August 2012

Elected Unions: Labor of Love

SOCIETY

Pickup Artists: Seduction School INTERNATIONAL

South China Sea: Ports in a Storm

Will a government cash injection keep China’s economy afloat?

$4.99 www.newschinamag.com

Volume No. 048 August 2012

POLITICS:

EDITORIAL

Published by China Newsweek Corporation Publisher: Liu Beixian Executive Directors: Liu Beixian, Zhou Jianming Editor-in-Chief: Wang Xiaohui Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Yang Yi Copy Editors: Jack Smith, Alex Taggart Lead Writer: Yu Xiaodong Editors: Wang Yan, Yuan Ye, Xie Ying, Sun Zhe, Li Jia First Reader: Lisa Gay Address: 5th Floor, 12 Baiwanzhuang South Street, Xicheng District, Beijing, China Post Code: 100037 Tel: 86-10-88395566 Fax: 86-10-88388045 Email: readers@newschinamag.com www.newschinamag.com Art Department Art Director: Wu Shangwen Art Editor/Designer: Zhang Dawei Marketing Office China Newsweek Corporation President: Wang Xiaohui Chief Executive: Fred Teng Tel: 1-212-481-2510 Fax: 1-212-481-2503 Address: Suite 1101, 15 East 40th Street, New York, NY 10016, USA Email: readers@newschinamag.com Toronto Office Director: Lai Hailong Address: 51 Halstead Drive, Markham, ON Canada L3R7Z4 Tel: 1-905-604-6150 Fax: 1-905-604-6170 Email: canada@newschinamag.com Marketing Director: Wang Chenbo Account Manager : Ren Jie Tel: 86-10-88388027 Circulation Manager: Yu Lina Tel: 86-10-88311834 Advertising Director: Gao Weiwei Tel: 1-212-481-2510 Marketing Promoter: Jerry Meng Tel: 1-212-481-2510 New York Office: Jing Xiaolin, Sun Yuting, Li Yang Washington Office: Wu Qingcai, De Yongjian Los Angeles Office: Zhang Wei San Francisco Office: Liu Dan Houston Office: Wang Huan London Office: Wei Qun Tokyo Office: Sun Ran Paris Office: Wu Weizhong Bangkok Office: Yu Xianlun Kuala Lumpur Office: Zhao Shengyu Moscow Office: Tian Bing Legal Advisor: Allen Wu ISSN 1943-1902

CN11-5826/G2

NEWSCHINA I August 2012

Policing is political

I

n recent months, as officials are reshuffled activities of the court and the procuratorate, givin provincial and local governments, a new ing police the sentences they want for the crimes trend has appeared. Fewer and fewer police they choose to prosecute. The rise of local petichiefs are being appointed as the heads of China’s tions against police abuses has matched this expolitics and law committees, positions equivalent tension of power. to a deputy government chief. This is a bold move In April 2010, the central government issued which seems to favor the establishment of rule of a decree prohibiting police chiefs from chairing law advocated by the central provincial politics and law government. committees, which finally Under China’s current led to concrete results this Incidents in recent years system, law enforcement is year. So far, Guangdong have proven that stability divided into three branchProvince has seen the most cannot be maintained es: the police, the court significant change, with through force. and the procuratorate, all no police chiefs officially of which are directly conpresiding over the region’s trolled by politics and law politics and law commitcommittees at each level tees, both at the provincial of government. In theory, government level and in 21 these three organizations city governments. The staare independent from one tus of ordinary members of another. The police handle the provincial politics and criminal investigations, submitting cases to the law committee has also been enhanced, with its procuratorate, which then decides whether or not directors appointed as deputy secretaries-general to bring the case to court. The theory is that this of the provincial Party committee. In seven city allows the judiciary to supervise policing. governments, including in the provincial capital However, 2003 saw the central authorities pri- Guangzhou, heads of the municipal politics and oritize “maintaining stability,” vastly prioritizing law committees are simultaneously appointed as police powers, with many police chiefs promoted the heads of local community working committo top government positions. By October 2008, tees, a Party body focusing on community relaout of 29 provincial governments on the Chinese tions. mainland, 22 had appointed police chiefs to major It is believed that this new initiative to keep law political posts. Of these, 11 also simultaneously enforcement firmly in the hands of the Party by bagged leaderships on their local politics and law scaling back police powers could herald a shift committee. Two were appointed as deputy gover- away from maintaining social stability through nors, with the remainder taking equally powerful force. As incidents in recent years have proven positions. At the county level, it is estimated that that force will not bring stability, the authorities in half of them, the local police chief also holds a now look to the establishment of rule of law as seat on the area’s top political body. a solution to social unrest. Of course, reaching This arrangement violates the principle of rule such an unprecedented milestone in a country of law by allowing the police to dominate the ju- like China will require more than a reshuffle of diciary. Police chiefs can simply “coordinate” the personnel.

1

Contents

Whatever their terminology, the Chinese government has once again opened its capacious wallet to avert a potential economic collapse. Have those in charge learned from the failings of the 2008 stimulus plan, or is this just another quick fix to a systemic problem?

Editorial

01 Policing is political international

10

13

SCO Summit : Neighborhood Watch South China Sea : Looking Forward

P10

Cover Story

LAW

feature

16 SMALLER, SMOOTHER, SMARTER :

Re-defining a Relationship/Off the Wagon

26 Statutory Rape :

Does Yes Mean Yes? 28 Village Self-Governance :

Cure or Curse?

2

P13 NEWSCHINA I August 2012

Photo by CFP

By Any Other Name...

Contents

P32

P64 politics

32 Labor Unions :

Assembly-line Democracy/ Power Shared, Sparingly society

38 Pickup Artists :

The Love Gurus environment

42 Green Economy :

The Only Way? economy

45

48

Appliance Recycling : Scrap Value Mobile Internet: Getting Smart

culture

50

52

Movie Theater Deal : Silver Smokescreen Movie Industry : Artistic Alliances

NEWSCHINA I August 2012

P54

54 Social History :

Traditional Wisdom

HISTORY

visual report

57 The “Three Goods” :

A Dubious Honor 60 The Once-Great Wall outside in

64

67

Mount Taibai : Walking in the Clouds Flavor of the Month : Bobbing for Dumplings

04 MEDIA FOCUS 05 What They Say 06 NEWS BRIEF 08 Netizen Watch 49 China by numbers 66 real chinese 68 ESSAY 70 CULTURAL LISTINGS 72 Commentary

P32 3

NewsChina Chinese Edition

Outlook Weekly

June 18, 2012

May 30, 2012

Only You Boycotted

Unaffordable Pacemakers

Over 400,000 Chinese viewers have boycotted Only You, a business-related reality show launched by local station Tianjin TV. The format involves a lineup of jobseekers who present their credentials to a panel of supposedly expert judges. The boycott was initiated after the screening of an episode on May 27 during which one contestant fainted after the panel viciously questioned the authenticity of his qualifications. Opponents criticized the program for chasing ratings by intentionally victimizing and humiliating contestants. Although Tianjin TV has defended the similarity between the show and the real-world job market, critics argue that preaching a gospel of “jungle rule” that deifies bosses and celebrates the trampling of employee rights is inappropriate for a prime-time TV show.

Blog Weekly

Despite 300,000-500,000 more arrhythmia sufferers being diagnosed each year, only 31 of every one million Chinese cardiac patients receive an essential pacemaker. A US sufferer of arrhythmia, by contrast, is 30 times more likely to have had a pacemaker installed. Unsurprisingly, China’s poor, particularly those in rural areas, cannot afford the steep medical bills that come with a pacemaker, with the State’s rigid medical insurance policy requiring that the use of higher-graded hospitals increases patient deductibles. Most of China’s less well-funded hospitals, however, lack trained personnel and the resources to perform cardiac surgery. Medical professionals are now calling for an exception to the government regulations, warning that an epidemic of heart disease could decimate rural populations.

Century Weekly May 28, 2012

Land Reform in Shenzhen The southern Chinese city of Shenzhen has officially had all its land appropriated by the State according to Chinese urban land use laws, but 2010 official statistics showed that 42 percent of its land technically remained in the hands of rural collectives. Of this vast area, some three-fourths are believed to be illegally held. Pressured by growing demand, the Shenzhen city government recently issued a land reform bill aiming to legalize these holdings by re-clarifying shareholder rights and interests. Typically, the government redefines the function of each lot of land, subcontracting or selling it to community organizations or developers while allowing them to negotiate with other shareholders about how to share the proceeds. Some hope that this model will be expanded to other cities, allowing otherwise poor people to capitalize on their land assets.

May 28, 2012

Underground Kidney Base Following a six-month stakeout by a Chinese blogger, an underground “kidney base” located in Hangzhou, Zhejiang Province, has been exposed to the public. Operating for four years, 30 illegal donors were found “imprisoned” at the base, having each sold a kidney for 30,000 yuan (US$4,412), with their removed organs fetching 10 times that price when sold on to hospitals. China reportedly has some one million people on its kidney transplant register, but less than 4,000 patients received a transplant last year, a shortfall which is fueling a boom in organ harvesting, with few hospitals asking questions about the source of donated organs, and an army of the destitute apparently willing to sell.

4

Oriental Outlook June 12, 2012

Confucius Challenged The US Congress issued a notice on May 17 claiming that visas held by several Chinese teachers working in US-based Confucius Institutes were illegal. Although a follow-up statement rescinded the claim, Chinese authorities were quick to attack what they perceived as a knee-jerk response to the “China threat.” The Confucius Institute program, which establishes cultural centers in foreign universities and is funded by the Chinese government, has come under fire for allegedly acting as a front for State propaganda organs, curtailing debate about sensitive issues while pushing Beijing’s soft-power agenda. The institutes claim that their sole focus is teaching Chinese language, history and culture. China has set up about 300 Confucius Institutes worldwide, and plans to expand the number to 500 by 2015.

NEWSCHINA I August 2012

Illustration by Wu Shangwen

“The likelihood that a student from Guangdong or Anhui Province will get into Peking University is one percent of the chance that a student from Beijing will get in.”

Peking University professor Zhang Qianfan, criticizing China’s region-specific college enrollment system.

“No effort, no action, no shame.”

Cui Yongyuan, a popular anchor with State broadcaster CCTV, hitting back after the Hunan education bureau expressed “no opposition, no support, no participation” towards his rural teacher training project in the province.

“All I did was lose a match, you shouldn’t make such a big deal of it. Playing tennis is my job, just like writing articles is yours.”

Li Na, China’s top-ranked tennis player, at a press conference after her loss at the French Open.

“We Japanese are equally friendly to foreigners and Japanese, but the Chinese favor foreigners. I hope Chinese people can be friendlier to each other.”

Japanese tourist Keiichiro Kawahara, in a recent interview with Chinese media, after the theft and speedy return of his bicycle in China led the public to question the country’s preferential treatment of foreigners.

“Showbiz is a vanity fair, but we must keep sight of what line of work we’re in. Walking red carpets is not a job.”

Prominent Chinese director Chen Kaige advising actors to focus on their craft.

NEWSCHINA I August 2012

“China’s promising development can be attributed to the reduction of government controls and the shrinking scale of State-owned enterprises (SOEs). The remaining problems are all because the government still has too much control, and the SOEs are still too big.”

Renowned economist Zhang Weiying at a financial forum organized

by Shanghai Jiaotong University.

“China is like an old peasant, carrying a huge bag of money on his back. He steps up to the podium, but is unable to speak.”

Long Yongtu, the chief negotiator of China’s accession into the WTO, talking about the lack of Chinese candidates for the leadership of international financial organizations.

“The judicial crime rate is six times higher than the regular crime rate.”

Chen Zhonglin, director of the Chongqing University School of Law, reporting the results of a crime stats survey.

“Chinese universities have become confused with training centers – they only teach students how to get a job, rather than how to be a responsible, well-rounded citizen.”

Liu Daoyu, former head of Wuhan University, at an education reform forum in Shenzhen.

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Top Story

China Launches Shenzhou-9 Spacecraft Propelled by the upgraded Long March 2F carrier rocket, China’s manned Shenzhou-9 spacecraft blasted off on June 16 from Jiuquan Satellite Launch Center in northwestern Gansu Province.

China’s fourth manned spacecraft, Shenzhou-9 successfully completed its first manual docking with unmanned space module Tiangong-1, in addition to another automated docking. Last November, China’s unmanned Shenzhou-8 made a successful automated docking with Tiangong-1, which was launched on September 29, 2011.

According to experts, this demonstrates that China has mastered essential space technology crucial for the country’s plans to build a space station around 2020.

Accompanied by two male astronauts, Jing Haipeng and Liu Wang, Liu Yang, 33, has become the first Chinese woman in space.

A People’s Liberation Army pilot with 1,680

hours of flying experience, Liu was recruited as an astronaut candidate in May 2010 and finally stood out in the selection for the Shenzhou-9 mission this March. To date, more than 50 female astronauts from seven different countries have been sent into space.

The spacecraft remained in space for 13 days, during which time the three astronauts lived and worked on Tiangong-1, mainly testing the communications system, loading the orbital lab, and carrying out equipment maintenance.

The manual docking was conducted six days after the automatic docking and separation. It was also the first time the astronauts manually piloted the spacecraft.

While rapid progress in aeronautical programs has led many to speculate that China is keen to seize space resources, Qi Faren, chief designer of the spacecrafts Shenzhou-1 through Shenzhou-5, told NewsChina that China’s space technology still lags far behind that of the US and Russia.

Policy

Law

Wider Door for Taiwanese

Corrupt Football Officials Sentenced

The Chinese government will further loosen controls on the employment of Taiwanese workers on the mainland, said Wang Yi, director of the Taiwan Affairs Office of the State Council.

At the Cross-Straits Forum held on June 17, Wang announced a package of policies to facilitate the employment of Taiwanese people, including allowing mainland enterprises to freely employ Taiwanese staff, and setting up four more pilot regions (Tianjin, Shanghai and Zhejiang and Hubei provinces) where Taiwanese can gain access to State-owned or State-funded organizations or organs.

A highlight of the package is that the Ministry of Education has granted Taiwanese who hold mainland residence permits to apply for teaching positions at universities. Meanwhile, from July 25, China will extend the duration of visas for Taiwanese from one to two years.

China’s high-profile football corruption case has seen two new convictions, chief suspects Xie Yalong and Nan Yong, each given sentences of ten years and six months.

The judgment was announced on June 13 by a local court in Dandong, northern Liaoning Province. Xie Yalong, former vice-president of the China Football Association and director of the football management center under the General Administration of Sports, was accused of accepting bribes of over 1.36 million yuan (US$200,000) between 1998 and 2008. Nan Yong, Xie’s successor, was charged with taking bribes of nearly 1.2 million yuan (US$170,000) between 1998 and 2009.

Beginning with a former official of the football association of Guangzhou who was detained for corruption in late 2009, the case has lasted nearly three years, with dozens of famous players, coaches, referees, club managers and senior officials allegedly involved in match fixing.

Critics believe the corruption is rooted in China’s unaccountable professional league system, and that without systemic change, there will remain no safeguard against corruption.

6

NEWSCHINA I August 2012

Economy

350 300 250

2011

2010

2009

50

2008

100

2007

150

0

Source: General Administration of Custom, PRC/Japan External Trade Organization

Society

Forced Late-term Abortion Scandal China’s one-child policy was once again called into question after a pregnant woman in her third trimester was forced to undergo an abortion in Ankang, Shaanxi Province.

Unable to afford the 40,000 yuan (US$5,882) fine for having a second child, 22-year-old Feng Jianmei was apprehended by local officials, and forced into an induced abortion at a local hospital.

Although the local government claimed that Feng underwent the operation voluntarily, Feng told the media that she was forced to sign a consent form before being injected with poison to kill her fetus.

Under pressure from public criticism, three local officials were later removed from their posts, and the director of the local family planning bureau made an open apology to Feng’s family.

While forced abortions on women in their third trimester have been illegal in China since 2001, they are reportedly still widespread in rural areas.

International

Hu Jintao Visits Denmark On the invitation of Queen Margrethe II, China’s President Hu Jintao paid a state visit to Denmark before heading to Mexico for the 7th G20 summit in Los Cabos.

Accompanied by a 200-strong business and trade delegation, Hu’s three-day visit beginning from June 14 cemented strong commercial ties between the two countries, with 18 trade cooperation agreements inked, valued at 3.35 billion US dollars.

Carlsberg Group Denmark, for example, signed a US$720m agreement with the government of Dali, Yunnan Province, planning to treble the annual production volume of the Dali beer factory. The world’s largest container shipping group A.P. Moller-Maersk agreed to invest in new ports in Ningbo, Zhejiang Province. Arla Foods, Europe’s largest dairy producer, also purchased a 5.9 percent share in China’s Mengniu Dairy valued at 2.2 billion HK dollars (US$0.3bn), making it Mengniu’s second largest shareholder.

Other agreements focus on energy, green economy, food security and bio-pharmaceutical engineering.

NEWSCHINA I August 2012

The third “Low Carbon, Green Life” photography exhibition was held in Beijing in early June.

Hosted by China Newsweek (the Chinese-language edition of NewsChina) under the China News Service, the exhibition was held in collaboration with the 2012 United Nations Conference on Sustainable Development held in Rio de Janeiro, Brazil, from June 20 to 22.

Representatives from six government departments, including the Ministry of Environmental Protection, the National Development and Reform Commission and the State Council Information Office, attended the opening ceremony on June 7, claiming that China will put more effort into promoting clean energy and further tightening pollution control.

The exhibition lasts two weeks, during which the 200 photos will be viewed by an estimated two million visitors.

7

Top Story/CFP, CNS; Law, International/Xinhua; Art/CNS

200

2006

China will launch direct trading between the Chinese yuan and Japanese yen as of June 1, according to an announcement by the People’s Bank of China on May 29.

Bypassing the US dollar, the move will be a significant boost to bilateral trade between the two economic powers. Given that roughly 60 percent of Sino-Japanese trade is conducted in US dollars, analysts estimate that direct trading could save the two countries some three billion US dollars in transaction fees every year.

The policy is also believed to be another measure to promote the internationalization of the Chinese yuan. Last October, China issued a package of new regulations allowing foreigners to invest directly in the mainland with Chinese yuan acquired abroad.

Low-carbon Photography Exhibition Held in Beijing

Sino-Japanese trade volume (in US$bn)

2005

Direct Exchange between Yuan and Yen

Arts

What’s Making China Angry?

Shi Baoyue, suspected of dodging millions of yuan in tax bills 13 years ago, was discovered hiding in plain sight as the deputy head of the Party school in Zhangjiagang, Jiangsu Province. Shi had won more than 50 national awards for his performance in various Party posts over the 13 years he was supposedly on the run from the law, casting serious doubt over the government’s recruitment methods.

What’s Surprising China?

Qian Jinfan, an 84-year-old retired cadre from Foshan, Guangdong Province, came out as transgender to protest discrimination. Qian, born male, said that she had identified as female since the age of three. After beginning hormone treatment four years ago, Qian added that it was unlikely she would ever undergo full sexual reassignment surgery, but has nevertheless become the oldest and one of the most high-profile transgender figures in conservative China.

What’s Amusing China?

A broken telephone pole in a public park in Guilin, Guangxi Zhuang Autonomous Region was held together by tape instead of being replaced by local telecoms engineers. The tape that held together the pole which had split completely in half was dubbed by netizens as “The Most Badass Piece of Tape in History.”

What’s Upsetting China?

An intern nurse in a Zhejiang maternity ward came under fire when she uploaded pictures of herself violently shaking the head of a newborn baby, seemingly in a bid to attract attention from other netizens. Though the girl was soon fired and the pictures were deleted, the hospital she worked for is struggling to repair its reputation.

8

Poll the People The criminal charge of “engaging in sex trade with girls under the age of 14” is taken advantage of by pederasts, especially those with influence over the judiciary such as government officials, who manage to escape due punishment

1.5%

98.5%

Do you agree with the removal of the criminal charge of “engaging in sex with girls under 14” from the criminal law statute?

Respondents:

123,281

Yes, more severe penalties are needed.

121,373 No. 1,909

Source: www.weibo.com

Most Circulated Post Retweeted 288,917 times Wu Bin, a 48-year-old bus driver, has become a national hero after saving a busload of passengers despite receiving a fatal injury while driving:

While driving on the expressway between Hangzhou and Wuxi, a piece of flying metal [later verified to be a broken piece of a brake pad from a truck] broke the windshield and pierced through [Wu’s] abdomen, perforating his liver. He slowly decelerated and brought the bus to a stable stop before collapsing, unconscious and never waking up.

NEWSCHINA I August 2012

Top Five Search Queries On

Over the week ending June 19 Most Brazen Proposal 534,971 A Wuhan man proposed to his girlfriend by kneeling down beside a heart-shaped suitcase filled with 200,000 yuan (US$31,420) in cash.

WHO’S

HOT? WHO’S

Liu Yang 466,591 The first Chinese woman in space.

Students Beat Up Urban Management Official 258,135 A bunch of junior high students from Shandong beat up an urban management official after the man assaulted an elderly street vendor beside their school.

Mario Balotelli 243,278 The eccentric Italian soccer player caused a sensation after he forgot to turn up to an Italy-Spain match during Euro 2012.

Handan Croc 89,530 The 1.3-meter reptile was discovered in Handan, Hebei Province, the first documented case of a crocodile appearing in northern China. Experts believed it may have been intentionally released from a zoo or menagerie.

Brother Wooden Cart The muscular physique of a 47 yearold wooden handcart puller from Wuhan of Hubei Province named Yan Jiaman had Chinese netizens swooning.

