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The Daily China News Update is produced by Charles Silverman
(03/07/13)
Business & Economics
Newswire
Google controls too much of China's smartphone sector: ministry (Reuters) 4
Wen Warns on China Tensions in Final Speech as Premier: Economy (Bloomberg) 5
China Weighs Risks to $50 Billion Investment After Chavez (Bloomberg) 7
China Promises Flexibility on Renminbi (Reuters) 8
China's solar king Shi 'shocked' at dismissal (Bloomberg) 9
Print
Shangpin taps China’s fashion eshoppers (The Financial Times) 11
China telecoms set for 4G shake-up (The Financial Times) 12
China's growth to surge in push (The Australian) 13
Not the Android China's Looking For (The Wall Street Journal) 14
Online
Announces Full Acquisition Of Crucco () 14
EMC China's Growth Focuses On Big Data, Cloud Computing () 15
Buick Dealership Uses Dead Baby In Car Ad, Told To “Go Die” () 16
China equities on track to go global (The FT Beyond BRICs Blog) 16
Guest post: No need to fear China’s housing crackdown (The FT Beyond BRICs Blog) 17
Chinese in Africa Find a Land of Challenge, But Opportunity () 19
Why Facebook, Google, and Twitter Made It in Vietnam, But Not in China () 21
Less Than 14% of Chinese App Developers Make a Profit, Says China Mobile Executive () 22
A Revolution in China’s Search Market? Sogou Integrates Search into its Input Method () 23
Middle East Telecommunications Provider To Source China Products () 24
60% of Chinese Users Don’t Know How “Smart” Their Smart TVs Are () 24
Alibaba to Offer Online Shopping Credit Line, for Mobile First () 25
China and Soft Protectionism () 26
China HP Organizes Special Unit For PC Quality Control () 28
Master Kong: How Internet rumors can affect share prices () 29
Politics & Law
Newswire
China navy seeks to "wear out" Japanese ships in disputed waters (Reuters) 30
China eyes residence permits to replace divisive hukou system (Reuters) 34
China’s Richer-Than-Romney Lawmakers Show Xi’s Reform Challenge (Bloomberg) 35
Print
China Hints at Changing Its Fuel-Price Mechanism (The Wall Street Journal) 38
China's new leadership faces growing environmental pressures (The Guardian) 38
Online
China’s State Planning Commission Welcomes You (THE WSJ CHINA REAL TIME REPORT BLOG) 40
Judge Re-Starts SEC Efforts to Subpoena Deloitte (THE WSJ CHINA REAL TIME REPORT BLOG) 40
China’s ‘Two Meetings’ Different This Time Around (THE WSJ CHINA REAL TIME REPORT BLOG) 41
At Chinese Congress, Delegates Talk Toxic Milk Powder (Time World Blog) 42
Why John Kerry Must Listen to China's Social Web () 43
In Central Asia, China Casts a Long Shadow () 45
In Broadcasting Lead-Up to Execution, China Ignores Rule of Law () 46
Miscellaneous
Print
Murder of baby found in stolen SUV prompts soul searching in China (The Guardian) 48
Chinese mourn death of carjacked baby (The LA Times) 49
Online
In China, It’s ‘Til Death – or Taxes – Do Us Part (THE WSJ CHINA REAL TIME REPORT BLOG) 50
Lei Feng Comrade-in-Arms Dies While Celebrating Lei Feng Day (THE WSJ CHINA REAL TIME REPORT BLOG) 51
Renewable energy; Cleaning up (The Economist Analects Blog) 52
Business & Economics
Newswire
Google controls too much of China's smartphone sector: ministry (Reuters)
SHANGHAI | Tue Mar 5, 2013
(Reuters) - Google Inc has too much control over China's smartphone industry via its Android mobile operating system and has discriminated against some local firms, the technology ministry said in a white paper.
The white paper, authored by the research arm of China's Ministry of Industry and Information Technology, also said China had the ability to create its own mobile operating system. (here)
"Our country's mobile operating system research and development is too dependent on Android," the paper, posted online on Friday but carried by local media on Tuesday, said.
"While the Android system is open source, the core technology and technology roadmap is strictly controlled by Google."
The paper said Google had discriminated against some Chinese companies developing their operating systems by delaying the sharing of codes. Google had also used commercial agreements to restrain the business development of mobile devices of these companies, it added.
A Google spokesman in China declined to comment.
The ministry did not recommend any specific policies, regulatory actions or other measures.
Analysts said the white paper, which lauded Chinese companies such as Baidu Inc, Alibaba Group and Huawei Technologies for creating their own systems, could be a signal to the industry that regulations against Android are on the horizon.
"In China, regulators regulate regularly especially where they can position the regulations as helping out domestic companies," Duncan Clark, chairman of technology consultancy BDA, said in an email to Reuters.
"Ironically, Android's success has underpinned a lot of the growth in China smartphone vendors in recent years," Clark said. Home-grown companies had failed previously in China's market for simple handsets, he said, due to weakness in software and operating systems.
South Korea's Samsung Electronics Co Ltd, the world's largest smartphone maker, uses the Android system, as do Chinese manufacturers Huawei and ZTE Corp.
Last September, the launch of a smartphone between Acer Inc and a unit of Alibaba Group was cancelled due to what Alibaba said was pressure from Google on the Taiwanese group. Representatives for Acer and Google declined to comment on the matter at that time.
Technology research firm IDC has estimated that China surpassed the United States as the world's biggest smartphone market in 2012, accounting for 26.5 percent of all smartphones shipped.
In 2010, Google conducted a partial pullout from China on the basis of censorship and after it suffered a serious hacking episode that the company said emanated from China. Since then, Google's search market share in China has fallen from almost 30 percent to 15 percent at the end of 2012. Android has been Google's bright spot in China.
In the third quarter last year, Android accounted for 90 percent of all mobile operating systems in China while Apple Inc's iOS system was at just 4.2 percent.
(Reporting by Melanie Lee; Editing by Edmund Klamann)
Wen Warns on China Tensions in Final Speech as Premier: Economy (Bloomberg)
By Bloomberg News - Mar 5, 2013
Chinese Premier Wen Jiabao said the nation lacks a sustainable growth model and faces mounting “social problems,” as he ends a decade in power that saw the economy grow fourfold to be the world’s second largest.
“We are keenly aware that we still face many difficulties and problems,” Wen told almost 3,000 delegates in his final report to the National People’s Congress in Beijing today. He set an economic growth target of 7.5 percent for this year, unchanged from 2012, and an inflation goal of 3.5 percent.
Wen steps down at the congress, which runs through March 17, after overseeing China’s rise to an $8 trillion economy that surpassed Japan and Germany and sustained its expansion through the global financial crisis. Those achievements have come at the cost of surging inequality, environmental degradation and growing financial risks, challenges that he leaves for incoming Premier Li Keqiang.
“There are also many problems Wen left behind, and the new leaders are to face and tackle,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. They include “the risk of a property bubble, significantly increased local government debt, income equality and worsening pollution,” said Zhang, who previously worked for the International Monetary Fund.
An annual expansion target of 8 percent was in place from 2005 to 2011. Last year’s inflation goal was 4 percent. Wen reiterated that interest rates and the yuan’s exchange rate will become more market-based.
Unbalanced Growth
China needs to navigate a global recovery that’s “full of uncertainty,” Wen said. In the domestic economy, “unbalanced, uncoordinated and unsustainable development remains a prominent problem,” he said, repeating a phrase that he’s used previously. “Social problems have increased markedly.”
The benchmark Shanghai Composite Index (SHCOMP) fell 3.6 percent yesterday, the most since August 2011, on measures to cool the property market, underscoring the challenge for the new Communist Party leadership of balancing growth and price concerns. The gauge rebounded 2.3 percent today.
“Li Keqiang will be thinking about how to keep the pace of reform fast enough to prevent China from a hard landing,” said Yao Wei, China economist at Societe Generale SA in Hong Kong, ranked by Bloomberg as the most accurate forecaster for quarterly gross domestic product. “The Chinese economy is losing competitiveness because of high wage growth, the corporates have high leverage and there’s excess capacity.”
One-Child Policy
January saw Beijing engulfed by pollution and the statistics chief reporting a drop in the workforce that may constrain expansion. China’s Gini coefficient, a measure of income differences, was 0.474 last year, according to the government, higher than the 0.4 level that analysts say signals a potential for social unrest.
Wen didn’t discuss changes to the one-child policy, saying China “should adhere to the basic state policy on family planning.” He also said that “we should resolve to solve the problems of serious air, water and soil pollution.”
Wen also set a goal for M2 money-supply growth of about 13 percent, following last year’s increase of 13.8 percent.
China is aiming for an 8 percent increase in foreign trade in 2013, the National Development and Reform Commission said in a separate report today, compared with last year’s 10 percent goal. Exports advanced 7.9 percent in 2012 and imports rose 4.3 percent.
The retail-sales growth target is 14.5 percent and fixed- asset investment is projected to rise 18 percent, according to the NDRC report. Retail sales rose 14.3 percent last year and investment increased 20.3 percent.
Biggest Risk
“The biggest risk this year is still growth, not inflation,” said Joy Yang, chief Greater China economist at Mirae Asset Financial Group in Hong Kong.
The nation plans to run a budget deficit of 1.2 trillion yuan ($193 billion), amounting to about 2 percent of gross domestic product and 50 percent wider than last year’s deficit. The Ministry of Finance said it will issue bonds to cover local governments’ portion of the budget deficit, which will amount to 350 billion yuan.
Wen’s response to the global financial crisis included lending that left local governments with 10.7 trillion yuan of debt at the end of 2010. “We will continue to strengthen management of local government debt” and “keep such debt at an appropriate level,” Wen said today.
“There are concerns that some local governments are accumulating too much debt for short-term high growth,” Li Daokui, a former member of the central bank’s monetary policy committee, told reporters at the congress today. “They are consuming May’s grain in April.”
Price Pressures
The economy expanded 7.8 percent last year, the weakest pace since 1999. The median estimate of 43 analysts surveyed in February by Bloomberg News is for a pickup to 8.1 percent growth in 2013. Expansion was 7.9 percent in the fourth quarter, the first acceleration in two years.
“This year, China is still under considerable inflationary pressure,” Wen said, citing upward pressure on prices of land and labor and monetary easing in major developed countries. In addition, “we need to leave some room for adjusting the prices of energy and resources,” Wen said.
The consumer price index increased 2.6 percent last year, less than half 2011’s rate, and economists project a 3.1 percent rise this year, based on a Bloomberg survey.
Wen reiterated China will pursue a “prudent” monetary policy and “proactive” fiscal policy. China has held off from easing monetary policy since cutting interest rates in June and July and lowering banks’ reserve requirements three times through May.
Australia, Europe
Elsewhere in the Asia-Pacific region today, the Reserve Bank of Australia kept its benchmark interest rate unchanged at a half-century low and reiterated it has room to cut further if needed to boost demand. Governor Glenn Stevens and his board left the overnight cash-rate target at 3 percent.
“With inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate,” Stevens said in a statement. “The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary.”
Economic releases around the world today include services industry reports in Europe.
To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@; Zheng Lifei in Beijing at lzheng32@
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@
China Weighs Risks to $50 Billion Investment After Chavez (Bloomberg)
By Bloomberg News - Mar 6, 2013
Chinese firms are assessing the risk that Venezuelan President Hugo Chavez’s death poses to investments worth at least $50 billion, after 14 years of closer ties between the two countries.
China Development Bank Corp., which has lent Venezuela more than $40 billion since 2008, has contingency plans in place, Yao Zhongmin, head of the bank’s supervisory board, said in an interview today. State-owned conglomerate Citic Group Corp. is also weighing the risks, Chairman Chang Zhenming said.
State-owned Chinese firms have won contracts to build railroads, housing and power stations since Chavez took power in 1999 and nationalized more than 1,000 companies or their assets. The terms of some of the deals may face new scrutiny should Venezuela’s opposition wins elections required to be held within 30 days.
“If you do get an opposition candidate that wins there could be more information out there about previous deals that will be very uncomfortable,” said Matt Ferchen, a scholar at the Carnegie-Tsinghua Center for Global Policy in Beijing. “That could be politically unnerving but also reason for leverage to rework some of the deals.”
Chavez died yesterday at age 58 of cancer. Since he announced his illness in June 2011, investors have speculated that his departure could pave the way for the opposition to win power and introduce more market-friendly policies.
Dollar Bonds
Chavez was a “great friend of China,” Foreign Ministry spokeswoman Hua Chunying said at a briefing today in Beijing, adding that China’s top leaders sent their condolences over his death. “China cherishes the two countries’ friendship and would like to work with Venezuela to constantly develop their strategic partnership,” she said.
Moody’s Investors Service rates Venezuelan long-term foreign-currency debt B2, or five levels below investment grade, the same as Honduras and Cambodia.
Led by China Development Bank, the world’s largest policy lender, China has made Venezuela the main focus of its global oil-for-loans program, in which loans were repaid with oil shipments. Some of the biggest state-owned companies, including Citic Group, China Railway Group and Sinohydro Corp. won more than $11 billion in contracts to build and supply equipment for infrastructure, according to data compiled by Bloomberg.
“As long as Venezuela maintains stable oil exports to China, then the risks to China’s loans are small,” said Sun Hongbo, an associate professor at the Institute of Latin American Studies, part of the Chinese Academy of Social Sciences. “No matter who wins the presidential election, China will continue to be a strategic partner for Venezuela.”
Gold Mines
Venezuela became the Americas’ largest recipient of Chinese credit under Chavez, as private lenders were driven away by the nationalization of more than 1,000 companies as well as currency and price controls.
While the Venezuelan government’s average bond yields have fallen to 9.06 percent from 10.91 percent a year ago, they still paid 4.39 percentage points above the average for emerging- market sovereign dollar-denominated debt globally yesterday.
CDB has a contingency plan in place to account for risks associated with Chavez’s death, Yao said, without elaborating.
Citic, a state-owned conglomerate that runs banks, brokerages and develops real estate, is building as much as $3 billion in housing in Venezuela.
Venezuelan Oil Minister Rafael Ramirez in January said the country was in talks with Citic to develop gold mines. Chang said Citic was undertaking a feasibility study for the mine in Venezuela and had not yet invested.
“I think no matter who is the president, they will still need to construct houses,” he said.
To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at mforsythe@; Henry Sanderson in Beijing at hsanderson@
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@
China Promises Flexibility on Renminbi (Reuters)
Published: March 6, 2013
BEIJING — China will press ahead with currency overhauls to allow more flexibility in the renminbi’s exchange rate, while maintaining a relatively steady value, a senior central bank official said Wednesday.
The comments from Yi Gang, who reiterated an assertion that the central bank — the People’s Bank of China — had reduced intervention in the foreign exchange market, emphasize the stability that Chinese policy makers want to ensure, even as they try to turn the renminbi into a more freely traded currency.
“We will continue to reform and open up. I’m confident that the renminbi exchange rate will be more balanced and flexible and basically stable,” Mr. Yi said on the sidelines of the annual meeting of the National People’s Congress.
“The renminbi exchange rate is closer to its equilibrium,” added Mr. Yi, who is a deputy governor at the central bank and also head of the State Administration of Foreign Exchange, China’s foreign exchange regulator.
Official remarks that the renminbi is near its equilibrium contrast with data this week suggesting that demand for the currency may be rising again as China recovers from its economic slowdown in 2012, the worst in 13 years.
The renminbi hit a seven-week high Wednesday, a day after data from the People’s Bank of China showed the central bank and commercial banks in China had bought a record 683.7 billion renminbi, the equivalent of $109.9 billion, worth of foreign exchange in January.
Economists say the purchase indicates capital is flowing back into China, although the central bank’s governor, Zhou Xiaochuan, played down the idea Wednesday.
“You can’t draw any conclusions from one month’s data. The volume every day is very high,” said Mr. Zhou, also speaking on the sidelines of China’s parliamentary session. “Sometimes there is more demand for renminbi and sometimes for foreign exchange.”
Large purchases of foreign currency by China’s central bank and commercial banks amount to base money creation and can fuel inflation in the country unless the People’s Bank of China soaks up the excess renminbi injected into the system. Mr. Yi said China would use open market operations to mop up excess cash stemming from foreign exchange inflows.
The foreign exchange committee said last month that China faced greater risks as capital flowed rapidly in and out of the country this year against a backdrop of economic uncertainty worldwide.
Ting Lu, an economist at Bank of America Merrill Lynch, said the record purchases of foreign currency in January showed pent-up demand for the renminbi as confidence in the Chinese economy rebounded.
But Mr. Lu said he did not think such large purchases would be sustained, as the central bank has signaled that there is little room for the renminbi — also known as the yuan — to rise.
“The room for further yuan appreciation against the dollar is limited, as is signaled by the People’s Bank of China’s recent interventions,” he said.
Despite the central bank’s declarations that it has reduced its foreign exchange interventions, currency dealers say they still spot aggressive buying or selling of dollars by the authorities.
