Today’s China Readings July 6, 2012

“承认硬着陆已至 Admitting that the hard landing is already here”–Wang Shuo, Managing Editor of Caixin Magazine, writing on his Sina Weibo immediately after the announcement that the People’s Bank of China Cut Benchmark Rates for Second Time in Month.

Clearly the global economy is slowing, perhaps precipitously, and China’s engineered slowdown has been exacerbated by global weakness and is now overshooting to the downside. There are signs of life in the property sector, as June existing home sales in Shanghai hit a 17-month high and June land transfer fees rose in 10 cities. The FT’s BeyondBrics considers if China property will muddle through and the Wall Street Journal looks at real estate developers’ debt in China Indomitable Developers – Passing the Debt Parcel. It is not clear if the recent pickup in the property market is a trend or a dead cat bounce.

Alibaba’s latest corruption scandal continues will the formal detention of the former head of group-buying Juhuasuan site for taking bribes. 21st Century Business Herald published a picture of Yan Limin, the detained executive. He certainly looks like he would enjoy a good bribe.

Over the last three weeks China has seen three large-scale riots for three different reasons. Migrant worker tensions erupted into a riot in Shaxi, Guangdong. Residents of Zuotan, Guangdong, protested over illegal land seizures by corrupt local officials. And citizens of Shifang, Sichuan took to the streets in an environmental protest. It is going to be a long summer.

Michael Anti recently gave a talk at TEDGlobal 2012 about censorship in China. As always Anti makes some very interesting points about censorship, and specifically the center-local relationship as it plays out on Sina Weibo.

If you want to see how easy it is for determined corporations to evade export controls, read Ars Technica’s How US software ended up powering Chinese assault helicopters.

Apologies for the brief commentary today and possibly over the next few days. Part of the reason I am back in DC this summer is to help my ageing mother and stepfather. I spent much of the day with my Mom at the emergency room after she took a fall (she is ok), interspersed with a trip to the memory-assisted living center to deliver diapers to my stepfather. Getting old sucks…

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:

  • Hit at home, China’s ghost fleet sails high seas | Reuters
    China’s huge fleet of coastal ships, usually confined to plying the Chinese seaboard, has sailed out of the shadows to seek international business in yet another sign that China’s economy is slowing.
  • 阿里首份反腐答卷:阎利珉被刑事拘留|阿里巴巴|首份|反腐_21世纪网
    more on the arrest of the alibaba executive for taking bribes
    阿里巴巴集团7月5日发布公告称,原聚划算总经理阎利珉因涉嫌非国家工作人员受贿罪被杭州警方刑事拘留,案件调查正在进行中。这是阿里巴巴集团就内部贪腐事件交出的首份答卷。
  • China Indomitable Developers – Passing the Debt Parcel – China Real Time Report – WSJ
    China’s property developers have shown themselves to be the great survivors of China’s economy. After two years of having sales squeezed from one end and their supply of credit squeezed from the other, the industry has so far managed to hold out against steep price cuts and significant consolidation…In large part that’s because developers have been able to tap non-traditional sources of finance – albeit at a much higher cost – even when Beijing thought it had turned off the tap. True to form, the sector has found itself new lenders of last resort to at least partially avoid the latest crunch, but assuming Beijing doesn’t relax housing restrictions before the most recent round of financing matures, this time developers might have trouble avoiding selling off their assets or pushing apartments out the door at whatever they can get.
  • Pentagon Digs In on Cyberwar Front – WSJ.com
    In June, the U.S. Air Force’s elite Weapons School—the Air Force version of the Navy’s famed “Top Gun” program—graduated its first class of six airmen trained to fight in cyberspace. The new course, at Nellis Air Force Base in Nevada, trains airmen working at computer terminals how to hunt down electronic intruders, defend networks and launch cyberattacks.
  • U.S. Files Trade Complaint Against China on Vehicles – NYTimes.com
    The United States filed a trade complaint against China on Thursday for new duties it imposed on American-made cars and trucks.
  • Land Transfer Fees Rise in 10 Cities – Caixin Online
    (Beijing) – The land transfer revenue of 10 major cities was 27.9 billion yuan in June, up 106 percent from May, but down 38 percent compared to the same month in 2011, a report by a real estate consulting firm in Shanghai says.
    The number of land transactions meant prices would go up in the third quarter and sales would grow for the first time this year in the second half, said Wu Xiaojun, a researcher at E-house China R&D Institute.
    Declining land transfer revenues will drive local governments to loosen housing curbs implemented by the central government in 2010, the report said. The number of land transactions would increase in the next six months, it predicted.
  • Shanghai Film Festival: History is never just history | The Economist
    Earlier this year Lu Chuan, a director, watched intrigued but concerned as Bo Xilai, a rising political star who was Communist Party secretary of Chongqing, was purged. Mr Lu knew such political upheaval might spell disaster for his new film, “The Last Supper”, due for release on July 5th. He was right to worry.
  • Hong Kong and China: A city apart | The Economist
    CHINA’S president, Hu Jintao, is a rare visitor to Hong Kong, and for all the pomp and ceremony surrounding his latest trip there on July 1st, he is doubtless relieved that he is not expected to return before he leaves office in a few months’ time. Tens, perhaps hundreds, of thousands of people took to the streets in Hong Kong’s, and China’s, biggest protest in years. They vented grievances not only against Hong Kong’s new leadership, which Mr Hu had just sworn in, but also against Beijing’s. Mr Hu’s successors will find Hong Kong’s disgruntled public an increasing challenge to the Communist Party’s troubled politics.
  • Fake degrees: A quick study | The Economist
    ALMOST 7m students are graduating from Chinese universities this summer, and there is plenty of pressure to turn newly minted qualifications into well-paid jobs. The competition is increased by the ease with which almost anyone in China can buy a fake degree.
  • How US software ended up powering Chinese assault helicopters | Ars Technica
    And no one is going to jail. Travesty
  • Apple Said to Pick AutoNavi to Offer IPhone Maps in China – Bloomberg
    Bought some autonavi shares today
  • 德阳副市长左正兼任什邡第一书记 李成金协助工作(图)_资讯频道_凤凰网
    Deyang vice mayor parachuted into shifang as first secretary. Wonder if disciplinary commission has started investigating shifang leadership ties to company behind that factory that caused the protests
  • 卫视冠军滑落:湖南卫视遭遇十年最大挑战|卫视|冠军|滑落_21世纪网
    核心提示:进入2012年以来,湖南卫视从全国卫视收视率的排行中跌落至第六位。“追逐者”江苏、浙江、天津卫视则一跃成为新的三甲。
  • Obama’s transportation secretary hails Chinese infrastructure | The Cable
    Echoing the laments of pundits like Thomas Friedman of the *New York Times*, U.S. Transportation Secretary *Ray LaHood* argued Saturday that China outpaces the United States in building major transportation infrastructure like high-speed rail because of its authoritarian system and because the Chinese don’t have the Republican Party holding up progress. ”The Chinese are more successful [in building infrastructure] because in their country, only three people make the decision. In our country, 3,000 people do,” LaHood said in a short interview with*The Cable* on the sidelines of the 2012 Aspen Ideas Festival on June 30. “In a country where only three people make the decision, they can decide where to put their rail line, get the money, and do it. We don’t do it that way in America.”