Top Blogger Profile Zou Hengfu Followers: 64,965 This 50-year-old economics professor with the Central University of Finance and Economics hadkept a low profile before recently accusing Chinese economists of preferring money to academia. He reserved particular criticism for researchers who had been appointed as independent directors by major State-owned enterprises, complete with hefty salary bumps, who had no qualms about being paid big money to give “hot air” lectures criticizing State monopolies.

NEWSCHINA I August 2012

Tiger Man A man from northeast China’s Jilin Province took two pet tiger cubs for a walk down the street.

NOT? Yili Milk Yili, one of China’s largest dairies, recently recalled a line of milk powder products after they were revealed to contain dangerous levels of mercury.

Songyuan Police A man from Songyuan, Jilin Province was detained by local police for 15 days and fined 3,000 yuan (US$470) for downloading 95 pornographic video clips from the Internet.

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international

SCO Summit

Watch

As the US returns its strategic focus to East Asia, China and Russia enhance their cooperation, but their long-term focus remains centered on Washington

By Yu Xiaodong

Photo by Xinhua

Anti-West?

SCO heads of state meet in Beijing, June 7, 2012

F

ounded in Shanghai in 2001, the Shanghai Cooperation Organization (SCO) is to date the only international organization initiated by China.

Comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, the SCO was originally set up to promote counterterrorism cooperation between member

10

states and to resolve regional border disputes.

Over the years, the organization has gradually extended its scope to cover overall security and economic cooperation. But except for a rare case in 2005, when a SOC announcement led to the eviction of US forces from Uzbekistan, the influence of the SOC has been limited.

A high-profile two-day SCO summit held in Beijing on June 6-7, attended by all six heads of state, raised eyebrows as China and Russia seemed to be openly adopting a united stance on a number of controversial issues in seeming opposition to the West, as indicated by the summit’s keynote joint declaration.

While the West has stepped up pressure on the Assad regime in Syria, the SCO statement voiced opposition to military intervention, instead calling for a “peaceful resolution through political dialog.”

The Iranian nuclear issue was covered by a statement indicating that, in the view of the SCO, “any attempt to resolve the Iranian issue by force is unacceptable.” The statement went on to openly oppose “forced regime change,” which has swept several Middle Eastern (“West Asian,” in Chinese government terminology) and North African nations, demanding “respect for the independent choice” of the relevant “countries and peoples.”

“It is in China’s core interest to maintain peace and stability in central Asia, as well as NEWSCHINA I August 2012

Photo by CFP

Member States Observer States Strategic Parteners

in the interest of all SCO member states,” said Cheng Guoping, China’s deputy foreign minister. “China will never allow the tumult plaguing West Asia and North Africa to occur in central Asia.”

During the summit, the SCO also admitted Afghanistan as an observer state, and included Turkey, a NATO member, on the list of its “dialog partners.” The SCO’s other observer states are Mongolia, Pakistan, Iran and India, with Belarus and Sri Lanka also having the status of dialog partners. On June 8, after the conclusion of the SCO summit, Chinese President Hu Jintao and Afghan President Hamid Karzai issued a joint statement announcing a “strategic partnership” between the two countries. China also offered 150 million NEWSCHINA I August 2012

yuan (US$23.5m) in aid to Afghanistan, triggering rumors that China is eager to fill the power vacuum expected after the 2014 withdrawal of US troops.

According to Zhao Huirong, an expert on central Asian and Russian studies at the Chinese Academy of Social Sciences, such a role for China in Afghanistan could be welcomed by the West. Other pundits argue that China’s cooperation with Afghanistan is driven largely by it’s domestic interest in curtailing Islamic separatism in Xinjiang, the very reason that prompted China to initiate the founding of the SCO. Chinese officials have repeatedly played down the notion that the SCO is a threat to the West. “The organization has proven to be a fortress of regional peace and stability

and a driving force for regional economic development,” remarked Chinese President Hu Jintao during the summit.

Ci Guowei, a senior official of the Chinese Defence Ministry, who was involved in the coordination of the “Peace Mission 2012” – joint-military exercises involving 2,000 soldiers from the SCO member states in the wake of the 2012 summit – told the media on June 15 that SCO members’ security cooperation targets “terrorists, extremists and separatists” within the region, but not any “third party.”

Professor Chen Fengying from the China Institutes of Contemporary International Relations told NewsChina that the perceived anti-western rhetoric is meant “to warn [the West] that China has its own

11

international

bottom line in Central Asia.”

Professor Su Hao from China’s Foreign Affairs College suggests that the development of economic cooperation between SCO member states is actually more significant than security initiatives. “Unlike previous SCO summits which largely focused on counterterrorism operations, the 2012 Beijing summit focused on strengthening internal cohesion through establishing cooperation in all fields,” said Su. Besides a declaration on regional stability and prosperity, the SCO members also signed a number of agreements in the areas of transportation, energy, telecommunication and finance. China pledged to offer a loan of US$12 billion to support these projects. In addition, the SOC members approved a midterm development strategy.

“Now that 11 years have passed since the founding of the SCO, the organization has set about clarifying the vision for the SOC’s development for the next 10 years,” said Professor Chen Yurong, senior research fellow at the China Institute of International Studies.

Honeymoon

It is worth noting that the SCO summit was held against the backdrop of what observers call a “honeymoon” period between China and Russia, the two dominant players in the Central Asian region.

During Russian President Vladimir Putin’s high-profile state visit to China prior to the SCO summit, the two countries signed a joint statement to build a “comprehensive strategic cooperative partnership” alongside 11 key contracts in a variety of fields such as nuclear power, energy and tourism. Elated, Russian Foreign Minister Sergei Lavrov claimed to the press that Sino-Russian relations had reached an “unprecedentedly high level.”

According to analysts familiar with SCO’s hidden diplomacy, Russia and China had previously disagreed on the roadmap of the SCO’s development. While China was trying to promote economic integration within the region, Russia was wary of China’s economic dominance. According to Professor Chen, China has been advocating the establishment of a free trade

12

area (FTA), but Russia has resisted the idea.

Conversely, China was concerned that it would be marginalized in any stepping-up of security cooperation, with all the other SCO member states being members of the Commonwealth of Independent States, a Russian-led amalgamation of former Soviet republics.

However, it was all smiles in Beijing, with many analysts claiming that such disputes were now in the past. “The latest changes in their respective international and domestic situations have pushed China and Russia towards consolidation of their partnership,” Zhao Huirong told NewsChina.

With Europe, Russia’s largest market, entangled in financial crisis on the eve of Russia’s joining the World Trade Organization, as well as souring relations with Washington, Russia has every reason to seek China’s support. During his visit, Putin expressed a conciliatory attitude toward China’s proposal for an FTA among the SCO countries by saying that a “loosely organized FTA” should be “given a try.”

“Putin is faced with various challenges since his re-election to the Russian presidency, such as opposition pressure as well as the need to maintain Russia’s economic growth and strengthen its military might, all of which requires closer economic ties to China,” said Lu Nanquan, an expert from China Society of Russian, Eastern European and Central Asian Studies.

China, on the other hand, sees a valuable ally in countering the US government’s avowed “pivot to Asia” strategy. “Strategic pressure from the US is the driving force behind strengthened ties between China and Russia,” commented a June 6 editorial in Ta Kung Pao, a Hong Kong-based newspaper. “As the US implements this policy, China and Russia may move even closer.”

Alliance Unlikely

However, many pundits in China, the US and Russia are skeptical of any prospect of a strategic alliance between China and Russia, or to become what some analysts refer to as “allies without an alliance.”

According to Shen Jiru, a researcher from the Chinese Academy of Social Sciences, Putin’s visit to Beijing is more of a

diplomatic balancing act than an overhaul of Russia’s US policy. “The US remains at the center of Russia’s diplomacy, and strengthened ties with China serve only to boost Russian confidence and increase its bargaining power in future dealings with the US,” Shen told NewsChina. Regarding economic cooperation, Shen said that Russia has been reluctant to be reduced to the status of a mere exporter of raw materials in its relationship with China.

US pundits also warn that China and Russia are more divided than not on issues of military strategy. Professor Joseph Nye from Harvard University told NewsChina that barring “serious errors” on the US side, it would “very unlikely” for China and Russia to form a strategic alliance, as both countries’ economies are heavily reliant on exports to the West. In 2011, SinoRussian trade volume was US$83.5 billion, only a fraction of the US$446.7 billion in trade between China and the US. Nye also pointed out that Russia’s economic and military decline has made it wary of China’s rise.

“China and Russia have close economic and political ties, but the two countries have been cautious in advancing military cooperation,” commented an April 26 report in Voice of Russia, citing a researcher from Russia’s Institute for Sociopolitical Studies: “A major reason is that China is increasingly becoming a power center, which diminishes the possibility of an alliance.”

In reporting Putin’s visit, the Staterun China Central Television repeatedly stressed that the strengthened partnership has been built on “equality” and “trust,” stressing its differences from the SovietChinese alliance of the 1950s in which China played second fiddle to the Soviet Union, which had styled itself the arbiter of a global revolution – a source of resentment in Beijing, ultimately resulting in the SinoSoviet split.

With a consolidated SCO and closer economic ties between its members, both China and Russia may be able to achieve certain respective short-term goals, but in the long run, the competition between bear and dragon will persist both regionally and globally.  NEWSCHINA I August 2012

South China Sea

Looking Forward Photo by CFP

China endeavors to increase its civil presence in the Nansha (Spratly) Islands to bolster its territorial claim

By Han Yong and Yu Xiaodong

Yongxing (Woody) Island, the largest of the Xisha (Paracels) atoll and seat of the newly established “Sansha“ prefecture

“

The first rule for fishing around the Nansha (Spratly) Islands is to figure out which reefs are controlled by China and which are controlled by another country,” Liang Yaxue, a local fishing boat captain, told NewsChina. “Otherwise, you may blunder onto another country’s turf.”

Comprising 750 reefs, islets, atolls and islands spread over 425,000 square kilometers of open ocean in the South China Sea, the Nansha Islands have become a flashpoint for tensions between China and its neighbors, with interested parties claiming sovereignty over swaths of overlapping “territory” and some even stationing garrisons on reefs or islets. Confrontations have been frequent, due to the proximity of certain garrisons.

For example, the Chigua (Johnson South) Reef, garrisoned by

NEWSCHINA I August 2012

China, was the site of a brief naval battle between China and Vietnam in March 1988. Chigua is only 4 nautical miles away from the Guihan (Johnson North) Reef, controlled by Vietnam.

During a fishing run in 2010, Liang’s boat was pursued by what he describes as “an armed fishing boat” launched from Guihan Reef. He claims the boat only abandoned the chase when the Chigua Reef garrison fired warning shots.

In the latest conflict, the Chinese fishery authorities detained two Vietnamese fishing boats claimed to be operating in a disputed area on May 16, 2012. Two days later, five Chinese fishing boats were pursued by three Vietnamese gunboats, which were in turn confronted by an armed Chinese fishery administration vessel, Yuzheng 310.

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international

With tensions mounting and the major players in the area increasing their presence in the South China Sea, calls are growing in China for a more assertive policy towards its regional claims.

Civil Presence

Vietnam is believed to have garrisoned some 2,000 armed personnel in the South China Sea, while the Philippines and Malaysia have a military presence comprised 100 and 120 soldiers respectively. Numerically, China is generally understood to have the military advantage, though the People’s Liberation Army has never released personnel figures for its South China Sea bases. However, asserting viable sovereignty over this disputed region is more than a numbers game.

China’s sovereignty claim over the Nansha Islands is largely based on historical records. Today, actual control and governance, in particular civil jurisdiction, is increasingly considered more important in exerting this claim. International law also tends to favor the side that exercises actual governance. In this regard, the question of territorial authority in the South China Sea remains unresolved.

Unlike the Xisha Islands, or the Paracels, another disputed island chain which has been kept under de facto Chinese control, many reefs and shoals in the Nansha Islands fell under the control of neighboring countries in the 1980s, before China resumed its regional patrols in the 1990s.

Currently, China controls seven reefs in the Nansha Islands.

Vietnam, the Philippines and Malaysia control 30, nine, and five islands and reefs respectively, with the three largest islands, Taiping (Itu Aba), Zhongye (Thitu) and Nanwei (Spratly), variously controlled by Taiwan, the Philippines, and Vietnam respectively.

Airstrips have been constructed on both Zhongye and Nanwei islands, along with other administrative facilities. China’s diminutive port on Yongshu (Fiery Cross) Reef, the largest reef under Chinese control, is Beijing’s only major permanent presence in the area.

With 30 islands and reefs under its direct control, Vietnam has long been China’s major rival in the region. Unlike China, Vietnam has endeavored to diversify its operations, maintaining a military presence while ramping up a civil presence and strengthening governance. For example, besides stationing a battalion of 600 soldiers on Nanwei, the Vietnamese have constructed an entire town complete with a hotel, a school, a temple and a hospital. Now, a second generation of native islanders has grown up calling Nanwei home, a major challenge to China’s sovereignty claim. In its latest effort, the Vietnamese government “approved” six Buddhist monks as abbots of temples on certain other Vietnamese-controlled islets and reefs. With settled civilian populations, the stakes for any military intervention on the part of other claimants are raised exponentially.

The Philippine government has also been encouraging civilians to settle Zhongye Island, though rather less successfully. A village called Pag-Asa has been established on the island with an official population of 350. In reality, the island has less than 60 permanent residents, most of whom are government employees. However, in early 2012 the Philippine government announced that it would accelerate its Zhongye settler program, building more facilities, in-

14

cluding a port and a school, as well as upgrading the airstrip on the island with a view to developing a local tourism industry.

In recent years, China has also been trying to establish a civil presence and some semblance of governance on the islands and reefs it controls in the South China Sea. A post office with only one staff member and China Mobile’s extension of cellphone coverage to the seven Chinese-controlled reefs and islets in September 2011 have, however, not led to any form of viable settlement. Limited available land on the reefs, which are located hundreds of miles from the Chinese mainland makes it impossible to sustain a sizable permanent population. Currently, the Chinese have established seawater desalination facilities and farms, but mainly to support the reefs’ garrisons. Civilians are thin on the ground.

So far, China’s efforts have mainly focused on extending the scope of its fishing operations in the area. In addition, Mischief Reef has been contracted to Lin Zhailiang, former vice-director of the Hainan Provincial Bureau of Aquatic Products, for the development of marine aquaculture. But, with fish feed having to be brought in from the island province of Hainan, which lies more than 1,000 kilometers to the north and which claims jurisdiction over the entirety of the Nansha Islands, the business is hardly profitable.

Similar problems are also plaguing the fishing business. Chen Jiming, chief engineer for the Hainan Fishery Research Institute, told NewsChina that 500 fishing boats are now authorized to fish the Nansha reefs, but only 300 are in service, 600 less than in the 1990s.

“Sometimes, there are less than 10 boats operating in the Nansha Islands area,” said Chen.

Fishing

Lin Hongyong, secretary-general of a fishermen’s cooperative based in Sanya, Hainan, told NewsChina that the sheer distance between Hainan, the home port of almost all Chinese fishing boats operating in the South China Sea, and the Nansha Islands means that only large trawlers can turn a profit. According to Lin, existing local fishery policies based on specific economic and environmental considerations actually discourage fishermen from investing in larger boats. For example, a cap is automatically put on the addition of new fishing boats to Hainan’s fleet due to a requirement that new additions do not exceed the fleet’s current combined horsepower.

To encourage fishermen to ply their trade in the South China Sea, the government has offered a 97,000 yuan (US$15,000) per 1,000 kilowatt diesel subsidy to boats fishing in all areas south of 12th parallel north. According to Liang and other fishermen, this subsidy is too small to make a difference to most fishermen, though that hasn’t stopped some from exploiting it by sailing just south of the demarcation line then allowing their boats to drift, before returning home and claiming their handout.

Safety concerns are another major factor keeping Chinese trawlers out of what the government claims is Chinese territory. According to the data from South China Sea’s fishery bureau under the NEWSCHINA I August 2012

Ministry of Agriculture, 380 cases of “foreign assault” on Chinese fishing boats and their crews have been reported between 1989 and 2010, involving 750 vessels and 11,300 fishermen. In that time, more than 800 Chinese fishermen have been detained or jailed, with 25 killed or missing and 24 injured.

In order to better protect the safety of Chinese fishermen, fishery authorities in Hainan Province sponsored the installation of China’s Beidou navigational system, China’s equivalent to GPS, on all fishing boats over 80 tons in 2010, allowing for quicker triangulation of the location of fishing boats in trouble. However, most local fishermen want greater guarantees. Liang, for example, suggested that the government build bigger fishing boats and contract them out to fishermen, allowing greater profits while also discouraging opportunistic attacks from foreign marine patrols.

ables China to explore oil and gas in deep water regions of the South China Sea, has been perceived as China’s first attempt to actively explore oil and gas wealth in the region. However, even if oil is successfully extracted, transporting it safely back to China still poses a daunting challenge. Building a pipeline across a thousand miles of 4,000-meter-deep seafloor is out of the question. The only option is tanker shipping through disputed and heavily-patrolled sea lanes.

Many argue that China’s territorial claims have less to do with fish and more to do with the promise of oil and gas wealth in the region. According to Liu Feng, a professor from the National Institute for South China Sea Studies, there are currently 1,350 oil wells in the South China Sea, with 790 in the vast region over which China claims sovereignty. However, not one is under Chinese control.

According to Liu, China has made two attempts to assert its oil claims in the past. In 1992, China National Offshore Oil Corporation (CNOOC) struck a deal with Crestone Oil, a US-based oil company, to explore an oil field in the western part of the Nansha Islands, only to have the claim blocked by neighboring Vietnam.

China later adopted a stance that forbade oil companies from countries without regional claims from exploring the disputed area, and dropped the joint project.

With the signing of the “Declaration on the Conduct of Parties in the South China Sea” with the Association of Southeast Asian Nations (ASEAN) members in 2002, China has been advocating the idea of “shelving disputes and engaging in joint exploration.”

In 2005, China signed an agreement with Vietnam and the Philippines on seismic data collection in the South China Sea, a joint program which has led to the discovery of various oil-rich or gas-rich geological structures. Unfortunately, the discovery of these reserves has only intensified regional differences, with both Vietnam and the Philippines preferring to work with foreign companies rather than with China when it comes to extracting oil and gas wealth.

According to estimates from Chinese officials, 30 million tons of oil, more than half of CNOOC’s annual output, are being pumped every year from foreign-operated wells in what Beijing claims is China’s sovereign territory. The policy of “joint exploration” has been dismissed as a failure, and, under growing domestic pressure, China has started to adopt a tougher stance. In May 2011, for example, a Chinese ship cut the exploration cable of a Vietnamese surveying vessel. “China can no longer afford to ‘wait and see,’” said Liu Feng. “The life span of the average oil well is only 25 to 30 years.”

The launch of a new generation of drilling platform, which en-

NEWSCHINA I August 2012

Photo by CNS

Oil Tap

Chinese garrisons on Meiji (Mischief) Reef in the late 1970s

Such a scenario would require a heavily-staffed forward base in the Nansha Island chain to provide logistical support. However, establishing such a base is far from simple. According to Xu Sen’an, former vice-director of the Policy Studies Office under the State Oceanic Administration, the “relevant authorities” are evaluating the logistics of building such a base in Mischief Reef. “With its huge lagoon as deep as 6 meters and with three main entrances, Mischief Reef could, in time, accommodate an aircraft carrier,” he told our reporter.

On June 21, China announced that the three disputed island chains would be given prefecture-level administrative status under the jurisdiction of Hainan Province. The new prefecture, named “Sansha” (indicating a grouping of the Three Shas - Xisha, Zhongsha and Nansha, complete with a “capital” on Yongxing Island, part of the Chinese-controlled Paracel chain), marks the first major Chinese attempt to extend political control to all three disputed chains.

But as countries in the region and some of the world’s major countries, such as the US, Japan and India, all have a stake in the region, China faces a delicate balancing act involving sensitive diplomacy, complex military strategy and hard economic pragmatism which, if mishandled, could escalate regional tensions into a full-blown armed conflict.

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cover story

SMALLER SMOOTHER SMARTER The recent growth slump has taught the government thats its dominance over the market cannot last. Its new economic growth package is significantly smaller than the 2008 stimulus, but is it being used wisely?

16

NEWSCHINA I August 2012

Mini-Stimulus

Re-defining a Relationship

Has the economic slowdown brought an end to China’s old growth model, and the beginning of a new relationship between the government and the market?

By Li Jia

T

raditionally, times of economic crisis can rekindle the passion of the relationship between markets and governments, as the two tend to be forced into closer cooperation. In China, this relationship has always been much closer and stronger, if not sweeter, than elsewhere. The government’s response to the global financial turmoil in 2008 made China the world’s second largest economy in 2010, a position that was strengthened in 2011, as world markets continued to slide. However, changes afoot could lead to a less unbalanced relationship between Chinese authorities and the country’s commercial interests.

Though still outshining any other country in the world in terms of economic growth, by the first quarter of 2012, China’s economy had been in decline for five consecutive quarters, the longest continuous fall since 2003. Market data in April and May forecast even bleaker times ahead – growth rate forecasts well below 8 percent in the second quarter have become commonplace. Since 2003, only three fiscal quarters have seen such lethargic growth.

Unsurprisingly, predictions of a policy shift have quickly come back into fashion. On May 23, the State Council declared that “stabilizing growth should be given higher priority,” a clear shift from the previous focus on price stability.

