Archive for December 4th, 2012
The SEC dropped a bomb on Chinese accounting firms by charging China affiliates of big four accounting firms with violating U.S. securities laws by refusing to produce documents.
Accounting guru Paul Gillis, whose phone is no doubt ringing off the hook this morning, calls this the beginning of the end and says it may result in the delisting of US-listed Chinese firms:
I believe that this marks the beginning of the process to deregister Chinese accounting firms from the PCAOB and to ban them from practice before the SEC. Unless resolved, this will likely lead to the delisting of U.S. listed Chinese companies. Multinational companies in China may also face issues since PCAOB rules require an auditor playing a substantial role in the audit of an MNC be registered with the PCAOB. There are situations where the China Big Four are playing a substantial role in the audit of U.S. MNCs that have substantial operations in China. They may need to resolve this by dividing the work among several firms so that no single firm plays a substantial role.
Yes these accounting firms are stuck between Chinese and US laws, but access to US capital markets is a privilege not a right and either these firms and the companies they audit play by US rules, or they list elsewhere, especially given the scourge of recent Chinese frauds. How will the SEC approve any more IPOs of Chinese firms until this issue is resolved?
Alibaba, which has indicated it hopes to list overseas in the next year or so, just announced that so far in 2012 it has processed 1 Trillion RMB in sales across its websites:
Wal-Mart’s revenues totalled $444 billion last year, so the Alibaba websites—which unlike Wal-Mart do not sell goods directly but act as online marketplaces for millions of large and small merchants—still have some catching up to do.
Alibaba is also helping solve one of the key distortions in China’s economy, the lack of credit access for small businesses. As Caixin notes in Rivaling Banks, Alibaba Offers Click-On Credit:
The maverick is Alibaba Group, an e-commerce giant that started a small-loan business as a sideline in 2007 while cooperating with two large banks. It broke away in 2010 after securing a small loan operating license from the central bank and has been winning market share ever since.
The private conglomerate’s Aliloans loan division doesn’t publish financials. But a source said the firm loaned more than 26 billion yuan to more than 129,000 small and family-owned businesses through company-related website platforms between April 2010 and July 1…
Daily income from interest on these loans has reportedly risen to more than 1 million yuan – a level on par with earnings at a typical regional bank in China.
Because a dispute with Japan is not enough, tensions with Vietnam are rising, as Vietnam now accuses China in a new seas dispute (TUOITRENEWS, previous BBC link was from a 2011 incident):
The latest clash involving Chinese patrol boats occurred 120km (80 miles) off the south-central coast of Vietnam and some 600km south of China’s Hainan island.One of three Chinese patrol vessels on the scene intentionally cut a submerged cable towed by the ship, the Binh Minh 02, said Do Van Hau, deputy chief executive of state oil and gas group PetroVietnam, which was operating the ship.”Chinese vessels were at very high speed and did not respond to our ship’s warning and then cut the cables of the Binh Minh 02, about 2km from where it was positioned,” he said.
The seas around China look to become only more tense and dangerously crowded in 2013. India’s naval chief said Monday that the Indian navy is prepared to deploy to South China Sea to protect oil interests (Reuters).
There are 17 days until the Mayan calendar’s apocalypse, and if we get past that 2013 will turn out OK, right?
BUSINESS AND ECONOMY
Caveating and caveating China’s upturn | FT Alphaville - As Capital Economics’ Williams writes, the relatively poor performance of small and medium businesses indicates a return of the same old growth strategy seen in recent years
China’s Huaxia Bank says rogue employee sold troubled wealth product | Reuters The deposit products, issued by the Zhongding Wealth Investment Center, were sold by an employee at Huaxia’s Jiading branch, in a Shanghai suburb, Huaxia said in a statement late on Sunday.
华夏银行私卖投资产品员工被拘 银行称两月内解决-财经网 - Huaxia employee accused of improperly selling WMPs has been detained, Huaxia says they will resolve things within the next two months
Authorities Investigate on Huaxia Bank over Troubled Wealth Products-Caijing - Some 30 investors were demonstrating in Lujiazui, Shanghai, outside a Huaxia branch, chanting slogans like “Huaxia Bank, Repay Our Money” on Friday.
Chinese property market finds its fizz – FT.com It is a sharp turnround from the bleak predictions for a downturn or even a housing sector crash that have dominated the news until recently. Just two months ago, the World Bank warned that a “property market correction” was one of the biggest risks facing the Chinese economy. The implications of the Chinese property market confounding expectations by strengthening rather than weakening would be huge for both China and the world.
楼市成交再创新高 标杆房企目标提前完成——2012楼市暖冬中落幕? 新华社——经济参考网 - many large real estate developers have already hit their 2012 sales targets..winter coming to an end?
