The Sinocism China Newsletter For 03.01.13

Today is an absolutely gorgeous day in Beijing. The mountains on the West side are again visible from CBD. Yesterday’s “sandsmog” dispersed in the high winds Thursday afternoon, bummer for those downwind…

Welcome to all the new subscribers, we now have over 8,000 people on the list. For those new to Sinocism, I often add my take to news items in bold.  There is also usually a longer commentary but I had a late night of research so just links today.

Thanks for reading, comments/suggestions/support always welcome.

THE ESSENTIAL EIGHT

Japan Overtook China as U.S. Securities Top Foreign Holder – Bloomberg – Japan overtook China last year as the largest foreign holder of U.S. securities, including equities, asset-backed debt and Treasuries, the U.S. Treasury Department said. Japan’s total holdings of U.S. securities grew to $1.84 trillion at the end of June 2012, from $1.59 trillion a year earlier. China’s holdings fell to $1.59 trillion from $1.73 trillion, Treasury said today in a preliminary report.

China’s new leadership unlikely to roll out new property curbs, analysts say | South China Morning Post  “I don’t expect the new leadership to mention new property measures at the meetings,” said Winnie Cheng Yun, research director at realtor Centaline Group. “Actually, some existing measures have been repeated again and again over the past few years.” The existing measures, reiterated in a State Council announcement on February 20, include expansion of a property tax trial, restricting purchases of second homes and increasing the supply of land and housing.

New top diplomats in China signal focus on U.S., Japan, North Korea | Reuters – Current Foreign Minister Yang Jiechi, ambassador to Washington from 2001-2005 and a polished English speaker, is tipped to be promoted to state councilor with responsibility for foreign policy, three independent sources said. China has only five such councilors and the post is senior to that of foreign minister. Yang, 62, will likely be replaced as foreign minister by Wang Yi, China’s ambassador to Japan from 2004 to 2007 and a one-time pointman on North Korea. Both will be appointed during March’s annual full session of parliament, the sources said.

大气污染事故罚款上限或取消 新华社——经济参考网 – upper limit to fines for air pollution incidents may be removed? good news if true// 《经济参考报》记者27日从多个渠道的权威人士处获悉,在经历两年冬季长时间、大范围的灰霾之后,环保部、国务院法制办、全国人大就加速《大气污染防治法》修订工作达成共识。这是该法2000年实施、2006年修订以来的又一次修订。环保部起草的修订建议稿不仅将企业违规排污的罚款上限提升到100万元,还取消了大气污染事故罚款上限。

Classical Music with Chinese Characteristics | ChinaFile– very impressed with the Chinafile site, and not just because I am an advisor and contributor// On a frigid Friday morning at the end of 2012, a stream of expectant concertgoers poured through the cavernous lobby of the China National Center for the Performing Arts. They had come to the stunning, egg-shaped arts complex at this unusually early hour holding invitations to the dress rehearsal for what was arguably the hottest ticket in town: the Beijing premiere of the Three Highs Philharmonic Orchestra. The Three Highs—San Gao, in Chinese, or “3H” in colloquial English promotional materials—is an amateur ensemble named not for any notes its performers might reach in concert, but for the status they must possess simply to be members. Indeed, “three highs” refers to the bureaucratic ranking of the ninety-seven musicians and the accompanying 141-member chorus, all of whom are high-ranking members of China’s Communist Party, intelligentsia, or military. They include Minister of Foreign Affairs Yang Jiechi, who sang in the chorus (along with dozens of other ministry officials); Shanghai Communist Party Secretary Han Zheng and chairman of the Inner Mongolia autonomous region, Bate’er, both of whom played accordion; Shenzhen Party Secretary Wang Rong, who served as concertmaster; and retired astronaut Jing Haipeng, who played trombone.

