In response to unexpectedly weak economic data the People’s Bank of China announced a 50 basis points reduction in banks’ required reserve ratio. Analysts now expect further easing, China bears are rejoicing that the end is nigh, and pundits like Walter Russell Mead are writing that “Authoritarian modernization always works until it quite suddenly doesn’t.” Gordon Chang no doubt has an already written his “I Was Right” essay and in it probably asks “what is 11 years of being wrong in the overall arc of Chinese history…?”
Is it really that bad here? As usual, I don’t actually know, though things are clearly slowing. In general I resist the extremes of both sides of the binary China boom and China bust argument and tend to believe things have always been messy here, they always will be, and that the economy, and the government, are more likely to muddle through than to either collapse or take over the world. But the “Coming Muddle-Through of China” will never sell as a book.
In a blockbuster article the Financial Times writes that Bo ally [Zhou Yongkang] gives up China security roles. The article jibes with some strains of the virulent rumors spreading around Beijing. The surprise is not that Zhou would go into powerless retirement after the 18th Party Congress–pretty much everyone paying attention in Beijing believes this–it is that he has already been reduced to a figurehead. The article concludes with the statement that “Some officials within the party, including premier Wen Jiabao, are trying to push through political reforms that would move China towards western-style democracy while hardliners, including Mr Zhou, are opposed to such a move.” The western-style Democracy claim is highly suspicious and makes me wonder how much the FT reporters are being spun by Zhou’s rivals and/or by people who want to secure a better historical legacy for their patron(s).
Related to that comment on political reform, today’s People’s Daily has devoted all of page 5 to a special section on the progress of political reform in China, led in by a front page article on the topic. This related article–人民日报整版谈政治体制改革：绝不照搬西方模式–claims that a Western-style political model is not in the cards for China. After I posted a link to this on my Sina Weibo a friend retweeted it to her 4.6 million followers and now there are hundreds of interesting and mostly skeptical comments about this topic.
Speaking of rumors and reporting on Chinese politics, this is the first time that China a leadership succession has really mattered to global financial markets. Reports of factional fighting and political instability can move markets. Last week Reuters reported out another rumor that has been making the rounds, that the Party was considering delaying the 18th Party Congress. I had heard the same rumor, from good sources, but in their version the idea was raised by some but quickly rejected as a bad idea. Reuters knows that this kind of news can have a real financial impact, as they write that “delay could also further unnerve global financial markets whose perception of Chinese politics as a well-oiled machine has already been shaken this year by the extraordinary downfall of an ambitious senior leader, Bo Xilai, in a murder scandal.”
What Reuters did not mention is that at the conclusion of the 6th Plenum of the 17th Party Congress in October 2011, before there were any indications of problems for Bo Xilai or political instability in general, the Party publicly stated that the “Communist Party of China to hold 18th national congress in 2nd half of 2012“. So unless the 18th Party Congress is held after December 31, 2012, it may be hard to argue there has been a delay.
TRAGEDY IN JIANGXI. 5 LITTLE KIDS UNDER CARE OF GRANDPARENTS FALL INTO POND AND DROWN. PARENTS AWAY IN CITIES WORKING. IN FACT, NO YOUNG PEOPLE IN VILLAGE TO SAVE THEM
- billbishop的微博 新浪微博-随时随地分享身边的新鲜事儿
POSTED THE PEOPLE”S DAILY REFORM SECTION TO WEIBO, HUNG HUANG RETWEETED TO HER 4.6M OR SO FANS, LOTS OF INTERESTING COMMENTS
MORE ON TODAY”S PEOPLE”S DAILY SECTION ON POLITICAL REFORM
- Anonymous blogger must appear in NY court – 1450 WHTC Holland’s Hometown Station
NEW YORK (Reuters) – A New York judge has ordered an anonymous blogger to appear in court next week over accusations that the blog Alfredlittle.com wrote false reports about a Chinese company to drive down the stock.
TODAY”S PEOPLE’S DAILY ENTIRE PAGE 5 IS DEVOTED TO A DISCUSSION OF THE PROGRESS OF POLITICAL SYSTEM REFORM, REJECTS WESTERN MODEL (SHOCKED…)
- China’s Young, Burly Shipyards Sinking Fast – Caixin Online
MAYBE THE PLAN CAN ACCELERATE DEVELOPMENT TO TAKE UP SOME OF THE SLACK?
