Category Archives: NEWS DIGEST

China

China’s Efforts to Chart Officials’ Assets Suffer Backlash – WSJ.com Amid China’s once-a-decade leadership change that concluded this spring, a handful of officials said they would make public disclosures of their assets. The pledges, spurred by extensive coverage in state-run media, fostered belief among some academics and others that Mr. Xi would increase government transparency and accountability. White-collar workers hope asset disclosures will ensure officials pay their fair share of taxes. But a Wall Street Journal examination of the modest asset-declaration programs announced in four provinces indicates details that may once have been available are again hidden.

State media hint Bo Xilai to dodge death penalty｜Politics｜News｜WantChinaTimes.com The timing of a recent article published in China’s state media highlighting the dangers of imposing the death penalty for controversial political figures could be the Communist Party’s way of sending a subtle message about the upcoming criminal trial of disgraced former Chongqing party chief Bo Xilai, reports Duowei News, an outlet run by overseas Chinese.

Cash-Strapped Nations Race to Attract Chinese Immigrants – WSJ.com While investor immigration programs are technically open to all, immigration lawyers say that governments are targeting anxious Chinese who are looking for potential escape plans for their families and protection for their assets in case of turmoil at home. “There is an all-out immigration war emerging for the Chinese,” said Jean-Francois Harvey, an immigration lawyer at Harvey Law Group in Hong Kong.

Coin of Realm in China Graft – Phony Receipts – NYTimes.com So widespread is receipt fraud that clerks at many hotel gift shops agree to falsify receipts so they show up as room charges. And at least one mutual fund company in Shanghai asks its employees to turn in fake receipts every month to claim half their salary — an accounting fraud that reduces tax liability for the company and the employee. In the Glaxo case, Chinese investigators say the drugmaker’s top Chinese executives worked closely in recent years with a Shanghai travel agency to falsify documents. For instance, airline ticket receipts were filed for trips that never took place and when executives listed 100 guests at a conference, perhaps only 80 showed up, making it possible to file false inflated receipts and thus embezzle from Glaxo’s London headquarters.

China Services Growth Picks Up in Sign Economy Stabilizing – Bloomberg China’s service industries showed the first pick-up in growth since March, adding to signs the world’s second-largest economy may be stabilizing after a two-quarter slowdown. The non-manufacturing Purchasing Managers’ Index (CPMINMAN) rose to 54.1 in July from 53.9 in June, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. An official gauge of manufacturing released Aug. 1 showed an unexpected expansion.

Austerity with Chinese Characteristics | Foreign Affairs With austerity the reigning buzzword in Beijing, it’s tempting to assume that China is finally joining the West’s ongoing debate about macroeconomics. In reality, China’s leaders are drawing on a vastly different intellectual history.–JOHN DELURY is an Assistant Professor at Yonsei University’s Graduate School of International Studies, in South Korea.

Can China’s deflation be positive? – MarketWatch Standard Chartered argues that the biggest reason for the fall in the PPI is due to declining producer goods, which tend to be raw materials or tools used to make other goods. This means not everyone is feeling the pain equally: Upstream firms — typically those involved in extracting raw materials — will suffer, but downstream firms could benefit from the same trend.

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I hope this News Digest finds everyone doing well this Friday – it’s certainly beautiful in Kunming, where the summer rains have relented for a bit. This last week had quite a few hits for ExSE. Our own blogger Red Oceans’  piece on the SCS was highlighted in the Sinocism newsletter while ExSE contributor Zhou Dequn’s article on Fuxian Lake was featured in China Dialogue.   Will Feinberg’s first of many pieces in a regional timber trade series was picked up on the popular Quartz blog.  In addition, ExSE blogger Colin Flahive and his work with Kunming’s Salvador’s Coffee House and a string of non-profits in Yunnan was written up in the Christian Science Monitor (link below). Way to go Colin! (Full disclosure: I frequently enjoy Salvador’s food, especially their new falafel wrap).