潘石屹首次否认侵吞50亿国有资产 称与任志强所有交易均合法合规_中国经济网??国家经济门户 – Pan Shiyi denies charges of sketchy dealings with Ren Zhiqiang involving 5B RMB of state assets…both Pan and Ren are very outspoken on Weibo, have been under attack recently in what almost looks like coordinated attacks to those with a conspiratorial bent. but SOHO China investors should be paying attention// 2月28日,针对SOHO中国与华远地产涉嫌侵吞国有资产的传闻,SOHO中国董事长潘石屹首次予以了回应。 当天上午,潘石屹在其新浪实名认证微博上表示,“最近有人在给我们和华远造谣,造谣的罪名是侵吞国有资产。我曾经建议公司CFO和律师发一澄清公告,但他们认为完全是不顾事实的网上诽谤,没有必要去一一回应”。潘石屹称,SOHO中国与华远地产的所有交易都是合法合规的,传闻华远地产向SOHO中国转移了40亿、50亿国有资产的说法都是没有事实根据的。

China Says Japan Is Raising Tensions Over Islands – NYTimes.com – China accused Japan on Thursday of escalating the maritime tensions in their relationship by harassing Chinese ships, continuing a succession of tit-for-tat accusations that reflect increasing distrust between the two countries.

Fei Chang Dao: Caixin and Weibos Block Access to Report on Private/Public Cooperation in Internet Censorship – translation of some of the good parts of the Caixin story from about the internet post deletion industry// Every Friday, senior employees from the major web sites (chief auditor and above) have to go to the Internet management office for a meeting. All major web sites have established public sentiment oversight departments and government relations departments to liaison with Internet oversight agencies. One web site went so far as to set up a police affairs office to be able to handle visits by oversight officials at any time. These orders are frequently used by public relations firms with special connections to smuggle in their own contraband. One person inside Yage Times gave an example: an official in the Shaanxi Land Resources Bureau once sought out a public relations firm to request the deletion of news showing photos of him wearing an expensive watch, and afterwards the public relations firm employed its special relationships to achieve the deletion goal.

 

BUSINESS AND ECONOMY

Exclusive: China plans bond overhaul to fund $6 trillion urbanization – sources | Reuters – 城市化 or 城镇化? // The urban development would be funded by a major expansion of bond markets, sources with leadership ties, and a senior executive at one of China’s “Big Four” state banks, who was formerly at the central bank, told Reuters.The urbanization drive will push the domestic capital market liberalization agenda,” the senior bank executive said on condition of anonymity. “Urbanization is Li Keqiang’s big project. He has to get it right and he is willing to pursue innovation to make it a success.”

奢侈品市场急刹车 2013年是“严冬”?_财经频道_一财网 – first financial continues its reporting on the sharp decline in China’s luxury market, says 2013 may be a “severe winter” for the industry…//历经五年的爆炸式发展之后,中国奢侈品市场并没有如奢侈品牌预想的那般继续高速前行,这辆消费大车的急刹车着实让它们打了个踉跄。

Frugality promised in upcoming “two sessions” – Xinhua | English.news.cn – friends who “facilitate” for a living say gift giving will be very restrained this year compared to previous ears but expect the gifts will eventually be given// Measures including tight controls over conference expenses and vehicle use have been detailed for the forthcoming “two sessions”, the latest efforts to fight against extravagance in China.

Reformist wealth fund boss Lou Jiwei next finance minister | South China Morning Post In another top appointment, Zhang Xiaoqiang, a vice-chairman of the National Development and Reform Commission, will be appointed chairman of the board of supervisors of the nation’s sovereign wealth fund, the China Investment Corporation (CIC), replacing Jin Liqun . Jin will become chairman of China International Capital Corp (CICC), the mainland’s leading investment bank, while former CICC top boss Li Jiange will become chairman of Shenyin Wanguo Securities. It remains to be seen who will be picked to fill the vacancy left by Lou.

