Today’s China Readings June 30, 2012

On Friday Bloomberg published a blockbuster story about the wealth of Xi Jinping’s extended family. This is the third “follow the money” story the Bloomberg team has written this year, after China Murder Suspect’s Sisters Ran $126 Million Empire about Gu Kailai’s family and Bo Xilai Clan Links Included Citigroup Hiring of Elder Son. In Xi Jinping Millionaire Relations Reveal Fortunes of Elite Bloomberg reports that:

As Xi climbed the Communist Party ranks, his extended family expanded their business interests to include minerals, real estate and mobile-phone equipment, according to public documents compiled by Bloomberg.

Those interests include investments in companies with total assets of $376 million; an 18 percent indirect stake in a rare- earths company with $1.73 billion in assets; and a $20.2 million holding in a publicly traded technology company. The figures don’t account for liabilities and thus don’t reflect the family’s net worth.

No assets were traced to Xi, who turns 59 this month; his wife Peng Liyuan, 49, a famous People’s Liberation Army singer; or their daughter, the documents show. There is no indication Xi intervened to advance his relatives’ business transactions, or of any wrongdoing by Xi or his extended family.

While the investments are obscured from public view by multiple holding companies, government restrictions on access to company documents and in some cases online censorship, they are identified in thousands of pages of regulatory filings.

Qi Qiaoqiao, the older sister linked in the article to many of the assets, has long had a reputation for greed. Bloomberg states explicitly that it found no evidence that Xi helped her or his other relatives in their dealings. It is possible that many people offer Qi and Xi’s other relatives opportunities in the hopes of currying favor with the “future first family”, even when no quid pro quo is promised or provided, just as people gave opportunities to Li Wangzhi, Bo Xilai’s first son, even though he had not spoken with his father in years. Regardless, this is yet another example of the abuse of power, or proximity to power, for money that has so many Chinese so cynical and dissatisfied with the government, and very few if any will believe that Xi is at least not aware of his extended family’s activities. Given Bloomberg’s strict reporting standards it is quite possible there are many more assets the reporters suspect belong to the family but did not include as they could not provide conclusive proof.

By sticking to public filings and verifiable facts Bloomberg avoids some of the traps of China political reporting that former Financial Times Beijing bureau chief Geoff Dyer warned about in a recent Foreign Policy piece. Bloomberg does not give us speculation or whispers about purported factional fighting or investigations, but when so much in China is really about the money it is good someone is trying to follow it. Is Bloomberg doing a better job at it than the US or Chinese governments?

Bloomberg contacted China’s Foreign Ministry for comment before publication, which likely explains why Bloomberg.com was blocked in China beginning Thursday. After publication two official Bloomberg Weibo accounts–@bloomberg彭博 and @彭博商业周刊中文版–disappeared from Sina Weibo, and as of this writing a search for “Bloomberg” on Baidu returns with the message “according to relevant law regulations and policy, part of the results cannot be displayed.” So far there are no reports of Bloomberg Professional access problems in China, which would be a very significant move given both the importance of Bloomberg machines to participation in global financial markets and the elite nature of terminal subscribers.

Bloomberg may have damaged its future business prospects in China but it is proving again that it may now be best news organization in the world. The billions of profits from the subscription business relieve Bloomberg News of many of the financial pressures stifling other media organizations, and in the US and Europe it has repeatedly demonstrated its willingness to report negative news and write unfavorable editorials about the banks and financial institutions that provide material amounts of Bloomberg’s revenue. China will harm its reputation in the global financial markets and damage its aspirations to make the Renminbi into a reserve currency if it disrupts access to the Bloomberg terminal network or forces Bloomberg to downsize its editorial presence in China. Blocking Bloomberg.com is an annoyance, but the real players rely on the subscription service.

ZeroHedge had a funny, and probably prescient, take on this story:

That a country will seek to block the internet when the wealth of its humble leaders is exposed is expected. However, what is unexpected is that the hidden assets of China’s president in waiting are rather easily discovered is troubling: it means Goldman has still much work to do in China, and much more advisory work to the country’s elite over how to best hide its assets in various non-extradition locations around the world under assorted HoldCos. Just like in the US. The good news, for GS shareholders, however, is that this indeed provides a huge new potential revenue stream.

Given how much appears to be in official PRC filings, was the recent move to restrict access to company filings only about limiting short-sellers’ access?

Who is next for the Bloomberg reporters, and when do they start collecting their prizes?

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still mostly blocked by the GFW. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions/donations are welcome, and feel free to forward/recommend to friends. Thanks for reading.