  • China Economic Watch | China’s Recent Financial Reforms: More than the Sum of the Parts?
    Although we have been critical of the pace of reform in China in recent years, it is important to acknowledge the flurry of reform activity that has taken place in the first half of this year. The Chinese and Western press have been chock-full of new financial initiatives pushed forward by policymakers. Most of these initiatives have been small tweaks rather than significant reforms. But the growing number of proposals and initiatives currently underway is a sign that pro-reform forces are pushing for change.
  • China Beige Book Shows Pickup Unseen in Official Data – Bloomberg
    China’s official statistics may be lagging behind independent data that show a pickup in the world’s second-biggest economy last quarter, according to a new private survey modeled on the U.S. Federal Reserve’s Beige Book.
    The China Beige Book, through interviews of about 2,000 company executives and bankers, found retail sales and manufacturing strengthened while property sales increased and shortages of unskilled labor failed to abate. CBB International LLC, the New York-based researcher that conducted the survey, provided a summary to Bloomberg News via e-mail yesterday.
  • Report warns China of rising sea levels – Xinhua | English.news.cn
    According to the 2011 report on China’s sea level, updated by the State Oceanic Administration (SOA) on Wednesday, the sea around China’s coast is expected to see a rise of 145 to 200 mm by 2050, affecting 87,000 square km of coastal lowlands….The administration said increased human activity in coastal regions, including the overuse of ground water and construction of high-rise buildings, has accelerated the rise.
  • World’s largest brown tide threatens east China shellfish – Xinhua | English.news.cn
  • Harmful chemicals found in fake diet capsules – Xinhua | English.news.cn
    Chemical substances that may cause severe side effects have been detected in eight counterfeit healthcare products, including weight-loss pills, the State Food and Drug Administration (SFDA) said Thursday.
  • Asia-Pacific vital for building new China-U.S. ties: Chinese Vice FM – Xinhua | English.news.cn
    China and the United States may begin their endeavor to build a new type of relationship between major countries in the Asia-Pacific region and “the success or failure of such endeavor really hinges on the region,” Chinese Vice Foreign Minister Cui Tiankai said here Thursday.
  • Xinjiang top official oversees counter-terrorism drill – Xinhua | English.news.cn
    Zhang Chunxian, secretary of the Xinjiang committee of the Communist Party of China, on Wednesday asked the soldiers to keep vigilant against all sorts of hostile forces and to strike “three forces” — a term for separatists, extremists, and terrorists — with “iron fists.”
  • Xinjiang boosts airport checks |Society |chinadaily.com.cn
    The airport operator and airlines in China’s Xinjiang Uygur autonomous region on Thursday announced security measures have been strengthened after a foiled flight hijacking last week caused nationwide concerns.
  • CBB International – What Is The China Beige Book™
    anyone have opinions on the quality of their data? feedback appreciated//
  • China Cuts Key Interest Rates – WSJ.com
    Ahead of the latest rate cut the central bank was flooding the local money market with cash—ramping up its use of reverse-repurchase operations, an increasingly important tool for pumping short-term liquidity into the banking system and so reducing banks’ funding costs. It did something similar in May, shortly before it cut banks’ reserve requirements, freeing up huge amounts of cash that banks could lend out to boost the slowing economy. The PBPC injected 143 billion yuan ($22.5 billion) into the market Tuesday, its largest such offering in nearly six months. That followed 125 billion yuan of injections, via two reverse-repo offerings, last week.
  • China cuts key interest rate for 2nd time in month |Economy |chinadaily.com.cn
    “It was asymmetric cuts in borrowing and lending rates again,” said Li Xunlei, chief economist for Haitong Securities, in his flash comments on his microblog. “The PBOC aims to stimulate domestic consumption while transferring the banks’ profits to the real economy.”..”I believe policymakers have more room in loosening monetary policy than fiscal policy,” he said.
  • How US uses sanctions to kidnap world – People’s Daily Online
    Although the United States declared that it implements a double-track policy of the “negotiation” and “pressure” on Iran, its policy focuses more on “pressure.” Recently, in order to completely strike down Iran’s economy and force Iran to give in, the United States has expanded the range and targets of the sanction and even fallen into a strange circle of “launching the sanction for the sanction.” In a sense, the sanction has changed from a measure of solving the Iran Nuclear Issue into a political trick manipulated by the United States.
  • China property: muddling through? | beyondbrics
    If the May and June sales increase persists, the property market will “muddle through”, says Stephen Green at Standard Chartered. “We will have to wait until mid-2013 before inventories come down to a normal level, so the bad times are not over yet. But sentiment should now improve at the margin.”
  • Existing property sales hit 17-month high in June — Shanghai Daily | 上海日报 — English Window to China New