China’s central bank wants to turn the renminbi into a convertible, or less controlled, currency that becomes a major medium of exchange in global commerce and one day would rival the dollar as an investment in government reserves.
China's solar king Shi 'shocked' at dismissal (Bloomberg)
March 7, 2013
Shi Zhengrong, who was ousted as chairman of China's giant Suntech Power this week, said he was “shocked” by the board's “misconceived and unlawful” decision to remove him and that he's been excluded from meetings for the past month.
“The problem is they don't have a solution,” the Australian-trained Shi said yesterday after issuing a statement. “They need a viable business plan. They need to talk to all the bondholders and suppliers and government."
"All the stakeholders want to talk to me. All the bank CEOs want to talk to me. They want to know why Dr. Shi didn't show up.”
Shi said the solar manufacturer's board has no plans for refinancing the $USUS541 million convertible bond due on March 15.
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Shi founded Suntech in 2001 after earning a Ph.D. in electrical engineering from the University of New South Wales and serving as executive director of Pacific Solar Pty. in Sydney.
It was the first Chinese solar company in the 17-member BI Global Large Solar index to sell shares on the New York Stock Exchange. Its 2011 sales of $US3.1 billion made it the world's biggest panel maker. It's yet to release 2012 earnings.
Accounting scandal
Shi's comments indicate divisions within the Chinese company's management about how to recover from an accounting scandal and plunging solar-cell prices, which have led to two years of losses for Suntech. Suntech said today it's confident its appointment of Susan Wang is valid and legal.
“This is definitely negative for the company, making internal conflicts public and leaving fewer efforts to deal with company matters,” Wang Haisheng, a Shanghai-based analyst at China Minsheng Banking Corp., said.
Suntech hired UBS last year to review options about how to refinance the bonds due this month and have been in talks with bondholders about a solution. The company also is seeking financial support from the local government in Wuxi, the Chinese city near Shanghai where it's based.
“Our best guess is that Suntech is preparing for ceding control to a third party,” said Nitin Kumar, an analyst at Nomura Singapore who rates the shares the equivalent of sell. “Management change at Suntech was sorely needed given the execution missteps over the last five to six years.”
The shares fell 3.8 per cent to $US1.16 in New York. The company's shares have risen 35 percent in the last three months on increased confidence in the manufacturer and its peers. Suntech hasn't reported a profit since the first quarter of 2011. It's bond, due March 15, was unchanged, paying 37.5 cents on the dollar.
Reshuffle
On March 4, Suntech named Susan Wang to replace Shi as chairwoman of the board. Shi remains as a director. Wang has been a director since 2009.
“The board of directors is confident that the appointment of Susan Wang as chairwoman to replace Dr. Zhengrong Shi is valid and effective under the law of the Cayman Islands, the country of the company's incorporation,” Suntech said in a statement today. “Shi remains a director on the board.”
In December, Suntech cut its forecasts for solar shipments. In July, it said it was investigating fraud involving a 554.2 million euro ($US680 million) financing guarantee it made involving German bonds that may have never existed.
Shi wishes to remain involved in the company.
“I have to do my best to save the company,” he said in the interview. The board's decision was “disastrous”, and he has been excluded from meetings for “about a month,” Shi said.
“I have good terms with all stakeholders, including the government, banks and suppliers,” he said, adding that after his removal was announced “banks started to worry that the company was going into bankruptcy.”
Shi said he didn't know if his removal was related to the bond payment due this month because of his exclusion. Stakeholders have been seeking him out since his exclusion, he said.
Print
Shangpin taps China’s fashion eshoppers (The Financial Times)
By Elizabeth Paton
March 6, 2013
From the streets of London and Paris to the flagships of Fifth Avenue and the futuristic malls of Hong Kong and Shanghai, the offline influence of wealthy Chinese foot traffic – and its staggering spending power – has underpinned the soaring fortunes of Western luxury brands.
However when it comes to the country’s luxury etail industry, which is worth an estimated $3.2bn according to Barclays Capital, it is a different story.
Historically, foreign players have struggled to reach levels of online popularity and patronage with China’s 535m internet users that reflect their bricks and mortar returns. This is particularly true when compared with domestic-based rivals such as deep-discount titan Taobao, which accounts for 79 per cent of all Chinese commerce sales.
Perhaps this is why attention has turned to a new market segment. According to David Zhao, chief executive of Shangpin, a members-only website offering 80 Western niche brands such as Stuart Weitzman, Alice by Temperley and Rebecca Minkoff otherwise largely unavailable in China: “Contemporary fashion has huge growth potential here.”
“Chinese customers are becoming increasingly knowledgeable and sophisticated about what they want from luxury purchases – there’s been a shift away from logos and ubiquitous brands to smaller niche labels with an alternative exclusivity factor,” Mr Zhao continues, noting Diane von Furstenberg, M Missoni and Milly by Michelle Smith have proved particularly popular, all accessibly lifestyle brands that lean towards a bold, colourful print-based aesthetic.
“Until 20 years ago, people had one option – a dark, ill-fitting Mao suit – so it’s of little surprise to us that customers are looking to assert their individuality,” says Mr Zhao, adding that the core Shangpin customer base is the young female professional.
Combine their desire for the unknown with the fact that Chinese netizens traditionally scour the internet for bargains rather than full-price purchases, and the underexposed, relatively less pricey segment of the fashion market seems ripe for expansion.
Shangpin launched its full-price website last October having raised $60m in funding from Walt Disney’s Steamboat Ventures and two other international investors. It initially began as a service for 2.4m VIP credit card holders at three major Chinese banks, after Mr Zhao recognised the trust Chinese have in national institutions.
The site gained credibility by association, a crucial asset considering 45 per cent of Chinese eshoppers say they fear products will be exchanged with fakes during delivery, according to a study by Boston Consulting Group.
The company also advises foreign brands with limited local experience on how to establish themselves in China. On Tuesday, it announced an alliance with the Council of Fashion Designers of America that will help both fledging and established US designers by providing business-to-business expertise on marketing and trends, local media exposure, plus translated customer information so brands can learn more about their new client demographic.
“China is of huge interest as a hitherto untapped market to American designers,” says Steven Kolb, chief executive of CFDA. “This new partnership will give members vital insight into the Chinese market, as well as the opportunity to build their brands via online distribution.”
“The geographical scale of the country means that ecommerce in China, much more than in the West, is the most effective distribution and marketing platform for smaller designers who want to reach Chinese regions where traditional bricks-and-mortar stores do not exist,” says Mr Zhao.
Indeed, up to 30 per cent of Shangpin’s sales now come from secondary and tertiary cities such as Wenzhou and Kunming, where there is a significant appetite for Western fashion but limited brand awareness beyond the global giants.
“While competition is fierce, demand from the 21st-century second tier Chinese consumer is undoubtedly booming – there’s millions to be made by winners in the space,” says Sage Brennan, a founding consultant at China Luxury Advisors.
China telecoms set for 4G shake-up (The Financial Times)
By Kathrin Hille in Beijing
March 6, 2013
China’s government looks likely to hand out licences for fourth-generation mobile services this year, triggering a new round of capital expenditure that could reinvigorate a slowing telecoms sector.
State media on Wednesday quoted Miao Wei, Minister of Industry and Information Technology, as saying on Tuesday that he expected 4G licences to be issued before the end of this year. Previously, the ministry had said those licences were not likely to come before 2014.
Shares in ZTE, China’s second-largest vendor of telecom networking equipment by revenue after unlisted Huawei, saw the biggest impact, closing 8.9 per cent higher. This allowed shareholders to claw back losses after a string of profit warnings had driven the share price down over the past year.
The state-controlled company has backed China’s homegrown mobile standard TD-SCDMA, by launching a large number of handsets supporting it. While it has secured a larger share of domestic network equipment contracts than Huawei, this has made it more reliant on domestic business than its larger rival. ZTE blamed an expected net loss of up to Rmb2.9bn for 2012 partly on delayed capital expenditure from Chinese telecom carriers.
Other telecom-related stocks received a smaller boost. The Hong Kong-listed units of China Unicom and China Telecom, the country’s second- and third-largest telecom operators by revenue and subscribers, closed 1.7 per cent and 2 per cent higher, respectively. China Mobile, the world’s largest mobile carrier by subscribers, was down 0.4 per cent.
Several Chinese carriers already have 4G trials under way in several cities, but overall China is behind many developed markets in its roll-out of the technology. This mirrors the country’s introduction of 3G, which was delayed several times before licences were issued in early 2009.
3G helped to narrow the huge gap in subscribers between China Mobile, the former monopolist, and China Unicom and China Telecom, the two other state-owned companies which the government admitted to the mobile sector to increase competition.
The government sent China Mobile into the 3G race with shackles, linking the firm’s licence to the condition that it build a network using the relatively new TD-SCDMA standard – a restriction which limited its capacity and prevented it from signing up large numbers of high-end customers. China Unicom and China Telecom were allowed to build 3G networks using the well-tested standards used in European and US markets, respectively.
As a result, the two challengers hold much larger chunks of the 3G market by subscribers than of the mobile market overall. China Mobile still dominates the overall mobile market with 715m subscribers compared with 243m at China Unicom and 163m at China Telecom. However, its lead in 3G is far slimmer, with 95m subscribers to China Unicom’s 80m and China Telecom’s 72m.
4G is expected to hold more opportunities for China Mobile because different mobile standards are becoming more mutually compatible. However, the development of 4G in China still faces hurdles such as a lack of devices equipped to use the standard, Mr Miao warned.
China's growth to surge in push (The Australian)
BY:SCOTT MURDOCH, CHINA CORRESPONDENT
March 07, 2013
CHINA'S economy could exceed the official growth targets set for this year as the incoming leadership pushes for a strong start.
The government's official Work Report delivered this week at the National People's Congress outlined that the economy should grow by 7.5 per cent this year, matching last year's.
However, economists expect growth will be above that mark, with incoming president Xi Jinping and premier Li Keqiang keen to avoid economic slow-down in their first year.
Speculation is growing over a fresh fiscal stimulus package.
HSBC's chief China economist, Qu Hongbin, said the economy could grow by at least 8.6 per cent, maintaining China's role as the fastest-developing nation in the world.
"Beijing is going to make the preservation of domestic demand growth as a priority for this year," Mr Qu said. "This year will also be special as the new leadership taking office from March will want to see China's growth recover through to the end, rather than for it to dip back into another cycle of deceleration."
The 7.5 per cent target is down from the 8 per cent official objectives that were in place for five years, until last year. China's economy has grown by at least 9 per cent, on average, over the past five years.
Mr Xi, who will be sworn in at the end of the congress by March 17, said the new government would press on with reforms to keep opening up China and its economy. The Work Report, delivered by outgoing Premier Wen Jiabao, was criticised for not outlining the government's plans for political and legal reform.
However, Mr Xi said his government would be bold with reforms. "We must have the courage, like gnawing at a hard bone and wading through a dangerous shoal," he said. "The government should give more respect to the law of the market and play a better role in advancing reform and opening up."
China also moved yesterday to defend the sharp increase in the military budget this year, in which $US114.3 billion ($111.7bn) will be spent on defence and national security. That means China has spent nearly 25 per cent more on its armed forces over the past two years.
An editorial in the English-language Chinese newspaper Global Times said the military budget increase was "no fuss" because the spending was in line with China's place as the world's second-largest economy.
"It's hard to say whether the scale of China's military budget is big or small; such assertions depend on which country China is compared alongside and the state of national security and potential threats," it said.
"There are many uncertainties facing China's strategic security. Hazards not only come from China's neighbouring countries, such as Japan and The Philippines, who are bolstered by a sense of US support.
"However, China's defence budget increase does not aim to spark a confrontation with the US. In following years, China will still lack the capability to have a strategic showdown with the US, no matter how much it spends on modernising its military."
The People's Daily, the official newspaper of the Communist Party, defended the military budget and said the planned increase this year was below the spending growth over the previous two years.
Not the Android China's Looking For (The Wall Street Journal)
By TOM ORLIK
March 6, 2013
China's searching for an alternative to Android.
The China Academy of Telecommunication Research, a think tank linked to the Ministry of Industry and Information Technology, has said that China is too reliant on Google Inc.'s GOOG -0.86% mobile operating system and accused the company of using its dominance to discriminate against Chinese firms.
The irony is that by making its operating system freely available, Google has provided a platform for explosive growth in China's smartphone industry. Lenovo Group Ltd., 0992.HK +1.07% ZTE Corp. 000063.SZ +10.03% and Huawei all use Android. An open system also allows Google's Chinese rival Baidu BIDU -1.58% to install its search bar in Android phones.
That said, it's easy to see why Beijing might be concerned. A dominant position—with about 80% of smartphones sold in China running the Android system—does provide scope for abuse. As bad, Android is a foreign technology underpinning a mobile Internet otherwise dominated by Chinese firms like Baidu Inc., Tencent Holdings 0700.HK +1.23% and Alibaba.
Looking longer term, China might be hoping to develop a homegrown operating system. That's a tall order in a quickly maturing market, where Android and Apple Inc.'s AAPL -1.27% iOS both have widely used systems supported by thousands of popular applications. Michael Clendenin, an expert on China's technology sector at RedTech Advisors, says that—arriving late to the party—a Chinese system would struggle to gain traction.
For Google, the immediate commercial implications are strictly limited. A think tank report is a long way from a change in policy. Even if Beijing did seek to limit Android's market share, with most Chinese smartphones using Android to access Baidu rather than Google search, the hit to revenue would likely be minimal.
Still, following Google's exit from the mainland search market in 2010, and China's threat to intervene in the acquisition of Motorola MSI +0.22% last year, this latest report suggests life for the U.S. giant isn't getting any easier. An expected law regulating the smartphone market could add to the pressure. Google's search for a more effective China strategy continues.
Online
Announces Full Acquisition Of Crucco ()
March 6, 2013
Chinese B2C e-commerce website announced that it will acquire the apparel e-commerce brand Crucco with an undisclosed amount of cash and equity.
The valuation of Crucco was reportedly over CNY10 million, but specifics are still not available. On the completion of the acquisition, the Crucco team will be merged into Vancl.
Chen Nian, founder and chief executive officer of Vancl, said this acquisition is based on the recognition of the strengths of Crucco's CEO Xu Xiaohui and its team. As a sub-brand of Vancl, Crucco will still be managed and operated by the Crucco team. In addition, Vancl will seek more acquisition opportunities in 2013.
Xu worked as assistant president of Vancl between 2009 and 2010, promoting the Internet marketing success of Vancl. After that, he created the lifestyle apparel brand Crucco. With over two years' operating experience, the Crucco website has reportedly achieved annual sales of over CNY10 million.
Starting from the end of 2012, Vancl set new goals for growth. With this acquisition, the company will be able to better meet customer demands, especially the diversified fashion demands of female users in China.
EMC China's Growth Focuses On Big Data, Cloud Computing ()
March 6, 2013
EMC announced its new 5-year development plan for its China business, covering channel expansion, cloud projects, and big data business.
Ye Chenghui, EMC's global senior vice president and president for Greater China, revealed that he set a new goal for China, which is to increase the operating revenue of the region by five times over five years.
Over the past five years, EMC China's operating revenue increased by five times and it reached a compound annual growth rate of 35%.
Ye said in the next five years, EMC China will focus on expanding local ecosystems. The number of EMC China's channel partners will be increased from the current 3,578 to about 20,000. Meanwhile, the company will continue to team with local industry partners to implement localization investment and cooperation.
Over the past few years, EMC not only cooperated with channels like Digital China, Lenovo Group, and Ufida, but also explored the development and joint venture sectors. Ye said EMC China is implementing in-depth cooperating negotiation with several enterprises.
According to Ye, the joint venture established by EMC and Lenovo Group already started OEM and distribution of storage products. The two parties' server development work is also apparently progressing well.
For cloud computing, Ye said the future opportunities in the Chinese market lie in sectors, including smart city, healthcare, education, and IT services. He predicted that EMC will realize at least 1,000 cloud projects in over 300 cities in China over the next five years.
For big data, EMC plans to launch more big data solutions and will focus on Chinese acquisitions in this sector. In the next five years, EMC's big data-related business is expected to see ten times increase by operating revenue. In addition, EMC China aims at 50% market share in the enterprise data center market.
Buick Dealership Uses Dead Baby In Car Ad, Told To “Go Die” ()
By Anthony Tao March 6, 2013
When it comes to PR disasters, few look worse than this. Then again, when you use a carjacking/kidnapping-turned-murder to try to push products out of your showroom, you deserve all the bad karma you get.
Abe Sauer of Brand Channel has this story:
Liaoning Tianhe Buick, a dealership in Jilin’s neighbor province, posted the following (now deleted) on its Weibo page:
A few thoughts following the Changchun stolen car incident: When buying a car it’s completely okay to choose higher technology. Tianhe Buicks carry the OnStar GPS system, allowing the lockdown of a stolen vehicle at any time and place. An easy heart, a piece of mind, likewise why not buy a completely safe Buick!!!!! Sales Hotline: 024-86547880 86547881 QQ:521279389 2523275273 .