特别策划_河北钢铁董事长涉牟私利 胞弟无偿使用国有矿产 – aggressive reporting by netease finance about corruption at hebei steel corp// 一家私营性质的矿业公司却开设在国企河北钢铁集团矿业公司庙沟铁矿矿场内,且其无偿利用庙沟铁矿的矿石,生产铁精粉获利。 网易财经调查发现,这家名为斯利矿业的私企股东之一王义平,实际是现任河北钢铁集团有限. 公司董事长、党委书记王义芳的胞弟。斯利矿业开工近5年来,涉嫌无偿使用国有企业土地、水 电及矿产资源获利,律师认为,此举已构成国有资产流失,以及涉嫌利益输送

住房公积金入市存多重障碍 新华社——经济参考网 –   监管部门关于住房公积金入市的最新表态,在给市场带来利好的同时,也引发了公积金进入股市是否安全的争议。接受《经济参考报》记者采访的专家表示,公积金的保值增值迫在眉睫,但是否要现在进入股票市场仍然需要研究,此外还存在不少制度上的障碍。

ConnectedPRC – interesting site from Reuters

Two months – no action | China Accounting Blog | Paul Gillis – It has been two months since the CSRC and MOF sent a recommendation to the State Council on audit regulation and nothing has happened.  While I hope I am wrong, I don’t think the State Council is going to do anything. ..There will be a hearing in Washington next week by the U.S.-China Security and Economic Commission on these issues. The Commission was set up by Congress to monitor, investigate and report on the national security implications of the U.S.-China bilateral trade and economic relationship. The hearing is on Thursday, March 7, at 9 AM in Room 582 in the Dirksen Senate Office Building. I will be testifying in the morning session.

China-Based Company and Former CFO to Pay Penalties for Disclosure and Accounting Violations; 2013-30; February 28, 2013– who were the auditors? there should be a free, searchable database of auditors and audit partners who have been involved with frauds// The SEC alleges that Keyuan Petrochemicals, which was formed through a reverse merger in April 2010, systematically failed to disclose to investors numerous related party transactions involving its CEO, controlling shareholders, and entities controlled by management or their family members. Keyuan also operated a secret off-balance sheet cash account to pay for cash bonuses to senior officers, travel and entertainment expenses and an apartment rental for the CEO, and cash and non-cash gifts to Chinese government officials. The SEC further alleges that Keyuan’s then-CFO Aichun Li, who lives in North Carolina, played a role in the company’s failure to disclose the related party transactions. Li was hired to ensure the company’s compliance with U.S. accounting and financial reporting regulations, and she received information and encountered red flags that should have indicated that the company was not properly identifying or disclosing related party transactions. Despite such knowledge, Li signed Keyuan’s registration statements and quarterly reports that failed to disclose material related party transactions.

US companies in China: tougher times | beyondbrics – The “new normal” is one of slower economic growth, rising costs, skilled labour shortages and an increasingly competitive business environment. Tougher times “will be the rule rather than the exception in the years ahead,” AmCham says in a report.

China News Round-up: Ghost Town in Tianjin?-Caijing – may get bad…very smart reader tells me “He Lifeng is leaving so the whole area will be neglected”…guess I was wrong in assumption that Zhang Gaoli’s ascension to the PBSC would mean Tianjin would not be OK?// Constructions of many commercial buildings in Xinagluowan Business District, Tianjin Binhai New Area, have reportedly suspended

Feeding China’s 1.3 Billion People – China Real Time Report – WSJ – As China’s farmers continue their exodus to the city from the countryside, some worry about food shortages. Will Freeman of research firm Dragonomics talks about which foods will be increasingly in demand as China becomes a country of city slickers.

Who Are the Chinese Buyers Snapping Up U.S. Real Estate? (Video) – China Real Time Report – WSJ – broker says “entrepreneurs”…wonder how many are corrupt officials and/or their family members…anyone in the US keeping a database of the buyers?// Chinese buyers are pouring more money into the U.S. real-estate market. Sotheby’s Angela Wong tells the WSJ’s Deborah Kan who these Chinese property buyers are and where their money is going.

