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The Daily China News Update is produced by Charles Silverman

(03/08/13)

Business & Economics

Newswire

Asian shares steady, eyes on U.S. jobs, China trade (Reuters) 4

China trade seen underlining economic rebound intact (Reuters) 5

China Inflation Over 3.5% May Prompt Rate Rise: NDRC Chen (Bloomberg) 6

China Investor Said in Talks for Stake in NYC GM Building (Bloomberg) 7

Print

For App Makers, China Is Untapped and Untamed (The Wall Street Journal) 8

Shell Sees Major Advance in China Shale Output Within Two Years (The Wall Street Journal) 10

China moves to make its markets credible (The Financial Times) 11

China in push to open currency borders (The Financial Times) 13

Online

Eight Questions: Michael Pettis, ‘The Great Rebalancing’ (THE WSJ CHINA REAL TIME REPORT BLOG) 14

Hope Springs Eternal: Electric Vehicles in China () 16

Chinese Business Negotiation Training: Role of Technology and IP in Chinese Business Negotiation () 17

German Electronics Retailer Pulls Out Of China () 18

The Coming Android Invasion of China () 18

China: rising wages will drive economic change under new leadership (The FT Beyond BRICs Blog) 19

Huawei hit by protests over illegal workers in Indonesia (The FT Beyond BRICs Blog) 20

Sina Weibo Testing New, WeChat-Like Public Platform () 21

Apart From WeChat, Chinese Developers Are a No-Show in Latest Global App Data () 22

Alibaba IPO to Bypass Hong Kong and Head to NASDAQ? () 23

IDC: Smartphone Sales Way Up in China, Now Account for 73.2% of All Mobiles Sold () 24

China’s Top E-Commerce Site to Launch Product Searches Inside WeChat App () 24

Government Signals China Might Finally Get a 4G Network This Year () 25

Chinese Fashion Expo Inks JV Agreement With UBM Asia () 26

WeChat Lead Says They’d Monetize the Official Accounts Platform First () 26

Suntech Falls 3.3% As Uncertainty Clouds Future Of Former Solar Industry Icon () 27

Politics & Law

Newswire

China village seethes over land grabs as Beijing mulls new laws (Reuters) 28

Exclusive: China wealth fund, Commerce Ministry to get new heads - sources (Reuters) 30

China navy seeks to "wear out" Japanese ships in disputed waters (Reuters) 32

China expresses condolences on Chavez's death (Xinhua) 35

Ex-US consulate guard sentenced to 9 years in prison for trying to sell secrets to China (The Associated Press) 36

Print

China key to enforcing U.N. sanctions on N. Korea (USA TODAY) 37

China’s Wen Warns of Inequality and Vows to Continue Military Buildup (The New York Times) 38

Online

Chinese officials; Spending less? Or hiding it better? (The Economist Analects Blog) 40

Billionaires Big at China’s Annual Political Conclave (THE WSJ CHINA REAL TIME REPORT BLOG) 42

When In China …. China Labor Law Controls () 43

Shanghai Party Bosses Believes License Plates Are Too Expensive () 44

Stories on the edge of the NPC (China Media Project) 45

Can the North Korea Challenge Bring China and the U.S. Together? () 46

Washington Court Sets $2 Million Bail For Chinese Student Charged With Vehicular Homicide, So His Mom Writes A Cashier’s Check () 49

Unpacking the Propaganda Legacy of China’s Lionized Communist Hero, Lei Feng () 50

Censorship Alert! Academic Study Shows Sina Weibo’s Human Censors Are Pretty Darn Fast () 52

Miscellaneous

Newswire

China faces social, financial risks in urbanization push (Reuters) 52

Chinese Super League switches gear to nurture home-grown talent (AFP) 53

Print

Pollution is one reason Guangzhou people’s lungs are turning black, warns expert (South China Morning Post) 55

Online

Introspection in China Following Murder of Two-Month-Old Infant (THE WSJ CHINA REAL TIME REPORT BLOG) 56

In China, Water You Wouldn’t Dare Swim In, Let Alone Drink (Time World Blog) 57

Lei Feng Movie Debuts in Nanjing, Zero Tickets Sold () 58

The Funniest China Map You'll See in Awhile () 61

Shanghai vs. Beijing, in One Image () 62

How to Win in China: Reflecting on the Life of one of China’s Most Vivacious Expats () 62

Business & Economics

Newswire

Asian shares steady, eyes on U.S. jobs, China trade (Reuters)

By Chikako Mogi

TOKYO | Thu Mar 7, 2013



(Reuters) - Overnight gains in U.S. stocks underpinned Asian shares on Friday, but prices were capped ahead of key U.S. jobs and Chinese trade figures due later in the session, while the dollar hovered near a 3-1/2-year high against the yen.

Global equity markets rose on Thursday after another piece of U.S. data indicated a steady improvement in the world's largest economy, raising hopes the government's monthly nonfarm payrolls report will be solid. The U.S. economy is expected to have added 160,000 jobs in February.

Friday's payrolls report is key to gauging the U.S. Federal Reserve's policy course as the Fed will keep its near-zero rate stance until the unemployment rate falls to 6.5 percent, as long as inflation does not threaten to top 2.5 percent.

Ahead of the nonfarm payrolls, Thursday's report showed the number of Americans filing new jobless claims benefits fell unexpectedly last week.

"The U.S. nonfarm payrolls report will be the biggest event risk over the next 24-hours of trading and the data may increase the appeal of the dollar as job growth is expected to pick up in February," said David Song, currency analyst at DailyFX.

The recent string of positive U.S. economic data drove U.S. stocks higher, pushing the Dow Jones industrial average .DJI to an intraday record for a third consecutive session on Thursday and boosting the dollar against the yen to a 3-1/2-year high of 95.100 on Thursday. The dollar was at 94.90 yen early on Friday.

The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was nearly flat. Australian shares .AXJO pared earlier gains to trade virtually unchanged while New Zealand shares .NZ50 earlier hit a record high.

South Korean stocks .KS11 opened down 0.1 percent.

Japan's Nikkei stock average .N225 opened up 0.8 percent, hitting its highest since September 2008. .T

The yen has come under renewed selling pressure as the dollar is increasingly bought on signs of a strengthening U.S. economy while expectations remain firmly in place for the Bank of Japan to take bold reflationary measures when a new leadership takes over later this month.

The yen fell sharply against the euro on Thursday to a low of 124.57.

After keeping interest rates steady as expected at its meeting on Thursday, European Central Bank President Mario Draghi suggested the bank was not in a hurry to act while noting that any threat of contagion to other euro zone members from Italy's inconclusive election results was muted.

The euro rallied more than 1 percent against the dollar on Thursday after Draghi's comments, and has kept the gains early on Friday, trading at $1.3108.

U.S. Treasuries prices fell for a fourth consecutive session on Thursday, lifting the benchmark U.S. 10-year Treasury yield as high as 1.997 percent.

Investors will be watching trade data from China, the world's second-largest economy and top consumer of many commodities.

"A huge seasonal impact in February should ensure a very misleading headline on China's exports. Risks seem firmly tilted to a clear negative reading on exports which should inflict at least passing damage on AUD, NZD and Asian currencies." said Sean Callow, a senior currency strategist at Westpac.

U.S. crude was down 0.1 percent at $91.45 a barrel.

(Additional reporting by Ian Chua in Sydney; Editing by Eric Meijer)

China trade seen underlining economic rebound intact (Reuters)

By Nick Edwards and Xiaoyi Shao

BEIJING | Thu Mar 7, 2013



(Reuters) - Chinese trade figures on Friday are set to lead a flurry of indicators underlining that the world's second-largest economy gathered steam in February, adding some momentum to a recovery from its slowest full-year of growth since 1999.

China's exports and imports likely maintained double-digit growth in the first two months of the year, a combination that markets will focus on because of distortions caused by the Lunar New Year holidays.

"The global economy is getting better, not worse, so we can reliably, comfortably, even conservatively say that global spending is going to pick up as the year goes on," said Tim Condon, head of Asian economic research at ING in Singapore.

"A second-half stronger than the first half is the baseline scenario," Condon told Reuters, reflecting his view that China's recovery is intact regardless of what seasonally distorted data for February might otherwise signal in the short term.

Many Chinese firms shut for the long Lunar New Year holidays, which fell in January in 2012 and in February this year. Reading too much into one month's data is a particular risk given the undeniable impact of the nationwide holidays.

A Reuters poll of 22 economists forecast that February exports grew 10.1 percent from a year earlier, while imports likely fell 8.8 percent. The trade balance is forecast to show a deficit of $7.8 billion.

While in stark contrast to January's 25.0 percent export growth and 28.8 percent import growth, when averaged over the first two months of the year, exports may have grown 17.6 percent and imports 10.0 percent.

"Our data in the first two months shows the foreign trade situation is improving," Li Linghong, chairman of Ningbo Port Group, operator of China's third-largest port, told Reuters.

Ningbo port's container volumes rose 13.6 percent in January and February from a year earlier and cargo volumes increased 12.4 percent, Li said.

"Usually the first two months are a peak season for companies to deliver orders, but it still shows the demand from the international market," he said.

EXPORT UNCERTAINTY

Still, the signs of recovery remain fragile after 2012 trade fell short of China's 10 percent growth target as major demand centers including the euro zone and the United States struggled to pick up from the global financial crisis.

That was underlined by a decline in both new export orders and imports in China's official manufacturing purchasing managers' index (PMI) in February.

That would hurt exports at a headline level and reduce imports to feed production lines in China's massive factory sector, which remains levered to foreign demand.

Industrial output data for January and February -- combined to smooth out the impact of the Lunar New Year -- may show a rise of 10.5 percent on the year when the numbers are published.

Up from 10.3 percent in December, the figures due on Saturday might still disappoint those who expected more following a pick-up in economic growth in the fourth quarter of 2012.

China's economy expanded by 7.9 percent in the fourth quarter from a year earlier, bouncing from the 7.4 percent rate of the third quarter, the slowest three months of growth in the country since the first quarter of 2009 when the global financial crisis raged.

Inflation and retail sales data are due for release alongside industrial output.

Economists polled by Reuters expected retail sales growth of 15 percent year on year for January and February combined, in line with the pace at the end of 2012.

The consumer price index meanwhile may have spiked to 3.0 percent in February from 2.0 percent in January almost entirely as a consequence of Lunar New Year effects on food costs.

China's own official statisticians seek to avoid the distortions in industrial output, fixed asset investment and retail sales data by publishing combined numbers for the first two months of the year.

(Editing by Neil Fullick)

China Inflation Over 3.5% May Prompt Rate Rise: NDRC Chen (Bloomberg)

By Bloomberg News - Mar 7, 2013



China may need to raise interest rates should gains in the consumer-price index stay at more than 3.5 percent for three months, a senior researcher affiliated with the country’s top planning agency said.

“In theory, if CPI remains above 3.5 percent for three months, there should be an interest-rate movement,” Chen Dongqi, the deputy head of the National Development and Reform Commission’s macroeconomic research institute, said in an interview yesterday after a speech at Tsinghua University in Beijing. “But it also can be decided by authorities’ own judgment.”

Speculation that China will raise interest rates for the first time since mid-2011 is rising as the world’s second- largest economy recovers from the weakest growth in 13 years, credit expands and property prices rebound. Premier Wen Jiabao this week set a 3.5 percent inflation goal for 2013, down from 4 percent last year, after price gains slowed to half the pace of 2011.

“The timing of China’s interest-rate increase will depend on the CPI situation,” Chen said. “It could happen late this year or early next year or even later.”

Consumer inflation may have accelerated to 3 percent last month, according to the median analyst forecast before data due on March 9. It was 2 percent in January and 2.6 percent for all of 2012. The median forecast of 40 economists is for a 3.1 percent rise in 2013.

Policy Aim

An acceleration in inflation in the second half and excessive investment from local governments after this month’s annual meeting of the national legislature are the two biggest risks to China’s economy, Chen said.

Chen said separately in his speech at the Chinese Economists 50 Forum that while the government’s inflation goal is 3.5 percent, the real policy aim should be 3 percent. “If we allow the CPI to reach 3.5 percent or even higher in the late months of this year, it will reduce room for next year’s inflation control,” Chen said.

There are some “structural bubbles” in China’s property market and two ways to deal with the situation, Chen said. “One is to gradually release the steam and the other is to put on a sudden brake.”

Any excessive or hurried tightening may result in “big swings” in economic growth as the property market affects about 30 other industries, he said in the speech.

The country’s new leadership faces the challenge of sustaining a recovery without triggering consumer and asset- price inflation. Wen, who this week set a target of 7.5 percent for growth this year, warned that “unbalanced, uncoordinated and unsustainable development remains a prominent problem.”

The customs administration will today report trade data for February. Exports probably grew 8.1 percent, according to the median estimate in a Bloomberg News survey, down from a 25 percent pace in January.

Data in the first two months of the year are distorted by the timing of the weeklong Lunar New Year holiday, which fell in February this year and in January in 2012.

To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@

China Investor Said in Talks for Stake in NYC GM Building (Bloomberg)

By Oshrat Carmiel & Hui-yong Yu - Mar 7, 2013



A Chinese investor is in talks to buy a 40 percent stake in Manhattan’s General Motors Building, a 50-story tower near the southeast corner of Central Park.

The prospective buyer is the family of Zhang Xin, chief executive officer of office landlord Soho China Ltd. (410), according to a person with knowledge of the negotiations who asked not to be named because the talks are private.

The sellers are a Goldman Sachs Group Inc. (GS) fund that invests on behalf of the sovereign wealth funds of Kuwait and Qatar, and Meraas Capital LLC, a Dubai-based private-equity firm, the person said. If completed, the deal would value the tower at about $3.4 billion, according to the Wall Street Journal, which reported the talks earlier today.

Boston Properties Inc. (BXP), the biggest U.S. office real estate investment trust, owns the other 60 percent of the tower. The Boston-based company led the investment group that paid $2.8 billion for the property in 2008, according to data from research firm Real Capital Analytics Inc.

“If we have the opportunity to work with a new partner, we’re happy to do that,” Boston Properties President Douglas Linde said Jan. 30 on the REIT’s earnings conference call. He said the company was content with its stake.

“We, as a 60 percent owner and with significant opportunities on the control side, feel really good about how we can operate the buildings and what we can do with regards to repositioning and re-tenanting and putting capital into the buildings,” Linde said.

Michael DuVally, a Goldman Sachs spokesman, declined to comment on the talks. E-mails to Zhang and Meraas sent outside of regular business hours weren’t immediately returned.

The marble-faced tower, on Fifth Avenue at 59th Street, is across from the Plaza Hotel. The Boston Properties-led group bought the building from New York developer Harry Macklowe, who won a bid for it in 2003. He was forced to sell it five years later to help pay $7 billion in debt he had defaulted on after borrowing to purchase seven other Manhattan skyscrapers.

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@

To contact the editor responsible for this story: Kara Wetzel at kwetzel@

Print

For App Makers, China Is Untapped and Untamed (The Wall Street Journal)

By JESSICA E. LESSIN

Updated March 7, 2013



The biggest app makers are increasingly setting their sights on China, as the internationalization of the apps business creates no only greater opportunities for developers but also heightened risks, Scott Austin reports. Photo: Getty Images.

China is emerging as the next battleground for global app makers—but cracking the world's largest smartphone market is proving to be vexing.

App makers must navigate dozens of app stores with looser rules than in the U.S., fend off a proliferation of cloned apps, and steer around a thicket of regulations and intense competition from local developers.

What's more, companies that charge for their apps are finding they need to get more creative about business models in China since users there are accustomed to getting most digital content free.

ZeptoLab UK Ltd. found this out firsthand when it launched puzzle game "Pudding Monsters" in China last year. Weeks before the launch, the firm scrambled to integrate with payments systems for multiple app stores, with each offering different ways for users to pay for unlocking new levels and virtual items.

Then, to combat rampant app piracy, ZeptoLab decided to distribute authorized versions of the app to forums and other free download sites where they knew Chinese consumers would be hunting for the game.

"It is the same work you have to do everywhere else—times 10," said Misha Lyalin, chief executive of ZeptoLab, known for its popular "Cut the Rope" game. That app has more daily active users in China than any other country.

ZeptoLab's experience is typical for the growing number of app makers targeting China. These companies know they must tap the world's most populous country before U.S. growth slows, but the path to making money isn't so obvious.

"There's a U.S.-sized population of high-income, educated users who could become customers in China," said Phil Libin, CEO of Evernote Corp., maker of a digital note-taking app.

But while he projects China will leapfrog Japan this year to become Evernote's second-biggest market behind the U.S., he said, "It could all fall apart tomorrow. There is so much uncertainty everywhere," including regulation and changing tastes.

Evernote, based in Redwood City, Calif., established an office in Beijing in May and expects to double its staff there to 24 people this year. Last year, the company launched a version of its service hosted in China and took an investment from Chinese private-equity firm CBC Capital. Mr. Libin said growth requires building ties with local developers and app stores—and patience. Mr. Libin said users aren't upgrading from free to paid versions at the same rate as the U.S.

The bulk of the apps business has historically been in the U.S., where companies like Apple Inc. AAPL +1.11% and Google GOOG +0.16% Inc.kicked off the craze years ago. North America represented 34% of the $14 billion in app-related revenues in 2012, down from 41% in 2011, according to ABI Research.

Now app makers are increasingly chasing the surge of smartphone users elsewhere, and particularly in China, which has surpassed the U.S. in smartphone shipments.

In China, app makers face competition from local apps built by companies like Tencent Holdings Ltd. 0700.HK +0.29% and Sina Corp., SINA +0.54% which add new features quickly. They are also more attuned to Chinese users' tastes, offering more interactive features and expressive, animated icons.

And revenue from apps sold in China still lag many other markets. Apps that include virtual currency tend to work better than paid models, said Christine Lee, who runs partner relations for app-marketing firm Tapjoy Inc.

The San Francisco firm said it has dozens of clients experimenting with new ways to make money from Chinese users, including offering free digital content in exchange for engaging with an ad or downloading an app. Apple has cracked down against the latter—and doesn't allow apps to give users virtual currency in exchanging for downloading an app. But other app stores don't have such rules, Ms. Lee said.

App distribution in China isn't the two-horse race it is in the U.S. Apple launched a localized Chinese app store that abides by government rules in 2010; CEO Tim Cook has been bullish on the market for Apple overall, saying on a recent earnings call "it's clear there is a lot of potential there." Google hasn't launched its Play app store in China, though consumers in China can access a version based in Hong Kong.

Rather, most of the activity happens through app stores operated by wireless carriers, Internet companies and startups jockeying to stand out by offering unique promotions. Many target Android apps or iPhones that have been modified to download apps without going through the app store.

Beijing-based AppChina allows users to download some 120,000 apps from its website and points to other sites with about 400,000 others that can be downloaded. The two-year-old service also offers reviews and editorial content. Unlike Google Play and Apple's app store, developers can pay to have their app promoted via an ad within the app store. Developers on average pay one to five renminbi (16 cents to 80 cents) per download depending on the app.

Still, many app makers said the growth opportunities make navigating the unfamiliarities of the Chinese app market worthwhile. At Fotopedia, which makes photo travel magazine apps, the company said China became its largest market last year, representing 20% of visits, compared with 14% from the U.S. At the beginning of 2011, China was Fotopedia's 10th-biggest market.

Christophe Daligault, senior vice president of global business for Fotopedia parent Fotonauts Inc., said Apple helped drive the growth by promoting Fotopedia's ad-supported iPhone and iPad apps in its Chinese app store. Now Fotopedia is planning to integrate with Chinese social networks like Renren Inc. RENN +0.67% and Sina Corp.'s Weibo, and to hire its first employees to focus on the country this year.

Fotopedia's Chinese apps are free with ads like most of its other apps, although Mr. Daligault said the ad prices are lower than in Japan and Europe and the U.S. He expects those prices to improve as the company develops relationships with ad networks that sell globally.

"China is a really big deal for us," Mr. Daligault said, adding he believes that its apps do well in the country because they are visual.