More incredibly, the dealership posted a picture of the two-month-old baby who was sleeping in the back of the SUV that was stolen in Changchun. The carjacker eventually turned himself in and admitted to strangling and burying the toddler in the snow.
Sauer again:
Needless to say, Weibo users are incensed. Some called the Buick dealership “virtueless.” Others called for the account to be suspended while others used curses. One said simply, “Go die.”
Liaoning Tianhe Buick has posted an apology, but the damage may have already been done. Or does all publicity remain “good”?
A solemn apology: At 11:45 pm on March 5 Liaoning Tianhe Buick improperly posted to its Weibo. To the family of the victims and to the public, we very deeply apologize for any emotional damage and hurt feelings.
China Buick PR Disaster as Dealer Uses Deceased Baby in Ad (Brand Channel)
China equities on track to go global (The FT Beyond BRICs Blog)
By Josh Noble in Hong Kong
March 6, 2013
Mainland Chinese shares are set to join global equity benchmarks as early as three years’ time, FTSE’s chief executive has forecast, raising the prospect that international investors will have to shift billions of dollars into the market.
Reforms by Beijing have had a “big impact” on how investors view mainland markets, said Mark Makepeace, FTSE chief executive, who is in Asia to “kick off a process” he believes will lead to Chinese equities joining his company’s global indices.
“If they continue with the current policies at the current pace ... I would expect China to be eligible over the next three to five years,” he told the Financial Times on Wednesday. “Investors need to start thinking about the issue now, and draw up plans in the next 18 months.”
Mainland equities are largely excluded from global indices because of restrictions on access for international funds under China’s qualified foreign institutional investor quota system. Just 1.3 per cent of mainland equities – known as A-shares – are owned by non-Chinese investors.
Chinese authorities have been actively seeking a greater role for overseas funds in the hope they can help make equities a trustworthy investment alternative to the property market for the country’s savers.
The China Securities Regulatory Commission last year accompanied officials from the Shanghai and Shenzhen stock exchanges on a global roadshow to raise interest in Chinese markets.
The CSRC has also lowered the barrier to entry for foreign asset managers applying for QFII licences. Guo Shuqing, CSRC chairman, said he would like to see foreign investor quotas increased tenfold this year.
The Shanghai stock exchange has directed listed companies to return 30 per cent of profits to shareholders via dividends as part of the effort to encourage longer-term investment.
The inclusion of mainland China in global benchmarks, such as those compiled by the FTSE or rival MSCI, was “long overdue”, said Howhow Zhang, head of research at Z-Ben Advisors.
“The current market will have to go through some fundamental changes to accommodate a major group of foreign investors,” Mr Zhang said. “[But] I wouldn’t be surprised at all if [it happens] in the next three to five years.”
Based on FTSE’s market projections, China would account for roughly 7 per cent of its Global All-Cap index, making it the second-biggest market in the benchmark behind the US.
Chinese equities listed offshore in Hong Kong and New York, in addition to the small foreign-owned portion of A-shares, currently make up about 2 per cent.
The challenge of migrating China into a global index would be “much bigger than anything we’ve faced before ... due to its sheer size”, Mr Makepeace said, adding that he expected a formal dialogue with Chinese regulators to start within the next 12 months.
If A-shares were added to the FTSE emerging markets benchmark, China would account for 40 per cent of the index, although Mr Makepeace said that would likely rise to more than 50 per cent by the time China is eligible for full inclusion.
Asset managers and exchange traded funds that track global and regional indices would be forced to buy A-shares were they added by the index compilers.
Shanghai and Shenzhen A-shares have a combined market capitalisation of $3.7tn, larger than the FTSE 100 or Japan’s Topix index.
Guest post: No need to fear China’s housing crackdown (The FT Beyond BRICs Blog)
Mar 6, 2013
By Stuart Rae and John Lin of AllianceBernstein
New measures to cool China’s housing market have triggered fresh volatility and stock declines across Asia. But we think the latest government moves won’t derail the long-term drivers of Chinese real estate growth.
How quickly things change in China. After house prices grew at nearly 1 per cent a month in 2011, investors worried that the market was overheating. Then, last year, fears that the government would clamp down on the market prompted a slump in real estate stocks, which later bounced back when the market didn’t collapse. Now, as new fears of a bubble prompted more mortgage restrictions, stocks across Asia dropped and Chinese property developers tumbled sharply again.
So what should equity investors do? In our view, the key to navigating the turbulence is to understand the underlying dynamics of the capricious housing market in the world’s most populous nation.
It’s widely believed that rapid urbanization is the fuel for Chinese real estate growth. Just over 50 per cent of China’s population lives in urban areas, compared with about 75 per cent in industrialized countries. Li Keqiang, the next premier who is driving the urbanization move, has stated his commitment to promoting more movement from rural areas to cities.
While urbanization is important, it’s only part of the story. In fact, we think housing upgrades account for a much bigger component of real estate demand, based on our view of various market trends. China’s housing stock is dominated by poor quality communist-built blocks. Large-scale residential housing projects only began to take off in the late 1990s, and modern units were only introduced in 2004. With more wealth, people naturally want housing that meets developed-market standards.
This distinction is important. Since upgrades and replacements are the engine of the market’s growth, changes in government policies can’t really impede the long-term trends. Tighter mortgage restrictions might cause some Chinese buyers to temporarily defer a housing upgrade, but people with more money will still want better houses next year—and developers are eager to build them.
Having a clearly defined long-term outlook can allow investors to take advantage of market turmoil. Indeed, as home purchase restrictions (HPR) were tightened in 2011, shares of Chinese real estate companies tumbled. Investors who bought these shares on the decline were rewarded in 2012, as restrictions eased and shares surged. Similarly, the latest blow may prove to be a buying opportunity for select Chinese real estate stocks that are best positioned to benefit from the next wave of replacement and upgrade construction.
Last October, we said that Chinese house prices and home sales were more resilient than widely perceived and that the real estate sector was attractively valued. It’s no different today. Even before the abrupt declines of the last few days, Chinese real estate stocks traded at a valuation of about 8.6 times earnings for the next 12 months—a discount of about 12 per cent to the MSCI China Index. Now, we think property stocks are likely to become even more attractive, especially given the likelihood that the fundamentals of demand in the property market should eventually reassert themselves.
There’s a broader lesson here for investors. China’s government loves to micromanage everything from power tariffs to oil prices to infrastructure investment. With this in mind, it’s much easier to separate the noise that often moves stocks from the sound of China’s incredible economic growth rumbling ahead.
Stuart Rae is Chief Investment Officer—Pacific Basin Value Equities and John Lin is Senior Research Analyst and Portfolio Manager—China Value Equities, both at AllianceBernstein.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AllianceBernstein portfolio-management teams.
Chinese in Africa Find a Land of Challenge, But Opportunity ()
March 6, 2013 | by Nan Chen
During Chinese New Year, Chinese gathered together with loved ones to watch the CNY celebrations. People passed around traditional treats like jiaozi and tang yuan. As revelers sang karaoke under red lanterns, one could think for a moment that this was Beijing. But one look out the window upon the streets jammed with matatu (a privately owned minibus in Kenya) reminded these Chinese expats that they were in Nairobi. More and more, Chinese are finding themselves living and working in Africa.
As a Chinese-American working in Nairobi, I have the special privilege of observing the Sino-Kenyan interactions and sliding (often awkwardly) between both worlds. Some Kenyans don’t believe I’m from the U.S. (“No, where are you really from?”) or occasionally ask me for a job in construction. Chinese friends invite me to dinner only to find out I don’t actually speak their language fluently (but I love the food). These encounters have brought me face to face with the Chinese expat community and Kenyans who have been affected by the influx of these new immigrants.
Africa, Land of Opportunity
17 years ago, Mr. Si arrived in Tanzania. He came to explore the market for a Chinese state-owned enterprise (SOE) and found the locals literally shoeless. However, beyond the poverty he saw an opportunity for growth. Almost two decades later, he resides in Nairobi overseeing operations for the same SOE. The company has recently partnered with the Kenyan Education Ministry to provide USD $24 million in manufacturing equipment and training for Kenya’s vocational schools. When asked why he stayed after all these years, he simply replied “Where there are business and trade opportunities, life is good.”
Since Mr. Si’s arrival, tens of thousands more Chinese have immigrated to Africa. In Kenya alone, official estimates of the Chinese expat population number over 10,000. On a recent afternoon, I had lunch with Mr. Si and several co-workers in their apartment. Their SOE not only provides them with furnished apartments, but also a personal chef from China who cooks three meals a day. The meal was some of the best Chinese food I’ve had in Nairobi, and the chef even recommended a place where I could buy fresh vegetables. Such benefits are not unusual for Chinese companies (particularly state-owned enterprises) and are one reason posts in Africa are desirable.
Personal chefs are not the only reason the Chinese come to Africa. Like Mr. Si, many Chinese see Africa as an opportunity to make money, whether as an entrepreneur or an employee. One employee of an SOE commented that the Chinese are in Africa for short term gain, unlike many westerners who have settled here. “We come in for a few years, make money and go home to our families.” Chinese employees stationed in Africa are often paid higher rates and have housing stipends. Likewise, those interviewed felt that the Chinese markets were saturated and competition was high, compared with Africa, where new opportunities were plentiful.
For Chinese expats, business comes first and politics second. The upcoming Kenyan elections matter only to the extent that they impact business. While among my western colleagues, these elections represent a momentous political situation with human rights implications, the Chinese (though not unconcerned with potential elections violence) find the politics disruptive of business. One person interviewed contrasted the Chinese in Kenya who come mainly for business reasons to the Japanese who come for a variety of reasons including volunteering, NGO work, or other non-business related reasons.
These contrasting views on politics appear to play out on a governmental level as well. While Western governments have voiced concern over the possible election of an ICC-indictee, Chinese officials have promised, “No matter who is elected, the Chinese Government is willing to work with the Kenyan Government.” One expat interviewed explained that “China’s style of politics is to not get involved in other countries’ affairs.”
Strangers in a Strange (but Welcoming) Land
As must be expected with any large influx of a new ethnicity into an otherwise homogenous area, some clashes have occurred. However, most of the Chinese expats with whom I spoke have very positive impressions of Kenya, and Africa as a whole. My own experience is that while discrimination definitely occurs, it is often not motivated by xenophobia or resentment. Rather, Kenyans have conflicting views: Chinese make poor products and take away Kenyan jobs, but at the same time provide massive infrastructure projects that employ many Kenyans. When asked about his opinion on Chinese investment, one local Kenyan in the service industry felt that Chinese goods were of poor quality, but at the same time were at a price that he could actually afford. On several occasions, locals have asked me for employment, assuming that I am a business owner or construction manager.
To be sure, there is some resentment among locals. In 2012, Kenyan shop owners protested competition from illegal Chinese vendors of cheap goods. However, Chinese I spoke with felt this was an isolated incident by a small minority of Kenyans, directed toward those Chinese “hawkers” and not the Chinese in general. Kenyans seemed to agree. One Kenyan dismissed those protests and simply pointed at the roads. “Before the Chinese, these potholes would be repaired maybe once a year.” According to Pew’s 2010 Global Opinion Poll, 86% of Kenyans viewed China “favorably.” Only 49% of Kenyans felt the same way about the US.
On the other hand, Chinese coming to Africa often come bearing preconceptions and prejudices of their own. A quick search on Weibo reveals many ignorant or derogatory comments towards Africans. For example, one Chinese Web user referred to Africans and Arabs as “unindustrious” and “lazy like snakes.” Interviewees felt their mainland counterparts often carry latent prejudices about Africans’ work-ethics, but they also complained about Kenyans’ work-ethics themselves. However, one colleague was quick to point out that this is not a complaint about Kenyans as an ethnic group, but a complaint about cultural differences in work. Another employee admitted that he had misconceptions about Africa before, and that “One cannot know a people until they get in the country.” Once here, he encountered a “highly civilized and motivated people.” However, he did express frustration with the highly bureaucratic nature of working in the capital of Nairobi.
Another common preconception among netizens and doting Asian mothers alike is about safety. Particularly in a city pejoratively nicknamed “Nairobbery” which has been subject to attacks from the terrorist group Al-Shabaab in recent years, the Chinese (and expats in general) tend to be on heightened alert. My own take on this is that the supposed dangers of Nairobi (and Africa at large) are a bit overblown, a combination of fear of the unknown and media sensationalism. One expat agreed, stating that “the only positive stories of Africa in the media deal with animals and nature.” These misconceptions may slowly be remedied by Xinhua news agency’s efforts to promote positive stories from their Africa offices and China Daily’s new Africa Weekly.
However, most Chinese immigrants in Nairobi are not taking any risks. One woman who works as a translator for the UN says that she never walks anywhere, preferring the safety of her car. A Chinese embassy worker agreed with her. Some Chinese companies or government offices even institute restrictions on their employees, requiring them not to leave their compounds at night (most foreigners live in gated compounds with 24-hour security).
Despite safety concerns and some culture clashes, most people with whom I’ve spoken find the Sino-Kenyan relationship mutually beneficial and amicable. On a recent visit to the facilities where Mr. Si’s company was training Kenyans on manufacturing equipment, I found Chinese and Kenyans huddled together over the large equipment. I asked the Chinese director what the future looks like after the partnership ends. He looked over at the manufacturing equipment and replied that the future of these Kenyans “is limited only by their own imaginations.” As for myself, I am pleasantly surprised that worlds away from my home, I can find a decent hot pot restaurant where the Kenyan host greets me with “nihao.”
Why Facebook, Google, and Twitter Made It in Vietnam, But Not in China ()
Mar 6, 2013
by Anh-Minh Do
Oftentimes, people like to compare Vietnam with China. In some ways, the similarities are pretty obvious. The Chinese dynasties ruled Vietnam for one thousand years. Vietnamese people celebrate Lunar New Year, and our names have Chinese roots. But online and in the tech industry, things look really different.
In Asia, there are four communist countries: China, Vietnam, Laos, and North Korea. Laos and North Korea are so small they’re not really on the tech map (even if North Korea is finally using mobile internet). That leaves China and Vietnam. In China, Baidu, Tencent, and Sina Weibo are the search and social media giants. In Vietnam, Google and Facebook are tops and Twitter isn’t blocked. What happened?
Search
China began interfering with Google’s search service in 2010, and it frequently fails to load but is not fully blocked. It’s due to China’s effort to manage the content that the majority of its population has access to; it’s also, some have argued, a big part of the protectionist success of Baidu and Sina Weibo who fill the shoes of Google and Facebook/Twitter. Today, Baidu gets an average of five billion search queries per day, and Google gets over 100 billion searches per month. But with Google partially locked out of China (it’s still the fifth most used search engine there), Baidu basically has near-exclusive access to the biggest market in the world.
In Vietnam, .vn is the number one search site and is number three. Vietnam has some new locally-made players like Wada.vn and CocCoc, but they’ll have a hard time up against Google’s dominance. In the mid 2000’s, Google was already slowly creeping into Vietnam. Youtube was and still is one of the most used and viewed websites in Vietnam and so Google was allowed to slowly creep in.
The interesting thing about Vietnam is that Google never officially opened up an office here. It still hasn’t. Google slowly entered, its value was assessed by users, and then it slowly rose to dominance. Now, if Google were blocked in Vietnam, it would leave a huge black hole in the Vietnamese cyberspace.
This is the trend in Vietnam. Let them in, assess how politically harmful they could be, and then realize it’s too late to cut them. For social media, it’s a little more complex. But the same principles apply.
Social Media
China began blocking Facebook in 2008 and Twitter in 2009. In China, the Great Firewall has been very hard to get through, so China’s users have flocked to local social services like Sina Weibo 1. Although many would argue that Chinese sites would still have more users even if others were not blocked. I don’t buy it. If Facebook wasn’t blocked in China, Zuckerberg would open up an office there and/or be collecting the same wealth of data that Weibo now collects on its users. Today, Sina Weibo supposedly has 500 million users. That’s more than Twitter’s 200 million and less than Facebook’s billion.
Vietnam started blocking Facebook in 2009. But the block was relatively casual. Most users still get on via DNS tweaks or using HotSpotShield with no problems. This is exactly why we’ve seen such explosive growth in Vietnam – doubling its numbers in a year. It’s currently the fastest growing Facebook country in the world, and Facebook has surpassed Zing as the nation’s top social destination.
Vietnam let Facebook in and let it grow until it was too late. Recently, I learned from an undisclosed source that Facebook supposedly has 15 to 20 million users in Vietnam already, so if authorities pull the plug it would be disastrous for users in the country. Hundreds and thousands of businesses have set up shop in Vietnam with Facebook Pages and advertisements.
And although the block has strengthened along with the political tides, that has more served to educate the population to self-censor more than deterred use of Facebook. Today, the block is as light as ever. And because of this, Vietnam has effectively avoided the need to build its own Weibo.
Oh, and as far as Twitter is concerned, in Vietnam, microblogging still hasn’t caught on. That’s probably why it’s not blocked.
