The Sinocism China Newsletter For 11.06.12

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

Spread the word by forwarding this email to your friends, follow me on Twitter @Niubi or Sina Weibo @Billbishopsupport Sinocism.

Bloomberg makes a useful contribution to the 18th Party Congress coverage with Xi Climbs to Power Mixing Father’s Capitalism With Mao Communism:

The public’s “very widespread alienation from the leadership” means “a real danger of chaos” if Xi fails to move ahead with market-driven change, said Ezra Vogel, author of “Deng Xiaoping and the Transformation of China.”

“The new leaders are very aware that their back is to the wall,” said Vogel, a professor emeritus at Harvard University in Cambridge, Massachusetts. “There’s such a strong feeling in the country that they need bold reforms and big changes and to attack corruption. A lot of high officials will have to suffer.”

For those who think Xi doesn’t believe in Marx, Sidney Rittenberg sets you straight:

“From Xi’s speeches it’s quite clear he takes Marxist theory very seriously,” Rittenberg said. “Not just slogans and lip service — he tries to analyze things.”

If you still have doubts about the Communist Party’s commitment to Marx, check out “信仰“ (Faith), a multi-part documentary released earlier this year that Party members are studying enthusiastically, per People’s Daily.

There has recently been some misguided speculation that China hints at reform by dropping Mao wording (Reuters). In Sacred Maos historian Jeremiah Jenne explains:

But the decision to cut Mao from a few articles or party documents is not news. In the early 1980s, the Party rendered its historical verdict on the Mao years, proclaiming the Great Helmsman to have been 70% correct and 30% incorrect, even as Deng Xiaoping and his protégés were working to dismantle major parts of Mao’s legacy.  Since that time references to Mao Zedong Thought have been in steady decline, reduced mostly to boilerplate attached to speeches and Party documents.

Bloomberg writes that a new US study concludes that China is the most threatening cyberspace force:

“China’s persistence, combined with notable advancements in exploitation activities over the past year, poses growing challenges to information systems and their users,” the U.S.- China Economic and Security Review Commission said in the draft obtained by Bloomberg News. “Chinese penetrations of defense systems threaten the U.S. military’s readiness and ability to operate.”

Yesterday Bloomberg broke the story that Coca Cola’s systems were hacked during the final stages of the aborted Huiyuan acquisition in China:

Hackers had broken into the company’s computer systems and were pilfering sensitive files about its attempted $2.4 billion acquisition of China Huiyuan Juice Group, according to three people familiar with the situation and an internal company document detailing the cyber intrusion. The Huiyuan deal, which collapsed three days later, would have been the largest foreign takeover of a Chinese company at the time.

As I wrote earlier this year in Cybersecurity and the PLA Officer’s Mistress:

Congress can pass a bill trying to pressure the Chinese but it will not solve the problem. For centuries countries have used whatever capabilities they have to spy on others, and no law is going to stop that. The onus on solving the problem lies with American companies and organizations.

Do you leave your cash out and your doors unlocked at night? If you do not inventory and secure your data and networks, you are effectively leaving your cash out for anyone, state or non-state, to steal.

Today’s links:


上海供地放量 单幅挂牌价超54亿 | 每经网 – surge in land sales in Shanghai// 核心提示: 上海之前一向低迷的土地市场一下子活跃起来。11月2日,上海挂牌出让的四幅地块总的起始价高达57亿元。其中单幅地块的起始价高达54.31亿元。

百克奶粉为勺子“让位” 雀巢被指变相涨价财经频道一财网 – inflation by another name. Nestle cuts size of milk powder bag from 900 g to 800 g, keps price the same

楼继伟:四大行股价没有真实反映经营实绩财经频道一财网 – CIC head Lou Jiwei vs. short-seller Jim Chanos. Lou says Chinese banks share prices cheap

银监解析理财隐患杂志频道财新网 – Caixin on CBRC look at risks in wealth management products

Machinery Makers Change Books to Appear More Profitable, Analysts Say – – Sany Group’s move to lower accounting standards added 470 million yuan to third-quarter net profit, a strategy it competitors have also used

Shorting China – Multimedia – Caixin Online – As Muddy Waters’ Carson Block says he’s no longer looking at China, Caixin’s U.S. correspondent Ni Weifeng discusses how short seller reports have hurt Chinese companies looking to list abroad, and why fighting back isn’t the most effective reaction.