Despite the hassles, entrepreneurs and investors are more optimistic about U.S. companies' chances in the Chinese app business than Web businesses that have tried to enter the market in the past.

Angel investor and Flipboard adviser Robin Chan said mobile app businesses have a good shot at being successful in China because Apple and Google can help bring products to China faster. "When you launch in the [Apple] App Store you are instantly global," he said. Flipboard, the popular media-reading app, has struck partnerships with stores including Wandoujia and App China in the country, which is now its third largest market by downloads.

For Chinese consumers, the more choices, the merrier. Roger Zhou, a 28-year-old product manager for a soon-to-be launched travel startup in Beijing, said he enjoys using the growing number of non-Chinese apps like Path Inc. and Facebook Inc.'s FB +4.07% Instagram.

"These apps are beautiful," Mr. Zhou said. But he noted that Chinese apps, like messaging service Tencent's Weixinand an app from video site Inc. SOHU +2.35% are more popular among its friends because people have more friends on them and they are faster to use.

Shell Sees Major Advance in China Shale Output Within Two Years (The Wall Street Journal)

By SIMON HALL

Updated March 7, 2013



SINGAPORE—Royal Dutch Shell RDSB.LN +0.42% said it may be less than two years away from a major advance in shale gas production in China, bringing the country closer to being the first outside of North America to cash in on technology that has transformed the U.S. energy industry.

Unlocking the gas trapped inside China's shale rock reserves, the world's biggest, would provide much needed energy supplies to the energy-hungry economy and help cut down on expensive imports of gas. It would also provide a windfall for Western energy giants that provide the complex hydraulic fracturing technology.

Shell is on track to have spent $2 billion by the end of this year exploring the central province of Sichuan, and has drilled nearly 30 wells in joint-venture projects with China National Petroleum Corp.

"Mid-decade we will be able to decide" on the so-called final investment decision that will determine whether to go into full commercial production, said Maarten Wetselaar, head of Shell's integrated gas operations world-wide, excluding North America.

The multinational energy company is already producing tiny amounts of shale gas as part of its exploration work, and it pumps this into Sichuan's natural-gas network. How quickly output can be ramped up after further investment is unclear.

Beijing has set an ambitious target of producing 6.5 billion cubic meters of shale gas annually by 2015, and as much as 100 billion cubic meters by 2020, from nearly zero now. Getting the Shell project into operation will be critical in meeting those goals.

In the U.S., which pioneered the technology to extract gas and oil trapped in shale rock formations, gas production has soared, bringing down prices of fuel for manufacturing and chemical production. It has also raised the prospect of liquefied natural gas exports from North America of as much as 70 million tons a year within a decade, equivalent to deliveries from current world leader Qatar, Mr. Wetselaar said in an interview

The U.S. Energy Information Administration has a preliminary estimate of some 36 trillion cubic meters of recoverable shale-gas resources in China, more than the U.S. and Canada combined, which, if extracted, could transform China's energy profile.

Those estimates have also sent rival Chevron Corp. CVX +0.08% into China searching for shale, while ConocoPhillips COP -0.24% and Total SA FP.FR +0.22% are also planning exploration projects. Foreign companies are obliged to have local partners when exploring for shale in China.

China's government hasn't yet given a formal go-ahead to Shell's draft production-sharing pact with partner CNPC, but Mr. Wetselaar said he isn't worried.

"We will get the correct regime in place," he said. "I don't think it is lack of intent."

Other obstacles in China to successful exploitation include scarce supplies of water required to get the gas out of shale rock, and more complicated geology than in Canada and the U.S.

Still, "outside of North America, China is the most mature in terms of wells, in terms of activity on the ground," Mr. Wetselaar said.

But after China, the next country ready to produce commercial quantities for shale gas is likely to be Ukraine, where Shell is in the early stages of a drilling program, he said.

Write to Simon Hall at simon.hall@

China moves to make its markets credible (The Financial Times)

JOSH NOBLE

Published Thursday, Mar. 07 2013



Although gambling is illegal in China – except at the baccarat tables of Macau and Hong Kong’s twin horse tracks – there is one venue on the mainland where some say games of chance are officially sanctioned: the stock market.

But that could be changing. There is a growing feeling among investors that China’s regulators are finally taking some of the necessary steps to transform the equity casino into a genuine international capital market.

Mark Makepeace, the chief executive of FTSE, said this week that recent market reforms could make China eligible for inclusion into international indices within three-to-five years, a move that would have wide implications both for the market and for global asset allocators.

Such a shift would be “very welcome by us as China fund managers . . . it would definitely help to diversify investor behaviour,” says Shumin Huang, Greater China investment manager at JPMorgan Asset Management. Better access to mainland equities – known as A-shares – would also enable investors to broaden their exposure into a wider range of sectors of the Chinese economy, such as consumer and health-care stocks.

The China Securities Regulatory Commission, under its chairman Guo Shuqing, has introduced measures to improve the functioning of mainland equities markets in the past year. Just this month, the CSRC has made it easier to short individual companies, increased the pool of available stock options and widened the group of investors allowed to invest onshore through its renminbi qualified foreign institutional investor (RQFII) scheme.

The broader goal is to encourage more global funds into Chinese markets and to balance out the short-term focus of domestic investors. China’s equity market currently has a heavy bias towards retail investors, while the fund management industry is hostage to a system of monthly or quarterly performance reviews that leave little incentive for long-term investment plans.

Chinese authorities believe that overseas capital, in the form of pension, sovereign wealth and asset management funds, could help change that, and have embarked on international roadshows to drum up interest. They have also lowered the requirements for those seeking licences to invest in mainland shares.

Working with index providers would be a guaranteed way of increasing foreign participation in mainland markets. The many global investors who track the indices compiled by the likes of FTSE and MSCI would be forced to buy into the Chinese market were it added to global and regional benchmarks, or had its weighting increased.

“This opening up could be a monumental change for global equity markets. It’s important that investors aren’t caught out,” says Deborah Yang at MSCI.

China’s current weighting in globally recognized equity indices is far lower than the size of its economy or its markets would imply. Mainland shares account for just 0.15 per cent of the FTSE Global index, 1.1 per cent of its Asia ex-Japan benchmark, and only 6 per cent of the FTSE China index. Without any restrictions on foreign investment, those figures would jump to 3.1 per cent, 19 per cent and 60 per cent respectively.

Similarly, China would grow from under a fifth to about a third of MSCI’s emerging markets index, which is tracked by $1-trillion in funds, if investment limits were removed today. In FTSE’s ranking of countries by combined market capitalization, China would rise to fourth from the current 11th spot.

There are some doubts, however, about the timing of the reforms.

“I’m not sure that high ranking Chinese officials could know the timetable for [opening up the market]. It’s both a financial and a political decision,” says one international fund manager with holdings in China. “They might have a long-term plan, but it is only directional.”

Global investors complain not just about barriers to entry, but also corporate governance, shareholder rights and complex equity structures. The biggest challenge may not be to provide access, but rather to align the interests of shareholders, management and the state.

“If investors cannot make money through the rational investment process, the market will remain very cyclical and speculative,” says Cong Li, chief investment officer at Mirae Asset Global Investments in Hong Kong. “Diversification of the investor base is a good thing, but more reform is needed. For A-shares to become a really good destination for international investors, it’ll really take a long time.”

Analysts say that radical measures will be needed to get Chinese markets up to international standards, prompting debate over how far and how fast China can realistically reform.

“We’re moving in the right direction, but I don’t get overexcited,” says Gary Dugan, chief Asian investment officer at Coutts. “We’re some years away from making it a credible market. It’s going to be a hard slog and there’s a lot things that could go wrong.”

China in push to open currency borders (The Financial Times)

By Simon Rabinovitch in Beijing

Last updated: March 7, 2013



China will give offshore money managers more freedom in deciding where to invest their renminbi holdings, in the latest step to boost the currency’s global appeal.

The Chinese Securities Regulatory Commission said it would allow offshore funds greater latitude in investing in renminbi-denominated stocks, bonds and other assets. Previously, they could only invest 20 per cent of their assets in Chinese stocks and could only offer their clients exchange traded funds and fixed-income products.

“Although this had been good for controlling risks, it was very difficult to satisfy the differentiated demands of investors,” the regulator said in a statement.

China has rolled out a series of reforms to give foreign institutions more investment freedom, in moves designed in part to promote the internationalisation of the renminbi. Such reforms could also help Chinese shares join global equity benchmarks within three years, according to Mark Makepeace, FTSE chief executive.

“The move to open channels for foreign portfolio investors will benefit the mainland market, bringing in more demand for equities and bonds,” Dariusz Kowalczyk, a strategist with Crédit Agricole CIB, said in a note to clients.

The latest changes will affect the so-called renminbi qualified foreign institutional investor programme, one of the main channels for overseas investment in China’s markets. Under the RQFII scheme, Beijing has granted approval to a select number of Hong Kong firms to invest offshore renminbi in mainland markets.

The regulator also said it would permit the Hong Kong units of Chinese banks and insurers as well as other Hong Kong-based financial institutions to manage RQFII funds. At the outset of the programme in late 2011, only the Hong Kong units of Chinese brokerages and fund managers had been allowed to participate.

The regulator had previously allocated RQFII quotas of Rmb70bn ($11.2bn), which have been fully used up. Late last year it said it would grant an additional Rmb200bn of quotas.

Increasing the number of investment options for offshore renminbi funds is likely to have a significant impact on Hong Kong’s market for exchange traded funds. Investors have demonstrated a preference for ETFs offered by RQFII licence holders, as their funds are backed by direct exposure to mainland assets rather than by derivatives. Allowing RQFII holders to buy more Chinese stocks should help them meet demand for ETFs tracking mainland shares.

But Chinese regulators remain concerned about opening the doors to foreign investors too quickly. Individual foreign institutions will not be allowed to hold more than 10 per cent of any Chinese stock, with overall overseas ownership capped at 30 per cent.

Additional reporting by Josh Noble in Hong Kong

Online

Eight Questions: Michael Pettis, ‘The Great Rebalancing’ (THE WSJ CHINA REAL TIME REPORT BLOG)

March 7, 2013



Opinion on the outlook for China’s economy is sharply divided. China bulls believe that, with reform, China has another decade or more of rapid growth ahead of it. The bears maintain that imbalances are so great that a sharp slowdown in the next few years is inevitable.

Few have done more to shape the bear case than Michael Pettis, a professor of finance at Peking University. In his new book, “The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy,” Mr. Pettis makes the case for why China is about to run out of steam.

China Real Time caught up with Mr. Pettis and threatened to pay him a below-inflation return on his savings unless he answered our eight questions.

The starting point of your analysis is the relationship between savings, investment and trade. Why start there?

The relationship between the three are well understood in economics but the implications are sometimes counterintuitive and usually forgotten, I started with basic accounting identities to show that much of what we think we know about trade and capital flows violates these principles and so is wrong.

China has a high savings rate. Is that just conservative households, or is something else at play?

We tend mistakenly to think of national savings rates in terms of cultural stereotypes. Aside from demographics, which change slowly, however, there are three things that mainly determine a country’s savings rates:

Most important is the GDP share of household income – the higher it is, the lower the national savings rate tends to be. Second is the amount of income inequality, with more unequal societies generally saving more. Third is the willingness to finance consumption with credit, which is itself determined largely by perceived changes in household wealth.

Any policy or condition that affects one or more of these factors will have an automatic impact on the national savings rate, and through that, on its current account and the current account of the rest of the world.

In China, growth, especially in the past decade, was heavily subsidized by hidden transfers from the household sector in the form of an undervalued currency, low wage growth, and most importantly, low interest rates. While this spurred rapid GDP growth, it caused the household share of that growth to collapse. It is no coincidence that the national savings rate surged at the same time.

Germany did something broadly similar at the beginning of the century, when an agreement between labor, business and the government restrained wage growth in order to boost employment. Right after that, the German savings rate soared while the savings rates of peripheral Europe collapsed. Again, this wasn’t merely coincidence.

How does that impact the China–U.S. trade relationship?

In China, household income is an extraordinarily low share of GDP, so naturally its savings rate is extraordinarily high, higher even than its extremely high investment rate. Since savings and investment must balance globally, this has automatic implications for the relationship in the U.S. between savings and investment. The balance of payments, after all, must balance.

This was one of the causes of the financial crisis?

Yes. In fact, throughout modern history savings and trade imbalances have been at the heart of most global financial crises. When domestic distortions force up or down a country’s savings rate, the impact on the trade account is of course matched by an opposite impact on the capital account and the result is a distortion in national balance sheets. A financial crisis is always a balance sheet crisis.

China’s current account surplus has shrunk to about 2.6% of GDP in 2012, from 10.1% in 2007 — does that mean the problem has been solved?

No, because the current account surplus did not shrink as a consequence of reduced savings, which is what is urgently needed in China. It shrank as a consequence of a surge in investment. The Chinese savings rate actually increased during this time. China’s trade surplus, in other words, did not decline because the country suddenly rebalanced. It declined because the rest of the world went into crisis and external demand collapsed. China was forced to choose between a surge in unemployment and a surge in investment, and for better or worse it chose the latter. This is why the current account contracted.

China now has rising wages, rising real interest rates and a stronger yuan – do these address the underlying problem of China’s high savings rate?

Yes they do, although this combination was only effective in the first half of 2012. Since then it has been partially reversed. This is why growth slowed sharply in the first half of 2012, only to surge again after the formal and informal banking systems were allowed to expand so dramatically in response to the slower growth.

Do you spot a lesson for China in what happened to Brazil after its decade of rapid growth?

It is not so much a lesson as a warning. Brazil’s miracle growth of the 1960s and 1970s was sustainable at first, but over the years, as always happens in similar cases, it became increasingly depended on debt-financed mal-investment. The result of many years of debt growing faster than Brazil’s debt-servicing capacity was an unsustainable debt burden, which ultimately left the country with the “lost decade” of the 1980s.

This is a common story, by the way. It seems to have happened many times during the last 100 years. Every example that I can find of a country that sustained an investment-led growth miracle ended with a debt crisis, a lost decade of slow growth, or both.

You’re expecting China’s growth to average about 3% for the next decade? What’s your forecast for 2013 and 2014?

Yes, I expect average growth rates over the next decade to drop sharply as China either chooses, or is forced by debt, to rebalance, but the pace depends on how quickly Beijing is able to consolidate power and impose the reforms it knows it must. If the leadership is successful in doing so quickly, I expect growth to drop to around 7% in 2013 and 5-6% in 2014. If not, I expect growth of around 8% in 2013. Growth in 2014 will then depend on how shaky the banking system will have become.

– Tom Orlik

Hope Springs Eternal: Electric Vehicles in China ()

MARCH 7, 2013



Hope springs eternal — and nowhere is it gushing more strongly than with electric vehicle enthusiasts all over the world.

In the United States, investors in Tesla Motors, Inc. (NasdaqGS:TSLA), the U.S. maker of electric sports cars, seem to be shrugging off the fact that the company is losing a $100 million a quarter, the bankruptcy of battery maker A123 Systems, Inc. (OTC Markets:AONEQ), as well as the fact that the Obama administration, one of the biggest proponents of electric vehicles, is already walking back its prediction that there will be 1 million on the road in the United States by 2015. Why else would investors give Tesla a $4.3 billion market capitalization in the face of such question marks?

In China, the government planners have named new energy vehicles (“NEV”) as one of seven strategic emerging industries in its 12th Five-Year Plan which began in 2011. China’s NEV plan is carried out under the country’s “863 Program,” a State High-Tech Development Plan that is funded and administered by the government to stimulate the development of advanced technologies in order to make China less dependent on foreign technologies. In a visit to Lishen Battery, a lithium battery maker in Tianjin, last September, then-President Hu Jintao underscored the government’s enthusiasm for battery and NEV technology when he said: “New energy is a strategic emerging industry with great promise.”

China has two very important reasons for endorsing new energy vehicles. First, the country is looking for every way that it can to reduce its dependence on imported oil. Soaring car ownership and a recent shift to less fuel efficient vehicles, however, are making this an even greater challenge. Secondly, the government sees its NEV plan as a way for China’s automobile industry to technologically leapfrog the existing global automotive assemblers that have one hundred years of experience making cars with internal combustion engines. This objective is also running into important hurdles.

If any country can successfully implement a comprehensive electric vehicle program, it is China. In addition to strong political support, China’s urban infrastructure is still a work in progress with an estimated 270 million people expected to move from the countryside into China’s cities in the coming years. With a virtual blank page on which to draw, there is significant latitude to build in electric charging stations and the other infrastructure needed by an electric vehicle industry. Moreover, China’s car culture is still young, and Chinese haven’t gotten accustomed to those long — and fast — car trips that their American counterparts take for granted. Theoretically, Chinese consumers should be more receptive to the limitations of electric vehicles.

In his recently published, authoritative “Blackbook” (Chinese Autos, Part 1: The Quest for Global Competitiveness — Technology, Competence, Ambition and Politics) on China’s auto industry, Max Warburton, senior auto analyst for Sanford C. Bernstein & Co., LLC, expresses grave doubt that China’s NEV plan is viable. In an interview for Warburton’s research, a senior German auto executive was quoted as saying:

With NEV, they’ve run into exactly the same technical barriers as everyone has faced in the rest of the world—the laws of finance and business may be different here, but the laws of physics and chemistry are just the same world over.

The biggest technical challenge for electric vehicles begins with the battery — they are big and expensive, and can catch on fire, as General Motors found with its Chevy Volt. At today’s prices, the battery pack for an electric vehicle costs $15,000, and that’s before the other powertrain costs of electric motors, converters and inverters for motor control are included. To make a competitive electric vehicle, China’s automakers need to advance battery technology significantly, but according to Warburton’s investigation, Chinese battery technology lags Western standards by a number of years. Despite its claims to the contrary, Warburton does not believe that BYD Company Ltd. (HKSE:1211.HK) has unique technology, and questions whether any other firm or institute in China can develop superior battery technology in the future.

Apart from the technical challenges, electric vehicles are not cost competitive and their performance is inferior to cars powered with internal combustion engines, according to Warburton. At current vehicle prices, oil prices would need to climb to $300 to $500 per barrel for electric vehicles to be cost competitive with gasoline and diesel engine cars in Europe, where gasoline taxes are 70 percent of the price at the pump. In countries with lower gasoline taxes, oil prices would need to be even higher. Oil prices would need to reach $800 per barrel in the United States, and $500 to $700 a barrel in China.

In Warburton’s view, “logical” consumers will only buy new energy vehicles in significant quantities when it makes economic sense to do so — either if vehicle prices fall or become cheaper due to government subsidies. He does not see any evidence that Chinese automakers will be able to produce a significantly less expensive electric vehicle, so the only question that remains is how far the Chinese government will go in supporting NEV technology in the name of achieving greater energy security.

Chinese Business Negotiation Training: Role of Technology and IP in Chinese Business Negotiation ()



Your sophisticated technology is NOT a source of power in Chinese negotiation.

American negotiators in China often make the mistake of believing that their sophisticated technology gives them leverage in Chinese business deals. Their logic is simple and irrefutable – they have something that Chinese partners and consumers want and can’t get anywhere else.

Learn to negotiate in China – online (from ChinaSolved)

What they don’t seem to realize is that once the Chinese side of the negotiating table becomes aware of the technology, then acquiring it becomes their only priority. In the US or Europe that would mean coming to an equitable agreement with the property owner. In China a negotiated agreement for technology is option 4 or 5. A Chinese business will negotiate and pay for new technology if he must – but it’s certainly not his first choice.

Chinese Negotiators’ First Choice for Acquiring Technology:

So what will your new Chinese partner do to get his hands on your designs, specifications and IP (intellectual property)? Use sophisticated hacking or stealthy corporate espionage techniques? Probably not. It’s much easier to just ask you nicely to explain it to them – and maybe have a few of your engineers fly in (your expense, of course) to show their Chinese counterparts how it all works. Does this really work? Yes – surprisingly often.

The myth:

Information is a scarce commodity – and if I have IP or technology that can be turned into a profitable business then I am in a powerful position when negotiating.

