Today’s China Readings May 26, 2012

The cover of this week’s Economist magazine asks “How Strong is China’s Economy?” The answer the Economist provides in this issue’s special report on China’s economy will not please the thundering herd of ursus sinica. The magazine writes that:

China’s economy will not crash. Like the high-wheeled penny-farthing, which rolled serenely over bumps in the road, it is good at absorbing the jolts in the path of any developing country. The state’s influence over the allocation of capital is the source of much waste, but it helps keep investment up when private confidence is down. And although China’s repressed banking system is inefficient, it is also resilient because most of its vast pool of depositors have nowhere else to go.

No one paying attention disputes that China’s economy has serious issues. But some of the increasingly giddy bears look to be overstating their doomsday scenarios.

Reuters reports that China leadership rules Bo case isolated, limits purge. This is good news for the economy, if true. My guess on the outcome of a criminal case? Death for the aide-de-camp (勤务兵) who allegedly administered the poison, death with reprieve for BoGu Kailai, and significant time for her husband.

Bo Guagua graduated from Harvard’s Kennedy School. Nick Kristof claimed on Twitter to have seen him in a stretch limo. It was graduation, nothing wrong with getting a limo, but given the history of claims about Guagua and cars we should not believe it until we see the pictures. Speaking of Harvard, this article from Slate is interesting–Harvard and the Chinese Communist Party: Top Chinese officials are studying at elite U.S. universities in large numbers.

