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Protesters may be off the streets but China is turning up the heat on Japan, in what looks to be a comprehensive strategy to force Japan to to “repent” over the Diaoyu Islands (People’s Daily). Beijing has postponed a reception to mark 40th anniversary of the normalization of China-Japan ties (Xinhua), China surveillance ships have entered waters near the disputed islands (Reuters) and China is delaying approval of working visas (Japan Times), among other measures. And Xinhua is happily quoting Ken Lieberthal’s remarks that appear to blame Japan:
The Japanese government’s bid to “nationalize” the Diaoyu Islands had broken its consensus with China to shelve the territorial dispute, a U.S. expert said Thursday.
“First of all, I think that Japan’s actions have been key in explaining what China has done,” said Kenneth Lieberthal, a senior fellow at the Brookings Institution who had been the senior director for Asia at the National Security Council in the Clinton administration.
Any chance Lieberthal’s comments were taken out of context?
A Chengdu court just sentenced Wang Lijun to 15 years a jail, a relatively lenient sentence that was not unexpected given the repeated references by the court to his cooperation and contributions to other cases. The question everyone is asking, and very few know, is what does this mean for Bo Xilai? The new leadership needs to put Bo into the deep freeze, and my guess is that such a relatively short sentence is bad news for Bo. Willy Lam wrote in August that Bo would likely be handled internally by the Party and not handed over to the judiciary.
Wang was wise to conduct further investigations over Heywood’s death and keep key evidence. He had no other choice but to enter the U.S. consulate and seek asylum. When mafia members break up with their bosses, they can attempt to seek police protection. But in Chongqing and for the former police boss, there was nowhere to turn. And this perhaps encapsulates one of the greatest embarrassments of the country’s current legal system…
According to the prosecutor, Wang “revealed important information of others’ legal activities” and “played an important role in the investigation of relevant cases.” Perhaps this represents only a prelude to another trial, which can serve as the final installment to the saga and open the door to legal reforms. While nothing has been a foregone conclusion with regard to the handling of the cases, it is clear that the establishment of a judicial system that can make horizontal and vertical checks on power must be implemented with greater urgency than ever.
We should hear more about Bo Xilai’s case at the conclusion of the imminent final Plenum of the 17th Party Congress. Expect an announcement that Bo Xilai has been turned over to the judiciary.
Willy Lam has just written Finalizing the 18th Party Congress: Setting the Stage for Reform? for the Jamestown Foundation. Lam does not expect significant reforms in the near future and he goes on the record with his predictions for the 18th Party Politburo Standing Committee:
Barring any last minute changes, the new PBSC is expected to consist of the following (and their prospective portfolios): Xi, age 59 (General Secretary and President); Li Keqiang, age 57 (Premier); Yu Zhengsheng, age 67 (Chairman of the National People’s Congress); Zhang Dejiang, age 65 (Chairman of the Chinese People’s Political Consultative Conference); Li Yuanchao, age 61 (Head of the Party Secretariat and Vice President); Wang Qishan, age 64 (Executive Vice Premier); and Wang Yang, age 57 (Secretary of the Central Commission for Disciplinary Inspection [CCDI]). The seven-member configuration is an effort by the leadership to return to the norm. Since the Cultural Revolution, the PBSC had consisted of either five or seven members. It was only increased to nine members at the 16th CCP Congress a decade ago. A seven-member PBSC in theory will make decision making more efficient (Apple Daily [Hong Kong] September 10; Ming Pao [Hong Kong], September 3).
Much more important is the fact from the 18th Congress onwards, senior cadres responsible for propaganda and law enforcement will only be ordinary Politburo members.
I am more optimistic about reforms, if only because the situation here is becoming increasingly untenable, as the leaders know far better than any outside observers. Reuters reported a couple of weeks ago that Xi Jinping had met with outspoken reform advocate Hu Deping, Hu Yaobang’s son. In fact, I have heard (though have no way to confirm) that Xi has met with Hu and others who share his views several times recently.