China’s small cities gear up for big spenders | Video | Reuters.com – China’s new growth engine is its small cities, far inland from the prosperous east coast. Migrant workers who once fled poverty at home are flocking back as entrepreneurs to ride a new spending wave.

 

POLITICS AND LAW

China Congress Offers Xi-Li Partnership Chance to Unveil Policy – Bloomberg – “Xi and Li take over a nation characterized by far more large-scale corruption, inequality of wealth and environmental degradation than was the case a decade ago,” said Kenneth Lieberthal, director of the Brookings Institution’s John L. Thornton China Center. “The population is now demanding that the government treat it with greater respect.” The two-week conclave, which will be attended by almost 3,000 delegates, will reveal the shape of the Xi-Li administration with the appointment of new cabinet ministers. It may also provide details on plans to revamp the central government by merging some ministries.

CPC Central Committee adopts state leadership candidates, gov’t restructuring plan – Xinhua | English.news.cn – The 18th Central Committee of the Communist Party of China (CPC) adopted a list of candidates for state leadership positions and a government restructuring plan as its second plenary session closed Thursday. The list will be recommended to the presidium of the first annual session of the 12th National People’s Congress (NPC), according to a communique issued after the plenary session.

Xinhua Insight: China’s new leadership to surface – Xinhua | English.news.cn– Based on relevant provisions, the NPC presidium nominates candidates for the chairperson, vice chairpersons, secretary-general and members of the NPC Standing Committee, as well as the state president and vice president, chairperson of the PRC Central Military Commission and the heads of the Supreme People’s Court and the Supreme People’s Procuratorate. The president nominates candidates for State Council premier. The premier nominates candidates for the State Council’s vice premiers, state councilors, ministers for government departments, ministers in charge of commissions of the State Council, governor of the People’s Bank of China and auditor-general, as well as the State Council’s secretary-general. The chairperson of the PRC Central Military Commission nominates candidates for vice chairpersons and members of the Central Military Commission.

Analysis: From builders to managers: educating China’s leadership | Reuters– Sun represents one of the more far reaching changes in Chinese politics. Highly educated leaders in a broad range of disciplines are rising to the top of the ruling Communist Party, according to data from Connected China, a Reuters database application that tracks the connections and careers of China’s leaders. Sun, 49, who joined the Politburo at November’s Communist Party Congress, is one of five PhD holders in a body in which all 25 members have at least a junior college education.

Special Report: Freedom fizzles out in China’s rebel town of Wukan | Reuters – “rebel”?…please…// Zhuang Liehong, a 28-year-old cigarette and liquor salesman, was fed up. Businessmen were seizing land here in Wukan, his hometown fishing village in southern China. Village officials not only didn’t help – they had secretly sold the land. Outside authorities did nothing.

人民日报:拼实力不如“拼爹”等现象是法治精神缺失_资讯频道_凤凰网 –

The Many Faces of Censorship in China – NYTimes.com–Yu Hua – Censorship in China conjures the image of rigid, unsmiling authority, but that disapproving scowl can give way to a different expression — and not always a consistent one. A film, for example, might be banned for 20 years, while the novel on which it is based sells briskly throughout that same period.

 

FOREIGN AND DEFENSE AFFAIRS

PacNet #14 – Building Toward a Stable and Cooperative Long-term US-China Strategic Relationship | Center for Strategic and International Studies – By Ralph A. Cossa, Lewis A. Dunn and Li Hong–The relationship between the United States and China, one country an established power, the other a rising power, will decisively shape the 21st century world. Of the many aspects of this relationship, one of the most important is the strategic relationship, with “strategic” meaning the many ways that the two countries’ plans, doctrines, capabilities, postures, and actions interact across the nuclear offensive and defensive, outer space, and cyber realm

China Says U.S.-Based Hackers Target its Websites | TIME.com–  China’s military said Thursday that overseas computer hackers targeted two of its websites an average of 144,000 times per month last year, with almost two-thirds of the attacks originating in the United States. The claim from Defense Ministry spokesman Geng Yansheng follows accusations last week by American cybersecurity company Mandiant that Chinese military-backed cyberspies infiltrated overseas networks and stole massive amounts of data from U.S. companies and other entities. China denied the allegations, and its military said it has never supported any hacking activity.

