China Readings for October 4th

  • The Top 10 Unicorns of China Policy – By Daniel Blumenthal | Foreign Policy – Unicorns are beautiful, make-believe creatures. But despite overwhelming evidence of their fantastical nature, many people still believe in them. Much of America's China policy is also underpinned by belief in the fantastical: in this case, soothing but logically inconsistent ideas. But unlike with unicorns, the United States' China-policy excursions into the realm of make-believe could be dangerous. Crafting a better China policy requires us to identify what is imaginary in U.S. thinking about China. Author James Mann captures some in his book, The China Fantasy.

    Here are my own top 10 China-policy unicorns:

  • The Ullens Collection – Experimentation and Evolution–Sotheby’s post-sale report – grand total sales 16.9M USD
  • Open Source Center Report-Profile of MSS-Affiliated PRC Foreign Policy Think Tank CICIR – PDF
  • Digital Dao: DST Global’s Connections to the Russian Government – big tencent partner.
  • China: pop goes the Lafite | beyondbrics | News and views on emerging markets from the Financial Times – FT.com – It’s not exactly the sound of a bubble bursting. But China bears looking for further indications of a weakening Chinese economy could do worse than look at the results of Sotheby’s latest fine wine auction in Hong Kong.

    According to Bloomberg, Sotheby’s has failed to sell all of the wine on auction for the first time in 17 sales. The biggest loser was Château Lafite-Rothschild – the Bordeaux wine that is most coveted by China’s super-rich.

  • China or the US? Make your choice – FT.com – The defining geopolitical drama of the next century will be the battle for power and influence between China and America. That emerging struggle is already posing awkward choices for Asian countries, caught between the two global giants.
  • Chinese Copper Demand: Not Quite As Horrible As You Think – From Lazard, some perspective on Chinese copper demand
  • Senate clears way for China currency bill debate – Scott Wong – POLITICO.com – The Senate on Monday night made a major move toward passing a bill cracking down on China’s currency policies, even as some conservative leaders warned it could start a trade war and a top House Republican said that it was going nowhere in the House.

    On a 79-19 procedural vote, the Democratic-controlled Senate cleared the way for debate on a bill that would impose tariffs on Chinese imports as a penalty for currency manipulation.

    House Majority Leader Eric Cantor (R-Va.) said the lower chamber was unlikely to take up the legislation, even if it clears the Senate later this week with strong bipartisan backing. The White House said it’s still reviewing the legislation, though it’s in no rush to get into a confrontation with one of its largest economic partners.

  • China’s rural poor left stranded as urbanites race ahead | World news | The Guardian – As workers leave the countryside in the hope of better pay, the communities they leave behind face increasing poverty
  • The US Government Would Likely Block An Alibaba Purchase of Yahoo | DigiCha – Alibaba CEO Jack Ma said Friday that he is moving to the US for a year and is interested in buying all of Yahoo ($YHOO).

    Political considerations may make it difficult if not impossible for Alibaba to take over Yahoo. Yahoo has hundreds of millions of email accounts, billions of pieces of data on US citizens’ Internet browsing activity, and millions of American’s credit card data and payment information. It is hard to see how in the current political environment CFIUS (The Committee on Foreign Investment in the United States) and/or Congress would not raise objections to the takeover of an American Internet icon, even a flailing one, by a Chinese firm. Remember, Jack Ma’s excuse for expropriating Alipay was that payment data is a national security issue.

    Even if Jack Ma were able to buy Yahoo he would likely face operational challenges beyond fixing the current mess. For example, would most users feel comfortable having their data in the hands of a Chinese company? Competitors would probably relish the opportunity to market against Yahoo’s new overlords.

  • A show of force – FT.com – When the US announced its decision last week to help Taiwan upgrade its fleet of ageing fighter aircraft, the response was swift and sharp. China should take “smart and devious revenge”, advised Major General Luo Yuan, deputy secretary-general of the academy of military sciences. He went on to demand “a tooth for a tooth from those who violate China’s interests”, suggesting his country learn from Russia and deploy missiles against America.