What this all means
Although Vietnam and China are neighboring socialist republics and Communist comrades, they’ve taken very different political stances towards the internet. China sees the internet variously as a battle field, a business goldmine, and a threat to social stability. China’s allegory is one of a large empire controlling the biggest population in the world and eventually leading the world. Information is essential to that and it must be tightly controlled and it must be Chinese. That was underlined this week by China’s tech ministry taking a dim view of Android.
Vietnam, with about 92 million people, is smaller in population than China’s most populous province, Guangdong, with its 104 million. The allegory in Vietnam is catch up and adapt. There isn’t a global agenda. That has allowed Vietnamese users to reap the rewards of the two tech giants – both Silicon Valley and China’s web companies – but that’s at the cost of not building giants of its own. Vietnamese social media and search startups struggle to compete with Facebook and Google with no government protection, financing, or encouragement.
There are two sides to this coin. In China, the result is a lot of space for startups and mega-tech companies like Baidu to build for the local population. But they sacrifice a connection to the world. In Vietnam, startups have to compete with outsiders while also getting a little more globally connected – although many would argue people here are still very isolated. The end result may be that some Chinese tech successes are inflated because they have no “real” competitors beyond their borders; and Vietnamese startups are stunted because they can’t out-execute the big guys or regional startups who expand into the country.
But the truth is, it’s a very hard comparison. Although they’re run under relatively similar governments, the scale alone puts everything out of proportion. Chinese companies immediately have access to a huge population while also competing with a host of other fellow Chinese companies. How they triumph over these odds is what really fascinates me.
I’d love to hear your thoughts on this, comment below at your leisure.
It’s debatable if the Great Firewall has helped those sites, or if better localization would’ve been enough for them to win. For example, Renren was beating Facebook in China before Facebook was even blocked.
Less Than 14% of Chinese App Developers Make a Profit, Says China Mobile Executive ()
Mar 6, 2013
by C. Custer
Many of China’s tech luminaries are gathered in Beijing for the Two Meetings, and that means they’re all talking to the press. Xu Long, a National People’s Congress rep and the CEO of China Mobile’s Guangzhou subsidiary, took to the airwaves himself yesterday and made a grim pronouncement for China’s mobile market: only 13.7 percent of Chinese mobile app developers are actually making a profit.
It’s not entirely clear where that number comes from, but Xu says the source is “an investigation” of the country’s million-plus mobile app developers. Xu says the low number of profitable developers is evidence that China needs to continue exploring healthy and sustainable models for developing the mobile market.
Despite that rather depressing number, Xu says he’s still quite optimistic about the future of the mobile marketplace in China. And, like the tech CEOs we talked about yesterday, he’s got proposals for how China can improve the marketplace, which center mostly on bolstering China’s broadband and wireless infrastructure as well as giving greater support to tech companies working in mobile.
(via Sina Tech)
A Revolution in China’s Search Market? Sogou Integrates Search into its Input Method ()
Mar 6, 2013
by C. Custer
China’s Sogou has been a player in the search market here since the early days. At present, it commands around 8 percent of the search market share, which makes it one of China’s top three search engines but still puts it way, way behind the dominant Baidu (which has more than 70 percent of the market). But Sogou does dominate the Chinese input method market, with reportedly more than 100 million users across its mobile and PC input methods.
Yesterday, Sogou announced an update to the “smart” version of its PC input method software that seems to signal the company is placing increased importance on search. Users of the latest version of the smart input method (which you can get here) will find that when they type certain terms, relevant search results pop up directly below the character selection bar. Sogou says this will save users massive amounts of time, as where previously they needed to open a browser and search for certain kinds of content, now they can get direct links from anywhere on their computer by simply by typing their search terms. Here’s how it works:
(See Image)
These results don’t pop up for every word you type, though, it only happens for certain kinds of terms: movie and TV titles, songs, app titles, e-services like banking, public transportation, the weather, etc. So if you have the Sogou smart input method installed, every time you type “weather,” a little window will pop up, showing you the local weather. Every time you type the name of your favorite song, links will pop up that allow you to listen to it directly from the input method without even having to open a browser.
If you think that sounds potentially distracting, you’re right, but luckily Sogou allows you to select what environments these results will pop up in during the installation process, so if you don’t want to see them while you’re working in Microsoft Word (for example), you don’t have to. You can also choose to make the pop-up results optional so that they only show up if you click the little light bulb next to the term you’ve typed. Of course, that adds an extra click to the process, but it makes the whole thing less of a distraction while still keeping it pretty convenient.
It’s certainly a time-saver, and it could funnel a lot of Sogou’s users through Sogou search channels if it’s widely adopted. This could be damaging to Baidu (and to its less-popular search competitor Qihoo) because many of its top searches are for entertainment or other content that might be covered by the Sogou app. But at present, the new smart feature is a voluntary add-on, and it remains to be seen how widely it will be adopted among Sogou’s user base.
I downloaded the new input method to take it for a test drive and was reasonably impressed. Because I had set it to pop up only when I clicked a button, the search results were never intrusive, and sometimes it was a bit faster than searching conventionally would be. With that said, there did seem to be a few bugs in the system. When I typed “weather,” it gave me Beijing’s weather, which isn’t particularly helpful since I am about 7,000 miles away from Beijing.
(See Image)
Also, because the search is designed to redirect you to Sogou products, sometimes it actually adds a step to the process. When I searched for “Miss Puff” (which is a Youku original TV show) and clicked on the search result for the show, it took me to a Sogou page that required me to click again to be redirected to the Youku page where I could actually watch the show. But when I searched “Miss Puff” on Baidu, there was a direct link to the show’s fourth season on Youku right on the top of the first page. Of course, this issue is likely to apply only to content that Sohu and Sogou don’t own the rights to, so for many searches, using Sogou’s input method search really is faster.
So will searching directly in input-method software catch on? That remains to be seen. Baidu does have its own input method software, so it could easily implement a similar feature set (and I will be surprised if it doesn’t), but Sogou has a bigger user base. Although the smart IME currently only works for Sogou’s PC input method, I wouldn’t be surprised to see a similar mobile product rolled out soon as well. It’s starting to look like this could be as interesting a year for search in China as last year was.
Middle East Telecommunications Provider To Source China Products ()
March 6, 2013 | By Editorial Staff
ZTE Corporation was selected as one of the preferred global vendors by STC Group, the largest telecommunication services provider in the Middle East and North Africa.
The agreement between ZTE and STC Group, announced at the Mobile World Congress conference in Barcelona, will allow ZTE to offer its portfolio of network infrastructure equipment through a global price structure based on total business located in Bahrain, India, Indonesia, Kuwait, Malaysia, Saudi Arabia, South Africa and Turkey.
In the 2012 financial year, STC Group reported revenue increased 6.7% to USD15.8 billion. Financial terms of this deal with ZTE were not disclosed.
60% of Chinese Users Don’t Know How “Smart” Their Smart TVs Are ()
By Tracey Xiang on March 5, 2013
A survey by Horizon, an independent market research firm, shows that about 60% of consumers are not clear about the smartness of their smart TVs. The survey is based on interviews with smart TV buyers aged from 25 to 40 in more than twenty first-tier cities.
77.9% respondents, ignoring the smart features, simply want their smart devices to receive TV programs. For those who have any idea about how “smart” a smart TV can be, their main demand is watching on-demand TV dramas. Only 3.7% consider developing more applications the most important thing for smart TV. Nevertheless, as high as 88.4% respondents would like to choose the smart as their next TV set.
Half the respondents found that, according to the same survey, remote controllers are not easy to use and the running programs slow down the device. About 30% of them think the apps built-in are poorly designed. 21.3% complained about the poor performance of voice and gesture interaction and facial recognition.
Major domestic TV manufacturers, including Changhong, TCL and Hisense, launched more than 30 smart TV models in the past year. China Market Monitor, a research organization on home appliances, estimates that smart TV sales will increase to 26 million in 2013 in China.
Users’ lack of knowledge about the “smartness” of tech products is also reflected in set-up box sector. An observer posted what he found during the Chinese New Year holidays when he traveled back to his hometown on Zhihu, a Q&A site. Within two days, 75% of 1600 households in the residential quarter, including his own family, signed up to a set-up box program, called Cloud TV, offered by the provincial cable company. The “Cloud TV” offers whatever smart TV also does: online videos, digital books and magazines, online games and the like, and a premium channel. However, the chances that users have no idea what the device can do is big. In this case it took the observer two days to teach his parents use the device and access TV programs.
The set-up box program mentioned above charges 500 yuan set-up fee and annual subscription fees — several hundred yuan, more or less the cable subscription rate. The expense is seldom a problem with a majority of families. And they’d always be willing to try the trendy out. But if the applications and paid services weren’t made easily accessible, further business models — what the smart operating system enables — couldn’t work.
Since the existing devices for smartizing the digital living room experience don’t satisfy users, other players are tapping into this sector with alternative services or devices. LeTV, starting as an online video platform, has expanded to content production and set-up box manufacturing. It plans to launch a “Super TV”, Android-based smart TV that is expected to take advantage of its content and other resources on the end-to-end value chain, later this year. It’s unknown whether it would help consumers make better use of the smartness of such devices. Anyway, the idea alone attracted investments from investors such as Innovation Works.
In some rural areas, a family may own a stand-up tablet. It’s much welcomed by households that it can do whatever they need from the Internet, playing casual games, chatting with kids through QQ, shopping online, or watching online videos by connecting it to a set-up box. Since Chinese online video services provide with almost all domestic TV programs, it works just like the smart TV with a smaller screen and at a much lower price.
Alibaba to Offer Online Shopping Credit Line, for Mobile First ()
By Tracey Xiang on March 5, 2013
Alibaba confirmed the rumor that it would roll out online shopping credit service, called “Credit Payment”, to users on Taobao and Tmall as soon as in the upcoming April. The service will be provided by Alipay, the payments service under Alibaba Group.
Credit limit, between 200 yuan ($ 32) to 5,000 yuan ($ 800), will be decided with algorithms based on user data, such as ratings given by sellers and purchase history. Interest free periods are up to 38 days. It is reported that 80 million Alipay users are qualified to apply for it.
The service will charge Taobao or Tmall merchants who join in the program 1% of payments (currently 0.8% as a discount), similar to the level with credit cards. Over 1.3 million merchants have already been qualified and can get on board whenever they’d like to. A logo signaling it will be shown on the webpages of merchants’ stores then.
It will first be available with mobile apps — nice move for promoting mobile payments and mobile shopping.
In general it must boost purchases given a majority of Chinese don’t own physical credit cards. Also the application process is easier for users since it’s based on existing data that they don’t have to provide with detailed information required by banks and wait on shipping.
The only inconvenience? You can only use the credit to shop on Alibaba’s properties — of course, it may not be an issue for most users as Alibaba’s cover almost all goods you can think of on earth.
The user data and historical purchases are what conventional banks don’t have to leverage purchasing power to the full. What’s more, Alipay will accumulate users’ credit history along the way after the service launches. For now, only Chinese central bank has the credit history of credit card holders — again, only a minority of Chinese consumers ever own physical credit cards.
Alibaba won’t take care of the credit with its own funds but through banks; for one thing, it’s not authorized to offer such a service. On the other hand, the company doesn’t have to worry about bad credit. For this ever-new business, it’s unclear what a regulatory process is needed. It is generally believed Alibaba has got approval from authorities as it’s not the first time it came up with such a unprecedented solution for online shopping. Years back, the company came up with the idea of holding up consumers’ payments till they confirm of receiving the goods to dissolve users’ disbelief in buying anything through the Internet without seeing a seller in flesh.
Some Chinese banks are working on “virtual” credit card. The China Merchants Bank, partnering with China Mobile the carrier, is to enable mobile devices to do whatever a plastic credit card can do. Alipay, however, said that they’d not go any further than offering consumer credit for online shopping, although its parent company launched an e-credit card for small businesses years back.
But apparently Alibaba’s ambitions on finance are going further with its newly restructured finance arm. The company expanded its micro-loan program to Guang Dong where are also crowded with small businesses last month. Zhong An, an online insurance company, will be established together with Ping An, one of the leading insurance companies in China, and Tencent, an Internet giant with huge amount of users, with Alibaba taking a 19.9% stake in the company.
China and Soft Protectionism ()
MARCH 6, 2013 BY DAVID WOLF
In the Hutong
What, cold again?
2142 hrs.
Though we may not be talking about it much, those of us who watch China for a living are looking forward with a mixture of dread and anticipation to the upcoming “two meetings,” the annual sessions of the National People’s Congress and the China People’s Political Consultative Committee. Even though the die of China’s future leadership was cast at the Party Congress in November, the coming NPC is the juncture where the reins of government are handed over to the new leadership, and the retiring members of the Hu Jintao/Wen Jiabao entourage graduate to the status of “elder statesmen.” For that reason, this is the point at which we will all be watching for some indication of how Xi Jinping and Li Keqiang will run the show a little differently.
While some will be looking for signs of political reform, my eyes will be cast elsewhere, namely to trade. What I want to find out is whether and how the new administration plans to play by the rules it signed up for when it acceeded to the WTO eleven years ago. Or, indeed, how it intends not to do so.
Since at least the early days of the Hu Jintao administration it was clear that the so-called Fourth Generation of leaders was somewhat less enthusiastic about playing the globalization game, and much more interested in just keeping a lid on the place. Stability was the name of the game, and the spirit of we-can-take-whatever-free-trade-can-dish-out that exuded from Zhu Rongji like a heavy cologne was blown out the window when Zhu left the building in 2003. In its place came a series of policies that I term collectively “Soft Protectionism (软保护主义),” a series of measures and behaviors that allow China to circumvent the intent of the global free trade regime almost at will.
Soft Protectionism, as I see it, consists of several pieces.
National Standards. We see this most blatantly when it comes to technology. The government establishes a standard based on a technology that is locally developed, and by so doing secures all or at least part of the market for Chinese output. The TD-SCDMA standard for third-generation mobile phones is a great example, as is the WAPI wireless LAN standard that was supposed to supplant Wi-Fi. China has learned that this policy is best conducted when it is done within the parameters of global standards-making bodies like the International Telecommunications Union (ITU) and the Institute for Electrical and Electronic Engineers (IEEE.) Through organizational activism, horse-trading, and the occasional theatrical tantrum, China is able to gain acceptance for standards that are, in some cases, little more than laboratory experiments. Using this global legitimacy, the standards ploy becomes legitimate. And lest you accuse me of being biased, let me make clear that we Americans all but invented this game, and we perfected it with our bull-headed nationalist behavior when it came to standards for digital televisions and the first digital phones. China is simply turning the tables.
Creative Use of Non-Tariff Barriers. Despite the openness promulgated by the WTO, there are still back doors that will allow governments to selectively protect industries. The first and favorite of these is the so-called National Security Exemption from the World Trade Agreements. The key phrase is “Nothing in this Agreement shall be construed . . . (b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests”
That exemption gives wide latitude to any government willing to interpret it liberally, and China can and does do so, especially when it comes to information products and software. Other countries use this exemption to ensure that they have access to weapons production in the event of international isolation. The U.S. uses it, for example, to ensure its ships, tanks, and warplanes are all made by factories on US soil, but it does not use it to stop the import of foreign merchant hulls, diesel trucks, or civil aircraft. China, according to Nathaniel Ahrens at the Center for Strategic and International Studies, is comfortable crossing that line.
China also manages to restrict the free trade in publications, television, film, and music by stretching the WTO’s Cultural exemption (introduced by France in 1993) beyond the breaking point. Under the guise of protecting its vulnerable culture, China requires specific approval for any publication, recording, video, or film coming into the country. Keep in mind that we are talking about the culture that for nearly two thousand years has managed to assimilate every culture and nation that tried to subjugate it. Nonetheless, the exemption is used at every juncture.
Passive resistance to WTO Rulings. Rather than submit to WTO rulings it does not like, China conducts a passive-aggressive policy of resistance, even at the risk of undermining the institution. Dan Harris of China Law Blog fame put it like this:
“China still intends to remain within the WTO so as to be able to obtain certain trade benefits. Rather than openly disregard the minerals decision, China will resort to “procedural games” (游戏规则) to render any response against China ineffective as a practical matter. China is proud of how it has used “procedural games” to avoid its responsibilities to respond to adverse WTO decisions and it openly states that it will continue to use this approach in these “national interest” cases. In fact, the term “procedural game” has become a standard feature of the China’s trade policy vocabulary.”
Government Catch-up initiatives. These are the micro-level great leaps that the government attempts to engineer over time in order to substitute domestically-made products and technology for locally-made equivalents. The past thirty years has seen China-government sponsored initiatives succeed in “catching up” in several industries, including shipbuilding, digital telephone switches, heavy trucks, wind-power generators, and solar power, and it is attempting to do so in automobiles, commmercial aircraft, microprocessors, and encryption software. The end result is the same: serviceable and appropriate products from overseas are gradually pushed out by government programs designed to deny them access to the market.
Government encouraged SOE support. This comes in many forms, but the most prevalent is outright cash payments. By offering low-interest or permanently rolled-over loans for state owned enterprises through state-managed policy banks at either the national or local level, China creates effective trade subsidies that are not counted according to international standards. A senior Obama administration official confided in me on the sidelines of the Strategic Economic Dialogue in Beijing last year that China’s export loans dwarfed even the U.S.’s generous programs through the Export Import Bank.