Today’s links:

  • 北京医改这六年:要改就改三甲|北京|医改|六年_21世纪网
    a look at 6 years of medical reform in Beijing
  • 重庆公安系统高层调整|重庆|公安系统|高层_21世纪网
    2 senior Chongqing police officials removed. 经2012年6月25日重庆市人民政府决定,免去王鹏飞的重庆市公安局渝北区分局局长、李阳的重庆市公安局刑事警察总队总队长的职务。
  • Tokyo governor’s panda naming proposal a “cheap farce”: FM spokesman – Xinhua | English.news.cn
    At least he has not starting smearing Panda poo on the flag. Not yet at least///China on Friday called Governor of Tokyo Shintaro Ishihara’s proposal to name a panda cub a “cheap farce.”…”Pandas are envoys of friendship,” Chinese Foreign Ministry spokesman Hong Lei said at a regular news briefing in response to a question on Ishihara’s proposal…Ishihara proposed Thursday that if a panda currently leased from China gives birth to a cub at a Tokyo zoo, it should be named after the so-called “Senkaku Islands” (China’s Diaoyu Islands)….”If a cub is born, it should be named ‘Sen Sen’ or ‘Kaku Kaku,’” Ishihara said, as quoted by media reports….”We will (eventually) return a panda cub (to China), right?” Ishihara said. “Our counterpart would at least be able to exercise sovereignty” over a panda with the name of the islands.
  • Popularize China-style Marxism, senior official urges – Xinhua | English.news.cn
    A senior Chinese official has called for more efforts in promoting contemporary Chinese Marxism, to enhance public faith in the country’s political theory amid growing social conflict.
    Li Changchun, a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee, made the remarks in a written instruction to a political theories seminar held on Friday.
  • Temple sued by daughter of monk |Hot Issues |chinadaily.com.cn
    Xin Yingheng, whose monastic name is Shi Yong-xiu, became a monk after his divorce in 1979 and was later elected abbot of Lingzhao Temple in Yuxi city, Yunnan province.
    In 2010, two young men killed him during a robbery. He was 63. After his death, it was discovered that he had more than 3 million yuan ($476,000) in his bank account.
    His daughter, Zhang Yiyun, 36, came forward to claim the funds as the monk’s only heir. But the temple declined her request, saying that monks’ possessions come from the temple and therefore should return to it.
  • Wealth products lose appeal amid falling inflation |Economy |chinadaily.com.cn
    Banks saw their wealth products become much more popular last year after the inflation rate began to outpace deposit interest rates by the greatest distance seen in three years. That trend is continuing this year.
    But the returns on such products are declining as the rate of inflation decreases and monetary policies are loosened, analysts and banking executives said.
  • 郭树清:不改善金融结构 中国经济将没有出路_财经频道_一财网
  • Report: New Loans to Hit New High in Q3; More Macro Easing on the Way-Caijing
    The report said macro easing will pick up momentum as the world’s second largest economy is going through a widely expected slowdown and inflation is under control..
    another “4-trillion” stimulus package is not likely, said Huang Wentao, chief macro-economic analyst with China Securities Co.
    The country’s public debt as a percentage of GDP has surpassed a safe minimum of 60% to reach 68% by the end of 2011 and China’s debt ratio is likely to hit as high as 85%, factoring in
    invisible debts including pension shortfall and bad loans in commercial banks, Huang explained, “there’s little room for fiscal policies.”
    He estimated GDP growth would go up at a steady pace to 7.9% in the fourth quarter after bottoming out in the second quarter at 7.8%.
  • Central Bank Governor: Continue with Prudent Monetary Policy-Caijing
    Chinese central bank governor Zhou Xiaochuan pledged on Friday to continue with “prudent” monetary policies, while asking financial sector to “better serve real economies”.
  • The Shale Gas Race – Caixin Online
    The shale gas revolution in the United States has led to some fervent debate in China: How can China also begin to develop shale gas? Can the United States really achieve energy self-sufficiency? If it can, what are the implications for China?
  • Program to Fix Nation’s Schools Leaves Many Untouched – Caixin Online
    National Audit Office finds 269 million square meters of school building slated for renovation or new construction still need attention
  • Chongqing Police Official Dismissed – Caixin Online
    The head of a district branch of the Chongqing Public Security Bureau has been removed from office, the municipality’s website said on June 28.
    The official was Wang Pengfei, chief of the Yubei District branch. He was dismissed on June 25.
    Separately, Chen Cungen, director of the municipal standing committee of the National People’s Congress (NPC), said a dismissal proposal had been approved at a meeting on June 26, the Chongqing Daily reported. The resignation of a deputy to the NPC was also accepted, he said. The identity of the deputy was not reported.
