The Sinocism China Newsletter For 02.06.13

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After many delays China has unveiled reform guidelines on income distribution (Xinhua):

China on Tuesday unveiled reform guidelines on income distribution amid growing public concerns over a widening wealth gap. The guidelines encourage further work to improve the initial distribution system and stepped-up efforts to build a redistribution adjustment mechanism, said a statement from the State Council, which declared approval and transfer of the guidelines.

Bloomberg has a summary of the guidelines in China Approves Income Plan as Wealth Divide Poses Risks:

China’s ruling State Council approved an income-distribution plan intended to tackle the nation’s wealth gap, with the government describing the task as huge, complicated and unable to be completed in a single step. The 35-point blueprint targets boosting minimum wages to at least 40 percent of average salaries, loosening controls on lending and deposit rates and increasing spending on education and affordable housing. State-owned enterprises should contribute more to the treasury, according to a statement yesterday on the government’s website.

You can read the full text of the income distribution reform guidelines at 国务院批转收入分配制度改革意见(全文)_资讯频道_凤凰网.

The pronouncement is long on goals but short on details, nor is implementation assured, as Nicholas Borst of the Peterson Institute for International Economics notes in China’s New Income Inequality Plan:

The new income inequality plan is a step in the right direction. Many of the issues identified in the report are desperately in need of reform. The inclusion of interest rate liberalization as a necessary reform to improve income equality is a hopeful sign that policymakers understand that the issue has deep roots in the country’s distorted economic model. As always, the key here is implementation. Without a series of follow up directives with more details, many of these policies are unlikely to be fully implemented.

At this point it may be a mistake to call this a “plan”. The original Chinese does not use that language, nor does the official Xinhua English story.

For those who want insight into how to profit from these guidelines, First Financial is out with a story highlighting investment opportunities that may arise from implementation of income distribution reform in 洞悉“收入倍增”国策 布局投资机会_财经频道_一财网.

It is Winter in the East China Sea but the situation between China and Japan may be heating up. Japan has protested to China after radar was pointed at vessel (Reuters):

A Chinese navy vessel aimed a type of radar normally used to aim weapons at a target at a Japanese navy ship in the East China Sea, prompting Japan to protest, Japan’s defense minister said on Tuesday, an action that could complicate efforts to cool tension in a territorial row between the rivals

The Asahi Shimbun reports that China’s Senkakus operations are overseen by party task force led by Xi and are now well-coordinated in an effort to avoid mishaps:

China’s response to the Senkaku Islands dispute is now under the direct command and coordination of a top-level task force of the Communist Party of China, led by General Secretary Xi Jinping.

A source close to the Communist Party said the creation of the new task force, said to be modeled after the U.S. National Security Council, means that the dispute has become one of the most important issues for China along with reunification with Taiwan and others…

It is headed by Xi, who is also chairman of the Central Military Commission, while Dai Bingguo, a state councilor in charge of foreign policy, serves as deputy chief. Members include senior officials of the PLA General Staff Department.

The dedicated team was created because the PLA and other government divisions were responding to the Senkaku Islands issue without coordination, the source said.

Members command surveillance ships and military forces via radio and videophone communications. Part of the aim is to prevent accidents caused by excessive front-line actions…

Since he became general secretary, Xi has repeatedly said: “Restoring the Chinese people is the greatest of our dreams.”

According to a source close to a military think tank, Xi’s remark is based on a report titled “China’s Dream,” written by Liu Mingfu, a professor at the PLA National Defense Academy.

The report, published in 2010, criticized the United States as a dictatorial nation seeking hegemony and oppressing China. It has been banned apparently for fear of fueling overseas arguments that China is a threat.

However, Gen. Liu Yuan, political commissar at the PLA General Logistics Department, decided to republish the report at the end of last year.

A son of former President Liu Shaoqi, Liu Yuan has been a friend of Xi’s from childhood. When Xi inspected the Guangzhou Military Region in December, he said, “Increasing wealth and military power is necessary for the great restoration of the Chinese people,” also a statement in “China’s Dream.”

The source close to the military think tank said, “Liu Yuan exerts no small influence on Xi’s policies and thinking.”

General Liu Yuan was in the news Monday for an excerpt of an essay he wrote that ran in  The Global Times (Chinese).

