Today’s China Readings June 7, 2012

China could use a rising stock market. The economic costs are relatively small compared to some of the other government-induced distortions, the stock market can be manipulated, and the millions of Chinese retail investors, many middle-class urbanites, could use the psychological fillip a growing portfolio can bring.

In China Seeks to Restore Stock Investors’ Vanished Trust Bloomberg writes that the government may be trying to do just that:

“The message from recent government announcements with respect to the equity market is loud and clear,” Jiong Shao and Jing Yang, analysts at Macquarie Securities Ltd., wrote in a May 10 report. “The government wants the A-share market to be up.”

The securities regulator is also encouraging companies to increase dividend payouts to lure more investors in a nation where dividend yields, or the amount of cash companies return to shareholders as a percentage of stock prices, are the lowest among the world’s 10 biggest equity markets.

China is in the midst of a cheap smartphone boom. Baidu, Qihoo, Alibaba, ShandaNetease and Haier have all announced Android-based phones priced at around $200 USD or less. They seem to be following Xiaomi (小米模式泛滥 盛大也玩千元机), Lei Jun’s smartphone startup that has raised hundreds of millions of dollars, including in a not yet announced round, and has already sold several million cheap smartphones.

The Chinese government supports the growth of this market, and as a condition for approving Google’s purchase of Motorola the government required that Google keep Android free for at least the next five years. The Economic Observer writes that one of the reasons companies are jumping into this market may be the promise of government subsidies, as the government is pushing for the development of an indigenous Mobile OS (互联网大佬集体做手机意在政府补贴?, English summary here.)

Apple has done well in China but it risks missing out on a huge segment of China’s mobile population unless they launch a cheaper model here. Perhaps this–Apple’s iPhone 3GS expected to live on for under $300 in developing markets–will be one of Apple’s answers to growing its addressable market in China.

The companies may not make a profit, but consumers will benefit.

The government though may be in for a real headache. First, the current mobile networks will be challenged by the increased data demands as tens of millions more Chinese go online with 3G. The network loads will be massive. But an even bigger concern for Beijing, and the related mobile service providers, is the likely exponential growth in the censorship load. Some filtering can be done with software, but as we have seen with Weibo much still has to be done with humans. I am no cyber-utopian, but the proliferation of cheap, 3G smartphones throughout China, and not just 1st and 2nd tier cities, could have profound implications for the political system.

China’s annual college entrance examination, known as the Gaokao 高考, starts today. China Daily writes that fewer students will sit for the national exam. This year “9.15 million students will sit for the national exam..with an expected average admission rate of 75 percent.”

The stakes are high and so is the temptation to cheat. China Daily also reports that in a recent crackdown ”Chinese police have busted more than 100 criminal gangs suspected of selling contents of major state-level exams and equipment used in cheating in these exams.”

The Wall Street Journal says that China’s Tough College Exam Isn’t Everything as according to a new survey ”only 9% of mainland companies polled consider educational background their top hiring criterion…The survey also found that what companies value most is practical, on-the-ground experience—such as internships—something that nearly 30% of respondents listed as their top priority when evaluating potential employees.”

The test is a culmination of years of stress, work, eye strain and tens or hundreds of thousands of RMB of prep fees. Good luck to the kids.

As Sinocism noted yesterday the Beijing Public Security Bureau released data indicating there are 3.8 million empty flats in Beijing. I asked how long it would take for them to try to walk back that claim, and it turns out it the answer is less than a day as noted in 北京警方:空置房概念基于电子地图 与房地产无关 and 北京空置房屋381.2万户”引热议 房产空置率有多高?. The Beijing PSB now says that their definition of “empty” is not really the same as a real estate developer or economic statistician’s definition of “empty”. They may be right. Regardless, China bears who may have prematurely celebrated the 3.8 million empty apartment figure are unlikely to retract their statements if proven to be incorrect.

Just because this will not occur again in our lifetimes, check out Nasa releases stunning new ultra-high definition footage of 2012 Venus transit.

And if you ever wondered what it was like to drive at speeds of up to 200 KM/H while trying to chase a white Lamborghini on a highway in Sichuan, this video is for you.

The best way to see this blog is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions are welcome, and feel free to forward to recommend to friends, as the more readers I have the better the content will become. And of course if you are feeling generous donations are always appreciated. Thanks for reading.

The best way to see this blog is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions are welcome, and feel free to forward to recommend to friends, as the more readers I have the better the content will become. And of course if you are feeling generous donations are always appreciated. Thanks for reading.

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