An array of measures taken right before and after that announcement were immediately interpreted by the market and the media as the launch of a new multi-trillion yuan stimulus package, similar to the one China launched in 2008. Analysts leapt into action, identifying industries likely to benefit from the new policies, and attempting to calculate exactly how big

NEWSCHINA I August 2012

17

9

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6

3

0 Institutions revise forecasts on China’s growth rate for 2012 (%)

9.0

8.9 8.7 8.5

8.4 8.2

8.2

8.2

8.6

8.5 8.1

8.0

8.2 7.9

CASS World Bank

Organization for Economic Co-operation and Development

IIMF

Chinese Academy of Social Sciences

Goldman Sachs

Deutsche Bank

Morgan Stanley

Number Crunching (April-May 2012) Good News (percentage changes year-on-year) Inflation eased: Consumer price index up by 3.0% in May, a twoyear low; Trade stronger: foreign trade up by 14.1% in May, higher than the 10% target; Credit back: yuan-denominated loans up by US$126bn in May, higher than the US$119bn market forecast

Entrepreneur confidence index at 67.5, the lowest since Q3, 2009; Business shrinking: Purchasing managers index at 50.4% in May, the lowest since January; Production slow: industrial added output up by 9.3% and 9.6% in April and May, a 35-month low; Fiscal position weaker: fiscal revenue growth down by 19.3 percentage points compared with the first five months of 2011; Investment cooling: fixed asset investment up by 20.1% from January to May, the lowest since 2002; Consumption stagnating: retail sales from January to May, weighted by price hikes, up by 10.9%, the lowest for the same period since 2006

18

Photo by CFP

Bad News (percentage changes year-on-year)

A construction boom has transformed urban China

NEWSCHINA I August 2012

Photo by CFP

Idle land at a steel plant in Hunan Province. Derelict sites like this are a visual reminder of China’s industrial overcapacity

the new package would be.

The government rushed to manage expectations. One week after the State Council’s announcement, both Xinhua and the People’s Daily, the top two State media outlets, made it clear that there would be no “stimulus 2.0.” However, both recognized that efforts were needed to boost the economy, and that some sort of action had indeed been taken.

The market was disappointed by the absence of a stimulus, and continued to call for more pro-growth measures. But this NEWSCHINA I August 2012

time, the calls were tinged with caution – like the government, the market also recognized that a 2008-style stimulus was not what the economy needed.

This hesitance reflects concern that a stimulus could worsen the imbalance left behind by its 2008 predecessor. The economy has changed, and both sides seem to realize it.

Tough Times

Since 2010, China has been aiming to cool its economy. However, a downturn

of this scale and duration is apparently a bridge too far for either decision makers or the market. Seven out of eight quarters since the second quarter of 2010 saw decrease, the longest sustained downward movement since 1992. “Quarter-on-quarter growth in the first quarter stood at only 6 to 7 percent,” said Rosealea Yao, principal analyst with GK Dragonomics, a research and advisory agency.

In April, industrial production, which normally moves in close step with GDP, recorded its lowest growth for 35 months.

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China’s GDP growth rate Q1, 2010 – Q1, 2012( year-on-year, % ) 15

12

Q1 2010 Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

9

6

3

0 Data: National Bureau of Statistics 9.0

8.9

The April data “shocked the 8.5 leadership,” ac8.4 8.2 cording to a report by Standard Chartered 8.2 8.2 8.0 in early June. Figures for May are more mixed, with foreign trade and inflation better than expected, but consumption and new orders markedly worse. The consensus on the market is that the danger of a further downturn is becoming increasingly palpable. Unexpected interest rate cuts by the central bank can be seen as an even clearer sign of the central government’s worries.

Yao believes that the current slowdown can largely be blamed on shrinking property development as a result of the government’s house price reduction policy. Real estate, she explained, absorbed about 25 percent of total investment, and at the same time, part of the investment in infrastructure and manufacturing was also related to the sector.

Professor Li Xuesong with the Chinese Academy of Social Sciences believes that external shocks are to blame. Both of China’s most drastic economic slumps, during the Asian and global financial crises in 1998 and 2009 respectively, were precipitated by a plunge in exports, he argued. “Export affects not only our trade surplus, but also a considerable part of investment in manufacturing,” he said.

There are two convergent points behind

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8.7

8.6

these ostensibly different arguments. Firstly,8.5 neither the real estate nor exports can 8.1 boom8.2 be restored in the short term.7.9The central government has repeatedly made it clear that it would be impossible to relax the current controls on property purchasing. Uncertainty over the fragile US recovery and the eurozone crisis has increased, and these problems will take time to resolve. China hopes to expand exports to other emerging markets, but those markets are also enduring slowdowns of their own.

Secondly, both arguments are based on the same focus: investment – both the hero and the villain of China’s economic miracle.

CASS It is no coincidence that controversy over the new growth policy is nearly all related to investment, a lesson learned from the stimulus in 2008, and from China’s growth model in general.

Quick Remedy

In November 2008, to cope with the shock of the global financial crisis, the Chinese government launched a high-profile 4-trillion yuan (about US$586bn at the time) stimulus package, with a focus on infrastructure investment. This was equal to 12 percent of the total fiscal stimulus commitment made by all G20 members

in April 2009. Spurred by this policy, new loans nearly tripled in 2009, and by 2010, they were still double the pre-crisis year of 2007.

In China, growth was restored just after two quarters of slump, while developed economies debated over bailouts to their ailing banks.

However, this short-term recovery soon began to show signs of undesirable side effects, and ultimately led to losses in the long term. Inflationary pressure became a concern in the second half of 2010, and was top of the agenda by 2011. Some stimulus cash was used for speculation, creating asset bubbles in numerous products, from garlic to gold.

More importantly, the stimulus aggravated a crucial problem in China’s economy.

In 2007, the central government decided to rebalance the economic structure by promoting domestic consumption, which had lagged far behind investment and export, the other two engines of China’s economy. However, as most of the stimulus package went to infrastructure, the role of government-led investment was further reinforced.

It is natural that emerging economies should save more, investing their savings in industrialization before they become rich enough to rely on consumption. China’s problem, however, is that its consumption is dwarfed by investment. Over the past five to ten years, household consumption in China increased by 9 percent annually.

Though a high figure, investment and export were increasing much faster, according to Yao. “Consumption protects an economy from external shocks, and is a real guarantee for long-term growth,” said Professor Li. He added that household consumption also guides manufacturers on what to offer to the market. Otherwise, the economic structure becomes distorted, and resources are wasted on misplaced investment.

According to the CASS report issued in April, 54 percent of China’s growth in 2010 was from investment, compared with 44 percent in 2006. The proportion reached NEWSCHINA I August 2012

Keeping Distance

The difference between a “stimulus” and a “growth-stabilization policy,” according to Louis Kuijs, project director at Hong Kong-based think-tank Fung Global Institute, is “mostly about the size and intensity of the policy response.”

Media and analysts have been trying to piece together various data such as loan growth and budget spending to detect whether or not there has been a policy change, and how it may shape up. They agreed that the new package is not only much smaller, but involves only a resumption of suspended projects, or accelerating projects originally scheduled for a later date, rather than initiating new ones.

The current downturn is not as sharp as that of 2008, and no mass unemployment has been reported. But more important reasons underlie the caution. Labeling the new package as “mini-stimulus,” Standard Chartered stressed that “the senior leadership is clearly worried that people will interpret these policies as a doubling down of China’s boom-and-bust, investment-heavy growth model.” UBS, a Swiss bank, says in its report that “the government is keen to avoid another 2009.”

The worries are apparently justified. It seems that the market and local governments are much more eager than the central government for a stimulus. Even the State broadcaster CCTV asked whether market sentiment would force the govern-

NEWSCHINA I August 2012

ment to be more forthcoming with the stimulus. Local governments are already trying to circumvent restrictions on the property market.

Yao at GK Dragonomics thinks this reflects that the market itself has become too reliant on government intervention, and on an investment-based growth model. Once there is suggestion of a downturn, the market’s knee-jerk response is to resort to government handouts.

Fortunately, the market has not lost all its independence. Criticism was aroused by recent reports that the National Development and Reform Commission (NDRC), China’s foremost macroeconomic planning agency, had been fast-tracking approval for infrastructure projects. Dr Zhang Monan at the State Information Center, for example, warned in the media that the risks of a new wave of government-led mega-investment should not be played down “when the negative effects of the 4-trillion yuan stimulus are yet to be dealt with.” Concern over the market was so serious that both the

People’s Daily and Xinhua stressed that there would not be a repeat of the low-efficiency investment of the 2008 stimulus. “We need investment, but not an investment frenzy,” said a People’s Daily editorial on May 30.

“This caution over government intervention is necessary and positive,” said Professor Li at CASS. In any relationship, personal space matters. This time around, the government and the market have become more prudent – memories of the failings of the 2008 stimulus are still too fresh. Details of the new package need to be assessed to determine whether the new development will re-shape China’s growth model.

Photo by CFP

91 percent in 2009 when the previous stimulus was implemented. Returns from those investments, however, have been poor. The CASS report shows that investment efficiency (GDP created by a given amount of investment) from 2008 to 2011 was at its lowest since 2000. The investment spree in 2008 and 2009 also led to heavy debts for local governments. Alongside a possible property market bubble, this has become the most significant threat to China’s financial stability.

In that context, the word “stimulus” has too many bad memories attached to it, both for the government and the market.

“China is facing the pressure of an economic downturn”- Du Ying, vice-minister, National Development and Reform Commission, Beijing, June 1, 2012

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cover story

Mini-Stimulus

Off the Wagon China’s market needs to keep its appetite up, but who decides what’s on the menu?

By Li Jia

Mini-stimulus: What's in the envelope? (as of June 22, 2012)

US$4.2bn in subsidies for energy-efficient home appliances

US$952m in subsidies for energy-efficient automobiles

US$1746 – US$2857 subsidies per unit for scrapped commercial vehicles

US$27bn subsidies for energy-saving and carbon emissions reduction Strategic emerging industries to be developed (energy-saving and environmental protection, information technology, bio-industry, high-end equipment manufacturing, new energy, new materials, energy-efficient automobiles) 0.25% interest rate cut by the central bank, June 8, 2012 0.5% down to 20% for deposit reserves ratio for commercial banks, May 18, 2012 33 preferential tax items for private investment; 13 sectors to encourage private investment

7

Data: various sources

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Wang Zhongbing, mayor of Zhanjiang city, Guangxi, kisses the contract approving a local steel project at the gates of the National Development and Reform Commission, May 24, 2012.

NEWSCHINA I August 2012

Contributions from the three engines of China’s GDP growth (%) 50

50

50

50

40

40

40

40

30

30

30

30

20

20

20

20

10

10

10

10

0

0

2005 100 80 60 40 20 0 -20 -40

0

2006 60

2008

60 50 40 30 20 10 0 -10

50 40 30 20 10 0

2009

0

2007

2010

Final consumption 2011

Investment Net export

Source: National Bureau of Statistics

Photo by CFP

M

NEWSCHINA I August 2012

r Yu, a Beijing taxi driver, is considering replacing his air-conditioner. “Without the subsidy, I would have kept my old one for another two or three years,” he said.

Recently, there has been plenty of good news for consumers like Yu – a total of US$5 billion has been allocated to subsidize buyers of energy-efficient home appliances and automobiles. Yet this is small potatoes compared with the government’s overall investment ambitions. Three recently approved steel production projects, for example, are worth a total of around US$32 billion. Huge fiscal support has also been announced for the development of seven “strategically important” hi-tech industries.

The increasing threat of a downward economic spiral has prompted the Chinese government to hurry out a series of pro-growth

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Photo by CFP

cover story

China now has the world’s most extensive high-speed rail network

measures, widely interpreted as a new economic stimulus package.

Private investors have also been given a seat at the table. Between late May and mid June, government ministries announced plans to encourage private investment in at least eight sectors, including some that have been the exclusive reserve of State monopolies for years.

Together, all these steps seem to strike a perfect balance between the short-term target of reversing the downturn, and the long-held ambition of shifting to a consumption and innovation-based growth model. Without a doubt, the package is very different to, and better-balanced than, the 2008 stimulus.

However, many argue that success will be impossible without a new answer to a very simple question: who will spend the money, and how?

Expensive Tastes 24

The US$16 billion subsidy on home appliances in place between the end of 2007 and 2011 generated US$147 billion in sales in China, according to statistics from the Ministry of Commerce. This new round of subsidies is even more important for home appliance manufacturers struggling with sweeping losses after the subsidies ended.

Some have expressed concern that excessive policy intervention, even in the form of financial support, will disturb the industrial cycle by overexploiting current consumption. That, they warn, could cause overcapacity in the near future. Indeed, the National Development and Reform Commission, the country’s economic planning authority, has long been busy containing overinvestment in everything from cement to vitamin C. The mismatch between what people need and what the government is eager to supply has further distorted the market. “Why have a railway that looks like it’s from the 22nd

century if many citizens are short of clean water?” asked Jörg Wuttke, chairman of the China Task Force of Business and Industry Advisory Committee to the OECD (BIAC).

Useful projects like building water treatment plants or installing insulation in houses, he asserted, can immediately create thousands of jobs.

Observing too many “showoff buildings” in many Chinese cities, Wuttke stressed that “buildings have to grow with the demand structure of this nation.”

The government’s passion for construction is only outstripped by its enthusiasm for innovation. On May 30, the State Council announced roadmaps for the development of seven so-called “strategic emerging industries,” including new energy, biotechnology and high-end equipment manufacturing, with a view to securing rapid, steady growth “while facing mounting pressure from the economic slowdown.”

20 as-yet unspecified mega-projects will be launched. These are normally undertaken

by State-owned giants, but the idea of a government-led innovation campaign is being openly challenged. Even State mouthpiece the People’s Daily gave voice to expert concerns that companies could obtain subsidies by “fabricating innovation stories,” rather than by making real progress in their R&D labs.

While recognizing that fiscal support is important to kickstart expensive research programs, Mr Wuttke sees at least two problems with China’s spending-focused approach.

First, innovators are discouraged by the lack of protection for intellectual property. Second, small and medium-sized enterprises, the real powerhouses of innovation, are not given systematic support. Fixing those problems is much more important than “feeding dinoNEWSCHINA I August 2012

Opportunity Knocks

The current slowdown has given private investors unprecedented opportunity.

Welcoming gestures towards private investors in industries long monopolized by Stateowned enterprises are nothing new. However, with no specific measures to implement, little progress has been seen on the ground.

The new growth package includes plans to open various sectors to private investors, including banking, restructuring of SOEs, transportation and healthcare, among others. For the first time, nearly all official announcements state clearly that “no discriminatory thresholds should be set against private capital.” This contrasts sharply with the past, when the rhetoric stressed “the leading role of State-owned capital.”

“For heavily indebted railway companies NEWSCHINA I August 2012

Photo by CFP

saurs that look big but possibly have small brains,” he said.

Professor Yao Yang with Peking University criticized the obsession with glossy high-end mega-projects. “Most people need street peddlers for their daily life, and most laborers need factory jobs. Even for college students, you can’t expect most of them to go into hitech research after they graduate,” he said.

The root of the tendency towards extravagance, Yao thinks, is political. “One megaproject certainly looks more beautiful than 100 smaller ones, which create just as much output and just as many jobs,” he said.

Mainstream observers of China’s economy used to focus on the country’s industrial overcapacity. Now there is more talk about misplaced investment, rather than overinvestment. The solution, Professor Yao insists, is to give decision-making power back to private investors, the real driving force behind the market.

Economic planners hope China is on the verge of a consumer revolution

or local governments, the only way out of the current difficulty is to invite private investors to be shareholders,” said Professor Li Xuesong at Chinese Academy of Social Sciences.

However, privately owned gas stations, for example, often find their oil supply interrupted. There are plenty of stories of private investors entering State-monopolized sectors, only to find themselves trapped.

So far, there has been little enthusiasm among the private sector on taking this new chance. “The only way to convince private investors to enter those industries,” said Professor Yao, “is to make it possible for them to be controlling shareholders in companies in those sectors, and to make sure that their contracts with the government are legally binding, not subject to policy changes.”

That is why Mr Wuttke repeatedly stressed that it is far more important for China to discuss how to reform the economy, than how to stimulate it. “What we have seen [of the

new stimulus] over the last few weeks has little to do with reform,” he said.

The government seems undecided. The People’s Daily has confused readers by calling for an end to monopolies, while simultaneously asserting that “we should confidently consolidate State-owned enterprises.” A joint report by the State Council and the World Bank highlighting China’s reform path over the next 20 years reportedly faces strong opposition from the State-owned Assets Supervision and Administration Commission (SASAC).

In the previous downturn in 2008, the government vowed to “take the opportunity to better structure the economy.” Now, with another slowdown in full swing, the window of opportunity is open once again. If it passes by, then there is reason to believe that today’s feast, paid for by consumers, taxpayers and private investors, will leave a bad taste in the mouths of everyone but the government.

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law

Statutory Rape

Does Yes Mean Yes? Debate over the future of China’s statutory rape law has led to a clash of values between politicians, legal figures and activists

By Min Jie

26

Photo by CFP

I

n recent years, a number of statutory rape cases involving public officials have shocked the Chinese public and ignited debate over a range of issues, from child protection to the thorny issue of what constitutes consensual sex.

A particularly notorious incident in 2009 involving five public employees in Xishui, Guizhou Province and a number of underage girls led to a media furor which has yet NEWSCHINA I August 2012

to die down. While the five offenders were arrested and sentenced to prison terms for statutory rape, many claim they should have been convicted of rape, a crime which in China carries a harsher maximum penalty under the country’s existing Criminal Law statute.

Statutory rape became a public issue in 2001, when township government officials in Lüeyang of Shaanxi Province coerced a 12-year-old girl into having sex with each of them in turn. They were eventually convicted of statutory rape. In 2012, a series of similar cases were reported in Yongcheng, Henan Province and Yongkang, Zhejiang Province.

The outcry which accompanying statutory rape cases has led to calls from certain quarters for the crime to be merged with China’s existing rape statute, rather than continuing to treat it as a separate crime.

Legal professionals, National People’s Congress (NPC) deputies and members of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) have been debating whether or not to enact this change ever since the criminalization of statutory rape as a separate crime in a 1997 amendment to China’s Criminal Law. Professor Ruan Qilin from the China University of Political Science and Law, who favors changing the law, told NewsChina, “Violent sexual abuse is different from nonviolent sexual abuse.”

Such viewpoints have been met with a backlash from other academics and the public, many of whom argue that coercing minors into sex, violently or not, constitutes rape.

Liu Baiju, a researcher from the Chinese Academy of Social Sciences and member of the CPPCC National Committee, submitted a draft resolution to the 2008 sessions of the CPPCC, urging that “intercourse with girls under the age of consent,” whether “consensual” or not, be classed as rape, and made subject to more severe penalties than non-statutory rape.

“Some in judicial circles have been pushing for abolishing the crime of statutory NEWSCHINA I August 2012

rape. I was the first to submit a draft resolution on the subject to the CPPCC,” Liu told NewsChina.

harsh than for rape, dulling the effectiveness of convictions.

Criminal Law

However, Professor Ruan Qilin of the China University of Political Science and Law told our reporter that, as many statutory rapes are reportedly consensual, current penalties are sufficiently harsh.

Ruan believes that whether or not violence is used against a victim should determine the penalty for sex crimes. “One important thing is ignored amid the clamor of advocacy for the abolition of statutory rape as a separate crime,” he said. “The fact is that rape in its most extreme form is punishable by death, but few statutory rape cases involve violence or the death of victims. Why must a statutory rapist die if he has neither wounded nor killed anyone?”

“What outrages the public most is the repeated sexual abuse of underage girls on the part of some public employees,” Wang Zhixiang, a professor at Peking University’s Institute for Criminal Law Research, told NewsChina. “The problem is the punishment meted out to repeat offenders who abuse minors is not harsh enough if the offence falls under the current statute.”

Women’s and children’s activists, however, see the debate differently.

“Giving special protection to minors is the point of departure for all child-related protection legislation the world over,” said Tong Lihua, director of the Beijing Center of Legal Assistance to Juveniles. “Legislation that lists ‘having sexual intercourse with underage girls’ as a separate crime overlooks the possibility of psychological harm done to victims.”

“Because a kind of ‘transaction’ is involved in these offenses, a notion exists among lawmakers that the underage girls in these cases are not actually victims,” Professor Wang Zhixiang of Peking University told NewsChina. “Considering that underage girls engaged in child prostitution are more at risk of physical and emotional harm than adult prostitutes, we have no basis to infer these cases are not rape, regardless of whether or not money has changed hands.”

The crime of having sexual intercourse with minors (children under the age of 14) did not appear on China’s first Criminal Law statute legislated in 1979. It did not become a crime until 1991, when the Standing Committee of the NPC enacted the Resolution on Punishing Prostitution.

In the revised 1997 Criminal Law statute, statutory rape was separated from rape, becoming a separate crime punishable by five to 15 years’ imprisonment. Rape, on the other hand, carries a minimum penalty of three to 10 years’ imprisonment, though life sentences or death can be sought for rapes resulting in the death of the victim.

“Listing intercourse with minors as a separate crime was meant to attach greater severity to such acts,” said Liu Baijiu. “In the course of legislation, however, while the minimum sentence for statutory rape was indeed more severe than for rape, the maximum penalty was in fact lighter.”

The 2009 Xishui case brought this issue to national public attention. Over a period of several months, five public employees repeatedly abused 11 schoolgirls. Although long prison terms were finally meted out to the offenders, public opinion held that the punishment was still too light and that these criminals should be charged with rape.

In his draft resolution submitted to the CPPCC, Liu Baiju pointed out that “Having sexual intercourse with minors should be considered as rape in law, despite the frequent involvement of money and other incentives offered to the victims by way of coercion.”