    The biblical language and the cold war references make it difficult not to perceive China’s military as a belligerent force bent on confronting the US. In the past two years, a series of fierce outbursts from men in uniform, combined with constant friction with neighbours, and the People’s Liberation Army’s rapidly growing capabilities, have triggered complaints about an assertive, even aggressive, Beijing. Many outside China believe that the PLA is behind this push.

    “Is the military now driving China’s foreign policy?” asked Iskander Rehman, an Indian security analyst, in an article this year. The answer is yes and no. But the balance may still shift, with substantial implications for the Asia-Pacific region and beyond.

  • “Rumors are a Cancer that Threatens the Internet and Society”. Sina Shorts Rejoice? | DigiCha
  • China bans production, sale of clenbuterol to improve food safety – China has banned the production, sale and use of clenbuterol tablets, a medicine used to treat bronchial asthma that has also been illegally used by farmers to make their pigs leaner.
  • China’s Liu Xiang becomes Communist Party official – FRANCE 24 – AFP – China's Olympic and world 110m hurdles champion Liu Xiang has taken up a Communist Party Youth League post, as the state seeks to capitalise on the millionaire athlete's star status.

    In a posting on China's Twitter-like Tencent microblog, Liu said he gave a speech at a Shanghai sports meeting Thursday as the representative of the youth league, an organisation widely seen as grooming China's future leaders.

    According to Xinhua news agency, Liu was named deputy secretary of the Shanghai sports bureau committee of the Communist Youth League, which would make him a municipal-level official.

  • Alibaba May Buy Its Biggest Investor Yahoo – Bloomberg – Ma’s role in the Alipay dispute may make it more difficult for his company to acquire Yahoo, said Laura Martin, an analyst at Needham & Co. in Los Angeles.

    “Jack Ma has damaged his credibility in American capital markets by his transfer of Alipay,” said Martin, who has a “buy” rating on shares of Yahoo and doesn’t own the stock. “With him, I’d get the cash at closing. You never know what you’re going to end up with.”

  • Lafite Fails to Find Buyer for First Time in 17 Sotheby’s Hong Kong Sales – Bloomberg – Sotheby’s (BID) failed to sell all of the wine in a Hong Kong auction for the first time in 17 sales as China’s wealthy collectors passed on oversized bottles of Chateau Lafite Rothschild yesterday in Hong Kong.

    The weekend sales came after the Standard & Poor’s 500 Index had its worst quarter since the end of 2008. Top lot in the two days of wine purchases, worth a total of HK$99.1 million ($12.7 million), was the sale of a 12-bottle case of 1988 Domaine de la Romanee-Conti Burgundy for HK$907,500.

    “There weren’t so many buyers,” said Liu Dan, a Beijing- based collector who picked up six cases of Chateau Mouton Rothschild 1996 vintage for $HK48,400 each. “Prices were cheap.”

  • China group’s eye on Yahoo fuels privacy fears – FT.com – Rebecca McKinnon, a senior fellow at the New America Foundation, said that any attempt by Alibaba to buy Yahoo was likely to be “highly controversial”, given the negative reaction in Congress last year when Chinese equipment maker Huawei attempted to become a supplier to Sprint, the US telecoms company.

    “Will people who use Yahoo email feel comfortable using a service owned by a Chinese company, knowing that in China all internet companies are expected to share information about user identities and activities on request?” she said.

    In a close parallel, US regulators had taken a close look at Deutsche Telekom’s purchase of a US wireless carrier, making it likely they would also study a Chinese acquisition of a big online communications firm, said Marc Rotenberg, head of the Electronic Privacy Information Center.

    The rapid increase in the amount of data held by US internet concerns had made possible foreign acquisitions more of a concern, Mr Rotenberg added. “That is one of the scenarios that has long been of concern with respect to Google’s enormous data aggregation.”