The Sinocism China Newsletter For 01.22.13

Please help grow Sinocism by forwarding this email to your friends, following me on Twitter @niubi or Sina Weibo @billbishop, and donating.

Just links today, may be a bit sporadic over next week depending in Internet connectivity, check Twitter @niubi for updates on status.

Today’s links:

THE ESSENTIAL EIGHT

房子的焦虑 – 经济观察网 - 专业财经新闻网站original story that telegraph corrupt cadres and panic property sales story based on..but if the “panic selling” since Oct/Nov really mattered in the market, why have prices gone up in most markets? Hainan though may be crashing// 此外,中纪委、监察部12月14日也下达通知:严令各地纪委、监察部、印监委及公安部门要按规定政策把好关,严惩以假名、匿名、假公司、企业进行非法、违法物业转售、出售等。严惩违规、违法提取各种货币、套汇及洗钱外流等活动。上述中纪委的通报称,据不完全统计,2010年大陆非法资金外流是4120亿美元,2011年达到6000亿美元,2012年估计已突破10000亿美元。2013年的非法资金外流规模将达到15000亿美元。

China’s Communist party cadres launch property fire sale – Telegraph - A report by the Communist Party’s powerful anti-corruption unit, the Central Commission for Discipline Inspection (CDIC), said “a wave of luxury home sales began last November and has accelerated since December”. It said the volume of deals had intensified by “a hundred times” after Xi Jinping, the incoming Chinese president, warned that corruption could kill the Party and put one of the country’s most vigorous and resolute politicians, Wang Qishan, in charge of stamping out graft…They never register the houses in their own names and they use a string of agents to do the deals,” said Mr Fu. He said one company had bribed an official by buying him a property at the Mountain Water International Complex. “The property was put in the name of the official’s relative. After six months, it was sold for two million yuan (£200,000), around the same amount it cost. Then the official could cash out.

学习时报刊文建议全国人大设宪法审查委员会_政经频道_财新网 - 文章称,“根据我国现行体制在全国人大常委会下设一个专门的违宪审查委员会来对各级立法机关的立法予以监督,专司全国各级人大及其常委会的立法是否违宪的审查”

PBOC Signals Change in Liquidity Management – WSJ.com- SHANGHAI—China’s central bank has taken a step toward establishing a more market-oriented interest-rate system, putting it more closely in line with the U.S. Federal Reserve and other major global central banks in how it manages banking-system liquidity. In a statement released late Friday, the People’s Bank of China said it would immediately begin using new short-term measures to inject or withdraw cash from the banking system as needed. The measures would be conducted with 12 major commercial members and would supplement its current twice-a-week open market operations when liquidity in the banking system suffers “temporary fluctuation,” it said.

China Premier-Designate Pushes for Disclosure of Pollution Index: Media-Caijing - This was the first time for a member of the ruling Party’s seven-member Politburo Standing Committee has addressed the pollution levels

Caterpillar Unit in Scandal Has Unusual Roots – WSJ.com- The company had been a relic of China’s planned economy, but a U.S.-trained mining engineer and coal tycoon, Li Rubo, and Emory Williams, a Beijing-based American entrepreneur, transformed it over the past decade, seeking to tap growing demand for industrial equipment. They got it publicly listed as a non-Chinese company, with prominent international shareholders. The company obtained its Hong Kong listing in 2010, using a maneuver called a reverse takeover, according to ERA Mining’s regulatory filings. It bought out a nearly defunct distributor of Hollywood DVDs called Era Information & Entertainment Ltd. and used its Hong Kong listing to bypass regulatory hurdles involved in an initial public offering.

Information Dissemination: 风向转变时,有人筑墙,有人造风车 - What does the PLA Navy look like if the Chinese decide to retain their shipbuilding sector through this downward economic period by keeping only 30 (~15%) of their major shipyards open via governement orders? I don’t know what that would look like, but I will note that 30 major shipyards building navy ships is the same shipbuilding capacity the United States leveraged to build all warships in World War II. While no one would expect China to field ships at the same pace the US did in WWII, even if China adds orders of a single large PLAN vessel or multiple smaller vessels for 30 shipyards over 5 years while sustaining current construction pace for PLA Navy and government maritime agencies, the size of the PLAN and associated government maritime agencies could potentially triple by 2020.