China: military vehicles to get new licence plates to cut misuse | beyondbrics – China’s new leadership has been making a lot of noise about cracking down on corruption. Now it seems that the military, where things are particularly bad, will start feeling the heat too. From May 1, all military vehicles will get new license plates, Colonel Geng Yansheng, defence ministry spokesman, said Thursday.

China nears approval of $16 billion domestic jet-engine plan: Xinhua | Reuters – China’s cabinet may soon approve an aircraft engine development program that will require investment of at least 100 billion yuan ($16 billion), state-run Xinhua news agency quoted unidentified industry sources as saying.China is determined to reduce its dependency on foreign companies like Boeing Co (BA.N), EADS-owned Airbus (EAD.PA), General Electric Co (GE.N) and Rolls Royce Plc (RR.L) for the country’s soaring demand for planes and engines.

 

HONG KONG, MACAO AND TAIWAN

China Policy Institute Blog » Media Freedom in Taiwan: The Real Threat of Monopoly – The truck tour was the last of a series of activities and protests against media monopolization in Taiwan since last year. Starting last July, six protests were held in front of the CtiTV station building, the Want Want China Times Group, the National Communications Commission, the Executive Yuan, the Fair Trade Commission and the Legislative Yuan, all to demand appropriate government agencies and institutions fulfill their obligations to protect Taiwan’s media diversity and maintain the quality of the media.

 

TECH AND MEDIA

Chinese Celebrity Blogger Han Han Talks Weibo, WeChat, and Why User Numbers Are Bulls**t–TechinAsia – everyone at dinner last night had cut Sina Weibo usage in favor of Wechat..Weibo still very important, but not now nor will ever be the “Facebook+Twitter” of China// Late yesterday, he broke his silence on to share a short post on his blog in which he discusses his impressions of Sina Weibo and Tencent’s WeChat. It’s a pretty interesting post, so we’ve translated select sections of it below for you to enjoy

China Mobile chairman says Skype and WeChat are bigger competitive threats than rival carriers – The Next Web– China Mobile chairman Xi Guohua has acknowledged that the world’s largest carrier is more concerned with competition from Internet services like Skype and Tencent’s WeChat than actions from rival carriers China Unicom and China Telecom. Xi told the Southern Metropolis Daily (via Sina Tech) in an interview that traditional carriers are facing enormous pressure. However, he downplayed competition between carriers as somewhat of a zero-sum game where some players go up as others go down.

Focus Media Sued by U.S. Fund on Unfair Price, Misleading Info; Privatization Threatened -Caijing – dinner last night w senior FMCN sales manager…shorts got this wrong, too much focus on ancient history, ignored deal dynamics that made their allegations irrelevant// Focus Media(DASDAQ: FMCN), China’s largest digital media group, was sued by an U.S. fund for the unfair price offered in the company’s privatization plan led by Carlyle Group, adding to uncertainties months before the deal was expected to complete.  In a complaint filed Monday in a federal court in San Francisco, Iron Workers Mid-South Pension Fund alleged the buyout price of the Shanghai-based advertising firm is unfair to shareholders, and that its proxy statement contains false and misleading information.

China’s Largest Search Engine Baidu Launches English Site For Developers | TechCrunch– Baidu, the search behemoth often referred to as “China’s Google,” launched its new English-language Web site for developers today. While the site is still in its infancy–right now there just a few intros up and no documentation–it promises to grow into a valuable resource for developers who want to take a crack at the Chinese market. Kaiser Kuo, Baidu’s head of international communications, says that the company can help developers who aren’t fluent in Chinese by making their apps discoverable through search on Baidu’s Mobile App Center. “As for monetization, no models are off the table,” Kuo tells me. “Subscriptions, freemium, in-app ads and just about any other revenue model is up for discussion, and depends on what works best for the type of app in question.”