The reality:

The Chinese side sees IP as a temporary – almost accidental – advantage that should be acquired as quickly and cheaply as possible. It was very considerate of you to take your creative, quirky, interesting ideas and convert them to files, documents or samples – but now that you have done that then you are really not necessary any more. The negotiation is no longer about your joint business – it’s about how to acquire the files or documents.

China Negotiating Power Technique 1: Wishing for more wishes

Convert your vulnerable technology to real negotiating power by using it to attract more Chinese counterparties. This takes a bit of finesse and experience, but the idea is to get potential Chinese partners to compete with one another over you. You don’t have to be clever, dishonest or James Bond-ish. Simply refuse to discuss exclusivity and make it clear to each Chinese counter-party that that you plan on talking to other people.

China Negotiating Power Technique 2: Channels of distribution

If your technology is in constant development – like software or fashion – and periodic obsolescence is part of your industry, then you have a different source of power. You should focus on developing independent channels of distribution. If you can control distribution channels in China, then you have power. The second best option is to control the people who control channels of distribution.

Learn more about negotiating in China on the ChinaSolved/China Training Institute online course: Negotiate Successfully in China.

German Electronics Retailer Pulls Out Of China ()

March 8, 2013



Media Markt China announced on its official website that the company will be closing its seven electronics retail stores in the country on March 11, 2013.

According to the statement, Media Markt's Chinese stores will remain open until March 11. After this date, the store on Huaihai road, Shanghai, will continue operating as the primary customer care center for Media Markt until it too will close its doors on April 30, 2013.

The decision has been approved by Media Markt China's two major shareholders, Germany's Metro Group and China's Foxconn Group.

Prior to this, Metro Group already announced in mid-January 2013 that it would discontinue the Media Markt business in China.

According to public files, Media Markt China has 750 employees working at its Shanghai headquarters and seven stores.

On behalf of the board of directors, Frank Bussalb, president and chief executive officer of Media Markt China, expressed their thanks to all staff. He thanked the employees for their outstanding work over the past two years. The high-quality customer support and service made a huge contribution to the development of Media Markt in China. The closing of these stores is the result of considering the severe market competition and the huge investment for the establishment and operation of the business.

The Coming Android Invasion of China ()

1 MAR 7 2013



An glut of cheap cell phones powered by Google's operating system may have big implications for China's economy- and society.

A massive glut of commodity smartphones running a stripped-down version of Google's Android software is coming to market in China, with the potential to upend the mobile phone marketplace and swamp the country's Internet censors.

Android already accounts for 90 percent of new smartphone purchases in China, a trend that is alarming the government enough that it is complaining about it. The volume of smartphone shipments in China hit 70 million in the fourth quarter --a 112 percent year-on-year increase--and the total number of Chinese smartphones is projected to reach a staggering 240 million this year. (That doesn't include simpler "feature" phones that can't as easily run software or access the Internet.)

Foreign firms like Samsung were the first to bring Android to China, and homegrown manufacturers like Lenovo -- set to become the top-selling Chinese Android handset maker this year -- are coming on strong. But they may all be eventually swamped by cheap commoditized handsets from more than a thousand no-name manufacturers, which TechRice's Kai Lukoff has dubbed "ChinaDroids." They have chipsets from Taiwan's Mediatek, run a heavily modified version of the "Ice Cream Sandwich" series of Android, and come preloaded with Chinese apps. By one estimate they already control 40 percent of the Chinese smartphone market.

These ChinaDroids don't carry any traces of Google's brand or its apps, but that doesn't mean that Google isn't indirectly benefitting. The sheer numbers of these smartphones could make life nearly impossible for China's army of censors. The watchdogs may be numerous, but they're only human: a recent study found the number of government deletions on the Sina Weibo micro-blogging service dipped sharply when censors were watching the evening news.

The idea of pushing censors to the breaking point must be satisfying indeed for Google, which has repeatedly butted heads with China over the country's Internet restrictions. Bill Bishop, who has closely followed these developments on his essential Sinocism blog, concludes: "Android is Google's revenge, powering hundreds of millions of affordable smart phones that are empowering Chinese at almost every level and dramatically increasing the operators' and government's censorship load."

By releasing Android into the wild, Google may have irrevocably tilted the playing field against China's Internet restrictions. Now the same ruthlessly efficient and low-margin companies that transformed China into the world's pre-eminent manufacturer could end up powering a smartphone wave that drowns its censors under billions of Weibo posts.

China: rising wages will drive economic change under new leadership (The FT Beyond BRICs Blog)

Mar 7, 2013

by Stefan Wagstyl



Higher wages and rising labour costs lie at the heart of the economic questions facing China’s leaders as they gather this week in Beijing for the National People’s Congress.

For hard-pressed exporters the developments are clearly negative. But for China as a whole they should be positive -with millions of workers earnings more pay and creating a growing consumer market – as long as the transition is managed properly.

Hannah Levinger of Deutsche Bank writes in a report that with rising GDP and a declining working-age population, real wages in China have already recorded striking increases, changing the country’s competitive position vis-a-vis Asian rivals:

Indeed, since China’s WTO accession in 2001, real wages paid in the manufacturing sector have risen by almost 200% in USD-terms, surpassing Thailand and closing the gap with the Philippines. Strikingly, Chinese wages continued to move ahead in 2009-11, even as regional peers felt the dampening impact of the global recession.

But China’s real GDP per worker is still below Thailand’s and Malaysia’s, not to mention South Korea’s. And, as Levenson writes:

over the last couple of years labour productivity growth started to slow down. In 2012, China’s productivity grew the least since 1999 (although it outpaced the rest of Asia). Worryingly, a similar slowdown was observed in total factor productivity, which takes into account efficiency gains such as managerial competences and technology diffusion.

So, China’s unit labour costs (ULC) have in the last two years risen faster than those of Asian competitors.

That’s tough for manufacturing exporters. But it’s not the whole story. Levenson says the increases in unit labour costs “may contribute to the needed shift in China’s growth model”.

Levinger highlights three supportive trends. First, the labour market is becoming more specialised and fragmented. Companies are moving inland, creating jobs closer to the homes of the millions of migrant workers who have left the countryside for coastal cities in the last three decades. “In 2011, workers taking jobs within their home provinces accounted for more than half of total migration,” she notes. This boosts inland growth and accelerates geographical restructuring and encourages companies to match skilled labour with specialised functions.

Second, rising worker incomes create demand for services which in turn generates new jobs. Services already account for the largest share in employment but for less than half of GDP growth.

Finally, while south east Asian countries have been able to profit from China’s labour costs, China remains a powerful competitor, even in labour-intensive industries. For example, Vietnam’s real wages in manufacturing have risen almost as fast as China’s but Vietnamese labour productivity was stuck at just 26 per cent of China’s, says Levinger.

She concludes: “Higher wages are sure to come, and are in fact a political imperative, but increasing efficiency can offset them at least partly.”

In other words, China’s leaders and its companies have to steer a careful way between maintaining export competitiveness in manufacturing by increasing added value, and promoting domestic consumption.

Levinger doesn’t go into this but the right approach will involve a complex mix of policies involving the exchange rate regime, credit allocation, financial deregulation, the promotion of small and medium-sized companies, education, residence permits (hukou), and urban development, to name just seven categories.

The new men in Beijing have a lot to think about.

Huawei hit by protests over illegal workers in Indonesia (The FT Beyond BRICs Blog)

Mar 7, 2013

by Ben Bland and Kathrin Hille



Huawei, the Chinese telecoms group, is the latest international investor to feel the brunt of Indonesia’s increasingly vocal trade union movement.

Union activists and current and former employees have launched a campaign against what they say is Huawei’s use of illegal foreign workers, its union busting practices and other alleged violations of Indonesia’s tough labour laws.

The dispute adds to the list of items troubling Huawei’s global image and puts to the test the company’s quickly-expanding public relations apparatus.

The group, the world’s second-largest vendor of telecoms networking equipment after Ericsson, with revenues hitting Rmb220.2bn ($35.4bn) last year, has been battling suspicions in the US and some other markets that its alleged links to the Chinese military could pose a security risk to its customers.

Ren Zhengfei, the company’s founder, was an officer in the People’s Liberation Army before he set up Huawei. However, the company denies that the military or government has any control over it and it has also rejected claims that it violates Indonesian employment law.

In Indonesia, Huawei employs around 4,000 people, who are working with most of the major mobile phone and landline operators to build much-needed network capacity.

At a series of small protests in Jakarta this week, trade unionists and current and former employees said the company was employing foreign staff without the proper permits and that it had fired employees who protested against this.

Six Chinese Huawei employees are facing deportation from Indonesia because they did not register as required with the local immigration office in Surabaya, Indonesia’s second city. Activists claimed this was just the tip of the iceberg.

“I like working at Huawei and if they follow the regulations then we welcome them in Indonesia,” said Ririn Setyawati, a 36-year-old programme controller for Huawei, who expects to be fired shortly because of her activism. “But many of the things they’ve been doing are unfair and we have to stand up for our rights.”

A spokeswoman for Huawei said that only around 20 per cent of the company’s staff in Indonesia were expatriates and that it strictly followed “all applicable Indonesian laws and procedures related to labour relations and employment matters”.

She said a recent spate of employees leaving the company had been driven by “performance issues”.

Sahat Sinurat, the director of industrial dispute prevention and settlement at Indonesia’s labour ministry, said he was setting up a taskforce to investigate the allegations about Huawei.

As the trade unions continue to flex their muscles, arguing that workers deserve a bigger share of the benefits of Indonesia’s economic boom, Huawei is unlikely to be the last company facing such troubles.

Sina Weibo Testing New, WeChat-Like Public Platform ()

Mar 8, 2013

by C. Custer



A couple weeks ago, Sina admitted its flagship product Weibo is threatened by WeChat. Then last week, I wrote about why the Weibo vs. WeChat battle is hugely important, and later in the week Han Han even chimed in. But the latest sign that this is the year of the Weibo-WeChat battle (and that Weibo might be losing) comes from TechWeb, which is reporting that Sina Weibo is conducting internal testing on a new WeChat-inspired “Public Platform” feature.

Like WeChat’s platform of the same name, the new Sina Weibo feature would allow users to send group messages, although right now it is apparently targeted only at large media outlets. The chief advantage of this platform, aside from the fact that it’s designed specifically for mobile, is that it would allow for the posting of messages longer than 140 characters. This means that news media, for example, could share full stories within the platform and their followers could read them directly within Sina’s app, without having to click a link and shift to a mobile browser. The same thing, of course, is also possible with WeChat.

Since Sina’s “Public Platform” is currently still in internal testing, it’s not clear what it will actually look like by the time it’s released — if it ever does get released. But one question raised by the folks over at TechWeb that’s worth pondering is whether media outlets will really be interested in engaging with a platform that doesn’t direct readers to their own websites. If users are reading full stories right in Sina’s app, that’s great for Sina, but it deprives those media outlets of website visitors, and thus advertising dollars. Aiming the Public Platform right at media outlets might make it a tough sell.

Whatever happens, it seems clear that both Weibo and WeChat are gearing up for a clash over users. While Sina tests a way to make its service more like WeChat, Tencent is rumored to be adding Tencent Weibo functionality into the WeChat app to make it a bit more like Sina Weibo. It’s not clear what either company will ultimately actually push out the door, but it’s quite clear that the space between Sina Weibo and Tencent’s WeChat is going to be a battleground as two of China’s biggest internet companies fight over the hearts and minds of China’s social and mobile web users.

(via TechWeb)

Apart From WeChat, Chinese Developers Are a No-Show in Latest Global App Data ()

Mar 7, 2013

by Steven Millward



AppAnnie just released its latest report on app monetization; after looking at some amazing performances by Japanese and Korean developers, we thought it’d be interesting to shine a spotlight on China. But it’s ultimately not very encouraging.

But first, the data from the iOS App Store shows that, to quote AppAnnie:

One of the fastest growing major countries by downloads for the social networking category is China, where monthly downloads doubled from January 2012 to January 2013. In fact, now half of the category’s worldwide downloads come from the United States and China. Social Networking app revenue in China still remains very minimal, so we look forward to seeing whether publishers monetize these new downloads over the coming year.

Here’s the corresponding chart with China’s social app downloads highlighted in red:

(See Chart)

WeChat, Whatsapp, and dating

WeChat is the sole Chinese representative on the global stage in this new monthly data. Made by Tencent (HKG:0700), it makes an appearance in sixth place:

(See Chart)

The report notes that WeChat beats Whatsapp in terms of downloads in January, and is seeing good progress in some overseas markets as WeChat takes on rivals like Line and KakaoTalk in Southeast Asia and the Middle East. But, with no consumer-side monetization right now, WeChat makes no further appearances in other rankings. In contrast, Whatsapp, which is a 99 cents download, is second in terms of social app revenue, while Line is in pole position thanks to its paid sticker packs and social gaming platform.

As for the top 10 downloads for iOS just in China in January 2013, it’s dominated by apps for chatting and dating. A complete newcomer steals in as the top iOS download – the dating/chat app MicroLove. The smash-hit messaging app WeChat is in third place. In between is Papa, the Instagram clone that was huge last year in China thanks to one little gimmick – allowing people to post voice messages along with their photos. Tencent, which is China’s biggest web company, continues its reign with top ten spots for its IM-style apps QQ and QQ HD (8th and 9th); Sina Weibo is an interloper in seventh spot.

WeChat might be quiet on the monetization front right now, but then Tencent has already explained to us that it’s focusing on user acquisition and being a useful social tool.

Chinese developers lose out to Japan

Elsewhere in the report, there’s not much more from the world’s most populous nation. For a newly-risen tech giant, Chinese developers are still not really making it on the world stage. Tencent appears in ninth place among monthly downloads on iOS among global publishers, but that’s pretty much it. With so few China-made apps and games having gone global, and local smartphone users being very reluctant to pay up, the scene doesn’t look too encouraging compared to neighboring South Korea and Japan.

The Android black hole

Despite all the good work that AppAnnie does, its Android data is sadly useless in relation to China since not many Chinese consumers actually use Google Play for app downloads (and paid apps are not supported). Instead, China’s Android users turn to a variety of third-party app stores. That leaves us not knowing what Chinese Android fans – of which there are very many – are doing with their phones.

The sole Chinese publisher on the Google Play top downloads rankings is ’s Go Launcher team, which makes an array of freeware tools and utilities. The ‘Go’ series of apps – including things like Go Weather – are popular around the world, which helped propel the developers into fifth place in terms of downloads (but not in terms of direct monetization).

It’s a timely reminder that, unlike with Korean and Japanese developers, China’s app creators cannot rely on profiting from their own populace, and have yet to muster a global blockbuster. That leaves Chinese developers struggling to monetize from other sources, like advertising or cross-promotion platforms in their home market, particularly on Android.

Alibaba IPO to Bypass Hong Kong and Head to NASDAQ? ()

Mar 7, 2013

by Steven Millward



According to sources close to Hong Kong’s South China Morning Post, e-commerce giant Alibaba might bypass the Hong Kong Stock Exchange and instead take its huge IPO to NASDAQ. The paper claims that Alibaba executives met with NASDAQ representatives for a secret meeting in the Chinese principality yesterday afternoon.

Alibaba, which runs online stores like Taobao and Tmall, previously listed its B2B service on the Hong Kong markets, before de-listing it last year in readiness for an Alibaba Group IPO. A listing could value the company and all its sites at well over $40 billion.

It was previously assumed that Alibaba Group would list in Hong Kong, but US markets might yet steal it away. Read more at the source.

[ Source : South China Morning Post ]

IDC: Smartphone Sales Way Up in China, Now Account for 73.2% of All Mobiles Sold ()

Mar 7, 2013

by Steven Millward



The China division of the market research firm IDC has said that Chinese consumers snapped up a grand total of 213 million smartphones in 2012 as a whole – representing 73.2 percent of all mobiles sold in the country. That smartphone stat is up 112.1 percent on 2011, showing that China’s shift to smartphones like Android, iPhone, and Windows Phone is now moving at top speed.

Though China has over a billion mobile subscriptions – though that doesn’t equate to the same amount of people – mobile sales overall still grew 135 percent from 2011 to 2012, so that 362 million new mobiles were sold last year. That’s a lot of old phones being replaced.

IDC also looked at just the final quarter of 2012 to find that 96 million mobiles were sold in Q4 alone.

Today’s smartphone numbers – these all being estimates – differ somewhat from the recent Digitimes figures stating that 189 million smartphones were sold in China in the past year – with as many as 86 percent of those being Android-powered. Little wonder that China’s tech ministry is worried about Google having undue influence over the nation’s smartphone landscape.

While you’re thinking of Chinese smartphone buyers, you might be wondering which brands they prefer to buy. According to recent Gartner data, Apple has slipped to sixth in China, while Samsung is up top, fending off strong challenges from a host of Chinese-made phones.

(Source: Xinhua, via Sinocism newsletter)

China’s Top E-Commerce Site to Launch Product Searches Inside WeChat App ()

Mar 7, 2013

by Steven Millward



The 300-plus million users of China-made messaging app WeChat can already use it for video calls, finding dates, or following brands and celebrities – and soon it will gain another aspect. China’s biggest e-commerce site, Taobao, is testing out a sort of e-commerce search engine inside WeChat. Once up and running, it’ll allow WeChat users to directly message Taobao on their phones by typing a kind of product that they’re looking for; then the app will respond with a link to the desired items.

Basically, it’s just an extension of the brands platform that WeChat already has in place, and which is used for social marketing by all kinds of stores and media outlets – from Starbucks to Chinese fashion magazines. All it requires is for Taobao to make use of WeChat’s brand platform to automate the text queries and auto-generate a relevant link. It’s pretty simple, but it helps users to search Taobao more easily than having to jump to a web browser or open up the actual Taobao app.

The ‘Taobao Search’ account is already on WeChat (add it by scouring for “tbsearch” within WeChat), but when we tested it out, the Taobao Search account didn’t respoond to my query about a Xiaomi phone (pictured above). Once this goes live, it will work as described. This is aimed at Chinese users, but there’s nothing to stop other companies implementing this kind of social searching in the popular messaging app.

According to Marbridge Daily, the Taobao Search account within WeChat will also show products for the sister site Tmall. Both are run by Alibaba Group.

Once the search function is working, all those product searches can be turned into mobile purchases in the normal way, by jumping into the Taobao app to complete the e-commerce purchase. This might boost the ratio of Taobao’s mobile purchases slightly – but mainly it looks to be a new and social avenue for searching for products.

Alibaba already has a dedicated product search engine in the form of eTao, which scours pretty much every online mall in China.

Government Signals China Might Finally Get a 4G Network This Year ()

Mar 7, 2013

by C. Custer



The folks over at China’s Ministry of Industry and Information Technology (MIIT) sure know how to play hard to get. They hold all the keys to China’s 4G network dreams — without permits issued by MIIT, no company is allowed to operate a 4G network — but they have remained coy about when, exactly, they’re going to unlock the door so that China Mobile can sprint through it and start rolling out its TD LTE network.

Yesterday, MIIT Minister Miao Wei gave the latest in a long line of teases that this could finally be the year for 4G networks in China. Meeting with the Qinghai legislative delegation, the Minister said that 4G licenses could probably be issued this year. Of course, as usual, the key word there is probably. Miao also said that the domestic 4G network still needs more development both in terms of the network infrastructure that provides 4G service and also in terms of 4G handsets and other devices, which are quite thin on the ground in China (although that’s partially because MIIT doesn’t approve them).

Of course, the issuance of a 4G license this year doesn’t necessarily mean that 4G service will be commercially available in 2013. If MIIT does issue a license but waits until the end of the year, it’s possible China Mobile might not be able to launch its network nationwide until 2014. And of course, there’s still no guarantee MIIT will issue the network permits this year anyway.

Personally, I think I speak for everyone when I say: quit leading us on, MIIT! We all know you’re going to issue the permits sooner or later, so let’s just set a date and stick to that. Enough of this “maybe” and “probably” vagueness!