U.S., China in deal on U.N. North Korea rebuke; Russia to back it | Reuters - The United States and China have struck a tentative deal on a draft U.N. Security Council resolution condemning North Korea for its December rocket launch, U.N. diplomats said on Friday, and Russia predicted it would be approved by the council.

 

BUSINESS AND ECONOMY

A Confusing Debut for Daughter of Mysterious Huawei Founder – China Real Time Report – WSJ- In a somewhat momentous move Monday, China telecom giant Huawei Technologies Co. presented Cathy Meng, its chief financial officer and daughter of founder Ren Zhengfei, for her first on-the-record meeting with the Western media. Less impressively, Ms. Meng followed up a vow to continue improving transparency at the famously secretive company by muddying the water on key operational issues.

State-owned Banks Cut Profit Expectations for 2013 – Caixin - The decline was mainly a result of last year’s interest rate changes, which adjusted the floating ranges of deposit and lending interest rates and limited banks’ pricing power over capital. The cost of capital rose also because many customers opted for better-paying wealth management products over ordinary savings accounts.

Caterpillar writes off most of China deal after fraud | Reuters - Caterpillar closed the purchase of ERA Mining Machinery Ltd and its subsidiary Siwei last June, paying HK$5.06 billion, or $653.4 million. ERA had been publicly traded in Hong Kong, doing business through Siwei, which is known for making equipment to support roofs in mines. A member of the Caterpillar board during the course of the Siwei deal told Reuters the board was distracted at the time by a larger transaction and paid relatively little attention to the Siwei acquisition.//serious due diligence negligence at best

Caterpillar Takes Action to Address Accounting Misconduct at Siwei, its Recently Acquired Company; Misconduct Results in a Fourth Quarter Non-Cash Charge of Approximately $580 Million and the Removal of Several Siwei Senior Managers – Yahoo! Finance -

UPDATE:Departure Of Caterpillar Executive Linked To China Writedown -Source – WSJ.com - Caterpillar said in a separate statement that Luis de Leon, a vice president responsible for mining products, was “leaving the company to pursue other opportunities.” That departure was partly related to Caterpillar’s displeasure over problems at ERA, though Mr. de Leon wasn’t being accused of accounting misdeeds, according to the person familiar with the situation. Mr. de Leon couldn’t be reached for comment. He joined Caterpillar in mid-2011, when the company completed its $8.8 billion purchase of Bucyrus International Inc., a Milwaukee-based maker of mining equipment where he had been chief operating officer.

Caterpillar Takeover Would Create Fortune For ERA Shareholders – Forbes 2011– ERA is 46% owned by Mining Machinery, a company which in turn is 33% held by chairman Emory Williams and 67% by James Edward Thompson III, according to Friday’s announcement. Regulatory approval is pending for the deal. Williams is a former chairman of the American Chamber of Commerce of China, located in Beijing. He graduated from Middlebury College in Vermont in 1978 and holds an MBA from Northwestern University’s Kellogg Graduate School of Management in 1980.  He is a co-founder of another Hong Kong-listed mining machinery company, International Mining Machinery. Thompson is the son of James E. Thompson, the chairman of Hong Kong-based Crown Worldwide Group.    Crown has made a name for itself among expats by helping with their relocation needs around the world.   The father has also made it onto the Forbes Hong Kong Rich List, ranking no. 28 in 2009

Caterpillar’s reverse merger | China Accounting Blog | Paul Gillis Boards should demand a lot more from due diligence for Chinese acquisitions, particularly where the target was audited by a small firm and came to market through a reverse merger. Due diligence procedures need to be significantly expanded in these high risk situations, and should include forensic audit procedures that are rarely included in a typical due diligence engagement.