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  • Land Use for Infrastructure Rises Rapidly – Caixin Online
    Infrastructure construction has replaced real estate development as the major consumer of land plots during the first three months of 2012, the latest official data shows.
  • Asia’s Richest Man Details Succession Plan – WSJ.com
    Li Ka-shing, the 83-year-old owner of Hong Kong’s biggest supermarket chain and with assets globally in telecommunications, oil and real estate, remains actively involved in the operations of his flagship blue-chip companies. On Friday he said he had no plans to retire anytime soon, but sought to put to rest frequent media speculation in the city on the future of his multi-billion dollar companies.
  • Not a Beautiful Day for ‘Oklahoma!’ in Beijing – WSJ.com
    The growing unease toward foreigners in Beijing may have claimed an unexpected casualty: a community theater production of “Oklahoma!”Last week, a cast of foreign and local thespians were told by Beijing authorities just before they hit the stage that they wouldn’t be able to perform the 1943 musical about two cowboys in love with a pair of farm girls.
  • Obama Shunning China Yuan Manipulator Tag Gets Romney Ire – Bloomberg
  • The Useless Tree: Confucius Institutes are not about Confucius
    They are not about Confucius.  Rather, the PRC government has chosen to use the name of Confucius as a trademark of sorts for a global soft power branding project.  The Institutes, most of which in the US are hosted by colleges or universities, focus on language learning, with a variety of other cultural activities: Lunar New Year parties: calligraphy; a little Peking Opera; etc.  As far as I can tell – and I have been in conversation with many US academics who have CIs on their campuses (my college does not have one) – there is no systematic effort to engage with Confucian thought in any serious manner.Indeed, I find no direct reference to Confucius the man and thinker on their English language web page;
  • Wen Call for Growth, Not Loan Push, Echoed by Cabinet – Bloomberg
  • Chinese Regulator to Help Private Companies to Raise Capital – Bloomberg
    The China Securities Regulatory Commission will modify rules to help privately owned companies to raise capital, part of government efforts to aid smaller businesses struggling for funds.
  • GameSalad and Tencent Bringing Code-Free Game Development to China | PandoDaily
  • The Jamestown Foundation: Wang Yang: The Future Torchbearer of Reform?
    If, as is likely, the post-18th Party Congress PBSC will continue to take wei-wen as the party’s overriding task, the chances of the nationwide application of the reforms that Wang has so painstaking eked out in Guangdong may be relatively slim.
  • The Jamestown Foundation: Taiwan’s Intelligence Chief Offers New Insights on Chinese Security Developments
  • High levels of chromium found in more capsules — Shanghai Daily
    IN the latest round of medical capsule inspections, 204 batches made by 56 pharmaceutical enterprises across the nation were found to contain excessive chromium.
  • China keeps quarantine on Philippine fruit — Shanghai Daily
  • BBC News – Documenting China’s lost history of famine
  • 解放軍指可用高鐵快速應變
    Discussion of how pla might use high speed rail. How does that for into bears’ spreadsheets who say high-speed rail a white elephant?
  • 北京招募网络监督志愿者_互联网_DoNews
    Beijing looking for Internet “supervisor” volunteers
  • U.S. Hopes to ‘Fix’ Visa Problem Without Forcing Chinese Teachers to Leave – Global – The Chronicle of Higher Education
    The U.S. Department of State is backing down from its insistence that 600 Chinese-language schoolteachers affiliated with university-based Confucius Institutes leave the country by the end of June because of visa problems.
  • 70 New Airports Planned, Aviation Official Says – Caixin Online
  • Drooping Credit Curve Signals Inflection Point – Caixin Online
    Recent data from exporters, bankers, realtors and others points to a slump in loan demand that may be here to stay
  • Alibaba Looks to CDB to Help Fund Yahoo Deal – Caixin Online
    (Beijing) – Alibaba Group Holding Ltd. is in talks with China Development Bank (CDB) to get two loans for as much as US$ 2 billion to help with a stock buyback deal with Yahoo, a source close to the negotiations said on May 23.
  • Foggy Business on China’s Fast-Train Tracks – Caixin Online
    A German maker of railway building materials is caught in a debate over bullet train contracting and safety
  • Wanda Red-Faced Over Demolished School – Caixin Online
    The Dalian Wanda group made headlines twice this week. Firstly, it announced it is buying the AMC chain of movie theaters in the U.S. in a deal worth $2.6 billion. But the group also gained some unwelcome headlines: a middle school rebuilt using funds from the Hong Kong government following the 2008 Sichuan earthquake has been demolished to a make way for one of Wanda’s commercial property developments. China Biz spoke to Caixin reporter Li Shen for the latest on the story
  • In thrall of the empire of the sons–Garnaut on princelings and business in China