Beijing should get more credit for taking on special interests, as it has brought the real estate industry and local governments to their knees with its resolve in keeping the real estate repression policies in place since April 2010. And there is no sign of those policies loosening, as a leading housing official made clear over the weekend–China will not ease grip on property market (Reuters), Real estate prices in no condition to rebound: ministry (Xinhua) and 人民日报-如何坚持房地产调控不动摇（经济热点面对面）—访住房和城乡建设部有关负责人 (People’s Daily).
On to today’s links:
BUSINESS AND ECONOMY
China’s economic growth to stabilize in Q4: think tank – Xinhua | English.news.cn – – The slowdown in China’s economic growth will be curbed in the fourth quarter of the year following government measures but uncertainties will remain for future development, a Chinese think tank said in a report Sunday. China’s economy is expected to grow by 7.7 percent in the first three quarters of 2012, while for the whole year, the growth rate will be 7.8 percent, the Center for China in the World Economy (CCWE) under the Tsinghua University forecasted in the report.
Analysis: China Biz Surveys Hint At End Of Economic Slide | MNI – some government researchers believe the worst has passed. Zhu Baoliang, an economist with the State Information Center, told MNI that growth may reach as much as 8% during the third quarter, a rate which would mark a notable improvement on the 7.6% expansion recorded during the second quarter of the year.
China Slowdown Seen Longer Than in Crisis by State Economist – Bloomberg – Growth may slow for a ninth straight period to below 7 percent in the first quarter, Yuan Gangming, an economist with the Chinese Academy of Social Sciences, said in an interview Sept. 19 in Beijing. Yuan, who formerly headed CASS’s Office of Macroeconomic Research in the Institute of Economics, forecast 7.4 percent expansion in the third quarter and 7.2 percent in the last period of the year.
China’s corruption crackdown takes shine off luxury boom | Reuters – The government imposed a “frugal working style” rule on its civil servants, which goes into effect on October 1, barring them from spending public money on lavish banquets or fancy cars, and from accepting expensive gifts.
Toyota Resumes China Operations After Protests – Bloomberg Toyota said it expected to fully restart production today in China, where protesters torched auto showrooms and smashed Japanese-branded vehicles last week, spokesman Joichi Tachikawa said. Aeon has reopened all of its China stores except two and is assessing damage on one that was attacked, according to spokesman Tomohiro Itosaka.
China aims to become world technological power by 2049 – Xinhua | English.news.cn – China aims to become a world technological power by 2049 and strives to be a leading nation in innovation and scientific development, according to a government document released on Sunday. The document, released by the Communist Party of China Central Committee and the State Council, or the Cabinet, namely opinions on “deepening technological system reform and accelerating national innovation system construction,” sets the goal for the country to be “in the ranks of innovative nations” by 2020.
Swire Properties Sees Strong Rent Growth in China, CEO Says – Bloomberg – rents up a lot at Beijing’s Village, for example. 3 year leases, Swire has a lot of leverage// Gross rental income from mainland China almost tripled in the first half of the year, a trend that will continue, Chief Executive Officer Martin Cubbon said in an interview with Bloomberg Television in Beijing yesterday. The company is also able to charge higher rents as some tenants have opted to stay longer after the landlord offered them relatively competitive leasing terms as properties opened, Cubbon said.
It Is Time to Really Complete Urbanization – Caixin Online – On paper, the rate of urbanization jumped from 18 percent in 1978 to 51.3 percent at the end of last year, during which the urban population grew from 238 million to 680 million. Officially, this figure includes everyone who has lived in cities and towns for at least six months. In reality, however, at least 250 million migrants working in cities are not entitled to the social benefits given to urban residents, and have little or no access to a secure job, welfare benefits, or education and medical benefits for their children. This imbalance is especially striking in the big cities where migrants congregate. Some analysts estimate that if this group of people were taken out of official counts, it would shave at least 10 to 12 percentage points off the urbanization rate.