Charting China’s Economy: The Fourth Quarter 2012 – China Real Time Report – WSJ - To engineer the rebound, China’s government turned again to boosting credit and investment spending. But beneath the surface, there were also signs a rebalancing toward consumption may be underway

China Plan Seeks to Bolster Airports, Locally-Produced Airplanes – Bloomberg - Authorities will seek to transform airports in the cities of Beijing, Shanghai and Guangzhou into international hubs, according to a State Council plan posted today to the Civil Aviation Administration of China’s website. They’ll also encourage the development and use of Chinese-made regional jets and general aviation aircraft and accelerate reform of how the country’s airspace is managed, it said. A more than 90-fold surge in China’s economy in the past two decades has fueled demand for flights. The State Council’s plan is based on guidelines released in July last year that were the first China has issued for the domestic aviation industry. Chinese carriers will need 5,260 new planes worth $670 billion through 2031, according to Boeing Co. (BA) forecasts

RIP Seaborne Coal « Nemo’s Blog - Interesting post from a big macro-trader

Carl E. Walter and Fraser J.T. Howie: Of China’s Financial Bondage – WSJ.com - It’s unlikely China’s banks will collapse in the near term, but the systemic risks to the financial system are growing. If China is to abandon its investment-driven economic model, it has to unwind its bank balance sheets. The creation of captive bond markets makes that reform even more difficult.

Family Planning, Retirement, Inequality Oh My! China StatsChief Offers Raft of Surprises – China Real Time Report – WSJ- China’s chief statistician normally isn’t seen as much of gambler. He knows the numbers too well. But at a briefing for the latest economic statistics on Friday, he seemed to be willing to roll the dice. While rattling off a series of statistics that were closely watched but not exactly shockers, Ma Jiantang, the head of the National Statistics Bureau, stressed a few numbers that caught reporters’ attention. He revealed that the nation’s labor pool is dwindling, and said this was something of particular concern. He then strayed into the sensitive areas of the one-child policy and the nation’s relatively young retirement age, suggesting maybe it was time to adjust policy.

国资委退房令发布三年 3家央企地产销售破千亿-财经网 - 3 years after SOEs were ordered to divest their real estate business, 3 alone had nearly 100B RMB in 2012 sales// 2010年3月国务院国资委发布78家央企“退房令”以来,各种博弈从来就没有停止过。三年来,伴随着整个房地产行业的起伏变迁,央企地产格局也重新洗牌。在刚刚过去的2012年,3家央企或国资背景的房地产企业赶上万科,全年销售额突破千亿

北京首次购房人群平均年龄仅27岁 为全球最低_中国经济网??国家经济门户 - average age of home buyer in beijing is 27, “lowest in the world”..skews perceptions of/frustrations around affordability// 据光大银行与某地产公司市场研究中心发布的调查显示,2010年北京首套房贷者的平均年龄仅27岁,为全球最低。相比之下,其他国家和地区的首次购房者平均年龄都在30岁以上。

 

POLITICS AND LAW

Setting Economic Reform in Stone, China’s Way – Part III: The Words That Changed History -Caixin -

人民日报-网传25人成绩单,是笔试入围名单,不是所有54名应试者成绩单 80后女副市长,并非倒数第一(求证·后续) -

人民日报-杨白冰同志生平 - People’s Daily official summary of Yang Baibing’s life// 杨白冰同志始终拥护党中央的领导,与党中央保持一致,坚持党的基本理论、基本路线和基本纲领。从领导岗位退下来后,仍然关心党和国家事业,关注国防和军队现代化建设,坚持学习中国特色社会主义理论体系。他对中央重要文件征求意见稿认真研究思考,郑重提出修改意见。他为党的十八大胜利召开感到欢欣鼓舞,对中国特色社会主义充满信心,对党和国家前途充满信心。他关心人民群众,多次为贫困地区和灾区群众捐款捐物。在病重住院期间,仍然坚持收听收看新闻,表现出一个老共产党员对党和人民的赤诚之心。他坚持原则、顾全大局,艰苦朴素、廉洁自律,对亲属子女和身边工作人员严格教育管理,始终保持了我党我军的优良作风和政治本色。

Hu, Xi mourn former PLA senior official Yang Baibing – Xinhua | English.news.cn -