  • Rumor: Sina Microblog Gifts Celebrities with Premium Membership | Marbridge Consulting – China Internet News
    Renowned columnist and magazine publisher Hung Huang posted an update to her Sina (Nasdaq: SINA) Weibo microblog account today saying “How come I’ve got a crown next to my name all of a sudden?” Commenters replied that Hung “got membered” – i.e., was made a premium member of Weibo by Sina without her knowledge or payment for the service.
  • Rumor: Production Cost for Smartphones as Low as RMB 400 | Marbridge Consulting – China Wireless News
  • Father in One-Child Saga Resurfaces in Beijing – WSJ.com
    Deng Jiyuan slipped away from the city of Ankang in northwestern China’s Shaanxi province and arrived in the Chinese capital on Thursday morning after trying and failing to spirit his wife, Feng Jianmei, out of a local hospital the previous Friday.
    “I came to Beijing in search of help,” Mr. Deng told The Wall Street Journal after meeting with reporters Friday afternoon in the office of a Beijing-based lawyer who has been assisting the family.
  • 2012 London Olympics: The Age-Old Chinese Gymnastics Issue – WSJ.com
    Chinese officials last week unveiled a team bound for London with an average age of about 19.5—nearly four years older than the minimum of 16 required to compete at the Olympics.
  • Ancient Village Rises in Shanghai; The Shock of the Old – WSJ.com
    Johnson Chang’s art project is in a suburb called Jinze, but as I discovered after checking in at the Fairmont Peace Hotel—an icon of Shanghai’s 1930s decadence, where Charlie Chaplin kept a suite and Noël Coward wrote Private Lives—the name isn’t listed in any guidebook
  • Gazprom falls victim to China-Vietnam territorial dispute — RT
    Gazprom’s projects in the resource rich South China Sea have come under question after the Chinese oil Company CNOOC offered foreign companies licenses on the Vietnamese shelf already granted to Russia’s energy giant.
  • Google Tries Something Retro – Made in the U.S.A. – NYTimes.com
    Etched into the base of Google’s new wireless home media player that was introduced on Wednesday is its most intriguing feature. On the underside of the Nexus Q is a simple inscription: “Designed and Manufactured in the U.S.A.”..Since the 1990s, one American company after another, including Hewlett-Packard, Dell and Apple, has become a design and marketing shell, with production shifted to contract manufacturers in Shenzhen and elsewhere in China…Now that trend may be showing early signs of reversing.
  • In Hong Kong, Frustration After Return to Chinese Rule – NYTimes.com
    Public mistrust of the central government in Beijing is at its highest since the handover in 1997, while approval ratings for Leung Chun-ying, the incoming Hong Kong chief executive, have dropped sharply before his inauguration.
  • 胡锦涛检阅驻港部队_网易新闻
    pics of hu jintao inspecting the troops in hong kong
  • Chinese Industrial Companies’ Profits Drop for Second Month – Bloomberg
    Income dropped 5.3 percent from a year earlier to 390.9 billion yuan ($61 billion), the National Bureau of Statistics said on its website today. That compares with a 2.2 percent decline in April and 4.5 percent gain in March.
  • Jing Daily: No, The Sky Is Not Falling In China’s Art Market. Here’s Why
    , the growing importance of the Chinese market to major auction houses, and its massive presence on the world stage means it is important to turn a critical eye to areas that deserve a closer look. But to understand where the Chinese art market is now, and how it got there, takes more than a few Google searches. Lower auction volumes and less dazzling auction totals may simply reflect a maturation of the young market; now that collectors are hanging onto their artwork for longer (rather than flipping them, speculator-style), we can expect to see volumes lower and fluctuations occurring. But at the same time, as work by the blue-chip contemporary Chinese artists of the 1990s becomes harder to come by, coming years will see the emergence of newer artists whose sales will pick up the slack. Still, it’s difficult to argue that Chinese buyers have turned away from top-quality contemporary art when three paintings by blue-chip artist Zeng Fanzhi, formerly held in European collections, sold in Hong Kong to Chinese collectors earlier this month for a total of US$9.7 million, each surpassing high estimates
  • China Tries to Breathe Free | Asia Unbound
    The Chinese government now has at its disposal an informed and engaged public along with NGOs committed to a better environment. So instead of wasting time, Beijing should seize the moment, tap into the energy and concern of the Chinese people, and mobilize them around a real initiative to address the challenge at hand.
  • VietNamNet – China’s sovereign claims in East Sea groundless: int’l scholars | China’s sovereign claims in East Sea groundless: int’l scholars
    They emphasised this at a seminar entitled “The East Sea and Asia Pacific in Transition: Exploring Options for Managing Disputes” in Washington DC on June 28.