SOE Sets 2012 Record for Land Purchase-Caixin- A recent purchase by a state-owned enterprise (SOE) has set a record for the highest price paid for a parcel of land this year and serves as a reminder of SOEs’ continued involvement in the property market. A subsidiary of China Metallurgical Group Corp., paid 5.62 billion yuan on November 30 for a plot in downtown Nanjing, in the eastern province of Jiangsu.Although China Metallurgical is among the companies allowed to continue with their property business, Caixin found that many state companies and their subsidiaries required to leave the sector remained active in land purchases over the past two years.
房地产调控下一步_杂志频道_财新网 -Caixin on next steps for real estate controls
Real estate prices rise for sixth month – People’s Daily Online- Home prices in a majority of major cities increased for the sixth consecutive month in November amid rising market expectations. The China Index Academy, a property research body, reported on Monday the average price of new homes in 100 monitored cities increased 0.26 percent monthly in November to 8,791 yuan ($1,395) per square meter. A rise of 0.17 percent was recorded in October.
钢企10月扭亏为盈 亏损面缩至26.25%_财经频道_一财网 - profits for many steelmakers in October, first time in months..but only 307m RMB..so still deep in the woods// 记者昨天获得的中钢协内部统计数据显示，
收入分配改革方案有望12月出台 或仅为框架方案_网易新闻中心 - long awaited income distribution reform plan expected by year end, may just lay out principles..bad sign for reform, as this only happens if it his SOE interests// 核心提示：媒体称，
Chinese Cities Dominate Brookings Report – Business Insider - The Brookings Institute ‘s latest report, the Global MetroMonitor Report, tracks the economic growth of metro areas from 2011-2012 — and Chinese cities were clearly miles ahead of their counterparts in the West.
Chinese growth: Paulson’s 5 reforms | beyondbrics - Hank Paulson, who now heads the Paulson Institute, a think thank, gave a frank assessment of the world’s second-largest economy in a recent interview in Beijing. If China’s new leadership goes too slow on reform, it could create a “risk to stability”, he said… Paulson is particularly focused on at this final challenge – urbanization – and the Paulson Institute has been working with Chinese mayors to address the environmental challenges of China’s growing cities.
The Case of the Unchanging Unemployment Rate -Caixin-The urban unemployment rate announced by the government has remained at 4.1 percent from the start of 2010 to June 30. Even during the worst of the global financial crisis in 2009, the figure climbed to only 4.3 percent.
America Supplants China in Rank of Biggest Firms – Bloomberg U.S. corporations led by Apple (AAPL) Inc. and Exxon Mobil Corp. (XOM) make up 171 of the top 500 with a market capitalization of $10.6 trillion, or 40.3 percent of the total, compared with 159 valued at $8.24 trillion in 2009, data compiled by Bloomberg show. PetroChina Co. and Industrial & Commercial Bank of China Ltd. lead the 24 Chinese firms worth $1.74 trillion qualifying today, down from 34 with a capitalization of $2.19 trillion.
POLITICS AND LAW
Commentary: Right path will lead to national revival – Xinhua | English.news.cn- According to goals listed in Hu’s report, China will be a moderately prosperous society in all respects when the CPC celebrates its centenary anniversary, as well as a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious when the People’s Republic of China marks its centennial anniversary. Although these missions are arduous, we are fully confident that we are on the right path, equipped with theories and the system of socialism with Chinese characteristics.
李庄案另一面_杂志频道_财新网 - Caixin on the Li Zhuang case and the problems in Chongqing of rehabilitating the many hundreds who met injustice under Bo Xilai and Wang Lijun
New leaders move to right Bo’s wrongs in Chongqing | South China Morning Post Meanwhile, the Southern Weekend newspaper reported that police in Chongqing were quietly rehabilitating and making restitution to around 900 police officers in Chongqing who had been fired, demoted or otherwise unjustly treated. Li, the former attorney, said Wang wanted to make sure only officers he could trust remained in the force and so purged anyone suspect.
Time to come clean on family wealth | South China Morning Post interesting that wang xiangwei seems to be piling on to wen jiabao?//Premier Wen Jiabao has asserted his innocence over claims of hidden riches, but the speculation will continue until he clarifies the matter
Don’t pin reform hopes on Chinese leaders’ youthful idealism – 长平 谁是谁非 - Chang Ping says people who want a democratic China must not read too much into the youthful idealism of their authoritarian leaders, lest such false hopes make them lose their will to fight
Where is Liu Qibao? – China Media Project The same day, China’s official Xinhua News Agency reported that Liu Qibao would make official visits to North Korea, Laos and Vietnam from November 29 to December 2. But Hong Kong media reported on Friday that Liu had not made the trip as planned, and there was no official explanation from China about the sudden change.