“Driven by the trend of ‘buying virginity,’ many offenders engage in sexual abuse of minors which equates to the crime of rape and should incur an equal penalty,” he added.

Many in the pro-abolition camp hold that in terms of deterring potential offenders and protecting minors’ rights, penalties for statutory rape are perceived as generally less

Violence vs. Non-violence

27

FEATURE

Village Self-Governance

Cure

or

Curse?

A social education program has shed new light on the debate over the viability of village-level self-governance in China

By Yu Xiaodong

I

n the ongoing debate on the issue of democracy in China, perhaps the most intriguing question is posed by the country’s vast rural society. Those in academic and activist circles hold sharply contrasting views on the impact of rural politics on China’ political future.

With a long history of self-governance, and as the only arena where ordinary people can legally and directly elect their leaders, many see village-level democracy as the best bet for promoting democratic reform in China. Such a view seems to be supported by the “uprising” in Wukan village, Guangdong Province in 2011, when

28

villagers ousted their corrupt leaders and successfully forced the authorities to allow open elections for new leaders.

However, many remain unconvinced, arguing that the feudal origins and authoritarian nature of that same history of village-level self-governance, together with a lack of contact with Western concepts of democracy and freedom among rural residents, actually makes China’s rural society an obstacle for progress toward greater democracy in the country as a whole. Han Han, one of China’s most famous writers, caused uproar earlier this year when he wrote that China’s intellectual democ-

racy advocates are detached from ordinary people, and are ignorant of the fact that the sudden implementation of democracy, through revolution for example, would inevitably lead to chaos.

The Chinese government seems to endorse his view. Answering the question “When will the Chinese people directly elect their leaders?” in a nationally broadcast press conference in late March, Premier Wen Jiabao reiterated his support for a gradualist approach toward direct elections.

“When the people are capable of managing the affairs of a village, they will be capable of managing a township, then a county…

NEWSCHINA I August 2012

Courtesy of Kou Yanding

Yuan Tianpeng talks to members of the rural cooperative in Nantang village, Anhui Province

they will follow the path step by step,” Wen said.

With top-down political reform stagnating and a popular revolution out of the question for all but the most radical activists, some argue that the only road to democracy begins at China’s bottom rung.

It comes as no surprise that in recent years, many activists and civil rights NGOs, both foreign and domestic, have focused on nurturing and supporting village-level selfgovernance initiatives.

Rules of Order

A recent initiative was spearheaded by

NEWSCHINA I August 2012

intellectual activist Yuan Tianpeng, a University of Alaska graduate who translated Robert’s Rules of Order, a classic manual of parliamentary procedure, into Chinese.

Yuan worked with Yang Yunbiao, head of one of China’s best-known homegrown village-level rural cooperatives in Nantang Village, Anhui Province, to apply the rules to its council meeting.

Nantang’s rural cooperative began as a loosely-organized group in 1998, as Yang, a self-taught lawyer, led the villagers to petition various authorities over corruption and rights violations within the village.

After more than 10 years of struggle that

brought down several corrupt village officials, the organization finally gained official recognition and was allowed to be legally registered. However, as the cooperative shifted its focus away from struggle against the authorities, it encountered a self-governance problem, and its council meetings frequently descended into disarray.

According to Yang, who is in his 30s, the council members, mostly in their 50s and 60s, were reluctant to speak up at first. But when encouraged, a few assertive figures would usually dominate the discussion.

When Yang intervened in an effort to make the discussion more balanced, the meeting would then degenerate into what he called “barbaric debate,” usually in the form of aggressive personal attacks. It seemed that the only solution was for Yang to make all decisions by himself, like a traditional “strongman” village official.

“But I didn’t want to become what I had fought against,” said Yang. Therefore, upon hearing about Yuan’s efforts to promote the basic Western parliamentary principles in Robert’s Rules of Order, he suggested that Yuan train the council members to apply the rules, so their meetings could become fully functional.

As the first Chinese member of the USbased National Association of Parliamentarians, Yuan Tianpeng has been promoting Robert’s Rules of Order as a system of procedural justice within China’s civil society, as an instructor at Peking University, as well as a governance consultant to several major Chinese NGOs. Yang’s invitation opened the door for Yuan to try his methods at the very root of Chinese society.

With funding from OXFAM, the training project was soon launched in Nantang, and its inner workings were recently published in the book Operational Democracy – A Rural Application of Robert’s Rules of Order, written by Kou Yanding, a freelance writer and rights activist who observed and participated in the process.

According to Kou, the book is hardly a success story. “But it was a valuable learning process, not just for the villagers, but for

29

Yuan, for me and for everybody else,” Kou told NewsChina.

An encounter between Yuan and the villagers got the project off to an inauspicious start. Upon arriving in Nantang, Yuan was appalled by the living conditions in the village, and insisted on staying at a hotel in the county seat. Village council members were disappointed that what Yuan, the highly anticipated “returning expert from the US,” had to teach them was just a book of rules, or “a kilogram of democracy” in the words of a township official.

As the project developed, both sides became frustrated, as terminology such as “motion,” “to second a motion,” and “amendment” confused council members so much that Yuan secretly described his efforts as “selling shoes to a barefoot tribe.”

But with the help of a team of volunteers acting out scripted scenes to explain and illustrate every scenario and concept in question, Yuan eventually managed to get his message across to council members.

After several days of exercises and debate, council members began to show interest in the rules, and managed to develop 14 basic provisions which they agreed would guide their meetings in future.

However, an ironic twist of opinion stopped Yuan in his tracks. When Yuan tried to introduce more complex concepts, such as procedural motions, other activists, including Kou, deemed them unnecessary and overly ambitious. To Yuan’s surprise and frustration, a motion was raised, and then passed by council members, ruling that Yuan cease his efforts.

Unlike most initiatives, which generally focus on raising awareness through oneway communication, this project deals with the very process of decision-making in a village, sometimes involving clashes between grassroots-level villagers and urban intellectuals with Western backgrounds, of-

30

Courtesy of Kou Yanding

FEATURE

Yang Yuanbiao, head of the Nantang Rural Cooperative, explains procedures described in “Robert’s Rules of Order to council members

fering first-hand insight into many of the questions regarding the viability of villagelevel self-governance in China.

Misguided?

The experiment, along with all the dynamics detailed in the book, elicited a variety of viewpoints among both academic and activist circles.

For Yang Peng, general secretary of the One Foundation and a respected scholar of political science and ancient Chinese philosophy, the project reflects a common misunderstanding among activists who often equate self-governance with direct elections. “There is a tendency among rights activists to apply elections to all aspects of self-governance, both within a village or within NGOs themselves.”

According to Yang, resentment of au-

thoritarian rule among rights activists has led to a bias against strong leaders, who he argues are an essential element in the efficiency and effectiveness of any body’s selfgovernance. “As a parliamentary procedure, Robert’s Rules of Order should only be applied when electing a leader or drawing up a budget. We must be aware of the limitations [of the rules] when applying them to village-level self-governance bodies.”

Li Yong, a well-known literary critic and activist, argued that the apparent impracticality of self-governance in Nantang is not limited to a single village, but is intrinsic across the entire country. In Li’s opinion, villagers themselves are entirely capable of governance, but lacking anything meaningful to govern, they become apathetic.

“Back in 1981 and 1982 when China’s groundbreaking land reform took place, NEWSCHINA I August 2012

NEWSCHINA I August 2012

in rural villages, but in urban homeowners.

“Whereas Party branches often take control of community affairs in rural villages, these do not exist in privately owned apartment complexes. There, genuine self-governance can be realized, as every homeowner has a stake in the neighborhood,” said Chen.

According to Chen, about 4,000 neighborhoods in Beijing house 80 percent of the city’s population, but less than 20 percent of these neighborhoods have a selfgovernance body, such as a homeowners’ association. “If activists were to shift their focus away from rural villages to urban neighborhoods, their effectiveness would increase tenfold.”

“It’s a pity that Mr Yuan does not participate in the activities of the homeowner’s association in his own neighborhood,” added Chen.

Li Dun, a professor of public administration from Tsinghua University, is pessimistic about the idea of a bottom-up approach in pushing further political reform, in both rural and urban communities. “These rules are not in use in the National People’s Congress [China’s parliament] as they should be. I doubt the relevance of their application in a village,” he said.

“In China, we attribute all problems to the authorities, but the reality is that the whole of society has been corrupted [by an authoritarian political culture], and everyone is a product of the system. People may talk about democracy and rule of law, but they still behave in an authoritarian way.” he added.

But for Yuan and Kou, this concept is exactly what they have been trying to tackle.

“People often ask me what I have achieved through the project. For me, this is a difficult question. I think that if there is any success, it would be that, at the end of the day, both villagers and activists are willing to listen to each other’s opinions and compromise,” said Kou.

Kou Yanding, author of the book “Operational Democracy – A Rural Application of Robert’s Rules of Order,” records the project’s progress

Courtesy of Kou Yanding

few Chinese villagers could read, and none of them had ever heard of anything like Robert’s Rules of Order. But when collectively-owned land was to be re-distributed to each household equally, villagers came up with very sophisticated rules and procedures to handle the distribution,” said Li. “It was the best self-governing project I have ever witnessed.”

According to Li, the prerequisite for village-level self-governance is that core interests must be subject to the approval of the villagers. However, since the government has now monopolized the proceeds from land appropriation, rural society has become marginalized, and the most capable rural residents normally choose to leave the villages to work in the cities, leaving villagelevel governance without its key participants.

Therefore, as long as matters regarding core interests in a village are not subject to the council’s decision, village-level selfgovernance has no future. Li suggested that the very reason behind the apparent success of Wukan village was that the issue in question, land appropriation, involved the core interests of the majority of the villagers.

For NGOs, providing something to be governed upon is the preferred method of nurturing democratic self-governance in villages. Typically, an NGO will offer financial support for infrastructure or livelihood projects, an irrigation initiative for example, on the condition that the villagers elect a committee to supervise the project’s implementation and management.

But the problem is that when the project is finished, the management team disbands.

Li warns that in Nantang village, the set of rules they established may not be applied at all after Yuan and his team leave.

For Chen Fengshan, an activist who has been promoting urban community-level self-governance for the past 10 years, the future of democracy in China does not lie

“For many, the argument seems to be whether or not [Chinese people] deserve to enjoy democracy. But the truth is, if you do not do the proper preparation, it will not just happen by itself,” commented Zhang Lixuan, chief editor of Duku, a popular literary magazine.

31

politics

Worker representatives at Ricoh take a vote

In 1978, Deng Xiaoping called labor unions a “paradigm of democracy,” but only this year have open elections for labor union representatives been granted to workers in Shenzhen, China’s economic frontier town. While some argue that a spiraling labor shortage has been the main driving force behind improving workers’ rights, fully elected union committees in Shenzhen-based multinationals have nonetheless been praised.

However, the future status of the independent labor union in China, still seen as a basic right in most western countries, remains in doubt.

32

NEWSCHINA I August 2012

Courtesy of Richo Labor Union

Labor Unions

Assembly-line

DEMOCRACY

Elected labor unions are being tentatively encouraged in Shenzhen, China’s trailblazing Special Economic Zone. Can Chinese workers expect to finally have their say?

By Min Jie in Shenzhen

F

or 15 years after Ricoh’s Shenzhen branch was launched in 1982, its workers had no union representation. This is not unusual for China’s southern manufacturing hub - many other local private and foreign-owned companies have entirely nonunionized workforces.

NEWSCHINA I August 2012

“Ricoh has been running without a union at home in Japan, so they did the same in China,” said Qian Jialiang, the current chairman of Ricoh’s labor union, which was formed in 2007 and is now recognized as the first entirely elected labor union among Shenzhen’s foreign companies. Qian believes the Ricoh model will soon be im-

33

politics

plemented in other major foreign-owned companies in the city.

Real Union?

Since 2006, the All China Federation of Trade Unions (ACFTU), China’s only legal labor union, began pushing for the establishment of labor unions in big foreign-owned companies operating in China.

Before that, the formation of unions was never encouraged or acknowledged, though it was not expressly prohibited.

A manufacturing base for many multinationals, Shenzhen quickly fell in line with the ACFTU, and in 2007, the city’s federation of trade unions demanded that all Shenzhen-based branches of Fortune 500 companies found labor unions.

Ricoh’s was among the first to respond, but the foundation of the labor union had little to do with the workers, with all 10 preparatory committee members selected from management, mostly from the company’s human resources department. The candidates for the union committee were predetermined by this preparatory committee.

However, when 112 worker representatives were asked to vote on which of these carefully vetted candidates were to represent their interests, the workers answered with candidates of their own, one of whom, Peng Xiujiao, was eventually elected as chairperson.

Peng was herself surprised to win a place on the committee. A production manager, Peng was the only candidate who had regular daily contact with assembly-line workers. She believes it was her familiarity that won her the ballot.

Ricoh’s second union election three years later was carried out completely independently of management. Among the 248 elected worker representatives, more than three quarters came from the factory floor, and all were directly elected by the workers themselves. Four assembly-line workers ended up winning seats on the committee.

Daimon Ichiei, president of Ricoh Shenzhen, welcomed the direct election of union reps. He told NewsChina that Ricoh’s labor union understood the company’s goals, and had the company’s interests at heart.

Meaning Business

For most Chinese workers, especially those working for Stateowned enterprises, their understanding of labor unions is rooted in the planned economy era, with unelected union reps largely acting as social events organizers – distributing movie tickets to model workers and holding small-time meetings, the outcomes of which would be largely ignored by management. In the private sector, even rubberstamp unions are largely non-existent. Ricoh’s newly-elected union had to overcome these preconceptions.

“It does take time to trust a labor union,” said Liu Bintao, a worker at Ricoh’s logistics department who himself served as a worker representative. After being summoned by the union committee as a consultant, said Liu, he began to believe in their sincerity. That the union is winning hearts and minds can be seen by its increase in membership. Only half of Ricoh’s employees joined the union when it was first founded, but this number quickly expanded to over 4,000 mem-

34

bers, more than 90 percent of the workforce. Today, all of Ricoh’s employees are members.

The Ricoh union committee meets with senior management once per quarter on average to relay employee complaints and requests.

Five such meetings were held in 2011, all of them attended by the company president. The union members were surprised at management’s interest in dialog, with meetings usually held at the request of the board of directors, not the union committee.

Daimon Ichiei believes that both employers and employees share the same goals of enterprise development and staff well-being, and sees frequent dialog with the company’s labor union as the best way to achieve these goals.

However, when it comes to certain tangible aspects of “staff wellbeing,” common ground has proven hard to reach.

In 2010, the Shenzhen Federation of Trade Unions required the city’s Fortune 500 companies to negotiate with their employees on salary, after a string of strikes, the most notable of which occurred in Shenzhen’s Toyota and Honda plants, threatening to cripple local industry.

Liao Jilie, vice chairman of Ricoh’s labor union, had investigated other companies before negotiating with Ricoh’s management. He found that some companies had reached vaguely-worded agreements such as “the amount of pay raises should be set by company regulations in accordance with the state of operations.” He decided a more concrete settlement would need to be reached at Ricoh, and approved by its workforce.

In the latest round of pay negotiations in February 2012, Ricoh’s management only offered an 8 percent pay raise, citing that the company’s profits had been dragged down to record lows by the 2011 tsunami in Japan, floods in Thailand and the Eurozone sovereign debt crisis. The union countered with a detailed report on the rising cost of food, housing, education and childcare, concluding that in 2011 the monthly cost of living for the average Ricoh employee increased by 350 yuan (US$55), and demanded a 19 percent pay raise to cover these costs.

After four rounds of negotiation spread over three weeks, both sides agreed on an average pay raise of 15 percent. More than 94 percent of the worker representatives said they were “satisfied” with this result.

Outside of Shenzhen, labor unions continue to act as mouthpieces for enterprise in the State sector, while failing to gain a foothold in the private sector. Genuinely elected unions are unknown outside the country’s Special Economic Zones, where enterprise and social organizations remain under tight Party control. During his visit to Ricoh, Wang Yang, the party secretary of Guangdong Province which oversees Shenzhen, himself an outspoken reformist, praised the union’s “weight and capability” in “performing its function.” However, Wang did not elaborate on what specific “function” a labor union in China should perform.

Qian Jialing, however, is in no doubt as to what a union should not be. He told our reporter that a true labor union is “neither a puppet of, nor a vessel for, nor a fierce opponent to its employer.” NEWSCHINA I August 2012

Labor Unions

Power Shared,

SPARINGLY

Elected labor unions in the manufacturing hub of Shenzhen have paradoxically been founded by a Party mandate

Photo by Chen Yihuai

By Shen Xinwang in Shenzhen

Workers debate during the election of their new union committee at a Shenzhen company NEWSCHINA I August 2012

35

Photo by CFP

politics

Wang Yang (fourth from left), Party secretary of Guangdong Province, visits Ricoh’s Shenzhen facility to publicly endorse the company’s labor union elections, April 19

W

hen the workers of Yantian International Container Terminals went on strike in early April 2007, the company’s management was caught off guard.

Yantian International runs the main Shenzhen port facility, the world’s fourth largest by throughput. To outsiders, Yantian International looked like the last place a strike could ever occur, as it was frequently held up as a national model employer, supposedly devoted to the rights of its workers to a decent wage, meaning Shenzhen’s army of stevedores pulled down a better salary than most.

In 2007, pay disputes were at the heart of eight to nine out of ten strikes, according to Li Ying, the deputy director of the legal section of Shenzhen’s Federation of Trade Unions. It was common for entrepreneurs to flee the city with millions in embezzled back pay, which made the eventual resolution of the Yantian strike even more unusual.

Different Music

The Yantian strike began when more than 400 workers held a sit-in at the company’s dining hall on a Friday, when most of the management were absent. Demanding a considerable sum of outstanding overtime pay, the workers raised a banner calling for “co-construction and sharing.”

Despite offering a decent initial pay packet, Yantian International had become notorious for failing to raise employee salaries – no stevedore or regular staff member had seen a raise in 10 years despite steep profit growth. In fact, when inflation was taken into account, employee pay had in fact dropped.

“Such straightforward demands had never been seen in previous strikes,” said Wang Tongxin, deputy director of the Shenzhen Federation of Trade Unions (SFTU). “They were no longer satisfied with simply serving as cheap labor.”

The strike at Yantian International was seen as a watershed case by Wang, as rather than fighting for mere material interests, workers at Yantian International were asking for a right to share in their employ-

36

er’s growth and to be given a voice of their own. The most publicized demand was for a labor union of “front-line workers” – which, Wang explained, meant a union independent of the company’s management structure.

Before 2007, it was illegal in China to establish a labor union in a private or foreign-owned enterprise. While labor leaders had lobbied the government to change the law, their entreaties had fallen on deaf ears. Stories of profiteering and worker exploitation in Shenzhen failed to initiate action, as the government feared the prospect of investors, attracted by the anti-union laws upheld in the city, would be put off if workers were given the right to form a union. One shipping firm announced that, were its workers permitted to unionize, the docks would cease to operate. In 2006, a major foreign-owned company petitioned the city’s Party secretary to block any pro-union legislation, threatening that any such action could derail a major infrastructure project. With only the voice of business to answer to, the government had little incentive to court worker opinions.

However, Wang told our reporter that as manufacturing declined and investment diverted into high-tech and innovative enterprises, an abundance of capital paired with the limited availability of skilled workers forced a change in strategy.

“We were no longer short of money,” Wang said, adding that financial incentives were a cost-effective way to attract the best and brightest workforce to Shenzhen.

Credibility Crisis

However, when the Shenzhen Federation of Trade Unions, a Partyaffiliated organization, offered to help found Yantian International’s first labor union, workers protested. State-controlled labor unions are the only workers’ organizations permitted in China, and few serve any function beyond organizing company outings. Union members themselves often see their organizations as a buffer between manageNEWSCHINA I August 2012

Courtesy of Richo Labor Union

Democratic Model?

Workers compete in a Chinese chess contest organized by Ricoh’s labor union, which has become a model for labor relations in Shenzhen

ment and labor rather than advocates of workers’ rights.

“Our credibility is in question,” said Wang. “Our comrades used to say we mediate between labor and capital, but a union is supposed to be on the side of the workers.”

The average union in China typically acts as a go-between, keeping the workforce quiet while gently pressing management for the occasional concession. Wang believes this model has had its day. In the early days of Reform and Opening-up, the intervention of the All-China Federation of Trade Unions in labor disputes was often welcomed, as few workers were aware of their rights, and those that were feared retribution for any industrial action. The federation could step in as mediator, ease tensions and, occasionally, wrest a pay raise or other benefits from management. However, with money and power in China increasingly entwined, workers have come to distrust their State-appointed representatives, questioning their interests.

In the 1980s and 90s, during the heyday of China’s industrial boom, migrant workers were abundant and easily replaced. Salaries were low, and worker safety ignored. In the 1990s and early 2000s, factory fires in the industrialized Pearl River delta killed dozens of workers. Suicides were a regular occurrence in larger enterprises, where sweatshop conditions were endured for mere cents an hour. Any attempt to unionize would result in detentions, arrests, even violence.

Though all citizens technically have the right to lodge a formal complaint against their employer with their local government labor bureau, few complaints are acted upon. Factory bosses are typically friendly with the authorities, and the sheer volume of complaints often overwhelm the skeleton staff employed by China’s labor bureaus.

As a result, civil unrest became a feature of industrial disputes, with frustrated employees, denied a release valve for their frustrations, taking to the streets. Labor disputes began to be a daily feature of life in Shenzhen, China’s manufacturing showroom, threatening to gut the city’s prosperity.