The China Shipbuilding Industry Association said new orders fell 40 percent nationwide in January and February from the same period last year. Sixteen key companies monitored by the association lost money, and 37 saw their profits decline.
Essence Securities said eight of China’s 10 largest shipyards received no new orders between January and April. The exceptions were Shanghai Waigaoqiao Shipping Co. and Guangzhou Shipyard International Co.
- Bo ally gives up China security roles – FT.com
SOUNDS PLAUSIBLE EVEN IF SOURCING MAY BE A BIT THIN, JIBES WITH SOME STRAINS OF THE VIRULENT RUMORS GOING AROUND BEIJING. ALL EXCEPT THE LAST GRAF AND WESTERN-STYLE DEMOCRACY REFORMS. I BELIEVE CERTAIN WESTERN MEDIA ARE BEING PLAYED ON THAT ANGLE BY “SOURCES” LOOKING TO IMPROVE HISTORICAL LEGACY OF THEIR PATRONS…//
China’s powerful chief of domestic security has relinquished day-to-day control of the country’s police, courts and spy networks in the wake of the most serious political scandal to hit the country in decades, according to senior Communist party members…
But according to three senior party members and diplomats briefed on the subject he has handed operational control of the pervasive Chinese security apparatus to Meng Jianzhu, the current minister of public security.
The trigger for Mr Zhou being sidelined was his enthusiastic lobbying on behalf of purged Chinese leader Bo Xilai during internal debates over Mr Bo’s fate in March and early April, these people say…
Some officials within the party, including premier Wen Jiabao, are trying to push through political reforms that would move China towards western-style democracy while hardliners, including Mr Zhou, are opposed to such a move.
- Chinese Economy “Unexpectedly” Slows; Will the Bubble in China Babble Burst? | Via Meadia
Authoritarian modernization always works until it quite suddenly doesn’t; many observers hailed Stolypin’s reforms in late Czarist Russia and spoke in awe about Russia’s rapid industrial growth in the years before World War One. At Via Meadia we’re not able to give assign a date to the China correction that lies in store; the current slowdown could be a blip on the screen or the start of something more consequential…
Napoleon is reported to have said that when China awakens it will shake the world. What that prophecy overlooked, and what the China babblers of today also miss is that the awakening process will first and foremost shake China itself. The transformation of a nation like China cannot long or successfully be led by technocrats however enlightened and skillful anymore than the technocrats of Brussels can manage the far less demanding tasks of building Europe.
The ground under Beijing is seismically active; one doesn’t know when the next quake will strike, but come it will. The steady rise in internal security spending tells us that the Chinese understand this, even if starry eyed pundits in the West can’t figure it out.
- 皇氏乳业产量虚夸5倍多 “水牛奶”被疑兑水奶 – 上市公司调查 – 21世纪网
ANOTHER POSSIBLE MILK SCANDAL, THIS ONE INVOLVING WATER BUFFALO MILK, A “HEALTHY ALTERNATIVE” MARKETED TO ELITE CONSUMERS, WITH ELITE PRICING
- Private lending drops in Wenzhou after credit crisis – Xinhua | English.news.cn
Private lending in Wenzhou, a city known as the cradle of China’s private businesses, shrank by 30% compared with August last year after a credit crunch almost crippled the local economy, according to a survey conducted by the city’s banking regulator.
- 我国政治体制改革取得重大进展（深化改革 攻坚克难）–时政–人民网
PAGE 1 PEOPLE’S DAILY ARTICLE SAYS CHINA HAS MADE SIGNIFICANT PROGRESS IN POLITICAL SYSTEM REFORMS
- 白电之乱：产能过剩6000万台 逼宫企业转型_科技_腾讯网
MASSIVE OVERSUPPLY IN THE CONSUMER WHITE GOODS INDUSTRY. LOOKS LIKE THE RURAL REBATES STIMULUS PLAN SKEWED THE MARKET, STOLE DEMAN FROM THE FUTURE
- Cited for speeding: Is China seeing a slowdown in bottled wine imports? | Grape Wall of China
Has China’s high-speed growth in bottled wine imports hit a road bump? First-quarter data from China Customs and talks with four industry players suggest we are seeing a slowdown.