There is not much that the US, the EU, or any grouping of governments can do about any of this, short of an all-out trade war, if China chooses to continue with these policies. What this means is that even as a full-fleged WTO member, China is still capable of providing a protected environment for its firms, and has proven willing to do so.
Such policies will help companies beat foreign interlopers at home, but at what cost? At some point China will confront the other edge of that sword, whether in the form of having its behavior mirrored by other countries with tit-for-tat trade measures within the scope of the WTO; or by discovering that the companies it protected at home were weak and unprepared when venturing abroad.
For Xi Jinping, the choice in the coming months is whether to continue to use Soft Protectionism as the nation’s de-facto trade policy, or whether he will instead switch off the pumps and force Chinese companies to build the resilience necessary to beat global competition away from home. For the companies themselves, as Sunzi said, “Enemies strengthen. Allies weaken.” The wise Chinese company will seek to step out from under Beijing’s umbrella as early as possible to learn to compete on a globalized playing field, rather than a nationalized one.
China HP Organizes Special Unit For PC Quality Control ()
March 7, 2013
China HP's Printing and Personal systems group unveiled a new quality and service system which focuses on ensuring better product quality.
In this new quality and service system, China HP's PPS group has integrated the former PC and printer after-sales platforms and provides round-the-clock after-sales services to users. At the same time, the newly established quality control commission will implement full supervision of product quality, covering product design, production, logistics, and service.
Rong Guangyu, general manager for the customer support and service department of China HP PPS, told local media that the quality control service will participate in the testing during the product development stage and provide the initial user experience feedback. For after-sales services, any user feedback related to quality will reach the development and production departments.
Rong said China HP's employees attach great importance to quality and managers on each level need to be responsible for product quality. At present, every HP product reportedly needs to pass 115,000 hours of strict tests. With the help of this strict quality management system, the company's product repair rate decreased by 50% year-over-year in 2012.
Rong pointed out that HP currently has 1,100 licensed service sites in China and the number is expected to increase to 1,500 by the end of 2013.
Master Kong: How Internet rumors can affect share prices ()
by Barry van Wyk on March 7, 2013
The chart above illustrates how Internet rumors can ravage a company’s stock price. The company in question is Master Kong (康师傅), China’s best-loved brand of instant noodles.
In 2011, Master Kong ranked second only to Sony in a survey of the most valued brands in China, as conducted by research firm TNS. Master Kong was founded in Tianjin, China, in 1991 by two Taiwanese brothers, and listed on the Hong Kong Stock Exchange in 1996 as Tingyi (Cayman Islands) Holding Corp. (This article will refer to the company as Master Kong for simplicity.)
Although the company’s board includes Taiwanese and Japanese members, Master Kong has always existed and operated only in mainland China. The company is the leading player in China’s instant noodle restaurant market as well as a producer of drinks and snacks (and soon even a smart phone). In the last few months of 2012, Master Kong experienced a PR crisis when rumors linked the company to the wrong side of the Diaoyu Islands dispute.
In the shadow of the Diaoyu Islands
On September 5 2012, the Japanese government announced that it had reached agreement with the Kurihara family, the so-called private owner of three of the five Diaoyu or Senkaku islands, on “nationalizing” the uninhabited islands. The previous month had seen contentious visits to the islands by nationalist activists from Hong Kong and Taiwan, as well as Japan. On September 15, the biggest anti-Japanese protests since China and Japan normalized diplomatic relations in 1972 broke out in cities across China, and the Japanese embassy in Beijing was besieged by thousands of protesters. Over the next couple of days the protests turned violent, with protesters clashing with police, attacking Japanese-made cars, and barricading Japanese restaurants.
In this tense atmosphere, the heat was also turned up on Chinese social media, and at some point during September, speculation started to appear on Weibo that Master Kong was owned by Japanese capital and should therefore be boycotted. On the September 20, Master Kong issued a statement in which it denied the speculation. On October 8, however, the speculation regarding Master Kong’s true owners was surpassed by the appearance of a potentially deadly rumor in the context of the Diaoyu Islands dispute raging at the time. It is impossible to pinpoint where and from whom exactly the rumor originated, but a definite early source was the Sina blog 逆风松涛的博客 (Mifeng Songtao’s Blog). On the afternoon of 8 October, a short post entitled “Master Kong donated 300 million yen to Japan for it to buy the Diaoyu Islands” (康师傅为日本购中国钓鱼岛捐三亿日元) was posted on the blog, which read in part:
Tear off Master Kong’s outer layer, and a sheepskin of Japanese goods appears! It has been revealed online that the company which calls itself Taiwanese has actually been bought out by Japan’s Asahi Breweries. With Master Kong’s drinks and noodles visible everywhere on Chinese soil, this grieves us greatly! We are firmly resolved not to buy anything from Master Kong from now on. Everybody spread this message, let all our compatriots know! Asahi Breweries contributed 300 million yen for Japan to buy the Diaoyu Islands, this trashy company!
The rumor spread over the Internet rapidly. Four days later, on October 12, Master Kong’s stock price on the Hong Kong Stock Exchange began a steady decline that would continue into the new year.
From rumor mongering to turf war
Master Kong continued to deny the rumors, even soliciting help from the Chinese government: On October 31, the spokesperson of the Taiwan Affairs Office of the State Council, a PRC government body, deniedthat Master Kong is in any way a Japanese brand.
A few days later, on November 3, the plot thickened considerably when the Taiwanese paper China Times (华夏时报) published a story outlining Master Kong’s views on recent events. A representative from Master Kong revealed in the article that his company had started noticing the strange rumors appearing online from September 18, and it had started collecting evidence from this date. Eventually, after piecing together various bits of information, Master Kong was able to get to the bottom of the rumors, and identify (as the company’s representative put it) the “manipulator behind the scenes” (幕后操纵): none other than Uni-President (统一集团), one of Master Kong’s chief competitors in the instant noodle market in China.
The article explained that although the Japanese firm Sanyo Foods invested in Master Kong in 1999, it never became a majority shareholder; the Taiwanese company Ting Hsin International Group (顶新集团) retained this position throughout. For its part, Uni-President denied any involvement when The China Times reporter contacted them for a response to Master Kong’s accusations.
In early December The Beijing Times (京华时报) also ran a piece on what it called “unfair competition” in the instant noodle market in China. It noted that the rumors regarding Master Kong were being spread by text message and social media. The next day, Global Times reported on the story for the first time in English.
In the first week of January 2013, Master Kong’s stock price arrested its long decline that started in October. Yet if Master Kong can now finally turn the corner from the rumors that dogged it from September last year, its experience serves as a reminder of how damaging and unpredictable Internet rumors can be in the age of social media.
Links and sources
Want China Times: Master Kong parent targets instant smartphone success
Wall Street Journal: Noodles and Electronics: Asia’s Most Valued
逆风松涛的博客: 康师傅为日本购中国钓鱼岛捐三亿日元
CNTV: 国台办发言人否认“康师傅”是日本品牌
China Times (华夏时报): 800亿方便面市场无间道
The Beijing Times (京华时报): 康师傅称再遭黑手造谣攻击
Tencent News: 康师傅 大灾面前涌大爱
Global Times: Master Kong to fight back
Politics & Law
Newswire
China navy seeks to "wear out" Japanese ships in disputed waters (Reuters)
By David Lague
HONG KONG | Wed Mar 6, 2013
(Reuters) - China's naval and paramilitary ships are churning up the ocean around islands it disputes with Tokyo in what experts say is a strategy to overwhelm the numerically inferior Japanese forces that must sail out to detect and track the flotillas.
A daily stream of bulletins announce ship deployments into the East China Sea, naval combat exercises, the launch of new warships and commentaries calling for resolute defense of Chinese territory.
"The operational goal in the East China Sea is to wear out the Japanese Maritime Self Defence Force and the Japan Coast Guard," said James Holmes, a maritime strategy expert at the Newport, Rhode Island U.S. Naval War College.
It wasn't until China became embroiled in the high stakes territorial dispute with Japan late last year that its secretive military opened up.
Now, the People's Liberation Army (PLA) is routinely telegraphing its moves around the disputed islands, known as Senkaku in Japanese and Diaoyu in Chinese.
News of these missions also has domestic propaganda value for Beijing because it demonstrates the ruling Communist Party has the power and determination to defend what it insists has always been Chinese territory, political analysts said.
However, experts warn that the danger of these constant deployments from both sides into the contested area increases the danger of an accident or miscalculation that could lead to conflict.
In the most threatening incident so far, Tokyo last month said the fire control, or targeting, radar of Chinese warships near the islands "locked on" to a Japanese helicopter and destroyer in two separate incidents in late January.
Beijing denies this but U.S. military officers have backed up Japan's account.
"We are in extremely dangerous territory here," said Ross Babbage, a military analyst in Canberra and a former senior Australian defense official.
"We could have had Japan and China in a serious war."
Some foreign and Japanese security experts say Japan's powerful navy and coast guard still holds the upper hand in the disputed waters but that this could change if Beijing intensifies its patrols.
"I believe China for the time being focuses resources on the South China Sea, which is a higher priority for them now," said Yoshihiko Yamada, a maritime policy expert and professor at Tokai University.
"But, if they shift more resources to the East China Sea, the coast guard alone would not be able to handle the situation."
There were signs that tension remained high last week when Tokyo protested that China had deployed a series of buoys around the islands to collect intelligence about Japanese operations.
China's Foreign Ministry said the buoys were in Chinese waters and positioned to collect weather information.
Beijing's paramilitary agencies have been equally forthright since the standoff began with a stream of news and footage of their deployments.
Ships from these agencies including customs, maritime surveillance and fisheries are in the frontline of Beijing's campaign to assert sovereignty over the disputed islands, which are believed to be rich in oil and gas.
A Chinese fisheries surveillance vessel entered Japan's territorial waters near the islands for the second day running on February 24 in what was the 31st similar incursion since September, the Japanese coast guard said last week.
News bulletins in China are saturated with coverage of Chinese paramilitary ships jostling for position with their Japanese counterparts around the rocky islands.
PRESSURE ON JAPAN COAST GUARD
There is evidence Japan's coast guard is feeling the pressure.
It plans to form a new, 600-member unit equipped with 12 patrol ships that will be deployed exclusively on missions around the disputed islands.
And, it is boosting its budget to buy ships and aircraft by 23 percent to 32.5 billion yen ($348.15 million) for the year starting in April.
The coast guard also plans to add 119 personnel in the year starting next month. That would be the biggest staff increase in 32 years.
As tension mounted around the islands ahead of his return to office as prime minister of Japan in December, Shinzo Abe proposed converting retired navy vessels into coast guard patrol ships.
Defence Minister Itsunori Onodera said on Tuesday that his ministry and the coast guard were discussing the idea.
Beijing has so far held its navy back from waters immediately surrounding the disputed territory but its warships are almost constantly patrolling nearby seas and other waterways around the Japanese archipelago, according to the PLA announcements.
In late January, the PLA said a naval fleet would conduct a naval exercise in the Western Pacific after "sailing through islands" off the Chinese coast, a clear reference to the Japanese archipelago. The navy had conducted seven similar exercises last year, it said.
In a series of subsequent bulletins, the PLA said three of its most modern warships, the missile destroyer Qingdao and the missile frigates Yantai and Yancheng would make up the fleet which would conduct training in the Yellow Sea and the East China Sea in an 18-day deployment.
The U.S. navy has also monitored the sharply increased tempo of Chinese naval and paramilitary operations near Japan.
In an unusually blunt public assessment, a senior American naval intelligence officer, Captain James Fanell, told a seminar in San Diego on January 31 that the PLA navy had last year sent seven surface action groups into the Philippines Sea south of Japan.
It had also deployed the biggest number of submarines in its history into this area, he said.
It was unclear if Fanell was referring to the same seven deployments the PLA disclosed last month.
"Make no mistake, the PLA navy is focused on war at sea and about sinking an opposing fleet," Fanell said.
And, the U.S. officer said, China's maritime surveillance agency, a civil proxy for the PLA, had become "a full-time maritime sovereignty harassment organization" with the goal of enforcing territorial claims.
The frequency of deployments appears set to continue with the PLA announcing on February 27 it would conduct 40 military exercises this year with an increased emphasis on "core security-related interests".
Senior Chinese officials have strongly implied that Japan's claim over the islands is an attack on one of China's core interests, an important distinction to Beijing in defining its non-negotiable national priorities.
In a speech to the politburo in late January, Chinese party leader Xi Jinping referred to the pain of "wartime atrocities", an apparent reference to Japan's bloody invasion and occupation of China last century, according to a report of his remarks carried by the official Xinhua news agency.
"We will stick to the road of peaceful development but will never give up our legitimate rights and will never sacrifice our national core interests," he was reported to have said.
And, Beijing continues to boost its military firepower. Chinese shipyards last week delivered a new, stealth frigate to the navy, the official PLA Daily newspaper reported.
The radar evading type-056 frigate would be introduced in big numbers as the first step in a systematic upgrade of navy hardware, the paper said.
BUT JAPAN SAYS IT WON'T BUCKLE
Despite the intense military and diplomatic pressure, the Japanese government shows no sign of wilting.
"We simply cannot tolerate any challenge now and in the future," Prime Minister Abe said recently in Washington.
"No nation should make any miscalculation or underestimate the firmness of our resolve."
Still, military analysts said Japanese forces must continue to match China's patrols and exercises.
In a paper prepared for an Australian military think tank last year, an influential Japanese military strategist, retired Vice Admiral Yoji Koda, said Chinese naval forces sailing around the Japanese islands "will surely meet intensive surveillance and continuous tracking" from Japanese forces and its U.S. allies.
Some military analysts suggest Beijing's continuous deployments around the Diaoyu/Senkaku islands are also part of a wider policy of enhancing its claims over a number of disputed territories in the East China Sea and South China Sea.
"If Beijing starts policing territory it claims as its own, and if rival claimants can't push back effectively, it will start looking like the rightful sovereign over that territory," said Holmes.
However, Holmes added that Japan poses a much stiffer challenge for Beijing than smaller nations like the Philippines which also has overlapping territorial claims with China.
While smaller in raw numbers than the PLA navy, the highly trained Japanese navy is generally regarded as the most powerful in Asia with state-of-the art ships, submarines and aircraft. And, it has a security alliance with the United States that obliges Washington to intervene if Japan is attacked.
Other military experts suggest Beijing has decided to intensify its operations against Japan, a nation whose wartime aggression is remembered across Asia, because confrontations with smaller neighbors in recent years had led to a region-wide diplomatic backlash.
"The Senkaku/Diaoyu hoopla of late is triggered by China's desire to extricate itself from total regional isolation caused by China's expansive territorial claims against virtually all of its maritime neighbors," said Yu Maochun, an expert on the PLA at the Annapolis, Maryland United States Naval Academy. ($1 = 93.3500 Japanese yen)
(Additional reporting by Kiyoshi Takenaka in Tokyo. Editing by Dean Yates)
China eyes residence permits to replace divisive hukou system (Reuters)
By John Ruwitch and Hui Li
BEIJING | Wed Mar 6, 2013
(Reuters) - China's new leaders are planning a system of national residence permits to replace the household registration or 'hukou' regime, a government source said, a vital reform that will boost its urbanization campaign and drive consumption-led growth.
The hukou system, which dates to 1958, has split China's 1.3 billion people along urban-rural lines, preventing many of the roughly 800 million Chinese who are registered as rural residents from settling in cities and enjoying basic urban welfare and services.
Critics have called for changes for years and a government researcher told Reuters a "unified national residence permit system" would be adopted as policy as part of a 10-year urbanization plan to be published after the current annual session of parliament.
Benefits and entitlement under the new system would be "basically equal", he said, although the changes would be eased in slowly. He did not say how long it would take.
"The trend is to dilute the urban-rural household registration divide", said the researcher, who was briefed on the details but declined to be identified because the plan has not yet been made public.
Previous administrations have experimented with reform on the fringes of hukou for years but have not delivered on calls to overhaul the system, which affords different welfare and civic services to urban and rural citizens.
In a speech to parliament on Tuesday that laid out the blueprint of the new leaders, outgoing Premier Wen Jiabao said hukou reforms should be accelerated to drive an urbanization effort that he said would underpin economic development.
Zhang Ping, head of the National Development and Reform Commission, China's main economic planning agency, said on Wednesday that guidelines for the urbanization plan would be launched in the first half of 2013.
"Urbanization is the biggest potential force driving China's domestic demand in the years ahead," Zhang told reporters.
China plans to spend 40 trillion yuan ($6.4 trillion) to bring 400 million people to cities over the next decade as the new leadership of president-in-waiting Xi Jinping and premier-designate Li Keqiang seeks to turn China into a wealthy world power with economic growth generated by affluent consumers.