NEWSCHINA I August 2012

The federation itself had to change its role. Unions in private and foreign-owned enterprises could not be imposed on a workforce.

Rather, the workforce should elect its own representatives.

“In the past the federation played the role of organizer,” said Wang.

“Now we had to let the workers organize by themselves.” Wang told our reporter that, while both captains of industry and government cadres had perceived elected unions as a potential source of unrest, his department was coming round to the idea that they could potentially avert crises sparked by avoidable abuses such as embezzlement of back pay. Also, they could facilitate communication between workers and managers, something which was impossible under the leadership of distrusted State-mandated union representatives.

At the end of 2012, employees of HGST, a manufacturer of storage devices under Japan’s Hitachi brand name, moved to strike to protest against a planned equity transfer deal, which employees believed would undercut their interests in the company. The strike continued for 22 days before the issue was resolved, with the main obstruction to negotiations being the workers’ refusal to allow their State-sponsored union representatives to take their part in negotiations.

The SFTU was forced to act. Rather paradoxically, it mandated the establishment of elected unions in 163 Shenzhen-based companies with more than 1,000 employees, beginning this year.

“Party leadership of labor unions does not mean that the Party should hand-pick the union committee chairman,” said Wang. The most vital aspect of capital-labor relations is negotiation between both parties on an equal footing. We need to rely on the labor union, not the individual worker, to act against employer misconduct.”

Wang also added that workers, even unionized workers, are usually more yielding than management, as they have more to lose in the event of a company collapse.

“My experience has convinced me that no workers protest in order to kill a company,” he said, adding that he saw the development of independent unions as a vital stage in the process of China’s “democratization.”

Yantian International’s newly-elected union successfully secured a two percent pay raise for its workers in 2008 amid the global recession, while other Shenzhen enterprises were cutting worker salaries and enforcing layoffs. In 2010, the union delivered a 10 percent raise, meeting its pledge to the workforce and winning their trust.

Wang Dongchuan, chairman of Yantian International’s labor union, said he recently heard a complaint from a stevedore who claimed the union had been idle since 2010. Wang asked the man if he felt mistreated, to which the worker replied: “No.” “So you’ve got a pay raise every year, and you haven’t been mistreated,” Wang replied. “That’s the function of a labor union.”

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SOCIETY

Pickup Artists

The Love Gurus A group of self-styled Chinese “pickup artists” are teaching their countrymen the finer points of attracting women

By Yuan Ye

38

NEWSCHINA I August 2012

I

Illustration by Wu Shangwen

n 2008, Xiao Ran was a quiet, introverted 25-year-old. Throughout his time at high school and university, he only once managed to get himself a girlfriend, and the liaison didn’t last.

Four years later, Xiao is one of China’s top pickup artists (PUAs), and a well known coach in the art of the lothario. Though reluctant to reveal the exact number of girls he had “TD’ed” (an abbreviation for tuidao in Chinese, literally “to push down,” a Chinese PUA slang term for “to sleep with”), Xiao is proud to have had four girlfriends in the past four years. However, he is keen to point out that he’s no player – he limits himself to one relationship at a time. He told our reporter that his first TD experience took one month of hard work, from pickup to pillowtalk.

Like most people in China, a few years ago, Xiao had never heard of a PUA. But in the meantime, competition for the hearts of the nation’s women has been heating up. “Most guys are AFCs – average frustrated chumps,” said Xiao. In fact, China probably has the world’s largest AFC population – according to data released by the National Bureau of Statistics, there were 34 million more males than females born between 1980 and 2000.

More importantly, sex is still something of a taboo topic in Chinese society. Picking up women in bars is generally seen as a morally dubious act, and certainly not something that most people would be willing to talk about openly.

Yet, with the recent influence of PUA culture from the West, a group of young Chinese pioneers quickly caught onto the trend, and devoted much of their spare time to adapting its theories for use in

NEWSCHINA I August 2012

39

their homeland. Today, there are an estimated one million PUA practitioners in China, a figure that is expected to keep growing.

Curtesy of Pan Sheng and Xiao Ran

SOCIETY

Building a Platform

In PUA circles, Pan Sheng is better known by his online identity “Cold Love.” One of the earliest advocates of PUA in China, Pan has been Pan Sheng, PUA pioneer and author of “The researching the topic for five Cold Love Method” years, four of which he spent developing a pickup philosophy entirely of his own, which he calls the Cold Love Method.

“Love is passionate. ‘Cold’ is a reminder to myself to be calm and sensible,” explained Pan, a freelance relationship consultant and founder of paoxue.com, one of the earliest and most popular PUA forums in China.

“Basically, there are two schools of PUAs in China – the ‘technique school’ and the ‘natural school,’” Pan told NewsChina. “I’m in the natural school.”

Indeed, 29-year-old Pan has the air of a natural. Smart, tall and well-built, he has been popular with females since his school days.

Yet, unlike some popular young men, Pan took an early interest in striking up conversations with female strangers.

In 2007, Pan found an online Taiwanese translation of The Xiao Ran, PUA coach and Paoxue webmaster Game, the world’s first PUA bestseller, by American writer Neil Strauss. While much of the book’s content seemed like second nature to Pan, it was also a doorway to an exciting new culture. He was thrilled by its methods. mon on the site. The team decided to tighten up registration rules, Pan began to practice the skills described in the book, and no- allowing only those who were invited by current users to register. ticed the growing number of people discussing PUA skills and Despite this, membership continued to grow. Today, Paoxue has sharing their experiences on the Internet. Pan realized there was a more than 300,000 registered users. need for a Chinese platform for those with similar interests.

While PUA practitioners joined in droves, Pan began to notice In 2008, he began to build a dedicated website for Chinese problems. One was that some foreign pickup methods were not PUAs, and registered the domain name Paoxue, meaning “pickup well adapted for use on Chinese women, due to differences in lanstudies,” with a group of collaborators. Today, Paoxue is an online guage and social mores. Another was that there was no systematic forum divided into various sections, including “Pickup Diaries,” method for Chinese practitioners to develop from beginners into “Pickup Books,” “Field Reports” and “Long-term Relationships,” advanced PUAs. In his opinion, most works produced by PUA aiming to provide users with a step-by-step guide to becoming a experts from the technique school are easy for beginners, but often PUA. lead to rigid, mechanical performances. “Some of the technique After just one year, paoxue.com had amassed tens of thousands practitioners became nerds,” Pan said. Yet on the other hand, the of users, more and more of whom claim to be active in the real-life writings of the natural school were too vague and theoretical. practice of the “art.” Yet at the same time, posts containing adverPan wanted to combine the two schools and customize a system tisements and pornography were also becoming increasingly com- for Chinese PUAs. The result was The Cold Love Method, a book

40

NEWSCHINA I August 2012

and multimedia package released in 2011, essentially consisting of three parts: the “core,” the “system” and the “plug-ins.” The core is mainly about his personal pickup philosophy, reflecting many of the ideas of the natural school. The system teaches the most easily applicable pickup methods, and plug-ins are specific tactics for special situations, environments and groups of people. In his continued research into PUA, Pan is constantly adjusting and supplementing his theories.

Room to Grow

“In truth, love is the process of learning to give.”

Obviously, not everyone is lucky enough to be a natural like Pan Sheng. Xiao Ran, now a close collaborator of Pan’s and webmaster of paoxue.com, is a case in point. A science major in college, Xiao was a simple, straightlaced young man. “I was too rational,” said Xiao, “which often led to my ignorance of women’s emotional changes.”

Xiao began to practice pickup in the summer of 2008. Working with other PUAs, Xiao felt a change in his personality. He learned to approach women, to communicate with them properly, and to develop relationships with them. Soon, he left behind his life as a bachelor, and began to find long-term girlfriends.

But Xiao didn’t really come out of his shell until late 2010, when his company sent him to work in the southwest city of Chongqing, a place with no established PUA community. “I had to go into battle alone,” said Xiao. His training soon came in handy. Two weeks after he arrived, he found himself in a stable relationship, which lasted for some time even after he returned to Beijing in the summer of 2011.

The experience gave Xiao a renewed sense of confidence.

He shared his story with Pan Sheng, who by then had founded PUACN, a professional organization to support the development of PUA websites in China. PUACN also promotes a wide range of offline activities, including regular training courses and an annual industry summit inaugurated in 2010. Pan was moved by Xiao’s story, and suggested that he share his experience with more people.

Xiao was good at telling stories, and as a graduate from a teacher training college, he had always dreamed of becoming an educator.

Having taken over much of the management of paoxue.com, Xiao also began a career as a pickup coach. Since September 2011, he has been giving online lectures once every two weeks, and has held a series of offline lectures.

The market for PUA training is growing quickly. “In 2010, the scale of the PUA industry was very small. But in 2011, it saw a growth spurt,” Xiao told NewsChina. Though lacking concrete figures, he said that training courses are now being held nationwide.

NEWSCHINA I August 2012

“The cost of one course can range from hundreds of yuan (tens of US dollars) per day to 20,000 yuan (US$3,180) for a two-week course,” said Xiao. Both he and Pan Sheng believe that there is still a lot of room for the industry to grow.

Taboo

Despite the boom, PUA culture remains far from the mainstream. In Pan Sheng’s opinion, “social misunderstanding” is the most prominent obstacle to its increasing popularity. “Many people tend to instinctively demonize PUA,” said Pan. “We have encountered numerous difficulties caused by a lack of understanding in recent years,” he continued. On the online forums, posters often suggest certain activities keep a low profile to avoid attracting too much

publicity.

These taboos have also put pressure on individual practitioners.

32-year-old Gavin is a graduate from a top university in Beijing, but despite holding down a lucrative job as a payroll manager in a large-scale State-owned enterprise, he had only ever had one girlfriend before he began to practice PUA in 2009. While he quickly fell in love with the lifestyle, he still has to conceal his activities from most of his family and friends.

While Gavin soon began to land girlfriends and rack up a number of TDs, he began to question what exactly it was he was pursuing. “In 2011, I started to study Pan Sheng’s Cold Love Method,” he said. Pan’s methods are not as technical as those of others, and emphasize that establishing a balanced lifestyle would naturally increase a practitioner’s sex appeal. The Cold Love Method focuses on stable long-term relationships, rather than fleeting encounters.

Yet Gavin remains confused about long-term relationships. “I’m still not sure whether or not I’m suitable for marriage,” he said.

“I want to get married,” said Xiao Ran. “The important thing is to find your match.” Xiao has also devoted much of his time to researching into marriage relations. “I’ve seen too many of my friends getting divorced soon after they get married. In most cases, they get married for the sake of it.” Xiao hopes that more people can think more clearly about what marriage really means.

“In truth, love is the process of learning to give,” said Pan Sheng. “What we’re really doing is trying to find solutions to the romantic problems Chinese people face.”

41

environment

Green Economy

The Only Way? “Green economics” may have been the talk of the Rio summit, but is this theory simply a new cloak for corporatism? NewsChina looks for the substance behind the latest geopolitical buzzword

By Wang Yan in Rio de Janeiro

T

wenty years after the 1992 Earth Summit in Rio de Janeiro, the United Nations again brought together governments and other international institutions and other major organizations for the United Nations Conference on Sustainable Development (UNCSD), or Rio+20, summit, held from June 20 to 22 2012.

Around 2 PM on June 19, after a sleepless marathon of fervent negotiations between nations and one day prior to the arrival of heads of state, a joint pledge entitled “The Future We Want” was finally submitted for formal ratification.

One of the two principal themes of the conference was “a green economy in the context of sustainable development and poverty eradication.” Discussing the text, China’s deputy Foreign Minister Ma Zhaoxu told the media that “It is a comprehensive, positive and balanced document that takes the major concerns of all sides into account.”

According to Ma, apart from reaffirming

42

“the principle of common but differentiated responsibilities,” the document also made “a very clear stance on green economics” by prioritizing poverty eradication over immediate sustainability. This stance seemed to incorporate the needs of developing countries while strengthening international cooperation, including the provision of financial resources, capacity building and technology transfer to developing countries.

However, as Jochen Flasbarth, president of German Federal Environment Agency perceived, many attending the conference were disappointed by the big talk but scant detail represented by the final draft document. “It ignores the possibility that green economy is not the only way we can organize our economic activities in the world of tomorrow,” he told our reporter.

Political Disputes

The term “Green Economy” was originally espoused by economist Paul Pierce in

his 1989 book Blueprint for a Green Economy.

Different from prior economic regimes, the theory demands that economies fit within the constraints of their host ecosystem.

The idea was adopted by the United Nations Environment Program (UNEP) in late 2008, resulting in the “Green Economy Initiative” against the backdrop of the global financial crisis and economic recession. Its objectives are to promote the world’s industrial revolution and promote national economies, create new green jobs, and thus secure the recovery and improvement of the world NEWSCHINA I August 2012

Photo by CFP

Leaders gather for a group photo at the United Nations Conference on Sustainable Development in Rio de Janeiro, June 20

economy through green initiatives.

A brief working definition of green economy developed by the UNEP states that a green economy can be thought of as “one which is low carbon, resource-efficient and socially inclusive.”

Since the development and implementation of green economics began to appear in the last decade, it has generated intense debate, with the theory’s application in policy ambiguous at best.

Duringbyan interview with NewsChina, A painting Tang Yijun Zhou Dadi, a researcher with the Energy NEWSCHINA I August 2012

Research Institute (ERI) of China’s National Development and Reform Commission said that although “all sides support sustainable development and green economy,” difficulties in the negotiation process lie in how to apply the principle of “common but differentiated responsibilities,” and whether or not developed countries will assume due responsibility rather than transfer the burden of green economy to developing countries.

According to Zhou, developing countries are generally only inclined to accept the idea of green economy if developed nations will

refrain from setting up trade or technology barriers which would cripple implementation in poorer nations.

“Green economics cannot become the trade and technical barriers which create even greater disadvantages for developing countries,” Zhou said, citing the European Union’s aviation carbon tax as an example.

Zhou added that global manufacturing is the backbone of economic development for countries with few competitive advantages beyond cheap labor. If the “green barrier” of raising production costs under the guise of

43

environment

environmentalism comes at the behest of developed countries, the price of products that fail to meet “green criteria” will rise, further deepening the global prosperity divide.

Zhou echoed the views of the representatives of other developing economies at the summit, stating that “green economics is a tool for sustainable development, not the final goal.”

During a side event in Rio Centro, a representative from French Guiana remarked that “the challenge before us is how to reconcile global forces that have been traditionally seen as incompatible.”

Jonathan Pershing, Deputy Special Envoy for Climate Change for the US State Department said to the reporter: “the concept of a green economy is still unclear, which is one difficulty in these negotiations.”

Engagement

However, continued discussion over what constitutes green economy hasn’t stopped the term’s invocation when rolling out supposed ecologically sustainable economic initiatives worldwide.

In China, enterprises in various fields are piloting green commerce schemes. During the conference in Rio, “China Going Green” was an event held both in the main conference venue and the China pavilion featuring fourteen domestic pioneers in sustainable development, including construction concern Vanke and solar energy industry giant Himin. The domestic market for green, or greener, development seems barely affected by diplomatic wrangling in Rio. However, the beaming smiles of the sales personnel manning the glitzy displays didn’t distract probing reporters.

As Huang Ming, CEO of Himin Solar was giving a presentation about his company’s brand-new patented solar heaters, two Brazilian journalists curiously asked when the computer simulations would become a reality. Huang proudly responded that the products already existed in China.

However, when a Chinese journalist asked Huang whether the heaters would actually save energy in the long run, he seemed perturbed, and cast around for an answer. In-

44

deed, the world is divided on whether solar cell technology can be made both sustainable and affordable in time to make a dent in global carbon emissions.

Indeed, while wind farms, immense dams and solar panels are a common sight across China, their relative efficiency and connectivity to the State Grid has been called into question time and again. It has been profitability that has driven China’s green tech boom, but may also prove to be its biggest flaw. Entrepreneurs, thirsty for government subsidies and facing falling demand, made a beeline for green tech innovation to revive flagging fortunes, but frequently fail to follow their projects through.

“A green economy is, to a degree, self-motivated,” said Zheng Yisheng, deputy director of the Centre for Environmental and Development Research at the Chinese Academy of Social Sciences. “No matter what the result of the international negotiations, the private sector is gearing up for the upcoming competition, aiming to win a better position by going green.”

However, even optimists like Zheng admit that China has a long way to go before it can truly call itself a pioneer in developing new green technologies. “Some of our products, I have to say, lack technological innovation and are substandard, which might be an obstacle to long-term development,” he told our reporter.

There are signs that developed economies are also establishing greener growth engines, but on their own terms. Jonathan Pershing told our reporter: “The US is less engaged in the language of international discussion, but deeply, deeply engaged in green economics.”

“I think it’s much the same for most countries. It means you continue to grow, to develop, it means better jobs, it means health, education, and welfare.”

Leaders from the Himalayan kingdom of Bhutan, famous for replacing GDP targets with a Gross National Happiness index, are major proponents of green economics. So far, Bhutan, with a total population of 700,000, has set up hydro power projects amounting to 1700 MW to maximize effective use of their nation’s only abundant resource. By

2030, the whole country expects to meet its energy needs through hydro power, and is already exporting energy to neighboring India.

Ugyen Tshewang, secretary of the National Environment Commission of the Royal Government of Bhutan told NewsChina that “green economics looks for sustainable solutions, making sure natural resources are optimally used for the sake of future generations.”

However, what works for tiny nations with a small carbon footprint may not prove applicable to resource-guzzling super-states like the US or China.

Critics

Green economics is not without its detractors. Environmental activists railed against the Rio declaration, terming the theory a new justification of natural exploitation. Research organization Etcgroup once argued that the involvement of corporations “will spur an even greater convergence of corporate power and unleash the most massive resource grab in more than 500 years.”

Liao Xiaoyi, a Chinese environmentalist and president of Beijing’s Global Village initiative, was among those disillusioned by the “blind alley” outcome of the Rio summit.

“Now everything is classified as economics.

Even environmental protection is tied to economic development.”

Other Chinese NGOs have welcomed the Rio declaration as preferable to no commitment from world leaders, with some claiming there is no alternative to the pursuit of green economics. “Green economics, for the moment, provides a good impetus for sustainable development,” said Zhao Ang from Friends of Nature.

As Brazil climate change Ambassador Luiz Alberto Figueiredo clarified to NewsChina on the negotiation process of green economy, “in the text [of the joint declaration], this [green economy] is one path that may be followed... of course, it is not the only way. There is room for different contributing methods, format and policies that could be called ‘green economy.’ But we should be very careful to indicate this is not a perfectly defined formulation and should not be adopted as an objective.” NEWSCHINA I August 2012

Photo by CFP

ECONOMY

Appliance Recycling

Scrap Value W

ang Zhiwu has traded down from his Audi saloon, switching it for a used compact. Beijing’s anointed “King of Scrap” is feeling the pinch of the global economic downturn.

Wang is one of Beijing’s biggest electronic waste traders, with each of the two rows of bungalows flanking his 400-square-meter courtyard, close to the iconic Bird’s Nest stadium, packed to the rafters with circuit boards obtained from discarded television sets, computers, printers and other electrical appliances.

This stocky 38-year-old receives real-time fluctuation reports from the London Metal NEWSCHINA I August 2012

China is trying to meet environmental targets and keep old or broken electrical appliances and their components off the black market by charging manufacturers while incentivizing eco-friendly recyclers

By Sun Zhe

Exchange via his cellphone on each day of trading. However, the latest market data has left him feeling gloomy, with plummeting scrap metal prices weighing on his business.

What is worse, a new government policy on recycling, set to be implemented on July 1, will charge electrical appliance manufacturers in order to subsidize government-authorized “e-waste” recyclers – a club Wang is locked out of.

Hazardous

At a glance, Wang Zhiwu can estimate how much gold, silver and copper can be extracted from any heap of circuit boards,

45

ECONOMY

and his savvy has become legend in his field. Though more than 100 governmentauthorized “eco-friendly” e-waste disposal companies have opened in China in the last few years, the industry itself runs thanks to businessmen like Wang, supported by millions of small-time traders who go house-tohouse collecting scrap. In China, unlike in developed economies, recycling centers pay consumers for their unwanted electrical appliances.

Unlike these private enterprises, government-authorized recycling centers, subject to strict safety regulations and environmental restrictions, could not possibly make ends meet without government subsidies – sustainable waste disposal is just too expensive.

They certainly could not afford to pay citizens to dispose of their garbage. In contrast, Wang’s clients, most of them from recycling workshops in Guangdong, focus entirely on the value of metal extracted from e-waste, giving them a somewhat cavalier approach to actually disposing of the huge volumes of largely valueless waste material they receive on a daily basis.

Wang’s goods, like most of the country’s ewaste, are trucked into Guiyu on Guangdong Province’s south coast, where they are sorted entirely by hand. Thousands of employees rip components off circuit boards, while the boards themselves are heated over a coal furnace to melt any remaining solder. Any usable components are sold back to electronic parts markets. Those containing gold, silver and other precious metals are soaked in acid baths to dissolve the plastic and non-precious metal, with the remains passed through another furnace to extract any copper. Unsurprisingly, these processes create horrific levels of pollutants, with most of the boards either incinerated or simply discarded as landfill.

Chlorofluorocarbons, or CFCs, a controversial chemical used as coolant in air conditioners and refrigerators, are released directly into the atmosphere when these appliances are dismantled. While banned in most industrialized nations due to their hugely destructive effects on the atmosphere (CFCs were the main chemical contributing to the hole in the ozone layer), they remain widely used in China.

