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

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Blame PEPCO for the late delivery. We had another 6 hours of power outages today, including one that started 2 minutes before I was going to press “publish”. It is just incredible the America’s capital city has such a third world electricity infrastructure. We had an outage last Friday, before the big storm, that was a brownout because the system was overloaded. The explanations today ranged from “fixed lines down the road” to “system overloaded due to excessive heat”. Either way, pathetic for PEPCO, and America. And Saturday and Sunday are forecast to have high temperatures over 100 degrees….

In what must have sparked real concern in Beijing, students were instrumental in organizing the recent protests in Shifang, Sichuan. Offbeat China explains in Traces on Weibo: How a NIMBY protest turned violent in a small Sichuan city?:

Students were organized online, reportedly through QQ (China’s No. 1 instant messaging tool) and Baidu Tieba (BBS managed by Baidu). Protest started on July 1. At the same time, they used both online and offline tools to call for support…These students made signs, T-shirts and even held a petition signing event and marched to local government building. They were also smart enough to promote their cause to everybody in Shifang – they handed out flyers during the protest, they texted call-for-support messages out and shared them on social networks, and they left call-for-participation messages on the wall…Apparently, Shifang government has tried to cool down students’ protest…but by the wrong means. It was reported that parents were urged to take their children home in special parent meetings and that parents who were CCP members were told if they didn’t get their children home, they’d be fired. Nothing seemed to have worked. The protest accelerated the next day, possibly out of the control of the students who organized the protest.

The role of the students elicited an editorial from the Global Times–环球时报：不应鼓励中学生走上冲突一线, translated as Do not foment youngsters to protest. China Media Project summarized the Global Times editorial:

In an editorial today, the Chinese-language Global Times, a spin-off of China’s official People’s Daily, writes that it is wrong and worrisome to see young teens participating in political actions that seen recently in Sichuan, where thousands of residents of Shifang city turned out to protests the building of a molybdenum-cooper plant. The paper wrote: “Middle school students are not yet adults and their ideas are not yet fully mature. They are very emotional and highly sensitive . . . [They] can be easily swayed by adults, either toward a correct social mentality or in the wrong direction.” “In every normal household,” the paper continued, “the correct duty of middle school students is to study, and not to be encouraged to join events of a political nature.”

Han Han also weighed in on the students in Shifang, via a TeaLeafNation translation:

These people are the masters of tomorrow, and now, they’ve already arrived. The world is yours, and it’s ours, but at it’s root it’s theirs. The Shifang government officials are our fathers’ generation; they need to look upon these post-80s and post-90s [youth] and make some changes. I know you all have already made many concessions and compromises, let’s finish making something good together.

So Shifang has environmentally aware, political active, digitally native, fearless student protesters. Beijing must realize that this is an extremely dangerous mix. I have written a few times about the coming tsunami of cheap Chinese smartphones and the challenges they will pose for China’s censorship regime. TechInAsia recently provided a useful breakdown of some of the leading new phones in Spec by Spec: China’s 5 Hottest Homegrown Smartphones. These are good phones with decent cameras and 3G connectivity. Even if the government turns off the networks it will not be able to delete all the photos and videos.

It will get even harder for the government with product enhancements like the forthcoming update to Tecent’s massively popular WeChat app. Per TechInAsia, WeChat is to Get Voice and Video Calling in v4.2 Update. I am not a cyber-utopian and enjoyed Evgeny Morozov’s The Net Delusion, but I am really starting to wonder if the mid- and junior level folks in the telecoms companies, and the employees at the big Internet companies, actually know exactly how corrosive these new technologies are to the Communist Party’s rule and are working to help society reach its “tipping point”? Perhaps they believe they will then be seen not as lackeys of the censorship regime but as heroic catalysts of change in China?

Then again, China’s security services are building plenty of counter-measures, as the Jamestown Foundation detailed in last year’s China’s Adaptive Approach to the Information Counter-Revolution.

Bloomberg’s Linda Yueh makes some excellent observations about yesterday’s rate cuts in China’s quiet radical moves. Yueh argues that:

China again widened the amount that banks can deviate from the benchmark lending rate, and it made asymmetric cuts to the lending and deposit rates. Both portend a significant set of financial reforms that is quietly emerging behind the headlines of further monetary stimulus….This may signal the eventual removal of the lending floor and the deposit ceiling. It would also complete the significant set of reforms that began in October 2004 when China lifted the ceiling on the lending rate and the floor of the deposit rate. With such reforms, China could finally have the market-clearing interest rate that it needs…The distortions in the financial markets preclude efficient capital allocation. For China to re-balance its economy and sustain its growth, improving the use of capital rather than increasing fixed asset investment or ‘factor accumulation’ is key. Yesterday’s quiet set of moves towards that goal may prove to be much more radical than they first appear.