Balance Sheet Reset – – Many companies only want asset and business scale growth. Profits are unimportant because there is wealth to be made even without profits, and there are bargaining chips that can be used to consistently expand their own capacity for risk resilience. Because government revenues are to a large extent built on the foundation of company business scales, the government has had an increasingly difficult time freeing itself from this game. Ending the game would lead to a fiscal revenue crisis. Nor are finance institutions willing to close down this game because most of what’s inside the corporate assets bubble is mixed with financial leverage. A collapse for asset valuations would lead to a financial system collapse. Ultimately, to prop up the system, the government must maintain or even strengthen its control of resources, even employing unpopular control measures. The financial system will force the central bank to put more currency into circulation. Ultimately, the central bank balance sheet will rapidly expand.
PCAOB makes progress | China Accounting Blog | Paul Gillis – I think the bottom line here is that the potential December 31, 2012 deregistration of accounting firms and subsequent delisting of U.S. listed Chinese companies has become remote. I think the PCAOB will move to formalize an extension very soon. The problem, however, has not been solved. The are two issues to watch now while we wait to see what the PCAOB ultimately does. The first is the SEC’s negotiations with China on Deloitte’s working papers. The judge has given the PCAOB and China until January to work out a deal. The second is the suit against Ernst & Young in Hong Kong over access to China working papers.
Beachfront in China’s Hawaii – Scene Asia – WSJ – This 3,757-square-foot home is located on the Diamond Beach Resort on the southern end of Hainan Island, which is often called China’s Hawaii by locals. The residential development sits on nearly 90 acres
温商人物志（4）朱小杰 _视听频道_财新网 – good caixin video series on wenzhou business people
POLITICS AND LAW
辽宁警察枪杀拒拆迁村民续：或因违法强拆引发_新闻_腾讯网 – Liaoning police shoot peasant in land dispute, claim it was in self defense//
Insight: China housing drive gives measure of next Premier | Reuters– The contrasting neighborhoods, both in Beijing’s poor, mining region of Mengtougou, embody the affordable housing policy overseen by Vice Premier Li Keqiang, who is expected to replace Premier Wen Jiabao in an upcoming leadership handover. Affordable housing – and how to pay for it – will be one of the defining challenges of the next leadership as it tries to deal with the high housing prices that are one of the greatest sources of discontent in today’s China.
Chinese democracy experiment marked by protest a year on | Reuters– On the first anniversary of an uprising that gave birth to the experiment, more than 100 villagers rallied outside Wukan’s Communist Party offices to express anger at what they saw as slow progress by the village’s democratically elected governing committee to resolve local land disputes. “We still haven’t got our land back,” shouted Liu Hancai, a retired 62-year-old party member, one of many villagers fighting to win back land that was seized by Wukan’s previous administration and illegally sold for development.
Xi-Li Inherit Weakest Growth Since Deng Xiaoping Opened China – Bloomberg – As the Communist Party prepares to anoint Vice President Xi Jinping, 59, and Vice Premier Li Keqiang, 57, next month as its so-called fifth generation in charge, data from exports to production signal the government will struggle this year to reach its 7.5 percent expansion target. The retiring top echelon took power in 2003 with growth above 9 percent and their predecessors were bequeathed a 14 percent pace in 1993, a year after Deng toured the southern boomtowns he’d spawned, urging more change.
‘Grinning’ official sacked for corruption — Shanghai Daily– A work safety official who was photographed smiling at the scene of a fatal bus crash that occurred in northwest China’s Shaanxi Province late last month has been removed from his post over a serious violation of discipline, local authorities said today. Yang Dacai was dismissed
Near caves where Mao lived after Long March, worries about the future | McClatchy – “If old Mao were alive,” he said, “then these corrupt officials would be hanged to death.”
China to deepen reform of press, publication sector – Xinhua | English.news.cn – China will deepen reform of the press and publication sector to develop a number of well-known groups in the world, a senior official said on Sunday. After ten years of reform, publication units had basically been transformed into companies, but their vitality had not been fully aroused, said Liu Binjie, head of the General Administration of Press and Publication (GAPP).