(People’s Daily via Sina Tech)

Chinese Fashion Expo Inks JV Agreement With UBM Asia ()

March 7, 2013 | By Editorial Staff



UBM Asia has signed a binding agreement with NOVO Mania Limited, the organizer of NOVOMANIA, to acquire the annual urban fashion event in Shanghai.

Upon completion, UBM will own 60% of a joint venture company, with NOVO Mania Limited, called UBM Novomania, to organize NOVOMANIA from 2013 onwards.

Financial terms of the deal have not been disclosed.

NOVOMANIA was launched in 2010 as an annual urban fashion event by the NOVO group of companies, a retailing and fashion conglomerate based in Hong Kong that operates and distributes over 50 international brands and has stores across 45 cities in China, and one of its partners, Focus Workshop, an innovative full service agency in China with expertise in luxury brands in beauty and wellness, fashion, real estate and FMCG. By bringing together designers, brands, buyers, distributors, retailers, franchisees, department stores, mall operators, real estate developers and the media, it creates a platform for introducing retail concepts to international brands which are seeking to enter the China market and for providing new business opportunities for domestic brands.

This year, Novomania will be held from July 17 – 19 at Shanghai Mart.

WeChat Lead Says They’d Monetize the Official Accounts Platform First ()

By Tracey Xiang on March 6, 2013



Alen Zhang, lead of WeChat (Weixin in Chinese) and vice president of Tencent, gives some ideas in an interview on what were widely speculated by the public and media about the cannot-be-hotter mobile app, such as why there hasn’t been a version for iPad. Of course, monetization is an unavoidable topic. But he didn’t say social games or micro-payments service which Pony Ma, CEO of Tencent, told the WSJ yesterday.

Monetizing official accounts

“Why would I build the official accounts platform? It has monetization potential. It’s possible that, when it works, not only does it can be monetized, but also doesn’t annoy users. What’s even better is (users) would like to pay for services. That’s good approach to monetization.”

The platform performs well on its own. A handful of WeChat official accounts have started featuring display ads within articles sent to their readers daily. Brands who are trying to do social marketing with the platform also see it a good medium for interacting with consumers. Some merchants claimed that they did see traffic from WeChat converted into transactions. It is reported that Sina Weibo is testing a similar platform enabling media Weibo accounts to send out rich-media posts, which is seen as Sina’s feeling pressured by WeChat’s official accounts program.

But Zhang doesn’t mention how to but only says they “don’t want monetization to conflict with user experience. It’s necessary that monetization must hurt user experience. There’s a possibility and that’s our goal”.

“Shake” to access everything

WeChat 4.5, the latest version launched last month, added shake-to-search-for-a-song feature. It functions like music recognition services like Shazam but takes advantage of the shake gesture. Prior to this version, users could shake to find users nearby who also shake their phones or shake to transfer web pages from PCs.

Alen Zhang sees “shake” fit well in mobile Internet as it doesn’t require users to type in anything. He mentions a couple of scenarios for shaking to interact: 1) the official WeChat account of a TV program would show up on your phone screen with a shake when you are watching the program; 2) The detailed information of an ad could be sent to a phone after a shake.

Voice-enabled features are self-developed.

It was speculated that the voice-related functions were enabled by iflytek, a well-known voice technology company. Mr. Zhang, corrected that all those features were developed in house by a team of over thirty engineers (The whole WeChat team consists of over two hundred).

Why no iPad app?

“…for iPad is more used in WiFi environments. So, it may happen that users who sign up to WeChat with iPads may not receive messages immediately after the other side sends some out. The experience must be terrible. That would lose the benefit of ‘always-online’. However it doesn’t mean we’d not roll out a version for iPad. If we’d do one, it must be that we’d have thought through, other than adding one for one more device.”

What’s WeChat?

“How you use it decides what exactly it is to you”, he says.

Suntech Falls 3.3% As Uncertainty Clouds Future Of Former Solar Industry Icon ()

3/07/2013



Shares in Suntech Power Holdings fell 3.3% in trading at the New York Stock Exchange on Wednesday amid a dispute over control of the company’s chairmanship and uncertainty about how one of the world’s largest suppliers of solar panels will handle a $541 million convertible bond issue maturing this month.

Following word on Monday that the Wuxi, China-based company had named former Solectron executive Susan Wang as its chairwoman, founder Shi Zhengrong issued his own statement on Tuesday calling the move “unlawful.”

Shi, a China-born Australian national, returned home after earning a Ph.D. there to become one of the best–known faces of the country’s solar energy industry in the past decade, appearing on the Forbes Billionaires List and Forbes Asia’s “Heroes of Philanthropy” list.

However, the industry has of late been plagued by excess supplies, heavy losses, and financial problems among Western governments that can’t afford to subsidize solar purchases. Suntech’s market capitalization yesterday stood at $211 million. Other one-time U.S-listed Chinese solar stars such as Yingli and LDK have also suffered big price declines.

Politics & Law

Newswire

China village seethes over land grabs as Beijing mulls new laws (Reuters)

By James Pomfret

SHANGPU, China | Thu Mar 7, 2013



(Reuters) - Torched vehicles and violent clashes in the Chinese village of Shangpu as farmers protest the loss of land to developers is an uncomfortable reminder to Beijing's incoming leadership that, for many, pledges of reform to prevent land grabs ring hollow.

Seizures of land across China have been fuelled by soaring prices and Beijing's urban expansion drive. But outdated laws mean farmers have little legal recourse to oppose land grabs - commonly where village leaders sell off plots to a developer with little or no consultation - or to demand fairer compensation.

Following a spate of high-profile cases, including that of Wukan -- a southern village that openly revolted over murky land sales in 2011 -- outgoing Premier Wen Jiabao pledged last year to overhaul the regime for land expropriations to give farmers more power. But turning draft policies into law is taking time and in some cases laws are being watered down, leaving land grabs as a leading cause of social unrest.

The case in Shangpu is typical of thousands of others in China each year, according to the accounts of villagers. They say a 33 hectare plot of land now being used to grow rice on the outskirts of the village, also in southern China, was sold off without their consent to make way for the construction of an electric cable factory.

They want the land back and the contract scrapped. Tensions boiled over on February 22 when thousands of residents fought and chased off several hundred men wielding steel pipes and spades who were hired as thugs to try to intimidate the villagers into acquiescing on the deal, they say.

Residents then gutted and overturned more than 20 vehicles driven by the intruders. The smashed jeeps and cars still litter the roads.

"We had every right to fight back and protect ourselves," said a 16-year-old villager who declined to be identified for fear of reprisals. "The land is our livelihood. We can't survive without it."

RULE OF LAW

Residents have now barricaded the village. Groups of young men - rocks, sticks and walkie-talkies at the ready - watch and block roads from makeshift guardposts, while others have petitioned authorities and are waiting for them to come to their aid.

"Every day we wait but the officials here are ignoring us. The police sit around and won't help. We haven't heard anything. The pressure is building," said a middle aged village leader, who would only be quoted by his family name of Li.

About 90,000 "mass incidents" - a euphemism for social unrest -- occur each year in China, of which some two-thirds are triggered by land related disputes.

The Landesa Rural Development Institute - a body advocating land rights that made this estimate based on wide-ranging surveys in China - says land reform is crucial to safeguard the rights of the country's 700 million rural people and mitigate a growing source of social upheaval.

Bringing greater security to China's farmers is also seen as crucial to developing a consumer-led economy in China, a pillar of Beijing's vision for the future. Policymakers hope that more assured land rights would encourage farmers to save less and spend more and also feel more secure about seeking urban jobs.

While all farmland is state-owned, Chinese laws allow farmers long-term land lease rights under village collectives charged with oversight. Land certificates are imprecise at best and over half of rural households lack documentation -- leaving possession dependent upon villagers' knowledge and officialdoms' whims.

A revised land management law now being debated by China's parliament, stipulates farmers be paid a "fair" commercial or market value, rather than 30 times the land's annual agricultural output as before -- a small, but significant distinction often exploited by officials who buy cheap and sell the farmland for a massive markup to businesses.

NEW LAWS TAKE TIME

"The rural land system is central to maintaining rural stability and ensuring China's long-term development," Wen said at this week's parliamentary session that will formally confer China's new leader Xi Jinping with full power.

"We intensified protection of farmland and farmers' rights and interests, and made a lot of preparations to improve the system of compensating for expropriation of rural collective land," he said in a report on China's policy blueprint for 2013.

Wu Xiaohui, a Chinese land expert and Beijing-based lawyer with Landesa, said revisions to the land management laws would "introduce procedural safeguards" so the likes of Shangpu's farmers can be heard and local government power restricted during land expropriation.

"The revision will not fix all the problems but it will be a significant improvement over the current laws," said Wu.

But the wheels of Chinese lawmaking turn slowly, involving multiple parties and government agencies. Already the scope of proposed revisions to the laws have been substantially watered down since Wen's push last year.

The Legislative Affairs Office of China's cabinet, the State Council, has backed the push to change laws. But some government entities, including the Agriculture Ministry and State Forestry Administration, "oppose any substantive revision", China's state-run Legal Daily reported recently.

The Forestry Administration was quoted as saying more study and time should be taken on the issue.

The draft laws have already been submitted to the heads of the National People's Congress, China's parliament, but at least two more reviews are needed before they can be passed.

Even when new laws are in place, the challenge of ensuring adequate enforcement is unlikely to be resolved so long as oversight of local officials nationwide is patchy and lax.

For now, only places that go to extremes such as Wukan and Shangpu tend to get noticed.

"This is a movement for justice," said a Shangpu elder dressed in green army fatigues as he drank tea with others.

"Xi Jinping said the whole country must fight corruption. This is good for China and the policy is correct. Our village supports the Party and Xi. We are only asking the Party gives our village justice."

(Additional reporting by Grace Li and Jason Subler; Editing by Neil Fullick)

Exclusive: China wealth fund, Commerce Ministry to get new heads - sources (Reuters)

By Benjamin Kang Lim and Michael Martina

BEIJING | Thu Mar 7, 2013



(Reuters) - China will likely appoint savvy international dealmakers to run its giant sovereign wealth fund and Commerce Ministry in a soft power push to soothe fears over a planned spending spree to boost Beijing's ownership of strategic global assets.

Securities regulator Guo Shuqing is tipped to take the helm at the $482 billion state investment vehicle, China Investment Corp (CIC) CIC.UL, and China's chief trade representative, Gao Hucheng, is seen running the Commerce Ministry, two sources with leadership ties told Reuters.

The appointment of seasoned, English-speaking financial negotiators to run the two agencies is a sign that China's new leaders would make commercial logic a major thrust of the push for market access Beijing needs for planned acquisitions of $560 billion of overseas assets in the five years to end-2015.

"The next government will pay more attention to trade policy and investment policy and the direction will be more open," said Tu Xinquan, associate director at the China Institute of WTO Studies at the University of International Business and Economics in Beijing.

Sources with ties to the leadership and officials at China's top ministerial think-tanks say the change of personnel reflects the focus President-in-waiting Xi Jinping and Premier-designate Li Keqiang have on furthering China's ambitions in the global economy. Academics said such appointments fit with the overall external thrust of China's new leadership.

"Here you have people who know the global system, and this is about China becoming much more active in it," said Scott Kennedy, director of the Research Center for Chinese Politics & Business at Indiana University.

BALANCED APPROACH

Guo has climbed to the top of China's financial ranks by sticking to a formula combining a balanced approach to risk with gradual reform. His favorite proverb - "Listen to both extremes and take the middle course" - speaks volumes about the approach the former chairman of China Construction Bank (CCB) (601939.SS) (0939.HK) took to managing the world's second-most valuable financial institution.

"Don't take too much risk. But not too little either. If you don't take any risk how can you make any money," the 56-year old quipped in an interview with Reuters in 2010.

The philosophy major and Oxford-educated scholar, who speaks English fluently, has moved easily between academia, government and a rapidly growing commercial sector that has helped China become the world's second-biggest economy.

He joined CCB as chairman in 2005 after a $22.5 billion bailout left the State Administration of Foreign Exchange, which Guo headed, as the bank's largest shareholder. Seven months after Guo took over, CCB sold shares publicly for the first time in Hong Kong and two years later in Shanghai - China's first state-owned lender to float shares in both bourses.

"The financial markets are generally quite positive on Guo, because he's got a track record of delivering on his promises," said Stanley Li, an analyst at Mirae Asset Securities in Hong Kong who has met Guo a number of times. "A reformer who is able to deliver is actually rare in China, as you tend to get people who talk a lot but can't deliver, or you get those who just don't want to rock the boat."

Gao has been in charge of China's global trade negotiations since 2010, and his years of experience as a trade negotiator could elevate the Commerce Ministry's role in policy battles, sources say.

The 61-year old, who didn't join the Communist Party until his late 30s, worked at the ministry's predecessor - the Ministry of Foreign Trade and Economic Cooperation - beginning in the early 1990s. Currently the longest serving of the Commerce Ministry's vice ministers, Gao studied abroad, worked in Africa, and earned his doctorate in sociology in Paris, according to his official biography.

SWEEPING RESHUFFLE

The likely appointments are part of a sweeping redistribution of top financial posts that will take place during the annual 2-week full session of parliament that began on Tuesday.

If Guo takes the CIC job, he would replace Lou Jiwei, 62, who is tipped to become finance minister, the sources said, adding that insurance regulator Xiang Junbo, 56, is the front-runner to succeed Guo as securities regulator.

Lou will succeed Xie Xuren, who is the front-runner to become chairman of the National Social Security Fund, which manages the national pension fund that stood at 18.3 trillion yuan ($2.94 trillion) as of mid-June 2012. Xie is tipped to replace Dai Xianglong, 68, who will retire.

Xie has reached the compulsory retirement age of 65 for cabinet ministers and was left out of the Communist Party's elite 205-member Central Committee during a once-in-a-decade handover of party power last November because he offended many powerful interest groups.

"Xie Xuren (as finance minister) rarely dined out. And when he did, he would pay his own way, embarrassing his host and fellow guests," said one financial industry source with direct knowledge of Xie's style.

The securities regulatory body, the sovereign wealth fund, the Finance Ministry and the social security fund declined immediate comment on the planned personnel changes. Guo, Lou and Xie could not be reached.

Reuters reported last week that central bank governor Zhou Xiaochuan is set to keep his job for an unspecified period, despite being aged 65, as the country's leaders seek to maintain the momentum of financial reform. He would be made a vice chairman of parliament's advisory body, giving him "national-level leader" rank that would exempt him from compulsory retirement, sources have said.

Like Zhou, Chen Yuan, 68, is likely to be appointed a vice chairman of the advisory body, the sources said, adding that Chen would stay on as chairman of China Development Bank CHDB.UL, the sources said. In its role as a policy bank, state-owned CDB lends to China's largest infrastructure projects and offers financial aid for the country's industrial giants to internationalize.

The Commerce Ministry is seen as one of the Chinese agencies most amenable to broader reforms, which could give Gao's appointment broader implications, said Tu, the professor.

That is significant given Beijing's growing interest in owning physical assets in the economies where China has a steady income from trade which could be used to fund purchases. That approach achieves twin goals of balancing capital flows and reducing exposure to paper assets from the United States and Europe, which analysts say China's top policymakers have tired of.

STRATEGY SHIFT

Beijing has watched for three years as Europe's crisis has choked growth and demand in China's biggest export market and stoked default risks on the near $800 billion of euro zone government bonds China is estimated to own as part of its $3.3 trillion of foreign exchange reserves.

Meanwhile, record low yields on U.S. Treasuries and a depreciating dollar have seen the value of China's dollar holdings fall by a third in the last 10 years, adding weight to Beijing's view that the time is ripe to change investment tack.

If China can engineer a rise in cross-border corporate merger and acquisition activity, it could take some of the political sting out of the rebalancing flows. But the reluctance of foreign governments to accept the acquisition of stakes in strategic assets by entities ultimately controlled by China's Communist Party, and a patchy track record in dealmaking, have led to frustrations.

The long delays to approving the record $15.1 billion takeover of Canadian oil and gas company Nexen by Chinese state-owned oil major CNOOC Ltd 00883.HK - the deal finally closed in February after seven months - offer a typical example.

Outbound China deals ran into trouble everywhere from Iceland to Myanmar in 2011, including a $5.4 billion PetroChina (601857.SS) deal in Canada, a $7 billion CNOOC (0883.HK) transaction in Argentina and Bright Food Group's SHMNGA.UL $2.5 billion bid to buy French yoghurt maker Yoplait. The United States regularly objects to Chinese takeovers on the grounds of national security.

($1 = 6.2181 Chinese yuan)

(Additional reporting by Victoria Bi, Lucy Hornby, Huang Yan and Aileen Wang; Writing by Nick Edwards; Editing by Ian Geoghegan)

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 expresses condolences on Chavez's death (Xinhua)

2013-03-06



BEIJING, March 6 (Xinhua) -- Chinese leaders Hu Jintao and Xi Jinping have expressed deep condolences on the death of Venezuelan President Hugo Chavez, Foreign Ministry spokeswoman Hua Chunying said Wednesday.

Hua said at a daily press briefing that Hu Jintao, China's president, and Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, have each sent condolence messages to Venezuela's Acting President Nicolas Maduro.

She said Wu Bangguo, chairman of the Standing Committee of the National People's Congress (NPC), also sent a message of condolences to Diosdado Cabello, president of the Venezuelan Congress.

"President Chavez was an outstanding leader of Venezuela and a good friend of the Chinese people," Hua said, adding that Chavez made significant contributions to advancing the friendly and cooperative relations between China and Venezuela.

The CPC, the Chinese government and people highly treasure the time-honored friendship between the two countries, according to the spokeswoman.

She added that China is ready to work with Venezuela to continuously deepen bilateral strategic partnership based on common development so as to bring benefits to their people.

Chavez died on Tuesday in a military hospital in Caracas.

Ex-US consulate guard sentenced to 9 years in prison for trying to sell secrets to China (The Associated Press)

Published: March 5



WASHINGTON — A federal judge sentenced a former U.S. security guard in China on Tuesday to nine years in prison for trying to sell photos and other secret information to China’s Ministry of State Security, about half what prosecutors had requested.

Before sentencing Bryan Underwood, U.S. District Court Judge Ellen Segal Huvelle noted the obstacles he had overcome — including mental health problems — and his ill-conceived plan.

“This is the most half-baked treason I’ve ever heard of,” she said.

The Justice Department says Underwood took photographs of restricted areas at the new U.S. consulate in Guangzhou and planned to use them to help China eavesdrop on U.S. officials. The department said that Underwood had lost nearly $160,000 in the stock market and hoped to make $3 million to $5 million. Underwood wrote a letter expressing his desire to work for the China ministry, but was turned away when he attempted to deliver it.

Last year, he pleaded guilty to attempting to communicate national defense information to a foreign government.

“I’m sorry that I’ve shamed the country,” a sobbing Underwood told the judge before she sentenced him. “It just seemed like I was behind the eight-ball my whole life.” He told her he was a paranoid-schizophrenic, and that his condition worsened when he joined the Marines. Underwood, 32, wearing an orange prison uniform, said he’s gotten better in jail with the help of medication. And he promised to return from jail a new man.

Underwood ended with a quote from the Bible’s Romans 5, “Rejoice in our suffering.”

From November 2009 to August 2011, Underwood was a civilian American guard with top secret clearance; his job included preventing foreign governments from improperly obtaining sensitive or classified information from the U.S. consulate.

The government had argued that Underwood’s activities could have harmed national security and asked for a sentence of 17 ½ years. Under federal sentencing guidelines, Underwood had faced a sentence of 15 to 20 years.

But Huvelle concluded that no harm was actually done. She also, on two occasions, said that Underwood had led “an exemplary life” before this, despite a horrible upbringing that included abusive and alcoholic parents. Underwood’s father had tried to kill him numerous times, according to defense lawyer Erich C. Ferrari. Underwood graduated from college and served a tour in Iraq.

Even prosecutor John K. Han said that it was a sad day, in part because Underwood had “overcome many obstacles.”

Huvelle said she found it “baffling” that Underwood could have gotten his clearance that enabled to get his job at the consulate. She compared his unsuccessful attempt to hand over a letter to a local police station to a homeless person walking up to a bank.