46

Aside from precious, non-reactive metals, e-waste also contains significant quantities of toxic heavy metals like lead, mercury, and cadmium, all of which are carcinogenic and have steadily crept into China’s food chain via water and soil. None of Guiyu’s countless recycling workshops have any filtration systems in place to prevent these heavy metals from being dumped directly into rivers or the ocean.

According to a report by the medical school of the local Shantou University, eight out of 10 children in Guiyu have elevated levels of lead in their blood, and the local miscarriage rate is reportedly six times higher than the world average. Due to widespread contamination of the water supply, the bottled water industry, all of which is imported into the area, is the second-biggest commercial sector after waste processing in Shantou.

A good day for a scrap hawker. He and his peers form the base of China’s e-waste recycling pyramid

Follow the Scrap

Wang himself cut his teeth as a businessman during Guiyu’s e-waste processing boom in the 1990s, when Guiyu started treating electronic waste imported from overseas and soon grew to be a global e-waste disposal base. He left his hometown in north Anhui Province after finishing junior high school and hopped from job to job in China’s prosperous southern and eastern coastal cities.

Wang told our reporter he was “looking for something better than an assembly-line salary,” and eventually he arrived in Guiyu, which he remembers liking “despite its choking air.” At a local workshop, he developed his knack for estimating the precious metal content in all types of circuit boards and electronic components, and was thus able to quit his job a year later and start his own scrap business.

As luck would have it, Guiyu’s rocketing pollution was quickly becoming an embarrassment for the central government, which tightened restrictions on imports of foreign e-waste into China (though without closing down any offending workshops). This allowed Wang to focus on the growing domestic market in e-waste, led by the country’s affluent megacities. Wang soon made his way to Beijing, and found very few street hawkers who understood the cash value of the pre-

E-waste being dismantled and sorted at a workshop

cious metals in the average computer motherboard. At the time, hawkers were selling such components as if they were scrap iron – by weight. Wang soon carved out a lucrative niche in the local market. Paying 2,000 yuan (US$310) for a pile of e-waste could earn Wang 100,000 yuan (US$15,650) or more.

NEWSCHINA I August 2012

the while using Beijing as the focal point of a growing network of waste collection businesses in north China, which relied on the ignorance of local refuse collectors as to the true value of e-waste, allowing Wang to hoodwink them into paying way under the market rate while believing they were getting a good deal.

Photo by CFP

Photo by Sun Zhe

Sustainability

Few legal businesses can turn a 50-fold profit, but Wang managed it.

Wang’s expertise with e-waste coupled with a strong network of connections in Guiyu helped his business grow by leaps and bounds. At his peak, Wang would send 20 tons of e-waste to Guiyu every two days, all NEWSCHINA I August 2012

“Hazard-free” recycling services were introduced to China amid the fallout of the revelations about Guiyu’s pollution crisis.

Growth was slow – in 2009, only four such “sustainable” recycling centers were operating in the entire country. However, when a national new-for-old policy for electrical appliances was adopted in 2009, this number soared to 105.

The new-for-old policy grant offers householders a ten percent refund on any new appliance if they turn in an old one at the time of purchase. Initially aimed at stimulating domestic consumption during the financial crisis, the policy also offered hefty subsidies to government-approved enterprises willing to dispose of obsolete appliances in a sustainable way. Unlike the small workshops in Guiyu, these authorized disposal services were vast plants operating under stringent environmental regulations.

Expensive machinery, usually imported from Europe or North America, would break down circuit boards into tiny fragments and separate out metals with electromagnets, with hazardous emissions and waste material kept to an absolute minimum. However, withdrawal of the old-for-new subsidy policy at the end of 2011 brought these plants to a halt, leading to a resurgence of the bad old ways, and returning Wang’s business to full profit.

This situation, analysts warn, is unsustainable. According to the National Development and Reform Commission, China’s e-waste volume is growing by 20 percent each year, and by 2015, some 160 million discarded electrical appliances will have to be dealt with.

Without government subsidies, however, China’s sustainable recycling plants cannot afford to purchase scrap from hawkers, who

instead have turned back to Guiyu’s recycling industry. According to a 2010 report by the United Nations Environment Program, China produces about 2.3 million tons of e-waste every year, second only to the United States. Most of this waste material is destined for the heavily polluting workshops of Guiyu.

The government’s new subsidy policy is set to reverse this trend once again. This time, however, subsidies will come from industry rather than the taxpayer. Appliance manufacturers can expect to be charged 20 yuan (US$3.10) for making a television, 15 yuan (US$2.30) for a refrigerator, 8 yuan (US$1.30) for a washing machine or air conditioning unit, and 13 yuan (US$2) for a personal computer.

Authorized disposal companies will receive a subsidy of 85 yuan (US$13.30) for a computer, 80 yuan (US$12.50) for a refrigerator, and 35 yuan (US$5.50) for a washing machine or air conditioner. Moreover, only authorized disposal companies will have market access, with enterprises such as Wang’s outlawed without disenfranchising front-line refuse collectors.

Wang estimates that more than 100,000 people in Beijing earn their living through ewaste collecting and trading. Big traders like Wang, who deal directly with Guiyu workshops stand to lose the most, their prices undercut by government subsidies.

However, Wang told our reporter that, with profits already disappearing, he feels it’s time to change his vocation. He has already rented 4 acres of land in Beijing’s rural suburbs, erecting multi-purpose factory buildings which he plans to lease to manufacturers or offer as storage warehouses. More than 10 years have passed since he entered the Beijing e-waste market, and small-time dealers have gotten wise to the true value of discarded appliances.

“When every street hawker knows the value of a CPU, you don’t have much of a profit margin any more,” said Wang. Born into a poor farming family, he joked that he had finally become a “landlord,” a title which was a badge of shame in the China of his youth.

“Landowning never went out of fashion,” Wang joked. “It has always been the most secure way to make money.”

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ECONOMY

Internet Telecoms

Getting Smart Chinese internet companies are making a belated bid to corner the global smartphone market. So far, however, only their prices have been competitive

Photo by CFP

By Cui Xiaohuo

Huawei unveils its new smartphone, April 18, Beijing

W

hat do China’s dotcom giants have in common? Most of them now have a sideline in smartphones.

On May 17, NetEase, a major Chinese internet portal with interests in search engine services, online gaming, video sharing and news channels, announced a plan to enter the smart phone market.

Almost simultaneously, e-commerce behemoth Alibaba, in collaboration with cellular phone manufacturer K-Touch, previewed its Ali series of discount smartphones, the lowest-priced of which will retail for 699 yuan (US$108) and the most expensive 2,000 yuan (US$308), still way below the retail price of the ubiquitous iPhone.

SNDA, an online gaming company, is also reportedly developing its own range of smart phones with a price tag of merely 1,000 yuan (US$154). Baidu, China’s dominant search

48

engine, and Changhong Group, a major domestic electronics manufacturer, are apparently undercutting SNDA with their own, cheaper smart phone. Not to be left out in the cold, Tencent, another Chinese Internet portal, is launching its own smart phone project with Longcheer Tech.

Should Apple be worried?

Not really, according to analysts. While Apple’s omnipresent branding has cornered the top end of China’s mobile internet market, domestic internet companies launching smartphones are mostly focusing on competitive pricing. The entry of these new players is more likely a belated response to the success of China’s domestically developed Xiaomi smartphone, which to-date has sold over 2 million handsets at 1,000 yuan (US$154) each, raking in 5 billion yuan (US$770m) since October 2011.

While Apple may be the brand of choice

for the country’s nouveau riche, the falling cost of 3G telephones and the advent of the affordable handset have made smartphones the new must-have item for China’s millions of mid- to low-income consumers. This group makes up the overwhelming majority of China’s estimated 400 million mobile Internet users. According to a May report released by Sino Market Research Ltd., of the top five brands in China’s mobile Internet sector, four are domestic. Retail of their services and hardware is mostly done online, and their marketing relies heavily on wordof-mouth.

According to statistics released by Millennium Media, an internet think tank, global advertising traffic via smartphones represents a 70 percent share of total internet traffic in 2012, a 62 percent increase on the previous year.

Zhang Yi, president of iimedia research, NEWSCHINA I August 2012

an Internet consultancy, told NewsChina that Internet companies are rushing to the smartphone market because they are eager to get a foothold in the mobile market. “At the core of the competition are the embedded applications and value-added services.

The quality of the phones itself takes a backseat,” he said.

Indeed, with handset prices now at rockbottom, applications and services have become the main battleground for China’s competing mobile internet companies.

Wang Ying, an internet analyst with Analysys International based in Beijing, said that most of these new smartphone producers aimed at attracting web users with cheap handsets, sold barely above cost, and capitalizing on sheer sales volume. However, the interchangeable nature of smartphone operating systems calls this strategy into question.

Indeed, it is in the field of software that Chinese dotcom giants continue to lose out to the big global players, with the vast majority of Chinese-made, Chinese-designed 3000 handsets coming bundled with Google’s An2500 droid, Nokia’s 2000 Symbian or Microsoft’s Windows Mobile. 1500 Domestic alternatives already on handsets are1000typically replaced with these systems, which500 have tailored their Chineselanguage editions0 to suit the needs of their Chinese customers.

150 Huang Meng, another industry analyst 120 with Analysys International, predicted that 90 Chinese enterprises were not likely to de60 velop any mobile phone operating system 30 that could compete with current main0 they never came up with stream systems, as any alternatives for good operating systems 60 on personal computers.

Attempts to market domestically59produced operating systems to 58 Chinese consumers have yet to succeed, due to questions57over compatibility, reliability 56 and practicality.

55 CEO of Innovation Works Kai-Fu Lee, 54 and former head of Google China, tweeted his prediction53 on Sina Weibo that most Chinese dotcoms52 would ultimately fail to challenge the big51international players in the cru50 cial fields of quality and customer satisfaction, with their cut-rate handsets merely acting as tools to seize Internet territory from competitors, rather than to win the loyalty of smartphone users. NEWSCHINA I August 2012

china

bynumbers 10.4%

Year-on-year decline in profits of State-owned enterprises from January to May 2012.

Total revenue grew by 11.3 percent, half the rate of the same period in 2011.

SOE Q1/Q2 Revenue, 2008-2012 (US$bn)

SOE Q1/Q2 Profits, 2008-2012 (US$bn)

3000

150

2500

120

2000

90

1500 60

1000

30

500 0

2008 2009 2010 2011 2012

0

2008 2009 2010 2011 2012

Source: Ministry of Finance

109.72

The CPI-weighted index of the effective yuan exchange rate in May, its highest rating since 1994. This index indicates the relative strength of a currency.

2nd

With US$57 billion, China was the world’s second largest recipient of officially recorded remittances, money repatriated by its overseas workforce, in 2011.

120 110

Source: World Bank

100

US$330m

90 80

Yuan

US$

Euro

Source: Bank of International Settlement

The amount of money misused by institutions under the central government in 99 projects co-funded by foreign loans or aid in 2010.

Source: National Audit Office

53.2% The confidence index of urban residents regarding their future income security in the 2nd quarter of 2012. It is the lowest 2nd quarter figure since the survey began in 1999.

Confidence index of urban residents for future income Q1, 2009 – Q2, 2012 60 59 58 57 56 55 54 53 52 51 50

Q1, Q2, Q3, Q4, Q1, Q2, Q3, Q4, Q1, Q2, Q3, Q4, Q1, Q2, 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012

Source: People’s Bank of China

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culture

Movie Theater Deal

Silver Smokescreen The multi-billion-dollar purchase of US movie theater giant AMC may be just the first move in a new gameplan for China’s largest private investor in the cultural industry

By Chen Jiying

O

n May 21, Dalian Wanda Group, a Chinese private conglomerate whose business covers real estate, hotels, tourism and entertainment, announced its US$2.6 billion acquisition of AMC Theaters, the second largest movie theater chain in North America. The transaction is by far the largest purchase ever in the US by a private Chinese business.

Comparing the two companies by revenue, the acquisition looks somewhat lopsided – Wanda cinemas registered a total box office revenue of 1.785 billion yuan (US$275m) in 2011, compared with more than US$10 billion raked in by AMC’s 346 theaters.

“It looks unlikely that Wanda will recover its investment in the short term,” a source from China Film Group Corporation (CFGC), a Chinese State-owned film distribution company, told NewsChina.

But, they added, “[Wanda president] Wang Jianlin is an astute businessman, and he never engages in long-run loss-making.”

From a broader perspective, the deal looks like a bold first step on Wanda Group’s quest towards world domination. Wang Jianlin has said that in the future, culture and tourism would be Wanda’s investment priorities, while the proportion of real estate in the group’s total business would be reduced significantly by 2020, according to the group’s international strategy. In 2005, Wanda began to branch out into cultural industries, and so far, its cultural investments have exceeded 10 billion yuan (US$1.54bn), making it China’s biggest investor in the cultural sector.

Wanda Group was attracted by AMC’s impressive box-office record, said Wang Jianlin at the press conference announcing the deal

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on May 21. However, the company’s takings belie the fact that it has been making losses continuously for several months. AMC’s 2011 financial report revealed that its total losses over 39 weeks had hit US$82.7 million.

By contrast, Wanda’s income has been growing steadily, becoming what is now the number one cinema corporation in China.

The success stems from Wanda’s unique business model – it plays the roles of both theater proprietor and film distributor. Wanda cinemas reap 5 percent of the profit in screening a movie, while the company’s distribution business takes a 50 percent profit from the circulation of a film. Furthermore, Wanda Group’s theater company is tied to its property business, cushioning the high rent prices for movie theaters.

Strong Model

Operating on this model, Wanda cinemas enjoy an above-average income compared to their competitors. The box office revenue of the average Wanda movie theater in 2011, for example, reached 20.75 million yuan (US$3.2m), far higher than the average income of 15 million yuan seen by other cinemas.

Some film industry insiders, however, have expressed their worries.

The wildly different economic system and business environment in the US mean that the Wanda model cannot be cloned on the other side of the Pacific, according to industry sources.

Wang Jianlin, however, seems unworried: “We [he and AMC CEO Gerry Lopez] are businessmen, and the acquisition’s sole purNEWSCHINA I August 2012

Photo by CFP

Dalian Wanda Group officially celebrates the acquisition at the AMC Theater, Beijing, May 21

pose is to make money. As to which movies should be screened, the decision-making power still rests with Lopez.” According to the deal, AMC will retain its branding and management after the purchase.

There are other concerns. A source at CFGC told NewsChina that the two countries’ movie markets are out of step with each other – the US market is on the decline, while China’s is still on the rise. China’s total box office income in 2011 hit 13 billion yuan (US$2bn), a 30 percent growth on the previous year. But in the same year, box office income in the United States dropped 3 percent compared with 2010.

Lopez attributed poor box-office takings in the US to a series of lackluster movies released in 2011, and said that AMC theaters had made a profit between January and April this year, thanks to a number of successful releases.

In addition to spending US$2.6 billion buying 100 percent of AMC stock and paying off its debts, Wanda Group has pledged to allot another US$500 million for the renovation of AMC theaters.

“The income of AMC theaters is expected to rise by more than 20 percent after the upgrade,” said Wang Jianlin.

What does Wanda want from this giant investment? To help Chinese films get a bigger share of the global movie market? When a reporter from a Chinese State-run media outlet posed this question, Wang appeared quite ambivalent about promoting Chinese movies overseas, saying that AMC is happier screening lucrative blockbusters, since Chinese films tend not to appeal to overseas audiences.

NEWSCHINA I August 2012

License to Screen

Some speculate that Wanda has its eyes on a government-issued license to distribute imported films in the Chinese mainland. At present, foreign-made movies in the Chinese market, the majority of which are Hollywood productions, generate 50 percent of the country’s cinema takings, and the average box-office income generated by a foreign production in 2011 was 250 million yuan (US$38.5m), far outstripping revenue from domestic films.

As China loosens its quota for imported movies according to the conditions of its accession into the WTO in 2001, more foreign film distribution licenses are expected to be issued. A number of industry players, including private enterprises like Wanda, Huayi Brothers and Bona Films, are vying to be at the front of the line.

Wang Jianlin did not conceal his ambition to secure a license: “As the number one box office player in terms of income, we are fully qualified for [the license].” Wang avoided stating explicitly whether the AMC acquisition, a move certain to increase Wanda’s leverage at home, would smooth the application process.

The source at CFGC said that the only two companies to have received distribution licenses so far were Huaxia Film Distribution and CFGC itself. Both are State-owned, while Wanda is private.

“Fierce competition looms ahead among the rivals,” the source said.

Wanda has made a strong play as the first Chinese movie theater company to truly go global. However, hopes that this might help to put the country’s cultural industry on the international market may be misplaced – in Wang Jianlin’s words, the Wanda-AMC deal is “strictly business.”

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culture

Movie Industry

A raft of new Sino-US film projects has raised the profile of the Chinese film industry.

But how does ‘Chollywood’ work? Film expert Wesley Jacks offers his insight

By Wesley Jacks

S

tep into a Chinese movie theater on an average weekend in 2012, and you are likely to find yourself in a new building packed with multi-colored lights, glossy posters, and long lines snaking back from the ticket counter. For major premieres, like Titanic 3D or The Avengers, even the daytime showings consistently sell out, and many theaters shut down online ticket purchasing systems to prevent scalping.

In a nation where massive growth numbers can seem mundane, the cash cow that is the Chinese film industry still stands out. According to statistics from China’s State Administration of Radio, Film, and Television (SARFT), revenue at the 2010 box office was 64 percent higher than in 2009. Last year, the jump was a “mere” 29 percent, enough to push the yearly total over US$2 billion, placing the Chinese among the top three largest movie audiences worldwide. Outpacing box office returns in 2011 was the nearly 50 percent growth in the number of cinema screens nationwide, installed at a rate of over nine new screens per day, many of which were equipped with the newest IMAX and 3D technologies. With numbers like these, countries all over the world are scrambling to get their films released in China, one of the last heavily-restricted media markets in the world.

Over the past few months, a series of big announcements from governments, film funds and production companies have jump-started

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Photo by CFP

Artistic Alliances

discussions about a new era of open cooperation between China and foreign film producers, especially the US. In February, DreamWorks Animation, makers of the wildly popular Kung Fu Panda series, announced plans to partner with the Shanghai Film Group and two local investment companies to build a new studio, dubbed Oriental DreamWorks and valued at US$330 million, outside Shanghai.

Just a few days after the DreamWorks announcement, US VicePresident Joe Biden and his Chinese counterpart Xi Jinping released statements announcing a revision of China’s film import policies. The highlights of the pact included raising the number of yearly imports from 20 to 34 and nearly doubling the revenue split that returns a portion of each ticket’s price to production companies.

In April, media company Seven Stars Entertainment announced it would be drawing from its US$12.7 billion fund to build an 800,000-square-meter film and media headquarters outside of Beijing called the Chinawood Global Services Base. The hub will include financial, technical, and creative companies dedicated to co-productions between China and other nations, local film financing, and 3D film conversion.

Also in late April, Disney-Marvel revealed plans to make Iron Man 3 a Chinese co-production by partnering up with the Beijing-based NEWSCHINA I August 2012

DMG Media group. Scheduled to begin shooting in China later this summer, the budget for the film is expected to easily surpass US$200 million.

These partnerships represent billions of dollars in joint investments between Hollywood and China. In the past, relations between the two have been shaky. Films about Tibet have earned Chinese industry insiders lifetime bans from movie making, and editorials in China’s State media regularly rail against the effect of “Hollywood ideology” on the moral fabric of Chinese society. Now, more money than ever is at stake, and the two sides appear to be playing nice. But to clearly understand the dynamics beneath this relationship today, one must look back to its origins 18 years ago.

If you stepped into a Chinese movie theater on an average weekend in 1994, you’d likely find yourself in an aging building with posters advertising a meager number of State-sponsored films. You would rarely need to stand in line for a ticket. Though economic reforms had revolutionized other sectors of the economy, they had not yet reached the film industry, which still prohibited any private investment in film production, distribution, or exhibition, making domestically produced films the only option, most of which had barely progressed from the overt propaganda of the 1950s.

Although the government wanted to maintain its strict controls over media, the film industry had reached a crisis point. The spread of TV to Chinese homes, the advent of VHS piracy in China, and a succession of unpopular, loss-making local movies had led local viewers to abandon movie theaters. Attendance in 1994 was less than one-fifth of the total in 1990.

Rather than continue subsidizing a fast-fading local industry, the Chinese government decided it had to break a nearly 45-year-old ban and open its doors to the media capital it had painted as a villain for decades. Allowing Hollywood access to local screens is dangerous for any domestic movie industry, regardless of the target nation’s politics.

Nations all over the world have dropped import barriers, allowed LA’s movie moguls in and then watched, helpless, as their native movie industry was steamrollered by US blockbusters.

In 1994, a new policy lifted the decades-old ban on American films and an import quota of 10 foreign films a year was set. While negotiating details, China used the promise of huge potential profits to keep the initial pact tipped in its favor, with the government insisting on full control over which films to allow in and what scenes to censor. Even more crucially, Chinese industry leaders would control each film’s distribution, decide on which day a film would open, how many screens it would show on, and when its run would end. This ensured that no important local products, specifically nationalist epics, would go headto-head with international blockbusters. Moreover, if the government felt that a foreign film’s gross was getting embarrassingly high, even a popular picture could be suddenly removed from theaters.

Early Offerings

The first American movie to hit Chinese screens after the Korean War was The Fugitive, which was soon followed by blockbusters like Jurassic Park, Speed, and True Lies. Though the government insisted it would only select films of “high cultural standards and technical

NEWSCHINA I August 2012

excellence,” proven box office appeal appeared to be the primary key for entry.