This next week will also be a big week for ExSE. Four of our bloggers will be embarking on an 18-day trip through Thailand and Laos tomorrow. Our travels will be done as part of the IES Kunming Regional Development Program. We’ll be starting in Bangkok with a two day cruise on a Chao Phraya barge learning about sustainable watershed management.  Then we make to Chiang Mai and the Golden Triangle before floating down the Mekong to Luang Prabang and Vientiane.

We’ll be looking at the sustainability of infrastructure development sites, analyzing China’s deepening regional footprint, and thinking about the US’s Pacific Pivot.  Our partners at Mae Fah Luang University in will introduce us to transboundary issues in the Golden Triangle but not before we cross into Burma for a day.  Decommissioned KMT soldiers (hopefully) will welcome us into their homes where they will regale us of their days in the sun as members of the  world’s most sophisticated heroin shipping network. And we’ll spend five days in tropical Luang Prabang considering the impact of rapid development on the world’s best kept secret.

We’ll try and blog something everyday, even if it’s just a short update. There’s guaranteed to be a lot of sun, a lot of fun and plenty of opportunities to learn about successes and challenges of development in the region, so be sure to follow ExSE!

China

China Pledges to Boost Financial Support After Cash Crunch – Bloomberg Misallocation of capital is hampering the restructuring of the economy and the financial sector must play a better role in helping the overhaul, the cabinet said in a seven-page statement (国务院办公厅关于金融支持经济结构调整和转型升级的指导意见-– 国办发〔2013〕67号) released in Beijing today. The State Council said it will maintain its “prudent” monetary-policy stance while ensuring a reasonably supply of money and credit.

China Allows Two More Local Governments to Issue Bonds -Caijing China has added two names to the list of a trial program which allows local governments to issue bonds directly, expanding the program to six regions in the country, said the Economic Information Daily.  Shandong and Jiangsu, two neighbor provinces in east China have been given the green light from the State Council to join four local governments which got approval for bonds issues in 2011, the paper published by the official Xinhua news agency said Friday.

Foreign Capital Flows out of China on Expectations of End of QE -Caijing China has seen a monthly net capital outflow in 16 of the last 18 weeks, according to fund flow data provider EPER. EPER figures showed foreign capital registered a net outflow of $834million in the first five trading days in June, the largest since January, 2008.

An Opportunity to Strengthen U.S.-China Ties – WSJ.com At present, with the global economic recovery remaining unsteady and unbalanced, both nations face challenges as well as opportunities. China is the largest developing country in the world, and the U.S. is the largest developed one. Economic cooperation and trade will benefit our two peoples and contribute to global economic recovery and growth.

U.S., China can forge a more cooperative relationship – Washington Post This week’s China-U.S. Strategic and Economic Dialogue is an important platform for conducting high-level communication on long-term, strategic and overarching issues. The main task of the upcoming dialogue, the fifth such meeting,is to implement the extensive agreement reached at the presidents’ meeting last month, deepening dialogue and cooperation in various areas, and advancing a new-model major-country relationship.

China at the Tipping Point? | ChinaFile–Carl Minzer China may indeed be at a tipping point. But it is not clear which way it will tip. Authorities may restart legal reform as part of a comprehensive program of political and institutional transformation. Or they may refuse, risking an escalating spiral of social and political turmoil. Continue reading →

CHINA

President Xi promises to shake off GDP obsession in promoting officials – Xinhua   “We should never judge a cadre simply by the growth of gross domestic product (GDP),” he said. When promoting officials, the CPC organization departments should consider integrity as a priority and then capability, he said. “The Party’s cadres should be firm followers of Communist ideal, true believers of Marxism and devoted fighters for the socialism with Chinese characteristics.”

Crunch Time – Why low growth is China’s new normal – FP There are two important lessons to be drawn from last week’s panic. First, the central bank and the leadership in Beijing seem determined to try to get their arms around credit expansion — even if that means, as it absolutely must, that growth will suffer and the banks will come under pressure. The extent of the freezing of the money markets on June 20 surprised many, including probably the central bank itself, but there will likely be more disruption in the markets over the next few years as Beijing tries to control what has become a runaway process.