Codelco Seen Cutting Copper Premiums to Chinese Buyers – Bloomberg – Imports by China, the world’s largest user, are set to fall next year as smelting and refining capacity rises, outpacing growth in consumption, according to researcher Beijing Antaike Information Development Co. Goldman Sachs Group Inc. cut its 12- month forecast for copper by 11 percent to $8,000 per ton from $9,000 because of slowing Chinese demand, it said Oct. 15.

Why Luxuries are More Expensive in China?-Caijing – “High taxes along with high logistics costs mean retail prices for luxury goods are much higher than identical goods sold overseas”

洋货双重标准的罪与罚_21世纪网 – interesting investigation by 21st century business herald about why foreign products are more expensive in China

广东保障房“井喷” 年底21万套房源供分配|广东|保障房|分配_21世纪网 – “surge” of 210,000 subsidized housing units coming on line by year end in guangdong

Chinese Law Prof Blog: CSRC to relax rules on Chinese companies listing in Hong Kong – Caixin and other media report that the China Securities Regulatory Commission plans to drop its requirement that Chinese companies listing in Hong Kong meet certain size criteria: 400 million yuan in net assets, an offering size of US$50 million, and 60 million yuan in profits in the year before listing. This is in line with what I’ve heard is the CSRC’s intention to move away from merit regulation and toward US-style disclosure regulation.

Gold rush: China jewelers go west for growth | Reuters– That should act as a shot in the arm for gold demand in the country, which is likely to grow at about 7 percent in 2012, slowing from a 22-percent increase last year, according to figures from metals consultancy GFMS, a unit of Thomson Reuters. Jeweler demand accounted for two thirds of Chinese gold appetite in 2011, with the rest taken up by investors



More Changes Made to Military Commission –Caixin – Both Fan and Xu’s appointments are out of the ordinary. Fan, a 65-year-old native of Liaoning Province, set a precedent by jumping directly from regional commander to one of the five vice chairmen of the CMC. Traditionally, vice chairmen serve a few years as a commission member before being promoted.

Analysis – China’s mission impossible: a date for Hu’s military handover | Reuters– The sources said Hu could instead choose to remain as commission chairman until February, when the party’s elite 200-odd-member Central Committee is due to meet just days before parliament assembles for its full annual session in March. Under that scenario, the Central Committee could install Xi as the new chairman of the Central Military Commission (CMC), with parliament then quickly rubber-stamping it. “If this happens, Hu’s legacy will be institutionalising the term of office of party and state CMC and harmonising this and future transitions,” the second source said.

Leader inspects Beijing’s security “moat” before congress – Xinhua | – Zhou Yongkang (C front), a Standing Committee member of the Political Bureau of the Communist Party of China (CPC) Central Committee, who is also secretary of the CPC Central Commission for Political and Legal Affairs, inspects the Baimiao Public Security Checkpost of Tongzhou, on the outskirt of Beijing, capital of China, on Nov. 5, 2012. Zhou inspected a security “moat” project created in areas encircling Beijing on Monday for the smooth holding of the 18th CPC National Congress

清华教授孙立平:中国改革的方向在公平正义资讯频道凤凰网 – Sun Liping talks about the need for the reform // “中国社会的出路在公平正义,公平正义的实现在机制,机制的建立在改革,改革的核心,是如何处理权力和权利的关系:一方面,如何限制、规范、约束公权力,另一方面,保障民众的权利。”以这样一句话,孙立平结束了自己3个小时的讲述

The Big Enterprise | ChinaFile Beta–Orville Schell – As someone who has been coming to China since 1975, when Mao still lived and the Cultural Revolution still enveloped the country, I can bear witness to the extraordinary progress China has made since toward becoming a modern country. But despite all this impressive progress—as I write this I am on a high-speed train crossing the country at 175 miles per hour on an absolutely smooth rail-bed—there is a fin de siècle feeling here right now, as if it is understood the country is coming to the end of this act of its grand drama, but the playwright has not yet written the script for the next act—indeed, has no idea what such a script would, or should, look like.