In comments that may or may not reflect official but unstated views but will certainly be noticed in Beijing, a US intel officer warned a conference in San Diego that China ‘bully on high seas’:

A top US navy intelligence officer has warned China is a bully on the high seas, with ambitions to sink American warships and seize control of waters from its neighbours. Captain James Fanell also accused Beijing of ”fabricating” history to claims on disputed islands in the south and east China seas and described China as the ”principal threat”.

Worried yet? Read Gideon Rachman’s The shadow of 1914 falls over the Pacific in the Financial Times:

It is, at least, encouraging that the Chinese leadership has made an intense study of the rise of great powers over the ages – and is determined to avoid the mistakes of both Germany and Japan. The fact that we are living in a nuclear age also makes the 1914 crisis much less likely to be replayed.

If things got really dangerous, there is also some wiggle room in the US-Japan security treaty. Article V of the treaty is commonly believed to commit the US to defend its ally by military means. In fact, it simply commits the two nations to “act to meet the common danger” in the event of an attack on Japan. That ambiguity could be dangerous, if it tempts China to call America’s bluff. But it could also be useful at a time of crisis.

In July 1914, leaders on all sides felt helpless as they were swept towards a war that most of them did not want. A study of that history might help the Chinese, Americans and Japanese to avoid a similar fate in 2014.

Let’s hope so. But hope is not a strategy, and weaseling out of supporting Japan in a conflict with China would likely destroy America’s credibility and alliances in the region, as China knows and likely desires.

Today’s Links:

THE ESSENTIAL EIGHT

Yum stumbles badly in China, warns on profit | Reuters - KFC parent Yum Brands Inc (YUM.N) warned on Monday that it expects 2013 earnings to shrink rather than grow as it struggles to manage a food safety scare in China, and sees no return to growth in restaurant sales there until the fourth quarter. The company’s shares fell 5.6 percent in after-hours trading, as Wall Street analysts and investors digested the disappointing news from the company that has been widely seen as a model for how to do business in the complex Chinese market. “This is going to take all the experts they have in public relations to stem the tide. I don’t think anyone saw this coming,” Edward Jones analyst Jack Russo said.//no one saw this coming? hello, been a big deal for weeks…anyone know how many ad agencies Yum uses in China to place its advertising?

What property crash? -Jonathan Fenby– TrustedSources- Remember that time not so long ago when the air was full of forecasts of an impending property crash that, combined with the mountain of local government bad loans, would bring down China’s banking sector and reduce growth to a snail’s pace, with all the political and social implications that would entail. Such apocalyptic visions have become par for the course. If one ventures to point out that the doomsayers have been proved as wrong as the investment bank bulls who forecast sustained growth of 12 per cent and above, the reply is that it may not have happened yet, but just you wait. Sought-after cooling. Well, the runaway expansion of the property market fuelled by the credit boom of 2009 has certainly cooled down, which is just what the government wanted. But the underlying strength of demand, especially from first-time buyers, means that control measures introduced nationally and locally have not sent the market into a tailspin.

SARFT bans “gift giving” TV, radio ads – Xinhua | English.news.cn- China’s TV watchdog on Tuesday ordered all radio and TV channels to cut advertisements suggesting “gift giving.” Ads on some channels have encouraged people to give gifts like luxury watches, rare stamps and gold coins, which has publicized incorrect values and helped create a bad social ethos, according to a circular issued by the State Administration of Radio, Film and Television (SARFT).

Chinese Firms Shrug at Rising Debt – WSJ.com- China’s banks and other lenders have extended hundreds of billions of dollars to Chinese companies over the past two years, helping them weather sluggish foreign demand in many industries as well as slowing growth at home. Analysts at Standard Chartered PLC estimate that Chinese corporate debt was equivalent to 128% of gross domestic product by the end of 2012, up from 101% at the end of 2009. In a 2011 research paper, economists at the Bank for International Settlements found that when a country’s corporate debt exceeds 90%, it becomes a drag on growth.

Worse than Poisoned Water: Dwindling Water, in China’s North – NYTimes.com- “My heart is really out for the leadership trying to come up with solutions because China’s just so maddeningly complex,” Michael Bennett, an environmental economist, was quoted as saying. As evidence of serious efforts to solve the problem, Mr. Bennett pointed to widespread, small-scale, government-approved water conservation programs taking place around the country. Will China solve its really serious water problems? “The trend is in the right direction, the question is whether it’s going to be fast enough,” Mr. Bennett said.