Wen said consumption was the key to unlocking the full potential of domestic demand in the economy and would reduce excess, inefficiency and inequality. It would also help deliver growth of 7.5 percent in 2013 - a level China barely beat in 2012 when growth eased to 7.8 percent, its slowest pace in 13 years.
Hukou reform can also unlock the funds of about 200 million rural residents who work in cities as migrants and spend much of their incomes on benefits like medical services and education for their children, which are given free to urban dwellers.
If policymakers successfully harness this demographic shift, China will enjoy continued economic strength, analysts say. If not, it could lead to social and political instability.
UNDERCLASS
"If they don't get it right, instead of growing a middle class, they are going to grow a huge underclass in the city, and that's very scary," said Kam Wing Chan, a population expert at the University of Washington.
"Without granting urban hukou to rural urban migrants it is very hard to turn them into the middle class. They will always be second class," he said.
One of the main reasons the reform has been delayed is money. Local city governments have dragged their feet on plans to give migrants equal welfare, saying they lack the fiscal means to foot the bill.
"If the central government is serious they've got to talk about how to finance this," said Tom Miller, an analyst with GK Dragonomics and author of the recently published book "China's Urban Billion".
The state researcher who declined to be identified said the urbanization plan would broadly put the burden of funding on central and local governments, enterprises that employ migrants and individuals. He did not discuss specifics.
"In doing so we can ensure that some people can transition from being rural to urban citizens and ensure basic public services for this segment of people," he said.
Another key reform needed in the urbanization plan would be new rural land management rules, although the researcher said there would be few details on this.
Peasants now do not have the freedom to sell their land at market prices, which has exacerbated China's wide rich-poor gap and made many reluctant to fully abandon their rural plots.
Officials like Chen Xiwen, head of the Central Committee's rural working group, have cautioned against urbanization, saying it could lead to a shrinking of farms as land is converted to other uses.
Migrant workers have for years lamented inequalities in the hukou system, like the lack of local medical coverage or equal access to higher education.
"In the countryside we generally want to change our rural hukou for city hukous," said Wang Baiqiang, an 18-year-old who left a village in Henan province last month for a job in an Adidas factory in the coastal province of Jiangsu, 14 hours away by bus.
"It's just better if you have a city hukou (if you live in a city)," he said.
(Editing by Raju Gopalakrishnan)
China’s Richer-Than-Romney Lawmakers Show Xi’s Reform Challenge (Bloomberg)
By Bloomberg News - Mar 6, 2013
The ranks of China’s ultra-wealthy in its legislature swelled 20 percent this year, highlighting the vested interests that may oppose any measures by incoming President Xi Jinping to reduce the nation’s wealth gap.
Ninety members of the National People’s Congress are on a list of China’s 1,000 richest people published by the Shanghai- based Hurun Report, up from 75 last year, according to a review of the data by Bloomberg News. Everyone on the Hurun list had a fortune of at least 1.8 billion yuan ($289.4 million), more than former Republican presidential candidate Mitt Romney.
The growing presence of wealthy people in the legislature coincides with efforts by Xi to stem corruption and the public display of luxury by officials as he seeks to address concern the Communist Party no longer represents interests of ordinary Chinese. Xi’s task may become more difficult as the rich move to cement their gains through legislation, said Yang Fengchun, an associate professor of government and management at Peking University.
“The National People’s Congress has a lot of rich businesspeople who have the knowledge and the means to make laws, and that’s a privilege the rest of society doesn’t have,” Yang said in a telephone interview. “The common people believe that they can’t protect the rights of the weak.”
Top Organ
While the NPC, which is now in session in Beijing, historically has served to rubber-stamp measures prepared by the Communist Party, it is the supreme organ of the Chinese government and brings together the most powerful people in China under one roof every March. Xi himself is a delegate as are incoming Premier Li Keqiang, other members of the ruling Politburo, provincial leaders and chief executives of state-run and private companies.
The combined net worth of the 90 NPC members was 637 billion yuan. The concentration of wealth in the NPC was calculated by comparing the list of 2,987 delegates against data from the Bloomberg Billionaires Index and the Shanghai-based Hurun Report’s Hurun Rich List 2012, which was released in September. Hurun Report publishes a luxury-goods magazine that tracks China’s affluent.
The richest member of the NPC -- and China’s wealthiest person -- is Hangzhou Wahaha Group Co. Chairman Zong Qinghou, 67, who has a fortune of $17.1 billion, according to the Bloomberg Billionaires Index. Zong, a Communist Party member, said in a 2010 interview he opposed a property tax, which could bring local governments additional revenue and reduce the wealth gap.
Wahaha Boss
This year, Zong submitted at least 10 proposals to the NPC including measures to make low-income housing more affordable and cut taxes on companies and ordinary people, according to an e-mailed list provided by his company.
“China’s economy will continue to develop quickly so there will be more rich people,” Zong told reporters March 5 at the opening NPC session, when asked if he thought there were too many billionaires in the legislature.
Also on the NPC is Pony Ma, the co-founder of Tencent Holdings Ltd. (700), a games and social-network operator. Ma has a $7.2 billion fortune, according to the Bloomberg Billionaires Index.
“Billionaires only account for a small percentage of NPC delegates,” Ma said March 5 at the Great Hall of the People where the NPC is being held. “This year is the first time that Internet guys were invited to attend.”
Joining Ma as a first-time NPC delegate is Liu Yonghao, chairman of poultry supplier New Hope Liuhe Co., with assets of at least $3.7 billion, according to the Bloomberg Billionaires Index data.
‘Normal’ Practice
“It’s normal that businessmen are chosen as delegates,” Liu told reporters. “There are some entrepreneurs like us coming from the common people by our own efforts.”
Fu Ying, the spokeswoman for the National People’s Congress, didn’t reply to a faxed question about the rise in the number of billionaires in the body sent March 5.
The 90 richest Chinese on the NPC represent 3 percent of the 2,987 delegates. Their average fortune is $1.1 billion.
By comparison, the top 3 percent of the 535 members of the U.S. House of Representatives and Senate -- 16 people -- have an average net worth of $271 million, according to figures from the nonpartisan Center for Responsive Politics, a Washington-based group that tracks money in politics. American disclosure forms ask officials to list asset values within a range, rather than specific amounts. The $271 million number is an average of the maximum figures.
Campaign Issue
Romney had a maximum estimated net worth of $254.1 million. Weeks before President Barack Obama won re-election in November, his campaign aired ads in the battleground state of Ohio highlighting Romney’s wealth held in offshore assets.
China’s income gap as measured by the Gini coefficient was 0.474 in 2012, statistics bureau data showed in January, above the 0.4 level used by analysts as a gauge of the potential for social unrest. China says the gap has narrowed for four straight years.
China’s State Council approved a blueprint last month to boost minimum wages to at least 40 percent of average salaries and increase spending on education and affordable housing.
Many Chinese have also benefited from the country’s boom, with more than 600 million people lifted out of poverty since 1978, an achievement of “staggering proportions,” according to the United Nations. Last year, rural per-capita income rose 10.7 percent and urban incomes rose 9.6 percent, according to the National Bureau of Statistics.
American Campaigns
While U.S. lawmakers may not be as wealthy as some of their Chinese counterparts, they rely on deep-pocketed donors for political contributions. President Obama’s campaign raised $715.7 million for the 2012 election, according to the Center for Responsive Politics. Romney’s campaign raised $446.1 million, including $1 million from employees of Goldman Sachs Group Inc., according to the center’s figures.
“Those who get rich first must help others get rich,” said Chen Guangbiao, chairman of China Huangpu Renewable Resources Utilization Group Co. and a member of the NPC’s advisory body, the Chinese People’s Political Consultative Conference. “The businessmen who are delegates must bear their duty to society,” said Chen, who is listed by Hurun as having 4.7 billion yuan in assets.
NPC delegates are chosen in their home provinces from lower-level people’s congresses. There’s no requirement for Chinese lawmakers or officials to publicly disclose their wealth.
Xi’s Family
In June, Bloomberg News reported that the wealth of Xi Jinping’s extended family included investments in companies with total assets of $376 million; Hong Kong real estate worth $55.6 million; and an 18 percent indirect stake in a rare-earths company with $1.73 billion in assets. The New York Times reported in October that the family of outgoing Premier Wen Jiabao had controlled assets of at least $2.7 billion.
“We don’t know how the rich people get there to the highest organ in policymaking, how they made their exchange of wealth into political privilege and political power,” said Huang Jing, a political science professor at the National University of Singapore. “It never goes through a formal and transparent process.”
To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at mforsythe@; Michael Wei in Beijing at mwei13@; Henry Sanderson in Beijing at hsanderson@
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@
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China Hints at Changing Its Fuel-Price Mechanism (The Wall Street Journal)
By WAYNE MA
Updated March 6, 2013
BEIJING—The Chinese government is considering changing the way it sets the nation's retail fuel prices to bring them more closely in line with global energy prices, the chairman of the country's top economic planning agency said.
The comments by Zhang Ping, chairman of the National Development and Reform Commission, offered the strongest indication yet that China will overhaul its fuel-price mechanism, which is widely criticized as distorting the country's refining and transportation industries by keeping retail pricing below market rates.
The NDRC controls China's retail fuel prices, adjusting them according to changes in global oil prices and domestic economic concerns, including inflation. Under the system, the NDRC can adjust prices whenever a basket of international crude-oil prices rises or falls by more than 4% over 22 business days. However, it doesn't always do so, and generally keeps retail prices below production costs for domestic refiners.
This system has "obvious disadvantages," and the NDRC may shorten the 22-day time frame or scrap the 4% threshold, Mr. Zhang told reporters on the sidelines of the National People's Congress.
Fuel prices were last adjusted in February, when the NDRC raised gasoline and diesel prices by 3.2% and 3.4%, respectively. Over the past 12 months, it has raised fuel prices four times and cut them four times.
The nation's oil refiners would welcome higher retail prices. State-owned China Petroleum & Chemical Corp., 0386.HK +1.12% the country's largest refining company, said operating losses from its refining business widened to 18.5 billion yuan ($2.98 billion) in the first half of 2012, from 12.17 billion yuan during the same period a year earlier.
State-owned PetroChina Co. 0857.HK +1.91% said its refining business lost 23.31 billion yuan in the first half of last year.
Both companies have been slow to upgrade refineries to enable them to produce cleaner fuels because the government's price caps limit their ability to pass higher costs on to consumers.
The current pricing system has also led to shortages of refined oil products during peak demand in summer and winter.
The NDRC last overhauled its fuel-price mechanism in December 2008.
—Yajun Zhang contributed to this article.
Write to Wayne Ma at wayne.ma@
China's new leadership faces growing environmental pressures (The Guardian)
Leaders say 'ecological progress' is a priority, but air pollution and greenhouse gas emissions from coal remain a problem
Chelsea Diana for AlertNet, part of the Guardian Environment Network
guardian.co.uk, Wednesday 6 March 2013
As the Chinese government prepares to make a leadership transition this week, the country faces conflicting pressures as it strives toward economic growth while wanting to reduce emissions.
While the country’s new leaders have declared “ecological progress” will be a priority, analysts at a World Resources Institute-led press teleconference said China must deal with series of inter-linked challenges– economic prosperity, energy security, mitigating climate change and social unrest – to make environmental strides.
Even then, any changes probably won’t be seen until after 2015, when the country’s current five-year environmental plan ends, the analysts said.
“We’re not going to see any big change in 2013, because it is in the middle of China’s 12th five-year plan,” said Melanie Hart, a policy analyst for the Center for American Progress. Still, “the 2011 to 2015 plan is dedicated to move in a low carbon direction,” she said.
China has been making progress on its targets for the 12th five-year plan to increase the non-fossil fuel share of primary energy consumption to 11.4 percent by 2015.
Growth in the use of non-fossil fuels is over 9 percent for 2012, with some estimates at 9.9 percent, compared to about 8.6 percent in 2011. The country’s overall rate of economic growth fell to 5.5 percent in 2012 from 11.7 percent in 2011, Hart said, reducing expected pressures on the environment.
But, while growth in Chinese coal demand is not as rapid as in the past and not as large as some groups in the U.S. had been projecting, China’s use of coal is still growing.
“It (coal consumption) will still continue to grow and grow exponentially,” said Julio Friedmann, energy technology chief at Lawrence Livermore National Laboratory in the United States, and technical program manager for the US-China Clean Energy Research Center for Advanced Coal Technology.
Friedmann said he expects a 50 to 60 percent increase in China’s coal consumption in coming years. That’s not as large as some experts had predicted, but even so, “I do not see a plateau in the coming years,” he said.
China’s demand for coal depends largely on the rate of economic growth, though other factors – regulation and environmental policy – also will play a role, said Ailun Yang, a senior associate at the World Resources Institute, during the conference call.
To help hold the line on fossil fuel emissions and pollution, Chinese officials have proposed a carbon tax, which would create costs for companies who emit carbon emissions. But Yang said an expansion of the resource tax to cover coal is more likely.
The resource tax, Yang said, would tax consumers. While proposals for a carbon tax have gotten quieter in the past year, she said, several provinces, including Xinjinag, Chongqing, Sichuan and Guizhou, are already piloting the resource tax with oil, gas and a few mineral resources.
While some of the initiatives sound promising, Yang said she did not expect any dramatic position changes by China’s new leadership.
But Hart said China recognises the very serious pressure it is under now that the country is the world’s largest greenhouse gas emitter. As the U.S. moves toward natural gas and away from coal with shale gas development, China is in a more precarious position if they can no longer “point toward the U.S. as the bad guy,” she said.
“They (China) are not going to be able to put themselves in the same bucket as developing countries like Sudan much longer,” Hart said. “China needs some recognition that they are no longer a developing country and since they are the largest emitter they need to take on responsibility.”
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China’s State Planning Commission Welcomes You (THE WSJ CHINA REAL TIME REPORT BLOG)
March 6, 2013
The National Development and Reform Commission is the wheel around which the Chinese domestic economy spins. Once known as the State Planning Commission, it’s in charge of everything from setting the price of gasoline that motorists use to approving steel projects that employ tens of thousands.
So that made the, uh — let’s call it, idiosyncratic — planning at the NDRC’s press conference at the National People’s Congress on Wednesday all the more puzzling. While 100 or so reporters and photographers milled about waiting for the NDRC’s chairman to show, the auditorium’s mood music –sans lyrics –ranged from West Side Story’s “America” (“I like to be in America/OK by me in America”) to Evita’s “Don’t Cry for Me Argentina,” to Phantom of the Opera’s “Music of the Night” (“Softly, deftly, music shall caress you”).
Only when NDRC chief Zhang Ping entered the room, did the auditorium’s music master switch to a rousing Chinese march. Perhaps it was all to make the NDRC’s foreign friends feel at home. If so, that didn’t last for long. While the China’s big media center on the west side of Beijing routinely provides translation, this time it was only half-done. A tired-looking young woman translated questions for Mr. Zhang from Chinese into English, and took assiduous notes while Mr. Zhang droned on in Chinese. But she didn’t translate any of his answers.
Neither the underemployed translator nor her boss gave any reason for skimping on the translation, although perhaps it’s meant to be part of the new frugality preached by the new Communist Party chief Xi Jinping
In any event, even a foreigner with a loose grasp of Chinese could tell that Mr. Zhang kept to script, essentially repeating what was in the agency’s statistics-laden 25-page annual report. (“By the end of 2012, urban population covered by basic old-age, basic medical, unemployment, worker’s compensation, and maternity insurance totaled 324.8 million, 535.89 million, 152.25 million, 189.93 million and 154.45 million, respectively….”reads a typical sentence.)
He did take time to praise urbanization, a favorite of the incoming premier Li Keqiang, and said the idea wasn’t for China’s biggest cities to become even lager megacities, which is also the view of outgoing premier Wen Jiabao.
With that, the 67-year-old Mr. Zhang, who like nearly all of China’s ministers, will shortly be retired, finished his presser. He left without a word, in either Chinese or English, on what comes next for him or the agency when his successor, a new state planner, takes over.
– Bob Davis
Judge Re-Starts SEC Efforts to Subpoena Deloitte (THE WSJ CHINA REAL TIME REPORT BLOG)
March 6, 2013
A federal judge has given a green light to the Securities and Exchange Commission’s efforts to obtain certain audit work papers from Deloitte’s China unit.
U.S. Magistrate Judge Deborah Robinson had paused the court proceedings in August after the SEC revealed it was in negotiations with Chinese regulators to establish a framework for the production of documents from China-based accounting firms involved in SEC investigations. But in December, the SEC said the negotiations had come to an unsuccessful end.
On Monday, Robinson said there was no longer any reason to postpone the SEC’s document request, and said the court would hear the merits of its subpoena application.
The SEC previously asked the U.S. District Court in Washington, D.C. to enforce a subpoena it sent Deloitte asking for information from its Shanghai unit’s audits of Longtop Financial Technologies Ltd., a Cayman Islands company with principal offices in China. The documents in question relate to potential accounting fraud by Longtop, but the ongoing legal battle with the SEC took on broader implications for accounting and law firms with operations in China.