145位企业家当选十八大代表 8成自国企金融系统国内财经新浪财经_新浪网 – cover story of “China Economy Weekly” on “Red Industrialists”, the 145 who are delegates to the 18th Party Congress. 80% come from SOEs and financial firms

胡锦涛:国内改革发展稳定任务更加繁重艰巨 挑战前所未有-财经网 – 当前,国际形势继续发生深刻复杂变化,国内改革发展稳定任务更加繁重艰巨,我们面临的机遇和挑战都前所未有,关键在于我们要继续紧紧抓住和用好机遇、积极有效应对挑战,不为任何风险所惧,不被任何干扰所惑

人民日报-转变,中国道路的历史性跨越 ——从十六大到十八大(上) 任仲平 – long page 1+ people’s daily commentary by ren zhongping on the historical transformation since the 16th party congress

Who is “Zheng Qingyuan”? – China Media Project – Ren Zhongping is byline referring to group commentaries by People’s Daily, and a series of influential commentaries on the occasion of the PRC’s 60th anniversary were written under the name “Ren Zhongping,” a writer who is expert at commenting on major affairs, but who is really a group of handsome guys and pretty girls at People’s Daily. These sorts of commentaries have not only tight logic, but are written with literary grace as well, and they are generally well received by readers.

Dalai Lama says expects China political reform under Xi | Reuters – hope rumors of secret delegation sent by beijing to seek solution to current crisis are true// China’s leader in-waiting, Xi Jinping, will have no choice but to embark on political reforms to leave a lasting mark the way the current leadership has done with economic reforms, exiled Tibetan spiritual leader the Dalai Lama said on Monday.

Factbox: Understanding China’s 18th Communist Party Congress | Reuters –



INSIGHT – Great expectations fill Greenland as China eyes riches – Yahoo! News Singapore – Great expectations could lead to greater disappointments, for locals and investors. Yet a scramble for Greenland already may be under way, in which some see China trying to exploit the icebound territory as a staging ground in a global battle for Arctic resources and strategic control of new shipping routes. Whether in iron, zinc or rare earth minerals vital for 21st-century technology like smartphones, China, the emerging economic superpower is eyeing investments in the Danish-ruled country whose own, increasingly autonomous, national government is looking further afield for investors.

China Buys Japan Water Rights After Two-Decade Land Prices Slump – Bloomberg – China leads the purchases of Hokkaido forest and water rights with 21 transactions of a total 57. Hong Kong buyers using Virgin Island-registered offshore companies accounted for another nine and Singapore investors eight, said Masayuki Mitobe, the head of water and land economic research for Hokkaido’s government. He said he could not name the investors due to privacy laws…Chinese investors have been looking at the water assets in Japan with the idea of exporting the bottled resource, said Hokuto Okudera, head of M&A Support Inc., a Tokyo-based broker focusing on mergers and acquisitions for small- and mid-sized companies.

China says “no concessions” on sovereignty issue – Xinhua |– A spokesman for China’s Foreign Ministry on Monday said senior Chinese diplomats will make no concessions on sovereignty issues in upcoming talks with Japanese counterparts. Hong Lei made the remarks when briefing reporters about talks between Luo Zhaohui, director-general of the foreign ministry’s Department of Asian Affairs, and Shinsuke Sugiyama, director-general of the Japanese Foreign Ministry’s Asian and Oceanian Affairs Bureau.

China objects to Dalai Lama’s Japan visit – Xinhua | – “The Dalai Lama is merely a political exile who has long been engaged in activities to split China under the disguise of religion,” Hong Lei said in response to a question regarding the Dalai Lama’s 10-day trip to Japan, which started on Sunday.

Flight tests on China’s air carrier confirmed by Ministry of Defense – – According to an official report released by the Ministry of Defense, jets have practiced touch-and-go landings, a maneuver that involves landing on the flight deck of the carrier and taking off again without coming to a stop

China and Russia Block Plan to Create Ocean Sanctuaries in Antarctica – SPIEGEL ONLINE – Proposals to establish marine reserves in two critical areas of the Southern Ocean were stymied by Russia, China and Ukraine at the end of a two-week international summit in Australia on Thursday. Commercial fishing restrictions in the proposed sanctuaries proved to be the main sticking point.