“No wonder he wasn’t taken seriously,” she said.

And the judge said he wasn’t driven by ideology, or even greed, but an attempt to dig himself out of a financial hole.

“He was not thinking straight,” Huvelle said. “This was just blundering.”

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China key to enforcing U.N. sanctions on N. Korea (USA TODAY)

Oren Dorell

March 7, 2013



New sanctions on North Korea have as little chance of stopping Pyongyang from developing a deliverable nuclear weapon as previous efforts, unless China gets more serious about enforcing them, nuclear experts and China watchers say.

The United Nations Security Council voted unanimously Thursday to boost sanctions against North Korea for its third nuclear test Feb. 12. Pyongyang threatened a pre-emptive strike on the United States with a nuclear weapon.

After the vote, China's U.N. ambassador, Li Baodong, said he nation wants to see "full implementation" of the sanctions.

"The top priority now is to defuse the tensions … bring the situation back on the track of diplomacy, on negotiations," Li said.

But Bruce Klingner, former deputy chief for Korea in the CIA's Directorate of Intelligence under President Clinton, said China is part of he problem.

"In the past, China agreed to resolutions but didn't enforce them in China," said Klingner, now a senior research fellow at the Heritage Foundation.

Klingner says China has recently been more vocal publicly about its displeasure with North Korea's recent missile and nuclear tests. Even so, Beijing has refused to help enforce previous sanctions it signed off on, he said. Klingner says he does not see the new sanctions as being enforced any differently.

The U.N. resolution Thursday authorizes countries to:

Inspect any North Korean vessel or airplane, and to deny landing or port rights if the North refuses to allow it.

Ban exports of expensive jewelry, yachts, luxury automobiles and racing cars to the North.

Freeze financial transactions or services that could contribute to North Korea's nuclear or missile programs.

Bans financial support for trade deals, such as granting export credits, if the assistance could aid the North's nuclear or missile programs.

"Taken together, these sanctions will bite — and bite hard," U.S. Ambassador Susan Rice said.

The new sanctions resolution is the fourth against North Korea since its first nuclear test in 2006. Many of the entities that provide North Korea with aid are in China, and that is why it is not likely to work, says John Bolton, who served as U.S. ambassador to the United Nations under then-president George W. Bush.

"There's no reason to think they're going to do anything different than they've done before," Bolton said. "I call this a marginal increase in sanctions."

Other analysts believe the change in Chinese rhetoric toward North Korea signals promise that Beijing will try to prevent Pyongyang from getting a nuclear bomb.

North Korea launched a satellite into space in December, which the international community viewed as a test of an intercontinental ballistic missile. Last month, Pyongyang detonated a nuclear bomb. China's criticism shifted then from calling North Korea's actions "not helpful" to actual condemnation, said George Lopez, a nuclear proliferation expert at Notre Dame University who served on a U.N. panel that monitored sanctions on North Korea.

The new sanctions are unlikely to stop North Korea from staging another nuclear test or two, but hurt its weapons program in the medium to long term, Lopez said.

"The fact this resolution has so many multiple prongs and assertions and stipulations is a very clear message to the North that the Chinese are serious," Lopez said.

Bolton said Chinese leaders do not appear to want North Korea to develop a nuclear bomb.

"The problem is they haven't done anything about it and haven't for past 10 years," Bolton said. "They haven't put any pressure on North Korea, which they are in a unique position to do."

Klingner said China is afraid that pressuring North Korea will cause a crisis on its border, such as a regime collapse that would lead to civil war or the unification with U.S. ally South Korea.

But the lack of firm Chinese action will also result in U.S., Japanese and South Korean responses "that are not in Beijing's interests," such as increased military exercises, and deployments of more effective weapons in Japan and South Korea, Klingner said.

China’s Wen Warns of Inequality and Vows to Continue Military Buildup (The New York Times)

By ANDREW JACOBS and CHRIS BUCKLEY

Published: March 4, 2013



BEIJING — Prime Minister Wen Jiabao of China entered his final days in power on Tuesday with a warning that the nation remained troubled by divisions between the urban rich and rural poor and unbalanced economic growth, and he vowed that the government would continue building up its military, which received a 10.7 percent increase in spending for 2013.

Mr. Wen delivered his sometimes gloomy assessment of the state of Chinese society in his final annual work report to the national legislature, the National People’s Congress, which will elect a new prime minister and government leadership at the end of the annual meeting.

Since Mr. Wen and President Hu Jintao took office, they have repeatedly pledged to narrow income inequality and spread China’s expanding wealth more evenly. But in his state of the nation report, Mr. Wen gave his administration mixed marks and detailed some of the problems that will be bequeathed to the new leadership under Xi Jinping, the incoming president, and Li Keqiang, who will succeed Mr. Wen as prime minister. Mr. Xi already succeeded Mr. Hu as Communist Party secretary in November.

“We are keenly aware that we still face many difficulties and problems in our economic and social development,” Mr. Wen said in the report, which was distributed to reporters before he read it to nearly 3,000 congress delegates in the Great Hall of the People.

He singled out as particular ills “unbalanced” economic development, income disparity, and inequalities dividing urban and rural residents. “Social strains are clearly increasing,” he said.

But even as the Communist Party has said it wants to focus on curing domestic ills, it has backed rapid military modernization, and a budget report released at the same time as Mr. Wen’s speech showed the expansion will continue. China’s official defense budget this year will grow to 720 billion renminbi, or about $116 billion, a rise of 10.7 percent over last year, according to a Ministry of Finance report. By comparison, the nation’s defense budget was just $20 billion in 2002.

“We should accelerate modernization of national defense and the armed forces so as to strengthen China’s defense and military capabilities,” Mr. Wen said. “We should resolutely uphold China’s sovereignty, security and territorial integrity, and ensure its peaceful development.”

The government will also increase spending on public security. According to the Ministry of Finance report, combined spending by central and local governments, including the People’s Armed Police, courts, jails and other areas of domestic security, will rise by 8.7 percent to 769 billion renminbi, or $123.5 billion. The government also announced major increases in spending on social welfare and health care.

The prime minister’s report, broadcast live on national television, is a highlight of two weeks of tightly controlled political theater that rarely strays from a stolid procession of speeches, news conferences and invariably pro-government votes — all of it intended to give a united and untroubled public face to a reliably secretive party leadership.

Last year, however, the script was challenged by a divisive scandal surrounding Bo Xilai, the combative party chief of Chongqing, whose fall unleashed months of revelations about murder, corruption and political infighting. Mr. Bo pilloried his foes during a news conference at the congress, was publicly censured by Prime Minister Wen Jiabao at the end of the meeting and then, a day after the congress ended, was dismissed from his Chongqing post.

Most analysts agree that the proceedings this year will ignore the plight of Mr. Bo, who is being detained awaiting prosecution on charges of corruption, abuse of power and obstruction of justice.

This year, the party’s new top leaders, Mr. Xi and Mr. Li, have paved the way for the 13-day session with vows to end flagrant privileges and self-enrichment by officials and their families. They have also vowed to create a more efficient government, and reduce the acrid smog that has enveloped Beijing and other northern Chinese cities for weeks this winter.

“They’ve already taken many steps that have raised hopes among ordinary people — now we’re looking for signs that the hopes can be satisfied,” said Deng Yuwen, an editor for The Study Times, a weekly newspaper published by the Central Party School in Beijing. “The congress won’t have any breakthroughs, but it can indicate where and how fast the leaders want to take things.”

This congress will be the last for Mr. Hu and Mr. Wen, who both retire at its end after a decade in their jobs.

On the final day of the congress, delegates will vote in a new government leadership dominated by Mr. Xi as president and Mr. Li as prime minister. The transfer of party leadership posts took place in November.

The nearly 3,000 congress delegates at the annual gathering are selected through a process that rewards loyalists; about 70 percent of the delegates are Communist Party members, and many are officials. Few dare defy the leadership’s will by voting against proposals or abstaining from ballots, and the congress has never voted down a proposal put before it.

The meeting is likely to approve a modest restructuring of government ministries and agencies. Over past months, analysts and well-connected businesspeople have said that Mr. Li wanted a drastic reorganization, to create enlarged ministries for financial regulation, environmental protection and other areas.

But recent Chinese news reports have described a more limited plan that is likely to include folding the scandal-laden and deeply indebted Ministry of Railways into the Ministry of Transport, and strengthening food and drug safety regulators to bring greater oversight of industries that are constantly hit by consumer safety concerns.

The apparent scaling back of the plans for administrative changes reflects how difficult it will be for the leadership to deliver on promises to free up the economy from state-owned enterprises and fight corruption, while still preserving single-party rule, said Zheng Yongnian, director of the East Asian Institute at the National University of Singapore. “In all these issues, there’s the same basic problem of deep distrust between the people and the government,” Mr. Zheng said. “Because there is so much distrust, the government is reluctant to make deep reforms. What they call reforms turns out be reassigning powers within government, not giving up powers to society. That’s not real reform — and then people feel increasingly frustrated.”

Reformists have been hoping that the new leadership would demonstrate a greater commitment to China’s Constitution, and would promote a more independent judiciary. They have also been agitating for an end to the country’s notoriously abusive re-education-through-labor system, which allows the police to imprison drug addicts, prostitutes and political offenders for up to three years without trial.

“The re-education-through-labor system, to a certain extent, makes citizens live in fear,” Dai Zhongchuan, a delegate and law professor, told a government-run news portal on Monday.

Many analysts, however, say such initiatives are unlikely to be embraced by China’s new leaders any time soon.

Party insiders have said that some officials likely to be promoted at the congress include Zhang Gaoli as executive deputy prime minister, and Li Yuanchao, a former party organization chief, as vice president. Wang Yang, the former head of Guangdong Province in southern China, is likely to succeed Wang Qishan as a deputy prime minister in charge of financial policy.

Mr. Bo was seen until last year as a contender for promotion into the central leadership, but his prospects capsized after the police chief of Chongqing fled to a United States consulate and then surrendered to Chinese investigators, raising allegations that Mr. Bo’s wife, Gu Kailai, had murdered a British businessman and then sought to cover up the crime.

Ms. Gu was jailed in August for the murder. Mr. Bo is likely to face trial and conviction over the cover-up and other misdeeds.

Online

Chinese officials; Spending less? Or hiding it better? (The Economist Analects Blog)

Mar 7th 2013

by J.C. | BEIJING



ORDERS from China’s new leader, Xi Jinping, for government officials to ease up on their guzzling of expensive grain liquor and their lavish banqueting have left restaurants and hotels in Beijing scrambling to help put up a façade of austerity during two key political gatherings now underway.

Officials taking part in the meetings—the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC)—have been in Beijing since March 3rd and have come from all over the country. But they have been careful to avoid ostentation and conspicuous consumption since December, when, on a visit to Hebei province, Mr Xi launched an austerity campaign for party and government officials. While there, he had a widely publicised (and conspicuously modest) meal of four simple dishes and a soup.

Since then, instead of hosting lavish “banquets,” a four-star hotel chain in Beijing has been organising “receptions” for government events. Although the costs of both kinds of functions are the same, it makes officials look as if they are behaving, says the hotel’s event manager.

“They are not spending less, they are just hiding it better,” says Mr Lee, a local businessman who works with high-end restaurants in the city, but does not want his full name used.

On the evening of March 5th, the opening day of the NPC, the public dining rooms were nearly empty at the government-owned Beijing Hotel (pictured). But the lobby lifts were not. Delegates and pass-holding guests were riding them up to the hotel’s private halls.

At Tian Di Yi Jia, a nearby luxury restaurant also favoured by officials, nearly a dozen black Audis and BMWs were parked outside the discreet entrance. Inside, only one table of foreigners was seated in the main dining room, but the reservation list showed many of the private rooms booked through the duration of the two meetings, which will end March 17th.

Willy Lam, a specialist in Chinese politics at the Chinese University of Hong Kong, says Mr Xi’s austerity drive has all the trappings of a classic public relations exercise.

“There are 1,001 ways to fool the auditors, and the campaign will have very minimal adverse impact on China’s GDP growth. Media reports saying otherwise have been exaggerating,” he says.

In February, China’s Ministry of Commerce reported that nationwide sales of high-end spirits fell by about 30% over the Lunar New Year. The ministry said sales have also fallen recently at high-end eateries by 35% in Beijing and by 20% in Shanghai.

Although independent analysts have confirmed a significant drop in luxury markets’ performance, this does not mean austerity measures will lead to institutional changes and constraints on official corruption over the long term, says Cheng Li, director of China research at the Brookings Institution, an American think-tank.

A better test of Mr Xi’s commitment to fighting corruption will be his ability to pass laws forcing government officials and their family members to declare their assets and financial activities. Up to now, it has fallen to foreign news media to shed light on the assets and financial dealings of those closest to China’s top leaders.

In June, a detailed report by Bloomberg, an American news service, said Mr Xi’s extended family controlled interests worth $376m and spread over a range of industries that included property, minerals and mobile phone equipment. Wen Jiabao, who at the end of the NPC will end his ten-year term as prime minister, received similar investigative treatment from the New York Times in October. The paper reported that “the prime minister’s relatives—some of whom, including his wife, have a knack for aggressive deal making—have controlled assets worth at least $2.7 billion.”

Billionaires Big at China’s Annual Political Conclave (THE WSJ CHINA REAL TIME REPORT BLOG)

March 8, 2013



Austerity is in at this year’s legislative gatherings in Beijing.

So are billionaires.

The main event on China’s political calendar, now underway in Beijing, features measured economic growth targets — and less cuddling of the cadres. But billionaire delegates are becoming a perennial feature of the twin meetings of China’s National People’s Congress and the Chinese People’s Political Consultative Conference, according to Shanghai research firm Hurun Report.

Hurun counts 31 billionaires among the NPC delegates this year, plus another 52 in the CPPCC.

In China, tycoons and politicians are increasingly comfortable bedfellows. Money and power feature in most countries, of course, but the contrast appears particularly stark in a system that swears allegiance to Communist Party roots. Plus, China’s business titans make for an extraordinarily affluent congress.

Zong Qinghou, the richest person on Hurun’s list with wealth estimated at $13 billion, is a legislator in the NPC for his third five-year term. He’s one of four billionaires Hurun says are back for a third time. The firm counts 13 billionaires new to the NPC this year.

The CPPCC, an advisory body, has two billionaires now in their fifth terms, Hurun’s figures show. It says 22 billionaires are new to the CPPCC this time. Of the five richest in the CPPCC, four are from Hong Kong real estate dynasties. The exception is Xu Jiayin, founder of Guangdong province developer Evergrande Property, who Hurun figures is worth $7.7 billion.

Some billionaires Hurun tracks are moving between the bodies. Liu Canglong of chemical group Sichuan Hongda, for instance, served in the NPC in the past but this year begins a term in the CPPCC.

Others are scions of rich men, including Lawrence Ho, a son of Macau gambling tycoon Stanley Ho, who Hurun says is the youngest CPPCC billionaire at 38 years old.

In numeric terms, tycoons are a minority at the meetings; billionaires represent only 1% of the 2,987 NPC delegates and 2.3% of the CPPCC’s 2,237 members. And the dominance of the Communist Party in China means delegates to China’s NPC and CPPCC don’t exercise power in the same way legislators can in other political systems. Some joke the NPC is for raising hands, because its members invariably vote in favor of plans presented, while the CPPCC is for clapping hands to support the ideas.

Yet, members and analysts say the positions afford status that can be particularly beneficial in business. Their seats, for instance, give them face-to-face time with top leaders, where attendees say there can be blatant lobbying.

Hurun puts the net worth of the five wealthiest in the latest NPC at $34.8 billion. That’s at least five times the wealth of all 535 members of the U.S. Congress in 2010, according to figures from the nonpartisan Center for Responsive Politics.

To be sure, another Hurun estimate of the world’s richest tycoons with a political profile shows a number outside China. The firm cites New York mayor Michael Bloomberg’s $20 billion in wealth as notable in the U.S., for instance. In Asia, Hurun points to the $3.5 billion fortune of Hong Kong Chief Executive Tung Chee-hwa’s brother.

In Beijing, Xi Jinping set the muted mood for the twin meetings, which are expected to culminate with his appointment to state president. After the Communist Party named Mr. Xi as general secretary in November, he traveled with a small motorcade and espoused belt tightening.

For the twin meetings, that means, as China Daily put it, the Chinese law makers and advisers are going without “ceremonies, flowers, banners and booze.” Banquets are toned down and purveyors of luxury are feeling the fallout, including liquor makers.

Internet users notice an absence of bling. They are swapping photos that compare the designer outfits delegates wore in 2012 against toned down and off-brand attire this year.

One property billionaire arrived for the CPPCC session wearing a no-name belt, for example. Last year, Hermes held up his pants.

– James T. Areddy; Follow him on Twitter @jamestareddy

When In China …. China Labor Law Controls ()

By Dan Harris on March 7th, 2013



Just received an email from a friend stating/asking the following (note that I have changed some elements of the email to strip it of any even potentially identifying information):

I am heading off again to work for a few years at our China Rep Office. My new employment contract with the head office says that [foreign country] law will apply. Will it? And what if there is a conflict between [the foreign country] law and China’s laws, which will control?

We get this question far too frequently and we have seen way too many employment contracts written as though U.S. law (it was actually not a U.S. company in the above instance) applies all around the world. The reality is that if you are working for a Chinese company in China (be it a Rep Office, a WFOE, a JV, or whatever), Chinese law is going to apply to your employment relationship. I know of no country that would allow otherwise. I mean, imagine if a United States subsidiary of a Pakistani company were to claim in a U.S. court that it should not be required to pay overtime because their contract with the employee calls for Pakistani law and Pakistani law does not provide for that, or that it can discriminate against women because there is no such law prohibiting that in Pakistan? Even if the employee at issue were a Pakistani citizen, there is absolutely no way in the world a U.S. court would go along with any of those arguments. In fact, the argument is so bizarre I am not even aware of anyone ever having made it.

Any employer-employee relationship between a Chinese company and an employee working in China is going to be governed by China law, no matter what the contract says. So in China there would be no conflict of laws because Chinese law would simply apply. This is why we also advocate for drafting China employment contracts and employee manuals with Chinese as the official language. Chinese courts and Chinese administrative bodies are the only rightful jurisdiction for China labor law disputes stemming from employment in China (yes, this is true for expats too) and so it only makes sense to have these documents in the language they are sure to understand.

Here is a more interesting/complicated related question: what would happen if a U.S. company had a contract with a U.S. citizen and that contract provided that the U.S. citizen would go work at the U.S. company’s WFOE for a few years and that contract called for application of U.S. law. Now as I have said above, no Chinese court would apply anything but Chinese law to this relationship, but what would happen if the U.S. citizen were to flip around and sue the U.S. company in a U.S. court for failing to abide by some particular U.S. law? I do not know the answer to this question (any U.S. employment lawyers out there), but I can tell you that if it were to benefit my client, I would argue that Chinese law applies and I think I would prevail on that. But, I can also tell you that if it were to benefit my client, I would argue that U.S. law applies.

Anyone know how a U.S. court would rule?

Shanghai Party Bosses Believes License Plates Are Too Expensive ()

Mar 7, 2013 Posted By Administrator



How much is a Shanghai license plate? 80,000rmb as of this month, that’s 12,865USD for two slices of blue painted tin, or basically four Chery QQ’s. Would you pay it? I wouldn’t. The Shanghai Daily has a report from the National Congress on the Shanghai Party Boss’s views that the Shanghai license plates are just too darn high.

SHANGHAI Party chief Han Zheng has admitted that vehicle license plates cost too much, and pledged to use the funds raised from the auctions for local residents.

“I agree that car plates are too expensive,” Han told a group discussion of the Shanghai delegation at the annual session of China’s legislature in Beijing yesterday.

Prices recently reached more than 80,000 yuan (US$12,698), enough to buy an economy car.

The Shanghai government started an auction for vehicle license plates in 1994, as part of moves to address the heavy traffic problem in the metropolis of 23.8 million residents.

Han promised to make public the income generated by vehicle license plates.