Unsurprisingly, American films began to consistently top box office charts, but an overwhelmingly favorable revenue split gave the vast majority of profits to the government-controlled distributors.

Film scholars like David Bordwell have pointed out that, slowly but surely, Spielberg, Cameron, and Bay were actually helping fund the development of Chinese studios, film funds, and marketing. Profits from foreign films were large, but in order to save face, the Chinese government continued to use its control over distribution to give local films uncontested theatrical runs. And Chinese films have continued to take at least 50 percent of total box office revenues every year since imports began, admittedly due to the skewed release ratios.

Despite the industry’s incredible growth since the mid-1990s, the balance of power between China and Hollywood has remained consistent up to the present day. Economic reforms have favored freer import policies while exploding revenues have kept China’s negotiating position strong, and the government’s authority over film content remains near-absolute.

A closer look at the announcements listed at the start of this article reveals this continued dominance. Despite its name, Oriental DreamWorks will be majority-owned by the three Chinese companies DreamWorks is partnering with, ensuring the government has the largest voice in the partnership. Rumors already abound that, to please local authorities, Iron Man 3 drastically altered the portrayal of its villain “The Mandarin” and added a “positive” Chinese character to its plot.

The quota increase and revised revenue split appears to favor Hollywood for the first time, allowing more films in and sending more money back to producers. Motion Picture Association of America chairman Chris Dodd referred to the old revenue agreement as “woefully below normal commercial terms.” But even this decision is a limited concession, coming more than a year after China missed a WTO deadline insisting that it end the government monopoly on the distribution of foreign media. By bringing the case to the fore, America had hoped to create room for non-State distribution partners who would base release dates, screenings, and marketing on profit motives rather than political mandate, a course which would likely place local films in direct competition with foreign blockbusters. Although China has admitted it has no legal authority to prevent private distribution, so far, no viable alternatives to the State-controlled duo China Film Group and Huaxia have emerged.

Ultimately, though moves like the increased import quota, newly announced international projects, and possible distribution revisions have changed the position of some pieces in this chess match between the world’s largest market and the biggest media producer, at this point, the strategies and strengths of the two players remain the same.

Bolstered once more by its ability to utterly dominate the conditions of its domestic market, China has begun attempts to establish itself as a producer of international media with Chollywood a prime example of its grand ambition. Though Chinese content has struggled to find international audiences, one can be sure the government won’t shy away from aggressively pursuing its interests.

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culture

Social History

Traditional Wisdom Taiwanese jewelry designer Xiang Jen Yao has taken it upon herself to combine millennia of Chinese traditional wisdom into a four-volume book aiming to tell the China story in the guise of a mother passing knowledge to her children

By Chen Tao and Yuan Ye

X

iang Jen Yao is not a writer. Yet, when her latest work – a fourvolume set on the topic of Chinese wisdom – hit mainland bookstores in late March, the initial run of 10,000 copies were snapped up in just two weeks, an unusual occurrence in China, where even bestsellers rarely have a strong initial response from consumers.

Titled The Inheritance of Tradition: Art of Chinese Living, the four volumes are separately named Spring, Summer, Autumn and Winter. Each volume contains six sections romantically titled “The Ambience of Everyday Life,” “Festivals and Celebrations,” “The Paramount Importance of Food,” “Ingenuity of Crafts” and “Pearls of Family Wisdom,” all of which touch upon culture, art, education, cuisine, costume, manners, health and even

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gardening.

Art of Chinese Living was first produced in Taiwan in 2010, with a cover price of $20,000 New Taiwan dollars (US$670) per set. An initial print run of 2,000 copies sold out in a matter of weeks, with its content posted for free online and profits from sales donated to the Dharma Drum University in Taipei.

The full-color layout with a large number of fold-out pages, sleek photography, traditional threading and organic glue binding combine to make Yao’s book extremely difficult and costly for China’s legion of book pirates to rip off. Taiwanese writer Lung Ying-tai compared Art of Chinese Living to an “encyclopedia of beauty.”

Yao and her publishing team spent five years on Art of Chinese Living. “The

The four-volumes of “The Inheritance of Tradition: Art of Chinese Living” are named Spring, Summer, Autumn and Winter

project had nothing to do with commercial considerations. I just hope every Chinese person will inherit the beauty and wisdom of life from our ancestors [by reading my book],” said Yao.

Life in Culture

Over the last one-and-a-half centuries following the Second Opium War (18401842), an event which forced China to open its doors to the world, some believe that the Chinese have become increasingly distanced from traditional modes of living. The emNEWSCHINA I August 2012

qqwdwedwewe

Xiang Jen Yao (center), with her family

brace of modernity has led many to reject tradition as impractical, irrelevant or simply dead.

However, Xiang Jen Yao, daughter of Peking Opera legend Gu Zheng-qiu and former Taiwanese Minister of Finance Ren Xian-qun, was raised in an environment which gave equal prominence to tradition and modernity.

Born in the late 1950s, Yao studied Peking Opera, guzheng (Chinese zither), classical Chinese literature and Chinese painting from an early age. Her family also attached great importance to the observance of traditional manners – her mother Gu Zheng-qiu forbade her to make any noise while walking in slippers at home. Yao told our reporter that the experience of watching her mother perform Peking Opera for the Taiwanese elite is NEWSCHINA I August 2012

one of her earliest memories.

After Yao was born, her father quit politics and relocated his family to a farm north of Taipei. Life on the farm cultivated Yao’s close ties with the earth and manual labor. “I like to touch the earth, to plant vegetables and to make handicrafts,” said Yao. “I have been fond of the land since I was a kid.”

Family education nurtured Yao’s love for art and culture. Yet, like most young people caught up in the course of “modernization,” Yao felt her ties to tradition loosen as she grew older. She began to favor the guitar over the guzheng in middle school. While she inherited her mother’s singing voice, she turned it to “new folk” singing, even releasing an album in 1978. Finally, after discovering a love for creative, modern art forms, she became a jewelry designer.

It was only in her later years that Yao began to perceive the importance of the classics which had “bored her stiff” in childhood and of traditional Chinese culture in her daily life, especially after she married and had children.

Both of Yao’s parents were born on the mainland. However, Yao’s father-in-law was born during the Japanese occupation of Taiwan (1895 – 1945), which had given his childhood a strong Japanese flavor. Yao’s mother moved to the United States in 1978, and Yao traveled extensively in the US and Europe when she was young. Her increasingly multicultural life led Yao to constantly make comparisons between Chinese and other cultures, crystallizing her personal perspective of the value of Chinese culture. With her sons and daughters leaving for higher education in the West, Yao wanted them to

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culture

“have a clear idea of real Chinese life.”

“I wanted them to know about themselves,” she said.

After accompanying her daughter to the United States six years ago, Yao began writing Art of Chinese Living as soon as she returned to Taiwan.

Practical Tradition

A major feature of Yao’s book was to change the popular perception that traditional modes of living were somehow less convenient and incompatible with a modern lifestyle.

When writing about Chinese idioms, Yao wallpapered her home with flashcards. When writing about eggs, she raised chickens and learned to wake up when her rooster crowed.

She ground soybeans and prepared tofu for her section on the role of the soybean in Chinese traditional life, and turned her terrace into a vegetable garden in order to refine her knowledge of vegetables. Her husband, architect Yao Ren-xi, joked that if his wife were to write about milk he’d likely discover a cow in the kitchen.

“I didn’t think of raising a cow,” Yao recalled. “But I did consider raising a goat.”

Yao said that she only chose to write about “living” traditions. Recipes had to be achievable in a modern kitchen in order to facilitate being passed down to subsequent generations. She had to be able to make dishes and handicrafts herself, with easily-obtainable materials, and personally tested all directions.

When writing about Chinese women’s costume, Yao selected 23 varieties from various historical periods. While sizing collars, cuffs, footwraps, overcoats and vests, she had them cut to fit the proportions of famed Taiwanese model Lin Chi-ling, while also simplifying designs to suit modern-day tailoring.

The book’s prominent visual element has been singled out for particular praise by critics. Working with acclaimed photographer Liu Zhen-xiang, Yao meticulously composed and edited the book’s photographic illustrations, often tearing up entire photo shoots to start from scratch. Slight dissatisfaction would often lead to starting over. Yao recalled shooting a particular dish of food 10 times before she was satisfied. Outdoor shoots were particularly exhausting. “Every time we shot a set

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Photos of Chinese herbs, kitchenware and cuisine in “The Art of Chinese Living”

of good photos, I was so exhausted that I had to rest for several days,” Yao told NewsChina.

Despite her endeavor taking its toll, Yao found herself incapable of easing off, urged on, as she describes it, by “the beauty and wisdom of Chinese living.”

Yao told our reporter that she prizes “Pearls of Family Wisdom” above all, adding excerpts from classical Chinese plays, poems, proverbs and idioms as well as family anecdotes to enrich the book’s content.

“Family should play a very important role in a child’s education,” said Yao, who is a vocal critic of what she perceives as the modern habit of burdening one’s offspring with expectations. “Often, when a child is still in elementary school, his or her parents start hoping that their kid will eventually end up at Harvard,” she said.

Success-oriented culture, in Yao’s view, should give way to a more rounded, esthetic culture in order to realize a child’s potential.

“I’m demonstrating traditions as a mother to her children,” she told our reporter.

With the exceptions of dance, painting and music, The Inheritance of Tradition covers nearly all aspects of Chinese traditional life.

In 2009, Yao took her draft to Nan Huaichin, one of the most prestigious scholars of Chinese cultural studies in Taiwan. Nan was deeply impressed by Yao’s work, and offered a glowing response. “The Chinese way of life is now in a transition which makes it neither traditional nor modern, neither Chinese nor Western. Yao has taken it upon herself to undertake an endeavor vitally important to the life of the Chinese, though most mortal beings may overlook her efforts,” he wrote.

Yao’s project is not yet complete. Her secondary objective for writing Art of Chinese Living was to translate the entire work into English and to publish overseas, having to invent a new vocabulary to describe many obscure Chinese traditions in detail.

After her travels in the West, Yao felt that most Westerners’ impressions of contemporary China came from “dirty, disorderly and shabby” Chinatowns. Chinese tradition was represented overseas by museum exhibits.

“There is delicacy in every aspect of China’s living traditions,” she told NewsChina.

“These ‘Chinatown’ impressions should be changed.” NEWSCHINA I August 2012

HISTORY

The “Three Goods”

A Dubious Honor An educational honors scheme initiated under Chairman Mao is seeing increasing public and institutional opposition, with many arguing that it gives certain students an unfair advantage. How much longer can it survive?

By Fang Yimeng and Xie Ying

A

s China’s high school seniors were busy preparing for their grueling college entrance examinations this June, debate flared up over whether or not to scrap a decades-old student evaluation system that rates students in terms of morality, study and health, a set of criteria known as the “three goods.” Under the scheme, those who are deemed outstanding in all three are named as “three goods students.”

The system has become increasingly controversial, since students who make the grade are often entitled to preferential treatment in the college admissions process, regarded by many parents as their children’s only route to career success.

“Many students and their parents resort to any means necessary to achieve the title, because it leads to benefits, such as bonus points

NEWSCHINA I August 2012

in exams. Some even bribe the teachers,” said Shen Peng, a member of China’s supreme consultative body the Chinese People’s Political Consultative Conference (CPPCC) at its yearly session in March of this year. He proposed that the three goods system be abolished.

Recent years have seen several similar proposals submitted to the CPPCC, and three goods selection has fallen out of practice in many localities where the title has been delinked from college enrollment, or replaced with other awards. The Guangzhou municipal government, for example, recently announced that “three goods” students would no longer receive preference when applying for college.

Concerns

The three goods idea can be traced back to 1950, when then educa-

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history

principle of overall moral, intellectual and physical development of the students,” Xiao Yuan, then director of education at the prestigious Beijing No 101 Middle School, told NewsChina.

“By 1955, the practice had spread across the country’s entire educational community,” he added.

Photo by Xinhua

Fever

Photo by Fotoe

The Communist Youth League and the Ministry of Education award certificates of merit to three goods students and graduates, February 3, 1982

Quadruplets are awarded “three goods” honors in their first year of elementary school, Beijing, January 22, 1979

tion minister Ma Xulun received a report showing that the health of the average Chinese student was deteriorating under the heavy burden of school studies.

“My father conveyed his worries to Chairman Mao, who then demanded that the students’ burden be lessened. He later wrote to my father, stating that the students’ health should come first,” said Ma Pei, Ma Xulun’s daughter, in an interview with NewsChina.

Addressing the second national congress of the Chinese Communist Youth League in June 1953, Chairman Mao formally put forward the principle of the three goods: “good health, good studies, and good work.”

Mao’s call was quickly answered by the Beijing Education Bureau, which called for all local schools to encourage “three goods students.”

The next year (1954), Beijing’s municipal Party committee issued a document on improving education quality, and calling for a more rounded approach to students’ overall development.

“The ‘three goods’ idea stemmed partly from the Soviet Union

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Beijing No 101 Middle School took the lead in implementing the three goods system.

“Candidates were jointly nominated by the class committee, the Youth League branch and the teacher in charge of the class, and the candidate list would then be sent to the school administration for final approval,” Wang Ruihua, then assistant to the school’s principal, told NewsChina.

“In 1955, the Ministry of Education officially listed ‘health, morality and studies’ as the primary principles for pupils and middle school students to follow. From then on, the selection was prevalent throughout Beijing’s schools,” said Yang Yumin, a teacher at Beijing No 5 Middle School at the time.

The statistics from Beijing’s education bureau showed that in 1956 alone, a total of 1,295 city-level three goods students were selected in the nation’s capital, on top of many more at class and school-level.

The three goods system was also promoted in colleges and universities. Yu Guoning, a 17-year-old freshman at Tsinghua University in 1953, told NewsChina she felt the campus was buzzing with an atmosphere of “three goods” fervor.

“As soon as evening study time ended, students would flood to the playground to play musical instruments or do physical exercise. A bell would ring every afternoon on the weekends, urging students to do physical training,” Yu said. During her time at Tsinghua, Yu joined a choir and a drama club, and in 1955, she was selected in her university’s first batch of three goods students.

The next year, Beijing’s first three goods students conference was convened, which formally defined the criteria for college-level three goods students as “active participation in political and social activities,” “strong in studies” and “strong in physical exercise.”

Priorities

As three goods practice was widely implemented in schools, the school authorities were puzzled as to which was the most important “good.” A contemporary report on the selection of three goods students showed that the confusion was more pronounced at colleges and universities.

The discrepancy was gradually influenced by China’s overall political atmosphere, according to Xiao Yuan. In 1958, the State Council brought manual labor into the curriculum, and schools began to place more value on “labor training” (viewed as a form of physical education at the time). “It was originally to implement the three goods system that we had students do more labor, but later it evolved into a means for the government to arrange employment for a growing number of jobless graduates,” said Xiao.

Guo Xiangang, a researcher at the China Institute of International Studies who began elementary school in 1959, told the media that NEWSCHINA I August 2012

when the central authorities placed “class struggle” at the top of the political agenda, family background became an important factor in evaluating a student. Despite being a star player on the school’s pingpong team and scoring well in examinations, Guo was deemed unworthy of the three goods title, since his family was not politically active enough.

Xie Huiliang, a contemporary of Guo’s, confirmed that the system began to take a heavy political slant. “Everyone wanted to be a ‘three goods’ student, and I didn’t dare to go against the grain…I always expressed my love and support for the Party,” he told NewsChina.

When the Cultural Revolution (1966-1976) plunged China into chaos, the three goods system was suspended, and was not resumed until 1982. Since then, the system has been criticized for placing too much importance on studies.

“Although my physical exercise was weak, I was still named a three goods student every year because of my high test scores,” Zhao Liyan, a Beijing resident who began elementary school in the late 1980s, told our reporter. “The candidate list was often drafted by the teacher in charge of the class, and she would ask my PE teacher to bend the rules for me.”

In the early 1990s, the Ministry of Education made a policy that city-level three goods students would be awarded point bonus in their college entrance examinations. Some “especially distinguished” students were even granted exam exemptions.

This triggered a backlash among scholars and educators. In 2005, Gu Mingyuan, director of the China Education Society and a professor at Beijing Normal University, openly called for the abolition of the system, saying it was unwise to label a child as either “good” or “not good.”

“Our education system should aim to make everyone into a three goods student, not just some of them. Moreover, it is unfair that some students get preference when applying for top schools,” he said.

However, not everyone is in agreement, particularly parents of students who stand to benefit from the system. “If my child really does better than others, why shouldn’t she be given a special honor as encouragement? I think it’s helpful to promote friendly competition,” Zhang Li, mother of a 10-year-old girl, told NewsChina.

“The three goods system originally meant well, but the privileges later attached to the title have corrupted the practice,” said Cao Wenlin, retired former principal of a Beijing elementary school. “It is better that we get rid of the privileges, and find a better way to select threegood students, such as introducing a more workable mechanism to gauge someone’s morality, rather than burying the whole system.”

Following Shen Peng’s proposal at this year’s CPPCC sessions, Xu Mei, spokesperson for the Ministry of Education absolved the department of responsibility on the matter, claiming it had “neither made a unified policy for three-good students selection, nor established the title at a national or provincial level,” and “would not interfere with any local reform.”

It may not be facing nationwide abolition anytime soon, but the three goods system may well be left to fall apart piece by piece. NEWSCHINA I August 2012

Photo by CFP

Days Numbered

Two girls study at home, the wall beside them covered with certificates of merit, Zhejiang, May 2, 2007

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visual REPORT

THE ONCE-G 60

NEWSCHINA I August 2012

A

s a military fortification, the Great Wall marked the dividing line between China’s farming culture and nomadic northern civilizations for more than a thousand years. Yet with the arrival of modern industry, life along the Great Wall has seen enormous changes, in places leaving the remaining fortifications to a life either as a revamped tourist attraction or forgotten ruins. Due to both human and natural causes, the Great Wall is slowly disappearing.

Photo by CFP

GREAT WALL NEWSCHINA I August 2012

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visual REPORT

1

1 2 3 4 5 6

In Shandan County, Gansu Province, villagers have built sheep pens along the Great Wall. Their flocks live south of the wall, and graze on the north side in the daytime.

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Parts of the Great Wall built during the Ming Dynasty (1368 – 1644) in Gansu Province have become a local playground.

In Zuoyun County, Shanxi Province, a church built in the late 19th century stands alongside ancient ramparts.

In Beijing, the Badaling section of the Great Wall is often so overcrowded with tourists that police are brought in to keep the crowds moving.

In Yinchuan City, Ningxia, a section of the wall has been partially restored for tourism development.

In Guyuan City, Ningxia, herdsmen gaze upon a Qin Dynasty (221 – 206 BC) section of the wall.

NEWSCHINA I August 2012

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NEWSCHINA I August 2012

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Photo by CFP

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OUTSIDEIN perspectives from within China

Mount Taibai

Walking in the Clouds Climbing Mount Taibai is a real treat. Rare flora and fauna and a plethora of exquisite cloudscapes greet the determined hiker with five days to spare

By Wang Yan

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Mount Taibai

NEWSCHINA I August 2012

Ajuga ciliata

Anemone reflexa

Glechoma longituba

Souliea vaginata

Staphylea holocarpa

Disporum cantoniense

Primula purdomii

Photos by He Li

Cardamine scaposa

Adonis sutchuenensis

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he Qinling Mountains, running roughly west-east, bisect China ’s north and south, marking the watershed between the drainage areas of the Yangtze and the Yellow rivers.

Boasting rich biodiversity, haphazard topography and a unique climate, there’s no better place to begin exploring this often-overlooked mountain range than Mount Taibai, its highest point.

I chose early May to make my ascent with a few friends, inspired by other travelers’ tales of blossoming rhododendrons on the mountain slopes. In the late spring drizzle, a taxi drove us along the meandering mountain roads to Haoping Temple, a Taoist retreat on the northern slope of Mount Taibai and the jumping-off point for our five-day excursion.

Two black robed Taoist priests were sitting down to lunch as we arrived, and invited us to join them. If only we hadn’t filled up in the foothills, concerned that square meals on the mountain slopes, populated largely by Taoist hermits and made famous in Bill Porter ’s 2007 travel-

NEWSCHINA I August 2012

ogue Road to Heaven: Encounters with Chinese Hermits (see: “Seeking the Root of Zen,” NewsChina, February 2011), would be hard to come by.

Reluctantly, we thanked the priests and continued our journey along the muddy track.

Bloom

The rain showed no signs of stopping, and the increasingly sodden pathway was threatening to completely encase our trudging feet. However, our minds were drawn from our soggy socks by a profusion of bellshaped lilies blossoming by the roadside. These milk-white blooms were immediately identified by one of the botanists traveling with us, and soon a running commentary on plant species was in full flower as new mountain flora revealed themselves every step along the trail. Soon, we were all on first-name terms with the surrounding plant life.