Will a New Watchword Be Born? – China Media Project – The appearance of “power is given by the people” in the political report to the 18th National Congress is virtually assured. But will this phrase be repeated and emphasized? This question, which will ultimately be decided by internal power plays, is a matter of wordplay that directly concerns China’s political future.
白岩松：怎么做一个既得利益者_要闻分析_财经国家新闻网 – bai yunsong on being “someone w vested interests” //“我也是一个既得利益者，但怎样做一个既得利益者？性质不一样。你能不能为年轻人铺路，能不能有时牺牲自己的利益？”
China to complete local lawmaker elections by year-end – Xinhua | English.news.cn – The elections started in the first half of 2011. More than 2 million lawmakers at county- and township-level will be elected by more than 900 million electorates in more than 2,000 counties and 30,000 townships, according to the NPC.
中国官员“红色教育” 助力十八大_多维新闻网 – 【多维新闻】中共十八大即将召开，与中国共产党有关的新闻关注度显著提高。近日，位于江西井冈山的中国井冈山干部学院迎来一群特别的“游客”，他们是包括路透社、法新社、半岛电视台以及《人民日报》、新华社、《光明日报》等在内的19家媒体的30位记者。这次观摩探访，主要是让中外记者进一步了解中国共产党干部培训的情况。分析称，中共此举在于着力加强新闻舆论正面引导，为十八大胜利召开优化舆论环境。
FOREIGN AND DEFENSE AFFAIRS
INTERVIEW/ Aaron Friedberg: More balancing needed than engagement with China – AJW by The Asahi Shimbun In a recent interview with The Asahi Shimbun, Friedberg, an Asian policy adviser for Mitt Romney, the GOP candidate for the U.S. presidential election, called for greater emphasis on balancing rather than engagement to deal with China’s emergence as a world power.He said that if nations in the region, such as Japan, bend on territorial disputes with China, Beijing will just keep pushing… A: Definitely, without question. 9/11 was, in a strategic sense, a gift for China. It was something that deflected the United States from what appeared to be an increasing focus on China. And, in a sense, we have come back to that now, 10 years later. If it were not for 9/11, if not for the wars in Afghanistan and Iraq, I think the United States would be much further along in developing the kinds of military capabilities it needs, to counter China’s growing anti-access, area denial (A2/AD) capabilities.
Japan-China Trade Ties Complicate Island Dispute – NYTimes.com – “The huge contradiction at the center of Japanese-Chinese relations is the fact that politics and the economics are moving in completely opposite directions,” said Kazuko Mori, a China specialist at Waseda University in Tokyo.
With China’s rise, Japan shifts to the right – The Washington Post – Japan is in the midst of a gradual but significant shift to the right, acting more confrontationally in the region than at any time since World War II. The shift applies strictly to Japan’s foreign policy and military strategy, not social issues, and has been driven both by China’s rapid maritime expansion — particularly its emphatic claims on contested territory — and by a growing sense here that Japan should recover the clout squandered amid two lost decades of economic stagnation.
Diplomacy lost in sea of trouble－Sydney Morning Hearld– One consequence is that Mr Hu is now expected to stay on as chairman of the Central Military Commission after he hands the leadership of the Communist Party to the Vice-President, Xi Jinping, at the imminent 18th Party Congress, Professor Shi said. ”If, say, there is a 1 per cent possibility of military conflict with such a major power, then, objectively, changing [the military chairman] may not be a wise political decision.” Whatever Mr Hu’s internal political pressures and private calculations, on the eve of a fraught leadership transition over which he is struggling to assert control, he has now torched whatever remained of his reconciliation efforts with Japan and his ”peaceful rise” doctrine that had been winning friends and soothing anxieties across the world until 2008. ”In his first five years Hu Jintao stuck to his peaceful rise concept and now the impression is almost the opposite, except with Taiwan,” Professor Shi said.”China has failed miserably in the east Asian strategic competition for friends.”