China’s Manufacturing Expands at Slower Pace Amid Credit Crunch – Bloomberg The Purchasing Managers’ Index was at 50.1, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That matched the median forecast of 33 analysts in a Bloomberg News survey and was down from May’s 50.8. Readings above 50 signal expansion.

China Audit Report: Local Debt Ratio Up to 189Pct in Some Cities-Caijing  1) Outstanding debts in 36 local governments were close to 3.85 trillion yuan at the end of 2012, up 12.94, or 441 billion from that in 2010. Bank loans accounted for 78.07 percent.

The Chinese Financial System: An Introduction and Overview | Brookings Institution The fear of slower Chinese growth has significant ramification for the global economy. The importance of China, and the central role of its financial system in fuelling that nation’s growth, led Douglas Elliot and Kai Yan to write a comprehensive overview of the Chinese financial system in the backdrop of the 5th meeting of the U.S.-China Strategic & Economic Dialogue.

Slow the Pace of Urbanization, CASS Researcher Urges – Caixin The country should slow urbanization in the face of slower economic growth, said Cai Fang, a population researcher at the Chinese Academy of Social Sciences.  Cai is also a member of the Standing Committee of the National People’s Congress (NPC), the nation’s top legislature

Xinjiang: bloody clashes brings army onto streets | South China Morning Post  The order for the patrols by the People’s Armed Police was issued by the Communist Party’s top law enforcement official, Meng Jianzhu, at an emergency meeting late on Saturday in Urumqi. The action came just days ahead of the July 5 anniversary of a 2009 riot between Xinjiang’s native Uygur people and Han Chinese migrants in the city that left nearly 200 people dead.

China state media blames Syria government, rebel forces for Xinjiang violence | Reuters  Chinese state media (媒体称去年起“东突”分子从叙交战区潜回新疆|新疆|“东突”分子|叙利亚_新浪新闻) on Monday blamed Syrian opposition forces in unusually specific finger pointing for training Muslim extremists responsible for the deadliest unrest in four years in China’s far-western region of Xinjiang. China has traditionally blamed violence in Xinjiang, home to Muslim Uighurs, on Islamic separatists who want to establish an independent state of “East Turkestan”. Continue reading →

CHINA

Tilting backwards The Economist – OVER the past couple of months, officials around the country have been summoned to briefings about a Communist Party circular known as “Document Number Nine”.  Its full contents have not been made public, but by all accounts it paints a grim picture of what the party sees as the threat posed by liberal ways of thinking. The message conveyed at these meetings has been a chilling one: stick to the party line and denounce any dissent.

China Falling? Not So Fast CFR – Joshua Kurlantzick assesses China’s economy.

Beijing’s Brand Ambassador CFR – China’s new ambassador to the United States (and a rising star in Beijing) sets out his vision for U.S.-Chinese relations, discusses whether China is a revisionist power, and how it plans to deal with cyber security — and Japan.

Riots in China’s Xinjiang province kill dozens The Guardian – At least 27 people have been killed in clashes across ethnically divided Lukqun township in Turpan prefecture. At least 27 people have been killed and three injured in riots in Xinjiang province, western China, state media have reported. Men carrying knives attacked police stations, a local government building and a construction site on Wednesday morning in a remote town in the Turkic-speaking region, according to Xinhua news agency.

At home abroad Banyan – The Economist IN TAIPEI’S dusty suburban outskirts there stands an old prison, an ugly grey building decorated with snarls of barbed wire, where the Kuomintang (KMT) used to keep dissidents, during its brutal authoritarian rule over Taiwan. That period began when the party fled from mainland China to Taiwan in 1949 and ended only decades later, in 1987.

Chinese wind-turbine firm charged with stealing US trade secrets  The Guardian – Sinovel Wind Group accused of illegally downloading software from former supplier American Superconductor. China’s largest wind-turbine company has been charged with stealing trade secrets from its American former software supplier, the US justice department has announced.