    SHANGHAI’S existing property sales soared to the highest in 17 months in June as more home seekers began to sign deals.
  • A rare video of Chinese previous secret Counterattack-1 anti-ballistic missile | China Defense Mashup
    The FanJi 1 (Counterattack-1) was a two-stage, semi-active radar-homing, hypersonic interceptor missile designed to intercept ballistic missile warheads at low- to medium-altitude. The first-stage of the missile used liquid propellant and the second-stage used solid propellant. The missile was 14m in length. Flight tests of two dummy missiles were carried out successfully in August and September of 1979. At the same time, the PLA proposed a missile defence zone around the capital Beijing using the FanJi 1. However, the development programme was cancelled by the Chinese government in March 1980 due to financial and political reasons.
  • Alibaba Says Former Head of Group-Buying Site Detained – Bloomberg
    Alibaba Group Holding Ltd., China’s biggest e-commerce company, said a former general manager of its group-buying website was detained by the police on suspicion of accepting bribes.
  • “大嘴”任志强十年吹涨楼价 刚需入市最佳时机已至?|大嘴|任志强|吹涨楼价_21世纪网
    尽管地产大嘴对房地产吹捧得多么迷人,都无法掩盖铁的事实,中国购房者大多是为了刚性和改善性需求, 但房价远没回到合理价位。
  • Photos of Chained-Up Kids Spur Ouster of China Orphanage Chief – Bloomberg
    A Chinese orphanage director was removed after photos emerged online showing a child chained to a bench and another restrained with cloth strips.
  • China’s myopia epidemic comes into focus – latimes.com
    As many as 90% of urban youth in China are nearsighted. Researchers think they can fight myopia by forcing youngsters to put down their books and expose their eyes to natural light.
  • 人民日报谈阿拉伯之春:稳定压倒一切_多维新闻网
  • China ‘stockpiling rare earths for strategic reserves’ – Telegraph
    China has started stockpiling rare earths for strategic reserves, a state-backed newspaper said, in a move which may raise more worries over Beijing’s control of the coveted resources.
  • 阿里反腐新进展:原聚划算总经理阎利珉涉嫌受贿罪被拘留-财经网
    yan limin, former head of alibaba’s juhuasuan group buying busines, has been formally arrested for accepting bribes
  • Apple Said to Pick AutoNavi to Offer IPhone Maps in China – Bloomberg
  • Can Bhutan forge a new tourist path? | Tashi Dorje – China Dialogue
    The Himalayan kingdom, until now wary of holidaymakers, is hoping to boost visitor numbers without tarnishing its environmental record.
  • China Policy ‘Misinterpretation’ Fueled Home Prices, Yi Says – Bloomberg
    China’s home price increase was the result of a “misinterpretation” of the nation’s economic policies, a government think tank researcher wrote today.
  • Li Ning Founder, TPG Executive to Lead as CEO Leaves – Bloomberg
    Li Ning Co. (2331) surged in Hong Kong trading after its chief executive officer stepped down and private-equity firm TPG Capital said it could boost investment in the sportswear retailer if needed.
  • China Repo Climbs as Banks Hoard Cash for Reserve Requirements – Bloomberg
    China’s benchmark money-market rate rose, following yesterday’s biggest decline in two months, as banks hoard cash to meet reserve requirements due today.
  • China’s New Rules May Curb Credit Growth, CBRC Official Says – Bloomberg
    China plans to retain a cap on loans at 75 percent of deposits and may add further requirements that constrain credit growth under draft rules, a senior official at the banking regulator said.。。The liquidity-risk management regulations may be more stringent than the loan-to-deposit ratio set by the nation’s commercial bank laws, the China Banking Regulatory Commission official said, asking not to be named because the discussions aren’t public. The comments refute a report in the Economic Information Daily, which said today that the ratio won’t be included in the new rules and may be scrapped.
  • China may Remove Loan-Deposit Cap in New Standard of Regulations-Caijing
    China may remove the 75 percent cap on the loan-to-deposit ratio, as part of the overhaul of the liquidity risk indicators, the official Economic Information Daily reported.
    Quoting sources close the banking regulator, the newspaper said “related departments have reached a preliminary consensus to remove the 75 percent requirement, but the China Banking Regulation Commission will continue to check on loan-to-deposit ratios under regular banking regulations.”
  • China’s Railway Ministry Issues More Bonds in Heavy Debt-Caijing
    China’s heavily-indebted Ministry of Railway announced Wednesday to issue 10-year construction bonds worth 18billion yuan, raising questions about the ministry’s ability to repay debt, according to the country’s Capital Week magazine.
    This is China’s second construction bonds this year, bringing the total bonds financing for the ministry to 88billion yuan as far this year, the report said.
  • iTunes Wades into Chinese-Language Controversy – China Real Time Report – WSJ
    On accessing the iTunes store for the first time, some Hong Kong users were irritated to find that the store was listing a number of song titles by the city’s popstars in Mandarin pinyin, a system that transcribes Chinese characters into phonetic Latin script, instead of displaying titles transliterated for the Cantonese language, which is spoken by the majority of the population.
  • In China’s papers, Sichuan unrest is just a business story – China Media Project

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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