The Real Problem with Those Gini Numbers - Caixin- Rampant corruption means officially produced figures for income inequality cannot be trusted. By Wang Xiaolu

Commentary: The Pivot Didn’t Cause China’s Misbehavior | The National Interest - incoming Secretary of Defense Chuck Hagel, Secretary of State John Kerry, and the rest of the foreign-policy community should resist being taken in by a meme that’s making the rounds among China-watchers. Writing in Foreign Affairs last fall, Boston College professor Robert Ross established himself as the leading spokesman for this school of thought. In a nutshell, analysts of Ross’s leanings maintain that Washington’s pivot is fanning paranoia in Beijing. It has goaded an increasingly fretful, increasingly jingoistic leadership into acting against weaker neighbors emboldened by U.S. diplomatic and military support.

China’s foreign policy dilemma | Lowy Institute for International Policy - In this Analysis, Linda Jakobson writes foreign policy will not be a top priority of China’s new leaders because they must focus on immense domestic problems. Therefore Chinese foreign policy can be expected to be reactive. This may have serious consequences because of the potentially explosive nature of two of China’s most pressing foreign policy challenges: how to decrease tensions with Japan and with Southeast Asian states over diverse territorial claims in the East and South China Seas.

 

BUSINESS AND ECONOMY

Yum to Introduce New China Ads After Lowering Forecast – Bloomberg - good news for ad agencies and media…//Yum! Brands Inc. (YUM), owner of the KFC and Pizza Hut dining chains, will introduce a new advertising campaign to lure consumers in China after a probe into its chicken suppliers hurt sales in the Asian nation. The “aggressive” marketing strategy to restore consumer confidence will start after the Chinese New Year ends, Chief Executive Officer David Novak said during a conference call today. Diners expect safe food, and Yum let them down, he said.

China’s January Data Gap Vexes Economists – Bloomberg - Government agencies on Feb. 8 will report slower inflation of 2 percent and faster export growth of 17.3 percent, the median estimates of analysts for figures skewed by the timing of the weeklong Lunar New Year holiday. Data for industrial output, retail sales and fixed-asset investment won’t be publicly updated until March. The wait prevents analysts and investors from fully gauging growth in the world’s second-largest economy following the first acceleration in almost two years last quarter. While it’s not simple to account for the effects of a festival whose timing varies from year to year, that shouldn’t keep the government from releasing data, according to analysts at Royal Bank of Scotland Plc and Mirae Asset Financial Group.

In China as a WFOE - We view this as meaning that foreign companies cannot engage in company research as a WFOE. However, many companies do it by creating a service WFOE stating that it will assist foreign investors in investing in China. Then what they really do is market research. As long as you do get caught, it does not matter. If you do get caught, the risk of any real problem is pretty low. Unless that is that you say something in your research that offends the wrong person.

Trusted Sources- China – Our Research- Our products Topical and thematic notes: In-depth analysis of important emerging trends and themes. Fenby China Report: A comprehensive look at political and macroeconomic developments both within China and in its evolving relationship with the outside world. Access to our analysts: Engage in regular conversations with our top analysts – in which you get to ask the questions. Trusted Sources analysts on-site: Our analysts present to and brainstorm with you and/or your clients. Private research: We carry out a range of tailor-made research and advisory projects to help clients drill down and gain more focused and detailed understanding of topics and themes that fall within our core research agenda. These include country outlooks, industry reports, watching briefs, portfolio investment strategies and policy papers. Jonathan Fenby’s China blog

U.S. businesses concerned over China market barriers – San Jose Mercury News - A U.S. business group voiced concern Monday over market access barriers in China, which it said likely contributed to a drop in foreign investment there last year. The U.S.-China Business Council’s president, John Frisbie, said that in a recent survey of its 230 member companies, nearly 10 percent of respondents reported that they had stopped or delayed a planned investment in China because of foreign ownership restrictions.

CHINASCOPE – Xinhua: Several Provinces Require Domestic-Branded Cars for Government Procurement - Xinhua recently reported that several provinces just released regulations that require government branches to use domestic-branded cars. These new rules are the implementation of the general requirements that the new Communist Party leadership recently developed. These provinces include Ningxia, Hunan, Gansu, Anhui, and Xinjiang. Shanghai and the City of Guangzhou (the capital of Guangdong Province) have already started purchasing domestic cars. However, the new regulations apply only when current government cars reach the end of their life. Meanwhile, there is still no official Catalog of Domestic Cars, which, starting in 2011, triggered a large internal debate. The main pressure came from foreign governments. China did not join the optional WTO Agreement on Government Procurement.