US factory boss freed by Chinese workers in Beijing – video The Guardian – Chinese factory workers announce they have set their American boss free after a deal on compensation for job losses was reached

China’s Shenzhou 10 spacecraft returns to Earth – video The Guardian – Three Chinese astronauts touch down in Inner Mongolia, bringing to an end their 15-day trip to the Tiangong 1 experimental space station

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CHINA IN THE REGION/WORLD

Ben Bernanke and China: have the markets over-reacted? The Guardian – Stock markets worldwide plummeted on Thursday after the Federal Reserve chairman signalled an end to quantitative easing and fears grew of problems in China’s banking sector

China worsens credit squeeze as manufacturing output declines The Guardian – Credit default swaps (CDS) on five-year bonds rose by 33 basis points to 133bps, according to financial data firm Markit. The cost of insuring against a default on Chinese sovereign debt soared on Thursday as China’s central bank worsened a credit squeeze by refusing to inject cash into the financial system. Credit default swaps (CDS) on five-year bonds rose by 33 basis points to 133bps, according to financial data firm Markit, as Chinese officials signalled a determination to rein in risky lending practices.

Caution Can Avert Downward Spiral in Sino-EU Trade Ties Carnegie Endowment for International Peace – China’s strategic turn to moving upmarket and pursuing sustainability has presented a significant challenge to Europe’s renewable energy market dominance.

Chinese industry: Ambitions in excess – FT.com For global manufacturers, the China effect over the past decade has been fearsome. It has destroyed jobs and capacity all over the world, shuttering factories in competitor nations. But in almost every sector where China’s low-cost goods have come to dominate, something strange has happened. Once the bulk of global manufacturing in a given industry has moved to China, overcapacity quickly follows and these sectors begin to cannibalise themselves.

Violent sell-off in world markets after Federal Reserve signals end to QE The Guardian – Ben Bernanke’s comments spark a global fall in stock markets and commodities, and strong rise in government bond yields. Stock markets worldwide plummeted on Thursday, after the Federal Reserve chairman, Ben Bernanke, rattled investors by signalling an end to America’s drastic recession-busting policy of quantitative easing.

Myanmar’s old friend China is left wondering where it went wrong – FT.com As President Thein Sein gave the opening address to the forum, the word in the halls of the Chinese-built convention centre was that he personally despises Beijing’s influence over its smaller, poorer neighbour. And on the second day of the forum news broke that state telecom giant China Mobile had dropped a joint bid with Vodafone to expand the country’s mobile phone network – apparently after being told the Chinese company had no hope of winning. In Beijing and Naypyidaw there is recognition that China handled the bilateral relationship badly thanks to a toxic mix of arrogance, neglect and meddling by elements of China’s People’s Liberation Army.

How Chinese Strategists Think The Diplomat – Toshi Yoshihara joins me (or I join him) over at Investor’s Business Daily to refocus attention on the human dimension of the U.S.-China strategic competition. Followers of these pages pixels know that Toshi and I are true believers in the idea that competition is a human enterprise. As Colonel John Boyd liked to say, people, ideas, and hardware — in that order — are the determinants of competitive endeavors like power politics. Continue reading →

This week’s big news in the region had more to do with the US than any other country. Last weekend saw Barack Obama and Xi Jinping meet for the much-anticipated Sunnylands Conference in southern California. At the same time, former US National Security Administration (NSA) employee Edward Snowden leaked classified information on the US’s security practices at home and abroad and has taken up refuge in Hong Kong. Sinocism has had excellent coverage of both stories and we recommend that you read more about it all here.

CHINA IN THE REGION/WORLD

United States and China Agreement on Hydrofluorocarbons (HFCs) Consumption and Production, June 2013  Council on Foreign Relations – President Obama and Chinese President Xi Jinping met in California June 7-8, 2013. Based on the Montreal Protocol findings regarding ozone layer-depleting emissions, they issued this agreement to reduce the production and consumption of HFCs, to address one aspect of climate change.