“The incomes are raised from the people and should be used to serve the people,” Han said.

While agreeing license plates were expensive, Han said demand still exceeded supply.

“If we want to keep the prices in line, we have to grant more license plates,” Han said.

“At present, Shanghai releases 9,000 plates each month. We hope to do the job better through enhancing supervision and improving the system,” Han said.

Han also said new property restrictions announced last Friday by the central government were designed to promote healthy development of the industry and stifle unreasonable increases in house prices.

“It is a long-term mission and (we) believe the policies can lead the market to a sound way of growth,” Han said.

Han said: “Shanghai is standing at a new point of growth, and we should rely on restructuring and innovation to drive that growth.”

He said effective management of relationships among businesses, government, market and society was fundamental.

Responding to a reporter from Hong Kong on the limit on baby formula people can take to the mainland from Hong Kong, Han said both the government and the producers had a responsibility for food safety.

He called on the two cities to enhance cooperation in this regard and said domestic companies should draw a lesson and make improvements.

Han told a reporter from Taiwan that Shanghai was confident the city’s cooperation with the island in both manufacturing and service sectors had a bright future.

Stories on the edge of the NPC (China Media Project)

By David Bandurski | Posted on 2013-03-07



Fairness has been one of the central themes at China’s ongoing National People’s Congress. There has been chatter about the country’s “inefficient growth model,” about the need for more equity in areas like income distribution, housing and education. Party leaders have pledged to “construct a fair social system and realize more efficient growth.”

Nearly all of these issues touch on the intractable question of how China will deal with its massive population of “rural” migrant workers, or nongmingong (农民工), who account for roughly half of China’s official figures on “urbanization” of its population (52%), but who really exist in an unstable no-man’s land between the city and the countryside, cut off from social services.

As often happens during the NPC, it’s the stories breaking on the margins that tell us the most about the real challenges facing China. And one of the top stories breaking in the newspapers and on social media today goes to the heart of the above-mentioned set of challenges about urbanization and China’s migrant population.

According to reports today by Guangdong’s Southern Metropolis Daily, a conflict broke out in Guangzhou’s Haizhu District yesterday between a migrant woman selling guava on the street-side and urban management officers, or chengguan (城管) who were trying to get her to clear off.

For those who aren’t familiar with them, chengguan are non-police urban enforcers set up by local city governments across China to deal with issues of urban order and cleanliness, such as illegal building structures and unlicensed commercial activity. They are known for their violence, particularly against migrants, and are generally despised by the public.

Reports have widely circulated alleging that one of the officers — even his badge number, X080324, has been shared — grabbed the woman by the throat as her terrified toddler looked on. While authorities in Guangzhou have denied these reports, images like these are rapidly making their way across social media today.

(See Images)

The above post from the “Breaking News” Weibo — one among thousands — had drawn more than 36,000 reposts and more than 14,000 comments by early afternoon. The post linked to a Sina slideshow that had drawn more than 80,000 viewers.

The Guangzhou story has naturally brought fevered discussion about the issue of social fairness. It has also drawn remarks about the National People’s Congress. Invoking the recent case of a baby in the city of Changchun who was found dead after the SUV in which his parents had left him was stolen from a rest stop [See Chinese report here

], one user wrote on Weibo:

Who is more fortunate? Is it Little Hao Bo in Changchun, or is it this child in Guangzhou? Wake up, you sleeping delegates!

The post is accompanied by images of the Changchun child, “Little Hao Bo”, and the Guangzhou child, followed by a composite (originally from Reuters) of delegates sleeping during Premier Wen Jiabao’s government report to the NPC.

(See Images)

In another post, a user wrote: “This kind of violence, this kind of inhumanity, fills one with terror. People have the freedom to set up a stall and make a living for themselves, so long as they respect environmental hygiene!”

“For the system to tacitly approve this kind of inhumanity is the worst evil of all,” read one comment underneath the post.

“The Guangdong delegates to the ‘two meetings’ should respond to this and tell us what they think,” read another.

Another suggested solving the domestic issue of chengguan violence and a festering territorial dispute with Japan all in one stroke: “I encourage the NPC to draft a proposal for the sending of all urban management officers to the [disputed] Diaoyu Islands, where they can be responsible for environmental work!”

Can the North Korea Challenge Bring China and the U.S. Together? ()

MAR 7 2013



It might if the UN enacts the sanctions its considering against Pyongyang. Part of an ongoing series of discussions with ChinaFile.

Orville Schell:

What may end up being most significant about the new draft resolution in the UN Security Council to impose stricter sanctions on North Korea, which China seems willing to sign, may not be what it amounts to in terms of denuclearizing the DPRK, but what it portends for U.S.-China relations. Although it is still too early to be certain, this may represent a bold new step forward by Party General Secretary Xi Jinping and China's new leadership in signaling the U.S. that China is now interested in finding new areas of convergence. To date, China has been rather reluctant to support multilateral action toward so-called rogue regimes: China opposed NATO's military campaign in Libya and, last July, China and Russia vetoed a UN Security Council resolution, that would have threatened sanctions against Syria's leadership.

But now not only have China's leaders agreed to strict new sanctions on a foreign power, but on a country that is both a neighbor and a traditional ally.

This is a particularly tantalizing moment because it comes just as the new leaders in Beijing are beginning to define their new foreign policy perspective while at the same time Barrack Obama is reorganizing his team for his second term. It may well represent the most significant gesture China has made toward Washington in recent years of wanting to reset the bilateral relationship.

When he visited Washington last year, Xi called for a "new type of great power relationship." And at the 18th Party Congress last November, Xi's predecessor Hu Jintao's report to the Party spoke of a "new type of relations among major powers" characterized by "mutual respect, mutual benefits and a win-win partnership."

It's going to be interesting to watch both how Washington interprets this gesture and how the Chinese for their part carry it out.

Susan L. Shirk:

It's good news that China and the U.S. managed to agree on intensifying and broadening United Nations sanctions on the D.P.R.K. after its third nuclear test, to include new restrictions on North Korea's diplomats' transferring cash out of the country, beefed up inspection of North Korean imports and exports and prohibitions on the sale of the luxury items North Korea's leaders enjoy.

China has been looking for ways to stabilize its relations with the U.S. and its Asian neighbors, and cooperating to strengthen the international pressure on Pyongyang certainly helps.

After more than a decade of reassuring diplomacy toward its neighbors, China has started using coercive diplomacy to show its resolve to defend its maritime territorial claims in the East China Sea and South China Sea. Its threatening rhetoric and actions have raised anxieties in Asian capitals and in Washington that China's rise might not be peaceful after all.

In this context, China is seeking opportunities to shore up its international reputation as a responsible power and prevent its relations with the U.S. as well as with South Korea from worsening.It can find such opportunities in developing common approaches to tough problems like North Korea, Iran, and Syria with the U.S. and other countries.

It's too soon to tell whether China's support of the sanctions resolution means that it has made strategic decision to radically change its policy toward North Korea. Some influential figures in the Chinese elite have soured on the D.P.R.K. and are speaking out publicly to urge a tougher approach or even abandoning China's troublesome ally. Yesterday Mao Zedong's grandson, a major general, criticized North Korea's nuclear program.

But remember that China did support three previous rounds of UN sanctions on Korea. The actual impact of the sanctions depends on how China enforces them. The sanctions could have real bite if China slows down trade across the border by stopping to inspect trucks to make sure they don't carry any of the items on the sanctions lists, and Chinese banks turn down North Korean business. The more transparent China can make its enforcement of the sanctions, the greater the boost to its international reputation and its relations with the U.S. and South Korea.

Suzanne DiMaggio:

I hope your read of Beijing's motivations is correct. But I am more inclined to see this move on China's part less as a "significant gesture" toward Washington and more as a clear-eyed assessment of the realities on the ground. Pyongyang's recent nuclear test, combined with ongoing work on an intercontinental ballistic missile capable of carrying a nuclear warhead that could reach the United States, raises the threat to a new level for Washington. Although the capability to hit U.S. soil is not yet a reality, Beijing likely recognizes that North Korea's actions could very well push the U.S. to beef up its military presence in the region, including stronger anti-missile defenses going to South Korea and possibly Japan. A more robust U.S. military presence in Northeast Asia that serves to strengthen capabilities of American allies is the last thing Beijing wants right now.

Ouyang Bin:

It's true that China backed previous UN sanctions on North Korea but then continued to pump resources into the D.P.R.K. The question is why.

Beijing's logic has always been that any tough policy measures directed at the D.P.R.K. could cause the regime to collapse, and China, obviously, was not and is not ready for that: refugees, political and economic chaos, a mess for China to clean up the dimensions and character of which are hard to predict, the possibility of dragging down China's economy and most importantly, the way the fall of the Kim regime would inevitably reshuffle the Northeast Asian geopolitical order. China's government, facing millions of episodes of social unrest and trying hard to maintain its economic miracle, doesn't want the kind of surprise that a collapsed North Korean regime would bring. Moreover, as Suzanne points out, China's decision makers have never felt comfortable with or relaxed their vigilance of America's presence in the region, which also means that the Chinese government has never and will not unreservedly follow any American-led move on this issue.

What is changing now is that Chinese are getting more and more fed up with North Korea; its unilateral withdrawal from the Six Party Talks in 2005, a mere 20-minutes heads-up to China about its nuclear test in 2006, and this week's threat to nullify the armistice that ended the Korean War are all irritants to the China-D.P.R.K. relationship. China's leaders may respond to its increasingly tense relationship with its neighbor by doing things like supporting the sanctions introduced at the UN this week, but they won't do anything big before thinking through this question of whether North Korea is a strategic asset for China or a liability.

Winston Lord:

I would hope Orville's upbeat interpretation proves sound, but we can all agree it is too early to tell. Xi Jinping may well wish to send a positive signal but this by itself is hardly grounds for much optimism. As has been pointed out, China has supported sanctions before. This time, as always, it dragged its feet -- maybe until South Korea was no longer UN Security Council chair -- and diluted the product. Let us hope that this time, unlike before, it does not undercut the implementation.

Beijing clearly is increasingly frustrated with its neighbor and, as has been pointed out, is hurting many of its own interests with its shielding and supporting of Pyongyang. But its concerns for "stability" and fear of reunification are likely to trump any real change in its policy. It continues to call for calm from all sides when clearly the North is causing all the trouble.

In short we will have to see much more solid proof of Xi's overall intentions. And on North Korea itself I fear that Lucy is still holding the football .

John Delury:

It would seem that senior Chinese Foreign Ministry official Cui Tiankai, likely to be the next ambassador to the U.S., read Orville's post overnight, and responded with comments on the sidelines of the CPPCC to make it clear the Beijing is not interested in using sanctions on North Korea as a means to improve Sino-U.S. relations. "it's very inaccurate to say China and the United States have reached a deal on imposing sanctions on North Korea," quoth Cui.

Presumably the draft (ie, leaked) UN Security Council resolution will still be approved as planned, but already Beijing seems to be signaling this is not the start of some grand cooperation with Washington to "teach Pyongyang a lesson." And that's a good thing, since draconian sanctions on the D.P.R.K. would not be a promising area for Xi Jinping and Obama to get their cooperative training wheels on -- for the simple reason that sanctions don't work on North Korea. The country has been sanctioned since it came into existence, but it's still there, acting as it sees fit rather than as others want it to. The last five years have seen considerable effort to increase sanctions and reduce economic cooperation (particularly by South Korea), and to what effect? Kim Jong Un has an even better nuclear and missile program than his father. So let's hope this is not what Xi and Obama pick for their first low hanging fruit of cooperation. More promising over the long run (though no easier in the near term), is for Beijing, Washington, and Seoul to coordinate the resumption of direct dialogue and phased economic engagement (lifting sanctions to incentivize licit economic development and peaceful foreign relations, rather than add sanctions to cut off the flow of yachts to the D.P.R.K.). Secretary Kerry seems to get that diplomacy and negotiation is the wiser course. That would be the place to look for U.S.-China cooperation...though it will be a hard slog with visible success coming more toward the end than the beginning of the process.

Schell:

Very telling post from John Delury. Indeed, it does seem as if Cui Tiankai were responding to my suggestion that Beijing might have been signaling the U.S. that it was now seeking to find some new area of collaboration with it via the issue of nuclear proliferation in the D.P.R.K. I found it very telling that he came right out to unabashedly disabuse anyone who might be led to naively presume that Beijing's apparent willingness to sign onto the new Security Council sanctions agreement was a hint of a new willingness to approach bi-lateral relations with the U.S. somewhat differently. At least for the moment, it would seem that no larger signal was intended. And, that's a pity, because the two countries urgently need to find such a reset button. (Of course, whether such sanctions against the D.P.R.K. are actually effective--as Delury seriously questions--is an entirely different question).

Washington Court Sets $2 Million Bail For Chinese Student Charged With Vehicular Homicide, So His Mom Writes A Cashier’s Check ()

By Anthony Tao March 7, 2013



Yichun Xu, 19, was charged with vehicular homicide in Des Moines, Iowa Washington on November 10 for speeding through a stop sign and crashing into a car full of people, one of whom later died from her injuries. Xu was driving four female passengers and reportedly going up to 70 miles per hour in a residential neighborhood. As reported, Xu was visiting the US for eight weeks to attend Puget Sound Community College. He drove a 2008 Mercedes C300 he had purchased four days earlier despite not having a valid driver’s license or prior driving experience in the US (as he told police). Investigators also found empty beer bottles in his car from a party he and his friends attended the night before.

Xu pleaded not guilty on December 6 and was ordered to be held at King County jail on a $2 million bail. “The bail was set at a high amount due to fears that Xu would flee to China if released,” reports Sina.

On Friday, Xu’s mother wrote a cashier’s check.

Ian Goodhew of the King County Prosecuting Office Attorney’s Office said it was rare for that much money to be posted.

Via SCMP, netizens who heard this news were outraged. “Many were concerned that the court might not get Xu Yichun back to the US if he returns to China. There is no extradition treaty between the US and China.” It’s unclear whether they feel a little better knowing the court confiscated Xu’s passport.

A microblogger, called “Pretending in New York” and describing himself as living in the US, shared a report by on Sina Weibo, a Chinese Twitter-style site, on Tuesday morning. The report revealed more details about Xu Yichun’s background from the Hong Kong-based Sing Tao Daily.

The report by a Sing Tao Daily reporter in San Francisco said Xu Yichun was from a rich family. His father, Xu Zhaohong, was the chief executive of , a prominent mainland tax and accounting firm.

“[Some of] the second generation of China’s rich families are trouble makers in other countries,” said “Pretending in New York” – which attracted a lot of praise from Chinese netizens.

This post and many related ones were deleted. (Perhaps because Sina fears they are simply rumors? more likely, because they don’t need netizens getting angry during the Two Sessions.)

The victim in that crash was 25-year-old Brenda Gomez, pictured above, whose family is represented by David Nold. According to the above-linked Kiro TV story:

“His attorneys tell me, and I take them at their word, that he wants to stay and face these charges and do the right thing. I’ve never met the parents, so I can’t speak as to their motives, or what they’re going to do next,” said Nold.

Nold said it’s frustrating to Gomez’s family not knowing Xu’s intentions or what it would do to his family to lose $2 million in bail money if he fled.

“It’s unfathomable to them how someone could walk into jail and pay $2 million, a sum of money that is quantifiable (but) a lot, and then perhaps be gone,” Nold said.

It would take some serious maneuvering for Xu to flee the country — even though, as it’s been shown time and again, money can buy a lot.

(H/T Alicia) Ed’s note, 2:12 pm: We’ve changed the headline so there’s no confusion about which Des Moines this happened in (Washington, not Iowa).

Unpacking the Propaganda Legacy of China’s Lionized Communist Hero, Lei Feng ()

March 6, 2013 | by Matt Sheehan



March 5 of this year marked the fiftieth anniversary of Chairman Mao’s invocation for all Chinese to “learn from comrade Lei Feng.” During this week the image, the story and ultimately the legend of Lei Feng, China’s most propagandized soldier, permeates all corners of official Chinese society. Over the last half-century the event has slowly morphed from a celebration of obedience to the Party into a catch-all celebration of community service and selflessness.

The Communist Party’s propaganda networks have made that transition as seamless as possible. Lei Feng’s legacy was first crystallized in a diary attributed to him and published after his death.Fifty years down the road, it’s that diary that has turned this model soldier into another one of the Communist Party’s awkward historical artifacts: something too useful to cast off entirely, but too embarrassing to embrace in its original form.

The man ostensibly at the center of this week’s publicity frenzy has long been held up as the ideal soldier, citizen and Party member. Orphaned in a family hounded to death by greedy landlords, the boy born Lei Zhengxing was supposedly eight years old when the Communist Party took power in 1949.

Ten years after watching the People’s Liberation Army sweep its way to victory, the young man changed his name to Lei Feng and prepared to enlist in that army. Standing just over 5 feet tall and weighing around 120 pounds, Lei Feng wouldn’t be an obvious candidate for modern China’s great martial hero. Declared physically unfit for duty, Lei Feng was only admitted on the basis of some experience with engineering and his outstandingly “correct” political thinking.

Between 1959 and 1962, Lei Feng would happily toil away in an army unit based near the northeastern city of Shenyang. During this time he threw himself fully into all duties and filled every waking minute of free time with study of Mao Zedong thought and the completion of selfless deeds. In a diary entry dated October 13, 1961, Lei Feng wrote of the joy in secretly doing favors for others.

Today was really great. Comrade X came back by bus and he was asking around everywhere for who washed his long johns and a pair of stinky old socks, but nobody said a word. So who was it that washed them? Only I know, but I didn’t say anything. I feel like doing this is my responsibility.

When not busy delivering his meager supply of apples to the sick or collecting children’s feces for fertilizer, Lei Feng threw himself into study of Chairman Mao’s teachings. In a diary entry dated the first of January 1961, the young soldier wrote:

Since studying Mao Zedong’s works my heart has brightened, my ideology and worldview have become more cheerful and lofty, and my energy for work grows by the day. Because of my constant elevation of political consciousness, I’ve finally been able to gain some small accomplishments in my work and studies.

As early as the 1970s, however, Western commentators had already established a convincing case that Lei Feng the legend was the invention of Party propagandists. The over-documentation of the supposedly anonymous soldier was suspicious, and the obvious staging of photographs from his life was doubly so. These days, even semi-official Chinese accounts of Lei Feng admit in passing that the diary he allegedly left behind is probably not authentic.

Lei Feng’s alleged death on August 12, 1962, and some embellishment from the political apparatus, made the 21-year-old a posthumous national hero. On March 5, 1963, Chairman Mao’s command to study comrade Lei Feng marked the beginning of a tradition that sees its fiftieth anniversary on Tuesday. To this day, the shaky factual foundations of the holiday haven’t stopped Chinese institutions from celebrating it with gusto.

Each spring, schools, companies and government organs are ordered to put together photogenic volunteer activities, with red banners exalting the volunteers who showcase the “Lei Feng spirit” by picking up trash, visiting the elderly or checking people’s blood pressure. Meanwhile, Chinese elementary schoolers recite and newspapers reprint some of Lei Feng’s signature catch-phrases. Most famous among these is his explanation of why he chooses to serve the people.

Human life is limited, but serving the people is limitless. I want to take limited human life and turn it into limitless service to the people.

The absolute sacrifice of the individual in favor of an infallible Party and Chairman takes on almost religious dimensions throughout the diary. It’s a posture that may have elicited praise at the time, but in 2013 it’s enough to make the Party blush. When admitted into the ranks of the People’s Liberation Army, Lei Feng wrote down a list of solemn vows he made regarding his life as a soldier.

Listen to the Party. Obey orders, follow commands. Wherever the Party points, I will rush there.

That sentence alone serves as reminder that the People’s Liberation Army is not China’s army; it’s the Chinese Communist Party’s army.

Nowadays, many Chinese people shrug off the annual Lei Feng propaganda blitz, and that’s an attitude that likely suits the Party just fine. By secularizing Learn from Lei Feng Day, turning it into a celebration of volunteering rather than obedience, the Party has managed to remain where it feels most comfortable: out of the picture but firmly in control. Over the past fifty years the Party has moved from revolution to rule, and its own concept of a model citizen has shifted in turn. Whereas the days of Lei Feng demanded fanatical worship of its revolution, today the Party would gladly take forgetful acceptance of its rule.

