Today’s China Readings June 8, 2012

China has cut interest rates for the first time since 2008. The reduction comes ahead of what many expect will be very weak May economic data and against the backdrop of a worsening outlook for Europe and the global economy. As the FT’s Beyondbrics explains in China’s rate cut: glass half empty?:

In another sign perhaps that the country is making up for lost time following two months of near-paralysis this spring amid political infighting over the fate of Bo Xilai, the central bank also introduced measures on Thursday to give banks more flexibility on the rates at which they can lend money and pay depositors.

In an important move alongside the rate cut, the Chinese central bank said it would allow banks to set deposit rates 10 per cent above the benchmark level and set lending rates 20 per cent below the benchmark

“The discount that banks were previously allowed to offer on lending rates relative to the benchmark rate has been doubled, from 10 per cent to 20 per cent, which means that the lowest official lending rate has effectively been cut by 63 basis points, not just 25 basis points,” said [HSBC’s Donna] Kwok.

The Wall Street Journal conducted a rare interview with Lou Jiwei, head of China’s CIC sovereign wealth fund. In China CIC Chief Lou Jiwei Sees Rising Risk Of Euro Breakup Lou told the reporters that “CIC sold down its exposure to European peripheral countries a long time ago, before incurring any losses, and has reduced its holdings of European stocks and bonds. “Right now we find there is too much risk in Europe’s public markets.”

China’s State Council Information Office published a draft of proposed new Internet regulations, as Reuters reports in China proposes strengthening Internet guidelines (original Chinese draft–关于《互联网信息服务管理办法(修订草案征求意见稿)》的说明.) The biggest change appears to be increased emphasis on real name registration on forums and blogs as well as microblogs (aka Weibo). Tea Leaf Nation has a good take on the draft in What to Make of China’s New Internet Law.

Investors do not seem worried, as Sina stock rose 1% in Thursday trading. But I believe the real name rule, if implemented, would be very negative for Sina. Sina management likely agrees, as in its recent annual filing with the SEC the company admitted it has not complied with Weibo real name registration rules. The actual technical implementation is not difficult, so it might be prudent to assume the delays are really due to concerns over the impact of real name registration. But the sell side analysts will likely say this is good news and churn out happy spin. If you believe them, I still have that Beijing bridge for sale… (and no position in Sina stock)

Meanwhile, has anyone profiled Sina Editor-in-Chief Chen Tong, the company’s real power behind Weibo?

Readers may remember a reference a few days ago to a nasty rumor that Boxun was spreading. I did not describe the rumor but noted that it looked like the start of a smear campaign. It was, though Boxun has so far only retracted part of it. The WantChinaTimes reports that Boxun takes back claim of Ling Jihua’s involvement in ‘coup’. The fact that someone is targeting Ling Jihua could be a sign that he is a dark horse for a big job in the 18th Party Congress, perhaps even a seat on the Politburo Standing Committee.

The South China Morning Post reports in Party polls 370 members on choice of top leaders that senior members of the Communist Party recently held an informal poll to pick their leaders for the next decade. The poll is non-binding, but the paper quotes scholars saying this “vote” represents a very important step forward for intra-Party democracy (the kind of political reform Chinese leaders are really talking about when so many in the West get excited about speeches mentioning political reform.)

There was another interesting tidbit in the SCMP story. China watchers have been debating whether or not Hu Jintao has reinstated the annual summer meetings in Beidaihe after publicly saying a few years ago that there would be no more summer seaside summits. According to the article:

“one party insider, a party theorist, confirmed that a secret vote had been conducted ahead of the top leaders’ summer summit, known in the past as the Beidaihe meeting, after the seaside resort in Hebei, neighbouring Beijing, where it was held. The meetings, often in mid-June, have continued since Hu came to power but now convene in Beijing.”

So there are Beidaihe meetings, but in Beijing? No wonder people are confused.

Caixin has posted a translation of its piece into the dirty business of IPO media relations, writing in Road Show Media Bandits Squeeze IPO Hopefuls that “before most stock debuts, companies helped by PR agents are paying media outlets to sanitize the news.” PR is a dirty business in China.

I highly recommend the recent Sinica Podcast on the state of gender equality in China. This edition features “Mary Kay Magistad, correspondent in China for the Public Radio International/BBC program “The World.”…sociologist Leta Hong Fincher, who’s doing her PhD at Tsinghua University, Didi Kirsten Tatlow of the International Herald Tribune, and Cao Haili, managing editor of the upcoming Chinese language online version of the New York Times.”

The story behind the 1989 “Tankman” photograph is fascinating. In Tank Man Revisited: More Details Emerge About the Iconic Image Time Magazine talks to Jeff Widener, the photojournalist who took the picture. Widener says it would not have happened without the help of a young American named Kirk Marsten.

I stayed a couple of nights in a room on the south side of the Beijing Hotel not far from where Widener took this photo, working as a “fixer” for a major US TV network. We missed Tank Man. Every time there was gunfire my job was to call the radio HQ in New York on one of those brick Motorola phones, tell them to roll tape, then crawl out onto our 12th floor balcony and hold the phone over the side. The scariest moment of the Beijing Hotel stay came one morning at 6 AM or so when I walked out the east exit of the hotel on my way to the Palace (now Peninsula) Hotel to deliver the video cassete I had stuffed in my waistband. I exited out the side entrance onto Wangfujing, right into the middle of a platoon of PLA troops having breakfast. Fortunately they were hungry so all they did was look me over as I quickly crossed the street and walked north, without looking back.

Widener’s full picture of the Tank Man scene is chilling. I will remember that view for the rest of my life.

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