Inside the NSA’s Ultra-Secret China Hacking Group – Foreign Policy The media has focused at length on China’s aggressive attempts to electronically steal U.S. military and commercial secrets, but Xi pushed back at the “shirt-sleeves” summit, noting that China, too, was the recipient of cyber-espionage. But what Obama probably neglected to mention is that he has his own hacker army, and it has burrowed its way deep, deep into China’s networks…

Chinese Land Grabs Revised Downward China in Africa – I’ve been critical of the Land Matrix’s early efforts to post a very problematic “database” of large scale land acquisitions. That database was recently revised and has been re-posted. I haven’t yet gone through it (I will) but at least regarding China, it appears more accurate than the earlier version.

Solar Panels: When Trade, the Environment, and Geopolitics Collide Peterson Institute – What happens when policy goals in one area collide with goals in another? This occurred when US and European manufacturers of solar panels squared off with environmental and geopolitical interests over cheap Chinese products. In the United States, domestic producers of solar panels succeeded in raising tariffs on Chinese imports.

Copycat Capitalists  Project Syndicate – Given the West’s anemic growth performance in recent years, it is hardly surprising that envy of China’s economic dynamism has manifested itself in official policy. But Western countries are shifting to statism at the very moment that China is heading in the opposite direction.

China’s Cold Eye on Hot Money Project Syndicate – With China feeling the impact of large-scale inflows of short-term capital, the authorities have announced new rules aimed at controlling hot money and reducing external risks. But, while the regulations are essential to managing the renminbi’s rapid appreciation and ensuring the accuracy of trade data, will they be enough?

The butterfly effect  Sea Globe Editorial – As the nature of China’s economic expansion changes, what will imbalances in its economy mean for Southeast Asia? Having scaled the ladder to the upper rungs of China’s top trading partners, Asean has much to gain from its strong neighbour. Trade between the two is set to expand to $500 billion by 2015, as they strengthen ties amid a global slowdown. While government officials are keen to present a rosy outlook for bilateral trade volumes, a health check of China’s economy throws up a few surprises.

Kazakhs launch ‘Silk Road’ China-Europe rail route | Reuters Kazakhstan has launched a new transit railway linking China to Europe, aiming to beat rival routes for journey time in the competition to handle a growing flow of goods along the ancient Silk Road trade route. “Kazakhstan is a virtual bridge linking the East and the West,” Yerkin Meirbekov, deputy railway department chief at Kazakhstan’s Transport Ministry, said in an interview. “You can actually say this is the revival of the Silk Road.” Continue reading →

This is has been a big week for the region, especially for China. President Xi Jinping is now at the tail end of his America’s visit, and today begin’s his much-anticipated Sunnylands Conference with US President Barack Obama. It’s being billed as the first chance for the two leaders to know each other on a personal level, and seeing the informal nature of the visit, it should give them plenty of time to talk. Hopefully some good can come out of the meetings, the Sino-US relationship could certainly use a friendly interlude.

Within China, the First Annual China-South Asia Expo began on Thursday in Kunming. ExSE’s own Brian Eyler has coverage of that event and what it means to China here.

Elsewhere, the World Economic Forum is taking place in Myanmar (Burma) this week. The developing nation will be hoping to use the hosting of this meeting of international business leaders as a showcase of their development thus far and attract investors for the future.

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Just links this week.  Next week be sure to follow Xi Jinping and Barack Obama’s California Summit as well as Li Keqiang’s trip to Kunming’s China-South Asia Expo.

CHINA IN THE REGION/WORLD

The Sino-American Decade –  Council on Foreign Relations Michael Spence writes that cooperation between the United States and China on issues surrounding the environment, trade, investment, and financial stability will be critical not only for the continued well-being of the two countries, but also for the successful rebalancing of the world economy.