Censorship Alert! Academic Study Shows Sina Weibo’s Human Censors Are Pretty Darn Fast ()

Mar 7, 2013

by C. Custer



If you wanted to learn more about Sina Weibo’s censorship patterns, today is your lucky day. A group of computer scientists from Bowdoin College, Rice College, and the University of New Mexico have, along with an independent researcher, released the results of an academic study of Sina Weibo’s censorship practices. The study, which we came across via MIT Technology Review, used “architecture [that could] detect post deletions within one minute of the deletion event,” giving the researchers perhaps the most precise look yet into how quickly Sina’s content team takes down sensitive Weibo posts. The results? Sina is pretty darn fast:

We found that deletions happen most heavily in the first hour after a post has been submitted. Focusing on original posts, not reposts/retweets, we observed that nearly 30% of the total deletion events occur within 5-30 minutes. Nearly 90% of the deletions happen within the first 24 hours.

So Sina’s censors are pretty fast. But what, exactly, are they deleting? Researchers used a variety of analytical tools to look at what content was most quickly deleted, and found that:

The topics where mass removal happens the fastest are those that combine events that are hot topics in Weibo as a whole (e.g., the Beijing rainstorms or a sex scandal) with themes common to sensitive posts (e.g., Beijing, government, China, and policeman).

Researchers also found that, unsurprisingly, users with more total deleted posts tended to get their posts deleted more quickly than other users, suggesting that Sina’s content team was watching their accounts more carefully. The following chart from the study shows the downward trend in post lifetime as a user’s number of total deleted posts increases:

(See Chart)

Of course, it’s not all humans doing the deleting. In fact, by the study’s estimations, for an all-human team to censor Weibo, 4,200 team members would be required, assuming each team member could read at the blazing rate of 50 posts per minute. The study points out that as a result of that, weibo’s censorship system has become an incredibly complex system, employing both human and software censors, employing multiple blocked keyword lists that trigger different censorship responses, search filtration systems, and more. (Of course, none of that should come as much of a surprise to longtime weibo users, who have likely experienced many of the different types of censorship on Sina Weibo firsthand).

If you’re really interested in Weibo censorship, the full paper is worth a read, and although it’s a bit dry and quite technical in places, the good news is that it’s only ten pages long.

(via MIT Technology Review)

Miscellaneous

Newswire

China faces social, financial risks in urbanization push (Reuters)

BEIJING | Thu Mar 7, 2013



(Reuters) - China's urbanization drive could fuel social unrest over land disputes and pose financial risks if money is thrown around recklessly, a senior communist party official and a leading economist said on Thursday.

Shifting people from the countryside to cities is a policy priority for China's new leaders as they seek to sustain economic growth that last year slowed to a 13-year low of 7.8 percent. The government hopes 60 percent of China's population of almost 1.4 billion will be urban residents by 2020.

The urban population jumped to above 700 million from less than 200 million in the previous three decades, but that explosion has triggered sometimes violent clashes over expropriation of farmland for development as well as water shortages, pollution and other problems.

"These are severe challenges as we are trying to sustain the urbanization process," said Chen Xiwen, head of the Office of Central Rural Work Leading Group, the top body which guides China's farm policy. "Many people have worries and such worries are understandable," he told a news conference on the sidelines of China's annual parliament session.

The government must protect farmers from losing their land in the process as local governments have been relying heavily on land sales to finance local investment, Chen said. "If the urbanization process becomes a process of depriving and harming farmers' interests, it cannot be sustained and society cannot maintain stability."

SPENDING BINGE

Li Yining, an influential economist at Peking University, warned that China's banks could be dragged into another spending binge that could spark a financial crisis.

"When we talk about urbanization, it seems the whole country is going into mass action to spend heavily ... this could trigger a financial crisis," he told the news conference.

China plans to issue guidelines on urbanization in the first half of this year, the head of the National Development and Reform Commission, the main economic planning agency, said on Wednesday. The commission sees the urbanization rate rising to 53.37 percent this year from 52.57 percent in 2012.

Chinese leaders have pledged to steadily reform the rigid household registration, or hukou, system that could help turn millions of rural workers from savers into consumers.

The hukou system has split China's population along urban-rural lines, preventing millions of Chinese who are registered as rural residents from settling in cities and enjoying basic urban welfare and services.

(Reporting by Kevin Yao; Editing by Ian Geoghegan)

Chinese Super League switches gear to nurture home-grown talent (AFP)

Super League is eager to put graft scandal as well as Drogba failure behind it with investment in existing and emerging stars

Friday, 08 March, 2013



Despite the echoes of a huge corruption scandal and Didier Drogba's short-lived stay, a sense of cautious optimism pervades long-suffering mainland football as the new season starts this week.

Following last year's failed experiments with Drogba and Nicolas Anelka, blockbuster signings have given way to the more sustainable model of focusing on existing stars and emerging talent.

And pundits say the Chinese Super League (CSL), which gets under way today, looks set finally to make its mark on the international stage and end China's 23-year wait for a continental title.

Ivory Coast international Drogba and former France striker Anelka raised hopes that the cash-rich mainland game was about to hit the big time when they arrived last season. However, both left Shanghai Shenhua in January.

Last year's hype reached its apex when David Beckham was seriously tipped for the CSL. Beckham will appear this year - but only as a paid "ambassador" for the league, a move which received a mixed reaction from fans.

Beckham will appear this year - but only as a paid "ambassador" for the league, a move which received a mixed reaction from fans

Domestic sides have been noticeably more cautious in the transfer market in the run-up to this season, quietly building their teams around established top names or young Chinese talent.

Many believe the conservative approach, coupled with a renewed attempt to draw a line under the wide-ranging match-fixing probe, whose final punishments were handed out last month, is reason for optimism.

"While Drogba and Anelka leaving is bad, there are many reasons to be positive about the new season," Yan Qiang, vice-president of Titan Media, one of China's leading sports publishers, said. "It is important not to forget that Shanghai Shenhua are just one club in China."

Shenhua will start the season on minus six points, and stripped of their 2003 league title, as punishment for their part in the match-rigging affair, which left 33 players banned and senior officials in jail.

"I have told them that our goal is to avoid relegation. We have to fight each game as a fateful match because we don't have any leeway," said Zhu Jun, Shenhua's colourful owner.

Deep-pocketed Guangzhou Evergrande, managed by World Cup-winning coach Marcello Lippi and staffed by a bevy of foreign stars, will aim to cement their reputation as one of Asia's top sides with their third straight Chinese title.

Last season's double-winners already look in impressive form after they swept aside Urawa Red Diamonds 3-0 in their first AFC Champions League game last week.

Brazilian forward Muriqui and Paraguayan striker Lucas Barrios had star roles against the J-League side, with Guangzhou hotly tipped to become China's first Asian champions since Liaoning in 1990.

Jiangsu Sainty, also in the Champions League, have based their success on home-grown talent, and Serbian coach Dragan Okuka is developing the club's youth strategy as he attempts to build on last year's second place.

Third-placed Beijing Guoan signed former Dalian Aerbin coach Aleksandar Stanojevic hoping that he can get the best out of underperforming former Premier League striker Freddie Kanoute and Ecuadorian Joffre Guerron.

In contrast with last season's headline-grabbing deals, Dalian Aerbin made the most high-profile signing in the mainland top tier, with the addition of French international striker Guillaume Hoarau, 29, from Paris Saint- Germain.

Shenhua, after last year's experiences with Drogba and Anelka, have opted for a different strategy entirely by signing the likes of 40-year-old defender Rolando Schiavi and fellow Argentine Patricio Toranzo, who plays in midfield.

Print

Pollution is one reason Guangzhou people’s lungs are turning black, warns expert (South China Morning Post)

Thursday, 07 March, 2013

Peony Lui



In Guangzhou, people’s lungs are turning black as early as their 40s, top Chinese lung expert Zhong Nanshan says.

Zhong, a delegate of the National People’s Congress and faculty of the Chinese Academy of Sciences, cited research data to prove that PM2.5 fine air particulates pose the greatest health risks and can lead to lung cancer, according to a report by China Youth Network.

“Particulate matter (PM2.5) can be carriers for sulphur dioxide and even viruses. When they enter the lungs they will always stay there,” Zhong said on Wednesday.

He stressed that particulates have been proven harmful to human respiratory, cardiovascular, endocrine, and nervous systems.

Zhong said lung cancer cases in Beijing had increased by 60 per cent in the past decade. “This is a very alarming figure,” he said.

On combating China’s haze pollution, Zhong believed the most important thing was to change the mindset. “Let’s get this straight - is gross domestic product [GDP} more important - or our people’s health?”

He suggested the central government include pollution control in the evaluation of officials' performance.

“Achievements used to be measured in GDP. We can start from a few of the most severely polluted cities and include haze reduction as part of the evaluation criteria.”

Zhong also said it was technically possible to combat air pollution. “It took the British government 30 years to do so back then. I believe that if we are determined enough, China’s pollution problem can be solved in 10 years.”

Zhong distinguished himself as a Sars expert during the outbreak in 2003. He played a leading role in Sars prevention and control in Guangdong Province.

He is also a leading anti-smoking campaigner in China. Before the Spring Festival, Zhong sent a letter to the Chinese Academy of Engineering asking it to cancel the academician title issued to Xie Jianping, known in China as “tobacco academician” for his reserch in tar reduction in cigaretees. However, he did not receive any direct official response.

He recently protested against a CPPCC National Committee member’s claim that China needs to accelerate the development of a “green” ecological tobacco industry. Zhong dismissed the suggestion, explaining it ignored the dangers of smoking.

Zhong’s discussion on PM2.5 got on the radar of most national media, as well as China’s Sina Weibo. The blog post was re-tweeted over 1500 times, and more than 440 netizens joined the discussion on China’s haze pollution.

Most applaud Zhong’s honest, open attitude, while expressing concern about the health dangers. One wrote: “These are truly heartfelt words. Please re-tweet to support Professor Zhong and urge the introduction of new environmental protection laws. We must do something to protect our lungs!”

Another said: “The tragedy is that we are all aware of pollution, but unable to resist. Good luck to our future health - especially the health of our outdoor workers.”

A third asked: “Is there any way to ‘clean out’ our lungs?”

A fourth said: “My lungs probably have already turned black. It doesn’t matter - I’m old. But what about my child?”

A fifth wrote: “Beautiful China, it’s time to stop the engine and walk slow.”

Online

Introspection in China Following Murder of Two-Month-Old Infant (THE WSJ CHINA REAL TIME REPORT BLOG)

March 8, 2013



Does the land of traditional family values and coddled Little Emperors take the lives of children too lightly?

That’s the question ricocheting around the Chinese Internet this week as the country struggles to come to terms with the death of a two-month-old infant police say was killed after being discovered in the back of a stolen car.

“It was only because the child was an inconvenience. [The car thief] didn’t feel hostile towards this child’s life, he just disregarded it, like it was some common object. Isn’t this a portrait of the entirety of Chinese society?” wrote one user of Sina Corp.’s Weibo microblogging service in a widely reposted comment. “Induced labor, contaminated milk, collapsing bridges…life here is worth less than a goose feather.”

The missing boy’s body was found on Wednesday after 48-year-old Zhou Xijun confessed to police the day before that he had strangled the child and buried the body in the snow, according to the official Xinhua news agency. Mr. Zhou told police that had found the child in the back of an SUV he had stolen on Monday in Changchun, capital of northeast China’s Jilin province, and that he abandoned the car in a nearby city after killing the child.

The child’s father, Xu Jialin, said he had parked the vehicle in front of a grocery store he owned and ran in to turn on a stove, leaving his child in the back seat with the engine running, according to Xinhua. He said we he came out minutes later, the car and his son were gone. News of theft spread quickly on social media sites as local police launched a city-wide manhunt.

The child’s death has prompted outpourings of grief both online and in Changchun, where thousands gathered for a candlelight vigil on Tuesday night. It has also sparked a fervent debate about whether the murder was an act of individual evil or a reflection of something sinister in Chinese society.

Among those arguing the latter on Wednesday was Yuan Yulai, a well-known and outspoken lawyer, who argued that brutal enforcement of family-planning policies had conditioned Chinese people to devalue life. “Please take a look at the bloody banners below,” he wrote on Sina Weibo, attaching photos of a number of crude one-child policy banners and slogans. “All you have to do is think about an outrageous policy that would lead local governments to abort a seven-month-old fetus, and suddenly it becomes clear the inevitability of this case. This society has already forgotten respect for life.”

The post was forwarded tens of thousands of times, but not everyone agreed with it. Even some who proclaimed themselves strongly opposed to the way China has enforced its family planning policy questioned the connection.

“Personally I am strongly against this kind of thing, but you can’t link it to the Changchun case,” wrote one anonymous microblogger. “There are also many people showing their love for this child and expressing their respect and affection for life. Please let’s not exploit the poor child any more.”

The debate seemed poised to continue on Thursday after a series of photos appeared online showing city administrative officers in the southern city of Guangzhou violently arresting a woman in front of her crying two-year-old daughter. The woman in question was an unlicensed peddler who began verbally abusing the administrative officers after asked her to leave the area, according the party-controlled Nanfang Daily.

“No matter how evil someone is to you, no matter how strongly the law is on your side, you shouldn’t treat a mother like that in front of her child,” wrote one Sina Weibo user. “This is basic humanity.”

Similar rounds of soul-searching have gripped China in the past, most notably in 2011, when a two-year-old girl in the southern city of Foshan was struck by two cars and left lying in the road as more than a dozen pedestrians walked by. The toddler, Yueyue, died a few days later, leaving the country to wonder how so many people could ignore a small child in mortal danger.

“The world still hasn’t recovered from the Little Yueyue incident, and then comes this stolen car strangulation,” wrote one distressed microblogger. “ Who’s going to save our souls?”

-- Josh Chin, with contributions from Yang Jie

In China, Water You Wouldn’t Dare Swim In, Let Alone Drink (Time World Blog)

By Gu Yongqiang / Beijing

March 06, 2013



Jin Zengmin was in a betting mood. Last month, the eyeglass entrepreneur from eastern China’s Zhejiang province announced that he would offer a $32,000 reward to the chief of the local environmental protection department if he dared to swim in a nearby river for a mere 20 minutes. Jin’s wager, which was announced on Sina Weibo, a Twitter-like social media service in China, turned viral on the Internet. The environmental cadre, unsurprisingly, declined to swim in the polluted water.

After more than three decades of economic prosperity, China faces serious environmental challenges that are sure to be discussed during the National People’s Congress, the annual conclave currently underway in Beijing. Air pollution blankets hundreds of cities and the soil in vast parts of the country is contaminated. Thousands of rivers, too, have been ruined by China’s rapid urbanization and industrialization, such as the waterway in Jin’s hometown, Rui’an, a small city near Shanghai that is home to more than 100 shoe factories. “When I was a child, people swam or washed vegetables in the river,” Jin told TIME. “But those factories use chemical raw materials to make shoes and dump their industrial waste directly into the river.”

In photographs posted by Jin on Sina Weibo, the river surface is covered by floating rubbish. What lies beneath could be even more dangerous. The smell, Jin alleges, is putrid. On Dec 8, Jin’s sister died of lung cancer at the age of 35. He blames water pollution for her death. “When my sister received medical treatment in big cancer hospitals in Shanghai,” Jin says, “we found that many patients there are from my hometown. They have various cancers, and what is astonishing is that most of the cancer patients are in their 30s to 50s. They are still young. I realized these cancers may have something to do with the water pollution in our hometown.”

After Jin’s sister died, he called the local environmental protection department and asked them to check for water contamination in the river. Jin says he was told by officials that the river was fouled by some household garbage but that the water still met national quality standards. Outraged, Jin took his bet online. Soon, a local newspaper conducted a crude experiment to test the river’s toxicity: they placed a live fish into water fetched from the river. Two hours later, the fish died. “I made my bet because I’m confident the water in the river is poisonous,” Jin says.

In January, air pollution was one of the hottest topics on Weibo, one of the few public places where Chinese can express their grievances. Faced with citizen outrage, the Beijing government unveiled anti-pollution measures to try to combat the record smog. February turned into water pollution month. After Jin’s wager became an Internet sensation, Deng Fei, a Chinese environmental activist, encouraged Weibo users to post pictures of polluted rivers in their hometowns. Thousands of people responded with photographs of fetid local waterways.

Local environmentalists say that China has enough money and technological prowess to clean up its rivers. The missing ingredient for an environmental campaign? Official motivation. Local governments depend on polluting factories to buoy local economies; local bureaucrats know their promotions are contingent on keeping growth rates high. Still, Chinese citizens are no longer sated simply by economic advancement and have taken to Weibo to express their dissatisfaction. “The appeals made by Jin Zengmin and other Weibo users forces people to face up to water pollution and have attracted more people to join the anti-pollution campaign,” says Ma Jun, a water expert and founder of the Institute of Public and Environmental Affairs. “[Internet activism] can prevent local governments from standing in line with the heavy polluters.”

Meanwhile, the price ofChina’s economic success continues to soar. Most of the country’s groundwater is tainted. Smog envelops the eastern seaboard. Soil pollution is pandemic,although just how bad it is few know because the exact figure has been deemed a “state secret.” Environmental whistle-blowers have been beaten and jailed. Many of the protests that have proliferated nationwide in recent years are related to environmental issues. Last June, hundreds of angry villagers from Deyang city in western China’s Sichuan province held a protest march after their crops were destroyed by what they said was industrial waste. The villagers were so angry that they occupied the local government office and clashed with the police.

On Dec 31, a broken pipe at a chemical factory in central China’s Shanxi province caused a leak of 38.7 tons of aniline, which is used to make industrial chemicals and is toxic to human beings. The aniline spilled into a river that serves as a source of drinking water for more than 1 million people in north China. Yet the local government hid information about the chemical leak for five days. Public outrage ensued, just as it has across the country after countless other environmental nightmares. Asks Jin: “If we Chinese die of cancer caused by pollution, what’s the meaning of economic growth for us?”

Lei Feng Movie Debuts in Nanjing, Zero Tickets Sold ()

by Peter Barefoot on Thursday, March 7, 2013



From Sina Weibo:

@财经网: Lei Feng Themed Movie Released in Nanjing, Four Showings Without A Single Ticket Sold: Yesterday [March 5] was “Learn from Lei Feng Day”, and a biographical movie named Young Lei Feng giving an account of Lei Feng’s life from when he graduated elementary school to the day he sacrificed his life debuted in Nanjing, resulting with an embarrassing “zero box office” situation where not a single person bought a ticket. An employee of the movie theater said, “We too are very surprised. Normally, a movie, no matter what it is, will still manage to sell at least some tickets.” (Yangtse Evening Post)

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Young Leifeng Trailer:

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Comments from Sina Weibo:

yourswang巨蟹座:

Nanjing, well done!

林一Demos:

A bunch of assholes wasting tax-payers’ money.

helloshenzhen:

Better an ugly truth than a false beauty [success].

寂寞台灯:

Surprising? Couldn’t be more normal. Who would spend money watching this kind of SB movie?

宇烈王:

Embarrassing, Lei Feng was my childhood idol.

南辕北辙001:

It is also a record-breaking box-office result! So rare, have you applied for a Guinness World Record?!

一岩su:

I’d rather die than to watch Lei Feng or Jiao Yulu movies. I’d rather die than to watch Anti-Japanese War serials.

七月天2010:

Super positive energy! I’m going to watch it!

律妹妹:

A small thing, [but I] feel China can still be saved!

浮云上一灰机:

Why spend money to go watch a false idol’s so-called deeds?

写不出字的小地蛋:

They can force middle school and elementary school students to go watch it, and then write about their impressions.

郁延:

Yesterday, Changchun’s news reported that some volunteers organized to go watch it! And those volunteers were college students. I changed the channel right away!