  • U.S., China Find Path on Iran – WSJ.com
    A steep drop-off in China’s crude-oil imports from Iran earlier this year, which companies involved blamed on a contract dispute, has provided a face-saving way for Beijing to appease the U.S. even as it officially maintains opposition to U.S. sanctions against Tehran, analysts said….The U.S. decision on Thursday to exempt China from penalties targeting financial institutions that do business with Iran’s energy sector came after data showing that China’s imports of crude from Iran over the first five months of 2012 were down almost 25% from a year earlier.
  • Cambridge Journals Online – Abstract – “To Get Rich Is Not Only Glorious”: Economic Reform and the New Entrepreneurial Party Secretaries
    This article examines the profound transformation market reforms have brought to the leadership of the Chinese Communist Party’s (CCP) rural grassroots organizations. Focusing on the political rise of private entrepreneurs and other economically successful individuals who recently obtained village Party secretary appointments in a north China county, the article explores their differing promotion channels, power bases, political resources and motivations to take up the CCP’s grassroots leadership position. It demonstrates that the variety among the new entrepreneurial Party secretaries – from large factory owners to de facto farm managers – shaped the network resource, factional affiliation and socio-political capital they rely upon to exercise their newly attained power. It also shows the crucial role played by community-based endogenous forces in transmitting the power of economic liberalization into dynamics for the reshuffling of the Communist Party leadership at the grassroots level.
  • Cambridge Journals Online – Abstract – Chasing Ghosts: Rumours and Representations of the Export of Chinese Convict Labour to Developing Countries
    i was at the blue frog on sanlitun a few weeks ago and the table next to me, with american accents so i assumed they were african americans, were discussing some kind of project in africa and one chimed in that it would be cheap because they would be using chinese prison labor//
    A recent addition to the global discourse of China’s interaction with developing countries has been the claim that the Chinese government exports prison labour to these countries. While no evidence is ever presented to support this claim, it has been widely circulated in international and local media, as well as on the internet. This article examines the origins of the rumour and the mechanisms of its transmission. It shows that while the rumour often originates at the grass roots in developing countries, it is promoted locally and globally by political, economic and media elites with distinct agendas that often involve building support for opposition parties, competition in obtaining contracts, or geo-strategic and ideological rivalry. We analyse the rumour’s circulation in light of the larger discourse on China and developing countries, and discuss why Chinese official responses to the claim have proved to be ineffective.
  • The Story That Got Bloomberg News Blocked In China | ZeroHedge
    That a country’s will seek to block the internet when the wealth of its humble leaders is exposed is expected. However, what is unexpected is that the hidden assets of China’s president in waiting are rather easily discovered is troubling: it means Goldman has still much work to do in China, and much more advisory work to the country’s elite over how to best hide its assets in various non-extradition locations around the world under assorted HoldCos. Just like in the US. The good news, for GS shareholders, however, is that this indeed provides a huge new potential revenue stream.
  • Second Thoughts on College in China Ahead of Gaokao Results – China Real Time Report – WSJ
    The hand-wringing is set to end on Saturday, the day the gaokao results are expected to be released. But even as next year’s crop of college freshmen draws closer to the moment of truth, the country’s social-media users are engaged in a spirited debate over whether it’s worth pursuing a higher education in China at all.
  • Yuan Has Worst Quarter Since Peg Ends as Europe Hurts Growth – Bloomberg
    The yuan weakened 0.88 percent this quarter to 6.3541 per dollar in Shanghai, according to the China Foreign Exchange Trade System.
  • Sell to China: ignore what shoppers say | beyondbrics
    The consultancy partnered with Kantar Worldpanel to do what they claim is an “innovative study of 40,000 Chinese consumers from 373 cities in 20 provinces”. The report promises to help brands figure out “what Chinese shoppers really do but will never tell you”….First of all: don’t listen to what shoppers say, watch what they do. According to Bain, consumers are doing the opposite of what marketers thought they were doing.
  • Video – A WSJ Documentary chronicles the fall of Bo Xilai, once a rising star of Chinese politics – WSJ.com