 

POLITICS AND LAW

Who’s the Xi Jinping insider posting his activities on Weibo? | South China Morning Post- The account on China’s popular Twitter-like service Sina Weibo, named “Hao Hao Xue Xi” (meaning “study Xi thoroughly” in Chinese), has published 343 posts and drawn more than 136,000 followers as of Tuesday morning. Written in a conversational style and studded with phrases in the Shaanxi dialect, the posts seem to give live updates of much of Xi’s daily work and official trips. Many photos have been posted alongside the text. Judging from the images, they seemed to have been taken with a mobile device at a short distance from Xi.

Latest Corruption Scourge in China Centers on Housing – NYTimes.com- “House Sister is a microcosm of China’s problems,” said Li Xinde, a freelance journalist who runs a Web site devoted to exposing official corruption. “Many ordinary people simply can’t afford to buy a single home, but ‘House Sister’ suddenly accumulated one after another. It’s a classic case that shows the crazy extent of the intertwining of money and power in China.” A former vice president of the Shenmu Rural Commercial Bank in the northwestern province of Shaanxi, Ms. Gong owned 41 residential and commercial properties in Beijing alone, the police in the capital said last week. They said Ms. Gong bought at least 10 of the properties by using an illegally obtained national identity card and Beijing residence registration, apparently to try to evade detection and skirt limits on nonlocal residents buying housing in Beijing.

The illegal private lending scheme behind China’s ‘house sister’-WantChinaTimes.com- Gong Aiai, who worked as a rural bank manager in Shaanxi province’s Shenmu county, has been dubbed “house sister” by Chinese netizens and media after being unveiled as the owner of over 20 properties in Beijing, part of which was paid for through running an alleged illegal private lending ring. The private lending business began thriving in Shenmu after locals grew wealthy from expanded excavations of local coal mines in 2005, when coal prices surged by over 50 yuan (US$8) per ton. More than 2,000 local residents owned assets in excess of 100 million yuan (US$16 million), according to a report released in May 2011. Since 2009, the county government has introduced free health insurance for all residents, free education, and free care services for the elderly and others in need, as local government revenue soared from 2005′s 670 million yuan (US$107.5 million) to 2011′s 4.53 billion yuan (US$726.7 million).

陕西神木警方:“房姐”龚爱爱非国家公职人员 系长期合同工-财经网 - Shenmu authorities now claim that housing elder sister gong aiai was not a civil servant but just a “contract worker”..predictable weibo response ensues…//经查,神木农商行属企业法人,龚爱爱系长期合同工,非国家公职人员。其于2012年6月递交辞呈,并于2013年1月2日获准离职。

知情人称陕西房姐为避免影响更多人主动投案_新闻_腾讯网 - 记者昨天从一名“房姐”身边人处获悉,自龚爱爱被曝出在北京有数十套房产和多个户口后,一直是全国媒体关注的焦点,因其迟迟不露面,媒体将新闻关注点逐渐扩大,她的亲属、朋友都受到媒体侵扰,为避免影响更多人,龚爱爱主动投案。知情人称,龚爱爱起初在西安,遭到曝光后她赶到北京照顾子女。 知情人称,龚爱爱与现任神木农商行副行长杨利平、煤炭老板韩某一起在北京SOHO买房,韩某为中间人,正是他参与办理了龚爱爱的北京户口。韩某日前在内蒙古鄂尔多斯被警方控制。

SOHO受累“房姐”事件 京沪售楼处冷清 | 每经网SOHO China getting a lot of bad press over housing elder sister case, leaked information about her ownership of SOHO China properties may hurt sales as potential customers fear their own data at risk// 昨日,SOHO中国CEO张欣在微博中称:“我们与《财经》查询,@财经女记者部落和财经杂志没有关系。我们大力支持反腐,但如果以不法手段取得公司客户信息,我们将向公安报警。保护客户信息是SOHO中国的责任,也是每家企业的责任。” 《每日经济新闻》记者以购房者名义造访SOHO上海中山广场项目售楼处,看到现场几乎没有前来咨询的购房者。前台欲打电话寻找销售人员也未果,最后通过负责当天接待的销售总监才找到销售人员。 这与此前SOHO中国销售人员的态度有很大区别。2010年,记者曾报道有地产私募整体收购上海的甲级写字楼项目,见报后不久就有一位自称SOHO东海广场项目的销售人员主动登门拜访,意欲找到意向客户上门销售。 北京的售楼处也一样冷清。昨日下午3时半左右,记者以客户身份在银峰SOHO售楼处看到,数百平方米的一楼销售大厅,只有三四名前台工作人员。客户的到来似乎也没引起他们的兴奋。