Overseas Chinese urged to support China’s development, reunification: Jia – Xinhua | English.news.cn – Top political advisor Jia Qinglin on Friday met a group of overseas Chinese origin people, urging them to support Chinese mainland’s modernization and the country’s peaceful reunification.
Top China official visits Afghanistan, signs security deal | Reuters – Zhou Yongkang, China’s domestic security chief and a member of the ruling Communist Party’s central Politburo, made an unannounced visit to the Afghan capital late on Saturday, holding talks with Afghan President Hamid Karzai at his garden palace. Zhou’s visit was the first to Afghanistan by a senior Chinese leader since 1966 and followed a visit by Karzai to Beijing in June when both countries agreed to cooperate on combating extremism in the regio
Australia counters Chinese threat– AUSTRALIA has been quietly building a regional defence coalition to restrain China’s increasingly ”aggressive” and ”autistic” international behaviour, an influential adviser to the Pentagon says. Edward Luttwak bluntly contradicts Australian and US denials that they see China as a threat or want to contain its rise. ”Australians view themselves as facing a strategic threat,” he writes in his coming book, The Rise of China v The Logic of Strategy.
Hill tries to foil plot against the Net – Eliza Krigman – POLITICO.com – The Senate on Saturday adopted a resolution denouncing efforts by foreign nations to give control over key Internet functions to the United Nations-backed International Telecommunications Union. The House adopted a resolution last month.
TECH AND MEDIA
The Politics and Power Struggles of the Chinese Internet Superpowers – The dust is settling on the latest round of competition in the Chinese Internet space, and four superpowers remain strong: Alibaba, Baidu, Tencent and Sina. While there are plenty of other players in the market, these four have distinguished themselves in each of their target markets, garnering hundreds of millions of users and near-monopoly positions along the way.
SOCIETY AND CULTURE
China: For Many Expats, It’s Not Worth It – Businessweek – Anne Stevenson-Yang, the American co-founder of J Capital Research, a Beijing-based equities analysis firm. After 21 years in China she has sold her house in Beijing and is looking to buy in New York City, in case things in China deteriorate rapidly.
Soul Searching in China Over Man Beaten Senseless by Anti-Japanese Protestors -WSJ– China is now being forced to contemplate just how out-of-hand the protests became. One of the worst examples: The case of a 51-year-old Chinese man Li Jianli who, according to the state-run Beijing Youth Daily, was beaten so brutally by an anti-Japanese mob for driving a Japanese car that he’s now partially paralyzed and can barely utter simple words like “thank you” and “hungry.”
Reel China: China, West try to bridge story differences in films – latimes.com – Reconciling disparate narratives in China versus America has become a challenge for filmmakers to appeal to Chinese sensibilities and censors.
China’s Brainwashed Youth – By Qi Ge | Foreign Policy – really? then why is the party so worried about things like weibo? pure puppets dont talk back. maybe jingoistic gremlins? //The protests against Japan didn’t get us our islands back, but they made one thing clear: The people are puppets of the Chinese Communist Party.
ENERGY AND ENVIRONMENT
Xinjiang Poised to Become China’s Largest Coal Producer: Will Move Global Coal, Natural Gas, and Crude Oil Markets | China SignPost™ 洞察中国 – In 2011, Xinjiang produced 120 million tonnes of coal. In our base case estimate, Xinjiang will produce ~240 million tonnes per year of coal in 2015 and slightly over 750 million tonnes per year in 2020.This would make Xinjiang one of the world’s 5 largest coal producers by volume.
An Honest Writer Survives in China by Ian Johnson | The New York Review of Books – A little over a year ago, I went with the Chinese writer Yu Hua to his hometown of Hangzhou, some one hundred miles southwest of Shanghai, and realized that his bawdy books might not be purely fictional; their characters and situations seemed to follow him around in real life too.
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