爱吃鱼的郑嘉沐:

Lei Feng is just a spokesman of a certain Party. His story is one primary school students can write from memory, so would anyone really want to buy a movie ticket to watch him wash the socks and fold the blankets for his teammates?

官员财产何时公开:

You all learn from He Shen, but you ask the common people to learn from Lei Feng! Suggest the government organize the officials, official second generations, rich second generations, real estate tycoons, NPC and CPPCC members to go watch it.

Spring佘迎春:

Can’t blame us, the plot distorts humanity, is disconnected with reality, and contains no entertainment value. If it were not for fulfilling a task [being required to go watch the movie], I reckon no one would spend 80 RMB for Lei Feng.

尘咏踪:

A brainwashing blockbuster…

尘语尘风:

Some people die, but they never really lived…

黑黑老:

Organize wu mao to go watch it, and those who don’t will have 5 mao [0.5 RMB] deducted.

super眞:

Because everybody knows, [a movie] that uses Lei Feng’s name is definitely going to suck!

马骝zcl:

There’s nothing to be surprised about. When China makes a movie like this, it’ll definitely going to be one that sings praises of the Party, without any meaning/substance at all. Look at those Americans’ Lincoln and how different it is.

北极熊归来2011:

Xinwen Liaobo and this Lei Feng movie, which one’s better to watch?

甜1雨:

I think the goal of “Learn from Lei Feng” is to encourage people to do good things! The original intention is good! Educational material that’s aimed towards good/positive notions should be respected! We can combine it with reality and absorb good ideas/ideology. This society is in dire need of positive things, even if it’s brain-washing, as long as it [teaches people to] think of others instead of hurting them.

狐狸-_-未成精:

Reminds me of those photos of Lei Feng posing on my textbooks as a child, a pile of stuff about learning this idea and that represents that I simply could never figure out, simply a waste of my youth. Not until now do I understand why Hong Kong people resist these things. I just want to say: FUCK the spirits, FUCK the ideology, FUCK the represents, damn it, fuck off!!!

哈哈小记:

Since it’s propagating Lei Feng spirit, why not show it for free? Who would spend money to learn to do good things?

是丫非:

Comrade Lei Feng reminds me of the story of the little North Korean girl who drowned protecting a portrait of Kim Jong-il…

The Funniest China Map You'll See in Awhile ()

1 MAR 7 2013



Translating Chinese province names into English produces some unexpected humor.

One of the pleasures of studying the Chinese language is realizing that a huge number of words actually consist of combinations of smaller words. For example, the word for camera, zhaoxiangji, literally translates as something like "mutual flash machine". Which, if you think about it, makes sense but...yeah. Never mind.

Along these lines, this nifty map (of unknown origin, but pulled from the Shanghaiist Facebook feed) shows China with the names of its provinces (and nearby countries) translated literally into English. Most of them are kind of meh, but a few amusing ones stick out:

Liaoning Province is called, quite ominously for a province bordering North Korea, "distant peace".

North Korea itself is referred to as "Morning Calm", which, given the country's recent behavior, doesn't seem to fit at all

Far-western, bone-dry Qinghai Province translates into "Blue Sea", which would be fine except that it's thousands of miles from the coast.

Guizhou, one of China's poorest provinces, is nonetheless referred to as "Expensive State".

Then there's Russia which, oddly, translates to "Land of Rowers", conjuring up an image of a fur coat wearing crew team spiriting down the Volga.

Though it isn't on this map, it's often remarked that the Chinese word for the United States, meiguo, translates to "beautiful country". Alas, this has less to do with an appreciation of the American landscape than the fact that meiguo sounds vaguely similar to America. All this goes to show how little the literal meanings of place names even matter. For example, what does the name "Hong Kong" evoke? For me, it's tall buildings, finance, British customs, kung fu movies, and great dim sum. Fragrant harbor? Not quite. But that's exactly what Hong Kong means.

Shanghai vs. Beijing, in One Image ()

1 MAR 7 2013



My wife and I have spent the past several nights at a hotel in Beijing, and we've just arrived at one in Shanghai. Both of the hotels are very nice and welcoming, and on check-in each of them provided a special notice about communication problems guests might encounter during their stay. Here are the notices side-by-side. You probably can't read the tiny print, but there is an explanation below.

On the right, the notice in Shanghai: Because of sunspot and sun flare activity from late February through mid March, TV reception will be spotty during predictable brief intervals. For instance, today the interference was predicted between 12:25 and 12:39 China time.

On the left, the notice in Beijing: Because of the "twin meetings" of China's main political bodies this week and next, Internet service will be slow or blocked altogether, online web and video may not be available, and "international TV stations will also be restricted in all public areas during this time."

Two pieces of paper, two of the mentalities and forces at work in this moment's China. One of them is open, except as constrained by forces of the cosmos. The other is defensive and reflexively closed-down. I won't go on and spell out the implications, but this juxtaposition was too neat to resist.

On the general subject of closed-mindedness, I got this answer from a technical-virtuoso reader who is very closely involved in how the Chinese "Great Firewall" works:

Encrypted traffic, especially [a certain protocol] is being focused on. China operates like one big LAN as best they can muster. If they outright block all encrypted traffic they go off the grid and no one is willing to do business there. Their choice? Randomly detect and disrupt encrypted traffic that has a high probability of being non-business traffic. If I were them, I would also be "white-listing" corporate data streams.

So, China is like a company with an IT director bent on stopping anything but official corporate business from being conducted on their network. That's the way to think of it.... China is doing nothing to [foreign] servers directly, but is disrupting the protocols they all use.

Thousands of users can connect to VPNs with no issue in China, so it definitely varies regionally and by ISP.

It's fun to be back in Shanghai. And if you're at the M on the Bund Shanghai Literary Festival tomorrow (Friday), please be sure to see Deborah Fallows at noon. I'll be there on Sunday.

How to Win in China: Reflecting on the Life of one of China’s Most Vivacious Expats ()

March 7, 2013 | by Eli Bildner



My favorite video of Henry Winter shows him strolling down the streets of Shanghai’s central business district wearing a wool poncho, a red-plumed cowboy hat, white wrap-around sunglasses, and knee-high leather boots.

It’s an outfit that would probably pass as unspectacular in Greenwich Village or in San Francisco. But in Shanghai, a tall white man promenading in a Zorro costume draws stares. Two girls in matching track suits (China’s take on the school uniform) point at Henry and giggle. The camera pans to show two men on electric bikes jolting to a stop as Henry walks by. They’re wearing black coats and shaded glasses, their faces as austere as the chalky Shanghai sky.

I first saw the video in late 2010, and forgot about it soon after. But when I heard of Henry’s death this past summer — at age 43, from a cerebral hemorrhage — I found the clip once more. The video is from a now-discontinued CCTV show called Wealth Story Forum. It tells the story of Henry’s life, touching on his schooling at Columbia and Wharton, work stints in France and Hong Kong, a stretch as a kung fu student in China, and, finally, his emergence as a Shanghai-based tech entrepreneur with an outré fashion sense.

But it’s the first part of the video — of Henry parading around in his Zorro outfit — that sticks with me. Part of what shocked me about Henry’s death was how lightly broadcasted it was. The only obituary I’d found of him was a seven-line piece appearing in the Lansing State Journal, a small daily in southern Michigan. That and a handful of posts on Chinese social networks: These were the only public tributes to a person that I’d considered an embodiment — and an inimitable one at that — of “making it” in China.

But in the months since Henry’s passing, I’ve thought less about the record of memorials and panegyrics, and more about the specific images that kick off the video clip. Those thirty seconds of Henry in full Zorro raiment constitute a scene of pure joy. It’s a scene that needs no context or commentary, a scene that is perfectly content to be where it is.

Which is, perhaps, Henry’s greatest lesson.

***

I first encountered Henry Winter through a “Business Mandarin” course I took while living in southwest China. Our class had spent most of the semester working through the canon of Chinese business case studies — KFC, Starbucks, China and the WTO. But with our workbook complete and a couple of sessions to go, our instructor rolled out a television set and popped in a pirated DVD: the third season of a reality TV show called Ying Zai Zhongguo, or Win in China.

I’ve had friends describe Win in China as a Sinocized version of The Apprentice (which I’ve never seen), and based on their explanation it does seem like a reasonable analogue. But unlike The Apprentice, in which participants contend for a job placement, the contestants on Win in China are all entrepreneurs vying for ten million RMB (US$1.5 million dollars) of venture capital. Over the course of a season, an initial cohort of thousands of contestants is winnowed down to 108 semifinalists, who then undergo a series of business simulations, debates, and nerve-wracking interrogations as they compete for the final prize.

Win in China ran for three years, from 2006 to 2008, and Henry Winter appeared as a contestant during the show’s third and final season. In the show, each semifinalist has two minutes to pitch his or her business to a panel of judges comprised of some of China’s most prominent entrepreneurs. By chance, the first clip we watched was of Henry’s presentation.

Later, I’d watch clips of some of the other pitches. And while the contestants vary widely in age and background — from American-born engineers to hardscrabble high-school dropouts — their presentations are largely similar: solemn, earnest, full of technical explanations of revenue models and competitive advantages. Each contestant on the stage — save Henry — wears a somber black suit.

Henry, on the other hand, gives his pitch attired in a flashy pink changshan robe. Speaking in flawless Mandarin, Henry cracks jokes, gesticulates frenetically, and manages to insert his company’s (rather long) domain name three times. When his two minutes expire, the audience erupts in applause. “It’s like we’re at a rock concert!” the show’s amused host ad-libs.

Henry’s performance on the rest of that episode is just as spectacular. In a question-and-answer session following Henry’s pitch, one of the panel’s three judges, a software billionaire named Shi Zhuyu, asks Henry whether he is just a “floral piece” for his company. At first, Henry looks confused, and the show’s host — thinking that perhaps Henry had become lost in the rapid-fire Mandarin — interjects to clarify:

“Are you just one of those good-looking but useless CEOs?” she asks.

“I got it the first time,” Henry replies with a grin. “I was just waiting for him to ask a bit more tactfully.”

A moment later, another judge asks Henry whether he works overtime.

“There’s no glory in working overtime,” Henry responds. “I believe in doing quality work in the shortest time possible.”

“But does your CTO work overtime?” the judge presses. “If he works overtime, and you don’t, don’t you feel bad?”

“I got over those guilt feelings a long time ago,” Henry retorts.

The three judges continue to cross-examine Henry; Henry continues to unload his quiver of one-liners and ripostes. At one point, the host asks Henry to demonstrate his hobby of disco dancing, a request to which Henry gleefully accedes. At the episode’s end, Henry is declared the winner of the day’s pitches; given a final minute to make a speech, Henry kneels on the stage and proposes on-camera to his girlfriend.

Admittedly, I’m the type of person who’s moved to tears by most Disney movies and even some poignant car commercials. But even taking into account that low emotional threshold, watching Henry on Win in China transfixed me in a way that — since moving to China — few things had.

As a college senior, I’d decided to move to China after graduation. Or — perhaps more accurately — I’d ventured the idea of moving to China and allowed everyone I encountered that year to validate my hypothesis.

“I’m moving to China,” I’d tell anyone who asked — friends, parents, parents’ friends.

“How wonderful,” I’d invariably hear in return. “China is the future.” For a year I felt, as perhaps every college senior since the late ‘60s has felt, an uncomfortable affinity with Dustin Hoffman’s diving suit-clad character from The Graduate.

But my decision to move to China had less practical roots as well. As graduation neared, I’d realized that I’d spent my entire education attempting to discover the truth of “the good life.” Now, with senior year nearly at its end, I felt no closer to answering that question — and clueless as to how to make any life decision in the absence of that certainty. College had become my fortress, a vehicle for deferring any consideration of my place in what my classmates and I termed “the real world.”

The only way I could conceive of breaking out of this fortress was to go somewhere. I’d always believed in the alignment of mental and physical itineraries. Perhaps it was an intuition that stemmed from my Judaism, from the story of Abraham, whose path to holiness begins in the Book of Genesis with a simple command: Lech l’cha — “Go!” Perhaps it was a belief that I’d gleaned from my favorite Kafka parable: “When the sage says ‘Go over,’ he does not mean that we should cross over to some actual place…he means some fabulous yonder…something that he too cannot designate more precisely, and therefore cannot help us in the very least.”

In a sense, I’d spent four years reading about “going over.” Moving beyond college required — almost literally — a leap of faith. I’d studied Mandarin in school, spent a summer in Beijing, and had a couple of contacts at Chinese universities. That was all I needed. It was decided: I’d “go over” — to China.

***

Perhaps unsurprisingly, when I actually arrived in China in the late summer of 2010, both my practical and metaphysical rationales for moving there seemed hopelessly misconceived.

For one, while China may have been (and may still be) “the future,” it remained unclear to me what, exactly, my role in that “future” should be. Nominally, I’d come to China on a research grant, aiming to study microfinance and rural development. In practice, I ended up spending day after day in Mandarin classes, wondering why I’d come to China at all.

And, frankly, by the fall of 2010 even China’s status as “the future” seemed precarious. I’d last been in China in 2008, as a summer language student in Beijing. That summer, the reality of China’s rise felt palpable; anyone could perceive it in the ubiquitous construction, the packed streets, the endless Olympic banners proclaiming One world, one dream! This is the zeitgeist captured in Win in China, which filmed its final episodes in the months leading up to the Beijing Olympics. With its soaring orchestral theme music, its frequent panoramic shots of Beijing’s swelling skyline, its lofty tagline (“Inspiration illuminates human life, entrepreneurship can change destiny!”) — Win in China plays like a constant reminder of the magnitude of China’s epochal ascent.

The reality in 2010 seemed more complicated. Within weeks of my arrival, the entire country was rocked by anti-Japanese protests stemming from the capture of a Chinese fishing boat in the disputed Diaoyu Islands. A month later, netizens cried foul after the son of a provincial official ran over a 20-year-old university student and then shouted, while speeding away, “Sue me if you dare! My father is Li Gang!” Even the nation’s economic indicators seemed to warn of a less blithe future. In November 2010, China’s consumer price index hit a two-year high of 5.1%. Exports had slowed — a casualty of the global recession — and financial analysts within China and abroad warned of an impending real estate bubble.

Since arriving in China, I’d felt bogged down by these statistics, felt defeated by the sense that I’d “gone over” and ended up in the wrong place. But, for some reason, watching Henry Winter — successful, uninhibited, ebullient — on Win in China lifted me from this despair. I didn’t know what “winning in China” would mean for me, but I believed again in its possibility.

***

In January 2012, after a year and a half of living in China, I decided to return to the States. I’d left my language studies in southwest China at the start of 2011, and quickly worked my way through three jobs and three cities. Shanghai was a fitting last stop — sprawling, glitzy, Starbucks cafés everywhere. I felt halfway home to New York without even leaving.

I made my decision a day before the arrival of chunjie, the Chinese New Year. This would be my second chunjie in China; a year earlier I’d spent the holiday with a close friend in his ancestral hometown of Sanming, a fourth-tier city of two-and-a-half million people in western Fujian province. In Sanming, I’d reveled in the vibrancy of the New Year experience: the drum roll of firecrackers that began at dawn; the cluster of uncles and aunts and cousins crowding the dining room table; my friend’s diminutive grandmother (who’d worked repairing power lines during the Great Leap Forward) force-feeding piece after piece of chicken into my friend’s mouth; the fusillade of midnight fireworks spurting color into the dark night.

My plans for a second chunjie in China involved stockpiling a week’s worth of noodles, Vitamin Water, and Kindle books and waiting out the holiday from my 14th-floor apartment in downtown Shanghai. On New Year’s Eve, I sat in my living room drinking tea and watching fireworks explode into shards five feet from my apartment. In the morning, I saw that the blasts had left smoke rings on all the windows.

The official New Year holiday lasts seven days; during that time I left my apartment maybe four or five times. I didn’t really have anywhere to go. Though I’d decided to leave China only a few days before, for months I’d felt myself slowly pull away — I worked late, cancelled dinner dates, dreamt of home.

It was after one of my rare ventures out of the apartment that I saw Henry Winter. I’d just returned from an aimless evening walk around the neighborhood, and I was standing in the foyer of the apartment building, waiting for the elevator. The doors opened, and there he was, clad in a crisp white suit and a matching fedora.

Since moving to Shanghai a few months earlier, I’d run into Henry a handful of times. We’d first met at a demo day for tech start-ups; I’d been working for a small investment firm and had come to take in a few of the presentations. I’d had a hunch that Henry might be there; I knew from his LinkedIn profile that he still lived in Shanghai and that he was active in the start-up world. And, sure enough, just as the pitches began I spotted Henry across the room.

Later, I asked Henry if he’d sit down with me for coffee and, while arranging to meet, we realized that we lived in the same apartment building, separated by just three floors. When we did meet for coffee, I was amazed to discover how similar Henry felt in person to the character I’d come to know on Win in China. Henry’s life trajectory, it was clear, had taken shape out of the same cheerful iconoclasm I’d witnessed on the TV show.

In person, for instance, Henry told me of how when he first began work as a consultant in Hong Kong, he discovered that he could complete his daily tasks within the first few hours of the day. And so, after a few days of goofing around in the office, Henry realized that by strategically positioning his suit jacket on the back of a desk chair, he could furtively slip away from work to spend his afternoons sailing, hiking, and horseback riding.

Henry also told me how he’d grown sick of management consulting, and decided to strike out as an entrepreneur. He told me how he’d moved to Shanghai to launch a marketing agency, and how he’d ended up creating China’s first text-message promotional campaign. He told me about how he’d decided to audition for Win in China — how he’d shown up at the casting call wearing a red blazer, red pants, and a giant blue Superman buckle.

All these details confirmed for me what I’d already suspected from a few hours of watching him on TV — that Henry was a worthy seamark for success in China. And they confirmed for me that by Henry’s standard, my own time in China had been a failure. I’d followed my intuition. I’d left home, “gone over”, opened myself up to the world. But I’d never arrived.

Henry paused as he exited the elevator. I wished him a happy new year. He reiterated an earlier invitation to join him for dinner sometime. And then he was off, strolling into the charcoal night.

***

At the end of our coffee date in Shanghai — the only time that Henry and I actually sat down together — Henry handed me a thin book called Made it in China. The book compiled the experiences of a handful of China-based foreign entrepreneurs, and Henry had authored one of the chapters. Taking out a pen, Henry added a short inscription on the page before his chapter: “To Eli,” Henry wrote, “with best wishes for true success.” Reading his inscription at the time, I didn’t feel much — or if I felt anything at all, it was perhaps even a slight disappointment at the generic nature of the tidings.

It wasn’t until after Henry’s death that I returned to Made it in China, and actually read through Henry’s chapter. And while the facts of Henry’s story, as recounted in the book, fit perfectly with what I’d already learned, the framing of the chapter felt entirely foreign.

Henry’s contribution to Made it in China is titled “Resilience and Persistence.” His essay is less a chronicle of a series of successes, and more a record of a succession of setbacks — of failed projects, lost sales, barely averted bankruptcies. Even Henry’s appearance on Win in China, I was reminded, was hardly an unvarnished success: Despite making it into the final round of the show, Henry ended up placing 12th, six slots away from the prize money.

Of course, by almost any measure, Henry did achieve real success in China: He built profitable companies, garnered awards, lived comfortably. But what I hadn’t grasped earlier was that I admired Henry not so much for how successful he’d been in China, but for how successful he’d been in being himself — unconventional, uninhibited, playful, alive.

I’d overlooked that critical modifier that Henry had added in his inscription to me, that Henry had wished me not “success” but “true success.” And that for Henry, “true success” had little to do with winning or “making it in China” — had little to do with succeeding by “going over” — and everything to do with succeeding by being exactly where he was.

Although Henry is gone, I feel fortunate in knowing that he left his particular prescription for the good life in our hands, in the short biography that accompanies his chapter in Made it in China:

After a grueling day of telling other people what to do, Henry enjoys recovering with a glass of red wine and a foot massage, while watching Star Trek in his home theater. He is a firm believer in enjoying each day, and pursuing passions now rather than later. After all, if aliens blow up the Earth tonight, what was the point of sacrificing everything for tomorrow?

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