SOHO中国再回应房姐事件 张欣称不法手段获取客户信息将报警 | 每经网 - SOHO中国CEO张欣今日在微博上作出回应,称串通洗钱与巨额回扣均属造谣,SOHO中国有责任保护客户信息。

户籍制度限制了谁?_杂志频道_财新网 - “房姐”多户口现象再次暴露出“法律因人而异”的窘态—很少有金钱不能购买的东西,也很少有不能变现的权力

Policeman owning 192 houses sacked|Society|chinadaily.com.cn - Authorities in south China’s Guangdong Province on Tuesday sacked a senior policeman who allegedly owns 192 houses and has double national identity cards. Zhao Haibin, member of the the Communist Party of China (CPC) committee of Lufeng City’s Public Security Bureau and deputy Party chief of a local town, was dismissed by the Lufeng CPC committee and Lufeng municipal government, an official told Xinhua late Tuesday. An investigation team was established to carry out a thorough probe into problems of Zhao as exposed on the Internet and by the media, said the official.

人民日报-坚决维护党的政治纪律 钟纪岩 - 党的各级组织要自觉担负起执行和维护政治纪律的责任,全面了解把握本地区本部门维护党的政治纪律情况,加强对党员遵守政治纪律的教育,促使广大党员干部坚定中国特色社会主义道路自信、理论自信、制度自信。对大是大非问题要有坚定立场,对背离党性的言行要有鲜明态度,不能听之任之、置身事外。发现触犯政治纪律的苗头性倾向性问题要及时提醒和纠正,对违反政治纪律的行为要坚决制止。

Chinese Blogger Thrives in Role of Muckraker – NYTimes.com - With his five cellphones constantly ringing, it is not easy these days to get the undivided attention of Zhu Ruifeng, a self-styled citizen journalist whose freelance campaign against graft has earned him pop-star acclaim and sent a chill through Chinese officialdom.

Citizen Zhu–New York Times Video - Zhu Ruifeng is a citizen reporter on a mission to expose corruption in China. But his passion for truth has cost him his marriage, and possibly more.

Premium liquor shares iffy amid frugality campaign – Xinhua | English.news.cn- The liquor sector may have led rises in China’s stocks at the end of last week, but a debate about the future prospects of drinks producers is making investors hesitant to inject funds. With a government campaign against extravagance seeing boozy Spring Festival banquets canned across China, many are speculating that the frugality push will have a sizeable impact on liquor makers. The contrasting opinions of two noted investment advisors on stockholdings of Kweichow Moutai encapsulate heated discussion over the profitability of major players who used to bring intoxicating returns to investors.

党报:不允许存在“封妻荫子鸡犬升天”现象_多维新闻网 - 【多维新闻】中共十八大后新领导层的反腐雄心可谓如火如荼,一大批贪官污吏应声落马。中共党报《人民日报》2月4日发表评论文章,强调封建社会那种“封妻荫子”、“一人得道、鸡犬升天”的腐败之道,决不允许在党内滋生蔓延。

Web China: SOE boss suspended for flouting frugality campaign – Xinhua | English.news.cn- The boss of a state-owned enterprise in south China was suspended from his post on Tuesday due to his part in a luxury banquet last month which flouted the country’s frugality campaign. Zhou Shaoqiang, general manager of Zhuhai Financial Investment Holdings Co., Ltd, was ordered to undertake self-reflection over public expenditure which exceeded standards, said the Communist Party of China’s discipline authorities in Zhuhai, Guangdong Province. A banquet which Zhou and 16 others had in a local restaurant on Jan. 4 cost 37, 517 yuan (about 5, 974 U.S, dollars), far more than the fake bill of 4, 689 yuan, which the restaurant had claimed under the instruction of Zhou.