Perhaps Yueh is getting ahead of herself, but as the Peterson Institute details in China’s Recent Financial Reforms: More than the Sum of the Parts?, China has initiated many financial sector reforms. Reforms in general are painful and face massive resistance, and China is effectively trying to upgrade a Tuplolev Tu-204 to a Boeing 747, in mid-flight. But Beijing deserves more credit than it has gotten for taking on entrenched special interests. The central government has inflicted enormous pain on the real estate sector and construction and building materials industries through the property controls introduced in Q2 2010. And now it is taking on the banks.

Beijing pays attention to the multitude of Western expert claims that China’s economy is near a crisis. Today’s overseas edition of the People’s Daily has a page two article denying that the economy is in trouble and warning readers against the ulterior motives of foreign institutions who are pushing the short China meme–中国经济“危急”说于实无据: 稳增长政策空间大 洋机构唱空有企图. Could this be a sign that the government will start to crack down on the PRC resident, foreign China bears, especially those who make lots of money consulting with foreign institutions, probably illegally under PRC law? And if People’s Daily publishes something like this, is it a sign Beijing is really worried about the state of the economy?

No official word yet from China about the Libor scandal. China has Shibor, which the government effectively controls, but it is irrelevant compared to Libor and the the hundreds of trillions of dollars of securities that rely on it. Expect China to argue that Libor is another relic of the hegemonic, corrupt Western financial system that nearly collapsed the world economy. Sadly, that argument has some merit…

Caixin has a good update on the customs investigations that have roiled the China art world–Customs Agents Clamp Down on Artful Dodgers. Has anyone met a Chinese artist or gallery who reports accurate sales and income information to the Chinese authorities? This industry is a gold mine for tax collectors.

And just because it is a great read, check out Will Moss’ Godzilla vs. the SARFT Monster on Chinese movie and television censorship over at Rectified.name.

Don’t forget that today is the 75 anniversary of the 1937 Marco Polo Bridge Incident outside Beijing.

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still mostly blocked by the GFW. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions/donations are welcome, and feel free to forward/recommend to friends. Thanks for reading.

Today’s Links:

• 人民日报海外版-稳增长政策空间大 洋机构唱空有企图 中国经济“危急”说于实无据(热点聚焦)
  the original people’s daily piece warning of the motivations foreign institutions pushing the china short theme
• 人民日报：要警惕外国机构唱空中国牟利_网易新闻中心
  People’s Daily–Be wary of foreign institutions calling to short China for profit
• 马云版Facebook 新阿里帝国腾挪计划|马云|阿里巴巴|Facebook_21世纪网
• The Jamestown Foundation: Re-Popularizing Marxism: Li Changchun’s contribution to reform
• The Jamestown Foundation: Confucius Institutes and the Question of China’s Soft Power Diplomacy
• Do not foment youngsters to protest – Globaltimes.cn
  The aftermath of the Shifang protest continues to ferment on the Internet. Among the protesters were many high school students, who have been hailed by a group of opinion leaders. Netizens even cheered those young protesters for “firing the first sho
• 环球时报：不应鼓励中学生走上冲突一线_评论_腾讯网
• Obama Attack on China Auto Duties More Than Justified – China Real Time Report – WSJ
  Chinese penalties on SUV imports amount to a tiny sideshow compared to other ways that China tilts this lucrative, $300 billion playing field in its own favor
• In Peru, Chinese mining firm moves a town to get to the copper underneath – The Globe and Mail
  High in the Andes mountain range, a Chinese mining company is now in the housing construction and demolition business as it works to relocate a Peruvian town that sits in the way of its $2.2-billion (U.S.) Toromocho copper mine.
• Chinese Scholars Call for Revision of One-Child Policy – WSJ.com
  A group of prominent Chinese scholars issued an open letter on Thursday calling for a rethink of the country’s one-child policy, the second high-profile challenge to the long-standing law this week.
  The group argued that the policy in its current form is incompatible with China’s increasing respect for human rights and need for sustainable economic development. The letter comes less than a month after the story of a woman who was forced to undergo an abortion of her seven-month-old fetus ignited public anger.
• For China, It’s All About America | China Power
  After a while, an undertone creeps into discussions with Chinese counterparts on regional and global issues.  Whether meeting with Ministry of Foreign Affairs officials, academics and policy analysts, or the media, an American soon begins to sense that part of the conversation is missing.  What’s absent is not boilerplate about values, opportunities, or common interests, but rather a sense of China’s broader set of relationships.  Ultimately, as one European diplomat put it to me, when it comes to China’s foreign policy, it’s all about the United States.  This monofocus on America tells us a great deal about China’s worldview, but it also reveals the degree to which Washington is hampered in forging a better working relationship with Beijing.
• Obituary for Peng Di, veteran foreign correspondent | SCMP.com
  Veteran Xinhua journalist Peng Di , the first China correspondent to open a bureau in Washington after the United States established diplomatic ties with Beijing in 1979, died on Sunday, his family said. He was 91.
• Retirement Promises Prove Iffy Even Under Chinese Communist Rule – Bloomberg
• Locked Up Abroad: Smuggling Drugs in China – Nat Geo TV Blogs
  Drug trafficking in China is not taken lightly. Individuals convicted of the crime can face heavy fines, lengthy prison sentences and in some cases capital punishment.  On June 26, 2010 a day known as “International Anti-Drug Day” sixteen people were executed for various degrees of drug related crimes including trafficking.  Though guards threatened Lockie with death, he was ultimately sentenced to 15 years in prison.  His son Scott’s fortune was a little better as he was able to make it through customs in Hong Kong and Japan with 10 kilos of hash.
• 传北京日报社长梅宁华内定下台_多维新闻网
  president of Beijing Daily being replaced?
  有消息指该报社社长梅宁华已经内定下台。在薄熙来被免职后，梅宁华曾经被曝是《北京日报》发出“总书记不能凌驾于党中央之上”一文的关键幕后人物，也曾涉入薄熙来案。
• Huntsman won’t attend Republican convention, cites party’s narrow focus – First Read
  “I will not be attending this year’s convention, nor any Republican Convention in the future, until the party focuses on a bigger, bolder, more confident future for the United States.
• 张维迎：企业家在政府面前还是喜欢说好话 真的不多-财经网
  on zhang weiying speech at china entrepreneurs summer summit
• The Jamestown Foundation: China’s Adaptive Approach to the Information Counter-Revolution
  While reaching a judgment about how effectively internal security officials can keep dissident activities isolated is premature, the MPS informatization efforts clearly indicate the competition between activists and security officials is not already over and the MPS may be capable of adapting to new challenges to state authority. At the Nanjing Conference in 2008, MPS chief Meng Jianzhu explicitly noted this competition, stating the rapid informatization of society requires the MPS to keep pace and “firmly establish intelligence [-led] and information-led policing” (Ministry of Public Security, December 20, 2008). Evaluating this competition probably will be one of the central questions for understanding the political future of China. The dynamism inherent in this competition—technological change and competing efforts to exploit those developments—challenge the static assumptions usually held about the capabilities of the Chinese security services. If political change driven from below comes to China, one of the important factors will be the success or failure of public security informatization to keep Beijing aware of the movements and communications of its citizenry.
• China, Politics, and Product Launches – Tech in Asia
  We recently wrote about Baidu’s new social service which (though it’s just a ‘coming soon’ page) looks poised to launch in Vietnam soon. One of our Vietnamese readers noted that, even though it hasn’t even launched yet, there is a backlash among some Vietnamese people about Baidu. She noted that due to the Paracel Islands dispute, “Vietnamese netizens don’t respond so kindly to anything originating from China.” I was aware of the dispute, but I had not anticipated that netizens in Vietnam would extrapolate that issue onto Baidu. That’s unfortunate.
• What Does This Korean Messaging App Think It’s Doing With More US Users Than Path? | PandoDaily
  Kakao is about to make a serious push into Southeast Asia, where juicy markets such as Indonesia, Thailand, and Vietnam await. Those countries all have huge populations that are especially accustomed to mobile communications, and they’re about to see a smartphone explosion….You can probably make a fair bet, too, that KakaoTalk will do a fair bit better in those markets than Path could ever hope for. A bigger question, however, is whether Americans will one day take to a mobile platform that offers an all-in-one solution, or if they prefer to stick to a more fragmented ecosystem, where they use devices’ proprietary apps for messaging, Facebook for social, and Instagram for photo sharing.