China Tightens Reins on Macau – WSJ.com Police in Gambling Enclave, Mainland Detain Junket Operators; First Sign of a Corruption Crackdown
The Mistress-Industrial Complex – By Christina Larson | Foreign Policy - Li sees a connection between China’s modern concubine culture and its runaway graft: the “emperor psychology” of the unrestrained: “Absolute power corrupts absolutely. When officials have absolute power, they become bold to ignore the law and social norms and do everything they like.” This ultimately hurts the party: “It’s misleading to think that keeping a mistress is not a big problem — that it won’t affect the official’s main work, records, and achievements. Temptation brings temptation.”
CHINASCOPE – Xinhua Commentary Calls for Harsh Measures to Crack Down on Corruption - Xinhua published a commentary quoting statistics from the Central Disciplinary Committee that showed that 95 percent of problem officials have mistresses. The commentary stated, “We can’t simply rely on the (issue of) mistresses to crack down on corruption.” It called for harsher anti-corruption action and a disciplinary system that prevents Party officials from being misguided.
Shenzhen deputy mayor latest casaulty in anti-corruption efforts｜WantChinaTimes.com According to China News, a Chinese-language online news website, Liang is the fifth Guangdong official to be investigated by legal authorities within 40 days. Previously, Wei Jinfeng, an official in charge of financial affairs, was stripped of both his party and governmental titles. Lu Yingming, in charge of the province’s national resources, was investigated for disciplinary issues. Zheng Beiquan, a former vice mayor as well as Chen Hongping, party secretary, were also apprehended by the law for disciplinary issues.
党报吁网络反腐法治化 中国席卷“反腐风”_多维新闻网 - 而值此中国上下大掀“反腐风”之际，作为中共喉舌的《人民日报》
Top Ten Myths About China in 2012 : The New Yorker - Finally, China has a political leader who thinks like us…Xi moves with the bodily vocabulary that pleases American politicians: he watches sports; he kicks a ball when it is presented to him…Xi has the makings of a more complicated figure for a more complicated time, a nationalist with strategic and historical motivations to assert a more muscular Chinese position on the world stage
Tibetan leader holds hope China can learn from Canada – The Globe and Mail In an exclusive interview with The Globe and Mail, Lobsang Sangay, a Tibetan refugee and legal scholar, expressed cautious hope that the change of leadership in China next spring will start to reverse increasingly hardline policies toward Tibet. There is a “basis” for optimism, he says, even though China is going through a period of rising nationalism.
FOREIGN AND DEFENSE AFFAIRS
Chinese Company Admits U.S. Charges Over Nuclear Exports – Bloomberg - A Chinese company agreed to pay $2 million in fines after admitting it helped to export nuclear reactor paint from the U.S. to Pakistan without a license. China Nuclear Industry Huaxing Construction Co., which is operated by the Chinese government, pleaded guilty in federal court in Washington today to conspiring to defraud the U.S. and violating U.S. export laws.
‘Maternity Mansion’ Lures Pregnant Women From China – Yahoo! - The unassuming home at the top of the hill in an upscale Chino Hills, Calif., neighborhood has been operating as a “maternity mansion,” charging women from China high prices to give birth in the United States, essentially buying American citizenship for their babies, according to neighbors who want the operation shut down. An address found on AsiamChild.com, a Chinese language website advertising the American birthing experience to prospective mothers, matches with the Chino Hills residence. Packages on the site range from $5,000 to $15,000 and call the expenditure a “worthwhile investment” in order to have an American baby.
David Cameron banned ministers from speaking to Dalai Lama – Telegraph David Cameron banned all contact with the Dalai Lama during crunch talks with Chinese Government over Euro bailout package earlier this year, leaked documents show.
TECH AND MEDIA
电影票房谁做主_杂志频道_财新网 - a little solace for Hollywood to learn that movie theaters occasionally screw Chinese film producers as well?
China-Based TribePlay Raises $750,000 to Produce Monthly Dr. Panda Kids’ Games - China-based game development studio TribePlay has raised $750,000 from Dutch and Asian investors to ramp up production of its Dr. Panda educational children’s games. The company is aiming use the funds to produce one title per month in 2013.
Recruiting Young Talent in China to Find the Next Big Idea – NYTimes.com - Like a high-powered talent scout, Mr. Bell, the co-founder of Trilogy VC, tours China’s top universities, seeking fledgling entrepreneurs. Each year, he offers millions of dollars to young students, who often have just a kernel of an idea. It’s not just early-stage investments. It’s early-early stage.
WP to Become Leading Mobile OS in China in Next 3 Years-Caijing - Windows Phone, Microsoft’s mobile operating system (OS), is likely to become a leading operating system on mobile devices in China over the next two or three years given the fact that it has surpassed iPhone OS in market share only months after it was introduced in the country. Windows Phone has captured over 7% of the market share in China since it was officially launched in March, exceeding the iPhone which has a 6% share after being on the market for a much longer period of time, according to Microsoft’s COO in the Greater China Region Michael van der Bel.