Beijing Court Takes Rare Swipe at ‘Black Jail’ System – China Real Time Report – WSJ- In a rare legal attack on the shadowy “black jail” system used to stifle dissent in the Chinese capital, a Beijing court on Tuesday sentenced 10 men to prison for illegally detaining petitioners and ordered them to pay compensation to their victims. The men, all farmers from the city of Yuzhou in central China’s Henan province, were given sentences ranging from six months to two years for intercepting and imprisoning a group of people, also from Henan, who had hoped to lodge complaints with the central government in April, according to the official Xinhua news agency (in Chinese). Three of the 10 were minors and therefore had their sentences commuted, Xinhua said.

 

FOREIGN AND DEFENSE AFFAIRS

人民日报-政府媒体一唱一和 妄称威胁来自中国 美国要搞网上“先发制人” 本报驻美国记者 温 宪 - 在这一阵针对中国的喧嚣中,美国媒体罕见地主动配合,与政府一唱一和。据悉,美国官方对关于网络安全的秘密政策评估已进行相当时日。在新政策即将出台之际,美国媒体集体抹黑中国令人感到意在铺垫。一些美国媒体自曝为了配合政府调查,甚至连媒体内的网络服务器都交给政府进行分析。此间有分析认为,美国媒体以往很少配合政府并向其提供资料,这次罕见地配合相关部门进行调查,显示出美国媒体与政府在针对中国网络袭击上的联手策略。

Scramble for Myanmar begins | TODAYonline- “What China is lacking is its California, another coast that would provide its remote interior provinces with an outlet to the sea,” said Mr Thant Myint-U, author and adviser to the Myanmar government. In Where China Meets India, his book on Myanmar’s geopolitical significance, Mr Thant says the pipeline is a milestone in Beijing’s Two Oceans policy. Similarly, author Robert Kaplan argues that China’s ability to establish a presence in the Indian Ocean will determine whether it becomes a global military power or stays as a regionalpower confined to the Pacific. For years, the West viewed Myanmar through the prism of human rights and democracy. That narrative has been one in which Ms Aung San Suu Kyi struggles to rid the country of military authoritarianism. It is a vital story, particularly for Myanmar’s 60 million downtrodden people. But it has obscured something arguably just as important: A tussle over one of Asia’s most strategic states.

How will John Kerry deal with China? _ Qiushi Journal - Seen from his review and voting records regarding China-related bills in Congress, Kerry generally voted in favor of bills conducive to promoting the development of China-U.S. relations, and generally voted against or expressed different opinions for bills not conducive to China-U.S. relations. However, recently during his attendance of the hearing of the Senate concerning his appointment, when it came to the “rebalancing” strategy in the Asia-Pacific, Kerry said “I am not convinced that the United States needs to increase its military presence in the Asia-Pacific” Though he subsequently added that he did not recommend any reduction to the current level either. Such a stand is quite different from that during the Hillary term and makes people “think”.

Gillard faces China election test | Little Red Blog- The other China issue that looms as an election wildcard is defence. China was furious that it was named as a possible threat in the 2009 Defence white paper and yet another such paper is due about May. The slight was exacerbated by the decision to allow the US to station 2500 marines near Darwin. China wants Australia to pull back from our alliance with the US instead of strengthening it. Yet Australia has excellent military-to-military relations with the People’s Liberation Army and recently announced joint exercises with the world’s biggest standing armed forces.  In the meantime,China has been more belligerent in its marine littoral, locking horns with Australia’s ally Japan. Gillard soft-pedaled on China in her recent limp speech on cybersecurity. Last week a clutch of major Western media organizations — including The New York Times, The Wall Street Journal and The Washington Post — accused China of hacking into and seriously compromising their systems, including the theft of email passwords. This is unacceptable and if it has happened to Australian media, Gillard needs to speak up and say so.

 

HONG KONG, MACAO AND TAIWAN

Taiwan’s envoy to US defends ‘shield’ of strategic ambiguity | South China Morning Post- Taiwan’s President Ma Ying-jeou startled friends and rivals by making his closest adviser “ambassador” to the United States on a mission to prove that the island is still a key ally. King Pu-tsung is considered the power behind the Taiwanese throne as Ma’s election strategist and former head of the ruling Kuomintang party. But he has never been a diplomat, and the appointment surprised the US and China – the rival powers who underpin Taiwan’s security and economy. King has highlighted the importance of the “strategic ambiguity” that the island of 23 million people maintains with its neighbour, on one side, and protector, on the other.