Jiang Zemin slips down a notch in Beijing’s order of seniority | South China Morning Post- For the first time, the name of former president Jiang Zemin has been officially placed behind those of members of the Communist Party’s current Politburo Standing Committee, prompting speculation that he is set to withdraw from the political stage. At the funeral service for General Yang Baibing , who died at the age of 93 in Beijing last Tuesday, the wreath placed in Jiang’s name came behind that of President Hu Jintao , party general secretary Xi Jinping and the other members of the Politburo Standing Committee, China Central Television reported on its main 7pm newscast yesterday.//Duowei reported a few weeks ago that Jiang had written a letter to Xi requesting that at official events he been treated same was as other “retired cadres”…sounds like that report was correct

原商丘信访局长张民强艳照门曝光 很黄很暴力【多图】 – 社会 – 舜网新闻 -

广州官员愿公布财产被批破坏官场潜规则_网易新闻中心 - 核心提示:1月21日下午,广州市政协副秘书长范松青在政协分组讨论时称,自己只有一套72平米的房子,“愿做财产申报公开第一人”的范松青会场遭同组委员质疑。有人说他“坏了官场潜规则”。

制度反腐的核心是权力结构改革 – 经济观察网 - 专业财经新闻网站 - 如果没有经济特区,我们的经济体制改革不知道还要摸索多少年。而30年来,政治体制改革之所以稳妥有余,积极不足,说得多,做得少,关键就在于没有政改特区这一政治体制改革的孵化器。致使政改之蛋,无人买单,自生自灭

 

FOREIGN AND DEFENSE AFFAIRS

Beijing, Tokyo continue talking |Asia-Pacific |chinadaily.com.cn- Beijing urged Tokyo to handle the standoff calmly and with sincerity, while observers said it remains to be seen whether the Japanese ruling coalition’s key members will bring constructive proposals to China during their visit. China consistently advocates resolving territorial disputes through dialogue and consultation, while the country has both the “determination and capability” to protect its territorial sovereignty, Foreign Ministry spokesman Hong Lei said. Hong made the remarks while criticizing Japanese Foreign Ministry’s previous statements that accused China’s growing presence on the Diaoyu Islands as “trying to change the status quo”.

日本政要今日向习近平转交安倍亲笔信_网易新闻中心 - Japanese politician delivering a letter from Abe to Xi, story all over Chinese media today// 核心提示:日本公明党党首山口那津男今起将携带首相安倍晋三的亲笔信访华,这是安倍政权上台以来,首个访华的执政党政治家。在公明党历史上,其创始人池田大作是中日建交的推动者,一生致力于中日友好。

Shinzo Abe’s adviser blasts China in barbed Hong Kong speech | South China Morning Post- Japan’s top foreign policy adviser, in an inflammatory speech delivered at a regional forum in Hong Kong yesterday, accused China of asserting a territorial claim by force and breaching the international order. Yachi Shotaro’s speech, read on his behalf by a former Japanese official, at the third Sino-US Colloquium, was immediately rebuffed by Chinese participants.

PLA to step up war preparedness | South China Morning Post- The People’s Liberation Army must rid itself of deep-seated habits, cultivated within the military by decades of peace, in order to prepare for war at a moment’s notice, the mouthpiece of the armed forces reported yesterday. The PLA Daily ran an article yesterday highlighting problems found during a military review on Wednesday of three recent drills in Inner Mongolia involving an unnamed artillery brigade with the 38th Army Corps, which is affiliated with the Beijing Military Command.

China Seeks Peaceful Solution to Disputes as Japan Pledges Calm – Bloomberg - China said it wants to settle territorial issues peacefully and criticized U.S. Secretary of State Hillary Clinton for comments she made after meeting Japan’s Foreign Minister Fumio Kishida in Washington. China expressed “strong discontent” with Clinton’s remarks that the U.S. doesn’t take a position on the ultimate sovereignty of islands in the East China Sea claimed by both China and Japan, Foreign Ministry spokesman Qin Gang said yesterday. Disputes should be resolved through discussions, Qin said a day earlier, in response to comments Japan’s Prime Minister Shinzo Abe made during a visit to Indonesia last week.