Youku’s Now The King Of China Web Video: Can It Make Money? – Forbes Postmerger TV shows now average $80,000 per episode as more sites are teaming up on deals and sharing content. Youku is still feeling aftereffects, with content acquisition costs of $23 million in the second quarter, or 37% of revenue, up from 25% of revenue a year earlier. Its loss widened to $5 million, despite bandwidth costs down to 29% as a proportion of revenues, from 60% of revenue at the time of Youku’s IPO two years ago. Smarter caching of videos at distributed servers closer to viewers helps. Bandwidth in China can cost nearly four times average global rates, Dele Liu, Youku’s president, complained in 2011.
SOCIETY, ART, SPORTS, CULTURE AND HISTORY
Tianjin Car wash accused of using forced labor |Hot Issues |chinadaily.com.cn- Lu Shilun, one of the rescued workers, was a mentally disabled man who lost contact with his father in Shenyang, Liaoning province, on July 22. Lu had worked in the store since Aug 2, and said he was beaten many times by the supervisor, according to the Beijing News report.
人民网：“美国式过马路”还不如中国式_网易新闻中心 - 核心提示：人民网针对“中国式过马路”发表评论称，
China Policy Institute Blog » Decline of Primary Schools in Rural China: Causes and Consequences - “Half of rural primary schools have disappeared between 2000 and 2010 and such a trend is still an ongoing process”, says Twenty-first Century Education Research Institution [resource link here], a NGO based in Beijing. The rapid decline of primary schools in rural China draws our attention to the reasons behind the decline and its consequences for rural students.
Henan Officials Commit a Grave Error – China Digital Times (CDT) - in Zhukou city in Henan province, where local authorities are razing millions of graves to make way for farmland. Scholars, local residents and sympathisers nationwide all oppose the campaign, but despite reports last month that it had been abandoned, an official insisted that “we will not give up the plan just because there were some online debates.”
Chinese Architecture, Old and New – In Focus – The Atlantic - The blend of old and new Chinese architecture is ever-present in cities and villages, as older buildings are torn down and newer ones built at ever faster rates. The images below show glimpses of Chinese architecture, both traditional and modern, as it appears today. [51 photos]
Li Jin – Chinese Contemporary Art better half smart, collected a few when they were a few hundred dollars each
TODAY ART MUSEUM | Li Jin·Today·Banquet – Li Jin’s Solo Exhibition Curator:Michael Kahn-Ackermann Duration: 9 December, 2012 – 6 January, 2013
ENERGY, ENVIRONMENT AND HEALTH
疯狂大牧场_专题频道_财新网 - Caixin cover story this week on the environmental impact of large dairy farms
Xi’s wife Peng Liyuan supports HIV kids | South China Morning Post- A day after Communist Party general secretary Xi Jinping visited a community clinic treating HIV/Aids patients in Beijing, his wife, Peng Liyuan, held hands with children infected with the virus. Attending the launch of a short film designed to increase public awareness of HIV/Aids in Beijing on Saturday, Peng, who stars in the Ministry of Health production, walked onstage arm in arm with the children who were her co-stars. They contracted the virus from their parents.
A thousand miles in search of the finless porpoise | Danwei It is well-known that the Chinese river dolphin, also known as the Baiji, is functionally extinct, in other words: as good as gone forever. The freshwater finless porpoise (江豚), on the other hand, which like the Baiji also lives in China’s Yangtze river, is currently endangered and seems to be heading for the same fate. In November, a 40-day scientific expedition was launched to carry out a survey of finless porpoises in the Yangtze river, and a journalist from Star News (市场新报) from Anhui province was invited along to capture in prose the few moments when the finless porpoise was sighted in an environment that is gradually dispelling them to the verge of extinction
Microblogging and the world: Intweetable | The Economist But even if China is not alone in having leaders who eschew Twitter, there is something emblematic about it. In a new book, “The Rise of China vs. The Logic of Strategy”, Edward Luttwak, an American military strategist, warns that Chinese leaders are at risk of mismanaging the nation’s drive toward superpower status to the point of catastrophic effect. One of its key failings, according to Mr Luttwak, is a peculiar insularity among its top officials: what he calls “great-state autism”.
Amazon.com: The Rise of China vs. the Logic of Strategy: Edward N. Luttwak As the rest of the world worries about what a future might look like under Chinese supremacy, Edward Luttwak worries about China’s own future prospects. Applying the logic of strategy for which he is well known, Luttwak argues that the most populous nation on Earth—and its second largest economy—may be headed for a fall.