Hong Kong takes strong measures as smugglers milk formula supplies- The Wall Street Journal has reported that since September, some 2,000 people trying to cross from mainland China have been turned away on suspicion of entering to bring contraband back to their home country. Nearly 100 parallel traders, mostly from the mainland, have been given prison sentences of up to two months since the charge began, according to the paper. Laws have been proposed to limit the amount of milk formula allowed to be taken out of the city to two cans per trip. This would serve to force parallel traders to make more trips across the border, thereby making it uneconomic for them to continue once the bill is passed by next month at the earliest.

MACAU DAILY TIMES – Beijing representative denies visa restrictions - The Director of the Chinese Liaison Office in Macau Bai Zhijian said the central government would help Macau to determine how many visitors it can accommodate, which he believed should be done as soon as possible and denied Beijing is playing its visa restriction cards by loosening or tightening the border control targeting the gaming industry.

Door is about to slam shut on high-rolling holidays to Macau | The Times - Beijing is planning a crackdown on Triad-linked “junket” operators who bring high-rolling gamblers into Macau from across China and smooth a money-laundering route that processes billions of dollars every year. The move, which law enforcement sources say will begin after Chinese new year in late February and will involve police operations in more than six big Chinese cities, is part of an anti-corruption campaign led by Xi Jinping, the country’s president-in-waiting.

 

TECH AND MEDIA

Baidu Tops Drop on Profitability Concern: China Overnight – Bloomberg - stock down 10%Tuesday after earnings Monday, lots of concerns also about impact from Qihoo (not necessarily by losing material search query share but that Qihoo may reduce keyword pricing and increase Baidu’s traffic acquisition costs (TAC)) as well as doubts about the strength of Baidu’s mobile strategy as usage rapidly shifts from PC to mobile

Baidu Reaches 80 Million Mobile Apps Users, Reveals Full 2012 Financials- Of course, the current situation is also very unlike the beginning of the web, as a lot of other Chinese major rivals and startups are now ahead of Baidu in some key areas. For example, Baidu is still without a social success, aside from its rather web 1.0 style BBS which is called Tieba. Also, one could argue that Baidu is not doing local listings and reviews as well as the Yelp-like Dianping. Plus, Baidu is a relative latecomer to mobile-based cloud services like file storage, though the company said recently that its Dropbox-esque NetDrive (pictured above) has over 30 million users. On top of all that, new challengers emerge all the time for Baidu, such as Qihoo’s new search engine last year. It’s also trying to battle Siri and Google Now on smartphones with its own ‘Baidu Voice Assistant’ app for Android.

Fei Chang Dao: On 36th Anniversary of Zhou Enlai’s Death, a Baidu Postbar Moderator’s Explanation of Why There is No Posting on the Zhou Enlai Forum - But perhaps because Baidu considered Zhou Enlai to be a highly sensitive political figure, the automatic “post screening” system completely halted posts from appearing that were banned from the Internet or that were uncivilized. This made everything completely safe, and never again would forum users go to the national Internet oversight agency to complain. But it also meant that forum users lost the right to freely post civilized content, and I think this point is something Baidu can’t do anything about.

Scott Sykes | Vice President, Head of International Media Affairs, Huawei - new blog

Turning Brand Fans into BFFs–Thoughtful China - Marketers are eager to tap Sina Weibo’s popularity, which prompted Sina Corp. to hire ad veteran Ken Hong to develop its social media marketing products and services. Find out more about his strategies and products for turning online fans into your brand’s best friend — and what he thinks about Tencent’s rival WeChat platform —  this week on “Thoughtful China.”

Chinese comedy aims to make Americans laugh | beyondbricswould be very surprised it Americans like this// ‘Lost in Thailand’ will start showing on Friday in 29 theatres of AMC, the second-largest cinema company in America. Wanda, a Chinese real estate group which also owns the country’s largest cinema chain, acquired AMC for US$2.6bn last year.

 

SOCIETY, ART, SPORTS, CULTURE AND HISTORY

China’s InitialView gains traction as most top US universities now accept its candidate interviews – The Next Web- With its successes at the university level, InitialView is also reaching out to secondary schools and prep schools in North America to tackle that market. It recently brought on board David Wivell, a former Director of International Admission and Student Programs at Northfield Mount Hermon, as its Head of Secondary School Relations. “While some secondary school solutions look similar, InitialView is the only one that has already been proven at the college level. Good boarding schools are run very much like small colleges, and I know distinguished secondary schools will appreciate that InitialView is used by prestigious higher education institutions,” Wivell said in a statement.