China’s ‘Two Meetings’ Different This Time Around (THE WSJ CHINA REAL TIME REPORT BLOG)
March 6, 2013
By Russell Leigh Moses
For years, the annual “Two Meetings” in China—the convocation of the National Peoples’ Congress and the Chinese Peoples’ Political Consultative Conference–has been the legislative equivalent of a dead cat bounce.
There’s always been some progress in past sessions, thanks to the heavy-lifting of reformers, some of whom believe that social problems are best met by legal measures, instead of dropping the heavy weight of the state on any attempt to engineer change from below.
Still, for the past 10 years, conservative opposition has shoved large-scale change off a cliff. Small adjustments and alterations rule these gatherings. Reform has been largely left to lie flat.
But not this time around.
For one thing, there’s the changeover in leadership that’s taking place, with both President Hu Jintao and Premier Wen Jiabao stepping down. To some in the Party, that peaceful handover is another hallmark of institutionalization; but there are reformist cadres who welcome the final passing of an era, so that serious transformation can move from the odd, unresolved debate into actual decisions.
There are also ample indications of shifts in the thinking of the Chinese leadership on reform. State media is saying there will be a “reform bonus” resulting from changes adopted at the “Two Meetings” (in Chinese) — a clear broadside by reformers against the customary loot and largesse dispensed to the usual suspects in state industry who have benefited from their stranglehold on the Chinese economy.
Then there’s a new seriousness in some Party circles about the sessions themselves, with some urging them to finally become “an integral part of China’s political life, [with] public and orderly political participation, an important platform to offer advice and suggestions for reform” (in Chinese).
Unlike previous legislative moments in March, there’s a spring in the Party’s step—and momentum behind reformers and the initiatives they carry.
Spurring much of this is Party chief Xi Jinping’s emphasis on changing the work style of cadres by being thriftier with time and public resources. That’s having an impact on the way officials talk and make decisions.
In the weeks since Xi took over the Party leadership, simple is starting to sell as doctrine from the center. Praise for one’s superiors is being downplayed (in Chinese). Officials are being encouraged to reset the social atmosphere by avoiding scandal or acting stupidly (in Chinese). As Xi noted during his recent speech at the Central Party School, cadres, by changing their work style, “can learn a little more, think a little more, do a little less unnecessary socializing, and be less formal” (in Chinese).
Indeed, Xi’s recent reaching out to the military is not only a strategy to curry political support; it’s an attempt by him and his colleagues to use the well-organized and Spartan lifestyle of the armed forces as a template for Party cadres to follow.
What’s also different this time around is that Xi’s emphasis in his speech at the Central Party School on “strengthening the sense of urgency in learning” is aimed far more at the Party than it is society. This is not the usual round of conservative-colored reform, the aim of which has been mostly to placate the public with promised crackdowns on corruption and the usual meanderings about the need to end official malfeasance. Learning to be better this time around, Xi insists, “should be comprehensive, systematic, and full of the spirit of exploration”, drawing on expertise and experience.
Efforts to change the actual functions of government agencies, instead of the usual administrative reordering and shuffling, are parts of this same package (in Chinese).
Previous “two sessions” under Hu put the heavy stamp of hardliners on legislation. Xi and his reformist colleagues are not about holding onto that old line, but stepping over it.
Of course, there are opponents and obstacles ahead. The old guard has to be anxious that new ideas are simply a prelude to striking out at adversaries. Leftists in the Party are trying to use Xi’s call for new thinking about the direction of the Party to bring out the tried and by-now quite tired socialist symbol Lei Feng. And there are those who doubt or dismiss some local efforts to display cadres as working closer with the masses (in Chinese).
But Xi and his supporters seem determined to fly, and not simply let another opportunity for reform flop back to earth. Suddenly, the “Two Meetings” are looking less like another uninteresting soft landing and more like the Party just might get airborne.
At Chinese Congress, Delegates Talk Toxic Milk Powder (Time World Blog)
By Yue Wang
March 06, 2013
In 2008, several Chinese infants died and thousands were hospitalized after consuming milk tainted with a chemical compound called melamine. Since then, Chinese parents have almost emptied Hong Kong’s stock of formula milk, hoping the semiautonomous city’s relatively stringent food-safety rules will keep their kids safe. Hong Kong parents have since protested that the supply of safe milk is dwindling. The city recently banned people from taking more than two tins of milk powder (about 1.8 kg in total) outside the Special Administrative Region. That, of course, has upset many mainland Chinese.
As the National People’s Congress (NPC) gets under way in Beijing, milk powder is emerging as a key point of contention between mainland China and Hong Kong. Hong Kong delegates insist the new rules are designed to prevent unscrupulous mainland traders from disrupting Hong Kong’s milk market. But the ban was met with harsh criticism. Chinese mainland delegates criticized the Hong Kong government for being “way out of line,” reported the South China Morning Post. Pan Shiyi, a prominent Beijing businessman, warned of “starvation” on the mainland. ”Hong Kong should help us by sending cans of infant-milk powder here. Instead, it established such a harsh law, putting those who purchase milk powder in prison,” he wrote. “The Hong Kong government should think twice about this regulation.”
Still others wonder why mainland authorities have yet to restore public confidence in the food-safety system. Li Xiaolin, a Beijing-based businessman, told the South China Morning Post that he wouldn’t let his 2-year-old grandson consume milk powder made in the mainland. Even People’s Daily, the Chinese Communist Party’s mouthpiece, has demanded an answer from the NPC. “China’s diary industry should be ashamed that Chinese people are going global for infant milk formulas,” read a February editorial. “We should think about why a country that can launch spaceships fails to ensure baby-food safety.”
Beijing has defended China’s diary industry. At a press conference on March 2, Lu Xinhua, a spokesman of the Chinese People’s Political Consultative Conference, said 99% of the milk powder in China was safe. But his remarks don’t seem to impress delegates nationwide. Cui Yongyuan, a famous TV host known for his outspokenness, said he has no confidence in mainland-manufactured formula milk when asked by a journalist to comment on the 99% claim. “How would I know where the 1% is?” he told Chinese reporters.
Vincent Lau, who recently led a protest calling for the protection of Hong Kong’s milk-formula supply, told TIME that China’s diary industry problem should be fixed at the source, not at the expense of Hong Kong. ”Even if it’s the same brand as what they are buying here, they don’t trust the product sold on the mainland. Hong Kong is tiny. Seven million people can’t take care of 1.3 billion.”
Why John Kerry Must Listen to China's Social Web ()
2 MAR 6 2013
The Chinese web provides a candid window into what the country's citizens want from their government -- and from the United States.
The United States and China both stand at the threshold of major transitions. In Beijing, newly selected leader Xi Jinping is set to assume the Chinese presidency this month, charged with navigating a complicated international environment and significant domestic challenges. Here in Washington, as the Obama administration begins its second term, John Kerry, the newly sworn-in Secretary of State, inherits a fraught relationship between the two Pacific powers.
U.S.-based China experts have lamented that the two countries lack a "shared vision" for the future of the world's most crucial bilateral relationship. They are correct. But seeking common ground does not mean abdicating the United States' unique role as exemplar. More than other nations, the United States strives to speak directly to citizens around the world, not just their governments. Precisely for this reason, familiarity with citizen voices abroad, and the ability to leverage grassroots sentiment to amplify diplomatic impact, is a vital prerequisite for Washington's unique brand of engagement.
In the Chinese netizen thirst for transparency, rule of law, and fundamental fairness, Americans can see unconscious reflections of our own values.
In order to craft an appealing diplomatic message that reaches beyond the heights of Chinese bureaucracy, Secretary Kerry must elevate the role of China's vibrant social media within the mix of American policy-making information. It must, at minimum, lie on equal footing with official meetings, intelligence assessments, "Track 2" dialogues, and academic exchanges. Only then can American officials begin to take a reliable reading of the Chinese public's temperature on Beijing's role in the world, China's relationship with the United States, and Chinese peoples' conceptions of their own rights and duties as citizens.
If Secretary Kerry were to scan Chinese social media today, or use available English-language tools that specialize in tracking it, he might be surprised by the candor he encountered. Virtually every other day, a corrupt Chinese official is felled by online sleuths. Angry anti-government rhetoric abounds, and while some of it is censored, much of it remains conspicuously visible. A year and a half ago, for example, citizens in the village of Wukan relied on social media to follow and debate protests against corrupt land deals there.
And while Chinese social media has not led to Chinese democracy, it has become a hotbed for crowd-sourced political activism. Earlier this month, online citizens (or "netizens") frustrated with corruption teamed up en masse to collect and share photographs of luxury cars carrying license plates of the People's Liberation Army, China's armed forces.
Chinese online chatter is hardly limited to domestic matters. In the aftermath of North Korea's third detonation of a nuclear device in February, the Chinese blogosphere quickly burst with discussion of the Kim regime , much of it unfavorable. Close followers of Chinese social media, however, would not have found this sentiment surprising. In May of last year, after North Korean officials captured a Chinese fishing boat and held its fishermen for ransom, the online vitriol coming from Chinese Web users stood in stark contrast to the friendly government-to-government relationship between the two nations. This information would, without a doubt, be invaluable in helping shape America's diplomatic approach to China.
Of course, there is nothing uniquely American about online criticism of misguided domestic policies, campaigns against government corruption, or frustration with Kim Jong-Un's reckless behavior. And that's precisely the point: in the Chinese netizen thirst for transparency, rule of law, and fundamental fairness, Americans can see unconscious reflections of our own values, and perhaps the early contours of a vision for our shared future. China's 564 million Internet users represent less than half of the country's population. But that number is growing each day, and China's future leaders are almost certainly among them.
None of this means that anti-American views have receded from the Chinese web, a raucous and pluralistic space that belies any monolithic conception of modern China. Far from it. But in the aggregate, opinion toward the United States is surprisingly favorable. Most importantly, the firmer Americans hold to its core values, the higher the praise rises. This is true even -- perhaps especially -- when our behavior has nothing to do with China. When First Lady Michelle Obama spoke at the Democratic convention, Chinese Web users called the speech "fresh" and "amazing," impressed that a president's wife spoke so openly and eloquently about financial struggles during the early years of their marriage. Earlier, over 20,000 Web users shared data drawn from the personal financial disclosure forms of American leaders because it contrasted so sharply with the opacity of Chinese officialdom.
In some ways, Chinese social media simply reaffirms the values of smart American foreign policy: the more we remain committed to our own ideals, and the more we practice what we preach, the louder our voices will resonate on distant shores. At the same time, social media portrays a modern China with the potential, in many ways still unrealized, to become a responsible and mature stakeholder in an emerging international order -- a government held accountable to its citizens. What happens next depends in large part on Beijing, and how closely it listens to its growing online chorus. But the United States also has a huge part to play. We must start by staying true to our own values by listening to and acknowledging netizen voices. And if we do that, we give Chinese reformists every reason to hope.
In Central Asia, China Casts a Long Shadow ()
1 MAR 5 2013
Along its western border, China's influence is only beginning to grow.
In the gravelly, uncertain road coursing through Kyrgyzstan's picturesque Alay Valley, it does not take long to stumble across the Chinese road workers' camp. Though just a dusty collection of prefab dormitories, the camps nevertheless proudly display the company's name, logo and various slogans in large red Chinese characters. A Kyrgyz security guard is fast asleep on his cot, and the camp is deserted except for a young engineer from Sichuan. He explains that they work six months out of the year, when snow doesn't block the passes. Next year, the road will be finished. He says his friends that work on Chinese-built roads in Africa get a better deal.
Further down the road, amid bulldozers and trucks full of dirt, are the road workers. They're slowly reshaping the mountains, molding them into smooth inclines and regulation grades. Then there are the trucks; hundreds of them, crowding at the Chinese/Kyrgyz border, all engaged in the increasingly active trade between the two countries. One of the truckers, a member of China's Muslim Uighur minority, is eager to chat. The roof of the world is his workplace. It takes three days to drive a 30 ton load from Kashgar, in China's Xinjiang province, through Kyrgyzstan to Uzbekistan. He and his colleagues bring 100 such loads across every week.
In many ways, China has a stranglehold on Kyrgyzstan's economy, so much so that, in the words of a former Kyrgyz cabinet member, the country's economy would collapse without its giant neighbor to the east. What little wealth that is generated in Kyrgyzstan is due to its role as a re-export center for Chinese goods headed for Kazakhstan and Uzbekistan, its richer neighbors, and Russia.
Kyrgyzstan is not a resource-rich country by most measures, but Chinese mining companies are active throughout its expansive countryside, exploring and extracting, sometimes in disregard of environmental consequences. These mining operations have occasionally been subject to raids from locals on horseback, but these attacks do not deter the Chinese. Kyrgyzstan does have some oil, but until now, it has not had the capacity to refine it into fuel. In the past, Kyrgyz drivers were dependent on their old colonizer, Russia, to refine the oil and ship it back to them for consumption. Not any more. A Chinese company is building a small refinery in Kyrgyzstan, using small-scale projects such as these to increase its influence in the country.
China's behavior in Kyrgyzstan is symptomatic of its wider approach to Central Asia, a remote region that has become central to Beijing's global diplomatic and economic profile. Driven by the Chinese economy's voracious appetite for natural resources, business opportunities along ancient trade routes, and a paramount desire to bring stability through development to a region bordering on China's restive Xinjiang province, these varied Chinese actors are rapidly reshaping a region that was both Russia's back yard and the United States' staging ground for operations in Afghanistan.
Consider one of China's largest firms, energy giant CNPC. Staring in 2007, CNPC built a pipeline connecting China's eastern coast with the immense natural gas fields of Turkmenistan in eighteen months -- a global record -- and is in the process of lengthening it to reach the resource-rich Caspian Sea.
China's behavior in Kyrgyzstan is symptomatic of its wider approach to Central Asia, a remote region that has become central to Beijing's global diplomatic and economic profile A series of purchases through a Chinese-Kazakhstani joint venture is set to bring China control of 40 percent of Kazakhstan's gargantuan oil wealth. CNPC plans to expand its natural gas network to all six Central Asian states (including Afghanistan) in the next five years, not only sending gas to Chinese consumers, but also distributing it in the region in order to gain political favor.
Meanwhile, China has taken the concept of a "new silk road" -- official if unrealized U.S. policy -- and turned it into reality. The China Road and Bridge Company (CRBC), as well as other contractors, have taken on the region's highway, railroad and electricity transmission challenges, paving over some of the world's most forbidding terrain while creating a new 'Synthetic Road' for Chinese goods to reach Europe, the Middle East and Chinese-built ports in Pakistan and Iran. The new road from Irkeshtam to Osh, containing the lone Sichuan engineer at his camp, is just one of many routes.
But, with such wide-ranging investments, is China concerned about security in a region abutting South Asia and the Middle East?
Beijing has long been reluctant to take on responsibilities for security outside of its borders, yet it remains paranoid about the potential spillover of Islamist extremism or ethnic conflict into Xinjiang. The Shanghai Cooperation Organization (SCO) -- a China-led regional grouping encompassing four Central Asian states and Russia -- serves partly as a coordinator for monitoring Uighurs and other perceived threats. This bloc, which has been called the NATO of the East, is arguably little more than a re-branding of bilateral Chinese initiatives as multilateral legitimacy. In 2012, the SCO served as cover for the offer of $10 billion in Chinese soft loans to members Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. As Western forces prepare leave Afghanistan and the rest of Central Asia by the end of 2014, China may find that it has to upgrade the SCO and other security arrangements to fill the regional security vacuum.
China has never explicitly stated that it seeks hegemony -- economic or otherwise -- over Central Asia. Yet China has become the most consequential actor in the region due to the unmistakable confluence of several actors: state owned enterprises looking for the next big project, shuttle traders seeking new markets, Confucius Institute teachers and overseas Chinese community organizers. These are the rather disorganized shock troops of China's would-be empire in Central Asia.
Remote as the Central Asian region may be, China's geopolitical future lies here. Its vast western land borders provide an outlet to the world's markets that the encircled South China Sea does not. In going west, the droves of Chinese opportunity seekers are repeating history along the old Silk Road. However, China's economic growth is now farther reaching and its global profile greater than even at the height of its imperial history. In Central Asia, China is redrawing the great power map and the consequences will be felt from Moscow, to Brussels to New Delhi and Washington. It is a Manifest Destiny that has only just begun.
In Broadcasting Lead-Up to Execution, China Ignores Rule of Law ()
MAR 5 2013
The nationally televised broadcast of an execution forces China to confront whether it is ready to implement the rule of law.
Since China began its rapid economic ascent three decades ago, it has made a point of unveiling landmark achievements with great media pomp. Most recently, the world watched breathless announcers from China Central Television (CCTV), China's main national broadcaster, laud the country's first aircraft carrier and space docking. In the same spirit, though with more somber tones, CCTV aired a live two-hour special last Friday featuring the final moments of four drug traffickers facing execution for murdering 13 Chinese sailors on the Mekong River in October 2011.