    In 2007, investigative reporters at Caijing Magazine discovered 92 per cent of the shares in the power generating company Luneng, with net assets valued on its books at 74 billion yuan ($12 billion), had been transferred to two unknown private companies for 3.7 billion yuan. A follow-up magazine edition was recalled and editors placed under huge pressure as soon as it hit news stands, after China’s leaders learned the identity of the princelings involved. Sources close to the Zeng family and also to the investigation reveal that the most sensitive identity involved, in this secret multibillion-dollar transfer of government assets, was Zeng Wei.
    Zeng Wei also teamed up with coal barons from Shanxi province. One of his partners hosted the wedding of his daughter at a beach resort in March, according to business sources, where the dowry alone was reported to consist of six Ferraris.
  • Consumers: Dipping into the kitty | The Economist
    Chinese consumption is about much more than shopping
  • Shades of grey | The Economist
    In March the central government unveiled a number of sensible reforms to tame the Wenzhou system without crushing it. Informal lenders will henceforth need to be registered, more private capital will be encouraged and the issuance of high-yield bonds approved. Yet the government still resists the more elegant solution to the problem proposed by Mr Zhou: allowing borrowers and lenders the freedom to set whatever interest rate they like.
  • Finance: Bending not breaking | The Economist
    China’s financial system looks quake-proof, but for how long?
  • Investment: Prudence without a purpose | The Economist
    China “bears” like Mr Chanos sometimes neglect this side of the country’s progress. In his 2010 presentation he compared China to the Soviet Union, another empire in the east that enjoyed a stretch of beguiling economic growth. Like the Soviet command economy, China is good at marshalling inputs of capital and labour, he pointed out, but China has failed to generate growth in output per input, just as the Soviet Union failed before it. Yet this analogy with the Soviet Union is preposterous.
    Economists refer to a rise in output per input of capital and labour as a gain in “total factor productivity”. Such gains have many sources. One textile boss got 20% more out of his seamstresses by playing background music in his factory, recalls Arnold Harberger of the University of California at Los Angeles. The striking thing about the growth in China’s total factor productivity is not its absence but its speed: the fastest in the world over the past decade. Between 2000 and 2008 it contributed 43% of the country’s economic growth, according to the APO. That is just as big a contribution as the brute accumulation of capital, which accounted for 44% (excluding information technology). Thus even if some of China’s recent investment has in fact been wasted, China’s progress cannot be written off.
  • Amazon.com: Ghetto at the Center of the World: Chungking Mansions, Hong Kong (9780226510200): Gordon Mathews: Books
    as Ghetto at the Center of the World shows us, a trip to Chungking Mansions reveals a far less glamorous side of globalization. A world away from the gleaming headquarters of multinational corporations, Chungking Mansions is emblematic of the way globalization actually works for most of the world’s people. Gordon Mathews’s intimate portrayal of the building’s polyethnic residents lays bare their intricate connections to the international circulation of goods, money, and ideas. We come to understand the day-to-day realities of globalization through the stories of entrepreneurs from Africa carting cell phones in their luggage to sell back home and temporary workers from South Asia struggling to earn money to bring to their families. And we see that this so-called ghetto—which inspires fear in many of Hong Kong’s other residents, despite its low crime rate—is not a place of darkness and desperation but a beacon of hope.
  • Pedalling prosperity | The Economist
    China’s economy will not crash. Like the high-wheeled penny-farthing, which rolled serenely over bumps in the road, it is good at absorbing the jolts in the path of any developing country. The state’s influence over the allocation of capital is the source of much waste, but it helps keep investment up when private confidence is down. And although China’s repressed banking system is inefficient, it is also resilient because most of its vast pool of depositors have nowhere else to go.
  • Resilient China: How strong is China’s economy? | The Economist
    Despite a recent slowdown, the world’s second-biggest economy is more resilient than its critics think..
    rapid development can look messy close up, as our special report this week explains; and there is much that is going wrong with China’s economy. It is surprisingly inefficient, and it is not as fair as it should be. But outsiders’ principal concern—that its growth will collapse if it suffers a serious blow, such as the collapse of the euro—is not justified. For the moment, it is likely to prove more resilient than its detractors fear. Its difficulties, and they are considerable, will emerge later on.
  • China Auto Rental cancels $138 mln U.S. IPO | Reuters
    China Auto Rental has formally withdrawn its application to hold an initial public offering in the United States, marking an end to the first attempt by a Chinese firm to list in New York since U.S. regulators tightened rules for foreign applicants.