- PCAOB, SEC and Localization | China Accounting Blog | Paul Gillis
Last week saw three significant developments with respect to accounting in China. First, James Doty of the PCAOB told reporters that he anticipated that the PCAOB would reach agreement with Chinese regulators to observe their inspections of Chinese accounting firms. Then the SEC charged Deloitte with securities laws violations for refusing to turn over working papers on a U.S. listed company. Finally, Chinese regulators announced rules for the restructuring of the Big Four into locally controlled entities. Taken together, these three events shape up an interesting six months ahead for U.S. listed Chinese companies and their shareholders, who risk getting caught in a regulatory crossfire.
- China, Japan, South Korea Agree to Trade Talks – WSJ.com
The leaders of China, Japan and South Korea agreed to begin free-trade negotiations this year, opening the possibility of an agreement that could rival the world’s largest free-trade zones in size, although it is likely to be far less comprehensive or rigorous.
- As Beijing Moves to Spur Growth, Its Tools Are Limited – WSJ.com
China’s leaders started to reach into their economic-stimulus tool kit this weekend to boost flagging growth, but the measures don’t pack the wallop they once had.
- Communist Party of China to hold 18th national congress in 2nd half of 2012
OFFICIALS STATEMENT FROM LAST YEAR. SO UNLESS HELD AFTER DECEMBER 31, 2012 THERE IS NO “DELAY”//
BEIJING, Oct. 18 (Xinhua) — The Communist Party of China (CPC) will convene its 18th national congress in the second half of 2012 in Beijing, the CPC Central Committee announced after concluding a plenum Tuesday.
- Echoing Out of Texas, a Voice of China Freedom – NYTimes.com
Bob Fu, a Chinese-born pastor who operates out of a squat, whitewashed house opposite a Family Dollar store here in Midland.
“When it comes to contacts in China, Bob’s network can’t be beat,” said Representative Christopher H. Smith, Republican of New Jersey, who convened the hearing to put pressure on the Obama administration and help ensure that Mr. Chen, a self-taught lawyer, would be allowed to leave China with his family to study law in the United States.
Mr. Fu’s most recent rescue was Li Jun, a Chongqing property developer who says he was tortured by officials seeking to appropriate his business.
The group’s tenacity and organizational prowess have alarmed the Communist Party, and officials appear to be especially vexed by Mr. Fu.
“I’m happy to meet with them,” Mr. Fu said, referring to feelers he has received from high-level security officials. “I’ll meet them almost anywhere,” he added. “Just not in China.”
LEADERS OF KEY CHONGQING SOES ORDERED TO REPORT ALL THEIR FAMILY ASSETS
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- China-US ties crucial to peace in Asia-Pacific region – People’s Daily Online
- William Farris – Google+ – Sina Weibo Censoring Searches for “Xu Ming Zhang Ziyi” The…
Xu Ming Zhang Ziyi (徐明 章子怡): In accordance with relevant laws, regulations, and policies, search results for “Xu Ming Zhang Ziyi” have not been returned” (根据相关法律法规和政策，“徐明 章子怡”搜索结果未予显示)
- China SignPost™ (洞察中国) #59–“China’s Rising Seaborne Food and Fuel Imports: Propelling Naval Expansion?” | Andrew S. Erickson
PEOPLE’S DAILY SAYS 18TH PARTY CONGRESS WILL BE HELD IN SECOND HALF IF YEAR< NO CHANGE FROM WHAT PARTY SAID LAST FALL ABOUT TIMING, REUTERS LOOKS TO HAVE GOTTEN STORY WRONG, OR OVERSTATED THE RUMORS THAT ARE FLOATING AROUND?
- Shanghai’s wealthiest people revealed|Society|chinadaily.com.cn
There are 370,000 people with 6 million yuan ($950,000) living in Shanghai today, or one-in-65 people in a city with a population of 23 million.
A total of 140,000 people in Shanghai have personal assets of 10 million yuan, an increase of 6.1 percent year-on-year, accounting for 13.7 percent of China’s high net worth individuals.
Furthermore, there are 8,200 “super-rich” individuals with assets worth 100 million yuan, up 5.1 percent from last year.
- Chinese Defense Ministry denies PLA at level-2 combat readiness – Xinhua | English.news.cn
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