identified as the talks are private. Pier 19, a 206,000-square-foot (19,100 square meters) warehouse near Fisherman’s Wharf and Coit Tower, could be used for offices, meeting rooms, galleries or a hospitality center for Chinese business people after renovations, one of the people said.
• IISS–War with China
  China could become the most powerful adversary the United States has ever faced. How might a war with China begin, how might it proceed, how might it end, and how might it be prevented? By James Dobbins
• Apple’s iPad Holds Nearly Three Quarters of China’s Tablet Market [Report]
  According to new figures from Chinese research firm Analysys International, Apple’s (NASDAQ:AAPL) iPad is doing very, very well in China’s tablet space. For the second quarter of 2012, iPads accounted for 72.6 percent of the entire tablet market, which is up 20 percent on the previous quarter (see interactive chart below).
• Bo Xilai and Reform: What Will Be the Impact of His Removal? | Hoover Institution
  by Joseph Fewsmith
  The unexpected flight of Chongqing’s Public Security head to the U.S. consulate in Chengdu in February started an unexpected sequence of events that led to the removal of Bo Xilai, the princeling head of the Chongqing party committee, and the subsequent decision to investigate him. Depending on the outcome of that party investigation, Bo could then be subject to civil proceedings (as is almost always the case). These events have disrupted what appeared to be the smooth transition planned for the 18th Party Congress later this fall. There has been much commentary on these events, and different observers look at the significance and impact of the Bo Xilai case on Chinese politics. Looking at Bo’s unique place in the Chinese political system and at the actions taken and commentary issued by the government in Beijing, this article concludes that Beijing is taking steps to narrow the case against Bo as much as possible, presenting it as a case of violating party discipline and the law. Although this makes sense in the short run, there may be ramifications of the case that will reverberate for a long time.
• As Chinese Companies Conquer Global Telecom Equipment, Other Industries Are Bound To Follow – Seeking Alpha
  The strategies employed by many of the emerging Chinese multinationals have a lot in common with those of Huawei and ZTE. Intense competition on price is combined with offering good enough products focusing on other developing markets. And then, head on competition with incumbents in their home markets.
• 国务院督查楼市调控 四省受到委婉批评_经济频道_财新网
  state council inspection teams confirm most provinces have strictly implemented real estate restrictions, found some issues, “tactfully” criticized hubei, hunan, hebei and shandong for some slippage in implementation//
  超过半数的省市落实调控政策情况受到国务院督查组肯定，湖北、湖南、河北、山东等四省因没有严格执行相关政策而受到委婉批评
• Change at CCB Means Reshuffling Continues – Caixin Online
  At least one top executive at China Construction Bank (CCB) has been transferred and the position left open, as reshuffling at major state-controlled banks continued.
  CCB Vice President Zhu Xiaohuang is set to be named China Citic Bank’s president, a source close to the situation said…
  All appointments of senior executives in these banks need to be verified by the Communist Party’s Organization Department, which handles personnel issues.
• Tension for Bank Boards as Big Brother Hovers – Caixin Online
  Six years have passed since Canadian banker Suzanne Labarge quit her post as an independent director on the Bank of China board.
  But a government regulation based on “Chinese characteristics” that sparked her resignation is still very much alive.
  The regulation effective from 2005 gives the China Banking Regulatory Commission (CBRC) permission to station a representative at any meeting called by a domestic bank’s board of directors.
• Subsidized Cartoons, Comics Tickling Too Few – Caixin Online
  Government support has built an animated film and comic book sector that critics is all about quantity not quality
• 经济观察网－专业财经新闻网站
  looks like rumors that economic observer newspaper shut were wrong
• Online retailer Vancl shifts production to Bangladesh｜Economy｜News｜WantChinaTimes.com
  Vancl, China’s largest online apparel retailer, will continue shifting orders to manufacturers in Bangladesh due to rising domestic labor costs, reports the Chinese-language Beijing Business Today.
  All of Vancl’s clothing is produced by outsourced manufacturers. For years, the majority of products were made by domestic factories situated in the manufacturing hubs of the Yangtze and Pearl river deltas.
• Iran’s ministries to go offline: phase one of move to intranet society (Wired UK)
  Iran has announced that all government ministries and state bodies will go offline from September 2012 to shield the country from an “untrustworthy” worldwide web that rests in the “hands of one or two specific countries”.

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