Bittercress, blue bugle and fairy bells lined our route to our sleeping place - Dadian, or the “Big Hall,” a Taoist temple complex which, when

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travel

we arrived, stood empty. We camped inheight. At noon, the fog finally receded side the compound and lit a camping Flora and Fauna and when the first beam of sunlight pierced stove for warmth and to cook the victory The Qinling Mountains are a naturalist’s through the thick clouds, we saw the snowonion leaves and Chinese toon shoots obdream, combining alpine and coniferous capped peak of Mount Taibai gleaming in tained from one of the many temples we forests and boasting 640 species of vertethe distance. had passed on our way. brate animals including the Qinling panda, With the arrival of sunlight came the fauWe awoke to birdsong but, unfortugolden takin ox, golden pheasant, golden na – pika, weasels, blood pheasant and goldnately, no break in the clammy fog. As snub-nosed monkey, Temminck’s tragoen pheasant began to appear on the trail. We our hike continued, we began to notice pan, crested ibis, golden eagle, blackthroat spent the night in a family-run inn near the the gradual increase in altitude, a sensaand the incredibly rare clouded leopard. top of the mountain, a full moon foreshadtion advertised in colorful splendor by owing our final ascent of Baxian Tai, Taibai’s the Taibai rhododendrons. Less than 20 Getting There summit, 12,300 feet above sea level. minutes after departure, these unimaginBuses to Meixian County from the main The peak, as it turned out, was far less exably beautiful pink and white flowers were bus station in Xi’an, Shaanxi Province take citing than the journey down. After returneverywhere – beside, below and above us. you to Hedi Village . From Hedi, it is a oneing to the inn to collect our baggage, we hit Eight hours of trekking brought us to hour taxi ride to Haoping Temple, startingthe southern descent along Galloping Horse Mingxing Temple, our second campsite. point for the hike to the Taibai summit.

Ridge, which protrudes above the clouds, The rhododendrons splattered color and There are five different routes up the mounoffering tantalizing glimpses into the vallife across the misty, mud-caked paths of tain, but the most-traveled is probably Haley below. We could observe the mounting Taibai, meaning we arrived at our restoping Temple – Pingan Temple – Fangyang clouds crawling up from the mountain valing place with more vigor than when we Temple – Mingxing Temple – Dawengong ley, blurring the boundary between heaven had staggered into the desolate courtyard – Da Ye Hai – Paomaliang – Laomiaozi – and earth. of Dadian the previous night. Mingxing Dudu Gate.

The southern slope of Taibai feels like a Temple is a deserted adobe house built different world – the dripping coniferous beneath mountain cliffs. Inside, a broken forests of the north face are replaced by rollbed, a shaky table and dangling, shredded ing alpine grassland, broadleaf birch and drapes were the only nods to comfort. We oak, and hornbeam forests which finally give set up our tent inside the house and foraged for combustible firewood way to the ubiquitous bamboo groves – the elusive wild pandas keeping in the forest, spending the night chatting and joking around our indoor well clear of the hiking trails. bonfire which did an admirable job of drying out our drenched clothing.

However, these chunky black-and-white denizens of the Qinling’s southern foothills could set up home on the mountain paths and be fairly Aim Higher comfortable that they’d never see a human being. Few people venture The next day took us through dense subalpine coniferous forest and to into the depths of this mountain range, making it an unparalleled oasis even greater altitudes. The temperature dropped noticeably and we began of tranquility in a country plagued by the noise and bustle of human to spy snowdrifts alongside the path, drifts which soon stood at waist development. real chinese

cai

cainiao newbie In China, if you’ve just moved into a new industry, calling yourself a cainiao can be a good way of getting a helping hand.

A slang term for a newcomer, cainiao literally means “game bird,” with cai meaning “dish” and niao meaning “bird.” The word itself can be dated back to the 1980s when China launched Reform and Opening-up, and game such as pigeons and quails landed on Chinese dining tables for the first time. In order to distinguish them from working birds, such as carrier pigeons, birds to be eaten were known as cainiao.

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The word’s assimilation into everyday speech originated with the armed forces, where soldiers used it to single out new recruits. The word was later popularized in Taiwan, where newcomers in any situation were nicknamed “cainiao zai” (“little baby bird”), since they were like birds learning to fly, bumbling around and sometimes crashing to the ground.

The word was introduced into the mainland at the end of the 1990s. While at first it was generally only used to describe trainees in the IT industry, the term soon made inroads into

niao

other professions. Now, a newcomer to almost anything can be called a cainiao, and the contraction cai has now evolved into an adjective to describe poor performance. For example, a bad singer might call their own voice “cai.”

The opposite of a cainiao is a daxia (literally “big shrimp”). A homonym in Chinese for chivalrous, kung-fu fighters, daxia refers to experienced “old hands.” Normal etiquette holds that as long as a cainiao acknowledges his or her status, a daxia should be willing to help.

NEWSCHINA I August 2012

flavor of the month

Bobbing for Dumplings

By Stephy Chung

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ike many Chinese families, my most cherished childhood memories are set around the kitchen table, and most of those feature dumpling making. The Chinese equivalent of ravioli, dumplings, or jiaozi, require the work of several hands, and therefore the process of making them has been a social occasion for thousands of years.

My father would take on the most grueling task – kneading a soft dough made from flour and water until it became buoyant. He would always take care to sprinkle extra flour to keep the dough from sticking. Then, inch-wide wedges would be partitioned off and flattened into round casings, or skins.

My mother was charged with the all-important filling – working green scallions, cabbage, white pepper, and ginger into a bowl of fatty ground pork. My sister and I would lop about a tablespoon of Mom’s mushy filling onto the skins, moisten the edges with a few drops of water, and pinch the sides to form diminutive, crescent-shaped parcels. The dumplings were then pan-fried, boiled or steamed.

Dumplings are eaten year-round, but hold particular significance during Chinese New Year. Resembling ancient Chinese currency in their most basic incarnation, these edible ingots are consumed to assure prosperity in the coming year. A few coins can be wrapped into a batch and whoever grabs a moneyed dumpling is said to be extra lucky. Candied versions are sometimes made, to sweeten the celebrations.

During other days of the year when people aren’t necessarily attempting to eat their way to wealth, dumplings are still regularly consumed, especially in the north, with the factoryprocessed frozen variety second in popularity only to instant ramen in the convenience food stakes. Other variants are found throughout the country – most notably the paper-thin-skinned Cantonese wonton and Shanghai’s delicate xiaolongbao, which burst with hot broth unless carefully maneuvered onto a sturdy spoon before eating.

Widespread availability and dramatically changing diets in China have not necessarily meant the traditionalists haven’t continued to NEWSCHINA I August 2012

dominate dumplings when it comes to variety.

The potential to stuff pretty much anything into a dumpling skin has yet to be fully realized. Restaurants, even those known for their dumplings, will offer only a few choices, mostly revolving around the minced pork of a billion Chinese childhoods, or, even less exciting, just eggs and Chinese chives.

In search of a good dumpling house, I had Beijing’s Baoyuan Dumplings recommended to me, their gimmick being that instead of the lackluster, natural white skins, their dumplings were festively colored and served up in a kaleidoscope of hues. If only the same esthetic had been applied to their decor. Located just off one of Beijing’s busy ring roads, weathered red lanterns give way to a dirty, dingy interior of sticky tables and dim lighting.

The menu however, made up for the disappointing and all-too-familiar ambience. Over 70 different choices of filling, many of which were vegetarian, had been studiously translated into English for the wandering westerner. Ingredients were impressive, with selections like turnip, fern root, sweet potato, cilantro, lotus roots, and more. Most dumplings were cheap – the equivalent of three to five dollars a dozen.

While there were no “tie-dyed dumplings,” as one expat magazine had suggested, the menu did offer up a few colors – purple, orange, and green. The conservative in me found this initially alarming – unable to shake the thought of the harmful food additives that have scandalized the Chinese media. Our somewhat surly waitress attempted to put me at my ease, assuring us the hues were natural, made with extract of purple cabbage, carrot and spinach respectively. Color was determined by filling, rather than by request.

Our indecisiveness soon had our gaily-clad server tapping her foot in annoyance, and an argument ensued over her insistence that we order a minimum of two sets of each dumpling, or by the dozen, rather than picking and choosing from the selection on offer. Baoyuan, clearly, wasn’t offering a tasting plate.

We finally settled on four varieties, meaning an intimidating 48 dumplings shared between us. Our first choice was the joint’s “Health Dumpling” – apparently a signature variety going on its entire page of glossy pictures – made with mushroom and bean sprouts and served, Two-Face style, in half-white and half-green skins.

The popular pick proved sensational. After less than a ten-minute wait, two steaming platters arrived. The dumplings were smaller than I had expected, but well-packed with flavorful filling. Next came shrimp, cucumber, bean vermicelli and egg dumplings, which achieved what I had considered impossible – each bite tasted like a complete, balanced dish.

The minced pork and Chinese mushroom dumplings were more standard, if succulent, fare complimented best when dipped in the chooseyour-own combination of vinegar, soy sauce, and chilli oil accompaniments.

Finally came my favorite - dried bamboo shoots with yellow flower, egg, and wood ear, satisfyingly salty and particularly strong in their range of textures – crunchy, fluffy, soft and chewy all at once, helped by the juicy slivers of wood ear, a gelatinous fungus popular in Chinese cooking.

Only the health dumplings came in Technicolor, with the rest only in flat white. However, the fact that our dumplings were also served mixed, with no indication as to which stuffing was where, gave a nice chocolate-box twist to the dining experience.

Though I would have preferred more colors and better, more patient service, Baoyuan Dumplings offers what all dumpling houses should, but few achieve – variety, quantity and truly diverse flavors.

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essay

Culturally Shocked

By James Cowan

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have lethal consequences when you return home. Take for instance the attitude one develops to crossing the road in China. Traffic on the Chinese mainland is of course a glorious, chaotic free-for-all, once memorably described as a “terrifying ballet of death” by one unfortunate news correspondent sent by their

Why on earth would you tip someone whose job is essentially to pick up a plate and carry it to your table successfully without dropping it en-route?

Illustration by Xiang Zhaohui

The phenomenon of haigui, or “sea turtles” – Chinese returning home to the mainland after stints abroad – is well known among Chinese and initiated foreigners. These returning Chinese are notorious for their relaxed work ethic, an undeserved sense of an entitlement to a higher salary, and an annoying tendency to drop English words casually and frequently into Mandarin. Similarly, foreigners that return after long stretches in China often find they have picked up a few habits that make re-adjusting to life at home harder than they might expect. These habits range from those liable to engender mild social embarrassment to those that are potentially life threatening.

To all those ex-expats out there, consider your first night out at a restaurant in your home country after an extended stay in China.

Did you find it difficult to attract the attention of the wait staff? Did you wish that you could simply call them over with a full-throated “fuwuyuan!” (literally: “service person”) instead of the awkward pantomime of half-raised hands, frantic eyebrows and stutterings of “excuse me”? Did you remember to say “thank you” absolutely every time somebody brought anything to your table? Did you tip? Why on earth would you tip someone whose job is essentially to pick up a plate and carry it to your table successfully without dropping it enroute? Practices that we may have once taken for granted suddenly seem strange in the cold, hard light of the Chinese perspective.

In fact, this new perspective brings several useful advantages. One is an increased willingness to haggle for anything, thanks to the expectation nurtured over time that people will, given half a chance, try to rip you off for almost everything. You may be surprised at the deals you can get if you know where to look, particularly because the lack of a strong bargaining culture in the West makes it easy to catch people off-guard. This writer counts 40 British pounds (US$62) off a pair of designer jeans bought at a family-owned store among several minor triumphs in this regard.

Yet a Chinese-influenced mindset can also

publication to get a taste of life in Shanghai.

Yet as everyone who has lived in China for long enough knows, there is method to the madness. While traffic laws appear flexible at best, drivers keep their wits about them and generally try not to mow pedestrians down as they meander across the road, substituting the crunch of tires on bones for annoyed and persistent honking. Not only this, it is also widely known that giving way, whether in a car or on

foot, is considered a tremendous loss of face in China and highly damaging to your social standing. It is therefore common for longterm foreign residents in China to engage in a fierce game of chicken with cars turning corners at crossings, extending an imperious, Caesaresque hand to bring oncoming vehicles to a halt if required.

In the West, the calculated disregard of approaching cars can be highly dangerous when people expect pedestrians to pay attention to basic road safety. At best, car drivers will sound their horn and mouth vehement expletives at you when they screech to a halt after trying to turn a corner as you stroll nonchalantly across the road.

Less life-threatening, but equally concerning, are issues of personal independence.

Many foreigners in China end up taking a leaf out the book of well-heeled Chinese by outsourcing household chores to an ayi (auntie), an obliging old lady who washes your socks, cooks your dinner and even pays your utility bills for a reasonable hourly fee, a convenient relationship that soon gives way to symbiosis.

However, such an arrangement is often economically (and socially) untenable in the West and may cause a severe case of reverse culture shock when it is no longer available. Suddenly, menial daily tasks present a formidable challenge: “You mean I have to iron my own clothes?” “These bills don’t get paid automatically?” “Load the dishwasher by myself? What the heck is a dishwasher?”

An extended soujourn in China offers new insight into oneself and allows the expat to question some social customs in the West that are widely accepted, but perhaps shouldn’t be.

But returning foreigners beware: if you aren’t careful, you may return home from China with eroded social skills, a cavalier attitude to personal safety and a severely impaired capacity for self-sufficiency in your daily life. By all means, hone your haggling and look forward to considerable savings in unpaid tips. Just stay safe on the roads. And don’t forget how to iron a shirt. NEWSCHINA I August 2012

“You Don’t Look American”

By Michael Thai

NEWSCHINA I August 2012

America projects, whether advertently or inadvertently, is so black and white, no pun intended. My hairstylist’s confidence was a direct reaction to the clarity and strength of America’s projected image. Unfortunately it is an image that is extremely one-dimensional.

Notions of race and nationality become

Notions of race and nationality become heightened when living as an expat.

Illustration by Xiang Zhaohui

“I’m sorry my Chinese is not very good. I just want your cheapest, most ordinary haircut for men.” The barbershop girl nods her head in understanding and continues to lather my scalp. Her hands move in a circular motion, spreading shampoo from the center outwards.

Another girl places a paper cup filled with steaming tea next to my glasses. I smile at her politely.

“You’re not Chinese?” she asks me again, trying to fill the awkward silence.

I shake my head. “No, I’m American.” I squint for a moment and try to catch her reaction in the mirror.

“Oh. You don’t look American,” she says as her hands now scrape the back of my scalp.

She starts to hum along to Bad Romance, which is playing over the speakers. “You look Chinese. Are you an ABC?” I shake my head again. “Not exactly, I’m just American. What do Americans look like?” She laughs and shrugs innocently in the mirror.

“Not like you.”

“You don’t look American.” I get this a lot in China. At first I was bothered by it. What exactly is an American supposed to look like?

Should we have tanned skin and wear feathers in our hair like antiquated Native American stereotypes? Or are we expected to resemble the aging Caucasian males synonymous with American hegemony? Or maybe Kobe Bryant? Or is it simply any race other than the Han Chinese, who seem to magically retain their nationality regardless of how long ago their ancestors migrated West?

Perhaps what bothered me most about these exchanges was that I was seeing American society reflected back through the eyes of foreigners. Chinese people who have never been to America, and who have never had American friends, probably don’t understand America.

And I don’t expect them to. But to be able to say with such confidence what an American should or shouldn’t be is frightening. America and Americans project an image of themselves out to the rest of the world as many countries do. And it is unfortunate that the image that

heightened when living as an expat. When meeting new people, you are immediately categorized by country. It becomes a convenient way to label and remember new acquaintances and friends. But it can also become a slippery

slope leading to lazy stereotyping and troubling oversimplifications.

I was once entertaining two Chinese friends while they were visiting Los Angeles for the first time. I decided to take them to a hole-inthe-wall Mexican and Greek grilled chicken restaurant in the heart of Koreatown. The place was in a rundown urban part of town, but the food was delicious. My friend turned to me when we arrived and said, “Wow, I love it. It’s so common. There are so many Mexicans here, real Americans!”

I nodded my head. My friend was beginning to understand. People from different countries often forget that America is a nation of immigrants. We have ghettoes, we have poverty, and we have ethnic enclaves as rich and pronounced as the hutong alleys of Beijing and the favelas of Rio de Janeiro. But we are not just a nation comprised of immigrants, but a nation built and molded by the spirit and ambition of lost pioneers. All Americans have been then, in that sense, lost. We have all, at some point in our history, left our homes, by will or by edict, in search of something better.

That search and that struggle are what make America’s accomplishments great. That is the narrative I wish we could become more proficient at telling.

There are always so many things I want to say in that moment when people say I don’t look American. But I realized that the person I wanted to speak to wasn’t the dolled-up girl in the barbershop, but my fellow Americans.

I wanted to ask them what we could do to better embrace our diversity, to better seize and accept a unifying and worthy narrative that makes us the same, not different. Why couldn’t we show that face to the world? Why can’t that be our defining story?

I had no easy answers for such a complex question. A question like this can’t be resolved in the span of one haircut. But still, I felt a great sense of relief. At least I had a starting point. At least I knew where to look. Conveniently enough, the barbershop was filled with mirrors. 

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Cultural listings Cinema

Pushing the Revolution Born in 1966, Wang Xiaoshuai grew up during the Cultural Revolution (1966 – 1976). One of China’s pioneering arthouse directors, Wang’s latest work 11 Flowers goes back to the chaos of his early years, focusing on the story of an 11-year-old boy, Wang Han, whose life is changed by a murder and the complicated reasons behind it. Accompanied by abrupt changes at school, in the factory where his parents work, and within his family, Wang Han walks towards his adolescence. In recent years, there has been an increase in movies about the Cultural Revolution, and although 11 Flowers has been criticized for being too personal, critics have acknowledged Wang Xiaoshuai’s efforts to push the genre forward.

Dance

Book

Strong First Steps

Revolution in the Central Soviet Area

Beijing Dance Festival, a two-week dance event combining master classes, workshops, seminars, and performances by new and well-established groups from both China and abroad, was held from July 16 to 28 in Beijing. One of the prominent sections of the festival was the Youth Dance Marathon, which featured more than 50 dance groups from all over China over 6 days. Focusing on modern dance, the festival is one of the biggest dance events in China, despite this being its inaugural year. Over the past years, modern dance’s influence in China has seen a rapid increase, though largely it still remains a sub-cultural phenomenon.

By Huang Daoxuan

Exhibition

Great Expectation Beijing-based artist Lin Guocheng’s first solo exhibition in Hong Kong was held recently at the 3812 Contemporary Art Projects gallery from May to July. Born in 1979 in Guangdong province, Lin, a young artist by Chinese standards, is almost entirely self-taught. From 2009 to 2012, his style changed from bright and colorful oil paintings, often with a distinctly digital feeling, to fountain-pen sketches of natural scenes reflecting a similar spirit to China’s traditional “mountain and water” painting style.

The newly founded 3812 Contemporary Art Projects aims to discover talented young artists with a less market-oriented approach. Lin’s semi-abstract paintings are clearly distinguished from the majority of current Chinese artists’ work.

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By the time the Red Army set out on the Long March in October 1934, the 32,400-square-mile Chinese Soviet Republic (or the “Central Soviet Area”), with a population of 4.35 million at its peak, had been the base of China’s communist revolution for three years. The Soviet cast a long and profound influence on China’s communist rule after its inception. The recent book Revolution in the Central Soviet Area (1933 – 1934), by Huang Daoxuan, a researcher from the Institute of Modern History of the Chinese Academy of Social Sciences, focuses on the historical changes on the eve of the Long March and discusses the reasons behind the 7,000-mile retreat.

NEWSCHINA I August 2012

Commentary

Social security reform will take more than postponing retirement Given its rapidly aging population, China’s social security system needs systematic reform to address inherent problems

By Qiu Feng

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hen officials at the Ministry of Human Resources and Social Society told the media that it was “inevitable” that China would have to raise the national retirement age in early June, it led to heated public debate.

China’s current retirement age is 60 for men and 55 for women, much earlier than most developed countries. In the State sector, female employees can apply to retire at 50. According to Li Bin, director of the National Population and Family Planning Commission, average life expectancy in China increased from 68 in 1987 to 73.5 in 2011, which makes the raising of the retirement age a necessity.

Actually, measures to postpone the retirement age have been conducted in several major cities. The Shanghai government, for example, issued a decree in October 2010 allowing local residents to postpone their retirement to as late as 65 for men and 60 for women. In a draft law on social security, the Shenzhen government also released plans to postpone the retirement age.

At the core of the issue is the aging population, especially in China’s major cities. In Shanghai, for example, the ratio between those who pay pension premiums and those who receive pensions has halved from 2.82:1 in 1993 to 1.41 in 2009. As China adopts a pay-as-you-go pension system, it is concerned that social security will not meet the demand in the near future if no action is taken. In Shanghai, the city social security fund has started to run on a deficit, which was 3.5 billion yuan (US$550m) in 2010. It is estimated that social security funds of 15 provinces are now running on a deficit, with a total shortage of 67.9 billion yuan (US$10.7bn). Ac-

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cording to an estimate from the World Bank, if no change is made to China’s social security system, its deficit will reach 9.15 trillion yuan (US$1.43tn) between 2001 and 2075.

However, the proposal has met with strong resistance. More than 450,000 people responded to an online survey conducted by people. com.cn, 93.3 percent of whom expressed opposition to the changes.

While opposition to postponing retirement can be expected in any country, it is particularly strong in China, as many people believe the social security system to be inherently unfair. Currently, China’s social security only covers urban residents, and adopts a dual-track approach to the public and private sectors. In the private sector, employees pay a social security rate based on average local income, while government pensions are covered by government revenue, at a level up to 3 times that of the private sector. Moreover, many suspect that much of China’s social security fund may be routinely misappropriated, given the opacity of its management. Therefore, postponing the retirement age without addressing the premium enjoyed by government employees and corruption within the system will only deepen the already strong resentment among the public.

With an aging population and a slowing growth rate, there is no doubt that China needs to reform its social security system. But the government must not take the easy way out by simply postponing the retirement age. Instead, it should take a systematic approach and address some of the inherent problems in China’s pension system. (The author is a freelance commentator) NEWSCHINA I August 2012