What Should Obama and Xi Accomplish at Their California Summit? – ChinaFile “We shouldn’t expect any major agreements or other “deliverables” to result from this meeting. The goal of the encounter is to establish the personal relationship between the two leaders and explore ways to dispel—or at least better manage—the mutual suspicions that have recently been dragging down the relationship. Both leaders are seeking to reassure one another that their intentions are not hostile.”

Frustrated Chinese send complaints to White House website – The Guardian Frustrated by censorship and Beijing’s stonewalling, bloggers and campaigners are turning to Barack Obama. The Chinese people would like President Barack Obama to stop an oil refinery from being built in southern China, endorse sweet-flavoured tofu and reopen an 18-year-old criminal probe of a poisoning case. And while he’s at it, if he wouldn’t mind mobilising US troops to liberate Hong Kong, as well as China as a whole, that would be great, too.

Asia Week Ahead: Xi’s journey to the West – Reuters Video President Obama readies the red carpet for China’s Xi Jinping, Australia faces economic pressures and Malaysia awaits crucial trade figures. Wayne Arnold gives us a preview of next week’s top stories.

China to study possibility of joining U.S.-led trade talks | Reuters China will study the possibility of joining the Trans-Pacific Partnership (TPP) trade talks, the Commerce Ministry said on Thursday, signaling its openness to the U.S.-led trade pact.

The Containment Fallacy: China and the TPP | Brookings Institution The argument that the TPP is a club that bars Chinese entry is inaccurate and unhelpful. China, like any other APEC economy, has the right to request entry into the TPP. Whether the Chinese leadership will judge TPP membership to be in their country’s national interest and whether TPP members can be persuaded that China is prepared to abide by the negotiated disciplines is a separate matter. But it is important to dispel the notion that the TPP precludes Chinese entry.

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The top stories this week are Myanmar President Thein Sein’s historic visit to the White House, Li Keqiang’s South Asian diplomacy tour, and Kunming’s environmental protests.

Top media outlets like AP, South China Morning Post, the Telegraph, the Guardian offer analysis and discussion of the government’s follow-up/crackdown after the latest 5/16 protest.  In addition to ExSE’s continuing discussion of the Kunming protests, we recommend the following three pieces.

New Dawn for Chinese Activism – SBS Australia A new age of environmental protest is dawning in China as the ‘lao  baixing’, or ordinary people, gain a voice with the help of social  media, writes Monica Tan.

China’s Environmental Politics: A Game of Crisis Management  – Council on Foreign Relations

Why China Can Handle Social Unrest – The Atlantic Recent protests in Kunming reveal an increasing consciousness of environmental rights in the country. But do they threaten the Communist Party’s grip on power?

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The big news this week came out of Kunming, Yunnan with the anti-PX plant protest. Following a successful, small-scale protest earlier in the month, over 2000 Kunmingers protested. East by Southeast had riveting on-the-scene coverage that was picked up by CFR’s Asia Unbound blog, Sinocism, China Digital Times and the Shanghaiist, among other news sources. Check out the Guardian, the Wall Street Journal  and Voice of America for more coverage.

Following the non-violent, 5 hour-long protest that shut down much of central Kunming, the city’s mayor, Li Wenrong, opened a Weibo account for public discussion of the chemical refinery’s construction and Kunming’s environmental issues as a whole.  The movement is definitely picking up steam, it will be fascinating to see what direction it goes in the coming weeks. Our blog will be bringing you continuing coverage of the protests next week.

The Taiwan/Philippines row looks to be heating up, even after an apology from Philippines over the killing of a Taiwanese fisherman in the South China Sea. Interesting to see how Taiwan, often overlooked in the island disputes, has responded to the situation, also how folks on the mainland view the situation.

Also, Chinese Premier Li Keqiang goes on his first foreign tour this week, visiting India, Pakistan, Switzerland and Germany. Should make for an interesting trip to India following the recent flare-up at the border.

These past two weeks have seen ExSE reach new heights in terms of readership and coverage, a big thank you to our readers for showing your support, make sure to check out the comment sections and let us know what you think about these issues! Continue reading →