China to issue new official map of ‘full’ territory – Taipei Times - Previous editions of the “Wall Map Series of National Territory,” which presented China’s claimed territory in horizontal format, only included the larger contested islands in the South China Sea in a separate box at the bottom right of the map, Xinhua news agency said at the weekend. The territories included in the box were half scale and not clearly detailed. The new map is vertical and is to be distributed by Sinomaps Press on behalf of the Chinese authorities starting next month. It will for the first time display the entirety of the PRC’s claimed territory on the same scale as continental China.

Norway supportive to China’s bid for permanent observer to Arctic Council – Xinhua | English.news.cn- Norwegian Foreign Minister Espen Barthe Eide said on Monday that Norway will support China’s application for the status of a permanent observer to the Arctic Council. Eide gave a definite “yes” answer to the question put to him by a Xinhua reporter if Norway would back China’s bid for the permanent observer status in the eight-member regional council comprising mostly of countries on the rim of the Arctic Ocean.

Information Dissemination: China’s recent expansion of the maritime agencies - One of the things that I’ve been really focusing on in the past few months is the recent dramatic expansion of China’s civilian maritime force. Much of this is caused by the border disputes with Japan, Vietnam and Phillipines. I think another part of this is the Chinese government supporting its domestic shipbuilding industry during the recent downturn in the global shipbuilding market. Before we start, here is a refresher course on what each of the agencies are about.

 

HONG KONG AND TAIWAN

Why Did Jackie Chan Body Slam America? – Speakeasy – WSJ - Chan has a bit of bitterness about America, how it treats foreigners, its sense of value and its sense of values. Combine that with his lifelong desire to be an acknowledged and appreciated member of his “home team” — channeled into a self-appointed role as chief evangelist for The New China, a place that is lifting itself up by its bootstraps, that’s fixing its problems and that’s poised to shape the future of the world — and you get a formula for unpredictable blurts of an impolitic nature.

United Airlines to restart daily Taipei-US flights – Taipei Times - United Airlines (UA) is scheduled to restart a daily year-round non-stop flight service between San Francisco and Taipei in April, in anticipation of increased two-way travel following Taiwan’s inclusion in the US’ Visa-Waiver Program in November last year.

 

TECH AND MEDIA

业内人说:杜一楠的24券失败总结 满篇尽现假大空_原创_DoNews-IT门户-移动互联网新闻-电子商务新闻-游戏新闻-风险投资新闻-IT社交网络社区 - 24quan founder Aaron Du mocked for his letter about lessons learned from burning 50m usd in vc money in his failed groupon clone. I interviewed him onstage at techcrunch’s disrupt beijing in 2011. very slick, us educated…and it turned out he was dishonest about the state of his business at the time//

 

SOCIETY, ART, SPORTS, CULTURE AND HISTORY

The Effects of China’s Push for Education – Room for Debate – NYTimes.com -

In China, Discontent Among the Normally Faithful – NYTimes.com -

 

ENERGY, ENVIRONMENT AND HEALTH

china medical news 中国医学新闻: Another doctor murdered: female neurologist killed making house call in Baotou - The killing of an emergency doctor during a house call in Inner Mongolia on Saturday has again raised concerns about medics’ safety. Baogang Hospital in Baotou, the Inner Mongolia autonomous region, said on its official website that Zhu Yufei, 34, a woman doctor in its neurology department, was killed while on a home visit on Saturday.

 

FOOD AND TRAVEL

The Shandong Oilman – Caixin - It’s oil with an extra something, but there’s nothing virgin-like about it. Pumped from sewers outside of restaurants, or pressed from trash, the oil is born from waste holes both human and mechanical. Known as “gutter oil” in China, it’s commonly used at greasy spoon restaurants and canteens, many of which purchased the cheap oil processed by businessmen like Liu Liguo. In July 2011, Liu was arrested at the gate of one of the gutter oil companies he founded. Prosecutors say one of Liu’s companies used cutting edge technology to produce, at peak operation, 60 tons of oil per day.

Subscribe to the Sinocism China Newsletter email. Free