Chinese scientists leave for Antarctic expedition – Xinhua |– A significant part of the mission will also include looking for a location for the country’s fourth station in the region and second-phase construction of the Kunlun Station. “A polar scientific expedition is an important realm where our country seeks to ensure its national interests, and it’s also closely related to the global climate, eco-environment, the future development of human society and other major topics,” said Liu Cigui, head of the administration, at the launch ceremony.

Michigan Couple Stole GM Secrets for Chinese, U.S. Says – Bloomberg – Shanshan Du, the ex-GM employee, copied the Detroit-based company’s private information on the motor control of hybrids and provided documents to her husband, Yu Qin, the government alleges. Qin used the confidential data to seek business ventures or employment with GM’s competitors, including the Chinese automaker Chery Automobile Co., the U.S. said. General Motors contends the stolen trade secrets are worth more than $40 million, prosecutors said

When Martin Jacques Fools the World–Sam Crane



From bankers to cage-dwellers, HK feels property price squeeze | Reuters– The former British colony’s yawning wealth gap and protests over soaring property prices have brought Leung, who took over as chief executive on July 1, head-to-head with some of the city’s billionaire property developers, who some analysts say could turn on the leader. “Hong Kong is still monopolized by property developers and if they can’t stand it anymore, they will go to Beijing to complain,” said political commentator Chip Tsao.



Chinese Messaging App Gains Ground Elsewhere –– Tencent is vying to make WeChat the dominant global mobile messaging application. The app is available in eight languages, including Russian, Indonesian, Portuguese and Thai, and there are plans to expand into other languages. “The Chinese Internet market is so set apart from other countries that we inside the industry refer to it as the Galápagos Island syndrome,” said Kai Lukoff, the editor of TechRice, a China-focused technology blog based in Beijing. “Domestic Internet products are extremely well adapted to the Chinese market, but they are way out of place for global users.”

Bank of America Merrill Lynch, Deutsche Bank, UBS to Help Finance Focus Media Buyout -Sources | Fox Business – Bank of America Merrill Lynch, Deutsche Bank AG (DB) and UBS AG (UBS) are joining the three original banks on the deal–Citigroup Inc. (C), Credit Suisse Group AG (CS) and Singapore bank DBS Bank Ltd.–to finance the buyout offer, the people said.

Chinese Film Company Completes Purchase of Digital Domain – – Zhong Lifang, vice chairman of Galloping Horse, said that a new company would open in Beijing by the end of November. Lower labor costs in China would make Digital Domain more competitive, she said.

E-grocer Tells Police about Leaked Customer Data, Source Says – – The Shanghai Public Security Bureau said police detained 11 suspects, including some Yihaodian staff members, according to media reports. Yihaodian is 51 percent controlled by U.S. retail giant Wal-Mart.



延安:陕北人的葬礼任韶华博联社 – great photos from a traditional funeral in Yan’an..looks almost like a Shaanxi version of an irish wake, love the pic of the rmb note in the baijiu bowl

China’s ‘golden decade’ brings some relief to rural poor | World news | The Guardian – The gap widens between town and country, but welfare state begins to take root with healthcare, pensions and free lunches



Ecosystem worsens despite efforts in China – Xinhua | – According to a survey on China’s water quality, water volume and biological resource by Chinese Academy of Sciences, 243 lakes have disappeared in the past 50 years, one fourth of them located in Xinjiang.



China: Worse Than You Ever Imagined by Ian Johnson | The New York Review of Books – The Xinyang Incident is the subject of the first chapter of Tombstone: The Great Chinese Famine, 1958–1962, the Chinese journalist Yang Jisheng’s epic account of the worst famine in history. Yang conservatively estimates that 36 million people died of unnatural causes, mostly due to starvation but also government-instigated torture and murder of those who opposed the Communist Party’s maniacal economic plans that caused the catastrophe.

Spread the word by forwarding this email to your friends, follow me on Twitter @Niubi or Sina Weibo @Billbishopsupport Sinocism.