  • China cancels UK visit over David Cameron’s meeting with Dalai Lama | World news | guardian.co.uk
    but will it cancel the pig & pork buys?//
    Beijing calls off trip by top official Wu Bangguo, saying meeting last month has ‘harmed Chinese-British relations’
  • Australia Targets Millionaires, Innovators With New Visas – Deal Journal Australia – WSJ
    The resource-rich country is encouraging the world’s wealthy to migrate here with an overhaul of visa regulations designed to attract investors and entrepreneurs.
    The center-left Labor government Friday unveiled a so-called significant investor visa, to be introduced from July 1, targeting migrants who can make an investment of at least 5 million Australian dollars (US$4.87 million) in the Australian economy
  • Royal Caribbean Plans New China Launch – WSJ.com
    The cruise company plans to launch the Mariner of the Seas, which can carry 3,114 guests, in China next year..It spent $50,000 on one of the largest industrial-sized woks to satisfy consumer demands for tastier wok-fried noodles.
  • Xiamen businessman disappears leaving RMB300m debts|Society|News|WantChinaTimes.com
    An entrepreneur in Xiamen in southeast China’s Fujian province has gone to ground leaving debts of 300 million yuan (US$47.5 million).
    Ke Binghuang, who runs a business borrowing money which he lends out again for higher returns, is said to be only a middleman who became caught up in the debt of another businessman who owes 1.6 billion yuan (US$250 million).
  • » Pictures Of Bo Guagua At His Harvard Commencement Ceremony Beijing Cream
  • Analysis: China’s nine-dashed line in South China Sea | Reuters
    the exact legal justification for China’s claim and the full extent of the territory affected remain uncertain, according to experts in maritime law.
    Like most of its claims to vast expanses of the resource-rich and strategically important South China Sea, Beijing prefers to remain ambiguous about the details, they say.
  • U.S. soldier, two Chinese charged with smuggling guns to China | Reuters
    A member of the U.S. National Guard and two Chinese citizens have been charged with smuggling multiple shipments of firearms from New York City to China, federal prosecutors said Thursday.
    Joseph Debose, 29, a staff sergeant with a unit of the U.S. Special Forces National Guard, was arrested Sunday in a sting operation by federal agents in North Carolina
  • Chinese Authorities Release Standard Chartered Banker Held Since March – WSJ.com
    Wu Yidian Eden was released on Thursday after being held by police in China’s eastern Jiangsu province where she was questioned over the disappearance of a man who had been her client, said Jason David Tan, her fiancé. Mr. Tan said that conditions of the Singapore national’s release require her to remain in China for one year and not speak with the media.
  • 《讲话》始终闪耀着伟大的真理光芒
  • Exclusive: China leadership rules Bo case isolated, limits purge: sources | Reuters
    Chinese President Hu Jintao has demanded senior Communist Party officials stifle tensions over the ousting of ambitious politician Bo Xilai and show unity as they prepare for a change of leadership, sources briefed on recent meetings said.
    Hu urged the party to close ranks at a meeting of about 200 officials early this month at a Beijing hotel, declaring the downfall of Bo – China’s biggest political scandal in two decades – to be an “isolated case”, the three sources said.
  • China Tries to Spur Growth, Cautiously – WSJ.com
    analysts say a massive stimulus program like that seen during the global financial crisis in 2008 and 2009—which relied on state-directed bank lending to prop up investment—remains unlikely.Instead, Beijing is turning to a patchwork of initiatives across various areas that it hopes will complement its long-term drive to shift to a more resilient, modern economy powered by consumption, innovation and private-sector activity
  • Propaganda firm owner ran smear campaign against USA TODAY journalists – USATODAY.com
    The co-owner of a major Pentagon propaganda contractor publicly admitted Thursday that he was behind a series of websites used to discredit two USA TODAY journalists who had reported on the contractor.
  • Shanghai clique fading as Jiang Zemin allies left out|Politics|News|WantChinaTimes.com
    Preparing for the once-in-a-decade power transition of the Chinese Communist Party at the 18th National Congress later this fall, Shanghai announced its latest leadership on Tuesday. Most followers of former president Jiang Zemin were passed over, suggesting the influence of Jiang’s clique is on the wane in the city where he rose to power, reports our sister newspaper the China Times.
  • Chongqing Names Party Conference Candidates – NYTimes.com
    Chongqing, the teeming western municipality once governed by the deposed politician Bo Xilai, has named candidates for its delegation to a critical party conference in the fall at which China’s next leadership lineup is expected to be announced. The list of 50 candidates includes some officials considered allies of Mr. Bo, but excludes Mr. Bo himself.
  • 社科院房地产蓝皮书:部分城市限购条件或变化_中国经济网――国家经济门户
    社科院24日发布《房地产蓝皮书》,预期2012年部分城市具体限购措施可能有所变化。同时,蓝皮书指出,2012年房地产调控将加大对自主性需求的支持力度,进一步体现差异化、精准化;对首套住房的金融支持力度将加大,对改善性住房需求限制也有可能逐渐松绑。虽然这仅是研究机构的一家之言,但折射出房地产调控的复杂性。

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