• Obama Campaigns in Ohio by Way of Beijing – Bloomberg
  Obama and Romney continue to talk about the importance of U.S. manufacturing to job creation and economic recovery. Yet it’s hard to see how the U.S. can make that a reality without China as a serious trading partner. What voters should demand from both candidates is a pledge to hold China accountable for any violations of World Trade Organization standards and to work on improving diplomatic and commercial relations.  Like it or not, China holds one of the keys to U.S. economic success.
• China’s Developers Surge After Interest Rate Cut: Shanghai Mover – Bloomberg
  China’s property shares rose the most in four months after the nation’s central bank cut interest rates for the second time in a month to bolster the country’s economic growth.
• Hong Kong Nabs $98 Million in Cocaine in City’s Biggest Bust – Bloomberg
  The drugs were believed to be en route to China and southeast Asia, Lee said. Hong Kong customs agents have been working with the DEA and South American authorities since the start of the year to combat drug trafficking.
• China Busts Traffickers After Babies Auctioned Off for $7,800 – Bloomberg
  Chinese police broke up child- trafficking rings in 15 provinces and arrested more than 800 people after babies were auctioned off to the highest bidder for up to 50,000 yuan ($7,800).
• Analysis: China’s yuan experiment faces risks, legacy | Reuters
  China’s plan to test yuan convertibility in a new services hub being built near Hong Kong fanned excitement Beijing may be dismantling its rigid capital controls sooner than expected….A reality check paints a different picture and suggests that China’s latest test bed carries risks that will make the country’s policymakers move slowly.
• Assad friend flees, U.S. wants Russia to pay price | Reuters
  Hillary Clinton urged Assad’s enemies meeting in Paris on Friday to make Russia and China “pay a price” for helping keep him power in Damascus.
• Father in China forced abortion case demands criminal prosecution, seeks compensation – The Washington Post
  The father of a forcibly aborted baby wants the Chinese officials responsible to face criminal prosecution and plans to seek government compensation, his lawyer said Friday….Feng Jianmei, a villager from central China’s Shaanxi province, was forced to undergo an abortion seven months into her pregnancy because the family could not afford a 40,000 yuan ($6,300) fine for having a second child, which violated China’s tough one-child policy.
• Anderson Cooper’s Coming Out Rattles China’s Closet – NYTimes.com
  When Anderson Cooper, the CNN anchor, recently announced that he was gay, he apparently inspired a Chinese microblogger using the name Sun Yelin-Xiao Hei. On Thursday, Mr. Sun posted a call on Sina’s Weibo, or microblogging, site for Chinese homosexuals to come out en masse on Dec. 12, 2012 — a day apparently picked for its neat number.
• Unlikely but true: China coal group in successful IPO | beyondbrics
  Coal may be an unloved commodity and IPO markets may be floundering, but a Chinese coal producer has just raised $900m in Hong Kong’s second-biggest new share sale this year….Inner Mongolia Yitai Coal, the biggest coal group in the Chinese region bordering Mongolia, sold 162.8m shares at HK$43 (US$5.50) apiece on Friday, at the low end of a range marketed to investors
• Guest post: China’s quiet radical moves | beyondbrics
• FT Alphaville » China’s asymmetrical and anti-bank rate cut
  This year’s second benchmark rate cut is asymmetrical, with deeper cut and lower floating range for lending rates, aimed at spurring lending.
• Economists React: China’s Unexpected Rate Cuts – China Real Time Report – WSJ
  The biggest beneficiaries are big SOEs with high leverage as they are likely to get a large rate cut on their loans thanks to the “lending rate liberalization.” The rate cut is good for all existing borrowers such as local governments and mortgage borrowers. But SMEs may not benefit much on their new loans, which will be mainly priced on the availability of loanable funds…No need to expect a slump in June and second quarter data, but we see improvement from May could be very limited. – Ting Lu, Bank of America-Merrill Lynch
• Pure Lands? China’s Sacred Mountain IPO Wave – China Real Time Report – WSJ
  “Religious places should never go public,” says Xue Manzi, a prominent Chinese investor in his Weibo account. “Capital markets have developed for hundreds of years in western countries, but has anyone ever heard of a church going public?”
• Jing Daily: Can Baijiu Take London? Diageo Seems To Think So
  As the company announced this week, Diageo plans to make Shui Jing Fang available at high-end Chinese restaurants in the British capital as well as high-end department stores and hotels — looking, ostensibly — to tap the growing number of wealthy Chinese tourists, property buyers, and students now seen throughout the city.
• China Air Daily
• International – Michael Zhao – A Stunning Visualization of China’s Air Pollution – The Atlantic
  The air in Chinese cities is getting worse, and these animations show just how severe the problem has become.
• Buddhists celebrate the 77th birthday of the Dalai Lama – Telegraph
• Men wanted for 36 Chinese millionaire single ladies – Telegraph
  A Chinese cupid has launched a nationwide manhunt on behalf of 36 female millionaires who have made fortunes from their country’s breathtaking economic boom but have failed to find love.
• Bloomberg Sues Chinese Company over Terminal Design Infringement-Caijing
  “there’s no need to copy Bloomberg,” said the Chinese company’s lawyer, explaining that DaZhihui is China’s most-sold financial data device, while noting that Bloomberg Terminal is “not famous” in the country.
• CapitalVue News: Fifteen Percent Discount Off Mortgage Rates For First Homes Reappears In Shanghai
• New Chinese Listings Waiver – WSJ.com
• Traces on Weibo: How a NIMBY protest turned violent in a small Sichuan city? | Offbeat China

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still mostly blocked by the GFW. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions/donations are welcome, and feel free to forward/recommend to friends. Thanks for reading.

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