Led by Burmese gang leader Naw Kham, the four men, along with two accomplices given long prison sentences, were apprehended last April in Laos after an extensive manhunt that included law enforcement teams from multiple countries. According to a senior public security official who spoke to the Global Times in February, China had at one point considered killing Naw Kham through a drone strike in response to mounting public outrage
Without a doubt, the case touched upon painful wounds from historical and current mistreatment of Chinese nationals working overseas. As more and more seek opportunities outside the country, the potential dangers they face from hostile foreign hosts have only heightened concerns. It was of little surprise, then, that CCTV emphasized during the broadcast that in bringing Naw Kham and his men to justice, China was displaying the "confidence and determination to safeguard national judicial sovereignty and national interests".
Still, any symbolic assurances of safety were not enough to mitigate the horror many expressed at the state's display of power over life and encouragement of blood lust. During and after the broadcast, a fierce debate raged on Sina Weibo, China's version of Twitter, over whether a public airing of an execution was at all appropriate.
A significant chorus of objections to the public execution claimed that it violated the rule of law. In China, where both Xi Jinping, China's incoming president, and Li Keqiang, its next premier, have designated implementation of the rule of law as the linchpin of the country's crucial political reform efforts, such claims should give pause.
Based on the army of legal pundits CCTV had on hand during the broadcast, it would seem the government had anticipated these arguments and sought to preempt them. Indeed, since the four men were sentenced in November, coverage of the execution in state media has boasted of China's meticulousness in following the judicial process during the case. On Friday, legal experts ticked through each of the procedural safeguards to demonstrate that the criminals have been dealt with fairly, from appealing the sentence to considering mitigating circumstances that were found ultimately to not apply.
What CCTV did not realize, however, was that the proceedings of the case did not have to be defended. They are as uncontroversial as the government's desire to protect its citizens from crimes on foreign soil. Rather, those who cried "rule of law" would be aiming their displeasure at CCTV's decision to broadcast the executions.
Then again, despite a technical point from prominent human rights lawyer Liu Xiaoyuan that China's Criminal Procedure Law prohibits public executions, the broadcast was perfectly legal. No execution was ever shown. What coverage of the trips to the execution site does reveal, however, is that China still lacks a culture that the rule of law requires. This sort of culture acknowledges the more visceral forms of justice but also prizes a rational approach to dealing with crime and punishment. The focus of the criminal justice system should be on deterrence, punishing only insofar as society may benefit and recognizing the humanity of defendants regardless of the alleged crimes. Vengeance and assertions of might are unwelcome in this context.
To be fair, even in societies that pride themselves on their mature legal systems the question of live executions has hardly been settled. Timothy McVeigh's execution, the last high-profile one of its kind in the United States, was broadcast on closed-circuit television in 2001 with journalists only able to bring in pen and paper. But every major broadcaster showed footage of the crowds outside, some supporting McVeigh, others counting down the seconds until his death with relish. Many felt that the execution should have been public to force the American people to confront the gruesomeness of the death penalty.
And yet neither executions nor final journeys are public in these countries (or, for that matter, in China in most cases). Indeed, Chinese authorities ended the television program Interviews Before Execution, which aired in Henan Province, last year in embarrassment after it became the subject of a BBC documentary. For all of China's awareness of the imperfections of legal justice, largely responsible for previous resistance to the rule of law, footage of dead men walking was a reminder that it needed something extra to legitimize official judgments of right and wrong.
China may have special reason to showcase its justice system, but all societies that still have capital punishment necessarily view its carriage as an achievement. To rigorously vet the road to an execution is to bless an outcome that would otherwise be unacceptable. What China learned on Friday is how quickly all this work is undone after the law reaches a point at which it can only hope to guide and not force.
Ironically, China's leaders probably thought they had a relatively straight-forward path to implementing the rule of law. That would only be true, however, if statute books and a healthy respect for order were all that the endeavor entailed. The comprehensive nature of a truly robust rule of law demands more. As the National People's Congress gets under way to pass a slew of new laws and officially hand over the reins of leadership, China has shown just how far away it is from understanding its chosen vehicle for future reform.
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Murder of baby found in stolen SUV prompts soul searching in China (The Guardian)
Zhou Xijun is said to have confessed to killing baby and burying body in snow after finding him on back seat of car
Jonathan Kaiman in Beijing
The Guardian, Wednesday 6 March 2013
A car thief in north-eastern China who discovered a baby boy asleep in a stolen 4x4 killed him and buried the corpse in the snow.
The 48-year-old thief's confession prompted a wave of seething incredulity on the internet in China and a bout of soul-searching about parenting, capital punishment and media censorship.
According to a post on the Jilin province public security bureau's microblog, Zhou Xijun turned himself in to Changchun city police at 5pm on Tuesday. He confessed that he stole the Toyota RAV4 from outside a supermarket on Monday morning, strangled the two-month-old boy, named Xu Haobo, after noticing him while driving on the highway, and buried his corpse in the snow. Zhou abandoned the vehicle outside a primary school in a nearby city and took a minibus back to Changchun.
The infant's father, a supermarket owner surnamed Xu, had left the car's engine running while he entered his market to turn on a stove. He emerged 10 minutes later to find the car missing, immediately called the police, and broadcast a message on a local radio station saying that he would not hold anybody accountable if the baby was safely returned.
The child's mother had a nervous breakdown after hearing Zhou's confession, Chinese media reported. It is unclear whether the baby's body has been found.
Xu's broadcast spurred an extensive manhunt across snow-covered Changchun, an industrial city of 7.6m people, known as "China's Detroit" for its high concentration of automobile manufacturing plants. The bulk of Changchun's police force – either 3,500 or 8,000 officers, according to conflicting reports – spent two days searching for the baby alongside scores of local volunteers.
Thousands attended a candlelit vigil in Changchun on Tuesday night, and "Changchun stolen infant" was among the most popular topics on the Sina Weibo microblogging website on Wednesday afternoon. Amid an outpouring of sympathy, some Weibo users debated whether the parents should be held partially responsible for losing the child. Some said the killer should be executed.
Other posts held a mirror up to the intense government control and crass commercialism that define life in China. Journalists leaked a circular from the Changchun propaganda department instructing local media on how to report on the crisis. "No frontpage coverage allowed," it said. "There shall be no questioning of the police's work." Posts containing the instructions have since been deleted by internet censors.
A Buick dealership in a neighbouring province used a picture of the baby in a microblog post advertising a GPS system that would guarantee customers "peace of mind" in similar circumstances. The dealership was skewered by netizens – "go die" wrote one – and subsequently issued an apology.
According to official statistics, China's homicide rate is 0.8 cases per 100,000 people – among the lowest in the world – and 94.5% of these cases are solved. Yet Zhou Xiaozheng, a sociology professor at Renmin University in Beijing, says that because many cases are unreported, the actual number may be much higher.
Zhou said that widespread desperation caused by China's growing wealth gap, rampant corruption and environmental degradation may be fuelling a rise in crime. "Social conflicts are obviously increasing, and this obviously takes the form of criminal cases," he said.
Chinese mourn death of carjacked baby (The LA Times)
By John Hannon and Barbara Demick
March 6, 2013
BEIJING -- Thousands in the northeastern city of Changchun mourned during a candlelight vigil Tuesday night for a 2-month-old boy who officials say was strangled to death by a carjacker.
Xu Haobo was sleeping in the backseat of his parent's SUV early Monday morning when his father stopped for a few minutes to turn on the heat in a store the family owned, authorities said.
"He left his kid in the car with the heat on, and he didn't take the keys," a bystander at the scene in Changchun later told TV reporters. "He was inside for a bit, and when he looked outside, there was nobody there."
The baby’s unintended abduction captivated China and led to one of the largest manhunts in recent memory. By 7:30 Monday morning, provincial radio had broadcast a notice asking listeners to watch out for the family's gray Toyota RAV4 and the infant. The search lasted into the next day, with taxi drivers joining a police search that stretched into neighboring provinces.
"We night drivers have all come out, we're calling each other, we were out with the day shift," a taxi driver was quoted telling the provincial television station Monday night.
Other media outlets described citizens driving around Changchun with their breastfeeding wives to provide for the infant in case he was found.
On Tuesday morning, police reported, inspectors identified the stolen car in a residential parking lot 20 miles outside the city. The infant's clothing was found nearby.
The search was suspended late Tuesday when Jilin province police announced that a suspect had turned himself in and confessed to strangling the child and dumping the body in the snow. The suspect was identified as a 48 year-old army veteran, Zhou Xijun, who had previously served time in a labor camp on charges of molesting a woman.
The tragic ending led an emotional outpouring of more than half a million comments on Chinese blogs.
"Death's too easy! Lock him up. Bet the people inside won't let him off! Let him rot!" one outraged microblogger commented on the provincial police blog.
"They should have executed him on the spot, or given him the lingering death," wrote another blogger, referring to a kind of torture used in imperial China.
Some Chinese bloggers contrasted the tragic outcome to recent cases in Britain and the United States in which carjackers abandoned the vehicles once the realized they'd taken babies as well. In one case last month in the Bronx, the suspected thief called 911 with the location of the car to make sure the baby wouldn't get cold.
In Changchun, thousands of people marched downtown on Tuesday night, holding candles to mourn the dead baby. Some brought toys and flowers. Lights throughout the city were dimmed in respect for the boy.
Online
In China, It’s ‘Til Death – or Taxes – Do Us Part (THE WSJ CHINA REAL TIME REPORT BLOG)
March 6, 2013
China is seeing a rush of divorces after new property curbs were announced over the weekend, as couples sought to dodge forking out more money to sell or buy homes.
At the Changning district marriage registration center in Shanghai, staff saw an increase in the number of people applying for divorces, according to a staffer interviewed by China Real Time. “There’s definitely an increase, but not a massive one. Usually there could be about 20 cases we handle a day, and after the new rules, it was about 30,” said its director, who would only give her surname Yu.
“We end usually at 11:30 a.m., but today, it was extended to 12:30 p.m.,” she added.
Local media reported that marriage registrars in Shanghai and Nanjing saw record numbers of divorce applications after the new property curbs were announced.
At 5 p.m. Monday, Nanjing city recorded 294 divorce cases, double the usual number, said the Guangzhou-based Xin Kuai Bao newspaper.
The number of people applying for documents stating that they are single also rose in the last few days, Ms. Yu said. “Typically there are around 100 applications a day, we’re seeing close to 200 now,” she added.
China’s State Council, or cabinet, said late Friday it would strictly enforce a 20% tax on profits from the sale of the seller’s second or subsequent home. Currently, most sales are taxed at only 1% to 3% of the home’s value. China will also raise down payments and mortgage rates on second-home sales in cities where prices had risen too fast.
While details are still hard to come by, sellers appear to believe divorce is one potential way to dodge the tax. A couple with two homes, hoping to sell one, could get a divorce so that each apartment belongs to an individual, treating both as first homes. The sale of one of the homes will then be tax exempt.
The government hasn’t released additional information, and date of implementation remains unclear. In some cities, the announcement also triggered a rush among property owners to sell ahead of the policy’s implementation.
Long queues of owners, many of them with their property deeds in their hands, were in evidence at a government housing office in Shanghai when China Real Time paid a visit on Tuesday. Many were trying to register their home sales before the tax increase went into effect.
Some observers have noted that the divorce rate could rise further when the tax is in force.
Fake divorces aren’t new in China. In 2010, when cities rolled out restrictions limiting families to only one additional home purchase, many couples sought fake a divorce to bypass the rules.
“The reason that they give is that they’ve lost mutual affection for each other, but we don’t know what the actual reason is,” Ms. Yu said.
The Shanghai Daily reported that in the past two days, a pregnant woman had also sought a divorce at a registration center in Yangpu district in Shanghai. “She told me she came here to avoid possible loss in the property transaction, and I could say nothing,” the paper said, citing an official at the center.
– Esther Fung
Lei Feng Comrade-in-Arms Dies While Celebrating Lei Feng Day (THE WSJ CHINA REAL TIME REPORT BLOG)
March 6, 2013
A retired soldier celebrated by Chinese state media as a witness to the good deeds done by model Communist figure Lei Feng died on Tuesday while marking the country’s 50th annual “Learn From Lei Feng Day.”
Zhang Jun, a photographer credited with producing more than 200 images of Lei Feng, suffered a sudden heart attack after speaking at a military conference on the study of Lei Feng in Shenyang, capital of the northeastern China province of Liaoning, according to China’s state broadcaster. He was 82 years old.
CCTV gave the story prominent play Tuesday evening, airing footage that showed Mr. Zhang giving a spirited presentation to a room full of military personnel, then cutting to a shot of him slumped in his chair. The report went on to show the elderly man on the ground receiving CPR from medical staff and, finally, lying on an operating table draped in a red flag with a yellow hammer and sickle.
Mr. Zhang’s death comes at a time when China’s new leadership, beset by concerns over a growing wealth gap and signs of discontent among the country’s have-nots, is eager to tap into the values of obedience and generosity embodied by the figure whose wholesome image he helped disseminate. Ideological chief Liu Yunshan, among the new crop of Communist Party leaders, on Friday echoed Mao Zedong in urging the country to study Lei Feng as a way to improve socialist morality.
According to Communist Party lore, Lei Feng was a soldier stationed in northeast China who was killed in 1962, at age of 21, when a fellow soldier backed a truck into a telephone pole. After his death, a diary was supposedly discovered in which the Good Samaritan documented his love of helping others and his dedication to Mao Zedong. The diary, which some say is forged, was later disseminated by Lin Biao, a People’s Liberation Army general who was a close ally of Mao’s, and “study Comrade Lei Feng” became a common refrain throughout the country.
While the party has periodically tried to revive the spirit of Lei Feng in the recent past, it has appeared to put extra effort into the 50th anniversary commemorations, which coincide with the opening of the country’s annual parliamentary session. Commemorative Lei Feng stamps have been issued, while Beijing’s Lei Feng Primary School recently announced that it would open a new Lei Feng museum.
Stories trumpeting the Lei Feng spirit have run in print, on TV and on the radio. Even the Financial News, a daily paper published by the central bank and typically filled with dry commentary on repo rates and open-market operations, ran a front page editorial on Tuesday reminding readers of Lei Feng’s “moving story.” Celebrations were held at a bank in the city of Fushun where the model soldier deposited 100 yuan in 1961, which has since been renamed in his honor, the Financial News said. “The entire bank was plunged into incomparable grief when the sad news of Lei Feng’s sacrifice reached them,” the paper added.
It’s not clear how receptive contemporary Chinese people are to the Mao-era propaganda. The English-language website of the state-run Global Times tabloid reported Wednesday that in an informal survey of 20 people, 70% said they didn’t know Tuesday was Learn From Lei Feng Day. Meanwhile, the Yangtze Evening news cited an employee at a movie theater in the city of Nanjing saying not a single person bought tickets for four showings of a new Lei Feng biopic called “Youthful Days” on Tuesday. Calls to the theater rang unanswered on Wednesday.
Mr. Zhang’s work has been held up repeatedly by propaganda officials in defending themselves against claims that Lei Feng was made up. According to CCTV, the photographer spent 19 days with Lei prior to his death, snapping pictures of his fellow soldier cleaning trucks, studying Mao’s works and helping children with their studies. Mr. Zhang traveled around the country spreading the Lei Feng spirit. Mr. Zhang publicly testified to his comrade-in-arms’ accomplishments on more than 1,260 occasions, according to the official People’s Liberation Army Daily.
“Old Zhang Jun, rest in peace,” the CCTV anchor said at the conclusion of broadcaster’s report Tuesday. “Long live the spirit of Lei Feng.”
– Josh Chin, with contributions from Richard Silk
Renewable energy; Cleaning up (The Economist Analects Blog)
Mar 6th 2013
by V.V.V. | SHANGHAI
A striking new report finds that China is a net importer of clean technology from America
A CASUAL glance at the business headlines might suggest that China’s renewable-energy industry is an unstoppable juggernaut. Over the past decade, Chinese firms have used supportive government policies and lavish subsidies to leapfrog to the top of the world’s wind and solar industries. This has prompted political backlashes overseas—especially in America, where Chinese exporters have faced anti-dumping duties and worse.
So China must hold a massively large trade surplus in clean energy with America, right? Quite the opposite, finds a striking report titled “Advantage America” released on March 6th. The two countries traded about $6.5 billion in solar, wind and smart-grid technology and services in 2011—and America sold $1.63 billion more of such kit to China than it imported from there. The analysis was done by Bloomberg New Energy Finance (BNEF), an industry publisher, and funded the Pew Charitable Trusts, a charity.
More surprising is the fact that America’s lead was maintained in all three categories studied by the boffins: solar, wind and smart energy technologies (see chart). One important explanation for this is that while China has strengths in large-scale assembly and mass manufacturing, it lacks the innovation to come up with high-value inputs. So American ingenuity is required to supply Chinese factories with such things as polysilicon and wafers for photovoltaic cells, and the fibreglass and control systems used in wind turbines.
The resulting picture is one that is reflective of the broader US-China relationship beyond trade. The two countries, though often appearing at loggerheads, are actually best seen in symbiosis. As Michael Liebreich of BNEF puts it in the report’s foreword, “the United States and China…are not so much competing as they are interdependent.”
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