 

ENERGY, ENVIRONMENT AND HEALTH

CHINASCOPE – Vice Minister of Health: China Relies on Organs from Prisoners on Death Row – On February 25, 2013, Huang Jiefu, China’s Vice Minister of Health, spoke at a conference where he stated that China is the only country that systematically uses organs from executed prisoners. According to Beijing Youth Daily, Huang stated, “For a long time, China has relied on executed prisoners as a primary source for organ transplants. Although the law provides that prisoners on death row may ‘voluntarily donate organs,’ there are loopholes in the implementation of the law. China is the only country in the world that systematically uses the organs of executed prisoners. This is not commensurate with China’s status as a major political power and a civilized country. Because an organ donation system has not been established at the national level, the organ transplantation industry has had many problems. The international hostile forces exaggerate this matter (the use of organs from executed prisoners), and attack our country’s human rights and civilization. They react negatively to all the reports about organ transplants in China and their principle is not to accept, nor publish, nor cooperate …”

Why China’s State Soil Secrets Matter – China Real Time Report – WSJ– While the mystery of what happened to the vast pile of cadmium-tainted rice has never been resolved, no one is disputing it existed – and that is where things get scary. Combined with earlier reports, including a 2010 U.S.-funded study that found Chinese cigarettes contained extremely high levels of heavy metals, the story suggests that something is very wrong with significant swathes of China’s agricultural land. How big is the problem? Pan Genxing, an expert at Nanjing Agricultural University, says he thinks 10% of the country’s annual rice output, roughly 20 million tons, contains excessive levels of cadmium, according to the Global Times. But that’s just a guess.

Map: China’s Provincial Water Resources and Use (2002-2010) | Circle of Blue WaterNews – Click through the interactive infographic to see how China, the world’s largest nation and second-largest economy, faces multiple challenges for sustaining its water suppl

Map: China’s Provincial Energy Production (1997-2010) | Circle of Blue WaterNews – Click through the interactive infographic to see how China, the world’s largest nation and second-largest economy, races to meet rising demand for energy.

Nine reasons China won’t need enough coal to justify coal ports in the Pacific Northwest | Grist– U.S. coal companies claim that exporting low-grade coal from the Powder River Basin through ports in the Pacific Northwest to Asia is big business, a sure thing, easily worth the pollution and disruption the new coal infrastructure would cause. Their case to investors, local communities, and state regulators is based on a simple premise: China’s demand for coal is steady and rising. And that does seem to be the conventional wisdom. But there are reasons to think the premise is false, and that the extraordinary sacrifices being asked of Northwest communities — dozens of trains a day passing through, spewing dust and noise; gigantic, polluting ports crowding out the cultural amenities in some of America’s most bucolic coastal towns — will lead not to jobs and enduring prosperity, but wasted time, wasted money, and disappointment.

 

FOOD AND TRAVEL

故宫筒子河内捞出万根玉米芯 多系游客丢弃(图)_新闻_腾讯网 – 10,000 corn cobs pulled from forbidden city moat, dumped by tourists…

 

JOBS AND EVENTS

Capital M Beijing Literary festival – Our annual literary feast begins March 2, as the Capital Literary Festival celebrates the best in fiction, literary non-fiction, journalism, the arts, poetry and more with a glorious mix of writers from around the world and at home in China.For three weekends, we’ll hear novelists, journalists, food writers, biographers, Sinologists, explorers, even screenwriters and rock stars discuss a richly diverse selection of genres in interactive forums and individual sessions. 2013 highlights include journalist James Fallows, Man Asian Literary Prize winner Kyung Sook Shin; “godfather of rock” Cui Jian; “In the Mood for Love” cinenamatographer Christopher Doyle; James Beard winning cookbook author & pastry chef Nick Malgieri and the “Indiana Jones of entomology”, Mark Moffett, aka Dr Bugs — and many more.

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