  • Han Han disillusioned over criticism from celebrity ‘assholes’|Culture|News|WantChinaTimes.com
    “Not every celebrity is an asshole, just most of them,” said one of China’s most popular writers & bloggers Han Han in an interview with New Express Daily, a newspaper based in Guangzhou.
  • Video: Shenzhou 9: China’s first female astronaut returns to Earth – Telegraph
  • yfrog Photo: pictures posted on weibo, said to be of hotan attempted hijacking
  • China says hijacking foiled in troubled Xinjiang | Reuters
    Passengers and air crew subdued six people who attempted to hijack a flight 10 minutes after it took off from the remote desert city of Hotan, a heavily ethnic Uighur area that has been hit by recent bouts of violence, Xinhua news agency said.
  • PPTV Tops Video Streaming in China With 34 Million Unique Daily Users?
  • Spec by Spec: China’s 5 Hottest Homegrown Smartphones
  • Three Chinese Smartphones Launched in One Day
    Things are getting pretty crowded in China’s cheap smartphone market. So crowded, in fact, that three domestic phones all launched yesterday, within hours of each other.
  • Xi Jinping Millionaire Relations Reveal Fortunes of Elite – Bloomberg
  • China Blogger Says Court Overturns His Conviction – ABC News
    criticized bo xilai
  • China’s Sina Looks to Rival Baidu with Closed Beta Web Forum Service
  • China may be lonely, but not isolated – Globaltimes.cn
    China has no intention of confronting the US’ power. None of the 21 nations participating in the exercise would like to see a confrontation between the two in the Pacific, and neither does the US…The exercise cannot solve the problems the US is now facing.
  • AP News | Ex-Sands exec alleges prostitution in Macau sites
    David Vitter solicited funds from Adelson?//
    The fired former chief executive of Las Vegas Sands Corp.’s Macau casinos alleges in court documents revealed Thursday that billionaire Sheldon Adelson personally approved of prostitution and knew of other improper activity at his company’s properties in the Chinese enclave.
  • In a Shift, Chinese Exporters Cling to Dollars – WSJ.com
    BEIJING—Many Chinese exporters are starting to hoard the dollars they earn, betting that the yuan is unlikely to appreciate much more, a shift in strategy that is having a ripple effect throughout the country’s financial system.
  • Documentary Captures Plight of China’s Fortune Tellers – China Digital Times (CDT)
    eijing director Xu Tong’s  second feature-length documentary Fortune Teller (Suan Ming, with English subtitles, available on Youku) details the story of a Buddhist handicapped man, Li Baicheng (pseudonym), and his deaf, mute, mentally disabled wife, Pearl Shi. The documentary won the Jury Prize at the Chinese Documentary Festival, was selected among the Best Ten documentaries at the China Independent Film Festival, and was an official selection for the International Film Festival Rotterdam 2011. The documentary shows that Li’s hard life stems from not only from his handicapped condition, but also the lack of government aid and his unsteady job as an independent fortune-teller in poor regions of Hebei province.
  • 刘锋:谈南海,一些中国媒体纰漏太多_评论_环球网
    摘要:谈南海问题,首先要厘清其内涵。南海问题的实质是南沙争端,即南沙群岛部分岛礁的主权争议和部分海域的管辖权争议。越南单方面挑起所谓的“西沙争议”,菲律宾觊觎黄岩岛并挑起冲突事件,是其蓄意将南海问题扩大化和复杂化。中国从来不认为西沙、中沙群岛存在所谓的争议。
  • India and China: Friend, enemy, rival, investor | The Economist
    India needs outside capital, and expertise in manufacturing and infrastructure. China must invest its surplus funds abroad, ideally not just in government bonds—as mostly happens in America—and ideally in countries that are not about to go belly up, as may happen in Europe. Chinese investment in India is an idea whose time has come, if only the two sides can conquer a legacy of mistrust.

The best way to read this blog is to subscribe by email, especially if you are in China, as Sinocism is still mostly blocked by the GFW. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions/donations are welcome, and feel free to forward/recommend to friends. Thanks for reading.

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  • http://www.postlinearity.com gregorylent

    china has a tradition of leaders being powerful … what better way to show one’s power than to have wealth …

    every shanghai person i have talked to about the bloomberg story says they already knew that, so what? ..

    i think there is too much sub-conscious moralizing inherent in the western mind … 

  • http://www.percy.in/ PercyAlpha

    “So far there are no reports of Bloomberg Professional access problems in China” If you know how gfw works, then you should realize when http://www.bloomberg.com/ was blocked, so was http://www.bloomberg.com/professional (or any sub-page). Here is the test link https://en.greatfire.org/www.bloomberg.com/professional

  • http://www.sinocism.com/ Bill Bishop

    that is the marketing page for the service. Bloomberg runs on a separate service