Chinese cast doubt over executive’s rags to riches tale | World news | The Guardian- “It sounds too unbelievable for fiction, but this is the true story of a life in two worlds,” enthuses the website for Ping Fu’s autobiography, Bend Not Break. In one interview to promote the book, the entrepreneur boasted that Michelle Obama had invited her back to the White House for a nightcap after the 2010 State of the Union address. But after Chinese readers flagged up a series of inconsistencies and improbabilities in interviews she has given, Fu has been forced to defend her book from accusations that some of it is not true. Fu, the president, chief executive and cofounder of the 3D software company Geomagic, has said she is “shocked, heartbroken and deeply saddened” by what she considers a smear campaign that “reveals the dark side of human cruelty” and “makes me relive the emotional abuse of my childhood”.//Penguin has a big mess with this book…wonder how many others of this genre were exaggerated or made up? there was a time when it was hard to check back in China. no longer

 

ENERGY, ENVIRONMENT AND HEALTH

雾霾追凶:62万台燃煤锅炉“逍遥法外”_财经频道_一财网 - first financial says 620,000 unregulated coal burners also played a key role in recent airpocalypse// 汽车尾气排放、燃油不达标并不是造成雾霾天气的唯一“凶手”。调查显示,燃煤锅炉对雾霾天气的发生,亦须负不可推卸的主要责任。

China proposes coal industry reshuffle|Economy|chinadaily.com.cn - The minimum standard for the scale of coal producers will be raised gradually, according to a revised draft of coal industrial policies released by the National Energy Administration, the country’s top energy regulator, to solicit public opinions on the proposals. The draft suggests that the annual output of coal companies in the country’s three major coal-producing regions — Shanxi, Inner Mongolia and northern Shaanxi — should be no less than 3 million tonnes.

Sinopec boss passes the buck to government — Shanghai Daily- SINOPEC Corp Chairman Fu Chengyu’s recent remarks on the worsening air quality in parts of China since the beginning of 2013 is not only a massive public relations disaster but also highlighted a serious lack of responsibility. Fu, head of China’s largest fuel supplier, acknowledged that the nation’s refineries were among the culprits for the toxic smog that is choking Beijing and other cities. But he told Xinhua news agency last week that it was not that the refineries failed to meet the air-quality standards in the country but the government standards were rather lax. In other words: “It’s not our fault.”

 

BOOKS AND LITERATURE

Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World (Belfer Center Studies in International Security): Amazon - When Lee Kuan Yew speaks, presidents, prime ministers, diplomats, and CEOs listen. Lee, the founding father of modern Singapore and its prime minister from 1959 to 1990, has honed his wisdom during more than fifty years on the world stage. Almost single-handedly responsible for transforming Singapore into a Western-style economic success, he offers a unique perspective on the geopolitics of East and West. American presidents from Richard Nixon to Barack Obama have welcomed him to the White House; British prime ministers from Margaret Thatcher to Tony Blair have recognized his wisdom; and business leaders from Rupert Murdoch to Rex Tillerson, CEO of Exxon Mobil, have praised his accomplishments. This book gathers key insights from interviews, speeches, and Lee’s voluminous published writings and presents them in an engaging question and answer format.

Where China Meets India: Burma and the New Crossroads of Asia: Thant Myint-U: Amazon- Thant Myint-U’s Where China Meets India is a vivid, searching, timely book about the remote region that is suddenly a geopolitical center of the world. From their very beginnings, China and India have been walled off from each other: by the towering summits of the Himalayas, by a vast and impenetrable jungle, by hostile tribes and remote inland kingdoms stretching a thousand miles from Calcutta across Burma to the upper Yangtze River. Soon this last great frontier will vanish—the forests cut down, dirt roads replaced by superhighways, insurgencies crushed—leaving China and India exposed to each other as never before.

 

JOBS AND EVENTS

GreenPoint Group-Client Services Director–Beijing- The GreenPoint Group is seeking a dynamic, high integrity, and results-oriented professional for the position of Client Services Director in our Beijing, China office. The ideal candidate will have the ability to serve clients well and interface with government, private sector, and other constituencies. This role is well suited to an individual with a passion for business excellence and a long-term desire to contribute meaningfully to U.S-China relations. Primary responbilities include client service, outreach and intelligence gathering, and business development. Candidates should be able to demonstrate a track record of sound judgment in the context of complex political and commercial matters, must be bilingual (Chinese, English) and must have five or more years professional working experience. To apply, please send resume and cover letter to [email protected]

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